CANFOR ELKO SAWMILL FUEL SWITCH GHG PROJECT PLAN NOVEMBER, REF NO: 01. File name: PP-CanforElko-KPMG

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1 CANFOR ELKO SAWMILL FUEL SWITCH GHG PROJECT PLAN NOVEMBER, REF NO: 01 Page 1 of 68

2 PROJECT PLAN Prepared according to the requirements of the BC Offsets Regulation (the Regulation). Project Name: Canfor Elko Sawmill Fuel Switch Validation Period: November 1, 2014 to October 31, 2024 Project Proponent: Prepared on behalf of Project Proponent: Canadian Forest Products Ltd. Yes Offsetters Clean Technology Inc. Prepared by: Simon Phillips, Offset Project Manager West Hastings Street Vancouver, BC, (Canada) V6B 1N2 Tel: (778) Date: November 27, 2015 Page 2 of 68

3 TABLE OF CONTENTS 1 LIST OF ABBREVIATIONS PROJECT SCOPE AND DESCRIPTION PROJECT DETAILS DESCRIPTION OF PROJECT ACTIVITY PROJECT LOCATION SECTORAL SCOPE AND PROJECT TYPE PROGRAM OF ACTIVITY ELIGIBILITY CRITERIA LEAKAGE MANAGEMENT CONDITIONS PRIOR TO PROJECT INITIATION PROJECT START DATE & TIMELINE PROJECT VALIDATION PERIOD ESTIMATED GHG EMISSIONS REDUCTION AND/OR REMOVALS ENHANCEMENT OWNERSHIP AND OTHER CONSIDERATIONS SUPERIOR CLAIM TO OWNERSHIP REGISTRATION IN OTHER EMISSIONS TRADING PROGRAMS COMMERCIALLY SENSITIVE INFORMATION COMPLIANCE WITH POLICIES, SCHEMES AND/OR LEGISLATION ENVIRONMENTAL IMPACTS ADDITIONAL BENEFITS STAKEHOLDER CONSULTATIONS ASSUMPTIONS & RISKS PROJECT ASSUMPTIONS ASSESSMENT OF PROJECT RISKS & UNCERTAINTIES CONTACT INFORMATION PROJECT PROPONENT CONTACT INFORMATION OTHER PROJECT PARTICIPANTS IDENTIFICATION OF RELEVANT GHG SOURCES, SINKS AND RESERVOIRS (SSR) TITLE AND REFERENCE OF PROTOCOL PROTOCOL APPLICABILITY BASELINE IDENTIFICATION & SELECTION IDENTIFICATION OF POTENTIAL BASELINES SCENARIOS Page 3 of 68

4 4.3.2 SELECTION OF BASELINE SCENARIO IDENTIFICATION OF BASELINE SSRS TEMPORAL APPLICABILITY OF SELECTED BASELINE PROJECT SELECTION & JUSTIFICATION PROJECT SCENARIO PROJECT BOUNDARY IDENTIFICATION OF PROJECT SSRS PROJECT JUSTIFICATION PROJECT JUSTIFICATION SUPPORTING DOCUMENTS COMPARISON OF PROJECT AND BASELINE SSRS AND SELECTION OF RELEVANT SSRS FOR MONITORING OR ESTIMATION QUANTIFICATION OF PROJECT AND BASELINE EMISSIONS BASELINE EMISSIONS PROJECT EMISSIONS LEAKAGE PROTOCOL CHANGES EMISSION FACTORS NET GHG EMISSION REDUCTIONS AND REMOVALS CARBON CAPTURE AND SEQUESTRATION RISK-MITIGATION PLAN GREENHOUSE GAS REDUCTION PERMANENCE PLAN LENGTH OF PERMANENCE PLAN MONITORING PLAN PURPOSE OF MONITORING MONITORING ROLES AND RESPONSIBILITIES GHG INFORMATION MANAGEMENT SYSTEM (IMS) DATA AND PARAMETERS MONITORED DATA QUALITY MANAGEMENT PLAN DATA QUALITY MANAGEMENT PLAN OBJECTIVES RESPONSIBLE PERSONNEL, QUALIFICATIONS AND TRAINING QUALITY ASSURANCE AND QUALITY CONTROL PROCEDURES DATA CONTROLS DATA CHAIN OF CUSTODY AND SECURITY RECORD BACK-UP AND ARCHIVING PERIODIC QUALITY ASSURANCE REVIEW Page 4 of 68

5 8 SUMMARY OF ASSERTIONS BASELINE RESULTS IN CONSERVATIVE GHG ESTIMATE PROJECT JUSTIFICATION PROJECT START DATE ACCURATE AND CONSERVATIVE ESTIMATE OF GHGS OWNERSHIP CONFORMANCE WITH EMISSION OFFSETS REGULATION REFERENCES AND SUPPORTING DOCUMENTS APPENDIX A APPENDIX B APPENDIX C Page 5 of 68

6 1 LIST OF ABBREVIATIONS AFE Authority for Expenditure AFOLU Agriculture, Forestry and Other Land Use BC EOR British Columbia Offsets Regulation CF conversion factor CH 4 methane EF emissions factor GHG - Greenhouse Gas GJ Gigajoules HDD heating degree days HHV higher heating value IMS information management system MFBM thousand board feet MMBtu Million British Thermal Units NG Natural Gas N 2O nitrous oxide NOx nitrogen oxides PoA program of activities QA quality assurance QC quality control SOx sulfur oxides SOP standard operating procedure SSR s, sinks and reservoirs te tonne of carbon dioxide equivalent TSA timber supply area Page 6 of 68

7 2 PROJECT SCOPE AND DESCRIPTION Project Overview Project Title Biomass Fuel Switch - Canadian Forest Products Ltd. Elko Sawmill BC Sectoral Scope Scope 1: GHG Reductions from fuel combustion biomass fuel switch 1 AFOLU (Agriculture, Forestry and Land Use) PoA (Program of Activities) Reporting Details Validation Details Applicable Protocol N/A N/A The project was carried out as described in the Project Plan in all material respects. KPMG is the validation body and complies with all requirements of the BC EOR. GHG Quantification Protocol: Fuel Switching From Fossil Fuel-Fired Energy Generation to Less GHG-Intensive Fossil Fuel or Renewable Energy Sources V2.1 May 13, March pdf 2 Source: Page 7 of 68

8 3 PROJECT DETAILS 3.1 DESCRIPTION OF PROJECT ACTIVITY The purpose of this project is to reduce natural gas consumption and associated greenhouse gas (GHG) emissions at a commercial sawmill through the operation of a heat-energy system that utilizes a residual biomass feedstock. The Elko sawmill produces finished lumber products. In order to process the saw logs into finished wood products, logs are debarked and sawn in the sawmill producing lumber and chips. The rough lumber is dried in kilns and planed in the planer mill. As a result, an energy system is required primarily for drying the lumber prior to planning and to meet product and moisture specifications. For a simplified process flow diagram, see Figure 3.1. Figure 3.1 Process Flow of Sawmill In addition to lumber drying, the heat energy system provides a small amount of space heating for both the saw and planer mills from the heat energy system. Canadian Forest Products Ltd. (Canfor) owns the sawmill, and it has commissioned the conversion of three regular natural gas kilns to utilize the energy produced by a biomass-based heat energy system. The new system will include a fourth kiln, a continuous dry kiln, and will distribute the heat through a hot oil/ heat exchanger, and will be fueled by biomass residues generated by on-site processes. A natural gas booster will be installed to ensure sufficient system capacity during winter months. The installation of the continuous dry kiln will greatly reduce the reliance on the natural gas booster. Page 8 of 68

9 The Canfor Fuel Switch Project (hereafter the project ) reduces GHG emissions by switching from nonbiogenic fossil fuel use to residual, biogenic biomass feedstock. The project will involve the conversion of three on-site natural gas kilns to thermal oil drying systems and the installation of a continuous dry kiln. The project also involves the installation of a highly efficient 38 MMBtu/hr biomass fueled stepped-grated heat energy system, and a thermal-oil, heat-exchange emissions controls and associated fuel handling and storage infrastructure. In addition a 12MMBtu/hr natural gas booster will be installed to ensure sufficient system capacity during cold weather periods, and to provide adequate lumber drying capabilities to support continued production volume growth. The booster will only operate to supplement energy output during peak demand periods in the winter. The energy system utilizes the residual biomass from the sawmill and planer processes and the mill utilizes timber harvested from sustainably managed forests. Consequently, the carbon emissions associated with the feedstock are considered to be carbon neutral (biogenic) and, thus do not create a net increase the overall atmospheric carbon pools. A new kiln control system will be installed to manage the oil flows to the individual kilns to maintain correct drying temperatures (Figure 3.2) and to provide space heating for the facility. The kiln production data are derived from a combination of reading from the sophisticated scanners within the mill, and these readings are adjusted based on physical inventory counts and reported monthly. Figure 3.2 Schematic of the Energy System Research into the impact of drying with thermal-oil systems indicates that drying quality and charge times should improve as compared to conventional natural gas-fired kilns. There is also expected to be product quality improvements from indirect hot oil lumber drying. Fuel usage varies from month to month depending on heating requirements, which are driven largely by Page 9 of 68

10 production and seasonal temperature. The ongoing project activity involves the continued use of biomass to displace natural gas Project Location Elko Sawmill 9600 Cascade Street Elko, BC V0B 1T3 Latitude: and Longitude: NAICS code: ([Saw Mills and Wood Preservation]) Figure 3.3 Project Location (Large) Satellite image of the Elko Sawmill with site shown by green dot (Source: Google Maps) Page 10 of 68

11 Figure 3.4: Project Location (Detailed) Close-up satellite image of the project site (Source: Google Maps) Sectoral Scope and Project Type The Project is a Scope 1: GHG Reductions from fuel combustion biomass fuel switch Program of Activity Eligibility Criteria N/A Leakage Management The sawmill heat demand for the project is estimated to be supplied by approximately 75% of the bark hog fuel produced at the mill. The remaining hog fuel will continue to be exported to the Skookumchuk Pulp Mill in accordance with the timber supply agreement. Timber supply studies show that there is enough residual biomass in the region to replace the business as usual exports from Elko. In the event that any biomass is d from the bush, i.e. slash-piles, a net increase in emissions would not result as the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for any increase in emissions associated with the collection, transport and processing of biomass residuals from slash-piles. Page 11 of 68

12 3.2 CONDITIONS PRIOR TO PROJECT INITIATION The Canfor Elko sawmill consumes approximately 838,000 m 3 of saw logs annually 3. Wood residues generated at the sawmill (chips, bark, sawdust and shavings) have historically gone to Skookumchuk Pulp, located approximately 100 km away. Increased production levels at Elko with capital investments that have occurred since the Canfor purchase in April 2012 have increased residual quantities sent to Skookumchuk Pulp, taking into account the bark being incinerated by the Project Plant. The Elko sawmill operated seven natural gas kilns to dry the lumber prior to planing. Three of these kilns were in regular operation at the time of the capital budgeting decision, while the other four were substantially less efficient units and were used sparingly to supplement drying capacity on the site. In addition, a small portion of heat from the natural gas was used for space heating the facility. Natural gas is a popular fuel choice for providing heat for industrial processes in BC due primarily to consistently low prices and anticipated supply surplus. 4 Natural gas is also preferable as it is an exceptionally reliable fuel, which lowers operation and maintenance costs. 3.3 PROJECT START DATE & TIMELINE The Proponent asserts that the project start date is November, This is the date in which the asset started reducing GHG emissions. 3 Based on internal production assessments for capital budgeting decision: Authority for Expenditure. 4 Due to a supply surplus, the U.S. Energy Information Administration projects an average gas price though 2035 below eight dollars. Source 5 Project start date is considered the date of commercial operation. Page 12 of 68

13 TASK/MILESTONE START END Planning/feasibility Design Final approval for expenditure Q July 2014 Prepare and complete final Project Plan Validation of Project Plan In progress In progress In progress In progress Construction Testing Q Q Q Commissioning Commercial operations October 2014 November 2014 April 2015 (outside date for conversion of 3rd kiln from NG to thermal oil.) Project Validation Period The expected validation period for this project is , a total of 10 years Estimated GHG s Reduction and/or Removals Enhancement Year Estimated Project Reduction (tco2e) Year 1 (2015) 17,217 Year 2 (2016) 17,217 Year 3 (2017) 17,217 Year 4 (2018) 17,217 Year 5 (2019) 17,217 Year 6 (2020) 17,217 Year 7 (2021) 17,217 Year 8 (2022) 17,217 Year 9 (2023) 17,217 Year 10 (2024) 17,217 Total Estimated Project Reduction (tc0 2e) 172,170 Page 13 of 68

14 Year Estimated Project Reduction (tco2e) Total years 10 Average Annual Project Reduction (tc0 2e) 17, OWNERSHIP AND OTHER CONSIDERATIONS Superior Claim to Ownership The Proponent asserts that Canadian Forest Products Ltd. has a superior claim of ownership and is responsible for the GHG emissions and emission reductions associated with their operations and will be demonstrated through of investment in the clean technology asset. Canfor does not participate as a capped entity in BC. Evidence of ownership is demonstrated with separate documentation, and confirmed in the Verification Report. Canadian Forest Products has retained Offsetters to develop the GHG project verification on their behalf Registration in Other s Trading Programs This greenhouse gas reduction project has not previously been recognized as an emission offset project under the Act or another emission-offset recognition scheme or for the purposes of another voluntary or mandatory greenhouse gas reduction program Commercially Sensitive Information No commercially sensitive information has been excluded from this version of the project plan Compliance with Policies, Schemes and/or Legislation The project proponent confirms that the project complies with all of the relevant policies, schemes and legislation Environmental Impacts The project has secured the relevant legal permits to engage in the project activity. The project will employ the use multicyclones and an electrostatic precipitator for particulate emission reduction that will meet the current and anticipated provincial air requirements 6. The project is expected to have a net positive impact on the community by reducing the number of heavy-duty transport vehicles and their associated GHG emissions that would have been used to transport the biomass off-site Additional Benefits There are several additional environmental benefits associated with the use of residual biomass over the 6 Source: Page 14 of 68

15 combustion of hydrocarbons as fuel. First, the use of residuals does not place excess strain on the forests to meet biomass demand as only by-products are used. The system is equipped with a sophisticated multicyclone ESP system to minimize particulate emissions. Additional economic benefits are the increase in jobs associated with design, installation and operation of the Project. Canfor utilizes a BC-based technology, Deltech, for the thermal energy system design, construction and maintenance. This investment in local green technology increases business and tax revenue in BC and creates/maintains multiple jobs. Furthermore, shifting to a bio-economy helps to decrease dependency on fossil fuel market volatilities, increase resiliency for the province and promoting utilization of sustainable feedstock on an indefinite basis. As mentioned, Canfor utilizes BC-based technology for its thermal energy systems which helps build local expertise, knowledge transfer and capacity building around biomass utilization. Canfor biomass projects are a sterling example of how the bio-economy can be incorporated into existing industrial settings and can serve as an illustration of successful biomass utilization that other industrial entities can follow. The project further generates capacity with regards to carbon accounting and showcases BC as a leader in clean technology Stakeholder Consultations No consultations were required to be undertaken with respect to this project as the project licensing did not trigger consultation requirements. It is noted, however, that all relevant permits are secured and all relevant regulations are being followed. 3.5 ASSUMPTIONS & RISKS Project Assumptions All assumptions employ the principal of conservativeness for both the project and baseline scenarios Assessment of Project Risks & Uncertainties Risk /Uncertainty Identification Quantification Risk/Uncertainty The quantification relies on a multiple regression equation that utilizes activity levels of production (kiln) and heating degree days. Both of these data s are inputs. Risk (High, Medium, or Low) Quantitative Impact on the GHG Assertion (%) Low/Medium <5 Mitigation / Management Strategy Data from kiln production is tracked by Canfor with multiple QA procedures to ensure. Heating degree days are taken from highly reliable data s. Page 15 of 68

16 Risk /Uncertainty Identification Performance Risk/Uncertainty Energy system does not operate according to specifications. Energy system unable to meet the facilities energy needs. Permanence Risk/Uncertainty n/a Other Risk/Uncertainty Risk (High, Medium, or Low) Quantitative Impact on the GHG Assertion (%) Low ~0 Low ~0 Regulatory Risk low ~0 Mitigation / Management Strategy Canfor will continue to monitor its process and product quality over the lifetime of this project. The energy system includes a natural gas booster and additional energy system capacity could be installed should the facility expand in the future. Both biomass furnaces and natural gas burners are required to meet permitted emission criteria. The supplier has guaranteed the electrostatic precipitator to achieve an outlet particulate emission level, which is expected to meet all future anticipated air emission permit requirements. Page 16 of 68

17 3.6 CONTACT INFORMATION Project Proponent Contact Information Primary Contact Name and Title Company Role(s) and Responsibilities Address Telephone Brief description of Company Michael Jordan Director Environment, Energy & Climate Change Policy Canadian Forest Products Ltd Negotiates contracts, liaises with CIB and consultants on fulfilling contract obligations West 75th Avenue Vancouver, B.C. V6P 6G Canfor is a global leader in producing sustainable wood building solutions, and a Canadian integrated forest products company based in Vancouver, British Columbia. Our North American manufacturing facilities produce high-quality dimension lumber and value-added finishing products. We are also a leading producer of wood pellets and green energy. Secondary Contact Name and Title Mark Feldinger, Senior VP Environment, Energy, Transportation & Sourcing Role(s) and Responsibilities Officer of CFP who signs off on offset contracts and other matters requiring Officer approval. Telephone MARK.FELDINGER@CANFOR.COM Other Project Participants Contact Name and Title Company Role(s) and Responsibilities Address Phil Cull, Vice President Project Development Offsetters Project aggregator and coordinating Suite West Hastings Street, Vancouver BC, V6B 1N2 Page 17 of 68

18 Canada Telephone Brief description of Company Phil Cull Offsetters is a leading provider of sustainability and carbonmanagement solutions, Offsetters helps organizations and individuals understand, reduce and offset their environmental impacts. Based in Vancouver, British Columbia and Portland, Oregon, Offsetters have a team of close to 30 with expertise in greenhouse gas measurement including CDP reporting, offset project development, water footprinting, climate change science and policy, renewable energy and energy efficiency, and carbon finance. Page 18 of 68

19 4 IDENTIFICATION OF RELEVANT GHG SOURCES, SINKS AND RESERVOIRS (SSR) 4.1 TITLE AND REFERENCE OF PROTOCOL The following protocol was identified to assist quantifying the project reduction: GHG Quantification Protocol: Fuel Switching From Fossil Fuel-Fired Energy Generation to Less GHG- Intensive Fossil Fuel or Renewable Energy Sources V2.1, May 13, PROTOCOL APPLICABILITY This project involves switching from fossil fuel-fired energy generation to a less GHG-intensive renewable energy (biomass.) The project start date is after the November cut-off. Under the baseline activity, fossil fuels are used to generate energy. Under the project activity, a less GHG intensive fuel mix is used to generate energy when compared to the baseline. The baseline fossil fuel used for energy generation is available in the region and not prohibited from use by regulations or programs during the crediting period. 4.3 BASELINE IDENTIFICATION & SELECTION Identification of Potential Baselines Scenarios In accordance with the protocol, realistic and credible alternatives to the project activity that are consistent with current laws and regulations are outlined below. The Baseline Scenario needs to take into account two primary activities that would have occurred in the absence of the project activity: 1) heat generation (H); and 2) residual biomass use (B). Heat generation The alternatives analyzed for heat generation are listed in Table Source: Page 19 of 68

20 Table 4.1 Baseline Alternatives for Heat Generation Baseline Approach Discussion of Suitability H1: no project undertaken Capital expansion of the facility identified as business critical and part of original purchasing decision therefor no project upgrade was not a viable option. H2: Continued operation of the existing Selected Approach burner(s) using the same fuel mix (natural The fuel mix would have continued to be natural gas. gas) and installation of continuous kiln using the same fuel mix (natural gas); H3: Continued operation of the existing This option is not operationally efficient. burner(s) using a different fuel (mix) other than natural gas or biomass; H4: Improvement of the performance This option does not lower Canfor s operating risk. of the existing burner(s); Biomass use The alternatives analyzed for biomass generation are listed in Table 4.2. Table 4.2 Baseline Alternatives for Biomass Use Baseline Approach B1: The biomass residues are dumped or left to decay under mainly aerobic conditions. This applies, for example, to dumping and decay of biomass residues on fields; B2: The biomass residues are dumped or left to decay under clearly anaerobic conditions. This applies, for example, to deep landfills with more than 5 meters. This does not apply to biomass residues that are stock-piled or left to decay on fields; B3: The biomass residues are burnt in an uncontrolled manner without utilizing them for energy purposes. Discussion of Suitability Companies are legally required to have a wood waste permit to dispose of the volumes of residual biomass. 8 Using the wood residue as a soil conditioner was not deemed a consistent and viable option for the region. The tipping fee to deposit wood residues at a landfill that can accommodate wood or municipal solid waste would make this option prohibitively expensive. 9 Regulation under the Environmental Management Act required that all beehive burners operating in the province be shut down and that they be replaced with incinerators meeting stringent emission control criteria. 10 As a result, uncontrolled burning is not currently a feasible option. 8 Source: 9 Source: 10 Source: Page 20 of 68

21 B4: The biomass residues are sold/provided to other consumers in the market and that the predominant use of the biomass residues in the region /country is for energy purposes (heat and/or power generation); region /country is for energy purposes (heat and/or power generation). B5: The biomass residues are used as feedstock in a process (e.g., in the pulp and paper industry); B6: The biomass residues are used as fertilizer; B7: The proposed project activity not undertaken as a project activity (use of the biomass residues for heat generation); The biomass is sold to third parties using it for various applications. However there is a surplus of biomass in the region. Selected Approach All of the wood residues have historically gone to Skookumchuk Pulp. Due to seasonality of the growing season in the region 11 and crop type 1213, this is not a viable option for the wood biomass residues. The Project faces a financial barrier without carbon financing. B8: Any other use of the biomass residues. No other viable use of the biomass residues was identified Selection of Baseline Scenario For this project, the most plausible activity for the heating activity using the barrier analysis and investment analysis has been determined to be: H2: Continued operation of the existing boiler(s) using the same fuel mix (natural gas) and installation of continuous kiln using the same fuel mix (natural gas).for this project, the most plausible activity for the residual biomass use has been determined to be: B5: The biomass residues are used as feedstock in a process (e.g., in the pulp and paper industry); Having established that natural gas would be utilized in the baseline scenario, the next step is to determine the most accurate means to establish the emissions that would have occurred in the absence of the project activity. These include: 1. Multi-year historic average fuel emissions profile as a function of total emissions generated at the facility prior to project start date; 2. Multi-year historic average fuel emissions profile as a function of Industry average fuel emissions profile for the facility size and type; 11 Source: 12 Source: 13 Source: Page 21 of 68

22 3. Production levels at the facility prior to project start date; Analysis of Choice 1: The inherent intra-variability in the sawmill industry makes it difficult to make a meaningful comparison between a baseline scenario that uses multi-year historic average fuel emissions and a future project scenario. In addition, a multi-year historic average would create a static baseline and be unable to take into account stochastic production levels including plant shutdowns as well as stochastic environmental factors such as temperature variability. A static baseline under such variable conditions is more apt to violate the principle of conservativeness 14. As a result, choice 1 is not an accurate method of calculating the baseline scenario. Analysis of Choice 2: There is much inter-variability between different sawmills and their associated energy use. This variation in energy consumption can be accounted for by location, product requirements and operator preference. Both temperature and production, key drivers for natural gas consumption, are not adequately taken into account using an industry-average fuel emissions profile. As a result, choice 2 of referencing other facilities using a performance-standard type baseline in order to apply an industry average emissions profile will not necessarily be relevant or conservative. In addition, this choice would not provide a dynamic baseline measurement capable of taking into account stochastic events described in choice 1. Analysis of Choice 3 (selected method): The heating requirements of sawmills are driven by two major factors: 1) production volumes, 2) temperature. Production volumes primarily determine sawmills heating requirements. For this reason and to maintain functional equivalence, the selected baseline scenario is choice 3, the historic average fuel emission profile as a function of production levels prior to the project start date. This selection is deemed the best predictor of future energy use. Variability in local temperature conditions is the second important predictor in establishing natural gas use. As recommended by the protocol, a standard indicator of space heating is heating degree-days. Consequently, the baseline will utilize multiple regression analysis including both local temperature and production volumes as independent variables for the dependent variable of natural gas usage. Homoscedasticity was confirmed in both independent variables. The baseline scenario shall apply over the full project period. Justification The baseline scenario will result in a conservative estimate of the GHG reduction to be achieved by the project as described above. By using seasonality and production as the predictor variables, the baseline generates a conservative, functionally equivalent estimate. Furthermore, the baseline represents a scenario that complies with all relevant legal requirements, agreements, contracts, and industry standards; the facility owner will sign a legal contract attesting to these statements. Conservativeness 14 International standards organization (ISO) Page 22 of 68

23 The project quantification methodology includes several factors that lead to a conservative estimate of the GHG emission reductions. These factors are listed below: 1) Omission of GHG s that would increase the baseline emissions, i.e., transportation emissions. Under the project scenario, transportation emissions would be significantly decreased as transport of biomass off site does not occur. 2) Model tends to underestimate emission reductions. As determined in the uncertainty analysis, there is a slight bias in a conservative manner of the baseline model. 3) As stated in the selection of the quantification methodology, methodologies that measure wood energy content for this project condition tend to result in or make possible systematic overstatements in the baseline as compared with the selected quantification methodologies Identification of Baseline SSRs To assist with confirming potential SSRs for the baseline, a project-specific activity and material & energy flow diagram was prepared (Figure 4.1). In addition, a diagram illustrating the sinks, s and reservoirs at various stages of the baseline condition is provided (Figure 4.2). Page 23 of 68

24 Figure 4.1: Process Flow Diagram for the project (Source: BC Fuel-Switching GHG Protocol) Raw Material Extraction and Production Equipment Manufacturing Site Development Site Construction Fuel Extraction and Production Equipment Testing Project On-Site Fossil Fuel Extraction and Production Grid Electricity Generation, Transmission & Distribution Collection of Biomass Fuel Transfer of Biomass Fuel Storage Facility Operation (e.g. space heating) Storage of Biomass Renewable Heat and/or Electricity Generation Maintenance Fuel Combustion for Heat Generation Heat and/or Electricity Local Energy Demand Storage of Biomass Transport of Biomass Processing of Biomass Flooded Land Processing of Biomass Transfer of Biomass Site Decommissioning 24 Page 24 of 68

25 Figure: 4.2: Sinks Sources and Reservoirs for the Baseline (Source: BC Fuel-Switching GHG Protocol) Upstream SSRs Before Project B1 Raw Material Extraction and Production B2 Site Development B3 Equipment Manufacturing B4 Transportation of Equipment B5 Site Construction B6 Equipment Testing Upstream SSRs During Project B7 Fuel Extraction and Production B10 Fuel Storage On Site SSRs During Project B11 Operation of Facility Downstream SSRs During Project B8 Fuel Delivery B9 Grid Electricity Generation, Transmission & Distribution B12 Maintenance B13 Fuel Combustion for Heat and/or Electricity Generation B14 Flooded Land Downstream SSRs After Project B15 Site Decommissioning 25 Page 25 of 68

26 Table 4.3: List of baseline SSRs SSR Gas * Description of SSR Upstream SSRs before baseline operation Controlled (C), related (R) or affected (A) Justification / Explanation B1 Raw Material Extraction and Production All activities related to the extraction, processing and production of all raw materials, e.g. silicon, cement, steel, plastic, etc., for baseline power generation equipment and associated infrastructure. Related Baseline B2 Site Development The baseline site may need to be developed. This could include civil infrastructure such as access to electricity, natural gas and water supply, as well as sewer etc. This may also include clearing, grading, building access roads, etc. There will also need to be some building of structures for the facility such as storage areas, storm water drainage, offices, vent stacks, firefighting water storage lagoons, etc., as well as structures to enclose, support and house the equipment. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment required to develop the site such as graders, backhoes, trenching machines, etc. Related 26 Page 26 of 68

27 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation B3 Equipment Manufacturing Equipment may need to be built either on-site or off-site. This includes all of the components of the storage, handling, processing, combustion, air quality control, system control and safety systems. These may be d as pre-made standard equipment or custom built to specification. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment for the extraction of the raw materials, processing, fabricating and assembly. Related B4 Transportation of Equipment Equipment built off-site and the materials to build equipment on-site will all need to be delivered to the site. Transportation may be completed by truck, train and/or barge. GHG emissions would be primarily attributed to the use of fossil fuels to power the equipment delivering the equipment to the site. Related B5 Site Construction The process of construction at the site will require a variety of heavy equipment, smaller power tools, cranes and generators. The operation of this equipment will have associated GHG emission from the use of fossil fuels and/or electricity. Related B6 Equipment Testing Equipment may need to be tested to ensure that it is operational. This may result in running the equipment in order to ensure that the equipment runs properly. These activities will result in GHG emissions associated with the combustion of fossil fuels and the use of electricity. Related Upstream SSRs during baseline operation 27 Page 27 of 68

28 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation B7 Fuel Extraction & Production Each of the fossil fuels used throughout the on-site energy generation component of the baseline (e.g. in heat and/or electricity generators, as vehicle and equipment fuels, etc.) will need to be extracted, processed/refined, and stored, with associated emissions depending on type of fuel. Related B8 Fuel Delivery Each of the fossil fuels used throughout the on-site energy generation component of the baseline will need to be transported to the site. This may include shipments by truck, pipeline, air, rail, or other transport modes, with associated GHG emissions. Related B9 Grid Electricity Generation, Transmission & Distribution A heat generation facility may require electricity for operation. Generation of this electricity will typically result in GHG emissions depending on the of the electricity. Additionally, where the project provides electricity to the grid, the baseline will need to include emissions associated with generation of this electricity by grid-connected generators. Related On-site SSRs during baseline operation B10 Fuel Storage All emissions, including evaporative, leakage or other fugitive, associated with the transfer of fuel from delivery container or pipeline to baseline fuel storage facilities/equipment. Some of these emissions may consist of GHGs. Controlled 28 Page 28 of 68

29 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation B11 Operation of Facility GHG emissions may occur during operation of the energy generation facility (not including primary fuel combustion for energy generation, which is accounted for separately). This may include running any auxiliary, emission control, or monitoring systems as well as heating and/or cooling systems. This may also include the running of auxiliary equipment or burning of various fuels to warm up the equipment during start-up periods. These start-up periods may be after both scheduled and nonscheduled shut-downs of the facility. Controlled B12 Maintenance GHG emissions may occur during scheduled and non-scheduled maintenance of the energy generation facility and its equipment. Examples include transportation to and from facilities or field equipment as well as running auxiliary equipment. Controlled B13 Fuel Combustion for Heat and/or Electricity Generation This SSR includes emissions from combustion of fossil fuel for the purposes of generating heat and/or electricity (primary project functions). Controlled B14 Flooded Land s resulting from decomposition of biomass on land that is submerged underwater in the baseline case (applicable to hydro-power projects only). Controlled or Related Downstream SSRs during baseline operation N/AN/A Downstream after baseline operation 29 Page 29 of 68

30 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation B15 Site Decommissioning Once the facility is no longer operational, the site may need to be decommissioned. This may involve the disassembly of the equipment, demolition of on-site structures, disposal of some materials, environmental restoration, re-grading, planting or seeding, and transportation of materials off-site. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment required to decommission the site. Related * Because wood residues were not tracked by weight, CH 4 and N 2O were excluded in both the baseline and project conditions, which, as noted in the protocol, lead to a more conservative estimate with highly efficient wood energy system as in the project Temporal Applicability of Selected Baseline The selected baseline is applicable for 10 years post validation. 4.4 PROJECT SELECTION & JUSTIFICATION Project Scenario Reduced emissions as a result of: a) replacing much of the combustion of natural gas with residual stream biomass and b) other reduced emissions as a direct result of this initiative including but not limited to reduced trucking of biomass offsite due to increased consumption of this material. The displacement of fossil fuels with biogenic s is the primary method of achieving emission reductions. The Project includes construction of a residual processing system with hog material handling conveyors, and storage bin, a single cell A BC-specific natural gas emission factor of 1,916 g/m 3 is used to determine the carbon intensity of natural gas per gigajoule of energy consumed. The emission factor is calculated using the heat energy values for the relevant region and time period. Therefore, a new natural gas emission factor is calculated for each verification period. Methane and nitrous oxide were excluded as it is necessary to know the weight of residual biomass to determine these emissions Page 30 of 68

31 MMBtu/hour biomass-fired stepped grate furnace, emissions control system and all associated programming and controls. The system will include a 12MMBTu/hour natural gas booster that addresses increased kiln drying energy demands due to high moisture content from green wood in the area. This will increase total energy output capacity to 50 MMBtu/hour. The proposed system will be capable of providing sufficient heat energy to operate the three existing Wellons kilns and the fourth continuous dry kiln to support annual production volumes of 272mmfbm. The project will also be equipped with the necessary environmental controls including a multicyclone ESP system. In addition, the bioenergy system will utilize a BC-based technology and will contribute to several ancillary jobs in the province Project Boundary Not available Identification of Project SSRs To assist with confirming potential SSRs for the project a diagram illustrating the sinks, s and reservoirs at various stages of the project is provided (Figure 4.3). 31 Page 31 of 68

32 Figure 4.3 Sinks Sources and Reservoirs for the Project (Source: BC Fuel-Switching GHG Protocol) Upstream SSRs Before Project P1 Raw Material Extraction and Production P2 Site Development P3 Equipment Manufacturing P4 Transportation of Equipment P5 Site Construction P6 Equipment Testing Upstream SSRs During Project P7 Fuel Extraction and Production P8 Fuel Delivery P15 Fuel Storage On Site SSRs During Project P16 Transfer of Biomass P17 Storage of Biomass Downstream SSRs During Project P9 Grid Electricity Generation, Transmission & Distribution P10 Collection of Biomass P18 Processing of Biomass P19 Operation of Facility P20 Maintenance P11 Storage of Biomass P12 Processing of Biomass P21 Fuel Combustion for Heat and/or Electricity Generation P22 Flooded Land P13 Transfer of Biomass P14 Transport of Biomass Downstream SSRs After Project P23 Site Decommissioning 32 Page 32 of 68

33 Table 4.4: List of project SSRs SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation Upstream SSRs before project operation P1 Raw Material Extraction and Production All activities related to the extraction, processing and production of all raw materials, e.g. silicon, cement, steel, plastic, etc., for project power generation equipment and infrastructure. Related Project P2 Site Development The site of the power generation facility may need to be developed. This could include civil infrastructure such as access to electricity, natural gas and water supply, as well as sewer etc. This may also include clearing, grading, building access roads, etc. There will also need to be some building of structures for the facility such as storage areas, storm water drainage, offices, vent stacks, firefighting water storage lagoons, etc., as well as structures to enclose, support and house the equipment. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment required to develop the site such as graders, backhoes, trenching machines, etc., and may include the reduction of carbon sinks where forests are cleared. Related 33 Page 33 of 68

34 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P3 Equipment Manufacturing Equipment to be built either on-site or off-site. This includes photovoltaic modules, wind turbines, as well as all required components for storage, handling, processing, combustion, air quality control, system control and safety systems. These may be d as pre-made standard equipment or custom built to specification. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment for the extraction of the raw materials, processing, fabricating and assembly. Related P4 Transportation of Equipment Equipment built off-site and the materials to build equipment on-site will all need to be delivered to the site. Transportation may be completed by truck, rail, air, and/or barge. Greenhouse gas emissions would be primarily attributed to the use of fossil fuels to power the equipment delivering the equipment to the site. Related P5 Site Construction The process of construction at the site will require a variety of heavy equipment, smaller power tools, cranes and generators. The operation of this equipment will have associated GHG emission from the use of fossil fuels and/or electricity. Related P6 Equipment Testing Equipment may need to be tested to ensure that it is operational. This may result in running the equipment in order to ensure that the equipment runs properly. These activities will result in GHG emissions associated with the combustion of fossil fuels and the use of electricity. Related Upstream SSRs during project operation 34 Page 34 of 68

35 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P7 Fuel Extraction & Production The fuel used throughout the on-site component of the project will need to be extracted, processed/refined, and stored. GHG emissions are associated with each of these steps. Related P8 Fuel Delivery The fuel used throughout the on-site component of the project will need to be transported to the site. This may include shipments by truck, pipeline, air, rail, or other transport modes, with associated GHG emissions. Related P9 Grid Electricity Generation, Transmission & Distribution A heat generation facility may require electricity for operation. Generation of this electricity will typically result in GHG emissions depending on the of the electricity. Related 35 Page 35 of 68

36 P10 Collection of Biomass Biomass may be collected from the forest floor, agricultural facilities, industrial facilities, historic waste piles, or other s using heavy equipment or conveyors. Collection of biomass from the forest floor is typically a component of the forest management plan or an additional function to gather the material for use. This would typically be completed by diesel-fuelled bulldozers. Related Collection of biomass from agricultural facilities, such as tree farms, would be completed by heavy equipment such as tractors or bulldozers as part of the site operational plan. Collection of biomass from industrial facilities is typically done as a means of keeping the work area clean. The biomass would either be mechanically or manually collected, and conveyed or moved in batches by heavy equipment. Collection of waste biomass from a landfill or long-term storage site is a re recovery procedure. It reduces the quantity of waste in the landfill and serves to extend the life cycle of existing landfills. This is typically accomplished using heavy equipment such as bulldozers and excavators. For the majority of situations, collection activities are fuelled by diesel, gasoline, or natural gas, resulting in GHG emissions. Other fuels may also be used in some rare cases. 36 Page 36 of 68

37 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P11 Storage of Biomass Biomass may be stored at the site of biomass collection before and/or after processing and before ultimate transport of the biomass to the project site. Depending on size, shape, composition and duration of storage, anaerobic decomposition may occur, resulting in the emission of methane gas. These piles may consist of storage piles at forestry, agricultural or industrial sites. Related Any energy inputs to this SSR, for wetting of biomass or agitation of biomass, would be covered under P5 Transfer of Biomass as these elements are typically related. P12 Processing of Biomass Biomass may be processed at the site of biomass collection using a series of mechanical processes, heavy equipment and conveyors. This equipment would be fuelled by diesel, gasoline or natural gas, resulting in GHG emissions. Other fuels may also be used in some rare cases. Where a project uses wood pellets or other processed solid biomass fuels, emissions associated with processing the biomass in order to produce the fuel would be accounted for here. Related 37 Page 37 of 68

38 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P13 Transfer of Biomass Biomass may be transferred between the point of collection, storage, and/or processing, as applicable, and ultimately into transport containers (truck trailers, rail cars or storage bins) or onto conveyors for transport to the project site. This may involve the use of heavy equipment such as loaders and cranes, or other mechanized devices. This equipment would be fuelled by diesel, gasoline, natural gas or electricity, resulting in GHG emissions. Other fuels may also be used in some rare cases. Related Any emissions associated with P11 Storage of Biomass, such as wetting of biomass or agitation of biomass would be accounted for here. P14 Transport of Biomass Biomass may be transported to the project site by truck, barge, train, conveyor (where the biomass combustion site is located adjacent to the biomass collection site), etc., with associated emissions depending on the type of equipment, number of loads and distance travelled. Related Where a project uses wood pellets or other processed solid biomass fuels, emissions associated with transportation from the of the biomass to the fuel processing site and from the fuel processing site to the project site would be 2.5 heating requirements accounted for here. On-site SSRs during project operation P15 Fuel Storage All emissions, including evaporative, leakage or other fugitive, associated with the transfer of fuel from delivery container or pipeline to project fuel storage facilities/equipment. Some of these emissions may consist of GHGs. Controlled 38 Page 38 of 68

39 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P16 Transfer of Biomass Biomass may be transferred at the project site between transportation bins, processing systems and/or storage, as applicable, and ultimately to the biomass combustion system, using a combination of loaders, cranes, conveyors and other mechanized devices. This equipment would be fuelled by diesel, gasoline or natural gas, resulting in GHG emissions. Other fuels may also be used in some rare cases. Controlled Any energy inputs associated with P12 Storage of Biomass, such as wetting of biomass or agitation of biomass, are to be included here. P17 Storage of Biomass Biomass may be stored at the project site before and/or after processing and before ultimate combustion. Depending on size, shape, composition and duration of storage, anaerobic decomposition may occur, resulting in the emission of methane gas. Controlled P18 Processing of Biomass Biomass may be processed on-site using a series of mechanical processes, heavy equipment and conveyors. Within the scope of this protocol, processing may also include gasification of the biomass, creating a syngas for on-site combustion. This equipment may be fuelled by diesel, gasoline, or natural gas, resulting in GHG emissions, and may consume electricity. Other fuels may also be used in some rare cases. Controlled 39 Page 39 of 68

40 SSR Gas * Description of SSR Controlled (C), related (R) or affected (A) Justification / Explanation P19 Operation of Facility GHG emissions may occur during operation of the power generation facility (not including primary fuel combustion for electricity generation, which is accounted for separately). This may include running any auxiliary, emission control, or monitoring systems as well as heating and/or cooling systems. This may also include the running of auxiliary equipment or burning of various fuels to warm up the equipment during start-up periods. These start-up periods may be after both scheduled and nonscheduled shut-downs of the facility. Controlled P20 Maintenance GHG emissions may occur during scheduled and non-scheduled maintenance of the power generation facility and its equipment. Examples include transportation to and from facilities or field equipment as well as running auxiliary equipment. Controlled P21 Fuel Combustion for Heat and/or Electricity Generation This SSR includes emissions from combustion of biomass and possibly fossil fuel for the purposes of generating heat and/or electricity (primary project functions). Controlled P22 Flooded Land 16 s resulting from decomposition of biomass on land that is submerged underwater as a result of the construction and/or operation of a hydro installation (applicable to hydro-power project only). Controlled or Related Downstream SSRs during project operation 16 Flooded Land emissions are referred to as reservoir emissions for hydro-power projects described in the Electric Power Sector Protocol 12 and other documents. However, in this protocol the term Reservoir has a specific GHG accounting meaning (i.e. as part of s, sinks, and reservoirs ), and thus this alternative terminology is used here. 40 Page 40 of 68

41 SSR Gas * Description of SSR N/A Controlled (C), related (R) or affected (A) Justification / Explanation Downstream after project operation P23 Site Decommissioning Once the facility is no longer operational, the site may need to be decommissioned. This may involve the disassembly of the equipment, demolition of on-site structures, disposal of some materials, environmental restoration, re-grading, planting or seeding, and transportation of materials off-site. GHG emissions would be primarily attributed to the use of fossil fuels and electricity used to power equipment required to decommission the site. Related * Because wood residues were not tracked by weight, CH 4 and N 2O were excluded in both the baseline and project conditions, which, as noted in the protocol, lead to a more conservative estimate with highly efficient wood energy system as in the project. All SSRs were categorized as controlled, related or affected (C/R/A) based on their relation to the project and equivalent project SSRs, where the Proponent is assumed to control all on-site SSRs, whereas upstream and downstream SSRs are assumed to be controlled by others, and thus are related to the project Project Justification 1. The project model was identified based on the project activities and processes. 2. All of the controlled or owned SSRs relevant to the project activity were identified. 3. All of the related SSRs relevant to the project activity were identified. 4. All of the affected SSRs relevant to the project activity were identified. 5. GHG inputs and outputs for each SSR was identified along with the parameters required to estimate or measure GHGs 6. All SSRs and material and energy flows were reviewed to ensure that relevant SSRs were completely identified Project Justification Supporting Documents Supporting information, including relevant data and parameters, can be found in the Appendices, which are part of the final Canfor Elko Fuel Switch Authority for Expenditure (AFE). 41 Page 41 of 68

42 4.5 COMPARISON OF PROJECT AND BASELINE SSRS AND SELECTION OF RELEVANT SSRS FOR MONITORING OR ESTIMATION Table 4.5: Identification of relevant SSRs SSR Controlled (C), related (R) or affected (A) Included / Excluded? P1/B1 Raw Material Extraction and Production P2/B2 Site Development Baseline Project Measured / Estimated Upstream Before Operation Justification / Explanation Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol 17. Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol. P3/B3 Equipment Manufacturing P4/B4 Transportation of Equipment P5/B5 Site Construction P6/B6 Equipment Testing Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol. Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol. Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol. Related Related Excluded N/A All upstream and downstream emission s before and after operation are Page 42 of 68

43 SSR Controlled (C), related (R) or affected (A) Included / Excluded? Measured / Estimated Justification / Explanation Baseline Project excluded from consideration as per pg. 39 of BC Fuel-Switching Protocol. Upstream SSRs During operation P7/B7 Fuel extraction and processing P8/B8 Fuel Delivery Related Related Excluded * N/A Since eligible projects involve either switching to less carbon-intensive fuels or to non-combustion based energy s, the amount of fuel consumed by the project (and thus emissions associated with extracting and processing that fuel) is not expected to be greater than the baseline under any circumstances. Additionally, challenges to including this emission in the quantification include: significant emission factor uncertainty; asserting ownership of associated emission reductions would be difficult (since these s are controlled by the fuel producers and not the project proponent); and these emissions likely occur outside of BC (which would make them ineligible for generation of offsets under the BC s Offset Regulation). Therefore, this emission is conservatively excluded from further consideration. *Note: for projects using biomass / biofuels, project emissions for this SSR may be relevant additional methodologies beyond those included in this protocol would be required. Related Related Excluded Estimated Fuel delivery emissions have been excluded due to the fact that the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for the increases in emissions associated with collection, transportation and processing (as per Section 3.1.4). Therefore this exclusion is in accordance with the principle of conservativeness. P9/B9 Electricity Generation, Transmission and Distribution Related Related Excluded Measured: electricity used Estimated: factors Electricity emissions are omitted in keeping with the Provincial decision to set 43 Page 43 of 68

44 SSR P10 Collection of Biomass P11 Storage of Biomass P12 Processing of Biomass Controlled (C), related (R) or affected (A) Baseline Project Included / Excluded? Measured / Estimated based on current published figures Related Related Excluded Measured: fuel and electricity use from collection equipment Estimated: factors based on current published figures. Justification / Explanation the carbon value of the BC grid to zero 18. Biomass collection emissions have been excluded due to the fact that the reduction of methane from combusting biomass in an efficient industrial facility, as opposed to burning slash-piles, more than compensates for the increases in emissions associated with collection, transportation and processing (as per Section 3.1.4). Therefore this exclusion is in accordance with the principle of conservativeness. Related Related Excluded N/A It is not envisioned that the project would result in longer-term, more anaerobic storage at the site of biomass collection than would be the case normally, considering that the same types and quantities of biomass would be involved. In fact, given that the project represents a market for the biomass and would provide a of on-going demand, it is expected that biomass would be stored for shorter durations in the project than would have happened in the absence of the project. As such, it is assumed that the project represents a reduction in emissions, and thus it is conservative to exclude this SSR from further consideration. Related Related Excluded Measured: fuel and electricity use from processing equipment Estimated: factors based on current Biomass processing emissions have been excluded due to the fact that the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for the increases in emissions associated with collection, transport and processing (as per Section 3.1.4). Therefore this exclusion is in accordance with the principle of conservativeness. 18 Source: 44 Page 44 of 68

45 SSR P13 Transfer of Biomass P14 Transport of Biomass Controlled (C), related (R) or affected (A) Baseline Project Included / Excluded? Measured / Estimated published figures. Related Related Excluded Measured: fuel use from transferring equipment Estimated: factors based on current published figures. Justification / Explanation Biomass transfer emissions have been excluded due to the fact that the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for the increases in emissions associated with collection, transport and processing (as per Section 3.1.4). Therefore this exclusion is in accordance with the principle of conservativeness. Related Related Excluded Estimated Biomass transport emissions have been excluded due to the fact that the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for the increases in emissions associated with collection, transport and processing (as per Section 3.1.4). Therefore this exclusion is in accordance with the principle of conservativeness. On-site SSRs During Operation P15/B10 Fuel Storage P16 Transfer of Biomass Controlled Controlled Excluded Estimated Project condition is biogenic biomass fuel. s due to natural gas storage would be smaller than in the baseline scenario. As a result, this emission has been excluded under the principle of conservativeness. Controlled Controlled Excluded Measured: fuel use from transferring equipment Estimated: factors based on current published figures. Difference in emissions between project and baseline. It is costly to directly monitor fossil fuel combustion GHG emissions, but low uncertainty average emission factors are publically available from recognized s such as Environment Canada. This is standard practice. Therefore, emission factors will be estimated. 45 Page 45 of 68

46 SSR P17 Storage of Biomass P18 Processing of biomass P19/B11 Operation of facility P20/B12 Maintenance Controlled (C), related (R) or affected (A) Baseline Project Included / Excluded? Measured / Estimated Justification / Explanation Controlled Controlled Excluded Estimated The majority of project configurations limit the storage of biomass under conditions conducive to anaerobic digestion (i.e. in piles, windrows or in landfill) to less than six months and it is expected that no methane will be generated during this time period. As such, this SSR may be excluded for simplicity. However, this SSR should be included where extended storage occurs, e.g. greater than six months. N/A Controlled Excluded Measured: fuel and electricity use from processing equipment Estimated: factors based on current published figures. Controlled Controlled Included* Measured: fuel use for heating and operation of facilities. Estimated: factors based on current published figures. Controlled Controlled Excluded Measured: fuel use for operation of vehicles, auxiliary equipment, etc. Estimated: factors based on current The project does not plan to process biomass prior to entering the heat energy system. Fossil fuels consumed for operation of the facility must be accounted for. It is costly to directly monitor fossil fuel combustion GHG emissions, but low uncertainty average emission factors are publically available from recognized s such as Environment Canada. This is standard practice. Therefore, emission factors will be estimated. *where the project and/or baseline does not include a facility with emission s beyond those other on-site SSRs listed in this table, then this SSR may be excluded from the project and/or baseline as appropriate Project maintenance will result in equivalent or lesser GHG emissions than the baseline; this SSR may be excluded from quantification. 46 Page 46 of 68

47 SSR P21/B13 Fuel Combustion for Heat and/or Electricity Generation P22/B14 Flooded Land Controlled (C), related (R) or affected (A) Baseline Project Included / Excluded? Measured / Estimated published figures. Justification / Explanation Controlled Controlled Included Estimated An important of emissions. Controlled or Related Controlled or Related Excluded Estimated n/a Downstream SSR s During Operation Downstream After Operation P23/B15 Site Decommissioning Related Related Excluded N/A All upstream and downstream emission s before and after operation are excluded from consideration. 47 Page 47 of 68

48 5 QUANTIFICATION OF PROJECT AND BASELINE EMISSIONS The Project Plan follows the methodology as prescribed in the selected Protocol. More precisely, the Project Plan uses a generalized equation that determines the total emission reductions for each SSR by multiplying a provincially accepted emission factor by the activity level and a conversion factor (if needed) to adjust the activity level units to match those of the emission factor. 19 The primary activity of this project is fuel combustion for thermal use (P21/B13). factor In accordance with the protocol, the project will employ option 2 for P21/B13, a prescribed governmentendorsed, BC-specific emission factor for the component of natural gas. Because wood residues were not tracked by weight, CH 4 and N 2O were excluded in both the baseline and project conditions, which, as noted in the protocol, leads to a more conservative estimate with highly efficient wood energy systems as in the project. 20 To adjust the emission factor for natural gas into meaningful units, the heat energy content values from the relevant grid for the relevant time period are used. These are the average daily heat energy content values are averaged for each month during the verification periods. 21 Activity Level Where applicable, the project will supply purchasing invoices and/or records to demonstrate the activity level. Because invoices and regional grid data often supply natural gas data as energy values, the project will employ accurate heat energy content of the supplied natural gas in order to enable conversion to applicable units. The project is calculated in a dynamic manner as it correlates production levels and temperature with energy consumption based on historical data to determine the baseline. Since using biomass as a fuel is carbon neutral, the emissions associated with the baseline and project pertain to the combustion of natural gas for heating. This is accounted for using the appropriate equations below. Equation 1: T ij = EF ij x AL i x CF 19 Source: 20 A BC-specific natural gas emission factor of 1,916 g/m 3 is used to determine the carbon intensity of natural gas per gigajoule of energy consumed. The emission factor is calculated using the heat energy values for the relevant region and time period. Therefore, a new natural gas emission factor is calculated for each verification period. Methane and nitrous oxide were excluded as it is necessary to know the weight of residual biomass to determine these emissions Source: CONTENT-VALUES.ASPX 48 Page 48 of 68

49 Where, T ij is the total emissions of GHG j (e.g. tonnes of, tonnes of CH 4, etc.) for SSR i; EF ij is the emission factor for GHG j and SSR i [e.g. tonne /(activity or input/output)]; AL i is the quantity of input/output or activity level for SSR i (e.g. volume of fuel combusted, distance traveled, electricity generated, etc.); and CF is a conversion factor to be used when the units of the activity level do not match those of the emission factor. Where both the activity level and emission factor are expressed in the same units, CF would be set to 1. Various calculation methodologies were considered in the construction of the baseline including the quantification methodology described in the protocol. However, using solely biomass inputs as the activity level used to determine natural gas usage was deemed inadequate as the heat energy system has the potential to be used as a disposal unit depending on biomass market conditions (i.e. surplus biomass is combusted and does not displace natural gas) or the time of year as heat demand in summer is substantially less than in winter so there is surplus energy system capacity during this time. Using this calculation method would have artificially inflated the baseline and violate the principle of conservativeness. Furthermore, determining energy usage through measurement of the differential between kiln input and output temperatures, mass flow and specific heat capacity of the oil were also deemed unfeasible as robust data collection measures does not exist in the necessary manner. The most suitable approach to evaluate the baseline and the subsequent sinks, s and reservoirs (SSRs) is a benchmark correlated with kiln production and temperature. For the purpose of this project, the construction of the baseline equation is based on actual invoice and/or spreadsheet data from historical natural gas purchase records for the site. In accordance with the protocol, it has been confirmed through proponent engagement that no biomass residues have been used as an energy fuel on this site in the past. All quantifications shall be based on sound engineering practices and the guiding principles of relevance, completeness, consistency, transparency, accuracy, and conservativeness. Canfor will continue to monitor its processes and product quality over the lifetime of this project; however, product quality is not expected to be adversely affected by the project installation. 5.1 BASELINE EMISSIONS Equation 22: (Baseline s) = T(B13) T(B13) Fuel Combustion for Heat and/or Electricity Where, T(B13) = GHG emissions from baseline fuel combustion for heat and/or electricity generation SSR B13 in tonne e/year 49 Page 49 of 68

50 This project selects option 2 in the protocol for quantification of fuel combustion for heat. Equation 16: T(B13) = EF(j) x AL(i) x CF Where, T(B13) = total emissions of GHG from fuel combustion EF(j) = emissions factor of fossil fuel type displaced by the project activity. 22 AL(i) CF = the quantity of the activity level = Conversion factor for activity level to match emission factor. Activity Level The activity level enables carbon emissions to be measured in a dynamic manner as opposed to static levels. A dynamic baseline is appropriate as it enables meaningful comparison between project and baseline conditions. The most reliable energy measure was deemed to be historical natural gas as opposed to biomass combustion. This conclusion was reached for four reasons: 1) Limited biomass inventory accounting and data; 2) Removes the opportunity to artificially inflate the baseline 23 3) Variability of residual biomass composition (e.g. tree type, residue type (bark, hog fuel) and moisture content); and 4) The energy system was sized for increased production and to allow for disposal of residual biomass bark, as uncertainties existed under off-take contracts for residual biomass (this surplus of on-site residual wood and subsequent disposal requirements make it necessary to assess the baseline condition using historical natural gas use; 24 ) 22 The emissions factor is calculated in a dynamic manner, and does not include the methane and nitrous oxide emissions associated with combustion in either the baseline or project scenario. As noted in the protocol, this is conservative. 23 Because there is a surplus of biomass residues at the facility, and no biomass residues are transported to the site, heat energy values have been calculated using historic natural gas levels. This approach removes the incentive to artificially report high levels of biomass consumption and, thereby, artificially inflate the emission reductions. Canfor sized the energy system to meet its heat demand and potentially for disposal purposes as needed; as a result, using biomass heat energy content as a baseline measure is unable to separate the portion of energy that would have been used specifically for heat in the absence of the project activity. Further to this point, no third-party invoice data would be available to substantiate the veracity of biomass usage claims. Therefore, it is both conservative and prudent to use this quantification methodology. 24 The protocol was written with the assumption that total heat generation would be used for project conditions. As a result, clarification was required on the most appropriate way to determine project heat consumption in a manner that was in accordance with the conservativeness principle. Reliable data records were not available or were excessively onerous to calculate to measure direct heat consumption. As such, Offsetters on behalf of the project proponent, engaged in multiple consultations to determine the most appropriate quantification methodology with relevant stakeholders associated with BC Fuel Switch Protocol. These stakeholders included representatives from the Climate Action Secretariat (CAS), the Pacific Carbon Trust (PCT) and the Delphi Group (Protocol author). Due to reliability of data and relatively low uncertainty, consensus was unanimously reached that the most 50 Page 50 of 68

51 Other approaches to take direct measurement of kiln heat inputs to derive energy system usage were not deemed feasible due to unavailable and/or highly uncertain data collection. The equation below was employed to assist in the quantification of baseline biomass conditions. The activity level was determined to be a function of two independent variables and calculated using multiple regression analysis. The two independent variables are: 1) Regional temperature (measured in heating degree days) 18 degree set temperature 2) Output production from the kilns (measured in mfbm a.k.a. thousand board feet) The dependent variable (natural gas usage in GJs) was regressed on to these two independent variables yielding the equation: Regression Equation (Activity Level) AL(i) = Fuel Qty NG,y = (26.49 * HDD month,i) + (0.50* PL month,i) + ( ) Where, Fuel Qty NG,y = the quantity of natural gas consumed (GJ) HDD month,i = the number of heating degree days for month (i) PL month,i = the production level (kiln) for month (i) (mfbm - thousand board feet) X 1 and X 2 correlate with the output Y (Fuel Qty NG,y) in HHVs; as a result, there is no need for take into account baseline or project boiler efficiencies. Hybrid Baseline approach As the project involves the addition of a continuous kiln, and therefore an energy generation capacity in excess of historical capacity, the selection of a hybrid baseline is appropriate. This hybrid baseline will contain: 1) the portion of energy provided for the three existing Wellons kilns based on historic consumption, and 2) the portion of energy provided for the additional capacity enabled by the continuous kiln based on a projected consumption. This projection will factor in the increased thermal appropriate indicator of heat generation under baseline conditions was a function of production kiln output measured in thousand board feet (mfbm) and temperature variation measured in heating degree days (HDD) for the region. 51 Page 51 of 68

52 efficiency of the continuous kiln relative to the existing Wellons kilns 25 and will be integrated into the baseline calculation through the kiln production level. PLmonth,i = PLmonth,i,rk + [PLmonth,i,ck x (1-Efck)] Where, PLmonth,i,rk = the production level for the three regular kilns (mfbm - thousand board feet) PLmonth,i,ck = the production level for the continuous kiln (mfbm - thousand board feet) Ef ck = the thermal efficiency upturn of the continuous kiln relative to standard kilns Thermal Efficiency Upturn Thermal efficiency improvement of continuous kilns relative to regular kilns. Ef ck = 0.28 Source Deltech 25 To summarize, the baseline quantification methodology uses a hybrid approach. A historic baseline has been applied to the portion of production from the historic kiln system and a projected baseline has been applied to the portion of the production that is utilizing the new continuous kiln system. The historic baseline utilizes a model based upon multiple regression analysis of historic data and derives natural gas consumption from heating degree days and kiln production. Since the continuous kiln has a higher thermal efficiency than the historic kiln system a projection that accounts for this efficiency improvement is needed. As a result, the continuous kiln production has been conservatively adjusted by a projected efficiency improvement based upon guidance by industry experts in order to ensure that equivalency is maintained between the continuous and conventional kilns. 25 The thermal efficiency upturn between traditional and continuous kilns is estimated to range from 18-28%. 28% was used for this Project Plan following the principle of conservativeness (Source: Deltech). This number will be updated at the time of verification based on a completed FPInnovations study or the most up to date FPInnovations data. 52 Page 52 of 68

53 5.2 PROJECT EMISSIONS Equation 21: (Project s) = T(P21, P19) T(P21 Fuel Combustion for Heat and/or Electricity Generation, P19 Operation of the Facility) The thermal heat required for NG booster combustion and operation of the facility, including space heating requirements 26. T(j) = EF(j) x AL(i) x CF Where, T(j) EF(j) AL(i) CF = total emissions of GHG from fuel combustion = emissions factor of natural gas displaced by the project activity. = is the quantity of the input/output activity level = Conversion factor for activity level to match emission factor. 5.3 LEAKAGE The sawmill heat demand for the project is estimated to be supplied by approximately 75% of the bark hog fuel produced at the mill. The remaining hog fuel will continue to be exported to the Skookumchuk Pulp Mill in accordance with the timber supply agreement. Timber supply studies show that there is enough residual biomass in the region to replace the business as usual exports from Elko. In the event that any biomass is d from the bush, i.e. slash-piles, a net increase in emissions would not result as the reduction of methane from combusting biomass in an efficient industrial facility as opposed to burning slash-piles more than compensates for any increase in emissions associated with the collection, transport and processing of biomass residuals from slash-piles. 5.4 PROTOCOL CHANGES N/A 26 For this project, these emissions are likely to be attributed to any remaining combustion of natural gas and in accordance with the Protocol must be subtracted from baseline emissions. As the space heating demand is not anticipated to change materially between the baseline and project condition, the inclusion of space heating in the project emissions is considered to yield a conservative claimed emission reduction. 53 Page 53 of 68

54 5.5 EMISSION FACTORS Factor Natural Gas Factor EF NG = 0.05 tco2e/gj Source BC-specific natural gas emission factor NET GHG EMISSION REDUCTIONS AND REMOVALS The project is estimated to result in emission reductions of 17,217 tonnes of e per year 30. Year November October 2015 November October 2016 November October 2017 November October 2018 November October 2019 November October 2020 November October 2021 November October 2022 November October 2023 Estimated baseline emissions (te) Estimated project emissions (te) Estimated leakage emissions (te) 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 18,855 1, ,217 Estimated net GHG emission reductions (te) Source: Canfor AFE estimates. 54 Page 54 of 68

55 November October ,855 1, ,217 Total 188,550 16, ,170 te 5.7 CARBON CAPTURE AND SEQUESTRATION RISK-MITIGATION PLAN N/A Greenhouse Gas Reduction Permanence Plan N/A Length of Permanence Plan N/A 6 MONITORING PLAN 6.1 PURPOSE OF MONITORING As recommended by the quantification protocol, data will be collected for all fuels identified as s in the project scenario. In keeping with the selected baseline approach, primary monitoring procedures involve monitoring natural gas consumption. Biomass monitoring is a secondary parameter, as it is not used in creation of the baseline scenario. Because biomass residues are generated on-site, emissions resulting from transporting biomass are not anticipated to be included as an emission in the project plan. However, should this situation change whereby biomass is shipped on-site, emissions from transportation will need to be included and monitored. Monitoring duties would include determining: place of origin, transport distances and modes, and energy content. The quantification protocol recommends using emission factors that reasonably represent local circumstances. Therefore, combustion emission factors will be d for each specific fuel where possible using default BCspecific emission factors; otherwise, standard emission factors from Tables A12-1 (BC, marketable) and A12-2 of the National Inventory Report published by Environment Canada will be used as these are the most applicable and up-to-date emission factors available at the time of this project plan. 55 Page 55 of 68

56 Fuel use for the operation of the NG booster will be collected and tracked on a monthly basis by Canfor. Any fuel use for operation of the facility including back-up auxiliary equipment has been and will continue to be collected and tracked on a monthly basis by Canfor. Since the emissions reductions result from changes in fuel usage, reported data will be used to calculate emission reductions. Data quality control will be achieved by cross-referencing fuel-use figures from Canfor with those provided by the fuel suppliers. 6.2 MONITORING ROLES AND RESPONSIBILITIES Offsetters will play an on-going role in monitoring the project activity. Offsetters will manage the offset project and be responsible for all related reporting and documentation. Further to this point, Offsetters will maintain a monitoring plan that will ensure that appropriate biomass is being d and per the definition and that it will not be stored for over six months on-site. 31 Table 6.1 Monitoring Roles Position Description Requisite Qualification Training Requirements Names of Assigned Personnel Data Collection and Storage (Canfor) N/A N/A Janeane Murphy Divisional Accountant Canfor Elko Sawmill Data Aggregation P.Eng. N/A Michael Jordan Director, Environment, Energy & Climate Change Policy Canfor calculation and project documentation P.Eng. Simon Phillips Project Manager Offsetters Clean Technology 6.3 GHG INFORMATION MANAGEMENT SYSTEM (IMS) The GHG information management system serves three primary functions: 1) Management of the data and information, 2) Documentation of the data and information collected, and 3) Provision of credibility and verifiability of the GHG data and information. 32 Offsetters has developed an internal Standard Operation Procedures (SOP) that describes best 31 The internal review process is addressed in section International standards organization (ISO) Page 56 of 68

57 practices for policies and processes to manage and maintain GHG information. The GHG IMS can be conceptually broken into three separate areas including: 1) Structure, 2) Content, and 3) Operating procedures. Structure: Offsetters currently employs Microsoft s Sharepoint software to manage its data. Users or groups are assigned a permission level for a specific securable object: site, list, library, folder, document, or item. Project managers and analysts working on project are assigned a permission level for a particular securable object. Other members of Offsetters are not able to view project files. Content: Documents stored on Sharepoint include PDF files of natural gas invoice data, Microsoft Excel spreadsheets of natural gas usage data, Microsoft Excel spreadsheets of GHG emission calculations and Microsoft Word Project Plans and Project Reports. Operating procedures: Documents stored on Sharepoint will carry access-restricted settings to ensure that only relevant parties have access to this information. In addition, Offsetters has developed an inhouse data management strategy designed to ensure best practices on data management are followed in house. Canfor will be responsible for collecting all on-site data relevant to the project as well as providing relevant invoice data for establishing baseline and project scenarios DATA AND PARAMETERS MONITORED Data / Parameter Data Unit Description Source Of Data Frequency of Monitoring/Recording Value Applied: Purpose of Data HDD month,i days Celsius-based heating degree days for base temperatures at 18.0C Detailed temperature readings taken throughout each day to generate monthly HDD data Varies temporally Calculation of baseline emissions (Activity level via regression model as stated in section 5.1. Temperature variation [HDD] is one of the parameters of this model) 33 Canfor stores all relevant data as part of its normal business operations. 57 Page 57 of 68

58 Data / Parameter Data Unit Description Source Of Data Description of Measurement Methods and Procedures to be Applied Frequency of Monitoring/Recording Value Applied: Purpose of Data PL month,i,rk thousand board-feet (mfbm) Output of regular kilns (kilns # 5,6,7) production All kiln production data is tracked through a manual and computerized process. The computerized process is used for comparison. This data is stored on an on-site server as well as backed-up on the Canfor centralized system server. monthly Varies temporally. Calculation of baseline emissions (Activity level via regression model as stated in section 5.1. Kiln production [PL month,i] is one of the parameters of this model) Data / Parameter Data Unit Description Source Of Data Description of Measurement Methods and Procedures to be Applied Frequency of Monitoring/Recording Value Applied: Purpose of Data PL month,i,ck thousand board-feet (MFBM) Output of Continuous Kiln (kiln #8) production All kiln production data is tracked through a manual and computerized process. The computerized process is used for comparison. This data is stored on an on-site server as well as backed-up on the Canfor centralized system server. monthly Varies temporally. Calculation of baseline emissions (Activity level via regression model as stated in section 5.1. Kiln production [PL month,i] is one of the parameters of this model) 58 Page 58 of 68

59 Data / Parameter Data Unit Description Source Of Data Description of Measurement Methods and Procedures to be Applied Frequency of Monitoring/Recording Value Applied: Monitoring Equipment QA/QC Procedures to be Applied Purpose of Data Fuel Qty NG (GJ) the quantity of natural gas consumed On-site natural gas flow meter. Outlined in Section 7 of this Project Plan Monthly Varies temporally. On-site natural gas flow meter. All invoices received by Canfor are cross-checked with the onsite meter on a monthly basis. Natural Gas data are used in the generation of the baseline regression model. Natural gas data are used in the calculation of the project emissions (facility heating emissions and NG booster emissions.) 7 DATA QUALITY MANAGEMENT PLAN 7.1 DATA QUALITY MANAGEMENT PLAN OBJECTIVES The objective of the data quality management is to reduce, as far as practical, the uncertainty related to the quantification of GHG emission reductions. 7.2 RESPONSIBLE PERSONNEL, QUALIFICATIONS AND TRAINING Project specific data is collected by Canfor and managed by both Offsetters Clean Technology as well as Canfor. Because Offsetters is developing the project on behalf of Canfor, relevant project data are collected by Canfor and sent to Offsetters. Offsetters Clean Technology Simon Phillips - Responsible for Offsetters project data management Project Manager Carbon Offsets 59 Page 59 of 68

60 Canadian Forest Products Limited Michael Jordan Responsible for Data Transfer (Canfor to Offsetters) Director, Environment, Energy & Climate Change Policy 7.3 QUALITY ASSURANCE AND QUALITY CONTROL PROCEDURES Quality Assurance procedures for Offsetters data collection, modeling and record keeping are detailed in Table 7.1. Table 7.1 Quality Assurance Offsetters Quality Assurance Measures: Details: Selecting appropriate emissions data Selecting appropriate activity data Prior to submission of all external documents, Offsetters cross-check all emission factors used to ensure that these factors are the most up-to-date and representative emission factors available. This task is performed by at minimum two Offsetters staff. When possible, local emissions factors are selected that have been prescribed by the most relevant legislative body When possible, activity data directly from the measurement is used (i.e. meter-reads). Uncertainty measurement An analysis of the uncertainty level for the data for each, sink or reservoir has been completed by Offsetters staff and documented in project documents. Fuel Energy Content All values are double checked to ensure that appropriate heating values are used. For natural gas invoice data, typically higher heating values (HHV) should be used. Fuel energy content is typically calculated taking an average of energy content for the fuel for relevant measuring period. Periods are cross-check by another Offsetters staff member. Quality Control reviews All completed documents are checked according to the QC specifications (see below) by at least one other internal staff member or Project Manager level or higher before being sent to any third parties. All QC peer reviews are documented. All inconsistencies are reviewed and corrected and where possible used to improve processes. Quality Assurance procedures for the Project data collection and record keeping are detailed in Table Page 60 of 68

61 Table 7.2 Quality Assurance Canfor Quality Assurance Measures: Details: Natural Gas Metering Calibration On-site natural gas flow meter conforms to the Federal Electricity and Gas Inspections Regulation. 34 Natural Gas Metering to Invoice All invoices received by Canfor are cross-checked with the on-site meter on a monthly basis. Kiln production output All kiln production data is tracked through a manual and computerized process. The computerized process is used for comparison. This data is stored on an on-site server as well as backed-up on the Canfor centralized system server. Quality Control procedures for data collection and record keeping are detailed in Table 7.3. Table 7.3 Quality Control Quality Control Activity: Assumptions and criteria for the selection of activity data and emission factors are documented. 35 Check for transcription errors in data input and reference. Check that emissions are calculated correctly. Check that parameter and emission units are correctly recorded and that appropriate conversion factors are used. Consistency in data between SSR (, sink, reservoirs) categories. Procedures Activity data and emission factors with information on categories are cross-checked to ensure that these are properly recorded and archived. All citations (data references) cited in the internal documentation are checked. Samples of input data from each data category (either measurements or parameters used in calculations) are cross-checked for transcription errors. calculations are conducted on both the biomass and the natural gas to ensure accuracy. Units are checked to ensure that they are properly labeled in calculation sheets and correctly carried through from beginning to end of calculations. All conversion factors are double checked. All temporal and spatial adjustment factors are checked to ensure that they are used correctly. Parameters, e.g., activity data, constant, that are common to multiple categories and confirm are checked, and that there is consistency in the values used for these parameters in the emissions calculations. 34 Source: 35 Unless otherwise specified, check refers to checking both the final documentation (often a project report or project plan) and the backup data (usually an excel workbook). 61 Page 61 of 68

62 Check methodological and data changes resulting in re- Temporal consistency in time series input data are checked for each category. calculations. Consistency in the algorithm/method used for calculations is checked throughout the time series. Undertake completeness checks. Estimates for all categories and for all years from the appropriate base year to the period of the current inventory are double-checked. Data gaps that result in incomplete category emissions estimates are documented (often by a Check that uncertainties in emissions and removals are estimated or calculated correctly. Compare estimates to previous estimates (trend analysis). comment on the excel sheet) Qualifications, assumptions and expert judgments are recorded and stored (if used). Qualifications of individuals providing expert judgment for uncertainty estimates are checked. Calculated uncertainties are checked to ensure completeness and correct calculations. For each category, current emissions reductions estimates are compared to previous estimates. If there are significant changes or departures from expected trends, these estimates must be re-checked and an explanation for the deviation will be provided. 7.4 DATA CONTROLS Offsetters has several internal data controls to reduce data uncertainty. Table 7.4 Data Controls Offsetters Data Control Details Data storage Data are stored in hard copy in secured (locked) file cabinets Data are stored in soft copy on Offsetters Microsoft Sharepoint site. Security Soft copy files: Only Offsetters staff can view files. Only Offsetters project development staff has read/write access to these files. Files are sent as locked documents to auditors A record of anyone who accessing the files is kept by Sharepoint All relevant excel sheet are protected with password encryption. Hard copy files Files are stored in a locked cabinet at the Offsetters head office, accessible by Offsetters project development staff upon request Version control Sharepoint has a comprehensive versioning control system, with check-ins/outs, and access to all previous versions 62 Page 62 of 68

63 Backup frequency Sharepoint site and data are backed up nightly by Iron Mountain, and stored in two separate offsite locations. Archiving Soft copy files Files are stored on Sharepoint indefinitely Hard copy files Hard copies of files are stored for ten years after the completion of the project, i.e., after the final verification is complete. 7.5 DATA CHAIN OF CUSTODY AND SECURITY Offsetters Clean Technology is responsible for securing from the project partner and maintaining all relevant data collected for the purposes of developing the carbon offset project. All relevant data are stored in a secure location on a Sharepoint program with access limited to Offsetters personnel to ensure security. In addition, data and commercially sensitive information will be set to absolute security which means completely locking down every document and providing limited access. Access to all documents on the server is recorded for further security reasons. In addition to the server, all relevant data that are collected are backed up and stored in a secure location. Any hard copies that are made of potentially sensitive information including data and contracts are stored under lock-and-key to prevent a breach of security. Figure 7.1 Data Flow 63 Page 63 of 68

64 7.6 RECORD BACK-UP AND ARCHIVING Offsetters stores all project data on Sharepoint. Data Sharepoint is backed up by Iron Mountain nightly, and stored in two separate external locations 36. Data will be stored for project lifespan plus 10 years 37 at minimum. 7.7 PERIODIC QUALITY ASSURANCE REVIEW Offsetters will conduct periodic quality assurance (QA) review of processes throughout the project period. This review will include cross-checking data entered with actual invoice data to ensure spreadsheet data are accurate and reliable. As part of Offsetters standard operating procedures (SOPs), all relevant emission factors are reviewed prior to verification to ensure that the most recent and applicable emission factor will be used. All calculation results will be cross-checked to ensure data have been properly processed. 36 Source: 37 Source: 64 Page 64 of 68

65 8 SUMMARY OF ASSERTIONS 8.1 BASELINE RESULTS IN CONSERVATIVE GHG ESTIMATE All assumptions employ the principle of conservativeness for the project and baseline scenarios. The Proponent asserts that baseline selected in this Project Plan results in a conservative estimate of the GHG reductions to be achieved by the project. See section 4.3 for a detailed description. 8.2 PROJECT JUSTIFICATION The Proponent asserts that Canfor Elko heat energy system project is beyond business-as-usual, and is not considered universal practice for the industry. Furthermore, there are no Federal or Provincial regulations mandating the company to undertake the project. As a result, the Proponent asserts that there are financial, technological or other obstacles to carrying out the project that are overcome or partially overcome by the incentive of having a GHG reduction recognized as an emission offset under the Greenhouse Gas Reduction Targets Act. 8.3 PROJECT START DATE The Proponent asserts that the project start date is November, ACCURATE AND CONSERVATIVE ESTIMATE OF GHGS The Proponent asserts that all relevant SSRs were identified and addressed. The project was quantified in a manner that ensures conservative estimates of emission reductions occur. The Proponent asserts that the selected baseline, SSRs and quantification methods ensure that the total of the emission reductions is an accurate and a conservative estimation of the GHG reduction, with respect to which the Proponent has ownership, that is to be achieved during the validation period from controlled SSRs in BC, taking into account increases in emissions or reductions in removals, as compared to the baseline scenario, from SSRs other than controlled SSRs. 8.5 OWNERSHIP Canfor owns and is responsible for the GHG emissions associated with their operations. 8.6 CONFORMANCE WITH EMISSION OFFSETS REGULATION The Proponent asserts that this project plan adheres to the requirements outlined in the B.C. Offsets Regulation. 65 Page 65 of 68

66 9 REFERENCES AND SUPPORTING DOCUMENTS Appendix A Canfor s financial assessment of the project for the Authority for Expenditure (AFE) 66 Page 66 of 68

67 Appendix B Canfor s benefits assessment of the energy system 67 Page 67 of 68

68 Appendix C A copy of Canfor s risk evaluation tool used to derive the hurdle rate for this project s capital budgeting decision. Source: Canfor s Authority for Expenditure 68 Page 68 of 68