CARGILL HIGH RIVER METHANE CAPTURE OFFSET PROJECT THIRD-PARTY VERIFICATION REPORT

Transcription

1 CARGILL HIGH RIVER METHANE CAPTURE OFFSET PROJECT THIRD-PARTY VERIFICATION REPORT REPORTING PERIOD: JANUARY 1, 2016 DECEMBER 31, 2016 Submitted to: Blue Source Canada ULC Suite 700, 717 th Avenue SW Calgary, AB T2P 3R5 Submitted by: ClearSky Engineering Inc. 221 Drake Landing Lane, Suite 1 Okotoks, AB T1S 2M4 April 19, 2017

2 TABLE OF CONTENTS 1. PROJECT SUMMARY INFORMATION VERIFICATION SUMMARY INFORMATION INTRODUCTION OBJECTIVE SCOPE PROGRAM CRITERIA VERIFICATION STRATEGY VERIFICATION PLAN VERIFICATION PREPARATION & PLANNING SITE VISIT EMISSION REDUCTION QUANTIFICATION ASSESSMENT PROJECT DATA MANAGEMENT SYSTEM ISSUES IDENTIFIED DURING VERIFICATION SAMPLING PLAN VERIFICATION SCHEDULE VERIFICATION FINDINGS CONFIRMATIONS STATEMENT OF VERIFICATION REFERENCES APPENDIX A: STATEMENT OF QUALIFICATIONS APPENDIX B: CONFLICT OF INTEREST CHECKLIST APPENDIX C: PEER REVIEW APPENDIX D: VERIFICATION PLAN i

3 LIST OF TABLES Table 1-1 Project Summary Information... 1 Table 2-1 Verification Summary Information... 2 Table 8-1 Site Visit Attendees... 5 Table 8-3 Verification Issue Log Table 11-1 Final Summary of Unadjusted Differences (SUD) Table LIST OF FIGURES Figure 3-1 Arial View of Cargill High River Methane Capture Project... 3 Figure 8-1 Anaerobic Lagoon Covers... 6 Figure 8-2 Protocol Quantification Approach... 8 LIST OF ACRONYMS Acronym ACCO AEP BOD CH 4 CO 2 e COD GHG GWP HHV hp PPE QA/QC SCADA SGER SS SUD Definition Alberta Climate Change Office Alberta Environment and Parks Biological oxygen demand Methane Carbon dioxide equivalent Chemical oxygen demand Greenhouse Gas Global Warming Potential Higher Heating Value horsepower Personal Protective Equipment Quality Assurance / Quality Control Supervisory Control and Data Acquisition Specified Gas Emitters Regulation Sources/Sinks Summary of Unadjusted Difference ii

4 1. PROJECT SUMMARY INFORMATION Table 1-1 Project Summary Information Project Title: Project Description: Project Location: Project Start Date: October, 2003 Cargill High River Methane Capture Project The Project captures biogas containing methane for fuel use that would have been released to the atmosphere from the anaerobic treatment of wastewater. 472 Avenue & Hwy 2A North P.O. Bag 3850 High River, Alberta T1V 1P4 Credit Start Date: January 1, 2004 Latitude: , Longitude: Credit Duration Period: January 1, December 31, 2016 (extension granted to initial 8 year crediting period) Expected Lifetime of the Project: Actual Emission Reductions / Removals Achieved: Applicable Quantification Protocol: Other Environmental Attributes: Project Registration: Ownership: Project Activity: Project Contacts: Lifetime of the equipment, expected to be far in excess of the credit duration period. From January 1, 2016, to December 31, 2016, the project emission reductions are asserted to be 75,250 tonnes CO 2 e. Quantification Protocol for Anaerobic Treatment of Wastewater Projects, Version 1, March 2009 No other environmental attributes, credits, or benefits are being sought or created by this Project. The project offset credits will be registered with the Alberta Emissions Offset Registry (AEOR) which tracks the creation, sale and retirement of credits. Cargill Meat Solutions, A Division of Cargill Limited This activity meets all the eligibility criteria for the Alberta offset system as described in Section 1 of the Offset Project Report. Authorized Project Contact Kelly Parker, B.Sc. Carbon Services Project Analyst Blue Source Canada ULC Suite th Avenue SW Calgary, AB T2P 0Z3 p: (403) e: kellyp@bluesourcecan.com Project Proponent Michael Bernardo Environmental Supervisor Cargill Meat Solutions 472 Avenue & Hwy 2A North P.O. Bag 3850 High River, AB T1V 1P4 p: (403) ext.482 e: Michael_Bernardo@cargill.com 1

5 2. VERIFICATION SUMMARY INFORMATION Table 2-1 Objective: Summary: Lead Verifier: Peer Reviewer: Designated Signing Authority: Verification Summary Information Develop a conclusion with a reasonable level of assurance as to whether the greenhouse gas emission reduction assertion is free from material misstatement, and is presented fairly in accordance with the Specified Gas Emitters Regulation (SGER) and the Alberta offset system program criteria. We have found the Offset Project Report for the Cargill High River Methane Capture Project, dated April 17, 2017 and the 2016 GHG Emission Reduction Assertion to be reliable, complete, and in compliance with the requirements of the SGER and the Alberta offset system program criteria. Klym Bolechowsky, P.Eng. ClearSky Engineering Inc. p: (403) e: klym@clearskyeng.com w: Kurt J. Hansen, M.Sc., P.Eng. Green Inc. p: (403) e: greeninc@telus.net Klym Bolechowsky, P.Eng. Verification Dates: The verification was carried out from October 12, 2016 April 19, 2017, inclusive. Site Visit Date: November 29, 2016 Report Date: April 19, INTRODUCTION ClearSky Engineering Inc. was engaged by Blue Source Canada ULC (Blue Source) to verify 2016 vintage year offset credits generated by the Cargill High River Methane Capture Project. The offset project was verified at a reasonable level assurance against the Quantification Protocol for Anaerobic Treatment of Wastewater Projects, Version 1.0, March 2009, the Offset Project Plan, v3.0, April, 2016, and the program requirements of the Specified Gas Emitters Regulation (SGER). Blue Source (the authorized project contact) prepared the offset project documentation and GHG Emission Reduction Assertion on behalf of the project proponent, Cargill Meat Solutions, A Division of Cargill Limited (Cargill) is the final year that the Project is eligible to generate offset credits (last year of 8 year credit period including a 5 year extension). The Project was implemented in October 2003 when the wastewater treatment lagoons were covered with a geo-membrane and a biogas capture system was installed to enable capture of the methane-rich biogas. After conditioning (water vapour removal & gas compression), the biogas is combusted in a facility boiler to produce steam for the meat processing plant. A flaring system was also installed to burn any unused biogas. 2

6 The captured biogas displaces approximately 30% of the natural gas required by the meat processing plant. The generated carbon offsets are from the avoidance of methane emissions created through the combustion of fossil fuel in a boiler and the avoided fugitive release of methane from the anaerobic wastewater lagoons. In the baseline condition, the facility was emitting 100% of the biogas from the treatment lagoons to the atmosphere. The Project was subject to its second AEP Audit in Figure 3-1 Arial View of Cargill High River Methane Capture Project Source: Google Earth The format of this report follows the structure outlined in the template for Offset Project Verification Reports, Version 2, February OBJECTIVE The objective of this verification is to develop a conclusion at a reasonable level of assurance as to whether the greenhouse gas emission reduction assertion is free from material misstatement, and is presented fairly in accordance with the SGER and the Alberta offset system program criteria. This verification was carried out in accordance with the following standards: ISO Part 3 Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions 3

7 ISO Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements. Five principles: o Accuracy: reduce bias, uncertainties and errors in calculations as far as is practical o Completeness: include all relevant emissions and removals o Consistency: enable meaningful comparisons in GHG related information o Relevance: include all relevant GHG sources & sinks o Transparency: disclose sufficient and appropriate GHG related information to allow users to make decisions with reasonable confidence 5. SCOPE The scope of the verification is the GHG Emission Reduction Assertion presented in the Offset Project Report Cargill High River Methane Capture Project, April 17, 2017 for the period January 1, 2016 to December 31, Level of Assurance: Materiality Threshold: 5% Reasonable 6. PROGRAM CRITERIA The verification involved executing verification procedures that assessed the Project and associated GHG assertion against the following criteria: Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7 Specified Gas Emitters Regulation, Alta Reg. 139/2007, with amendments up to and including Alberta Regulation 104/2015 Quantification Protocol for Anaerobic Treatment of Wastewater Projects, Version 1.0, March 2009 * Technical Guidance for Offset Project Developers, Version 4.0, February 2013 Carbon Offset Emission Factors Handbook, Version 1.0, March 2015 Template: Alberta Offset System, Offset Verification Report, Version 2, February 2013 Template: Alberta Offset System, Offset Project Report, Version 3, February 2013 Template: Alberta Offset System, Offset Project Plan, Version 3, February 2013 * The Protocol is currently under review to address known risks in the protocol. 4

8 7. VERIFICATION STRATEGY The verification strategy is a mixed approach of predominantly substantive procedures and some controls reliance: Substantive Procedures were employed for biogas volume to boiler and flare, biogas parameters (pressure, temperature, methane content, HHV), and wastewater flow rates & BOD analysis results Test of Controls by reviewing meter calibration records 8. VERIFICATION PLAN The Final Verification Plan is provided in Appendix D. A description of the verification procedures executed is described below VERIFICATION PREPARATION & PLANNING A Statement of Qualifications for the verification team is included in Appendix A. The first task completed was a conflict check which is documented in the Conflict of Interest Checklist included in Appendix B of this report. A date for the site visit was established and the following information was requested: Draft Offset Project Report Draft GHG emission reduction calculation spreadsheet Supporting Documentation: o Records from plant SCADA system data historian (Proficy) o Wastewater treatment anaerobic process performance data o Biogas condition system equipment specs o Biogas analysis reports o Wastewater BOD analysis reports o Sludge press recycle manual records o Lagoon venting manual records o Lagoon cover inspection reports A risk assessment was completed and a Preliminary Verification Plan & Site Visit Agenda was developed and sent to Blue Source prior to the site visit (see Appendix D) SITE VISIT The site visit occurred on November 29, 2016 with the following individuals in attendance: Table 8-1 Site Visit Attendees Cargill Meat Solutions Blue Source Canada Verifier Michael Bernardo, Environmental Supervisor Kelly Parker, B.Sc., Carbon Services Project Analyst Klym Bolechowsky, P.Eng., Lead Verifier 5

9 The purpose of the site visit was to perform the following tasks: Discuss the details of Project operation and performance in 2016 with operational personnel Tour the Project site to corroborate the GHG sources/sinks, facility description and boundaries, and details of the calculation methodology described in the Project Plan; including review of: o Anaerobic wastewater treatment plant o Biogas capture system o Biogas conditioning equipment and electricity consumption o Biogas supply to plant boiler o Project propane consumption for flare pilot burner o Project monitoring and metering Assess the reliability of the data used as input to the GHG offset calculations and the overall approach An initial meeting was held with Michael Bernardo of Cargill along with Kelly Parker of Blue Source and the Lead Verifier. A series of questions were asked to gain an understanding of the project and operation details in 2016 (see Preliminary Verification Plan & Site Visit Agenda, Appendix D). The project changes that occurred in 2016 include: Sediment removed from the East lagoon in 2016 is accounted for in baseline B7 calculations for BOD/COD. A change was made to the biogas conditioning equipment: a 0.5 hp air compressor motor was replaced in October 2016 with a 7.5 hp motor. The two biogas blowers were separated in 2016 with one blower dedicated to the flare, the other to the meat processing plant boiler. A site tour was conducted (PPE requirements: CSA safety boots, hard hat, safety glasses) starting with the two anaerobic lagoons. Each lagoon is completely covered with a geomembrane (80 mil high density polyethylene) to capture biogas (typically approx. 75% methane by volume). Figure 8-1 Anaerobic Lagoon Covers and Manual Vent 6

10 We viewed that biogas conditioning system for removal of water vapour and the two electric drive Delta blowers that compress the biogas for delivery via piping to the meat processing plant boiler. The new 7.5 hp air compressor motor was viewed. The biogas control panel was viewed displaying the flow rate and pressure to the boiler and flare. The biogas temperature gauge was also observed. We then went outside to view the lagoon covers and manual vents (three per lagoon, six in total) that were installed in 2015: Figure 8-2 Lagoon Manual Vents Source: Cargill Anaerobic Lagoon Pressure Relief Vent Monitoring Sheet The biogas flare stack equipped with a propane fuelled pilot was viewed. The lagoon BOD sampling schedule was confirmed. Some of the project monitoring has been converted to electronic capture via the plant SCADA system and stored in a data historian called Proficy, however, some manual records are still collected by plant operators and transcribed for input to the GHG emission reduction calculations (see section 8.4, Data Management). A final meeting wrap-up meeting was held after the tour and final questions were posed to Cargill staff. The following tasks were completed after the site visit: Follow-up data requests including: o Clarification of data inputs that were from manual records vs Proficy data historian o Copies of all manual records used as data inputs to GHG calculations Phone and communications to clarify information provided Discuss updates to the Offset Project Plan as a number of project changes have occurred since last version Detailed review of GHG emission reduction calculations Sampling of Project manual records for comparison to calculation inputs (see Sampling Plan, Appendix D) 7

11 Follow-up with Blue Source on any identified issues observed with calculations and record sampling (see Table 8-1) 8.3. EMISSION REDUCTION QUANTIFICATION ASSESSMENT According to the Quantification Protocol for Anaerobic Treatment of Wastewater Projects, numerous GHG sources/sinks (SS) exist throughout the life cycle of a biogas capture project. The following baseline condition and project condition sources are required to be included in the GHG quantification effort: Figure 8-3 Protocol Quantification Approach Source: Quantification Protocol for Anaerobic Treatment of Wastewater Projects, Version 1.0, March 2009 Not all of the above sources/sinks (SS) are applicable to the project. This is documented in the Offset Project Plan and the rationale for the excluded SS was confirmed. The above equations reduce to: Emission Reduction = Emissions Baseline Emissions Project Emissions Baseline = sum of the emissions under the baseline condition = Emissions Fuel Extraction and Processing = emissions under SS (B1) + Emissions Thermal Energy Generation = emissions under SS (B3) + Emissions Anaerobic Wastewater Treatment Process = emissions under SS (B7) Emissions Project = sum of the emissions under the project condition = Emissions Fuel Extraction and Processing = emissions under SS (P1) + Emissions Facility Thermal Energy Generation = emissions under SS (P3) + Emissions Biogas Venting = emissions under SS (P17) + Emissions Biogas Conditioning = emissions under SS (P18) + Emissions Biogas Flaring = emissions under SS (P19) 8

12 The baseline condition GHG calculations quantify emissions from the extraction and processing of natural gas that would have been combusted in absence of the project (B1), the combustion of the natural gas in the boilers (B3), and the methane emissions that would have occurred from the anaerobic wastewater treatment lagoons (B7). The project condition GHG calculations quantify emissions from the extraction and processing of propane flare pilot fuel (P1), the combustion of biogas in the boiler (P3), biogas venting (occasional due to excess biogas buildup in the lagoons and inefficiencies in the capture system) (P17), electrical consumption of the biogas conditioning equipment (P18), and biogas flaring (P19). The equation for each of the above SS is documented in the protocol and it was confirmed that the correct protocol equations and constants were applied in the GHG emission reduction calculations. The equations and units were checked for accuracy. The spreadsheets were checked thoroughly for correctly functioning links and formulas. The sources of the emission factors referenced in the calculations were checked and confirmed. The emission contributions by SS were reviewed in context to previous year s values. In 2016, the largest contributors to the generated offset credits are B7 Anaerobic Wastewater Treatment Process (88.1% of baseline emissions) and P17 Venting of Biogas (88.5% of project emissions) (see Contribution Analysis, Appendix D). Overall, the total offset credits generated increased by 7.1% from 2015 largely due to an increase emissions associated with anaerobic wastewater treatment (B7) and a decrease in venting emissions (P17) PROJECT DATA MANAGEMENT SYSTEM The Project relies on mostly automated monitoring records with some manual records for key parameters. The conversion of data recording from manual operator logs to the SCADA system has been occurring gradually since 2012 due to a finding in an AEP Audit conducted in 2012 by Millennium EMS Solutions Ltd noting numerous transcription errors due to the mainly manual data management system. The remaining parameters that are recorded manually are internal BOD analyses, external biogas compositional analyses, and manual biogas venting. Effluent flow-rates were recorded manually from Jan. 1 Jan. 23, 2016 and sludge press recycle flow-rates were recorded manually from Jan. 1 Jan. 25, Jan. 27 Feb. 17, The manual records used in 2016 as inputs to the GHG calculations were checked during the verification according to the sampling plan (Appendix D). Project Meters The list of key project meters and their maintenance and calibration requirements is provided in Table 4, page 51 of the Offset Project Plan. As noted in the Offset Project Plan, several of the project meters do not require calibration according to the manufacturer. These include the vortex meter for biogas flow rate to the boiler, the magnetic flow meters for the inlet and outlet flow rates from the anaerobic lagoons and the sludge press recycled wastewater. E- mails from the manufacturers confirming this were provided. The flare flow meter requires periodic verification and the report of the most recent verification completed in Jan was reviewed. 9

13 8.5. ISSUES IDENTIFIED DURING VERIFICATION Based on the review of the GHG emission reduction calculations, Offset Project Report, and sampling of records, the following issues and discrepancies were identified and followed up on through the course of the verification: Table 8-2 Verification Issue Log # Type Description Status 1 qualitative Data quality issues with BOD analysis manual records including transcription errors and illegible writing quantitative The calculation of project emissions from biogas conditioning (P18) should be updated to reflect the change in horsepower of a blower motor that was changed out in quantitative The calculation of project emissions from biogas conditioning (P18) should be updated to reflect the leap year in quantitative The calculation of project emissions resulting from propane used as flare pilot fuel (P19) should be updated to reflect the leap year in quantitative Increase frequency of biogas moisture testing to assess effect of moisture content on emission calculations (wet biogas flow rate times dry-basis biogas analysis data). Addressed, see Findings Table Addressed Addressed Addressed See Findings Table 11-1 It was noted that there is a high level of uncertainty in the venting emission calculations as a venting occurrence is recorded by operators performing as recorded in the Anaerobic Lagoon Pressure Relief Vent Monitoring Report. The need to initiate venting by manually opening a vent valve is indicated to the operators by the height of the lagoon covers. If cover heights become unsafe, and the biogas demand from the boiler cannot lower the cover height, then venting is initiated and the start and stop dates/times are recorded. Therefore, there is a human factor element involved. This uncertainty is acknowledged by the Protocol which states on page 38 for P17 Biogas Venting: Venting emissions are not normally practical to measure, therefore estimation is reasonable.. The venting calculation method was updated for the 2015 vintage year and the rather complex calculations based on Bernoulli s theorem and friction losses were checked and confirmed. An uncertainty factor of 30% is applied and this adds conservativeness to the calculations. 9. SAMPLING PLAN The Final Sampling Plan is provided in Appendix D, section D.7. 10

14 10. VERIFICATION SCHEDULE The verification schedule is summarized as follows: Verification Planning: October 12 November 14, 2016 Project site visit: November 29, 2016 Detailed Verification review: March 7 April 18, 2017 Peer Review: April 19, 2017 Submit Peer-Reviewed Verification Report to Blue Source: April 19,

15 11. VERIFICATION FINDINGS Based on the verification review of the emission reduction offset credits generated for the 2016 vintage year, no evidence of material discrepancy was identified. Material Discrepancies No evidence of qualitative or quantitative material discrepancies was identified. Immaterial Discrepancies The following quantitative and qualitative immaterial discrepancies were identified: Table 11-1 Issue Log # Final Summary of Unadjusted Differences (SUD) Table Type Description Effect on GHG Assertion 1 qualitative Instances of transcription errors were discovered in reviewing the BOD analysis records that were input manually. This indicates more internal QA/QC is needed on manual records prior to verification. 5 quantitative Any residual moisture remaining in the biogas after conditioning will affect the calculations that use the biogas %CH 4 and HHV reported on a dry basis from the biogas analysis reports. Only a single analysis was completed in January 2016, indicating a small moisture content of 0.21% by volume. Addressed Indeterminate Observations The project venting emission calculation is complex and has inherent uncertainties. Consider reliable estimation methods such as: o Since the duration of each venting event is recorded, use this value and the measured biogas flow rate to the boilers (say a few days before and after each venting event) to estimate the volume of biogas vented; or o equip each vent outlet with a mechanical rotating vane cumulative rpm meter or other flow measurement device either temporarily to determine typical vent flow rates at different lagoon heights, or permanently. 12

16 12. CONFIRMATIONS Confirmations are beyond the scope of a GHG verification, but are activities the ACCO requires verifiers to perform during the verification. Confirmations determine whether the information reported in the greenhouse gas assertion are accurate. The following project information was confirmed: consistency of offset project information across offset project documentation offset project location and any applicable approvals information offset project contact, report dates, emission reduction numbers completeness and accuracy of process and data flow diagrams 13

17 13. STATEMENT OF VERIFICATION April 19, 2017 Alberta Climate Change Office (ACCO) 12th Floor, Baker Centre Street Edmonton, Alberta T5J 1G4 Scope ClearSky Engineering Inc. has reviewed the Greenhouse Gas (GHG) Emission Reduction Assertion prepared by Blue Source Canada ULC (authorized project contact) on behalf of Cargill Meat Solutions (project owner). The subject of the verification was the assertion of GHG emissions reductions associated with the Project for the period from January 1, 2016 to December 31, 2016 as described in Cargill High River Methane Capture Project, Offset Project Report, April 17, The Project generates GHG offsets from the capture of biogas containing methane for fuel use that would have been released to the atmosphere from the anaerobic treatment of wastewater. Blue Source is responsible for the preparation and fair presentation of the information within the Offset Project Report and the GHG Assertion in accordance with the requirements of the Alberta offset system under the Specified Gas Emitters Regulation (SGER). Cargill Meat Solutions is responsible for the operation of the Project and the implementation of Project data monitoring and collection controls to enable the preparation of GHG Assertions that are free from material misstatement. Our responsibility is to develop a conclusion with a reasonable level of assurance as to whether the GHG Assertion is free from material misstatement, and is fairly presented in accordance with the Quantification Protocol for Anaerobic Treatment of Wastewater Projects, March 2009, and the program requirements of the Alberta offset system under the SGER Methodology Our review was completed in accordance with ISO Part 3 Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions, and ACCO Technical Guidance. We planned and performed our work in order to provide reasonable assurance with respect to the GHG emission reduction information we reviewed. Our verification criteria were established based on guidelines approved by the ACCO. We believe our work efforts provide an acceptable basis for our conclusion. GHG Assertion The GHG Assertion states that for the period of January 1, 2016, to December 31, 2016, the Project resulted in GHG emission reductions of 75,250 tonnes CO 2 e. Conclusion Based on our work, it is our opinion at a reasonable level of assurance that the GHG Assertion presented in the Offset Project Report, dated April 17, 2017 prepared by Blue Source for the Cargill High River Methane Capture Project is materially correct and presented fairly and accurately in accordance with the SGER program criteria. 14

18 Klym Bolechowsky, P.Eng. Principal, Lead Verifier ClearSky Engineering Inc. Okotoks, Alberta 15

19 REFERENCES Blue Source Canada ULC, Cargill High River Methane Capture Project, Offset Project Report, April 17, 2017 Blue Source Canada ULC, Cargill High River Methane Capture Project, Offset Project Plan, Final Report, version 3.0, Cargill OPP_v3.0_ docx, April 2016 Blue Source Canada ULC, GHG Emission Reduction Calculator, Cargill_WWT_VY2016_v1.0_ xlsx AEP, Carbon Offset Emission Factors Handbook, Version 1.0, March 2015 AEP, Quantification Protocol for Anaerobic Treatment of Wastewater Projects, March 2009 AEP, Technical Guidance for Offset Project Developers, Version 4.0, February AEP, Template: Alberta Offset System, Offset Verification Report, Version 2, February 2013 AEP, Template: Alberta Offset System, Offset Project Report, Version 3, February 2013 AEP, Template: Alberta Offset System, Offset Project Plan, Version 3, February 2013 AEP, Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance. Version 1.0, January 2013 Government of Alberta, Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7, 2003 Government of Alberta, Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and including Alberta Regulation 104/2015 (Regulation), 2015 ISO, Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements, 2006 ISO, ISO Part 3 Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions,

20 APPENDIX A: STATEMENT OF QUALIFICATIONS 17

21 Statement of Qualifications The statement of Qualification must demonstrate that the qualifications of the third party verifier meets or exceed the qualifications stated in Section 18 of the Specified Gas Emitters Regulation (SGER). The qualification requirements as stated in Section 18 are provided below along with our qualifications addressing each: SGER Requirements for Third Party Verifiers 18 (1) A person is eligible to be a third party auditor under this Regulation if the person (a) is (i) registered as (A) a professional engineer under the Engineering, Geological and Geophysical Professions Act, or (B) a chartered accountant under the Regulated Accounting Profession Act, (ii) a member of a profession that has substantially similar competence and practice requirements as a profession referred to in subclause (i) (A) in a province or territory of Canada, or (B) approved by the director, in a jurisdiction outside of Canada, (b) has technical knowledge of (i) specified gas emission quantification methodologies, (ii) audit practices, and (iii) any other matters considered relevant by the director, and (c) has any other qualifications that the director considers necessary. ClearSky Engineering Inc. Qualifications The Lead Verifier, Klym Bolechowsky, P.Eng., is a Professional Engineer registered with APEGA under the Engineering and Geoscience Professions Act, with technical expertise related to the project sector. The Verification Report will be peer reviewed by Kurt J. Hansen, M.Sc., P.Eng., a Professional Engineer registered with APEGA under the Engineering and Geoscience Professions Act (i) specified gas emission quantification methodologies: The Lead Verifier, Klym Bolechowsky, P.Eng., of ClearSky Engineering Inc. has detailed technical knowledge of GHG emission quantification methodologies, the Alberta GHG Offset System, and verification experience related to wind-powered electricity generation. Relevant experience includes: Alberta Environment Audit of GHG Offset projects, 2010: 3 wind farms, 1 landfill gas capture project Offset Project Verification of Wind Energy Offset Project CCEMC Validation of Renewable Energy GHG Offset Project, 2011 SGER Compliance Report Verification Reviews for Gas Plants, Refinery, Alberta Environment Audit of 4 major electricity generation facilities which included participation of the Auditor General of Alberta,

22 (ii) audit & assurance practices: Klym Bolechowsky is intimately familiar with audit and assurance practices in accordance with ISO Part 3. He has his Certificate of Completion for the CSA GHG Verification Using ISO three day training course. Klym was retained by SAIT Polytechnic as a subject matter expert to develop a 40 hour ISO GHG Quantification & Verification training course to prepare participants for ISO certification. Course development was completed June He has presented papers on GHG verification procedures at recent conferences including the Air & Waste Management Association conference in Calgary on June 24, 2010 and the EPA Emission Inventory Conference in Baltimore, MD, Apr. 15, He has worked on two AEP SGER Audits, one in collaboration with Grant Thornton Chartered Accountants who provided valuable insight into audit and assurance procedures for GHG verification work. (2) A person is not eligible to be a third party auditor for a facility if (a) that person is the person responsible for the facility or is a director, officer or employee of the person responsible for the facility or of an affiliate, within the meaning of section 2 of the Business Corporations Act, of the person responsible, or (b) the person is an employee or agent of the Government. The verifier is eligible to conduct a verification review for the offset project as defined by the regulation and can demonstrate freedom from any conflict of interest related to Blue Source and Cargill as documented in the Conflict of Interest Checklist, Appendix B. Signed: Date: April 19, 2017 Klym Bolechowsky, P.Eng. Principal, Lead Verifier ClearSky Engineering Inc. City, Province: Okotoks, Alberta 19

23 APPENDIX B: CONFLICT OF INTEREST CHECKLIST 20

24 Question Yes No 1. Can the verifying organization or the verification team members directly benefit from a financial interest in the Project Developer or the Project Developer s Project? For example: Owning share of the Project Developer; Having a close business relationship with the Project Developer; Contingent fees relating to the results of the engagement; Potential employment with the Project Developer; or Undue concern about the possibility of losing the verification or other fees from the Project Developer. 2. Can the verifying organization or verification team members be in a position of assessing their own work? For example: Provided greenhouse gas consultation services to the project; Provided validation for the project If providing non-greenhouse gas work for the company, consideration needs to be given as to how potential and perceived conflict of interests can be managed. A member of the verification team was previously employed with the company 3. Does the verifying organization or a member of the verification team, or a person in the chain of command for the verification, promote or be perceived to promote, a project developer's position or opinion to the point that objectivity may, or may be perceived to be, compromised? For example: Dealing in, or being a promoter of, greenhouse gas credits on behalf of a project developer; or Acting as an advocate on behalf of the project developer in litigation or in resolving disputes with third parties. 21

25 Question Yes No 4. Is one or more of the verification team too sympathetic to the project developer's interests by virtue of a close relationship with a project developer, its directors, officer or employees? For example: A person on the verification team has a close personal relationship with a person who is in a senior greenhouse gas compilation role at the project developer; or The verification team or a person of influence on the verification team has accepted significant gifts or hospitality from the project developer. 5. Is a member of the verification team or a person in the chain of command deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers or employees of the Project Developer? For example: The threat of being replaced as a third party verifier due to a disagreement with the application of an greenhouse gas quantification protocol; Fees from the project developer represent a large percentage of the overall revenues of the verifying organization. The application of pressure to inappropriately reduce the extent of work performed in order to reduce or limit fees; or Threats of litigation from the project developer. Signed: Date: April 19, 2017 Klym Bolechowsky, P.Eng. Principal, Lead Verifier ClearSky Engineering Inc. City, Province: Okotoks, Alberta 22

26 APPENDIX C: PEER REVIEW 23

27 Green Inc. 612 Dalmeny Hill NW, Calgary, AB, T3A 1T6 ph , cell , 19 April 2017 Klym Bolechowsky ClearSky Engineering Inc. 221 Drake Landing Lane, Suite 1 Okotoks, Alberta T1S 2M4 RE: GI Peer Review of ClearSky Third-Party Verification Report to Blue Source; Cargill High River Fluidized Bed Boiler (FBB) Offset Project; 2016 GHG Emission Offset Report by Blue Source Canada Dear Klym, Green Inc. (GI) has reviewed ClearSky 19 April 2017 verification report on the subject matter and understands that a peer review is a required part of verification under the Alberta Specified Gas Emitters Regulation, and clearly understands that the review process requires that persons different from those who undertook the fieldwork perform a final evaluation of the evidence and conclusions of the verification team. The peer review of GI did not discover any deficiencies in the verification approach and 19 April 2017 report statements and information regarding the Blue Source-asserted and Cargill-reported 2016 GHG emission offsets associated with the facility. Should you require additional information please contact me. Yours truly Kurt J. Hansen, President, M.Sc., P. Eng. Green Inc., Calgary greeninc@telus.net

28 APPENDIX D: VERIFICATION PLAN 25

29 D. VERIFICATION PLAN D.1. SCOPE & OBJECTIVES In accordance with the Specified Gas Emitters Regulation (SGER), ClearSky Engineering Inc. has been engaged by Blue Source Canada ULC (Blue Source) to conduct a verification of the Cargill High River Methane Capture Project for the 2016 vintage year. The Alberta Climate Change Office (ACCO) has outlined the requirements of the verification plan in their document entitled Technical Guidance for Greenhouse Gas Verifications at Reasonable Level Assurance, Version 1.0, Jan. 2013, and these elements are addressed in the following sections of this Verification Plan. The objective of the verification is to provide ACCO with assurance that the Offset Project Report accurately represents the greenhouse gas (GHG) emission reductions associated with the project and that the process is being carried out in accordance with the SGER and the Technical Guidance documents. The scope of the verification is offsets generated in D.2 LEVEL OF ASSURANCE The verification will be conducted at a reasonable level of assurance. D.3 MATERIALITY Quantitative discrepancies are considered material if they exceed 5% of the total reported GHG emission reductions or removals asserted. D.4 VERIFICATION STANDARDS This verification will be carried out in accordance with the following standards: ISO Part 3 Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions ISO Part 2 Greenhouse Gases: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements. Five principles: o Accuracy: reduce bias, uncertainties and errors in calculations as far as is practical o Completeness: include all relevant emissions and removals o Consistency: enable meaningful comparisons in GHG related information o Relevance: include all relevant GHG sources & sinks o Transparency: disclose sufficient and appropriate GHG related information to allow users to make decisions with reasonable confidence D.5 VERIFICATION CRITERIA Verification criteria are the benchmarks or comparison standards to which the verifier compares the GHG offset assertion and supporting evidence. The verification criteria for this review include: 26

30 Climate Change and Emissions Management Act Specified Gas Emitters Regulation Quantification Protocol for Anaerobic Treatment of Wastewater Projects, March 2008 Technical Guidance for Offset Project Developers, Version 4.0, February 2013 Carbon Offset Emission Factors Handbook, Version 1.0, March 2015 Template: Alberta Offset System, Offset Verification Report, Version 2, February 2013 Template: Alberta Offset System, Offset Project Report, Version 3, February 2013 Template: Alberta Offset System, Offset Project Plan, Version 3, February 2013 D.6 RISK ASSESSMENT A risk assessment identified areas where we will focus our efforts. Three categories of risk were assessed: Inherent Risk the likelihood of a material error, omission, or misrepresentation because of inherent challenges in the subject matter Control Risk the likelihood that the organization s control procedures will fail to prevent, detect, or correct an error or omission Detection Risk the risk that the procedures applied by the verifier do not detect a misstatement in the GHG assertion. There is an inverse relationship between the inherent and control risks, and the detection risk. If the inherent and control risks are high, the verifier must design and perform procedures that result in a low detection risk so that the overall verification risk is low. The risk assessment was conducted during the planning stage and finalized during the execution phase of the verification and is summarized in the following table: 27

31 Risk Assessment & Verification Procedures Line Item Attributes Inherent Risk Control Risk Detection Risk Design GHG Assertion Level Completeness Accuracy Medium Protocol is under review due to identified risks. Medium manual and automated records Medium Verification Procedure Conduct a site tour to view all emission sources and compare with inventory Detailed checking of manual records for transcription errors, check QA/QC procedures Check all emission factors Baseline - Fuel Extraction and Processing (B1) Baseline - Thermal Energy Generation (B3) Baseline - Anaerobic Wastewater Treatment Process (B7) Occurrence Completeness Accuracy Cut-off Classification Occurrence Completeness Accuracy Cut-off Classification Occurrence Completeness Accuracy Cut-off Classification Low minor source determined by simple calculation Medium Equiv. natural gas volume calculated based on well documented parameters Medium many parameters involved in calculation, some manual data collection, largest contributor to baseline emissions. However, protocol acknowledges uncertainty. Low data collected by SCADA system and lab analysis reports Low data collected by SCADA system and from lab analysis reports Medium mix of manual and automated data collection Highest Higher Medium Recalculate emission reductions Check source of emission factors Check lab analysis reports in detail and unit conversion factors in calculations Detailed review of manual BOD records, manual sludge press recycle flow rates, manual effluent flow rates. Ensure that equations from the protocol are applied properly. Check year to year variation. 28

32 Project - Fuel Extraction and Processing (P1) Project Facility Thermal Energy Generation (P3) Project Biogas Venting (P17) Project Biogas Conditioning (P18) Project Biogas Flaring (P19) Occurrence Completeness Accuracy Cut-off Classification Occurrence Medium Completeness Accuracy Cut-off Occurrence Low insignificant source determined by simple calculation automated data capture of biogas volume, uncertainty about final moisture content Occurrence Completeness Accuracy Cut-off Occurrence Occurrence Completeness Accuracy Cut-off Occurrence Occurrence Medium Completeness Accuracy Cut-off Occurrence High largest contributor to project emissions, complicated calculation Low conditioning equipment is all electric and power ratings are documented automated data capture of flow rate but highly variable source. Pilot fuel volume calculation based on limited data. Low data collected by SCADA system and from lab analysis reports Low data collected by SCADA system and from lab analysis reports High - uncertainty due to human element to data collection Medium many pieces of equipment involved makes changes harder to detect Low flow data collection is automated Highest Higher Lowest Higher Higher Check source of emission factors Check lab analysis reports in detail and unit conversion factors in calculations Review daily venting reports, check calculation in detail. Check year to year variation. Check equipment list against equipment in use during the site visit. Review flow rates and check for outliers. Check pilot fuel emission calculation in detail. 29

33 A contribution analysis was conducted to assess the relative contribution of each line item to the overall GHG assertion. This was useful in the risk assessment phase to focus in on priority line items. Contribution Analysis, 2016 Baseline Emissions t CO2 t CH4 t N2O tco2e TOTAL (tco2e) % of Baseline % of Total Offset B1 Fuel Extraction & Processing , % 1.6% SS B3 Facility Thermal Energy Generation 12, , % 16.6% B7 Anaerobic Wastewater Treatment Process 4, , % 134.8% ALL 13,201 4, , % Project Emissions t CO2 t CH4 t N2O tco2e TOTAL (tco2e) % of Project % of Total Offset P1 Fuel Extraction & Processing % 0.0% P3 Facility Thermal Energy Generation , % 2.9% SS P17 Venting of Biogas 1, , % 46.9% P18 Biogas Conditioning % 0.9% P19 Biogas Flaring , % 2.2% ALL 38 1, , % Emissions Offset Credits Created t CO2 t CH4 t N2O tco2e ALL TOTAL (tco2e) 13,163 2, , % 83.41% 0.01% -0.92% % D.7 SAMPLING PLAN Based on the risk assessment and contribution analysis, raw data and records for the following will be sampled: Biogas methane content and HHV 100% of lab analysis reports BOD IN, BOD OUT 100% of manual records Effluent flow rate 100% of manual records and analyze electronic records to identify outliers Sludge Press Recycle flow rate analyze electronic records to identify outliers Biogas temperature analyze electronic records to identify outliers Anaerobic Lagoon Pressure Relief Vent Monitoring Report 50% of manual records D.8 VERIFICATION PROCEDURES The subject matter pertaining to this verification is described in the Quantification Protocol for Anaerobic Treatment of Wastewater Projects. The verification will employ substantive procedures consisting of analytical tests and tests of detail - inspection of facility, documents, and inquiry. The verification procedures are described previously in the Risk Assessment table. The verification process will also include the following procedures: Confirmation of ownership of offset credits Inspect the facility and interview project staff Obtain copies and review manual records for biogas system and wastewater treatment 30

34 Review the emission factors utilized in the calculations and compare to source publications to ensure appropriate factors are utilized. Recalculate emission reductions. Assess the data management system during the site visit Obtain copies of Blue Source QA/QC checklists Details on data storage procedures (hard copy and electronic) and record of on-site document retention time Minimum experience requirements for operators in charge of the project and monitoring and evidence of competency (resume, education, training) A thorough understanding of the GHG Offset Project drives the verification approach. The verification process will commence with gaining an understanding of the entity, business and industry by reviewing the Offset Project Report and background information provided. The review of these items will then direct the area of focus for the site visit, and the assessment of the GHG quantification method and accuracy of emission reduction calculations. The review of the data management system will assess how the inputs to the offset credit calculation are determined and will consist of discussions with project management and review of project documentation and records. A description of the data management system and controls is included in the main body of the verification report. The objective of the verification is to provide reasonable assurance that the emission reduction calculations are reasonable and not materially misstated. A positive statement of verification will be issued if there is sufficient and appropriate evidence to support the GHG assertion at a reasonable level of assurance. A reasonable assurance conclusion is a positive factual statement that says the GHG emission reduction assertion is correct. D.9 SITE VISIT The site visit was completed on November 29, 2016 at the Cargill Meat Processing Plant located in High River, AB. Safety requirements for the site visit include: hard hat, semi sealed eyewear, CSA safety boots. D.10 VERIFICATION REPORT A verification report will be prepared summarizing procedures and findings. Detailed documentation of the verification process will be maintained and described in the final verification report. The documentation will include a description of activities during the verification, notes on the methodology and calculation review, notes from the site visit, and a detailed description of any findings and observations. A Statement of Verification will be prepared and signed by the Lead Verifier. A signed Conflict-of-Interest checklist and Statement of Qualification will also be provided. 31

35 D.11 VERIFICATION SCHEDULE The verification schedule is summarized as follows: Verification Planning: October 12 November 14, 2016 Project site visit: November 29, 2016 Detailed Verification review: March 7 April 18, 2017 Peer Review: April 19, 2017 Submit Peer-Reviewed Verification Report to Blue Source: April 19, 2017 D.12 VERIFICATION TEAM The verification team will include the following members: Klym Bolechowsky, P.Eng., ClearSky Engineering Inc. (Project Manager, Lead Verifier, Designated Signing Authority) Kurt Hansen, M.Sc., P.Eng., Green Inc. (Peer Reviewer) Klym Bolechowsky, P.Eng. Lead Verifier Mr. Klym Bolechowsky, as Project Manager and Lead Verifier, will be the main contact with Blue Source & Cargill. Klym is a registered Professional Engineer in the province of Alberta and is an experienced Third-Party Verifier having completed numerous verification projects under the SGER. He has his Certificate of Completion for the CSA GHG Verification Using ISO three day training course. He has twenty years of experience in the air quality field both as a consultant and in industry. Prior to ClearSky Engineering Inc., he provided air quality consulting services at Levelton as the Manager of the Environmental Studies Group in the Environment & Energy Division. Some of his recent projects relevant to GHG offset project verification and biogas capture include: 2009 AEP Audit of the Clover Bar Landfill Gas Capture Offset Project at the City of Edmonton Landfill Reference Contact: Renée Levesque, Environmental Portfolio Specialist, Capital Power Corporation, (403) , rlevesque@capitalpower.com Annual GHG Offset Project Verification for Nexen Soderglen Wind Farm Reference Contact: Tom Rudd, Team Lead Gas and Power Operations, Nexen Energy ULC, (403) , Tom.Rudd@nexencnoocltd.com 2011, 2012 SGER Compliance Report Verification, Whitecourt Power Biomass Plant Reference Contact: Erwin Karst, Plant Manager, Whitecourt Power LP (780) , EKarst@capstoneinfra.com SGER Compliance Report Verification for Suncor Edmonton Refinery Reference Contact: Dan Burt, Climate Change Management Specialist, Suncor, (403) , dburt@suncor.com 32