Ofgem Sustainability Audit RO – Solid Biomass

The Renewables Obligation Order and Ofgem require an Independent sustainability audit for generating stations with a TIC ≥1MW. The audit must be performed in accordance to the International Standard for Assurance Engagements (ISAE 3000). The date of report submission is by the 30th June each year.

EnviroSense is a provider of assurance engagements in the biomass, biogas and bioliquid industry.

Below is a summary of the Ofgem guidance, the sustainability criteria and audit requirements which are included for your information and further reading, or do contact us directly with any questions you may have. We shall be pleased to answer any questions.

Ofgem Sustainability Audit and Report
Solid biomass generating stations with a total installed capacity (TIC) ≥1MW must provide a sustainability audit report, compiled by an independent auditor in order to verify the sustainability information reported to Ofgem and included in the generating stations Fuel Measurements and Sampling (FMS) procedures, is accurate. The audit is often referred to as the “Ofgem sustainability audit”. The information reported by the operator is in relation to the sustainability criteria laid down in the Renewables Obligation Order 2009 (as amended) and Ofgem sustainability criteria

Renewables Obligation Sustainability Criteria
At present, generating stations that generate electricity from solid biomass do not have to meet the renewables obligation sustainability criteria in order to receive financial support in the form of ROCs. Reporting is conditional and ROCs can be withheld in the absence of complying the RO requirements for an annual sustainability audit.

The Ofgem sustainability audit must be performed in accordance with the International Standard on Assurance Engagements for non-financial information (ISAE 3000). The Renewables Obligation sustainability criteria specifies points that must be addressed as part of the audit process which include the need for the auditor to consider:

• Whether the systems used to produce the relevant sustainability information are likely to produce information that is reasonably accurate and reliable.
• Whether there are controls in place to help protect the relevant sustainability information against material misstatements due to fraud or error.
• The frequency and methodology of any sampling carried out for the purpose of obtaining or checking the data on which the operator relied in preparing the relevant sustainability information.
• The robustness of the data on which the relevant sustainability information was produced.

In addition to making a clear statement expressed in the negative form, the auditor must state whether anything has come to the attention of the person preparing the report to indicate that the relevant sustainability information is not accurate.

Impartiality is a condition of conducting the Ofgem sustainability audit. Any other direct services or activities performed by the audit company that may influence the outcome may invalidate the audit and be called into question by Ofgem. Such instances could result in the Ofgem sustainability audit having to be performed again by a separate party.

Sustainable Solid Biomass and the Sustainability Criteria
Ofgem have published the Renewables Obligation Sustainability Criteria Guidance document. The sustainability criteria centres upon three aspects; greenhouse gas emissions, the Timber Standard and land use.

Greenhouse gas emissions (GHG) meet or be below threshold values in order for the solid fuel to be classed as sustainable. An operator of a generating station using solid biomass must report their GHG emission value in grams of CO2 per MJ of electricity. This means that for most operators, the relevant GHG emission threshold is 79.2 gCO2eq/MJ electricity. An operator of a generating station that meets the definition of ‘post-2013 dedicated biomass station’ will be required to report against the GHG emission threshold of 66.7 gCO2eq/MJ electricity. The Ofgem sustainability auditor will need to verify how values are determined and met.

Fuels that have different fuel classifications may have dissimilar life cycles and carbon intensities, for example, wood processing residues are calculated from the ‘process of collection’ which may be a combination of road or sea transport. Virgin wood requires the greenhouse gas emissions to be calculated for the full life cycle involving growing and use of fertilisers. Consequently, economically viable virgin wood from short-rotation forestry, transported relatively long distances will result in higher emissions than processing residue from local sawmills.

The sustainability criteria in the Timber Standard and regarding land use are both more complex. Feedstocks can be split in to three main categories of fuel classifications; waste, solid wood, or non-wood or waste solid biomass. Firstly, if the solid biomass can meet the definition of waste, or wholly derived from waste, it is exempt from the sustainability criteria. This does not meet the feedstock is sustainable biomass and can be used in mass balance calculations (see later references) – it is only exempt. Secondly, if the solid biomass is wood or derived from wood then it must meet the Timber Standard (and greenhouse gas criteria as above). Thirdly, if the feedstock is neither of the former two sources, such as an agricultural residue, then the biomass will be exempt from the Timber Standard though not the greenhouse gas criteria or land use criteria. Ofgem have produced a table similar to the one below to provide a summary of reporting requirements for fuel classifications and the applicable sustainability criteria to meet. This is very helpful:

Solid Biomass

table5

Timber Standard
EnviroSense personnel have been working within timber and forestry management supply chains for over 20 years and are well versed with the Timber Standard and the sustainability indicators in the standard in addition to the UK Timber Procurement Policy (UK-TPP) from which the Timber Standard principles are drawn. The Timber Standard provided by DECC, the full title of which is, “Timber Standard for Heat & Electricity: Wood fuel used under the Renewable Heat Incentive and Renewables Obligation” specifies exactly how sustainability is defined via indicators S1-S10. S1 to S4 relate to how the term and definition of sustainability can be defined and only S5-S10 are included below for brevity.

S5. Management of the forest must ensure that harm to ecosystems is minimised.

S6. Management of the forest must ensure that productivity of the forest is maintained.

S7. Management of the forest must ensure that ecosystem health and vitality is maintained.

S8. Management of the forest must ensure that biodiversity is maintained.

S9. The forest management organisation and any contractors must comply with local and national legal requirements relevant to.

S10. Management of the forest must have full regard for legal, customary and traditional tenure, use rights grievances and disputes, workers and labour rights.

(The full benchmarking exercise is in Ofgem’s RO Sustainability Guidance)

Timber Standard Sustainability Criteria and Category A and Category B Evidence
Evidence can be ‘Category A’, ‘Category B’, or a mixture of both. ‘Category A’ evidence, at the time of writing is aligned with the UK Timber Procurement Policy, only FSC or PEFC certified wood with a certified content greater than 70% meets the requirements of Category A evidence.

‘Category B’ evidence is bespoke evidence that is not FSC or PEFC or a currently recognised forestry scheme by CPET or Ofgem that meets all the land criteria. Bespoke evidence must meet two conditions for use in reporting to Ofgem as sustainable feedstocks:

1.Traceability from the forest to receipt by the operator of the generating station
2.Forest management in accordance with the indicators S1-S10

An example of Category B evidence is if wood has been bought from a UK forest holding where the transport documents show origin from the holding that has a fully compliant UK Forestry Standard (UKFS) approved forest management plan by either the Forestry Commission (Scotland or England), Forest Service (Northern Ireland) or Natural Resource Wales and the plan has been obtained which is accompanied by a felling licence issued by either of the applicable authorities. This is then fully UKFS compliant. In this instance the Category B evidence would be indisputable and naturally this is where an operator of a generating stations wants to be as feedstocks linked to ROCs evidently have financial risks attached to them.

Recognised Voluntary Schemes
In 2012 Ofgem commissioned a benchmarking study of voluntary schemes that comply or partially comply with the sustainability criteria. At the time or writing (July 2015), Ofgem are finalising the results of a second benchmarking exercise that will include additional schemes such as the Sustainable Biomass Partnership, FSC Controlled Wood forest management standard, Sustainable Forest Industries (SFI) controlled sources (Fibre Sourcing Standard) and possibly Grown in Britain. Currently only Green Gold Label meets all the land criteria. The results are slightly misleading as for FSC and PEFC biomass relate mainly to wood from forests that have achieved forest management certification and must constitute a ‘forest matrix’. Therefore wetlands are not habitats likely to receive FSC or PEFC certification unless they constitute a forest matrix. A summary of the results are as follows:

Timber Standard Sustainability Criteria and Regional Based Risk Assessment
DECC have published a a document entitled “Regional Based Risk Assessment” which uses a methodology based on FSC Controlled Wood Risk Assessments. The Regional Based Risk Assessment enables operators of generating stations to take a risk-based approach to legality and sustainability at a regional level opposed to at the forest management unit level and determination of the risk of non-compliance with the Timber Standard criteria. A ‘region’ is defined as an area of sufficiently homogenous conditions where legal and sustainability characteristics or requirements do not significantly differ. One example of a region is a US State such as South Carolina where legislation, forestry and forest management regulation in addition to the biome has a degree of uniformity.

Conclusions must be supported by tangible evidence analogous to FSC Controlled Wood Risk Assessments. The conclusions made should be based on logical and informative evidence. In collating evidence to substantiate conclusions made in your supply base evaluation, your company may wish to consider if only a sample of evidence is required based on the risk of non-compliance of forestry regulation and good regulatory control in the forestry sector.

Agricultural, aquaculture, fisheries residues and other solid biomass
If the solid biomass is not wood or derived from wood, in order for the biomass to be eligible for ROCs it cannot be obtained from land that:

• At any time during or after January 2008 was primary forest.
• At any time during or after January 2008 was land designated for nature protection purposes (unless production of that biomaterial did not interfere with purposes for which this land was designated).
• At any time in January 2008 was peat land (unless the cultivation and harvesting of biomaterial did not involve the drainage of previously un-drained soil).
• At any time in January 2008 was a continuously forested area (unless that land is still a continuously forested area)
• At any time in January 2008 was a lightly forested area (unless that land is still a lightly forested area, or unless the biomass meets the GHG emission criterion when the GHG emissions from land use change are included using actual GHG values)
• At any time in January 2008 was wetland (unless that land is still a wetland).

The above evidence can be indicated and the energy crop deemed sustainable if the energy crop has been assessed to meet the Energy Crop Scheme.

Information sources are freely available to show that land has not been converted and a variety of sources can be used in risk assessments.

Ofgem Sustainability Audit Report Recommendations and Adding Value
Ofgem have highlighted the fact the recommendations can be made in the audit report provided these do not alter the validity of the attestation statement. The attestation statement must be clear and unambiguous.

Auditors from EnviroSense will highlight options where they believe improvements could be made, or potential information sources could be utilised to aid the client. These are optional, not conditional or negative and the intention that the recommendation can be reviewed at a later point by the company to consider. At no point will a recommendation invalidate the attestation statement or affect the outcome of the audit.

Why EnviroSense?
EnviroSense is a trusted third-party that has worked many companies in the biomass industry and has several non-disclosure agreements in place as we recognise the sensitivity of much of the information involved in the audit especially supplier and customer details, feedstock sources, costs and joint ventures or planned business.

EnviroSense has years of experience in a variety of audits including attestation engagements performed to ISAE 3000 and we understand the need to work with companies to provide a valued service. This means a positive approach when conducting audits and providing trusted advice and interpretation of the finer details of the sustainability criteria.

Do contact us if you have any questions as many issues can be clarified over a discussion on the phone and we shall be pleased to help – Emma Hughes or Richard Watkins:
01531 637396

Or feel free to contact the Lead Auditor directly with any specific audit questions you may have –
Robin Askey:
07799 032253