Ofgem Sustainability Audit – Biogas, Biomass, Biomethane – RHI

Ofgem Sustainability Audit – Biogas, Biomass, Biomethane – Renewables Heat Incentive (RHI)

The Non-Domestic Renewables Heat Incentive and Ofgem require an Independent sustainability audit for RHI claimants. The audit must be performed in accordance to the International Standard for Assurance Engagements (ISAE 3000).

EnviroSense is a provider of assurance engagements in the renewables industry. We can answer questions you have.

Contact Robin Askey on: robin@envirosenseltd.co.uk   or    07799 032253 

 

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 Annual Report
Claimants of the Non-Domestic Renewables Heat Incentive have two options to comply with the new sustainability requirements by the 5th of October 2015 as a new requirement in relation to The Renewable Heat Incentive Scheme and Domestic Renewable Heat Incentive Scheme (Amendment) Regulations 2015. The requirement is explicit in that it states:

“A participant who generates heat or heat and power from solid biomass or biogas in an accredited RHI installation on or after 5th October 2015 must use only sustainable solid biomass or sustainable biogas” and “A participant who produces biomethane for injection on or after 5th October 2015 must produce for injection only sustainable biomethane”.

A consequence of not complying is unfortunately enforcement action that includes reducing or withholding RHI payments. Unfortunately sustainable solid biomass, sustainable biomethane or sustainable biogas is the only option for RHI payments after the 5th of October.

The options are either to source from the Biomass Suppliers List (BSL) if your installation is not biogas and a CHP installation, or self-reporting and provision of an annual sustainability audit, often referred to as a “Ofgem sustainability audit” if the biomass or biogas installation is 1MWth or above. If your installation is less than 1MWth the annual Ofgem sustainability audit is not required. RHI participants fortunately have five routes to demonstrate compliance as summarised in Table 1.

table3

Sustainable Solid Biomass, Biogas or Biomethane – the Sustainability Criteria
There are two elements to sustainability as described in The Renewable Heat Incentive Scheme and Domestic Renewable Heat Incentive Scheme (Amendment) Regulations 2015 and Ofgem guidance:

1. Greenhouse gas emissions (GHG) meet or less than emissions values in order for the fuel to be classed as sustainable solid biomass, biogas or biomethane. The emissions value is 34.8gCO2(eq) per MJ heat generated or MJ of biomethane injected.

2. Complying with the land criteria that includes two sub-elements; the Timber Standard and land use. Both the Timber Standard and the land use criteria are explained within this guidance in subsequent paragraphs.

Greenhouse Gas Criteria
As mentioned, the greenhouse gas emissions (GHG) must meet or be below threshold values above in order for the fuel to be classed as sustainable. The Ofgem sustainability audit will need to verify if RHI participant is required to report their lifecycle GHG emission and this is correct in grams of CO2 per MJ of heat generated or MJ biomethane injected, the value as mentioned is 34.8 gCO2(eq) per MJ of heat generated.

Different fuels have different default values, actual values can be used but these are less conservative. The Actual Value method can be time consuming as a large amount of accurate data is required that will need to be verified by the auditor. Not all values must be actual values, standard input data from reference sources can be used. To provide an indication of the different carbon emissions per gCO2(eq) per MJ of heat produced, the default values from the Renewables Heat Incentive and Domestic Heat Incentive Scheme (Amendment) Regulations 2015 are below:

table2

Values are only one element of a lifecycle fuel chain that may have a few stages:

arrows

The above is a relatively simple process when in fact this may be more complicated and onerous in some cases. Invariably there may be some errors that arise during the Ofgem sustainability audit and provided the threshold values are met, the overall significance of such errors are low and the RHI participant should make amendments on Register submissions

Land Criteria: Solid Wood Biomass – The Timber Standard
Wood must meet the Timber Standard in order for the fuel to be classed as sustainable. 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. The indicators are present on the EnviroSense ISAE 3000 – Solid Biomass Sustainability Audit website page. Also present on the Solid Biomass Sustainability Audit website page is information on how the Timber Standard can be met with ‘Category A’, or ‘Category B’ evidence, or a mixture of both in addition to how recognised voluntary schemes may be used to show compliance with the land criteria (click here).

Land Criteria: Energy Crops (not wood biomass)
Provided the energy crop was not obtained from a protected source, financial assistance was paid for the energy crop under the Energy Crops Regulations (2000) or equivalent, or was a residue other than agriculture, fisheries or forestry then it can be classified and evidence be shown that it is an ‘Energy Crop’. This being the case, then compliance with the Timber Standard is not applicable. As mentioned, evidence to demonstrate that the energy crop is not from a protected source is defined in the Regulations and Orders as being from:

Land that at any time during or after January 2008 was primary forest.
Land 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).
Land that that is highly biodiverse grassland
A formerly continuously forested area or lightly forested area
Land that 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) or wetland.
Land that has not interfered with nature protection, caused or as a consequence of the production of biomass

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.

Exemption from the Sustainability Criteria: Wastes
Waste feedstocks are exempt from Ofgem sustainability reporting but this does invalidate the requirement to have the Ofgem sustainability audit and submit a report unfortunately. The auditor will need to verify that the feedstocks received can be classified as wastes and the installation has determined the fuel classifications correctly in addition to other points such as the amount and classification of feedstocks burnt and claimed on, the heat contributions of feedstocks and management processes and records to substantiate accurate Register returns.

For the feedstock to be classed as waste it must meet the principles of waste as defined in the DEFRA ‘Guidance on the legal definition of waste and its applications’ published in 2012 though this guidance is not definitive and in general terms in this is material that user discards, intends to discard or must discard. Particular cases should be discussed with Ofgem in order for the definitions of waste to be compatible with the Renewables Energy Directive (RED).

Performing the Audit
The audit must be conducted in accordance with International Standard on Assurance Engagements for non-financial information (ISAE 3000). A condition of the audit is that suitably qualified experienced independent auditors perform the engagement. It is essential that the auditor verifies if the sustainability information reported to Ofgem complies with the sustainability criteria and that Register returns are accurate and produces and Ofgem sustainability report and attestation statement

In general, the auditor as part of the audit, has 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 states whether anything has come to the attention of the person preparing the sustainability report to indicate that the relevant sustainability information is not accurate.

Impartiality is a condition of conducting the audit. Any other direct services or activities performed by the audit company that may influence the outcome of the audit can invalidate the audit and be called into question by Ofgem.

Preparing for 5th October 2015 – An Ofgem Sustainability Pre-Audit
Depending on how assured the operator of the installation is that they comply with the sustainability criteria, pre-audits to check compliance with the sustainability criteria are available through EnviroSense. The purpose of the pre-audit, or series of pre-audits, is to work with the installation and identify:

Misstatements or errors in the reported data
Non-compliance with sustainability criteria
Options to enable compliance and information required to demonstrate compliance
General recommendations that may make the process of reporting and auditing easier and less burdensome

EnviroSense cannot act as consultancy and then audit the same company since this will be a conflict of interest. Non-compliance will be clearly reported and discussed with the installation. Discussions and general recommendations are not prescriptive or leading and the intention is for the installation to understand the non-compliance, misstatement or error and enable the installation to arise on a suitable course of action to rectify the issue to enable compliance. Ofgem, especially with regards to the RO and the sustainability audit guidance for auditors has made clear references to ‘work with the auditor’. Ultimately the installation is required to understand the sustainability criteria, which of course is in their best interests, and what is required to demonstrate compliance.

Installations using waste or biomass wholly derived from waste should not require a pre-audit. Discussions with employees at EnviroSense are free and any questions you may initially have we will be happy to answer.

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 with 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 with particular reference to supplier and customer details, feedstock sources, costs and joint ventures or planned business.

EnviroSense has much experience in a variety of audits including the Ofgem sustainability audit and other engagements performed to ISAE 3000. 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 or 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 will 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