FAQ’s about EU ETS Aviation
13th November 2009
This is a transcript from the Q and A session of the recent LRQA Business Assurance Webinar on EU ETS Aviation
Madlen King, LRQA’s Climate Change Manager and a leading EU ETS expert, answered the questions of aircraft operators and other members of the audience.
Questions & Answers
Q: Is there any guidance for charter operators who may have difficulty in providing future flight plans?
A: I think the only reason that you would need to predict your future flight plans, is for your predicted emissions within your monitoring plan application. Now, as this is only really required in order to determine whether you are above or below the 50,000 tonne emissions threshold for uncertainty tiers or above or below a 500,000 threshold for materiality levels, then you need not worry too much, there is no need for great accuracy in stipulating any future flight plans and any future levels of emissions.
Q: Is there any guidance for new entrants as to how they will be treated within the reserve for new entrants and fast growth operators?
A: At present, the only guidance on that is as detailed in the monitoring and reporting guidelines. Essentially, what the scheme has done is they have set aside 3% of the total cap in a special reserve which new operators can apply to, to obtain free allowances. Now there is a number of detailed documents on the European Commission website which talks about how you can access that. That special reserve is also set aside for operators that increase their operations by in excess of 18% of their tonne-kilometerdata from 2010 to 2014. We will have to await further guidance on how that will work from the European Commission and the forms etc to be used. However, what we do know at present is that any submission to the special reserve will need to be verified by an accredited verifier.
Q: Is there any method to track the offset measures and then the explanation behind it is, for example: if an operator exceeds the emissions cap and the operator deploys to offset carbon by investing in green projects. How will it be determined how much he is able to achieve and how is it measureable?
A: No, that’s fine. The only way that that can be used is through the mechanism that we spoke about earlier, so if your emissions offset projects, as you called them, are either clean development mechanism (CDM) or joint implementation (JI) projects then you can use 15% of your total emissions to be surrendered as credits from those schemes rather than European Union allowances. No other offset projects are acceptable under the scheme, so essentially only credits from projects under CDM or JI are currently acceptable.
Q: What is the uncertainty threshold for data?
A: That’s a very interesting question. The uncertainty threshold depends on the size of your emissions. A ‘tier two’ uncertainty of 2.5% must be applied to operators with emissions of greater than 50,000 tonnes and a tier one 5% uncertainty for those with less than or equal to 50,000 tonnes and therefore those uncertainties must be demonstrated by your measurement equipment.
As fuel density varies for example: it’s like going from India to the USA the density of fuel uplifted in India and then gives a figure, where is in the USA it is and gives a different figure. In that case the fuel remaining in the US plus the fuel uplifted for the return flight from the US to India, I guess the question regards to incorrect calculations and how to reduce it when the density of fuel is different depending on the flight pattern and scheme.
The density that needs to be applied to the different measures at the different points in time are as defined in the monitoring and reporting guidelines, depending on whether you chose method A or method B. Now there is a standard density that you can apply, a 0.8 kg/litre figure within the monitoring and reporting guidelines. However the general message coming out of the competent authorities is that they do not wish the standard density factor to be applied and they will seek an explanation why an operator is proposing to use that and why it has nothing more accurate. I think if you want to raise any more detailed questions about density, then I can take those in a separate email, otherwise we are getting quite complicated for others here.
Q: Annual emissions must be checked, must they be checked for fuel and per flight?
A: Yes, the annual emissions reporting requirement is a total CO2 emissions per fuel and then broken down by the flights. So as in the last part of that presentation, as in the monitoring and reporting guidelines, the reporting is broken down to that level.
Q: It states that ten years of records are specified. Do they need to be copies of the original statements or the electronic data systems into which this data is recorded? Is that acceptable? So does it need to be the original statement or a copy thereof, or can it be an electric data system which is recording?
A: The ten year data retention refers to all records and all data required to reach your final figure as reported. And therefore the records need to be held from source or raw data and traceable all the way through. So the scheme requires you to retain, for example your supplier docket and then that figure transferred into an electronic system. Your supplier docket should therefore either be retained in hard copy or scanned in, as that is the raw/source data that needs also to be retained.
Q: Can you give us some more details on the work LRQA have done for airlines under the scheme?
A: I can give some generic statements. Prior to the EU ETS we have worked for a number of aircraft operators both within Europe and outside of Europe in conducting emissions verifications for annual reports, and conducting verifications of their offset calculation mechanisms, whereby they offer to offset the emissions for people travelling on their flights. Under the EU ETS what we are currently providing is preliminary verifications for operators as they prepare their monitoring plan applications and as they commence implementing the systems that they will be operating from the first of January, and we are doing that for operators in the Middle East, for operators in the States and for operators in Europe.
Q: Can standard fuel density be used?
A: Yes. The monitoring reporting guidelines do allow it, but from my experience talking to the competent authorities they would like to see an explanation as to why a more accurate figure can’t be used. A number of people that we are working with are submitting proposals to use the data as stipulated in the supplier dockets and then when that figure has not been provided they will use the standard figure. I think at the moment it remains to be seen whether that is acceptable to the competent authority or not or whether they will come back with further questions to those applications.
Q: If the airline works for bio-fuel projects whether EU ETS comes with any extra allowances for the airline which operates the bio-fuel projects?
A: Wonderful question! The very interesting thing about bio-fuel is, bio-fuel is zero carbon rated under the scheme. So if you can demonstrate to a competent authority and to a verifier that you are using a pure bio-fuel or a certain percentage bio-fuel, then one tonne of bio-fuel burnt is zero CO2 emissions. One result of this scheme is trying to encourage the use of bio-fuels at present, regardless of perhaps poor public perceptions on the fact that bio-fuel should not be zero carbon rated.
Q: What is the current value of an EU allowance?
A: The current value of an EU allowance is around 14 Euros.
Q: Can I use credits from another greenhouse gas scheme to meet my surrender obligations under the scheme?
A: Yes you can. Under the scheme an operator is entitled to use approximately 15% of its total surrendering, from schemes including the clean development mechanism and joint implementation. So you can get credits that are called CERs or ERUs and you can submit 15% of your total surrendering requirements with credits from those schemes.
Q: What will happen to an air operator who does not submit their monitoring plan on time?
A: That is an interesting question. If it’s specific to Bulgaria the decision will be down to the regulators and competent authority within Bulgaria. But I know that within the UK they are stating fines that will be required for operators that have not submitted their monitoring plans on time. I think the most important issue is that if a TKM monitoring plan is not submitted and is not approved, then that operator will not get any free allowance and will have to buy its entire requirement at approximately 14 euro’s per tonne. I think because the requirements have been brought out very late and operators are rapidly trying to get up to speed with the requirements, that a number of the regulators will bend over backwards and will allow you some lateness in your submissions. But again that does depend and will vary from regulator to regulator and I suggest that they get in touch with their competent authority as soon as possible and try and commence that process.
Q: When must the monitoring plan applications be verified by?
A monitoring plan application does not need to be verified. The monitoring plan needs to be submitted to the competent authority, the original date being the end of August this year. A number of countries have delayed that submission. The monitoring plan application does not need to be verified before it is submitted to the competent authority.
Q: What is the advantage of splitting the verification process?
A: Speaking from experience, in the first year of the EU ETS we were brought in to complete verifications in around February knowing that the deadline is the 31st of March which is very little time for issues to be identified. In the first year of operation under the scheme, we in LRQA personally did not experience a single monitoring plan that was correct. That meant that the operator was required to go back to the competent authority and to get a monitoring plan changed before we could verify compliance with that monitoring plan, compliance with the scheme requirements and that the data is correct. So, our recommendation having learnt from the difficulties that other people have come across under the scheme, is to engage with a verifier as soon as possible, this means that you can split the data verification, you can do the first quarter followed by the second quarter, or the first half followed by the second half, and you can also identify any problems early enough so that you have time to go back to the competent authorities and request any changes that are required.
Q: Is the verification process done on site?
A: The verification process for most stationary installations is done on site and you can imagine the differences between what a verifier currently does for stationary installations where they have to go and inspect, for example how many boilers might be on the site and what fuel will be going into those boilers. But when we are talking about aviation, we can’t go and look at how many planes you have and confirm the fuel going into those planes, because they could be anywhere in the world. So, under the verification requirements in the EA6/03 document that I previously spoke of, we are currently defining what is meant by site, and what we are trying to agree upon is that the site for an aircraft operator is anywhere where all the data can be accessed. So as I mentioned previously that can either be at the HQ or that could be anywhere remotely, in your operators offices which maybe anywhere around the world where the verifier can look at your record systems, can look at the original raw data and raw records, but may also need to go and look at monitoring equipment if necessary.
Q: Will LRQA be fielding aviation experts when you verify an airlines monitoring report, i.e. do you have direct airline experience?
A: We in LRQA do have direct airline experience and greenhouse gas related airline experience. We have worked with a number of aircraft operators verifying greenhouse gas emissions data, verifying offset calculation mechanisms and we have taken that learning and we have conducted training for our existing greenhouse gas verifiers and we have also taken on aviation experts from outside of LRQA to compliment that expertise. So in answer to your question, yes we will be fielding verifiers with aviation experience and expertise.
Q: Talking about the risk analysis as an operator what are the aspects covered and is there any guidelines as to how go about doing this?
A: The risk analysis essentially covers looking at the breadth of the operations, how complicated they are, the depth and complexity of the monitoring systems and also the number of people that are involved in those monitoring systems. The purpose of it is for a verifier to get some understanding and some comfort in the systems prior to setting and establishing a data sampling plan. The document EA6/03 and is prepared by the European Co-operations for Accreditation. Once the EA6/03 document has been amended to include aviation, we will be able to obtain a copy of that, which I believe is generally free of charge available on the web, but we can certainly have that also available on our website. It does give guidance on what a verifier will have to look at to do their risk analysis. So as an operator, this would be a useful document for you to make sure that you can demonstrate to a verifier that your risks are low and therefore the verification will be quicker and the data sampling will be lower.
Q: A specific question regarding member state, this one is from Cyprus. And the question is: Is it possible to change the reporting member state as Cyprus does not currently have an online submission facility?
A: No. I don’t believe it is possible to change the administering member state. You could possibly change your administering member state if you had a legitimate reason, e.g. being that you don’t fly into Cyprus and they have got the data wrong. But I would certainly imagine that because they don’t have an online submission facility, is not a legitimate reason for having your administering member state being changed.
Q: What is the liability or penalty to an operator not following or submitting EU ETS?
A: The maximum liability would be if you did not submit a tonne kilometre monitoring plan and did not submit verified TKM data, the maximum liability would be 100 euro’s times your annual emissions for every year that you operate under the scheme. Without submitting your TKM data you do not qualify for any free allowance. Generally you should be getting 97% of your emissions for free and you will not be able to get any of those if you don’t submit your data.
Q: What is the maximum deviation allowed from the projection of carbon emissions?
A: If that is referring to the projection within the monitoring plan you can deviate as much as needed. The only purpose for having a projection within the monitoring plan is to establish which side of the materiality levels you come and which side of the uncertainty levels you come. If you deviate across those borders, then you will need to resubmit your monitoring plan and have it amended but that is the only implication, it really doesn’t matter if your projected emissions differ 100% or 1,000%.
Q: Is the data to be monitored per flight or per route?
A: Both, we will come on to that in my second presentation and it is quite complicated so please can we park that one for now.
Q: Is there an EU ETS aviation released data sampling procedure for verifiers, verification companies to follow?
A: No.
Q: The monitoring plans ask whether the procedures are part of certified management systems. Does that include civil aviation authority approval or certification to others IOSA?
A: If you have any recognition of your management systems whether it be ISO or any under any aviation scheme, I would mention that within your monitoring plan application.
Q: Has LRQA already gained any experience of airlines under the scheme and if so what were some of the general errors and non-conformities that we have discovered or found?
A: Yes, we have already been working with a number of aircraft operators under the scheme and in my next presentation I do have a slide which covers some of the sticking points and some of the issues and also as we go through in the next presentation, the monitoring of TKM and the monitoring of annual emissions. We will be talking about what you probably currently have and how you probably need to amend that to meet the requirements of the scheme.
Q: You have referred to operators in your presentation. Are these issued with a permit as in the case of stationary facilities in the current EU ETS?
A: No, they are not. There is no permit for aircraft operators there is only the monitoring plan.