Ministry of Environment

The Ministry expects 160 to 200 reporting operations to report, and 80 to 100 of those to have verification requirements.

Where: Reporting Regulation s.1.

What is included in the definition of facility depends on the location, management or control, and functional integration of the buildings, structures, items and equipment in question.

For example, consider a company that manages or controls several coal pits, crushers, hoppers and a processing plant on a series of sites. While coal pits, crushers and a processing plant might be situated at distinct physical sites, factors such as the following would be used to determine if these sites function as a single integrated site and are one facility:

• Operations, equipment, or buildings among these sites are dedicated primarily to serving each other (for instance, if most of the coal from pits goes to the crushers, that in turn supply most of their coal to the processing plant); and,
• the sites are adjacent or contiguous (in certain cases such as mines, the various sites may cover an extensive area).

Where: Reporting Regulation s.1(1) and Schedule C.

Biomass, as defined in the Reporting regulation, is generally included in the determination of whether the reporting and verification thresholds have been exceeded. Only certain types of biomass are excluded from that determination, as listed in the indicative list in Schedule C.

This approach follows the Western Climate Initiative (WCI) cap-and-trade design recommendations (September 2008). WCI recommended that biomass determined by each WCI Partner jurisdiction to be carbon-neutral be excluded from the calculation of the reporting and verification thresholds. Due to sustainable forestry practices in B.C., wood biomass was included in Schedule C at this time.

The Ministry of Environment will accept proposals in 2010 on what other types of biomass it should consider as carbon-neutral and will then adjust Schedule C over time to be consistent with B.C.’s carbon neutral policy.

The regulation is not intended to set B.C.’s carbon neutral policy which is being developed separately by the Climate Action Secretariat and will include stakeholder consultation.

Where: Reporting Regulation s.1, s.2(2), and s.12(4).

While fuel combustion by mobile equipment does not appear explicitly as an activity in Table 2 of Schedule A, the linear facilities operation and each individual facility emitting more than 1,000 tCO2e and carrying out either oil and gas extraction and processing, oil transmission, or carbon dioxide transportation activities (Table 2, rows 2, 5, and 6) have to report emissions from mobile drilling rigs as considered in the regulation and prescribed in BC.360 of the Methodology Manual.

Where: Reporting Regulation s.2 and s.6.

Yes, emissions from a contractor who carries out activities in Tables 1 or 2 of Schedule A of the Reporting Regulation are attributable to the reporting operation and are thus included in its emissions report. Please also see Question 7.

Contractor emissions are included because of interest in obtaining a complete profile of emissions at a reporting operation, avoiding the contracting out of emitting activities to avoid future allowance obligations, and harmonizing reporting requirements across North America.

Where: Reporting Regulation Schedule A, Table 1.

The WCI Electricity Generation quantification method (WCI.040) specifies that electric generating units combusting municipal solid waste or landfill gas would use the WCI.20 General Stationary Combustion calculation methodologies. The specific calculation methodology to be used would depend upon whether or not they are not subject to the verification requirements.

Similar facilities that do not generate electricity would use the same calculation methodologies.

Where: Reporting Regulation s.2.

These emissions would be attributable to the reporting operation that carries out electricity generation (cogeneration or otherwise) and emits carbon dioxide from combustion of landfill gas which is a non-Schedule C biomass. The reporting operation that generates the power would need to report, not the supplier of the landfill gas.

Where: Reporting Regulation s.3(2) and s.4.

Landfill gas, as generated at landfill sites, is covered by the Environmental Management Act, Landfill Gas Management Regulation (2008). Public sector organizations are covered by the Greenhouse Gas Reduction Targets Act, Carbon Neutral Government Regulation (2008).

However, emissions generated by combusting landfill gas at a landfill site are not exempt from the Reporting regulation. The exclusion in Section 4, “Nothing in this regulation requires an operator of a reporting operation to report emissions of landfill gas as defined in the Landfill Gas Management Regulation.”, applies only to landfill gas as produced by decomposition of solid waste at landfills. The carbon dioxide emissions created by combusting landfill gas are not generated by decomposition and have to be reported.

Where: Reporting Regulation Schedule A.

Yes, emissions from electricity generation are included as Row 9 in Table 1 of Schedule A in the regulation.

Where: Reporting Regulation s.3(3).

Electricity imports are likely to be included in the first regulatory update, scheduled for 2010.

Where: Reporting Regulation s.6(1).

The 10,000 tonnes threshold for reporting in B.C. captures roughly 90% of B.C.’s large emitter emissions, as is the Western Climate Initiative target.

For comparison, the federal government and Alberta are decreasing their thresholds to 50,000 tonnes this year and contemplating further lowering of the threshold value. The US Waxman-Markey bill sets a threshold of 10,000 tonnes. The US Environmental Protection Agency’s threshold is 25,000 tonnes, but that regulation is not designed for cap-and-trade at this point.

Where: Reporting Regulation s.2 and Schedule A, Table 1, row 6.

B.C. is following the WCI recommendations for mandatory reporting. As stated in section 2.3.4, p. 47 of the WCI document entitled “Response to Stakeholder Comments and Final Draft Essential Requirements of Mandatory Reporting”, open–pit or surface mines were excluded from reporting at this time because of high uncertainty in the measurement methodology. Depending on requirements for harmonized reporting, open-pit cal mine fugitive emissions may be included under the regulation at a later date.

Where: Reporting Regulation s.2 and Schedule A, Table 1, row 7.

Post-mining operations include all processes occurring after mining at the coal deposit and prior to combustion. Facilities that use the coal are responsible for the methane emissions from all post-mining operations even though coal storage piles are only part of post-mining operations. This adopts the approach established by the California Climate Action Registry of attributing all post-mining fugitive methane emissions to the facility using the coal, since this facility is ultimately responsible for the coal having been processed and delivered to the facility.

Where: Reporting Regulation s.13 and s.14.

The WCI Reporting Committee is currently examining the specifics of the EPA Mandatory Reporting Regulation and will be harmonizing the WCI Essential Requirements of Mandatory Reporting (which are incorporated by reference in the B.C. Reporting Regulation) with the EPA rule. Where the EPA methods are sufficient for a market-based cap and trade program, they likely will be adopted. Where not, more rigorous WCI requirements will likely be kept, or adopted.

Where: Reporting Regulation s.18 and s.22.

The regulation requires a verification body to be accredited by a member of the International Accreditation Forum (IAF) in accordance with ISO 14065 through a program developed under ISO 17011 (both standards available for purchase via the Standards Council of Canada). Both the Standards Council of Canada (SCC) and the American National Standards Institute (ANSI) run GHG accreditation programs. For verifications that are completed prior to December 31, 2012, verification bodies may be accredited by the California Air Resources Board as specified under the regulation. Reporting operations can find listings of accredited verification bodies (with contact details) through the following links:

• Standards Council of Canada (SCC) - Directory of Accredited Clients
• American National Standards Institute (ANSI) - Accredited Bodies
• California Air Resources Board - List of Accredited Verification Bodies

Reporting operations should ensure that the verification body they hire is free of any potential threat to independence in relation to the verification, as defined in Section 18, unless the verification body can establish, document and implement strategies to mitigate such a threat. Section 22 of the regulation describes this requirement.

In general, a threat to independence reduces a verification body’s ability to verify an emissions report in an ethical, objective and independent manner. An example could be a situation where a verification team member has a financial interest in the reporting operation. Another example could be where the verification body designed the reporting operation’s GHG data management system.

What is the estimated cost of verification?

Where: Reporting Regulation Part 4.

The cost of verification depends on a number of facility-specific factors that do not necessarily relate to the size of the operation. The Climate Registry (TCR)’s website provides a Guide to Understanding Factors that Affect Verification Costs, which can be used by an operator to understand which factors may affect their costs for verification and to identify means of mitigating these costs. TCR’s “Tips for an Easier Verification" may also be useful. However, since TCR’s reporting program is not identical to B.C.’s, certain factors discussed in the guide, such as “Number of Emission Years for Simultaneous Verification” and “Reporting Tiers”, are specific to The Climate Registry.

Where: Reporting Regulation s.22 and s.26(1) and Verification Manual s.4.

The template is being developed with input from assurance experts and in coordination with other WCI Partner jurisdictions to facilitate consistency across the region. The template will be provided by the Ministry in 2010 in time to inform selection of an appropriate verification body by reporting operations. In the mean time, reporting operations can refer to section 4 of the Verification Manual for direction on what constitutes a conflict of interest. The template will be based on this content.

Where: Reporting Regulation s.23.

The experience gained by a reporting operation during other audit processes, such as financial audits, will be invaluable for preparing for third party verification of greenhouse gas emissions. Similar data controls and data trails, record keeping procedures and documentation will be required for third party verification as are required for financial audits. However, GHG verification includes significant technical content related to monitoring, measurement and quantification of greenhouse gas emissions and is specific to the requirements set out in the Reporting Regulation. Therefore, other audits cannot replace third party verification of the GHG emissions report.

Note that the verification requirements (drawing on ISO 14064-3) were developed to support reliance on verification results by financial auditors for reporting operations participating in a cap and trade system.

Where: Reporting Regulation s.24.

The Reporting Regulation obliges reporting operations to quantify their emissions and prepare their emissions report such that a verification body can provide reasonable assurance that the assertions in the emissions report are materially correct and represent the reporting operation’s attributable emissions, and that the reported emissions satisfy the regulation requirements. A verification statement expressing this finding is termed “positive and unqualified”. A reporting operation that cannot obtain a positive and unqualified verification statement is out of compliance with the regulation. However, section 24 recognizes that certain situations (such as a fire at a data storage location) are beyond the control of the reporting operation. Section 24 also recognizes that reporting operations will undergo a learning phase during initial verifications. Section 24 therefore requires that if a positive and unqualified verification statement is not possible, then the reporting operation must obtain a positive statement with as few qualifications as possible, and barring that, an adverse verification statement. Enforcement action taken by the ministry to address qualified or adverse verification statements would take into consideration the specific situation and the reporting operation’s effort and action to meet the requirements of the regulation.

Where: Reporting Regulation s.25.

According to section 25(b) of the regulation, SOU (sum of overstatements and understatements) is the net result from summing overstatements and understatements resulting from errors, omissions and misrepresentations. B.C. intentionally uses a summation of the actual errors, allowing for overstatements to offset understatements. Some other jurisdictions may use a summation of the magnitudes of errors.

The following example may help illustrate how the SOU is used:

There are two emission sources at a reporting operation, A and B. The reporting operation reports emissions from A are 100,000 tonnes carbon dioxide equivalent (CO₂e), and 50,000 tonnes CO₂e from B. However after discovering reporting errors, the verification team estimates that the emissions from A should actually be 105,000 tonnes CO₂e and 42,000 tonnes CO₂e from B:

SOU = absolute value ( (105,000 - 100,000) + (42,000 - 50,000) ) tonnes

= absolute value ( 5,000 + (-8,000) ) tonnes

= absolute value (-3,000) tonnes

= 3000 tonnes

Therefore, in this case Percentage Accuracy (PA) = 100 – (3000/150,000*100) = 98%, which is above the numerical materiality threshold of 95%.

However, given that the facility reported emissions from B 16% below what the verification team expects, the verification team may find that they cannot issue a positive verification statement given section 25(a), which considers whether the individual or aggregate effects of an error would influence a person’s opinion of the reported emissions. Since the equation in section 25(b) allows errors above and below the reported emissions to cancel each other out, section 25(a) gives the verification team an opportunity to identify material errors omissions or misrepresentations in the emissions report if they feel the magnitude of individual source errors present a concern regardless of the netting in section 25(b).

Where: Reporting Regulation s.26.

The ministry is developing a sample verification statement and will provide it to stakeholders in 2010. Section 26 of the regulation describes the content of the verification statement.

Where: Reporting Regulation Schedule A, Table 1, row 7.

The methane content in coal seams varies widely. The reference document was used in Environment Canada’s National Inventory Report and subsequently used to derive the Western Climate Initiative Essential Requirements for Mandatory Reporting emission factors.

For example, the emission methane content for the Elk Valley Field was 1.5 m3/tonne while the factor for the Battle River field in Alberta was 0.1 m3/tonne.

Where: Verification Manual s.2.

Section 2 of the Verification Manual provides a definition for “verification team”. The definition is based on the expertise that the verification team must collectively possess, including an understanding of audit principles and of the nature of the reporting operation’s emission sources and relevant industrial processes. It is possible that for a simple reporting operation with a small number of emission sources, such as natural gas combustion, a verification team of two individuals could posses the necessary expertise. At the very least, a lead verifier and independent peer reviewer are required.

Where: Verification Manual s.8.

TThe Verification Manual states in s.8 that a site visit is a visit to a facility or any other location of central data management. The manual also describes what action is required of the verification team during a site visit. This action includes determining whether all emission sources have been incorporated into the emissions report appropriately and understanding the data trail and data controls used by the reporting operation.

The verification body, in consultation with the reporting operation, will determine how the site visit requirements can be met for linear facilities operation. It is not expected that a verification team representative would visit every facility within a linear facilities operation, since this would be cost-prohibitive and otherwise unnecessary. As part of the verification plan, the verification team should determine which locations within the linear facilities operation they need to physically inspect and how else they can make the necessary observations and gather sufficient information.

The Ministry expects both interpretative questions (such as how do I interpret the facility definition for my sites) and questions which require Director’s approval (such as can I use the alternative parameter measurement clause at my facility, or I would like the following reported data to be deemed confidential business information) to arise. For questions such as these, please contact Ministry staff directly.

For questions that require Director’s approval, please contact Lee Thiessen at (250-356-7917 / Lee.Thiessen@gov.bc.ca)

For questions on the main body of the regulation, please contact Dennis Paradine at (250-387-0732 / Dennis.Paradine@gov.bc.ca)

For questions on the verification section of the regulation, please contact Christine Woodhouse at (250-387-7950 / Christine.Woodhouse@gov.bc.ca)

The Ministry of Environment will be continuously updating its website to provide additional guidance and the forms required to be used. The methodology and verification manuals and some additional materials are now posted and additional updates will be occurring in the near future.