Launch of consultation on the RTFO C&S Technical Guidance.

Background and objectives.

RFA CEO Nick Goodall set out the background and objectives of the consultation, noting that the UK is recognised as developing best practice for monitoring sustainability of biofuels. The RFA is looking for responses to the consultation document and is open to sharing ideas.

1) Introduction

RFA Head of C&S Aaron Berry introduced the consultation, saying that the purpose of C&S measurement is to distinguish between good and bad biofuels.  The C&S Technical Guidance has been developed through multi-stakeholder engagement.

The legislative context is the EU Renewable Energy Directive (RED) which begins in April 2010. The UK will adapt to EU rules, but the details are unclear. There are questions over whether it will include carbon incentivisation, how to deal with verification and auditing, and which standards qualify. The wider political context is the global drive for sustainable agriculture.

The RFA is consulting on:

1. Changes to the technical guidance;
2. Verification guidance;
3. Approach to indirect effects.

The consultation is a method to inform policy makers.

The consultation starts 17^th December 2008 and runs for eight weeks (until 12 Feb 2009). The RFA C&S Technical Guidance will be updated for in time for the next reporting/obligation year which starts in April 2009.

2) Proportionate feedstock reporting

Gemma Reece - Ecofys

The current technical guidance states that in the absence of an operational chain of custody, a mass balance approach should be used. The current C&S Technical Guidance outlines how to deal with C&S data WITHIN a feedstock, but it was felt further guidance was needed on how to deal with C&S data within a feedstock mixture, for example, biodiesel from a mixture of palm and rape oil. Proportionate feedstock reporting is desirable because non-proportionate feedstock reporting gives a competitive advantage to international companies.

Ecofys propose that the feedstock reported by suppliers should be representative of the feedstock mixture; and suppliers should have consistent and transparent reporting processes.

During discussion, it was mentioned that DEFRA was planning a major meeting at which biomethane would be discussed and the question was asked whether the RFA is considering biomethane. The response was that biomethane is already included in the RTFO under biogas.

3) Norm for audit quality

Bart Dehue - Ecofys

There are three issues for audit quality:

1. Why the need for a norm?;
2. Major and minor musts for criteria to be included;
3. Impact on existing quality standards.

All existing qualifying standards will be benchmarked against the norm for audit quality - preliminary results indicate that all existing qualifying standards do meet the norm.

Questions from the floor included:

Question a) Will ACCS & RSPO meet this norm for audit quality?
Answer: Yes.

Discussion: Auditor needs qualifications regarding sustainability issues as well as the product.

Question b) Why is the RFA giving Qualifying Standards a year to comply with the norm?
Answer: It is a pragmatic approach, to allow time for them to change their guidelines/procedure - the RFA will work with the standard bodies to meet the norm. In meantime suppliers can continue to report QSs. Comment from Bart: Downgrading QSs next year might reduce the demand for ACCS & similar standards.

4) Approach to indirect effects

Philip Watson - E4tech

The consultation is only looking at indirect emissions from waste and by-product feedstocks. For example, tallow diverted to biofuels may lead to an indirect increase in greenhouse gas emissions in the oleochemical industry.

The presentation dealt with the question of what is meant by indirect greenhouse gas emissions and considered two examples of the influence of policy support for biofuels.

A method was proposed to assign indirect greenhouse gas emissions from wastes and by-products:

Step 1) Identify existing use of the product.

Step 2) What are the greenhouse gas emissions from replacing this product with something else?

Step 3) Repeat the calculation for other uses affected and calculate a weighted average.

A feedstock can be partly waste and partly co-product. E4tech suggest setting a default value conservatively; if a supplier can prove a lower value using actual data, they can report the lower value.

Comments from the floor included:

a.) A company is currently building power plant; a dis-incentive for 2nd gen fuels will lead to choice of other fuels. UK government is aggressively promoting renewable electricity (due to fear of running out of electricity) but dis-incentivising renewable transport fuels.

b.) There is no GHG management in agriculture; hence emissions criteria in biofuels will distort market.

Response from Greg Archer (RFA board) : RFA doing cutting edge work & have duty draw attention to Government departments/industy of work/issues that affects them.

Concerns raised from the floor:
 - If an end use does not have "saving planet" on the tin, you can ignore GHG. Hence we must consider GHG from all agriculture. Worried it will all be put in "too difficult" box, so biofuels will be only agricultural products with emissions control.
 - Energy Security is equally important in EU Renewable Energy Directive (RED).

 - RED considers indirect land use only of biofuel v bioenergy, but not other indirect effects.

 - RED goes for allocation method for co-products not indirect effects .
 - RED counts biofuel from waste twice.

Response from Aaron: RFA is developing its approach to inform policy, not to set next year's guidelines. In principle, the indirect impact of crop-based fuels (land-use change) should be consistent with indirect impact of waste feedstock. The UK will soon have to adapt to EU RED, so RFA proposes no change in method in the short term.

Feedback form the floor: Swedish Gas Centre already has comparative figures for indirect effects.

Bit disappointed RFA decided not to take action for 2009 though debate going for four years. Argued that tallow diversion is a direct not an indirect effect. Clearly boundaries are not consistent. Source considered for crops but not for by-product. Clearly an issue with EU RED, but not compulsory to count waste double; opportunity to influence RED before it goes live. Other countries are prepared to make changes.

Comment: It is difficult for biofuel producers/suppliers to report/assess indirect effects. It's very complex and subjective.

Aaron - Acknowledged that there are different definitions/boundaries of what is defined as direct vs indirect effects. We are taking action through our research program. Objective analysis can be done, the RFA intends to develop a methodology through 2009.

Further question from the floor: Any evidence which approach will influence EU policy best?

Aaron: UK has to adapt to EU RED but develop policy mindful of Gallagher report.

There are lots of different mechanisms; overlap leads to possible double counting.

Long term UK policy to reward GHG savings, EU fuel quality directive will make that possible.

5) Benchmarked Standards

Gemma Reece - Ecofys

The RFA meta-standard is used to benchmark existing quality standards. The benchmarking is against five environmental and two social principles. Benchmarking also looks at audit quality.

 - New benchmarked standards.

Over the past year, six standards have been benchmarked:

Genesis, GlobalGAP, Fediol, Scottish Quality Crops (SQC), German Qualität und Sicherheit and Round Table on Responsible Soy (RTRS).

Genesis QA meets the RTFO meta standard on the environmental level and is at the qualifying level on the social side. The draft criteria for RTRS meet the qualifying standard level.

Other kinds of sustainability scheme have been looked at including:

DEFRA Environmental Stewardship for England only, which is not a certification scheme.

International Finance Corporation (IFC) Performance Standards on Social and Environmental sustainability, which has a second party audit rather than a third party audit.

It is proposed that in future to focus on those standards that are third party verification schemes for benchmarking.

 - Standards under development in 2008-2009.

Roundtable on Sustainable Palm Oil (RSPO) - the GreenPalm book and claim system is approved by RFA for use. This standard is now fully operational.

RoundTable on Responsible Soy (RTRS) - in 2008-09 the criteria used for benchmarking was the Basel Criteria on Soy. The latest draft of RTRS principles, which is under consultation, meets the environmental and social qualifying standard level.

Better Sugarcane Initiative, which is due to publish first formal draft principles.

These standards can be reported before they become operational providing the producer is a member of the relevant standard's body and an independent audit has been carried out against the criteria.

As regards to managing the transition from standards under development, the RFA will announce on the web when a scheme becomes operational. If a successful independent audit was conducted prior to the scheme becoming operational suppliers can continue to report this fuel as meeting the standard for up to 15 months. Suppliers should endeavour to source qualifying feedstock from the operational standard.

After the presentation Aaron mentioned that the RFA encourages biofuel companies to approach standard bodies as their customers to ask them to adapt their criteria to meet the RTFO meta standard criteria.

One of the stakeholders expressed concern that they had tried that & tried NFU without success.

Questions from the floor included:

Question a) Do ACCS & LEAF fit into this?
Answer: Yes.

Question b) Roundtable for palm oil is not yet available in some countries; what should suppliers do?.

Answer from Aaron: Report as RSPO where audited & available. If not available in that country, an independent audit against the RSPO criteria will be acceptable.

6) Fuel chain default values

Fuel chain defaults were developed before actual data was available for UK market supplies of biofuels. Actual data reported has now been reviewed, and the consultation document includes a table of fuel chains where the old default has a lower carbon intensity than actual supplies. A number of the high level defaults have been revised in light of this data, in keeping with the intent that the high level defaults should be more conservative than fuel reported from known country and/or feedstock.

For Fuel level defaults (i.e. unknown feedstock and country of origin), the carbon intensity default is equal to the fuel chain with the highest carbon intensity, providing that fuel chain is 1% or more of the fuel type.

For Feedstock level defaults (i.e. unknown country of origin only), the carbon intensity default is equal to the fuel chain with the highest carbon intensity, providing that fuel chain is 5% or more of the feedstock type.

Default values have been developed for new fuel chains including:

1. Ethanol from sulphite liquor.
2. Biodiesel for certain countries using sunflower
3. BioETBE

In line with the RED methodology, the carbon intensity of bio-ETBE is now set equal to the carbon intensity of the bioethanol feedstock.

Comment from the floor: The key requirement is incentivising people. The initial default score for UK wheat ethanol gives no incentive for agriculture to trace sources.

Last Modified: 20 Feb 2009