|How to prepare for an annual emission report verification from an operator’s perspective under the new V&A Regulation|
|Wednesday, 01 August 2012 06:50|
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The basic need is the acknowledgment whether the extent of the engagement falls within the scope of the verifier’s accreditation. This should done with the help of Annex I to the V&A Regulation which specifies the relevant codes of activity groups for the scope of accreditation for verifiers.
General Information on legal framework regarding accreditation under EU ETS rules
The new Commission Regulation (EU) No 600/2012 of 21 June 2012 on the verification of greenhouse gas emission reports and tonne-kilometre reports and the accreditation of verifiers pursuant to Directive 2003/87/EC of the European Parliament and of the Council (OJ L 181, 12.7.2012, p. 1, hereinafter referred to as “V&A Regulation”) will enter into force on 1 August 2012 and shall apply from 1 January 2013.
Emissions and, where applicable, activity data occurring prior to 1 January 2013 shall be verified pursuant to the requirements set out in Commission Decision of 18 July 2007 No 2007/589/EC establishing guidelines for the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council (OJ L 229, 31.8.2007, p. 1 – repealed with above date by the Commission Regulation (EU) No 601/2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council (OJ L 181, 12.7.2012, p. 30 – further referred to as ‘M&R Regulation’). Thus the remarks following below relate in the strict sense to reports and verification relating to emissions occurring after 1 January 2013 but certain aspects may be also exploited in the verification framework currently in force.
The V&A Regulation addresses inter alia the legal framework governing the relations between the verifiers on the one hand and operators and aircraft operators (further referred to jointly as “operators” or an “operator” as appropriate) on the other, on occasion of the examining of the annual report regarding emissions, pursuant to the ETS Directive.
In that regard the particular account should be taken of Articles 7 to 10 of V&A Regulation.
The operators need to be mindful of the fact that the general obligation of the verifier is to carry out the verification with the aim of providing a verification report that concludes with reasonable assurance that the operator’s is free from material misstatements. Additionally, an attitude of professional scepticism is required from a verifier by law. Due to the above requirements the operators should prepare for verification with appropriate diligence, and having in advance collected all necessary documents.
The V&A Regulation expressly states rather obvious fact that where the verifier discovers that an operator is not complying with M&R Regulation, that irregularity must be included in the verification report even if the monitoring plan concerned is approved by the competent authority.
It is useful for operators to know that during the verification, the verifier is under the obligation to assess whether:
(a) the operator’s report prepared in the framework of the Union’s greenhouse gas emission allowance trading scheme is complete and meets the requirements laid down in Annex X of the M&R Regulation;
(b) the operator has acted in compliance with the requirements of the greenhouse gas emissions permit and the monitoring plan approved by the competent authority (with the requirements of the monitoring plan approved by the competent authority, where the verification of an aircraft operator’s emission or tonne-kilometre report is concerned);
(c) the data in the report are free from material misstatements;
(d) information can be provided in support of the operator’s data flow activities, control system and associated procedures to improve the performance of their monitoring and reporting.
How to prepare for verification
Regardless of the obligations imposed by the V&A Regulation on verifiers, also the operators, before granting a verification engagement, in their best interest should carry out some formal examinations.
Checking the scope of the verifier’s accreditation
The basic need is the acknowledgment whether the extent of the engagement falls within the scope of the verifier’s accreditation. This should done with the help of Annex I to the V&A Regulation which specifies the relevant codes of activity groups for the scope of accreditation for verifiers. It is necessary to check the verifier’s accreditation certificate where the scope of accreditation of the given verifier must be indicated. It may be useful also make sure whether the period of certification has not lapsed.
Economic capabilities of the verifier and time allocation
The debatable issue as regards the engagement of the verifier may be the further scope for assessing the verifier’s economic capabilities by the operator when entering into the verification agreement.
It is, among others, due to the fact that according to the V&A Regulation the verifier itself is under the obligation to assess whether it:
(a) has the competence, personnel and resources required to select a verification team capable of dealing with the complexity of the installation or the aircraft operator’s activities and fleet as well as whether it is capable of successfully completing the verification activities within the timeframe required.
(b) is capable of ensuring that the potential verification team at its disposal holds all the competence, and persons required to carry out verification activities for that specific operator or aircraft operator;
(c) has determined the time allocation needed to properly carry out the verification.
So, once the verifier has assessed the above facets in the positive, and has signed the binding agreement for verification obliging him towards the operator under the conditions agreed, it may be doubtful whether the operator has any further interest in questioning the above economic capabilities of the verifier. However, if it occurs that the verifier is unable to conclude verification under the conditions agreed, the consequences will fall on the operator which will have its report not verified on the statutory deadline (31 March). The timeframes left may additionally may not be suitable for engaging another verifier.
In conclusion, taking account of the risks the operators are facing on the occurrence of the potential event of the verifier failure to produce the verification report it seems reasonable that the operator has verified the economical capabilities of the verifier before approving the relevant engagement.