The Motor Fuel Greenhouse Gas Emission Reporting Regulations

Transcription

1 The Motor Fuel Greenhouse Gas Emission Reporting Regulations Annex C Consultation response form for the proposed amendments to the Motor Fuel Greenhouse Gas Reporting Regulations Moving Britain Ahead

2 1. Annex C consultation response document on the proposed amendments to the Motor Fuel Greenhouse Gas Reporting Regulations The consultation period begins on 29 November 2016 and will run until 22 January Please ensure that your response reaches us at the following address on or before the closing date. Please send consultation responses by to: LowCarbonFuel.Consultation@dft.gsi.gov.uk Name: Michael Wright Address: Department for Transport Great Minster House 33 Horseferry Road London SW1P 4DR. Phone number: address: LowCarbonFuel.Consultation@dft.gsi.gov.uk If you would like further copies of this consultation document, it can be found at or you can contact Michael Wright - details above - who can also help if you need alternative formats (Braille, audio, CD): When responding, please state whether you are responding as an individual or representing the views of an organisation. If responding on behalf of a larger organisation, please make it clear who the organisation represents and, where applicable, how the views of members were assembled. If you have any suggestions of others who may wish to be involved in this process please contact us or forward the document to them. A summary of responses, including the next steps, will be published within three months of the consultation closing on Paper copies will be available on request. This Annex (Annex C) sets out the questions on the proposed amendments to the Motor Fuel Greenhouse Gas Reporting Regulations. 2

3 Questions 1-5 relate to our proposed introduction of a greenhouse gas (GHG) reduction target to be applied to all fuel suppliers, and the introduction of supplier obligations regulated via a specific GHG saving mechanism. Questions 6-11 concern our plans to adopt a system to incentivise upstream emission reductions (UERs). Questions relate to our proposal to allow suppliers of electricity used in electric vehicles to claim GHG credits under the GHG saving mechanism. Questions concern our proposed introduction of a buyout mechanism for suppliers to pay a fee for any GHG savings not delivered. Questions covers the proposed introduction of civil penalty notices for suppliers not complying with the amended Regulations. Questions are about our proposals to make aviation fuels eligible for GHG credits under the amended Regulations. Questions regard the introduction of reporting requirements for suppliers about the origin and place of purchase of fuels supplied in the UK and the EU. Questions relate to specific amendments to the GHG Reporting Regulations to (i) delete the requirement on the Secretary of State to review whether to impose life cycle GHG emission reduction obligations, and to (ii) set a date for reviewing the Regulations. Questions regard the cost benefit analysis of the amendments to the GHG Reporting Regulations. The responses to this consultation are likely to be discussed with representatives of the sector, as well as within the Department. Therefore the points you raise may be shared. If you are not content for this to happen please let us know. Subject to the outcome of the consultation the amendments to the legislation will be introduced as soon as practicable. 3

4 Throughout this response the term means No answer Chapter 1: Delivering greenhouse gas savings in transport The greenhouse gas reduction obligation Q1: Do you agree that the UK should set the GHG reduction target on fuel suppliers at 6% for 2020 and not include the optional aspects which could increase it to 10%? The REA would like to point out that the UK is required to implement Article 7a of the Fuel Quality Directive by April Implementation will only happen at the earliest in September 2017 so the UK will be in breach of its obligations and subject to infraction proceedings. This Consultation does not refer to the date for transposition. By contrast the RTFO Consultation is quite open about the need to transpose by September Q2: Do you agree that the proposed interim GHG reduction targets for 2018 (2%) and 2019 (4%) will help industry prepare for the more stretching 2020 target (6%)? Interim targets are essential to keep the contribution from low carbon fuels on track to making a contribution to the UK s Carbon Budgets. 4

5 The greenhouse gas saving mechanism Q3: Do you agree that a single application for RTFCs and GHG credits should be required for biofuels? Please set out any circumstances where you consider that a separate application might be required. It is not clear how this will interplay with the Development Fuels application as well? Q4: Do you agree that the proposal to use a system of tradeable credits will provide flexibility to suppliers and is an effective way to meet the GHG obligation? 5

6 Q5: Do you agree that we should align the minimum threshold in the GHG obligation with that in the RTFO? Please include any comments you may have on the proposed method of calculating the deduction. 6

7 Chapter 2: Delivering greenhouse gas savings through upstream emission reductions Q6: Do you agree with our proposal to legislate for the criteria covering the origin, reporting and eligibility of UERs? No Not in certain aspects The REA is not in a position to answer all the questions on UERs in any detail. However, we would like to state a number of principles that we believe should be adhered to for future legislation and Guidance from the DfT : 1. There should be parity of treatment for suppliers of fossil fuels and biofuels i.e. the rules governing fossil fuels (e.g. reporting, verification..) should be comparable in their stringency. 2. There should be transparency in the way that fossil fuels/uers are treated, in the way that there is transparency for biofuels under the DfT reporting of RTFO statistics. This should include open statistical reporting, a data base for UERs etc, so that the public can be assured, as they are for biofuels, that genuine GHG emission reductions are being achieved. 3. The UK biofuels industry should be part of all future Consultations on Guidance, including detailed rules for the administration of UERs see, for example Para 2.10 on page The UK should not abandon a stringent approach to dealing with requirements to reduce carbon emissions from the fossil fuel industry, including UERs just because the UK has voted to leave the EU (see e.g. para 7, page 9). Given this major piece of policy, the GHG credit scheme should a priori have longevity well beyond 2020, and in any event to 2030 in line with the proposals for the RTFO. 7

8 Q7: We would welcome views on assessing a UER project baseline, and calculating emissions reductions against the baseline. Do you consider that requiring a minimum standard in national guidance for each criterion listed at ISO is the best way to ensure that UERs are additional? Q8: We would welcome views on the verification and validation of UER projects, including how verifiers should be appointed, and what the role of the Administrator should be - if any - in appointing verifiers. See Q 6. 8

9 Q9: We would welcome views on our proposal to adopt a specific verification standard (like ISAE 3000) and/or other standards, in the absence of a central UER administrative database. Do you consider that ISAE 3000 would be adequate to minimise the risk of multiple claiming in the event a central database is not available? The REA believes that there should be a central UER administrative data base. This is particularly important if the UK moves in the future to a GHG only reporting system in order to comply with domestic legislation, especially the Climate Change Act. Q10: We would welcome comments on the possibility of accepting credits generated from the Kyoto Protocol flexible mechanisms, such as the Clean Development Mechanism and Joint Implementation projects, including any advantages and disadvantages. CDM and JI projects should be transparent and details publicly available so that the public can be satisfied that credits are given legitimately. 9

10 Q11: Do you agree with the proposal that UER credits should count as GHG credits against a fuel supplier s obligation? Only if properly verified. See Q 6 and Q 10. Chapter 3: Supporting electric vehicles Q12: Do you agree that enabling electricity suppliers to receive GHG credits - which they can trade with fuel suppliers who need them - is the best way that the GHG saving from electricity used in electric vehicles can contribute to other fuel suppliers' GHG obligations? but see our comments below on the issues laid out in the Consultation The energy suppliers to public infrastructure are generally hidden from the consumer but will be relatively easy to report from data supplied by the charge point operator(s). In regards to 2020, we feel that proportionately, there are likely to be fewer domestic charge points with data logging ability compared to today, unless OLEV re-instates its requirement for domestic charging points to report data usage in a meaningful way. Usage data may be held by charge point suppliers (domestic and commercial/public), charge point operators (commercial/public) and charge point owners (domestic and commercial/public). We agree that with the alternative approach, estimates will be problematic, especially with Plug-in Hybrid Electric Vehicles since there is great variability as to what proportion of mileage is covered electrically depending on the usage pattern. There is anecdotal evidence of many vehicles never being plugged in and, effectively, being used as non-plug-in hybrid vehicles, deriving all of their energy from traditional liquid fuels. 10

11 In regards to domestic private charge points, twin-element smart meters would be useful for reporting and may be desirable for EV tariffs but are potentially difficult to retrofit where the metering is remote from the consumer unit. e.g. in a meter box, since existing model specifications suggest that the supplies are separate downstream from the meter. Most newly installed domestic charging points are not capable of logging usage data since the easing of the communications requirement from OLEV in Previously charging points reported via 3G/GPRS to give a standalone system. If applicants were in an area with no mobile phone signal on the charge point manufacturer s chosen network, they could not receive the grant. Other charging points are now available with WiFi to use the home network (mostly for greater interactivity by the driver/householder) but data is vulnerable to the householder making changes to the router etc. Q13: Do you agree with our proposed approach of using actual and estimated metering data? The charge point industry (incentivised by OLEV) should look to provide accurate data in a cost-effective manner and to enable newly installed charging points (and/or the installations including the metering) to be compatible now. Previous difficulties in providing charging points with sufficient 3G or GPRS coverage (one reason for OLEV removing the data reporting requirement) would not be present if communicating smart meters (whether by GPRS, PLC or whatever means) are available and the charging data is available direct from the meter or indirectly from the charging point via the meter. OLEV previously allowed estimates of usage to be derived from connection times and the rating of the charging point, if direct kwh metering was not available. 11

12 Q14: Which of the proposed methodologies A-D (or combination of methodologies) do you prefer, and why? Do you have a proposal for an alternative methodology? C Method C would likely provide the best cost: benefit for estimating usage, since 'charge point operators' will best be able to extrapolate data based on charge point type, especially relating to current rating and if they were installed to support a vehicle manufacturer scheme: the charge point operator may have data relating to the vehicle model (originally) associated with the charge point e.g. PHEV (lower average energy consumption) versus EV (higher consumption) and may provide granularity based on vehicle make and model. Estimated consumption will be far better correlated by vehicle than by charging point specification alone. 12

13 Q15: Do you agree with the proposal that electricity suppliers should contact their customers to ask if they have an EV charge point, and who the infrastructure operator is? Please set out any alternative suggestions for obtaining this data. No We have doubts that asking consumers if they have an EV charge point would result in a high response rate, without an incentive. If it is a blanket communication to consumers it may also detract from responses if consumers feel that they may be penalised for running an EV without a home charging point i.e. using a 3-pin plug. Energy suppliers, once active in the promotion of charging points in partnership with vehicle supply chains, have pulled back having found less value than originally thought. The 'infrastructure operator' is an erroneous term for domestic charging, especially since OLEV removed the requirement for data reporting. The vast majority of newly installed domestic charging points (and an increasing proportion of the population as a whole) do not have data reporting capability, so the 'operator' is more accurately described as a 'supplier.' OLEV would be the better source of determining the location of domestic charging points since all grant supported installations are recorded by them - and sub-divided by charge point manufacturer and model number to indicate type and current rating. There are also a minority of domestic installations not funded by OLEV including additional charging points at the same address. Anecdotal evidence suggests an increasing number of plug-in vehicles (especially PHEVs) are not choosing a home charging point, meaning that there is unrecorded use of EV charging via a 3-pin plug, which can be a significant amount of energy, e.g. 10 kwh per night / 2,500 kwh p.a. Small EVs (e.g. two-wheelers using a 3-pin plug) are, currently, very low energy consumers and the cost:benefit is likely not high enough to warrant explicit metering. The installation of domestic charging points is notifiable to DNOs (Distribution Network Operators) so they, and the Electrical Networks Association, should be capable of providing data showing the supplies that have a charging point associated with them. In regards to Electricity Suppliers being able to calculate individual GHG intensity value: If this creates additional value for energy suppliers offering 100% renewable energy (or offering it through a renewable tariff) then this may create an economic driver for consumers to choose these tariffs over the 13

14 general mix. The REA would prefer to see those suppliers that are exclusively renewable be able to benefit from asserting an advantageous GHG intensity value. For example, 74 value to the reduction to 31% of the general mix. Circa 107 if 100% renewable. Given that the energy cost to run a small EV is circa 3,000kWh x 0.08p/kWh = 240 p.a. this is significant. Q16: Do you consider that GHG credits will provide an incentive for electricity suppliers to obtain data on electricity used in EVs, and that in doing so, some of that reward will be passed to charge point operators? No Since the vast majority of domestic charging points are sold to the end user, with grant support, rather than on a lease basis, the 'charge point operators' (misnomer as explained above) do not stand to benefit from the revenue from GHG credits. The energy supplier (usually with no commercial connection to the 'charge point operator') may choose to pass on the reward to the consumer by a reduction in the p/kwh rate or an itemised rebate and encourage competition between energy suppliers to attract customers with EV tariffs. This may further incentivise the use of Demand Side Reduction and timeshifted charging to periods of low carbon generation if the GHG rate applied is proportionately higher during those periods. This may act as a sales incentive for the vehicle dealer if there is a demonstrable reduction in kwh price for charging EVs from energy suppliers, since this directly influences the pence-per-mile operating cost. For public charging points, it will not likely be obvious to the consumer that the charge point operator has applied the GHG reward but it may improve competition by lowering tariffs for usage, especially if higher credits are offered to renewable supply tariffs and consequently continue to stimulate the EV market in this growth period to

15 Q17: Do you have alternative suggestions for how data could be verified / validated? An alternative would be closer co-operation with OLEV for existing and new charging point installations may provide additional data which will allow more accurate mapping and comparison of estimated data between charging point suppliers/operators. Q18: Do you agree that continuing to reward electricity used in EVs with GHG credits could be a way to incentivise investment in UK EV infrastructure (for example charge points) in the longer term? We would welcome suggestions as to how the reward could contribute to the development of EV infrastructure, or how future policies might direct support here. Continuing this incentive would provide a net cost saving to encourage the uptake of charging points where 3-pin plug charging would otherwise be used, especially in conjunction with Time Of Use tariffs. The use of charging points is likely to become necessary for BEVs anyway as battery capacities now routinely exceed 40kWh, but PHEVs may otherwise continue to avoid the additional expense of charging points. At the 74/tCO2e level, it appears to be a relatively low revenue for public charging point operators that will likely best lower the operating costs for the consumer in the continuing new adoption phase of EVs to 2020 rather than providing a mechanism for re-investment of the infrastructure. 15

16 Chapter 4: Setting the buy-out level to incentivise greenhouse gas savings whilst minimising costs Q19: Do you agree that a medium buy out price of 74/tCO2 is the best option (option 2b in the CBA)? This would limit the maximum impact of the FQD on 2020 pump prices to 0.42ppl (2015 prices). No not necessarily The buy-out price should be at the upper end. Within Germany s GHG scheme, the buy-out price is 470/t CO2e. This is based upon them having a GHG rather than volume based system, which the UK may move towards. If the UK system remains based upon volume, it may be satisfactory to have a lower buy-out. Q20: Do you have any other comments on the proposed approach for a new separate GHG buy-out mechanism? If you have an alternative proposal please set it out. 16

17 Q21: Is there a better way we could minimise costs whilst still achieving the policy objective? Chapter 5: Civil penalties and revocation of greenhouse gas credits Civil penalties and revocation of greenhouse gas credits Q22: Do you have any views on the proportionality of the proposal to enable the Administrator to issue civil penalties to ensure the integrity of the proposed GHG obligation? 17

18 Revocation mechanism Q23: Do you agree that there should be a mechanism to withdraw GHG credits where it transpires that they should not have been issued, and that the mechanism should be the same as that used under the RTFO No Q24: If you disagree with this revocation proposal, please set out an alternative mechanism which prevents rewarding UK fuel suppliers where GHG savings were not delivered. 18

19 Chapter 6: Eligibility of fuels Aviation fuels Q25: Do you agree that renewable aviation fuel should be eligible for reward under the GHG obligation scheme? Aviation is a sector where there are no decarbonisation alternatives to renewable fuels in the foreseeable future. Besides technological and operational improvements and GHG offsets (ICAO CORSIA), renewable fuels are going to be crucially important especially in longer term, and their deployment needs to be started as soon as possible. For this, this eligibility is an important enabling element. Inclusion of non-biological renewables, including hydrogen 19

20 Q26: Do you agree that we should include renewable fuels of nonbiological origin, including hydrogen, under the GHG Reporting Regulations thereby making them eligible for GHG credits and subject to the reporting requirements? Chapter 7: Supplier reporting requirements Reporting origin data and place of purchase Q27: Do you agree with our proposed proportionate approach underpinning the GHG reporting requirements? This means that suppliers are exempt from the requirements if they do not have data on the FTN, whether the crude is of EU/non-EU origin, and/or the place of purchase. No 20

21 Q28: Do you envisage any situations where origin data will not be available and/or cannot be reported? If yes, please provide details about these situations and why the data could not be reported. Q29: Do you envisage any situation where data on the place of purchase will not be available and/or cannot be reported? If yes, please provide details about these situations and why the data could not be reported. 21

22 Q30: With regards to the verification of the information supplied, do you have any comments on our proposal to provide the Administrator with powers to require independent assurance (verification) of the data, where necessary? These powers are essential. Simplified reporting requirements for small and medium-sized enterprises Q31: Do you have any comments on the proposed application of the simplified reporting requirements for small and medium-sized enterprises? 22

23 Greenhouse gas obligation reporting deadlines Q32: Do you agree that the reporting deadlines proposed for the GHG obligation should align with those in the RTFO? Chapter 8: Reviewing the Greenhouse Gas Reporting Regulations Review of the operation of the Greenhouse Gas Reporting Regulations to date Q33: Do you agree that the GHG Reporting Regulations minimise burdens on suppliers by relying on data already submitted and verified under the RTFO? No 23

24 Q34: Are there ways that any costs or burden could be minimised further? Q35: Do you have information on compliance costs when the legislation was introduced further to the estimates provided? 24

25 Q36: What changes, if any, did suppliers make as a result of the introduction of the GHG Reporting Regulations in 2013? Q37: What were the costs to suppliers of familiarising themselves with the regulations and implementing any changes to their business? Q38: What uses have suppliers made of data collected on the greenhouse gas intensity of fuel reported under the GHG Reporting Regulations? 25

26 Q39: Has the operation of the scheme to date assisted suppliers to monitor their progress towards their GHG target? No Further comments In respect of the proposed changes to the Greenhouse Gas Reporting Regulations Q39: Do you have any other comments on the amendments to the GHG Reporting Regulations 2012 proposed within this consultation? 26

27 Annex A Greenhouse Gas cost benefit analysis Q41: Do you agree with our assessment of 'additionality' of GHG savings from upstream emission reduction projects? No Q42: Are you able to provide any evidence relevant to the assessment of costs, including any evidence on the administrative costs for fuel supplier familiarisation with the requirements of meeting the 6% GHG target required under the FQD? 27

28 Q43: Can you provide evidence on the cost of reporting fossil fuel origin and place of purchase data to the regulator? Q44: Do you have any evidence you would like to provide on the costs and benefits associated with the proposed changes to civil penalties? 28