Aircraft operators and verifiers gear up for the first all-important Aviation EU ETS audit period
Mon 13 Sept 2010 – The first annual emissions and tonne-kilometre data reports are due to be submitted within the next six months by aircraft operators included in the Aviation EU Emissions Trading Scheme (ETS). Before the reports can be submitted they must first be audited by an independent and approved verification body. The pressure is now on operators not only to find and appoint a verifier in time but also ensure the reports meet the stringent requirements of the Competent Authorities in the EU states administering the scheme. However, the process and regulation of appointing verifiers specifically for the Aviation EU ETS is far from uniform across Europe and has the potential to lead to a situation of too few approved verifiers handling the audits of too many of the 4,000-odd operators in a short space of time.
The verifiers themselves must first be accredited by the relevant accreditation body in the EU state they are seeking to operate before they can be approved by the respective Competent Authority (CA). For example, in the United Kingdom, this role is performed by UKAS (United Kingdom Accreditation Service), whereas in France it is Cofrac and in Germany DAkkS. Although there are lists of verifiers released by each body, they may only be accredited to perform fixed installation EU ETS audits and not Aviation EU ETS audits.
The CAs of France, Germany and the UK have yet to publish lists of aviation-specific accredited verifiers and it is therefore up to aircraft operators to select and check the status of potential verification bodies. Many of the bigger airlines will have already started, or even completed, a tendering process and are likely to choose the larger, international auditing companies.
UKAS-accredited verifier SGS UK advises operators, when deciding on which verification body to entrust with their audit, should take into consideration experience, reputation, resources, global presence and cost. “Operators are especially likely to benefit from engaging established verifiers with long-standing experience within the climate change and greenhouse gas verification fields, including the EU ETS, to ensure a smooth verification against EU ETS requirements,” says the company.
Last week, SGS announced that it had been selected by British Airways as the airline’s verifier, having been engaged by BA earlier in the year to help prepare the monitoring and reporting process. SGS, which operates in 140 countries and has experienced greenhouse gas (GHG) emissions verification staff in all regions, says it is equipped for the increase in reporting operators. It adds its verifiers have received extensive training in the specific requirements of the EU ETS for the aviation sector.
“We have for a long time supported the principle of emissions trading as being the most cost-effective way of managing emissions,” commented BA’s Head of Environment, Jonathon Counsell, on the appointment. “We look forward to working with SGS to ensure we meet the requirements of the EU ETS.”
Those requirements are stiff and operators run the risk of the CAs rejecting incorrectly submitted reports in a so-called “denied opinion”. Consequently, verifiers are strongly urging operators to not only engage with them as early as possible but to also allow for an initial compliance assessment or pre-verification audit.
“Early initiation of the verification process is fundamental in the first year of GHG emissions reporting for any operator within the scope of the EU ETS,” says Lisa Brough, Technical Director for SGS Climate Change Programme. “We recommend an initial verification assessment during the reporting year, followed by completion of verification in early 2011 to assist operators achieve compliance and avoid the potential application of civil penalties.”
German accredited verifier Guido Harling of ETSverification – in Germany it is the individual who is accredited, not the company – is concerned that having had their monitoring plans accepted by the CAs, many operators will put off the verification issue until the first quarter of 2011.
“With almost three-quarters of the reporting year completed, now is the time for operators to take a close look and check whether the implemented procedures and the data collected up to this point will satisfy the EU ETS directives,” he advises.
An integral part of the pre-verification, he says, is the gap analysis that aims to highlight any weakness in the operator’s EU ETS management and control systems, and to identify any areas where compliance with the requirements require attention.
“The benefit of this, if done early in the reporting period and before the start of the legal verification, is that it can highlight any compliance and system design issues, thus enabling correction in a timely manner,” he says. “If not corrected, such issues might impact in an adverse way that could result in a denied opinion.
“The cost of a pre-verification, which usually lasts two or three days, is well-spent compared to the efforts and stress that could arise when discovering a gap or non-conformity in the data for the first time in, say, February 2011.”
ETSverification is one of Germany’s first accredited Aviation EU ETS verifying bodies listed by the German Competent Authority, the DEHSt, claims Harling, and has been chosen by S7 (OJSC Siberia Airlines) to perform pre-verification and the official verification of the carrier’s emissions and tonne-km (TK) reports.
Shaun Bainbridge, a director at UKAS-accredited verifier CICS, repeats the advice: “It’s important that the verification process is started as early as possible. That way, any problems with data collection and monitoring can be ironed out well in advance, ensuring that fines for late reporting are avoided.”
Antony Barrett, Market Engagement Manager at BSI, which recently received confirmation from UKAS of its extension to scope for verifications of the Aviation EU ETS concurs. “It is imperative that operators are now thinking about their verification requirements, as with two reports to submit by 31 March, errors could prove costly,” he says.
“If not already doing so, operators should now be engaging with verifiers to schedule in their verifications. At BSI we are also offering operators health check sessions in advance of formal verification to help ensure that an operator’s systems and data are robust. Errors with data this year could prove to be a costly mistake as the TK reports submitted to the regulatory authorities will determine an operator’s allocation of free allowances for the remainder of Phase III of the EU ETS – which runs until 2020 – so it is vital to ensure that the data submitted is accurate.”
Multi-national BSI says it is already working with a number of aircraft operators to ensure their data is approved and reports submitted to the regulatory authorities before the 31 March deadline. In August, Monarch Airlines selected BSI as its provider of verification services. BSI employs a full-time team of verifiers, all of whom, says the company, are IATA trained.
IATA has run a course for verifiers who are experienced with auditing fixed installation organizations that are already part of the wider EU ETS but may not be overly familiar with the practices of the aviation industry. Other verification bodies that do have prior knowledge of the industry have also found the IATA course valuable.
“We’ve got a long track record in aviation verification, having worked with international carriers to monitor their emissions, and we undertook dedicated training with IATA’s Training & Development Institute,” comments Bainbridge of CICS.
Aircraft operators, particularly those based outside the EU, are faced with the dilemma of choosing either a larger verification and auditing body with a global presence or selecting one of the smaller verifiers like Harling’s ETSverification that have greater experience of the aviation industry and understand how air carriers operate on a day-to-day basis.
Another small verifier, but with big ambitions, is Paris-based VerifAvia, which is dedicated to the aviation sector. It recently became the first and, it believes, the only verification body so far to be approved by the French Civil Aviation Authority (DGAC), the Competent Authority of France.
VerifAvia says it was the first verification body to apply to the French accreditation authority Cofrac for the necessary ISO 14065 accreditation for the Aviation EU ETS. “Now that the French legislation on EU ETS verification was published in the Official Journal of the French Republic on 25 August, VerifAvia is considered as temporarily able to conduct verification audits while the accreditation process is underway,” comments CEO Julien Dufour.
Although France has yet to pass the full EU directive on the Aviation EU ETS into national legislation, it would appear to be the only member state to have published a regulation (‘Arrêté’) on the verification process, which states a verifier must be accredited by Cofrac or by any accreditation body that is a signatory of the European co-operation for Accreditation (EA).
In common with other CAs, the DGAC does not approve verifiers but it is expected to publish a list within a few weeks of verifiers who are able, or temporarily able, to verify reports once it has proof of their accreditation or acceptance of their request for accreditation. As the DGAC, along with the transport ministry, has recently been integrated into the ecology ministry (Ministry of Sustainable Development), there may be a delay in posting this information online, reports Philippe Langumier, Head of Environment at the DGAC.
The German CA, the DEHSt, has a long list of EU ETS verifiers accredited by DAkkS, the German accreditation body, but it is difficult to pick out those that are approved for the Aviation EU ETS. The UK’s Environment Agency, the UK CA, said back in April it would shortly publish a list of accredited verifiers on its website but has yet to do so, instead referring operators to the UKAS website, which has a list of EU ETS accredited verifiers for fixed, or stationary, installations.
VerifAvia is now also approved as a verifier in Wallonia (Belgium), Luxemburg and Cyprus, and is in the process of seeking approval in Germany and Austria. Its London-based subsidiary VerifAvia (UK) has recently passed its Pre-assessment Head Office visit by UKAS and is now preparing for the Initial Assessment and Witnessed Assessment, with ISO 14065 accreditation expected soon after.
Dufour expects approval by other EU CAs to follow. “Most EU countries have said they would accept foreign verification bodies that are accredited by a national accreditation body under Regulation (EC) 765/2008 and according to the EA-6/03 guidance for the recognition of verifiers, which will be the case for both our French and UK companies,” he says.
One issue still to be resolved by the European CAs is that of remote, rather than onsite, verification of small emitters, who could be hit hard by the costs of an onsite audit, particularly if based outside the EU. The French Arrêté says a site visit is not mandatory whereas the UK’s Environment Agency is less sure on the position.
The UK Parliament recently passed the second stage of the Aviation EU ETS regulations and came into force on 31 August. These regulations mainly cover the administration costs to be charged to operators included in the scheme and level of penalties for non-compliance of the regulations.
Comments Dufour: “I believe the UK is the first country to charge for each step of the EU ETS compliance process. Everything is incredibly expensive. The UK Government will sell the 15% of auctioned allowances, which should bring hundreds of millions of pounds into the UK treasury. It is crazy that they are charging on top of this for EU ETS compliance!”