Green Gas Certification Scheme, one of the green gas schemes I mentioned in my previous blog have replied to the issues I raised and their response is below. Many thanks for taking the time to respond.
I still don’t understand why, if as their note suggests, the scheme is not causing additionality, anyone would want to pay and be the holder of green gas certificates if they have no carbon value and can’t be used for offsets. It all seems a bit pointless.
I am also very concerned about the suggestion of using certificates at new building developments as a form of offset. The zero carbon homes criteria have already been significantly watered down and are still being watered down. The last thing that should happen is for new homes to be able to buy green gas certificates and claim carbon savings which have already been paid for by UK taxpayers through RHI.
Green Gas Certification Scheme
response to Richard Lowes’ Blog
“Biomethane, RHI and ‘Green Gas Certificates’”
18th November 2014
Summary
The Green Gas Certification Scheme (GGCS) supports the arguments put forward in Richard Lowes’ blog1. The GGCS is completely opposed to any double-counting or misleading claims of additionality associated with the nascent Biomethane to Grid (BtG) sector. These are the core principles of the scheme which was set up in 2010 specifically with a view to ensuring that there was clarity around the origin, identity and environmental status of green gas. We are also now actively working with the UK Accreditation Service (UKAS) in order to guarantee the technical competence and integrity of the scheme.
The GGCS does not consider it appropriate to associate a general CO 2 emissions factor to a kWh of BtG which we consider to be misleading. Rather, the GGCS considers that it is for Government to identify such a factor for each specific context in which it considers that BtG can contribute to the achievement of is CO2 savings target or other policy goals. In this respect we consider that Richard Lowes could have brought out much more clearly in his blog the differences between the GGCS and Green Gas Trading (GGT)’s Biomethane Certification Scheme (BMCS).
There is little public awareness of green gas as a product in contrast to green electricity. We are convinced that environmentally progressive companies can play an important role in building this public awareness. To do this they have to be confident that their claims can be substantiated. This is the role of green gas certificates which make the origin and unique identity of each unit of green gas transparent. Indeed, some major companies are already actively seeking biomethane where they have identified genuine CO2 emission savings potential and are working with GGCS to source the associated green gas certificates.
The GGCS has been working with Government to identify ways in which greater awareness of green gas as a product might stimulate increased demand for the use of biomethane; and whether there are CO2 emission savings attributable to biomethane use in certain sectors which are separate from those already being attributed to the RHI.
About the GGCS
The GGCS was set up in 2010 specifically with a view to ensuring that that there could be no double counting or misleading claims of additionality in the nascent BtG sector. In this way we hoped to avoid the well-known pitfalls which have surrounded ‘green’ and ‘renewable’ electricity tariffs for the past 15 years. The GGCS was set up to support and underpin the development of the sector. Furthermore, as a not-for-profit scheme governed by its members, the GGCS can afford to keep its fees very low and to re-invest any surplus directly back into promoting the sector.
The GGCS website describes the scheme in the following way 2:
‘The GGCS is a simple and reliable way to eliminate double-counting of registered green gas. It provides certainty for consumers who buy the gas, confidence in the green gas sector and an incentive for gas producers to inject green gas into the grid instead of using it to generate electricity.’
The GGCS Scheme Rules contain the following important statement on additionality 3:
‘The fees payable by participants are designed to cover the costs of setting up, administering and auditing the GGCS. They are not intended to confer any ‘value’ on the green gas in addition to any incentive or other benefit the green gas producer may already have received under any existing or future Government incentive scheme such as the RHI. Participants in the GGCS must agree not to make any claims of ‘additionality’ in respect of the green gas simply on the strength of its inclusion within the GGCS.’
From these core statements it should be clear that the GGCS does not support any claims of additionality linked to, inherent in, or deriving from its green gas certificates. The GGCS agrees that green gas certificates per se are not evidence of any additional CO 2 savings over and above those attributable to the RHI. In this respect the GGCS is very different from the more recently established BMCS which does claim that its certificates are evidence of additional CO2 savings. We do not agree with the statement in Marks and Spencer’s response to Richard Lowes’ blog4 which states that there is ‘ a ‘true’ carbon value for the biomethane…., which is the key to its use as a potential offset’ .
Renewable Heat Incentive (RHI)
The Renewable Energy Association (REA), founder and owner of the GGCS, was active in lobbying for support for the biomethane sector some years before the introduction of the RHI. The REA’s initial desire was to establish the ‘equivalence’ or ‘displacement’ principle, i.e. the recognition that 1kWh of renewable gas injected into the gas distribution network at location A was equivalent to 1kWh of gas taken from the network at location B. The offtaker at location B could then use the gas for transportation, to generate electricity or to meet some other low carbon requirement and claim the relevant subsidy if there was one.
This approach was not favoured by Government, and instead an injection tariff (equivalent to a feed-in tariff for gas) was eventually introduced, by means of the RHI, on the basis that paying developers a set price per kWh of biomethane injected to grid would offer the necessary stable and low-risk policy environment for developers. This pragmatic solution is proving extremely effective in increasing deployment of BtG, with a growing number of biogas plants now choosing to go down this route rather than using biogas to generate electricity.
However, an injection tariff does not have links with the end-user of the gas. REA was always clear that end-users could play an extremely valuable role in raising awareness of BtG. It was with the expectation that end-users would want to publicise their activities, and to do so without uncertainties over double-counting in the RHI context, that the GGCS was developed.
The REA was also aware that the use of gas as an energy vector could deliver some additional CO2 savings, particularly in the transport sector, as we outline below. There may be scope for end-users to claim any such additional CO2 savings, and if green gas certificates are a means of doing this then we are keen to explore this further.
GGCS certainly does not claim that green gas certificates replace or substitute for the CO 2 savings value assigned to BtG, paid for by tax payers as a consequence of the RHI, at the point in which the biomethane is injected to the grid. We agree entirely with Richard Lowes’ arguments here.
Consumer awareness
Whilst the RHI has brought on significant and welcome growth in the BtG industry, it has provided limited opportunities to promote the wider recognition of green gas as a product. The GGCS was designed to make the concept of green gas more tangible and thus promote the development of the BtG sector. Renewable electricity has been promoted in much the same way over the past 15 years, despite the fact that renewable electricity supplied is not ‘additional’ since the majority has been generated with the support of financial incentives such as the Renewables Obligation (RO).
The risks of, and reasons for, double-counting renewable electricity are now very well understood. The use of Renewable Electricity Guarantees of Origin (REGOs) and Levy Exemption Certificates (LECs), while clearly not conferring much, if any, additional CO2 savings to the associated electricity, have allowed the concept of displacement of electricity generated from fossil fuels to be communicated effectively to consumers. This has led to increased consumer recognition of, and demand for, renewable electricity, with many consumers now also generating their own electricity supported by the Feed-In Tariff. Several small suppliers have entered the electricity supply market, one of which supplies only renewable electricity to consumers, supported by, and so not additional to, the RO and FITs.
There are many ways in which environmentally progressive companies can promote innovative ways of integrating renewables into their operating systems and businesses. These would not be visible unless they could make their use of green gas more transparent. Some of these are described in more detail below. There are also opportunities for Government to use the guarantees that green gas certificates provide to help deliver other policy objectives. While such use does not lead to more actual generation of green gas, it does at least allow supply chain pressure to build and encourage companies and consumers to be more environmentally aware and engage in the dissemination of awareness of different options for energy use.
In many other EU Member States in which BtG projects are more mature, highly successful green gas certificate programmes have been in active operation for several years, and have created precisely this increased awareness and ‘consumer pull’. Currently biomethane is produced in 15 EU Member States and injected into the natural gas grid in most of them, and green gas certificate programmes operate in Germany, the Netherlands and Denmark amongst others.
Transport
Transporting biomethane through the gas grid remains a much more efficient way to convey it offsite than the ‘physical delivery’ of biomethane by tankers across the road network. Incentivising the use of BtG backed up by green gas certificates, on a ‘mass balance’ basis for this purpose could help deliver additional CO2 savings in sectors which are beginning to explore the potential for using green gas. Government has already recognised this in relation to allowing the use of green gas certificates by bus operators wishing to access Low Carbon Emission Bus (LCEB) support. The Department for Transport (DfT) published its revised guidance in December 20135.
The DfT’s recent ‘Low Emission HGV Task Force: recommendations on the use of methane and biomethane in HGVs6’ report highlighted that ‘a key action to help reduce carbon emissions from freight operations and contribute to meeting the targets set out in the Carbon Plan is to increase the use of natural gas and biomethane in HGVs’, and the Annex to the report highlights that green gas certificate schemes ‘may help to incentivise biogas producers to make a greater volume of the gas available as biomethane for vehicles rather than using it for electricity or heating’.
In discussions with the DfT, officials have acknowledged that as the use of gas increases in the freight and bus sectors, there are clear benefits to transporting biomethane through the gas grid to filling stations. In this way, green gas certificates would simply reflect the CO2 emission savings achieved through avoiding the ‘physical delivery’ route.
Low carbon homes and buildings
Some energy service companies are investigating the possibilities of using green gas certificates to audit the delivery of biomethane to onsite Combined Heat & Power (CHP) plants in building developments, where CHP can provide low carbon power and/or heating. This could be in relation to retrofitting of existing buildings, but is particularly important to developers in the context of the Department for Communities and Local Government (DCLG)’s forthcoming 2016 Zero Carbon Homes and 2019 Zero Carbon Buildings policy statements. Here again, the alternative would be the physical delivery of biomethane over the road networks. There is potential for policy-makers in DCLG to explore such opportunities in their current examination of the ‘Allowable Solutions’ policy.
Greenhouse gas emissions reporting
The Department for the Environment, Food and Rural Affairs (Defra)’s rules for mandatory Greenhouse Gas (GHG) emissions reporting for major companies is contained within the Climate Change Act 20087. Despite this, the policy does not directly contribute emission savings to the achievement of the UK’s CO2 emission reduction targets but is instead designed to drive businesses to take greater accountability of their carbon impact.
A Defra study from 2010 8 sets out that the key benefits in terms of climate change realised by companies who report in line with this guidance include:
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providing transparency to the Board;
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brand building and public reputation; and
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being able to set targets for reductions.
Defra’s mandatory GHG report guidelines are, therefore, principally framed around driving businesses to have a greater understanding of the environmental impact of their own energy use.
Defra published a consultation paper 9 earlier this year revising its GHG reporting guidelines. It introduced an option for companies to use green gas certificates within their annual emission report. In relation to any risks associated with double counting of emissions savings, the consultation paper states [p99] that: ‘projects to inject biomethane onto the grid are new to the UK… double-counting is not considered a significant issue though it will be kept under review’.
The GGCS therefore supports the use of green gas certificates as permitted evidence within these current guidelines so long as the associated CO2 emissions reductions are not described as additional to those already attributed to the RHI. Though the deadline for this consultation was 24 March 2014, recent communications from Defra have indicated that there is currently no set date for a formal Government response to this consultation. In the absence of this response it appears to GGCS that these companies are not permitted to present green gas certificates as evidence of CO2 emissions reductions in their reports, though they may choose to source them for other reasons.
Further information
The GGCS is owned and administered by Renewable Energy Assurance Ltd (REAL), a wholly-owned subsidiary of Renewable Energy Association (REA), the principal not-for-profit trade association representing all renewable technologies. Further information about REAL and REA is available here: www.renewableenergyassurance.org.uk and here: www.r-e-a.net .
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1 http://gastransitions.postach.io/biomethane-rhi-and-green-gas-certificates
2 http://www.greengas.org.uk/
3 http://www.greengas.org.uk/governance/scheme-rules
4 http://gastransitions.postach.io/biomethane-rhi-and-green-gas-certificates
5https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/268067/dedicated-gas-buses-low-carbon-emission-buses.pdf
6 https://www.gov.uk/government/publications/low-emission-hgv-task-force-recommendations-on-use-of-methane-and-biomethane-in-hgvs
7 Companies required to report are those that are UK incorporated and whose equity share capital is officially listed on the main market of the London Stock Exchange; or is officially listed in a European Economic Area; or is admitted to dealing on either the New York Stock Exchange or NASDAQ.
8 The contribution that reporting of greenhouse gas emissions makes to the UK meeting its climate changes objectives: A review of the current evidence – November 2010.
9 https://consult.defra.gov.uk/climate-change/ac04ad33
2 http://www.greengas.org.uk/
3 http://www.greengas.org.uk/governance/scheme-rules
4 http://gastransitions.postach.io/biomethane-rhi-and-green-gas-certificates
5https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/268067/dedicated-gas-buses-low-carbon-emission-buses.pdf
6 https://www.gov.uk/government/publications/low-emission-hgv-task-force-recommendations-on-use-of-methane-and-biomethane-in-hgvs
7 Companies required to report are those that are UK incorporated and whose equity share capital is officially listed on the main market of the London Stock Exchange; or is officially listed in a European Economic Area; or is admitted to dealing on either the New York Stock Exchange or NASDAQ.
8 The contribution that reporting of greenhouse gas emissions makes to the UK meeting its climate changes objectives: A review of the current evidence – November 2010.
9 https://consult.defra.gov.uk/climate-change/ac04ad33
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heat-policy 
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