Regulatory Guidance indicates practical consequences of the new M&R Regulation which must be taken into account when setting up the monitoring plan in relation to bioliquids and biofuels: the simplest way forward would be to establish a written procedure which requires the operator to attribute each batch of biomass used in the installation to either a (sustainable) “biomass” source stream or to a “fossil” source stream, depending on whether a proof is available for meeting the sustainability criteria or not.
The treatment of the solid and gaseous biomass
The issue of the sustainability criteria under the M&R Regulation is not set out unambiguously in the very wording of the legislative text, thus other regulatory guidance are inevitably helpful. The problem was touched in Emission factor and sustainability of biomass under the new M&R Regulation analysing the considerations of the Impact Assessment document accompanying the new M&R Regulation.
The conclusion was that comparing the legal status of the biomass under the EU ETS rules in force in 2012 with the third trading period (as of 2013) an important change to a definition of zero-rated biomass takes place i.e. that requirements to meet sustainability criteria contained in Directive 2009/28/EC (“RES-D” or “RES Directive”) in order to qualify for zero rating apply only for biofuels and bioliquids.
The above stance has been decidedly confirmed by the “Guidance document No. 3 - Biomass issues 17/10/2012” (Guidance document No. 3), which contains the key explanation stating:
“At the time of writing this guidance, no sustainability criteria are applicable to solid biomass and gaseous biomass other than biogas for transport purposes.”
Pursuant to the Guidance document No. 3 it becomes obvious in the context of recital 2 of the M&R Regulation that due to the zerorating of emissions from biomass, the EU ETS constitutes a support scheme within the meaning of the RES-D. Pursuant to Article 17(1) of the RES-D, bioliquids and biofuels may only receive support and count towards the national targets where they comply with sustainability criteria set out in Article 17 of that Directive. Consequently, the sustainability criteria must be applied for biofuels and bioliquids that are consumed and zero-rated for greenhouse gas emissions within an installation or an aircraft operator’s activities covered by the EU ETS.
The expression “Applying the sustainability criteria” within the Guidance document No. 3 means using the sustainability criteria for deciding whether a fuel or material falls within the definition of biomass, and consequently whether its emission factor is zero. A biogenic material which does not comply with the relevant sustainability criteria of the RES Directive, where they are applicable, is considered as fossil, i.e. the emission factor is greater than zero.
The Guidance document No. 3 has proposed some useful simplified assumptions to apply in the context of the EU ETS:
1. Source streams of solid biomass and biogases (if not mixed with fossil materials) can always be assumed to have an emission factor of zero.
2. Biofuels are only relevant for aircraft operators (as biofuels are per definition always used in transport, and mobile machinery is excluded from the installation boundaries).
3. Bioliquids are the only case for the application of sustainability criteria relevant for installations.
Additional clarifications
Following to the above and based on the definitions, the Guidance document No. 3 gives also some additional clarifications:
1. Where biomass in the liquid state is used as process input in installations (e.g. where a biomass material is used for chemical syntheses), and where no energy purpose can be identified, this biomass does not fall within the definition of bioliquid, and consequently sustainability criteria do not apply. Such material may be zero-rated under the EU ETS if it complies with the definition of “biomass” without further restriction. Because the RES-D sets out only targets for renewable energy consumption, non-energy use of biomass would not count towards the targets. In order to ensure consistency between the calculation of the RES target and emissions monitoring, competent authorities should ensure that only those bioliquids that do not count towards the national RES target are exempted from the sustainability criteria. Where a Member State intends to include the energy input from a certain bioliquid in the calculation for its target, it must be assumed that an energy purpose prevails, and sustainability criteria apply.
2. The European Commission advocates a broad definition of bioliquids, and therefore suggests including in particular viscous liquids such as waste cooking oil, animal fats, palm oil, crude tall oil and tall oil pitch.
Black liquor from the pulp and paper industry is generally considered equivalent to solid biomass. It should therefore be assumed by competent authorities (at the time of writing this guidance) that no sustainability criteria are to be applied.
The Annex of the Guidance document No. 3 in section 7.1 contains an informative list of materials which can be considered as biomass (without prejudice to application of sustainability criteria).
Types of source streams
The Guidance document No. 3 also underlines that while under the MRG 2007 a source stream has been either fossil, biomass or mixed, the application of sustainability criteria under the new M&R Regulation leads now to the following types of source streams (some may appear as theoretical cases):
1. Fossil source streams
2. Biomass where sustainability criteria apply (currently biofuels and bioliquids as defined by the M&R Regulation):
(a) Criteria are satisfied: Biomass is zero-rated
(b) Criteria are not satisfied: Biomass is treated like a fossil source stream.
3. Biomass where no sustainability criteria apply: Always zero-rated.
4. Mixed source streams:
(a) Fossil / biomass mix (where either no sustainability criteria apply, or where they apply and are satisfied): The emission factor is the preliminary emission factor multiplied by the fossil fraction.
(b) Fossil / biomass mix (where sustainability criteria apply and are not satisfied): The whole source stream is treated as fossil.
(c) Biomass mix or fossil / biomass mix, where only a part of the biomass satisfies the applicable sustainability criteria: These source streams are to be treated like those under point 4(a), with the non-sustainable part considered as part of the fossil fraction.
Among examples indicated are:
Point (a): This could be fibre wood panels, where biomass (wood, which is solid, and therefore no sustainability criteria are to be applied at the time of writing this guidance) is mixed with resins which are usually made from fossil raw materials.
Point (b): This could be a liquid fuel where the supplier claims that x% biofuel has been added, but does not provide evidence for that amount.
Point (c): An example would be rape seed methyl ester (“biodiesel”), where the rape seed oil satisfies the sustainability criteria and respective evidence is provided, while the methanol is either stemming from fossil sources, or where it is claimed to be biomass, but no evidence for meeting the sustainability criteria is available.