BAKONYI IOENERGY LTD - Vidékfejlesztési …klima.kvvm.hu/documents/116/JI_Verification_Report_HUN...Report Template Revision 4, 02/07/2007 VERIFICATION REPORT BAKONYI BIOENERGY LTD

Report Template Revision 4, 02/07/2007

VERIFICATION REPORT BAKONYI BIOENERGY LTD.

VERIFICATION OF THE

Ajka Biomass Project, Hungary

BUREAU VERITAS CERTIFICATION

REPORT NO. HUNGARY-001/2009 REVISION NO. 02


Report No: HUNGARY/001/2009 rev. 02

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PROJECT DETAILS

Project Title:

Ajka Biomass Project, Hungary Client: Client ref.:

Bakonyi Bioenergy Ltd Mr. Trenka Ervin Scope of present mission: Date of verification activity:

Verification of 2008 emission report 10/03/2009 – 29/05/2009 Date of on-site visits (see also separate attence sheets):

10/03/2009, 31/03/2009, 07/05/2009 Verifier details: Bureau Veritas Certification Holding SAS 224-226 Tower Bridge Road, London, UK, SE1-2TX Tel: +44 (0) 20 7661 0788 e-mail: [email protected] Local Contact: György Laczkó Business Developer Bureau Veritas Magyarország Kft. Bureau Veritas Hungary Kft. H-1117 Budapest, Budafoki út 56. Tel: +36-1-802-6909 Fax: +36-1-206-1999 [email protected]



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VERIFICATION TEAM

NAME ROLE IN TEAM GRADUATION EXPERIENCE

ASHOK MAMMEN LEAD VERIFIER PHD (OILS & LUBRICANTS).

OVER 20 YEARS OF EXPERIENCE IN CHEMICAL AND PETROCHEMICAL FIELD.

LEAD AUDITOR FOR ENVIRONMENT, SAFETY AND QUALITY MANAGEMENT SYSTEMS, LEAD VERIFIER FOR GHG PROJECTS. HE HAS BEEN INVOLVED IN THE VALIDATION AND VERIFICATION PROCESSES OF MORE THAN 60 CDM/JI AND OTHER GHG PROJECTS.

ZSOLT BÁCSKAI VERIFIER BIOLOGICAL ENGINEER WITH ENVIRONMENTAL SPECIALISATION, MSC IN POLLUTION AND ENVIRONMENTAL CONTROL

ENVIRONMENTAL CONSULTANCY, AUDITING OF QUALITY, ENVIRONMENTAL AND OTHER MANAGEMENT SYSTEMS

GYORGY MUCSKAI SPECIALIST MECHANICAL ENGINEER, POWER PLANT AND NPP SPEC.

GHG VERIFICATION, POWER PLANT BUILDING, NUCLEAR OPERATION, QUALITY AND ENVIRONMENTAL SYSTEMS

KÁROLY JÁRÓ SPECIALIST MSC IN MECHANICAL ENGINEERING WITH ENERGY SPECIALISATION

OPERATING AND MAINTENANCE OF COGENERATION UNITS, AND OTHER POWER PLANTS. ENERGY AUDITS

FLAVIO GOMES (GLOBAL PRODUCT MANAGER)

INTERNAL REVIEWER, FINAL VERIFICATION OF THE REPORT

CHEMICAL ENGINEER WITH MSC IN CIVIL ENGINEERING

ENVIRONMENTAL CONSULTANCY, AUDITING OF ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT SYSTEMS, CLIMATE CHANGE LEAD VERIFIER



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PROJECT SUMMARY Bureau Veritas Certification has made the verification of the “Ajka Biomass Project, Hungary” of Bakonyi Bioenergy Ltd. (referred to also as “BBE” in this report) located in town Ajka, Hungary on the basis of UNFCCC criteria for the JI Track I, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 6 of the Kyoto Protocol, the JI rules and modalities and the subsequent decisions by the JI Supervisory Committee, as well as the host country criteria. The verification scope is defined as an initial and periodic independent review and ex post determination by the Independent Entity of the monitored reductions in GHG emissions during defined verification period, and consisted of the following three main phases: i) desk review of the key documents,like PDD, previous Verification Report, MP, MR (list of abbreviations on the next page) ; ii) site visit including inspection of facility, records, interviews with project staff; iii) resolution of outstanding issues and the issuance of the final verification report and opinion. The overall verification, from Contract Review to Verification Report & Opinion, was conducted using Bureau Veritas Certification internal procedures. The output of this verification process is a list of Clarification Requests, Corrective Actions Requests, Forward Actions Requests (CL, CAR and FAR) presented in Appendix 4, Table 5. In summary, Bureau Veritas Certification can confirm that the project is implemented as planned and described in determined project design documents – with slight amendments which were thoroughly investigated and verified. The data are monitored with the necessary accuracy, as it is possible to assure that the electricity considered for calculation of Emission Reduction comes only from the biomass combustion in boilers inside the validated boundary. Our opinion relates to the project’s GHG emissions and resulting GHG emissions reductions reported and related to the valid project baseline and monitoring, and its associated documents.

Report No.: Subject Group:

HUNGARY-001/2009 JI Indexing terms Project title:

AJKABIOMASS PROJECT AT BAKONYI POWER PLANT

No distribution without permission from the Client or responsible organizational unit

Work carried out by the team shown above Work verified by:

Flavio Gomes – Lead verifier, Global Product Manager

Date of this revision: Rev. No.: Number of pages (excluding Appendices):

28/05/2009 14:12:00

02 20



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Abbreviations AIE Accredited Independent Entity BBE Bakonyi Bioenergia Ltd. BPP Bakonyi Power Plant CAR Corrective Action Request CDM Clean Development Mechanism CL Clarification Request CO2 Carbon Dioxide ERU Emission Reduction Unit FAR Forward Action Request GHG Green House Gas(es) IETA International Emissions Trading Association JI Joint Implementation MoV Means of Verification MP Monitoring Plan MR Monitoring Report PCF Prototype Carbon Fund PDD Project Design Document PP Power Plant QMS Quality Management System UNFCCC United Nations Framework Convention for Climate Change



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Table of Contents Page

1 INTRODUCTION ............................................................................................... 7 1.1 Objective 7 1.2 Scope 7 1.3 GHG Project Description 8

2 METHODOLOGY ............................................................................................... 8 2.1 Review of Documents 11 2.2 Site visi ts, interviews 11 2.3 Resoluti on of Clarif ication, Corrective and Forward Action

Requests 11

3 VERIFICATION FINDINGS .......................................................................... 12 3.1 Remaining issues CAR’s, FAR’s from previous verif ication

done by Bureau Veritas, 11/2007 12 3.2 Project Implementation 12 3.3 Internal and External Data 13 3.4 Management and Operational System and Quality Assurance 13

4 FIRST PERIODIC VERIFICATION FINDINGS ..................................... 14 4.1 Completeness of Monitoring 14 4.2 Accuracy of Emission Reduction Calculations 15 4.3 Quality Evidence to Determine Emissions Reductions 16

5 PROJECT SCORECARD .............................................................................. 17

6 VERIFICATION STATEMENT (“MEGJEGYZÉSEKKEL ELLÁTOTT POZITÍV HITELESÍTÕI ZÁRADÉK”) ................................. 18

7 REFERENCES .................................................................................................... 19

APPENDIX 1: VERIFIERS’ DECLARATION (HUNGARIAN) ....................................... 21

APPENDIX 2: VERIFICATION PLAN (HUNGARIAN)................................................... 22

APPENDIX 3: ATTENDANCE SHEETS OF ON-SITE VISITS (IN HUNGARIAN) ..... 23

APPENDIX 4 : COMPANY JI PROJECT VERIFICATION PROTOCOLS................... 24

Table 4/1: VERIFICATION PROTOCOL ........................................................................ 24

Table 4/2 : Data Management System/Controls ............................................................ 33



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Table 4/3-4 : GHG calculation procedures and management control testing & Detailed audit and random testing of residual risk areas................................. 39

Verification Protocol Table 5: Resolution of Corrective Action and Clarification Requests .............................................................................................................. 45



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1 INTRODUCTION

Bakonyi Bioenergy Ltd has commissioned Bureau Veritas Certification to verify the emissions reductions of its JI project “Ajka Biomass Project” (hereafter called “the project”) at town Ajka, Hungary. An initial verification was carried out in November-December, 2007 where several CARs and FARs were identified, and the conclusion was that emission reductions cannot be verified at that status of preparedness and monitoring. BBE applied several changes in its monitoring system, installed new monitoring equipment, and implemented a comprehensive system in order to achieve the credibility, transparency, accuracy of their emission report. This report summarizes the findings of the verification of the project from 1st Jan 2008 to 31 Dec 2008 , performed on the basis of UNFCCC JI Track I criteria. 1.1 Objective

First objective to review all actions, changes which were implemented to close all CARs and FARs, and to confirm that the system provides verifiable data. Second objective was to perform periodic independent verification of the monitored reductions in GHG emissions during defined verification period, against UNFCCC criteria refer to Article 6 of the Kyoto Protocol, the JI rules and modalities and the subsequent decisions by the JI Supervisory Committee, as well as the host country criteria. 1.2 Scope

The verification scope is defined as an independent and objective review of the project design document, the project’s baseline study, the monitoring plan and Monitoring Report as well as other relevant documents. The information in these documents is reviewed against Kyoto Protocol requirements, UNFCCC rules and associated interpretations, as well as the host country criteria.

Although the Hungarian JI regulation requires the verifier to make a statement also on the additionality in the Periodic Verification reports, we have to emphasize that the additionality criteria were checked at the stage of project planning and registration, in 2003, by an independent verifier, and on the basis of that verification the project was accepted and registered as JI project. To make a detailed review of additionality 6 years after could lead to any conclusions, including the statement that the project could not be verified as additional in 2009. We believe that whatever conclusions could be drawn from such exercise, this should not make any effect on the emission reduction results in 2008. Due to this reason we accept the conclusion of previous determination conducted in 2003, and consider the project additional.

The verification is not meant to provide any consulting towards the Client. However, stated requests for forward actions and/or corrective actions may provide input for improvement of the project monitoring towards reductions in the GHG emissions. See further in APPENDIX 1 VERIFIERS’ DECLARATION



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1.3 GHG Project Description

Due to a more competitive economic environment and stringent environmental regulations, possibilities for coal-based electricity generation are shrinking and this type of electricity generation will likely become unfeasible for Bakony Power Plant Co. in the second half of the decade. To overcome this challenge and avoid a full shut down, this project converts two of the five boilers from coal to biomass. An independent company BBE Ltd. was established for the biomass based electricity production, which planned to produce a minimum of 190.4 GWh/year of net electricity. BBE is a typical “project company”, with nearly no staff, and renting infrastructure, services and labour from the mother company, Bakony Power Plant Co.

The biomass mainly consists of wood from forestry management as well as wood waste. While this is a tested and feasible technology elsewhere, the value of greenhouse gas credits were needed to secure the financial structure of the project as well as to offset most of the project risks. The biomass project risks mainly relate to the price developments in the biomass fuel market and regulatory uncertainties about long-term government support for preferential renewable energy feed-in tariffs.

Conservative calculations of the greenhouse gas reductions resulted in a total of 453,000 tons of CO2equivalent for the period of 2008-2012, as of PDD issued and accepted in 2003.

However, financial situation, fuel prices and other conditions changed since the project was determined, all the existing boilers remained operational, and the coal remained as an important fuel for all of the boilers. See details later. 2 METHODOLOGY

The verification is a desk review and field visit including discussions and interviews with selected experts and stakeholders.

In order to ensure transparency, a verification protocol was customized for the project, according to local legal requirements of Hungary as being a Track 1 country, but based on the Validation and Verification Manual (IETA/PCF). The protocol shows, in a transparent manner, criteria (requirements), means of verification and the results from verifying the identified criteria. The verification protocol serves the following purposes:

• It organises, details and clarifies the requirements the project is expected to meet; and • It ensures a transparent verification process where the verifier will document how a

particular requirement has been verified and the result of the verification.

The verification protocol consisted of below tables the different columns of which are described underneath.

The overall verification, from Contract Review to Verification Report & Opinion, was conducted using Bureau Veritas Certification procedures.

The completed verification protocol is enclosed in Appendix 4 to this report.



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Table 1. (Initial) Verification Protocol Objective Comments Conclusion (CARs/FARs/CLs)

The requirements the project must meet.

Description of circumstances and further comments on the conclusion

This is either acceptable based on evidence provided (OK), or a Corrective Action Request (CAR) of risk or non-compliance of the stated requirements. Forward Action Request (FAR) indicates essential risks for further periodic verifications. Clarification Request (CL) is used when the verification team has identified a need for further clarification.

Verification Protocol Table 2: Data Management System/Controls

Objective Comments Conclusion (CARs/FARs/CLs) The project operator’s data management system/controls are assessed to identify reporting risks and to assess the data management system’s/control’s ability to mitigate reporting risks. The GHG data management system/controls are assessed against the expectations detailed in the table.

Description of circumstances and further comments on the conclusion

Description of circumstances and further commendation to the conclusion. This is either acceptable based on evidence provided (OK), or a Corrective Action Request (CAR) of risk or non compliance with stated requirements. The corrective action requests are numbered and presented to the client in the verification report.

Verification Protocol Table 3: GHG calculation procedures and management control testing

Identification of potential reporting risk

Identification, assessment and testing of management controls

Areas of residual risks

Identify and list potential reporting risks based on an assessment of the emission estimation procedures, i.e.

Ø the calculation methods,

Ø raw data collection and sources of supporting documentation,

Ø reports/databases/information systems from which data is obtained.

Identify the key controls for each area with potential reporting risks. Assess the adequacy of the key controls and eventually test that the key controls are actually in operation.

Internal controls include (not exhaustive):

Ø Understanding of responsibilities and roles

Ø Reporting, reviewing and formal management approval of data;

Ø Procedures for ensuring data completeness, conformance with reporting guidelines, maintenance of data trails etc.

Identify areas of residual risks, i.e. areas of potential reporting risks where there are no adequate management controls to mitigate potential reporting



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Identify key source data. Examples of source data include metering records, process monitors, operational logs, laboratory/analytical data, accounting records, utility data and vendor data. Check appropriate calibration and maintenance of equipment, and assess the likely accuracy of data supplied.

Focus on those risks that impact the accuracy, completeness and consistency of the reported data. Risks are weakness in the GHG calculation systems and may include:

Ø manual transfer of data/manual calculations,

Ø unclear origins of data,

Ø accuracy due to technological limitations,

Ø lack of appropriate data protection measures? For example, protected calculation cells in spreadsheets and/or password restrictions.

Ø Controls to ensure the arithmetical accuracy of the GHG data generated and accounting records e.g. internal audits, and checking/ review procedures;

Ø Controls over the computer information systems;

Ø Review processes for identification and understanding of key process parameters and implementation of calibration maintenance regimes

Ø Comparing and analysing the GHG data with previous periods, targets and benchmarks.

When testing the specific internal controls, the following questions are considered:

1. Is the control designed properly to ensure that it would either prevent or detect and correct any significant misstatements?

2. To what extent have the internal controls been implemented according to their design;

3. To what extent have the internal controls (if existing) functioned properly (policies and procedures have been followed) throughout the period?

4. How does management assess the internal control as reliable?

risks

Areas where data accuracy, completeness and consistency could be improved are highlighted.

Verification Protocol Table 4: Resolution of Corrective Action and Clarification Requests

Report clarifications and corrective action requests

Ref. to checklist question in tables 2/3

Summary of project owner response

Verification conclusion

If the conclusions from the Verification are either a Corrective Action Request or a Clarification Request, these should be listed in this section.

Reference to the checklist question number in Tables 2, 3 and 4 where the Corrective Action Request or Clarification Request is explained.

The responses given by the Client or other project participants during the communications with the verification team should be summarized in this section.

This section should summarize the verification team’s responses and final conclusions. The conclusions should also be included in Tables 2, 3 and 4, under “Final Conclusion”.

Above Tables 3 and 4 were used in a merged version, to have easier inter-connections between original and residual risks

In the same Appendix, the last table is summarising those findings where documented actions were required: Verification Protocol Table 5: Resolution of Corrective Action and Clarification Requests



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2.1 Review of Documents

The Monitoring Plan (MP), Monitoring Report (MR) submitted by BBE and additional background documents related to the project design and baseline, i.e. country Law, Project Design Document (PDD), Kyoto Protocol, Clarifications on Verification Requirements to be Checked by a Independent Entity were reviewed.

The verification findings presented in this report relate to the project as described in the Project Design Document, v. 20 JULY 2003 , and the Year 2008 JI Monitoring Report “Ajka Biomass Project, Hungary”, version 2.02 final, 26 May 2009. These and further source documents a referenced in section 7, References

2.2 Site visits, interviews

On 10/03/2009, 31/03/2009 and 07/05/2009 Bureau Veritas Certification performed site visits, interviews with project stakeholders to confirm selected information and to resolve issues identified in the document review and previous visits. Representatives of BBE were interviewed

The visits were planned as part of Verification Plan, required by Hungarian law, see in Hiba! A hivatkozási forrás nem található. (in Hungarian). 2.3 Resolution of Clarification, Corrective and Forward Action Requests

Different problems, concerns were raised during the verification process, these were raised as requests for corrective actions and clarification. CARs needed to be clarified for Bureau Veritas Certification positive conclusion on the GHG emission reduction calculation.

Corrective Action Requests (CAR) are issued, where: i) the deviations concerning the implementation of the project as defined by the PDD are

not in line with the Kyoto Protocol requirements, UNFCCC rules and associated interpretations, as well as the host country criteria;

ii) the revised and improved monitoring method as elaborated in the new MP represents a possible risk to report on higher quantity emission reductions than the reality.

iii) there is a risk that the project would not be able to deliver ERUs.

Forward Action Requests (FAR) are issued, where: iv) the actual status requires a special focus on this item for the next consecutive

verification; v) an adjustment of the MP is recommended.

The verification team may also use the term Clarification Request (CL), which would be

applied where: vi) additional information is needed to fully clarify an issue.

To guarantee the transparency of the verification process, the concerns raised are

documented in more detail in the verification protocol in Appendix 4 , “Verification Protocol Table 5”.



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3 VERIFICATION FINDINGS

In the following sections, the findings of the verification are stated. The verification findings for each verification subject are presented as follows:

1) The findings from the desk review of the project activity documents and the findings from interviews during the follow up visit are summarized. A more detailed record of these findings can be found in the Verification Protocols in Appendix 4 . 2) The conclusions for verification subject are presented or referenced. 3.1 Remaining issues CAR’s, FAR’s from previous verification done by Bureau Veritas, 11/2007 Many of open issues were resolved, however, some risks were not fully addressed, or the offered solution did not fully solve the problems. These are listed in Appendix 4 , TABLE 4/1, Section “B”, and reference is made to newly raised CARs / FARs where applicable. The final closure of new CARs / FARs are demonstrated in Appendix 4 , Verification Protocol Table 5

3.2 Project Implementation

The Project was implemented and commissioned before the approval. All facilities and equipment as described in the PDD have been installed. However, the independency of the old and new plant was not realised as it was forecasted as most likely scenario, and this caused some uncertainties in the ERU calculations.

The PDD states (p.16): “…the two plants is independent and they would operate separately and independently from the biomass project…; …the heat and related CHP electricity production at Ajka has no effect on the output of the biomass project and vice-versa”, which was not implemented. This lacking independency required several extra considerations, special technical assumptions were made to provide the most conservative calculations. All of these were reviewed by verification team and was proved to be conservative and in line with requirements.

The power exported to the grid is being monitored through energy meters. The main and check meters have been calibrated and are sealed. The meters are repaired and calibrated, tested and sealed.

Procedures have been identified and implemented to monitor the data that need to be collected and recorded. The verification team has verified all the records as per re-designed ”Monitoring Report”. The new procedures provide comprehensive coverage of responsibilities of various site personnel.

BBE has established mechanisms for measurement and computation of generated electricity as observed from the documents and records maintained at the site.



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3.3 Internal and External Data

As per the monitoring plan for calculating the ERUs, the following data needs to be monitored. Types of internal data (in the order of MR)

1. Quantity of biomass, brown coal and black coal used by boilers 8-12 [t] 2. Natural gas consumed by boilers 11-12 [Nm3] 3. Net calorific value [MJ/Nm3] and emission factor [t CO2/ TJ] of natural gas consumed by

boilers 11-12 [MJ/Nm3] 4. Biomass and coal stock measurement [t] 5. Determination of the weighted average heating value of the fuels (biomass, coal) used by

boilers 11-12., including biomass moisture content, fuel calorific values 6. Steam produced by boilers 8-12 [t] 7. Steam consumed by turbines II-VII [t] and 70Bar direct steam output to the alumina plant 8. Electricity produced and sold by turbines VI-VII [GWh] 9. Number of road and railway batches, average weights, distance and types for each forestries Fuel consumption of on-site logistic machinery (both owned and rented) [l] Types of external data (in the order of MR) 1. Biomass, gasoline and diesel oil CO2 emission and oxidation factor 2. Biomass, gasoline and diesel oil CH4 and N2O emission and oxidation factor 3. Density of logged wood 4. Forestry work (sawing, chopping, logistics) average consumption 5. CO2, CH4 and N2O GWP factors 6. Average diesel oil consumption of heavy duty vehicles 7. Hungarian Gridmix factors Sources are clearly defined and referenced in the MR, these factors were cross-checked with original source, and after correction some mistakes the correct data were applied Findings in connection with Data Management are presented in Appendix 4 , TABLE 4/2 : DATA MANAGEMENT SYSTEM/CONTROLS. 3.4 Management and Operational System and Quality Assurance Bakonyi Power Plant Operates a ISO 9001:2000 certified Quality Management System. Neither on the certificate, nor in Quality Manual there is no mention of BBE or JI, GHG. There is one procedure which refers to EU-ETS date gathering and reporting, but it is not referred to in the Quality Manual. However, as the project participant BBE is only a project company, and all operative staff/equipment belongs to Bakony Power Plant PLC, we can conclude that once the JI issues will be fully integrated into the Quality Management System (QMS) of BPP, it will be under quality control. Generic data management procedures are documented in the QMS. Those procedures that specifically belong to the JI monitoring system (e.g. periodic internal audit of biomass related data, required for monitoring calculations) are included in the MP, which will also be implemented in the QMS once the verification is complete and the plan can be finalised. This issue can be closed fully only at next verification, when the implementation is seen.

Position and role of each person in the GHG data management process is clearly defined in the new MP, from raw data generation to submission of the final data. Accountability of senior management is demonstrated also through job description.

Specific monitoring and reporting tasks and responsibilities are included in the MP.



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FAR4: The original intention in MP was that internal control should be done before the due annual verification. This should be revised and more frequent controls (internal audits) should be considered at those points where the late internal control can result in loss of verifiable data (e.g. control of measuring equipment). FAR6 It is highly recommended to include all JI related procedures, roles, responsibilities in the Quality Management System to make sure it is subject to proper management (including e.g. revision and distribution control, training, regular internal auditing, Management review etc.) 4 FIRST PERIODIC VERIFICATION FINDINGS 4.1 Completeness of Monitoring During the creation of the PDD several alternative operational conditions were drawn up, including the stop of coal firing, shift to gas turbines with the rest of the power plant, or separation of the common steam pipe system, but also the continued parallel operation of coal/biomass firing was not excluded. As a result the PDD only contained a monitoring concept instead of detailed monitoring plan. During the initial verification process in 2007 Bureau Veritas drew the attention of BBE to the several shortcomings of the monitoring systems in form of CARs/FARs, the follow-up revision of the issues are detailed above, in TABLE 4/1 , Section “B”. The first “real” MP was found a well designed, comprehensive document, but several items were still criticised, see later. Although for this specific type of retrofit project (featured with biomass mostly from logged wood, common steam pipe, additional fossil fuel burning) – until the time of verification – there was no approved CDM/JI methodology, in principle the consolidated methodology ACM0006 is similar, and that was used as a starting point. The applied methods were investigated and discussed with Ajka in severaly steps, as it is documented in this report.. CAR5: The original PDD mentioned at “Indirect off-site emissions” the potential fire wood price increase and subsequent substitution for other fuels at households, and mentioned “monitoring plan addresses this issue”. The MP did not refer to this issue. CAR6: Although the PDD mentioned the methane release from bulk biomass storage as potential on-site emission, and there will be considerations in the MP, the first version of MP did not refer to this issue. Although this might be expected from low % of fuel (61 % of fuel is logged wood which is chopped right before the combustion), BBE should demonstrate how they address this area.



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4.2 Accuracy of Emission Reduction Calculations The data management was massively improved, the newly set up, fully computerised scale belt system and boiler feeding system generates data in closed system. Most – previously separately managed – calculations were brought together into one excel sheet, where the figures, forms could be easily traced back to source and could be verified. The full calculation methodology and data transfers between different elements of the system is described in the MP. However, see also CL2 . CL2: To ease future verification processes, it is recommended to draw up an information flow diagram, describing the entire process from raw data to reported totals, highlighting critical (manual) data transfers, calculations. The excel calculations were thoroughly reviewed by Bureau Veritas step by step, and where inaccuracies, wrong references were found it was commented within the table. All of the 8 “rounds” of this iteration process were saved under a separate version number, and interim versions with the verifier’s comment + client’s response can be easily traced back. The correction of these issues were done in several steps, with the inclusion of verification expert team, and separate meetings were hold with the consultant + conference call with BBE expert to clarify the answers and settle the final solutions. The final calculation spreadsheet was validated by BV team and was found to be free from significant error and mistake. Some of the findings were documented also here. CAR1 In the Monitoring Report there are references to accuracy of most measuring equipment, but there are no evidences of reference to overall uncertainty. The review of actions on CAR1 resulted another CAR:



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CAR3 The uncertainties of sampling and lab tests are not incorporated into the total uncertainty calculation. The applied formula is not resulting reasonable result. CAR4: There is a second woodchipper producing woodchips from logged wood, which is operated by an external company on the site of Bakonyi. The electricity used by it is sold to the sub-contractor, and was not counted as such self-consumption, which is specifically related to biomass processing. 4.3 Quality Evidence to Determine Emissions Reductions All “raw data” for the calculations were collected on a separate sheet of Excel table, thus allowing easier sampling of them. During the verification wide range of documented evidences, including

• measurement records (lab results and electricity meter readings); • original/copied invoices, delivery notes from fuel suppliers; • technical records from PP operations (operating hours of boilers/turbines, steam volume

measurements, etc.) • electronic data logged automatically by the system (weight measurements from weight

bridge and belt scale system) were reviewed, as listed on p. 19, “References”. All records were legible, good quality, kept in a traceable and retrievable way. Majority of those records are subject to investigation of several other organisations as well (energy authority, taxation, EU-ETS verifier). FAR4 The original intention in MP was that internal control should be done before the due annual verification. This should be revised and more frequent controls (internal audits) should be considered at those points where the late internal control can result in loss of verifiable data (e.g. control of measuring equipment).



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5 PROJECT SCORECARD

Conclusions Summary of findings and comments

Risk Areas Baseline

Emissions

Project Emissio

ns

Calculated Emission

Reductions

Complete-ness

Source coverage/ boundary definition P P P

All relevant sources are covered by the final monitoring plan and although there are some energy flows across boundaries, these are now under control and are taken into account on a conservative way.

Accuracy Physical Measurement and Analysis

P P P

Key parameters are measured with the application of state-of-the-art technology, some parameters – which do not directly influence the final result – are measured with acceptable compromise, which do not endanger the accuracy of the final result. Although back-up solutions were seen for some measuring equipment, but there should be a comprehensive plan to cover all key devices (see FAR8)

Data calculations P P P Emission reductions are calculated

correctly.

Data management & reporting P P P

Data management and reporting were found to be satisfying. Some potential for improvement is indicated by open FARs, see VERIFICATION PROTOCOL TABLE 5

Consistency Changes in the project P P P Results are consistent with underlying

raw data.



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6 VERIFICATION STATEMENT (“MEGJEGYZÉSEKKEL ELLÁTOTT POZITÍV HITELESÍTÕI ZÁRADÉK”)

Bureau Veritas Certification has performed a verification of the “Ajka Biomass Project”. The verification is based on the currently valid documentation of the United Nations Framework Convention on the Climate Change (UNFCCC).

The management of BBE is responsible for the preparation of the GHG emissions data and the reported GHG emissions reductions of the project on the basis set out within the project Monitoring Plan as indicated the PDD. The development and maintenance of records and reporting procedures in accordance with that plan, including the calculation and determination of GHG emission reductions from the project is the responsibility of the management of the project. Bureau Veritas Certification verified the Year 2008 JI Monitoring Report “Ajka Biomass Project, Hungary”, version 2.02 final, 26 May 2009 for the reporting period as indicated below. Bureau Veritas Certification confirms that the project is implemented as planned and described in validated and registered project design documents, with slight but verified amendments described in 3.2. Installed equipment being essential for generating emission reduction runs reliably and is calibrated appropriately. The monitoring system is in place and the project is ready to generate GHG emission reductions. Some of the identified Forward Action Requests could not be fully closed, but which do not influence the uncertainty of the final emission reduction results. These issues are detailed in Verification Protocol Table 5, and will be subject to further investigation during the next Periodic Verification. Bureau Veritas Certification can confirm that the GHG emission reduction is calculated without material misstatements. Our opinion relates to the project’s GHG emissions and resulting GHG emissions reductions reported and related to the valid and registered project baseline and monitoring, and its associated documents. Based on the information we have seen and evaluated we confirm the following statement: Report ing period: From 01/01/2008 to 31/12/2008 Veri f ied parameter CO2 equivalents (t) data uncertainty (%) Basel ine emissions 91 849 1,15 Project emissions 6 594 4.55 Emission Reductions 85 255 1.62



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7 REFERENCES Category 1 Documents: Key documents/records provided by BBE that relate directly to the GHG components of the project.

/1/ Project Design Document, v. 20 JULY 2003 /2/ UNQUALIFIED VALIDATION REPORT, SGS, dd. 28th August 2003 /3/ UNQUALIFIED VERIFICATION REPORT, Bureau Veritas, 16/11/2007

/4/ Year 2008 JI Monitoring Report “Ajka Biomass Project, Hungary”, version 2.02 final, 26 May 2009(ER_report_BakonyiJI_EN_v02_final.pdf)

/5/ Monitoring Plan v.2.01, 26 May 2009

/6/ MU0706 “Examination of fuels and lubricants” (internal work instruction in Quality Management System of BPP)

/7/ ME0805 “GHG Monitoring Procedure” (internal procedure in Quality Management System of BPP)

/8/ EU 0713 “Monitoring and measurement equipment” (internal procedure in Quality Management System of BPP)

/9/ 3/2008 Vezérigazgatói utasítás (BPP instructions for sampling of biomass) /10/ 1/2006/KL Osztályvezetõi utasítás (BPP instructions for sampling of coal) /11/ fuel invoices /12/ Ajkai Erõmû elszámolási algoritmusai (calculation formula agreed with MAVIR) /13/ extracts from “Fagyöngy” and MérlegSys” databases /14/ Fuel stock data from bookkeeping /15/ records of steam measurements

Category 2 Documents: Key background documents/records related to the design and/or methodologies employed in the design or other reference documents.

/1/ ER_calculations.xls, (key spreadsheet with most calculations, modified several times throughout the verification process)

/2/ ER_discussion..xls (explanatory background file, modified several times throughout the verification process)

/3/ Bakonyi_Energiamerleg.xls (energy balance calculations, modified during the verification process)

/4/ Villamos_fogyasztok_lista.xls (list of electricity consumer equipment on site, modified during the verification process)

/5/ bizonytalanság_bio.xls (core spreadsheet extracted from the closed database, with summarising all data of incoming biomass deliveries)

/6/ Tüzelõanyag szállítási szerzõdések 2008 (summary sheet of fuel delivery contracts in 2008)

/7/ Job descriptions /8/ Informatikai Biztonsági Szabályzat (issue 20/04/2007) (Information Security Rules)

All above documents and samples of core records were reviewed, and satisfactory document control practice was observed. Contents were commented in the relevant chapters of the report.



VERIFICATION REPORT

Page 20

Persons interviewed:

List persons interviewed during the verification or persons that contributed with other information that are not included in the documents listed above.

/1/ Kovács László (Plant Manager, BPP)

/2/ Trenka Ervin (Adviser, Department of Husbandry, BPP)

/3/ Kiss István (Head of Department of Husbandry, BPP)

/4/ Jagadits Károly (group manager, BPP)

/5/ Gergely Gubacsi (consultant, Interzóna)

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