Quantification method for low-carbon-intensity electricity integration

Quantification Method for Low-Carbon-Intensity Electricity Integration (PDF)

1.0 Introduction

This quantification method (QM) is intended for use by registered creators applying to have a CO2e-Emission-Reduction Project recognized to create credits under the Clean Fuel Regulations (the Regulations).

Credits may be created under the Regulations with this QM through the integration of Low-Carbon-Intensity (CI) Electricity Sites. These sites convert the energy from low-CI energy sources into electrical energy as the end product, and supply that electricity to a facility that produces, processes, stores, transports or distributes liquid fossil fuel or petroleum feedstocks upstream of refining (Fossil Fuel Facility). Emission reductions are quantified based on the amount of electricity consumed from either fossil fuel-based sources or purchased from the electrical network that is replaced with low-CI electricity. Emission reductions in this QM are calculated based on a life cycle approach, as life cycle carbon intensities are used to account for the emissions associated with the electricity.

As per paragraph 32(2)(f) in the Regulations, this QM is applicable to projects carried out in Canada.

2.0 Terms and definitions

The definitions in the Regulations apply. Refer to subsection 1(1) of the Regulations for other definitions not included in this document. This section includes only those additional definitions not found in the Regulations.

Electrical network: a network for the distribution of electricity that is subject to the standards of the North American Electric Reliability Corporation.

Fossil Fuel Facility: a facility that produces, processes, stores, transports or distributes fossil fuels that are in the liquid state at standard conditions or petroleum feedstocks upstream of refining. It does not include a facility that primarily engages in the production, process, storage, transport or distribution of fossil fuels or petroleum feedstocks in the gaseous state at standard conditions.

Low-CI electricity: For the purposes of this quantification method, low-CI electricity means electricity that:

Low-CI Electricity Site: a location where the low-CI electricity is generated by converting low-CI alternative energy sources into electricity as the end product and supplied to the Fossil Fuel Facility during the CO2e-emission-reduction project.

3.0 Eligibility

To demonstrate that a CO2e-emission-reduction project meets the requirements under this QM, the registered creator must supply sufficient evidence that:

  1. The project, including both the low-CI Electricity Site and Fossil Fuel Facility, is located in Canada;
  2. The quantification of reductions achieved by the project is based on actual measurement and monitoring (except where indicated in this QM);
  3. The low-CI electricity is generated and consumed at a Fossil Fuel Facility or supplied directly to a Fossil Fuel Facility from a separate low-CI Electricity Site, and not supplied through an electrical network:
    • The low-CI electricity is supplied "behind the meter";
    • The electricity included in the quantification is not supplied to the electrical network;
  4. The low-CI electricity is not consumed as an energy source for electric vehicles
  5. For a facility that distributes fossil fuels that are in the liquid state at standard conditions, the quantification includes only electricity used at the Fossil Fuel Facility that reduces the carbon intensity of fossil fuels.
  6. The electricity supplied at the Fossil Fuel Facility is low-CI electricity in accordance with the definition.
  7. The low-CI Electricity Site commenced generation on or after July 1, 2017.
  8. The metering of the low-CI electricity consumption at the Fossil Fuel Facility is made at a point downstream of both the electricity generator and any storage system, typically where generated electricity is connected to a load.
  9. If low-CI electricity is also supplied to the electrical network, there must be systems installed to prevent reverse flow of electricity to the electrical network or there must be separate metering systems in place to measure both the low-CI electricity that is consumed by the Fossil Fuel Facility and the low-CI electricity supplied to the electrical network.

4.0 Crediting

4.1 Crediting period

CO2e-emission-reduction projects using this QM are eligible to create credits under the Regulations for a period of 10 years, beginning on the later of the day on which the project is recognized by the Minister or, any preferred day referred to in paragraph 34(2)(b) of the Regulations indicated in the application. A single five year extension of the crediting period may be permitted in accordance with subsections 42(1) and (2) of the Regulations.

4.2 Credit creation

The owner or operator of a Fossil Fuel Facility that is consuming the low-CI electricity is the registered creator by default. The registered creator may differ from the default, if the owner or operator of the Fossil Fuel Facility enters into an agreement with another party to create credits for the CO2e-emission-reduction project in accordance with section 21 of the Regulations.

The owner or operator of this Fossil Fuel Facility or the party with whom they have entered into an agreement with in accordance with section 21 of the Regulations must register as a registered creator in accordance with section 25 of the Regulations and have the project recognized after submitting an Application for Recognition of CO2e-Emission-Reduction Project, prior to creating credits.

If more than one person applies for recognition for the same project, no credits will be granted for that project until an agreement is reached by the parties to designate the registered creator.

4.3 Class of credits created

Credits are created in the liquid class.

5.0 Project

5.1 Project locations

A project location is defined as either a low-CI Electricity Site or Fossil Fuel Facility located on a single property or group of contiguous properties owned or operated by the same legal entity. A project must include one Fossil Fuel Facility and at least one low-CI Electricity Site. The low-CI Electricity Site and the Fossil Fuel Facility may be at the same location or separate locations. Where multiple low-CI Electricity Sites or Fossil Fuel Facilities are located on non-contiguous properties, they would each be considered separate locations.

Each project location must be uniquely identified using global positioning system (GPS) coordinates (5 decimals). Supporting documentation demonstrating the project location(s) must also be provided that includes aerial photographs, maps or satellite imagery.

5.2 Project aggregation

Multiple low-CI Electricity Sites may be aggregated into a single project, if they supply low-CI electricity to a single Fossil Fuel Facility and provide the same type of low-CI electricity. A given low-CI Electricity Site may be part of multiple projects where it supplies low-CI electricity to multiple Fossil Fuel Facilities, as long as there is appropriate metering at each Fossil Fuel Facility. If a single low-CI Electricity Site supplies multiple types of low-CI electricity, the types of low-CI electricity can be aggregated into a single project, if metering is available for each electricity type. The electricity supplied by a given low-CI Electricity Site to a given Fossil Fuel Facility must only be included in a single project, to prevent double counting of the low-CI electricity.

Long Description

The first scenario of the picture includes four separate low-CI electricity sites and a single fossil fuel facility. The four separate low-CI Electricity Sites supply electricity to the Fossil Fuel Facility. This scenario could be considered one project. The second scenario of the picture includes two separate low-CI electricity sites and four separate fossil fuel facilities. If the first low-CI Electricity Site supplies electricity to two Fossil Fuel Facilities, and the other low-CI Electricity Site supplies electricity to three Fossil Fuel Facilities, including one which is receiving electricity from the first other low-CI Electricity Site, each Fossil Fuel Facility must have its own project. Therefore, there would be 4 separate CO2e Emission Reduction Projects, at 4 Fossil Fuel Facilities. There is one project for the Fossil Fuel Facility that receives electricity from two separate low-CI electricity sites.

5.3 Sources and Sinks Relevant to the Project

The CI of each low-CI electricity source, used to quantify the project emissions (CIP), may be selected from Table 13 in the Specifications for Fuel LCA Model CI Calculations. The source of electricity is indicated in column 1 of this table (Technology) and the CI of the electricity source is indicated in column 4 of this table (Total Emissions). The CI values published in the most recent version of these specifications for the compliance period in which credits are created, must be used.

Alternatively, if the source of low-CI electricity is not included in Table 13 of the Specifications for Fuel LCA Model CI Calculations, a registered creator or carbon-intensity contributor may determine a CI of electricity under section 79 of the Regulations and apply for approval under subsection 80(1). The CI of electricity must be approved by the Minister under section 85(1) of the Regulations in order to be used to create credits.

The methodology and data sources used to determine the CI of electricity, as well as the sources of emissions accounted for in the CI values are detailed in the Fuel LCA Model Methodology.

6.0 Baseline scenario

6.1 Baseline identification and selection

The baseline scenario for projects using this QM is defined as the electricity consumed at the Fossil Fuel Facility, that is either from fossil fuel-based sources (such as natural gas simple cycle, co-generation, etc.) or the electrical network, which is replaced by the low-CI electricity source. For new facilities, a default is prescribed for the baseline electricity source.

The emissions from the baseline scenario are dynamic and will be quantified annually. The amount of electricity in the baseline is based on data from the project and is the measured electricity consumption from the low-CI Electricity Site(s) during the project, which is expected to change annually. The baseline electricity source(s) and the proportion of electricity from the source(s) will remain static throughout the crediting period; however, the carbon intensity values for the baseline may be updated periodically, and can be found in Table 13 or 16 in the Specifications for Fuel LCA Model CI Calculations. The CI values published in the most recent version of these specifications for the compliance period in which credits are created must be used.

6.2 Sources and sinks relevant to the baseline scenario

The baseline electricity CI values must be selected from Tables 13 or 16 of the Specifications for Fuel LCA Model CI Calculations. The methodology and data sources used to determine the CI of electricity, as well as the sources of emissions accounted for in the CI values are detailed in the Fuel LCA Model Methodology.

7.0 Quantification methods

7.1 Emission reduction quantification

To determine the total emission reductions for the compliance period, the following equation must be used:

Emissions Reductions (tCO2e)Total Project  = Σ(EmissionsBaseline ─ EmissionsLow-CI Electricity)Project  × Vcanada / Vtotal

For the purpose of subsection 36(3) of the Regulations, the number of provisional credits that are created for each compliance period is determined based on the proportion of the quantity of crude oil or liquid fossil fuels that is not exported from Canada and that has a reduced carbon intensity as a result of the activities carried out for the project (VCanada/VTotal).

Where

VCanada is the volume used in Canada and is one of the following, depending on the type of project:

  1. In the case of a CO2e-emission-reduction project that reduces the CI of fossil fuels at a refinery in Canada, the volume of gasoline and diesel, expressed in m3, produced at that refinery and that is used as a fuel in Canada or sold for use as a fuel in Canada during the compliance period.
  2. In the case of a CO2e-emission-reduction project that reduces the CI of fossil fuels, crude oil or bitumen processed or produced at an upgrader in Canada, the volume, expressed in m3, of:
    1. diesel produced at that upgrader that has a reduced carbon intensity as a result of the activities carried out for the project and that is used as a fuel in Canada or sold for use as a fuel in Canada during the compliance period; and
    2. crude oil produced at that upgrader that has a reduced carbon intensity as a result of the activities carried out for the project and that is delivered to refineries in Canada for processing during the compliance period. 
      1. If the crude oil, produced at the upgrader that has a reduced carbon intensity as a result of the activities carried out for the project and delivered to refineries in Canada, is part of a blend, then 𝑉Canada is the volume of the blend, expressed in m3, delivered to refineries in Canada for processing multiplied by the volume fraction of the crude oil within the blend that was produced at the upgrader and that has a reduced carbon intensity as a result of the activities carried out for the project.
  3. In all other cases of a CO2e-emission-reduction project that reduces the CI of fossil fuels at a facility in Canada, the volume of gasoline and diesel, expressed in m3, that has a reduced carbon intensity as a result of the activities carried out for the project and that is produced, processed, transported, stored or distributed for use in Canada during the compliance period.
  4. In all other cases of a CO2e-emission-reduction project that reduces the CI of crude oil or bitumen at a facility in Canada, the volume of crude oil or bitumen, expressed in m3, that has a reduced carbon intensity as a result of the activities carried out for the project and that is delivered to refineries in Canada for processing during the compliance period.
    1. If the crude oil, that has a reduced carbon intensity as a result of the activities carried out for the project and that is delivered to refineries in Canada, is part of a blend, then 𝑉Canada is the volume of the blend, expressed in m3, delivered to refineries in Canada for processing multiplied by the volume fraction of the crude oil within the blend that has a reduced carbon intensity as a result of the activities carried out for the project.

VTotal is the total volume and is one of the following depending on the type of project:

  1. In the case of a CO2e-emission-reduction project that reduces the CI of fossil fuels at a refinery in Canada, the total volume of gasoline and diesel, expressed in m3, produced by that refinery during the compliance period.
  2. In the case of a CO2e-emission-reduction project that reduces the CI of fossil fuels, crude oil or bitumen processed or produced at an upgrader in Canada, the total volume, expressed in m3, of:
    1. diesel produced at that upgrader that has a reduced carbon intensity as a result of the activities carried out for the project during the compliance period;
    2. crude oil produced at that upgrader that has a reduced carbon intensity as a result of the activities carried out for the project during the compliance period.
  3. In all other cases of a CO2e-emission-reduction project that reduces the CI of fossil fuels at a facility in Canada, the total volume of gasoline and diesel, expressed in m3, that has a reduced carbon intensity as a result of the activities carried out for the project and that is produced, processed, transported, stored or distributed during the compliance period.
  4. In all other cases of a CO2e-emission-reduction project that reduces the CI of crude oil or bitumen at a facility in Canada, the total volume of crude oil or bitumen, expressed in m3, produced, transported or stored during the compliance period that has a reduced carbon intensity as a result of the activities carried out for the project.

7.2 Quantification of the project emissions

To determine the total emissions from the low-CI electricity project for the compliance period, the following equation must be used:

EmissionsLow-CI Electricity (tCO2e) = Σ (Qp  × CIp) × 1 tCO2e / 1000000 gCO2e × 3.6 MJ/kWh

Where:

QP = Measured quantity of low-CI electricity consumed at the Fossil Fuel Facility (kWh)

CIP = Carbon intensity of the low-CI electricity consumed at the Fossil Fuel Facility for the CO2e-emission-reduction project (gCO2e/MJ)

7.3 Quantification of the baseline emissions

To determine the emissions from the baseline for the compliance period, the following equation must be used:

EmissionsBaseline(tCO2e) = QP  × CIBaseline  × 1 tCO2e / 1000000 gCO2e × 3.6 MJ/kWh

Where:

QP = Measured quantity of low-CI electricity consumed at the Fossil Fuel Facility (kWh)

CIbaseline = Carbon intensity of the baseline electricity consumed at the Fossil Fuel Facility as determined below (gCO2e/MJ)

For existing facilities, the carbon intensity of the baseline (CIbaseline) is that of the electricity source being displaced by the low-CI electricity, with proof of electricity consumption of that source in 24-month period prior to project start date.

Refer to section 6.1 of this QM for the selection of the CI.

For existing facilities with increased electricity consumption, the carbon intensity of the baseline (CIbaseline) is calculated by the following equation:

CIBaseline = Σ  (QB  × CIB) / QT

Where:

QT = Measured quantity of electricity consumed at the Fossil Fuel Production Facility excluding any amount of electricity used in electric vehicles for the 24 month period prior to the project start date (kWh)

QB = Measured quantity of electricity consumed from each baseline electricity source (fossil fuel or network) for the 24 month prior to the project start date (kWh)

CIB = Carbon intensity of each individual baseline electricity source (fossil fuel or electrical network) (gCO2e/MJ)

For new facilities, three baseline options exist. The carbon intensity of the baseline (CIbaseline) is determined in accordance with section 6.1 of this QM.

8.0 Monitoring requirements

8.1 Data requirements

The following Table 1 provides monitoring, measurement, and quantification information that must be used to quantify the baseline and project emissions information. All requirements of the Regulations apply.

A CI of the low-CI electricity that is determined under section 79 and approved under section 85 of the Regulations, must adhere to all requirements, or the CI will cease to be valid, referred to in section 86 of the Regulations. The registered creator or CI contributor will also be required to submit a CI Pathway Report annually on April 30 following the compliance period, in order to use the CI to create credits, or it will become invalid under section 86(2) of the Regulations.

Baseline Scenario
Description Unit Measured/ Prescribed/ Calculated Method Frequency Additional Details Application/ Annual Credit Creation Report

Electricity consumed at the Fossil Fuel Facility (for each electricity source) (QB)

*For existing facilities only

kWh

Measured

Direct metering of electricity consumed. Continuous metering for a 24-month operating period prior to project start date Evidence of the source(s) of the baseline electricity that was consumed at the Fossil Fuel Facility during 24 months is required and provided on a monthly basis. Each source of electricity being used must be identified including the region of the electrical network from which it was sourced or the fossil fuel type. Application
Carbon intensity for (CIbaseline) gCO2e / MJ Prescribed or Calculated

Refer to section 6.1 of this QM:

Table 13 or 16 of the Specifications for Fuel LCA Model CI Calculations

Or

Calculated in section 7.3 of this QM
Annual

Required to use baseline electricity CI values, that is either calculated or prescribed dependent on baseline scenario.

Application & Annual Report
Carbon intensity for individual type of baseline electricity (CIB) gCO2e / MJ Prescribed

Refer to section 6.1 of this QM:

Table 13 or 16 of the Specifications for Fuel LCA Model CI Calculations
Application and Annual

Required to use individual baseline electricity CI values to calculate the baseline electricity CI through a weighted average in existing facility.

Application & Annual Report
Project
Description Unit Measured / Prescribed Method Frequency Additional Details Application / Annual Credit Creation Report
Electricity used on site from a low-CI electricity source (Qp) kWh Measured Direct metering of electricity consumed. Continuous metering for the compliance period Evidence that the low-CI Electricity Site commenced generation on or after July 1, 2017. Annual Report
Carbon intensity for low-CI electricity (CIp) gCO2e / MJ Prescribed or Calculated

Refer to section 5.3 of this QM:

Table 13 of Specifications for Fuel LCA Model CI Calculations

Or

The CI approved under subsection 85(1) of the Regulations or the actual carbon intensity specified in the carbon-intensity-pathway report referred to in subsection 123(1).
Annual

Required to use prescribed electricity carbon intensities dependent on the electricity sources, or an approved CI.

Annual Report
VCanada m3 Calculated Based on records and/or measurements, as the case may be. Crude oil may be measured in different units and converted into m3 at standard conditions. Annual

A volume of gasoline, diesel, crude oil or bitumen, as the case may be, may be included in VCanada only if records are retained that establish that this volume of gasoline, diesel, crude oil or bitumen met the conditions mentioned in the description of VCanada, for that type of project. An example of acceptable records is an attestation from the person purchasing the gasoline, diesel, crude oil or bitumen that it will ultimately be used in Canada.

The total volume VCanada as well as the volume of the gasoline, the diesel or the crude oil, as the case may be, included in VCanada must be included in the report.
Annual Report
VTotal m3 Calculated Based on records and/or measurements, as the case may be. Crude oil may be measured in different units and converted into m3 at standard conditions. Annual

The total volume VTotal as well as the volume of the gasoline, the diesel or the crude oil, as the case may be, included in VTotal must be included in the report.

Annual Report

Table 1: Data and Monitoring Requirements

9.0 Reporting requirements

9.1 Application for recognition of CO2e-Emission-Reduction Project (section 34 and Schedule 4 of the Regulations)

  1. Items 1, 2(c), (f) and (g) of Schedule 4 of the Regulations
  2. Name of Project
  3. An explanation of how the project is anticipated to lower the CI of a fuel in the liquid class
  4. For the owner or operator of the low-CI Electricity Site(s) and Fossil Fuel Facility
    1. Name
    2. Civic address
    3. Postal address
    4. Telephone number
    5. Name, title, telephone number and, if any, email address, of a contact person,
    6. Name of Fossil Fuel Facility or low-CI Electricity Site
  5. For the purpose of items 2(a) and (b) of Schedule 4 of the Regulations, Project Location of the Fossil Fuel Facility and each low-CI Electricity Site including GPS coordinates (5 decimals), civic addresses if any, and supporting documentation that includes aerial photographs, maps, or satellite imagery demonstrating the project locations.
  6. If applicable, the name, serial number, GPS coordinates (5 decimals) and, if any, civic address of any equipment with which the project is carried out, if the equipment is not located at the Fossil Fuel Facility or a low-CI Electricity Site.
  7. Evidence that the low-CI electricity commenced generation and consumption at a Fossil Fuel Facility on or after July 1, 2017.
  8. Baseline Scenario Description
    1. 24 months of evidence of the amount and source of electricity consumed at the Fossil Fuel Facility prior to the project start date, provided on a monthly basis
      1. For any portion of electricity supplied from the electrical network: the purchasing receipts for the 24-month period are required (on a monthly basis)
      2. For each fossil fuel sourced electricity produced on site: the technology description, fuel source, quantity of fuel, nameplate capacity of equipment, hours of operation, and electricity generated as measured by a meter for the 24-month period
    2. For an existing facility: the amount of product(s) outputted from the Fossil Fuel Facility for a 24-month period prior to the project start date (provided on a monthly basis), and evidence of which electricity source was displaced by the low-CI electricity (if there was no increase in product output and electricity consumption)
    3. For a new facility, supporting documentation and a description of the baseline electricity source selected
  9. Project Description
    1. Start date of the project including generation at low-CI Electricity Site and consumption at Fossil Fuel Facility
    2. Project components (e.g., equipment, systems, processes, technologies)
    3. Indication of if electricity is supplied to multiple locations from the low-CI Electricity Site
    4. For solar generated electricity
      1. Capacity of electricity generator
      2. Type of equipment
      3. Make and model of the equipment
      4. Hours of operation during a compliance period
      5. Total electricity generated throughout a compliance period (kWh)
    5. For wind generated electricity
      1. Capacity of electricity generator
      2. Nominal wind
      3. Diameter of the wind turbine
      4. Make and model of the equipment
      5. Hours of operation during a compliance period
      6. Total electricity generated throughout a compliance period (kWh)
    6. For any other type of low-CI electricity
      1. Capacity of electricity generator
      2. Make and model of the equipment
      3. Hours of operation during a compliance period
      4. Total electricity generated throughout a compliance period (kWh)
    7. If applicable, the carbon intensity for each source of electricity approved by the Minister under section 85(1) and the alphanumeric ID
    8. All inputs into project scenario and baseline condition listed in Table 1

9.2 Annual credit creation report

  1. Report required as per section 120 of the Regulations with the requirements in Schedule 11
  2. All inputs into project scenario and baseline condition listed in Table 1.

10.0 Record keeping requirements

Refer to sections 165 to 168 of the Regulations and the Monitoring Plan referred to in section 136 and Schedule 21.

11.0 Verification

For the verification of a report referring to a CO2e-emission-reduction project, the relevant requirements set out in sections 129 to 154 of the Regulations and the relevant specifications set out in the Method for Verification and Certification − Clean Fuel Regulations apply, including the following requirements.

11.1 Materiality thresholds

11.1.1 Quantitative materiality thresholds

The quantitative materiality thresholds to be applied while verifying the Annual Credit Creation Report for a CO2e-emission-reduction project, are the quantitative materiality threshold described in sections 150 and 151 of the Regulations and in the Methods for Verification and Certification - Clean Fuels Regulations.

11.1.2 Qualitative materiality thresholds

The qualitative materiality thresholds to be applied while verifying the Annual Credit Creation Report for a CO2e-emission-reduction project are described in the Methods for Verification and Certification – Clean Fuels Regulations

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