ERGaR RED MB scheme

The core principles of the ERGaR RED MB scheme

Sustainability

The details of the economic operator, unique identification number, feedstock classification, GHG emission intensity, date of expiry and name of the conformity assessment body that has issued the relevant Proof of Sustainability (PoS) must be clearly indicated on the Proof of Origin (PoO). The PoS must be inseparably attached to the PoO.

Export destination

ERGaR RED MB is exclusively concerned with biomethane consignments destined for export and not counted in the country of production to meet national biofuel quota targets. If a biomethane consignment has been counted towards meeting the national biofuel quota target in its country of production, then the biomethane consignment in question is not eligible for an ERGaR PoO and must not be exported through the ERGaR RED MB voluntary scheme.

Chain of custody

For biomethane injected into the European natural gas network, the complete chain of custody must be covered. Since it is impossible to track biomethane injected into the natural gas pipelines in a physical sense, the full chain of custody (from raw material supplies to end-user) is covered in two stages:

The first part of the chain of custody starts with the raw material supplies and covers production (anaerobic digestion followed by biogas upgrading, solid biomass gasification followed by methane synthesis, etc.) up to injection into the natural gas network. This part is documented by the established sustainability verification procedures defined in the RED and the resulting document is attached to the electronic dataset of the ERGaR PoO.

The second part of the chain of custody covers pipeline transportation from the point of grid injection until the withdrawal by the end-user. This part is administered by the ERGaR RED MB voluntary scheme, applying mass balancing methodology for biomethane injected into the natural gas grid.

 

Figures 1 and 2. – Chain of Custody: Biomethane in the transport sector (source: AGCS, 2020)

Single logistical facility

The interconnected European natural gas network is treated as a single logistical facility with the effect that mass balancing according to Art. 18 sec. 1.  RED shall be done at European level. Biomethane consignments injected into the grid anywhere within the territory of the European Union, the EFTA and the European Economic Community, and corresponding biomethane consignments withdrawn from the grid anywhere within the territory of the European Union, the EFTA and the European Economic Community may be balanced. However, ERGaR RED MB mass balancing covers only biomethane consignments transferred internationally, i.e. crossing at least one country border.

Only interconnected gas grids may count as a single logistical facility under the mass balance system. Gas grids in the states of the European Union, EFTA and European Economic Community which do not have interconnections with other gas grids cannot transfer biomethane to other states (of the European Union, EFTA and European Economic Community), as this would be contrary to the principles of the mass balance system.

Mass balancing

Mass balancing within a single logistical facility means that it is sufficient to document the input (injection) and the output (withdrawal): there is no need to track or document the physical movement of biomethane within the logistical facility, as long as the mass balance between the injection and withdrawal points can be properly documented.

Biomethane volumes injected into the interconnected European natural gas network are mass balanced with matching withdrawn gas volumes on a consignment to consignment basis.

The 15 basics on the functions of the ERGaR RED MB Scheme

 

  1. the mass balancing is performed within the scheme on a consignment to consignment basis,
  2. two physical transactions are balanced:
    • the injection in the country of production and
    • the withdrawal in the country of consumption;
  3. the two physical transactions are decoupled in place and time but are strictly connected by the ERGaR PoO;
  4. the interconnected European natural gas network provides the physical connection between the two transactions/consignments;
  5. the interconnected European natural gas network is treated as a single, closed logistical facility;
  6. the ERGaR RED MB Scheme administers the transfer of the biomethane consignments via the European natural gas network by balancing the input and output for each biomethane consignment;
  7. the ERGaR RED MB scheme covers solely the cross-border transfer through the European natural gas network, the ERGaR PoOs serve only for the documentation of cross-border transfer, no ERGaR PoO may be created for a domestic transaction – the injection and withdrawal transactions must be realised in different countries (connected through the interlinked European natural gas network);
  8. no change of ownership occurs during the transfer within the ERGaR RED MB Scheme (while the transfer is realised within the single logistical facility);
  9. economic operators have no accounts in the ERGaR RED MB Scheme (and are not connected to the ExtraVert Platform);
  10. the ExtraVert Platform developed for the ERGaR RED MB scheme by Vertogas B.V. provides for transfer of the data packages for each biomethane consignment separately;
  11. only the national biomethane registries have accounts in the scheme’s administration and only these organisations are connected to the ExtraVert Platform;
  12. ERGaR PoOs may be created exclusively for biomethane consignments having been certified as sustainable in accordance with Article 18. of the RED. regulation;
  13. a sustainable biomethane consignment for which an ERGaR PoOs has been created part of the natural gas/biomethane “blend” that the ERGaR mass balancing system relates to;
  14. the ERGaR RED MB Scheme handles only cross-border transactions,
  15. no ERGaR PoO can be created for a biomethane consignment which is placed on the market in the country of production as renewable fuel.

Mass balancing within a single logistical facility

Mass balancing

 Definition

“The mass balance system shall operate at a level where consignments could normally be in contact, such as in a container, processing or logistical facility or site (defined as a geographical location with precise boundaries within which products can be mixed)”.[1]

Mass balancing within a single logistical facility means that it is sufficient to register/document the input (injection) and the output (withdrawal): there is no need to track or document the physical movement of biomethane within the logistical facility, as long as the mass balance between the injection and withdrawal points can be properly documented.

The mass balance system applied by ERGaR RED MB complies with Art. 18 sec. 1 RED, as it adheres to the following principles:

  • Products with different sustainability characteristics (biomethane consignments and fossil natural gas) are physically mixed in the closed logistical facility (the interconnected European natural gas network) but each sustainable biomethane consignment is administratively segregated by the PoO.
  • The system ensures that for each volume of sustainable biomethane for which claims are made at withdrawal from the logistical facility, an equivalent amount of sustainable certified material has been injected into the logistical facility (the interconnected European natural gas network).
  • The sustainability information related to the individual physical biomethane consignment remains connected with the volume related information within the ERGaR RED MB scheme. The energy and the intrinsic value may only be transferred together – there is no transfer in sustainability information between parties without trading the physical product.
  • Each participant in the supply chain keeps track of all sustainable biomethane consignments they source and sell; no participant can ever sell more certified product than they have sourced.

With regard to distributing biomethane (blended with natural gas) through the natural gas pipeline system, the interconnected European natural gas network is defined as a logistical facility. Correspondingly, the ERGaR RED MB mass balance system is operated at the level of the interconnected European natural gas network as a logistical facility.

The common characteristics of mass balance systems include the requirement thatPhysical product and sustainability information are coupled when they are traded between parties. There cannot be trade in sustainability information between parties without trading physical products between the same two parties (as is possible in a book and claim system).”, (Ecofys, 2013, https://bit.ly/3hpLMEF)

This requirement is fulfilled in the ERGaR RED MB scheme by the condition that ownership of an ERGaR PoO (coupled with sustainability information) does not change within ERGaR RED MB and the same economic operator acts at both ends.

Mass Balancing via the ERGaR RED MB Scheme

Within the ERGaR RED MB voluntary scheme, mass balancing is the methodology applied to trace the chain of custody of sustainable biomethane distributed along the European natural gas network. Mass balancing is performed on a consignment by consignment basis.

Sustainable biomethane consignments for which an ERGaR PoO has been issued are part of the natural gas/biomethane “mixture” (according to Cf. Art. 18 sec. 1 RED) that the ERGaR mass balancing system relates to. Mass balancing must be carried out on a consignment by consignment basis for two principal reasons:

  • the full chain of custody can be covered only in this way;
  • individual biomethane consignments have different sustainability characteristics.

For each sustainable biomethane consignment, the volume of biomethane injected into the natural gas network and the methane volume withdrawn from the gas grid must be equal: Both volumes must be converted to energy units and the mass balance must be established in energy units.

The link between the two consignments (injected and withdrawn) is established by means of the PoOs registered and handled within ERGaR RED MB. One PoO represents one sustainable biomethane consignment. Only volumes that have been injected and subsequently booked into ERGaR RED MB may then be withdrawn and booked out of ERGaR RED MB. This ensures that the mass-balance can never be negative and provides a high degree of legal certainty.

In the ERGaR RED MB mass balancing procedure, the national biomethane registries are responsible for withdrawals on their territory: the registry operating in the consuming country is not allowed to exchange the ERGaR PoO for a domestic PoO without first receiving evidence from the economic operator with title to the PoO, that the corresponding physical withdrawal transaction has taken place.

 

Figure 3. – Mass balancing system according to the ERGaR RED MB voluntary scheme (source: REGATRACE project, 2019)

 The European natural gas network as a single logistical facility

A Europe-wide single logistical facility

To enable proper administration (via mass-balance methodology) at the European level, the interconnected natural gas network operating within the territory of the European Union, the EFTA and the European Economic Community is treated as a single, closed logistical facility with the effect that mass balancing according to RED Art. 18 sec. 1.  shall be done at the European level. Biomethane consignments injected into the grid anywhere within the territory of the European Union, the EFTA and the European Economic Community, and corresponding biomethane consignments withdrawn from the grid anywhere within the territory of the European Union, the EFTA and the European Economic Community may be balanced. However, ERGaR RED MB mass balancing exclusively covers biomethane consignments traded internationally, i.e. crossing at least one country border.

Only interconnected gas grids can count as a single logistical facility under the mass balance system. Gas grids in the states of the European Union, EFTA and European Economic Community that have no interconnections with other gas grids cannot transfer biomethane to other states (of the European Union, EFTA and European Economic Community), as this would be contrary to the principles of the mass balance system.

Biomethane in the European gas grid

Mass balancing for a single consignment injected into the interconnected European natural gas network by the ERGaR RED MB voluntary scheme is illustrated below, taking as an example the cross-border transfer of a biomethane consignment from the Netherlands to Denmark:

Figure 4. – Example of biomethane mass balancing in the European natural gas network (source: ERGaR, 2020)

Provision of biomethane and gas data

Injection data

Biomethane can be registered as injected into the interconnected European natural gas network upon injection into either the transmission system or into the distribution system as defined in Articles 2.3. and 2.5. of Directive 2009/73/EC concerning common rules for the internal market in natural gas. Correspondingly, the primary source of information regarding the injected volume is:

  • either a transmission system operator (as defined in Art. 2.4.);
  • or a distribution system operator (as defined in Art. 2.6.).

The fact of injection and the injected volume must be verified via a third-party audit in all cases.

Withdrawal data

The economic operator requesting the transfer of the ERGaR PoO to a domestic PoO in the country of consumption must provide evidence that they have withdrawn the same gas volume as is represented by the ERGaR PoO. The information of the withdrawn gas volume is based on metered data.

According to the ERGaR RED MB scheme rules,  the withdrawal must be confirmed by

  • either a natural gas transmission system operator;
  • or a natural gas distribution system operator.

The fact of withdrawal and the withdrawn volume must be covered by third party audit at all economic operators having required the transfer of PoOs to them.

 

For further information on the role and the functioning of the ERGaR RED MB scheme, please contact us.

 

[1] Communication from the Commission on voluntary schemes and default values in the EU biofuels and bioliquids sustainability scheme (2010/C 160/01) Article 2.2.3