Renewable Transport Fuel Obligation DfT presentation to LowCVP Fuels - - PowerPoint PPT Presentation

Renewable Transport Fuel Obligation

DfT presentation to LowCVP Fuels Working group, 5 October 2006

I ntroduction

• Currently finalising details of scheme prior to formal

consultation in early 2007

• A number of detailed issues still to be resolved – slides

below set out current working assumptions and should not be taken as a statement of Government policy

• Areas for further discussion include:

Charging Banking Carbon and sustainability reporting

Explaining the Schem e Design

• Key Assumptions
• Main Operational Processes

• 1. We have made a number of assumptions in
• rder to take the design forward within programme

timescales…

• The Obligation period is one year, from April 15th to April 14th.
• The Obligation rate covers all road fuels except road fuel gases

and is applied to total fuel sales

• Certificates are currency units associated with a period – they

do not have an identifier, an expiry date or other properties

• Anyone who can supply the required information can register on

the scheme and trade certificates

Assumptions (continued)

• There will be banking and redemption of certificates from

previous periods

• Recycling will be required and permissible
• Monthly reporting of CES data and other scheme performance

information will be required.

• There will not be an information gateway from the HMRC
• There will not be any charging, at least in the early years of the

scheme.

Assumptions (continued)

• There will be banking and redemption of certificates from

previous periods

• Recycling will be required and permissible
• Monthly reporting of CES data and other scheme performance

information will be required.

• There will not be an information gateway from the HMRC
• There will not be any charging, at least in the early years of the

scheme.

• 2. Main Operational Processes
• Registration process
• Awarding of certificates
• Trading of certificates
• End of year reconciliation
• Processing of carbon and sustainability reports
• Possible establishment of certification system for C&S reports
• Compliance and enforcement

The “Register a new account” process

• Fossil fuel suppliers above the de minimis

level log-on and do first part of registration:

• Identity of organisation, directors and

(max 3) users

• Proofs of identity
• Expected volumes

Confirm user names and complete security process Administrator verifies identity information Administrator requests further information e.g. user names and passwords, bank details for payments etc Confirm log-on successful, provide account number etc.

We expect that most supplier accounts will be registered during system piloting and roll-out

The Administrator Suppliers and Traders

The “Aw ard Certificates” process

15 Aug 14 Sept Monthly reporting interval 14 Oct Monthly reporting deadline Suppliers submit volume data that they have previously given to HMRC Suppliers submit C&S data apportioned to the fuel delivered Administrator does risk profiling to identify any unusual volumes

• Automated data upload
• Automated validity check
• No evidence provided

A “cooling-off” period allows any inadvertent errors to be corrected

Evidence is requested in the case of suspicious volumes and certificate issue is suspended Administrator awards certificates to all approved balances 14 Nov End of cooling-off period Administrator asks for confirmation

The Administrator Suppliers

The “Trade Certificates” process

Suppliers agree the details of a trade Administrator transfers the certificates from one account to the other Vendor submits details

• f number of

certificates, date of transaction and purchaser account number Suppliers agree the details of a trade

• Data is submitted via

internet interface

• Transaction is automated
• No purchaser confirmation is

required

• Any disputes between suppliers re

the value or timing of the transaction are outside the scheme. Purchaser can check details of trade on certificate balance

The Administrator Suppliers and Traders

The “End-of-period reconciliation” process

14 June 14 Aug Auditor’s opinion deadline Suppliers finalise their volumes with HMRC and provide an auditor’s opinion that the volumes reported to the Administrator and HMRC tally. Administrator issues provisional fuel volumes and obligation volumes Suppliers may trade to meet any further deficit in their position Administrator issues revised fuel volumes and obligation volumes Administrator recycles buy-out funds to suppliers 31 Aug End of cooling-off period Supplementary trading period ends Suppliers meet their obligations with certificates and/or buy-out payments 7 Nov Late payment deadline Administrator issues final volumes Biofuel suppliers decide whether to surrender or bank certificates The Administrator Suppliers

Processing m onthly C&S reports

• Projects on C&S initiated –extensive consultation process
• Monthly reporting provides regular data for Ministers about

scheme impact on C&S

• Reporting requirement gradual, evolving as the global industry

changes its practices to report more data

• Evolution subject to discussion and agreement with stakeholders
• Issue of certificates dependent on timely receipt of the C&S report,

but not the values of any fields requested.

• The intention is to move to issuing more certificates for fuel with a

better carbon saving performance and possibly minimum sustainability standards

Possible certification regim e for C&S reporting

• We are investigating the possibility of establishing a certification

system for C&S reporting.

• This may constitute an additional section within an existing

standard e.g. ISO 9000

• The standard would be agreed under the auspices of UKAS
• UKAS would then accredit organisations (e.g. BSi, VCA) to

assess suppliers against the standard

Possible certification regim e for C&S reporting ( cont)

• Suppliers could apply for certification, be assessed and then be

granted certification that their C&S reporting systems meet the standard

• Suppliers so certified would not be subject to C&S reporting

audits by the Administrator

• We will seek to make the standard and the assessment process

as light touch as possible, and economical for all suppliers

The “Inspect for, and enforce, compliance” process comprises of a set of activities designed to ensure compliance and minimise fraud

• The Administrator must protect the Government and the scheme

from fraud.

• Fraud can arise in a number of ways, including:
• Evasion of the obligation
• Under reporting of fossil fuels
• Over reporting of biofuels
• Bogus certificate claims (i.e. by persons / organisations with no

biofuel capability whatsoever, but hoping to claim and sell certificates without discovery)

• Hacking into the Administrator’s systems

Compliance process (cont)

• The Administrator will have a number of tools at his disposal

to combat these risks:

• Rigorous registration process
• Desk research, risk profiling, access to public information
• Requests for evidence
• Auditor’s opinion on suppliers’ volumes
• Audits of “high-risk” suppliers

Conclusions

• Grateful for feedback on any of the issues raised here
• Still time to make changes ahead of formal consultation
• Believe scheme design strikes good balance between

protecting integrity of scheme and minimising administrative workload