EUROPEAN COMMISSION

DIRECTORATE-GENERAL
CLIMATE ACTION
Directorate B – Carbon Markets & Clean Mobility
Unit B.2 – ETS (II): Implementation, Policy Support & ETS Registry

Guidance Document
The Monitoring and Reporting Regulation –
General guidance for installations

MRR Guidance document No. 1,

Updated Version, 10 February 2022

This document is part of a series of documents provided by the Commission ser-

vices for supporting the implementation of the “Monitoring and Reporting Regu-
lation (the “MRR”). A new version of the MRR has been developed for the use in
the 4th phase of the EU ETS, i.e. Commission Implementing Regulation (EU)
2018/2066 of 19 December 2018 in its current version1.
The guidance represents the views of the Commission services at the time of
publication. It is not legally binding.
This guidance document takes into account the discussions within meetings of
the informal Technical Working Group on MRVA (Monitoring, Reporting, Verifica-
tion and Accreditation) under the Working Group III (WGIII) of the Climate
Change Committee (CCC), as well as written comments received from stakehold-
ers and experts from Member States 2. This guidance document was unanimously
endorsed by the representatives of the Member States of the Climate Change
Committee by written procedure ending on 7 February 2022.
All guidance documents and templates can be downloaded from the documenta-
tion section of the Commission’s website at the following address:
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en .

1
Updated by Commission Implementing Regulation (EU) 2020/2085 of 14 December 2020 amend-
ing and correcting Implementing Regulation (EU) 2018/2066 on the monitoring and reporting of
greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of
the Council; the consolidated MRR can be found here:
http://data.europa.eu/eli/reg_impl/2018/2066/2022-01-01
2
“Member States” in this document means all countries that apply the EU ETS, i.e. the 27 EU Mem-
ber States plus the EFTA countries Norway, Iceland and Liechtenstein.

1
1
 Version History
Date Version status Remarks
16 July 2012 published Endorsed by CCC on 11 July 2012
27 November re-published Minor updates taking into account general up-
2017 dates of the MRVA suite of guidance materials;
Hyperlinks updated
10 February Re-published Major revision: move from MRR 2012 to MRR
2022 2018, including its revision in 2020, i.e. revision
for use in the 4th phase of the EU ETS; FAQ in-
cluded; guidance on RED II criteria included

2
TABLE OF CONTENTS
1 SUMMARY ................................................................................. 6
1.1 Where should I start reading? .............................................................6
1.2 What is new in the MRR? .....................................................................7

2 INTRODUCTION ........................................................................ 9
2.1 About this document ............................................................................9
2.2 How to use this document ...................................................................9
2.3 Where to find further information ......................................................10

3 THE EU ETS COMPLIANCE CYCLE....................................... 13

3.1 Importance of MRV in the EU ETS .....................................................13
3.2 Overview of the compliance cycle ....................................................14
3.3 The importance of the monitoring plan ............................................16
3.4 Milestones and deadlines ...................................................................17
3.4.1 The annual compliance cycle ................................................................17
3.4.2 Preparing a new trading period .............................................................19
3.5 Roles and responsibilities ..................................................................20

4 CONCEPTS AND APPROACHES ........................................... 21

4.1 Underlying principles .........................................................................21
4.2 Source streams, emission sources and related terms ...................23
4.3 Monitoring approaches ......................................................................24
4.3.1 Standard methodology ..........................................................................25
4.3.2 Mass balance approach ........................................................................28
4.3.3 Measurement-based approaches .........................................................30
4.3.4 Fall-back methodology ..........................................................................31
4.3.5 Combinations of approaches ................................................................32
4.4 Categorisation of installations, emission sources and source
streams.................................................................................................33
4.4.1 Installation categories ...........................................................................33
4.4.2 Installations with low emissions ............................................................35
4.4.3 Source streams .....................................................................................35
4.4.4 Emission sources ..................................................................................37
4.5 The tier system ....................................................................................37
4.6 Reasons for derogation ......................................................................38
4.6.1 Unreasonable costs ..............................................................................39
4.7 Uncertainty...........................................................................................41

5 THE MONITORING PLAN ....................................................... 43

5.1 Developing a monitoring plan............................................................43
5.2 Selecting the correct tier ....................................................................46
5.3 Uncertainty assessment as supporting document..........................50

3
 5.3.1 General requirements ...........................................................................50
5.3.2 Simplifications .......................................................................................51
5.3.3 Further guidance ...................................................................................52
5.4 Procedures and the monitoring plan ................................................52
5.5 Data flow and control system ............................................................56
5.6 Keeping the monitoring plan up to date ...........................................58
5.6.1 Significant modifications ........................................................................59
5.6.2 Non-significant modifications of the monitoring plan .............................60
5.7 The improvement principle ................................................................61

6 CALCULATION-BASED APPROACHES ................................ 63

6.1 Monitoring of activity data .................................................................63
6.1.1 Tier definitions .......................................................................................63
6.1.2 Relevant elements of the monitoring plan .............................................64
6.2 Calculation factors – Principles.........................................................67
6.2.1 Default values ........................................................................................68
6.2.2 Laboratory analyses ..............................................................................71
6.3 Calculation factors – specific requirements ....................................72
6.3.1 Emission factor ......................................................................................73
6.3.2 Net calorific value (NCV) .......................................................................74
6.3.3 Oxidation factor and conversion factors ................................................74
6.3.4 Carbon content in case of mass balances ............................................75
6.3.5 Biomass fraction ....................................................................................75
6.3.6 Applicability of RED II criteria ................................................................76
6.3.7 Special rules for biogas .........................................................................80
6.3.8 Special rules for mixed process materials ............................................80
6.4 PFC emissions.....................................................................................81

7 SIMPLIFIED APPROACHES.................................................... 82
7.1 Installations with low emissions .......................................................82
7.2 Other “simple” installations ...............................................................83
7.2.1 Practical approach to simplifications .....................................................84
7.2.2 Determining the scope for simplified approaches .................................84

8 CEMS ....................................................................................... 87
8.1 General requirements .........................................................................87
8.2 N2O emissions .....................................................................................89
8.3 Transferred / inherent CO2, N2O and CCS ........................................90
8.3.1 Transferred CO2 and CCS ....................................................................90
8.3.2 Transferred N2O ....................................................................................92
8.3.3 Inherent CO2 .........................................................................................92

9 ANNEX I ................................................................................... 93
9.1 Acronyms .............................................................................................93
9.2 Legislative texts ..................................................................................94

4
10 ANNEX II – FAQS .................................................................... 95
10.1 What type of costs are included in or excluded from the
determination of unreasonable costs? .............................................95
10.2 Is it possible to apply a mass balance approach to activities, for
which the MRR does not explicitly allow a mass balance
approach? ............................................................................................96
10.3 How to determine unreasonable costs when applying no-tier (fall-
back) monitoring approaches for activity data? ..............................97
10.4 To what extent are the tier requirements for minor source streams
different to those for major source streams? ..................................99
10.5 Is it possible to apply tier 2a for net calorific value (NCV) and tier
2b for emission factor (EF) or vice versa for the same fuel? .......100
10.6 What does “additional effort” mean in case of de-minimis source
streams or for installations with low emissions? ..........................101
10.7 How to determine the oxidation factor by taking into account the
carbon content of ashes? ................................................................102
10.8 How are emissions to be calculated if the emission factor (EF) and
net calorific value (NCV) are based on analyses per batch? ........104
10.9 Application of Article 31(4); clarification on how to apply the 1%
rule ......................................................................................................105
10.10 Article 26(3): What does a conservative estimate mean in practice,
what does it look like? Are there any generic figures that could be
used, for example emissions from a typical diesel back-up
generator? ..........................................................................................106
10.11 Does an operator of an installation with low emissions have to
submit improvement reports? .........................................................106
10.12 Does the determination of unreasonable costs require the use of a
depreciation period? How is it determined and how should
evidence be provided? .....................................................................107
10.13 Do CO2 emissions stemming from the purification of natural gas
have to be monitored and reported? ..............................................107
10.14 Do fuels stored in pressurised gas-bottles (e.g. propane,
acetylene, etc.) and used for certain process steps within the
installation have to be monitored and reported? ..........................108
10.15 Do non-significant source streams (e.g. with single digit annual
emissions) and mobile sources need to be covered by the
Monitoring Plan? ...............................................................................108
10.16 What is the difference between flares and post-combustion
units? ..................................................................................................109
10.17 How to report emissions from mixed (fossil-biomass) materials 110

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 1 SUMMARY
Monitoring and reporting of emissions is a cornerstone of the EU ETS 3 (the Eu-
ropean Union Emissions Trading System). Following the revisions of the EU ETS
Directive in 2009 and 2018, updated rules for monitoring and reporting have been
laid down in the form of an EU Regulation (the Monitoring and Reporting Regu-
lation, hereinafter the “MRR”). At the same time, a Regulation for verification of
emissions and accreditation of verifiers (the “AVR”) was established. In 2018,
both Regulations were revised and republished. A further revision took place in
2020. This guidance document builds on these new Regulations, following the
2018 and 2020 revisions.
This guidance document is part of a series of guidance documents and electronic
templates provided by the Commission services to support the EU-wide harmo-
nised implementation of the MRR. It gives an introduction to the EU ETS compli-
ance system, the concepts used for monitoring and reporting of stationary instal-
lations, and then describes in more detail the requirements laid down in the MRR
for the possible monitoring approaches. This guidance does not add to the man-
datory requirements of the MRR, but it is aimed at assisting in more correct inter-
pretation and facilitated implementation.
This guidance document represents the views of the Commission services at the
time of publication. It is not legally binding.

Note that this document does not cover requirements for aircraft operators.
Aircraft operators in search of guidance on monitoring and reporting in the EU
ETS are invited to consult guidance document No. 2.

1.1 Where should I start reading?

This document has been developed to guide readers who are new to the EU ETS
as well as those who are already familiar with the EU ETS. The latter group should
in particular pay attention to sections which are marked with a sign4
throughout the document (for a list of guiding symbols see section 2.2). Section
1.2 of this summary will serve as useful starting point.
Readers with little experience of the EU ETS and its MRV (Monitoring, Reporting
and Verification) system should read in particular chapter 3 (about the EU ETS
compliance cycle) and chapter 4 (concepts and approaches). All readers who
need to monitor an installation and therefore have to develop (or update) a mon-
itoring plan, are advised to check chapter 5 on monitoring plans. Depending on
the monitoring approaches relevant for the installation to be monitored, chapters
6 (calculation-based approaches) and 8 (measurement-based approaches) will
give valuable insight into the details of MRR requirements for those approaches.

3
For an explanation of acronyms and for references of legislative texts please see the annex of this
document.
4
In the original version of this document, the New! icon was used for highlighting elements that were
new compared to the 2nd phase of the EU ETS. In this update, however, the symbol indicates
changes between phases 3 and 4.

6
The MRR has put considerable emphasis on simplifying monitoring wherever this
is possible for cost effectiveness reasons without compromising the robustness
of the monitoring. Operators in search for such options are advised to look out for
the “simplified!” icon.
Operators of installations with low emissions (for definition see section 4.4.2) small

should look for the “small” icon, and in particular to section 7.1. Finally, the MRR
provides an option for Member States to employ standardised and simplified
monitoring plan templates. This option is discussed in detail in section 7.2 of this
document.

1.2 What is new in the MRR?

The MRR was revised for phase 4 of the EU ETS (starting on 1 January 2021)
taking into account extensive discussions with Member States, gathering their
experience during phase 3. The following main elements can be highlighted:
 Improvements of the wording in general, with the aim of making the MRR more
readable and user-friendly, but also for making it legally clearer and to correct
some inconsistent or incomplete phrasing;
 Better alignment with other legislation, in particular the AVR and the free allo-
cation rules (the FAR5 and ALCR6), e.g. by removing Article 12(3);
 More clarity on the scope of process emissions regarding the coverage of or-
ganic or mixed (inorganic (carbonate) and organic) materials, including urea
for flue gas scrubbing;
 Some simplifications of the tier system, e.g.:
 Values guaranteed by supplier comply with tier 2a instead of previously tier
1 (Article 31(d));
 Competent authorities can accept stoichiometric values as meeting tier 3
requirements for pure chemical substances;
 More alignment between calculation- and measurement-based approaches;
 More clarity regarding tier levels and more flexibility for the determination of
the biomass fraction of (mixed) fuels and materials;
 Adjustment of the rules regarding the treatment of inherent CO2 and (pure)
“transferred CO2”, including the rule that CO2 chemically bound in PCC (Pre-
cipitated Calcium Carbonate) shall be considered not emitted;
 Addition of rules for transfer of N2O between installations;
 Article 68 (force majeure) has been removed, as it is not relevant anymore;

5
Free Allocation Rules (Commission Delegated Regulation (EU) 2019/331 of 19 December 2018
determining transitional Union-wide rules for harmonised free allocation of emission allowances
pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council)
6
Allocation Level Changes Regulation (Commission Implementing Regulation (EU) 2019/1842 of
31 October 2019 laying down rules for the application of Directive 2003/87/EC of the European
Parliament and of the Council as regards further arrangements for the adjustments to free alloca-
tion of emission allowances due to activity level changes)

7
  Clarification of the monitoring of emissions from flue gas scrubing, and some
other minor issues in the sector-specific rules of Annex IV.
There have also been several changes relevant for aircraft operators in order to
align EU ETS requirements with rules for CORSIA 7, where relevant and useful.
Those changes are outlined in Guidance Document No. 2.
The second revision focussed on:
 Alignment of requirements of the Renewable Energy Directive II (RED II)8
with the MRR regarding sustainability and greenhouse gas savings cri-
teria for biomass;
Note that these alignments will apply only from 1 January 2022, in order
to allow sufficient time to the Member States for transposing the RED II into
national law (by 30 June 2021) and to apply the same rules during the complete
reporting year, which is a calendar year in the EU ETS. This also aims to avoid
a non-harmonised implementation of the EU ETS across the EU.
 The determination of biogas fed to and used from a natural gas grid (and a
similar approach for biofuels used for aviation);
 Better treatment of materials that contain both inorganic (carbonate) and other
forms of carbon;
 Some minor technical or language-related corrections;
 Introduction of the GWP (Global Warming Potential) values in line with the
IPCC’s 5th Assessment Report (AR5).

Note: some Article numbers have changed between the “old” (2012/601) and
“new” (2018/2066) MRR. The correlation table below (taken from Annex XI of the
new MRR) applies. In this guidance document, all MRR Article numbers refer
to the “new MRR” (Regulation (EU) 2018/2066 including its 2020 amend-
ments).

Table 1: Correspondence table between “old” (2012) and “new” (2018) MRR

Commission Regulation Commission Implementing

(EU) No 601/2012 Regulation (EU) 2018/2066
Article 1 to 49 Article 1 to 49
- Article 50
Article 50 to 67 Article 51 to 68
Article 68 -
Article 69 to 75 Article 69 to 75
- Article 76
Article 76 to 77 Article 77 to 78
Annex I to X Annex I to X
- Annex XI

7
ICAO’s “Carbon Offsetting and Reduction Scheme for International Aviation”
8
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on
the promotion of the use of energy from renewable sources (recast)

8
 2 INTRODUCTION

2.1 About this document

This document has been written to support the MRR (Monitoring and Reporting
Regulation), by explaining its requirements in a non-legislative language. For
some more specific technical issues, further guidance documents9 are available.
The set of guidance documents is further complemented by electronic tem-
plates10 for information to be submitted by operators to the competent authority.
However, it should always be remembered that only the Regulation is legally
binding.
This document interprets the Regulation regarding requirements for installations.
It builds on earlier guidance as well as best practice identified during earlier
phases of the EU ETS. It also takes into account the valuable input from the task
force on monitoring and reporting established under the EU ETS Compliance Fo-
rum, and from the informal Technical Working Group on Monitoring, Reporting,
Verification and Accreditation (TWG on MRVA) of Member State experts estab-
lished under Working Group 3 (WG III) of the Climate Change Committee (CCC).

2.2 How to use this document

Where article numbers are given in this document without further specification,
they always refer to the MRR in its current version11. For acronyms, references
to legislative texts and links to further important documents, please see the An-
nex.
This document only refers to emissions starting from 2021 (with the exception of
biomass-related topics, which will apply in full only from 2022, see section 6.3.6).
A “New!” symbol (such as on the margin here) indicates where changes to re-
quirements compared to the MRR 2012 have taken place.

This symbol points to important hints for operators, verifiers and competent au-
thorities.

This indicator is used where significant simplifications to the general requirements

of the MRR are promoted.

The light bulb symbol is used where best practices are presented.

The small installation symbol is used to guide the reader to topics which are ap- small

plicable for installations with low emissions.

The tools symbol tells the reader that other documents, templates or electronic
tools are available from other sources.

9
See section 2.3.
10
Note that Member States may define their own templates, which must contain at least the same
information as the Commission’s templates.
11
Implementing Regulation (EU) 2018/2066; The consolidated MRR can be found here:
https://eur-lex.europa.eu/eli/reg/2018/2066

9
 The book symbol points to examples given for the topics discussed in the sur-
rounding text.

2.3 Where to find further information

All guidance documents and templates provided by the Commission on the basis
of the MRR and the AVR can be downloaded from the Commission’s website at
the following address:

https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en

The following documents are provided12:

 “Quick guides” as introduction to the guidance documents below. Separate
documents are available for each audience:
 Operators of stationary installations;
 Aircraft operators;
 Competent Authorities;
 Verifiers;
 National Accreditation Bodies.
 Guidance document No. 1 (this document): “The Monitoring and Reporting
Regulation – General guidance for installations”.
 An exemplar simplified monitoring plan in accordance with Article 13 MRR.
 Guidance document No. 2: “The Monitoring and Reporting Regulation – Gen-
eral guidance for aircraft operators”. This document outlines the principles and
monitoring approaches of the MRR relevant for the aviation sector. It also in-
cludes guidance on the treatment of biomass in the aviation sector, making it
a stand-alone guidance document for aircraft operators.
 Guidance document No. 3: “Biomass issues in the EU ETS”: This document
discusses the application of sustainability criteria for biomass, as well as the
requirements of Articles 38 and 39 of the MRR. This document is relevant for
operators of installations and useful as background information for aircraft op-
erators.
 Guidance document No. 4: “Guidance on Uncertainty Assessment”. This doc-
ument for installations gives information on assessing the uncertainty associ-
ated with the measurement equipment used, and thus helps the operator to
determine whether he can comply with specific tier requirements.
 Guidance document No. 4a: “Exemplar Uncertainty Assessment”. This doc-
ument contains further guidance and provides examples for carrying out un-
certainty assessments and how to demonstrate compliance with tier require-
ments.

12
This list reflects the status at the time of writing this updated guidance. Further documents may be
added later.

10
 Guidance document No. 5: “Guidance on sampling and analysis” (only for in-
stallations). This document deals with the criteria for the use of non-accredited
laboratories, development of a sampling plan, and various other related issues
concerning the monitoring of emissions in the EU ETS.
 Guidance document No. 5a: “Exemplar Sampling Plan”. This document pro-
vides an example sampling plan for a stationary installation.
 Guidance document No. 6: “Data flow activities and control system”. This doc-
ument discusses possibilities to describe data flow activities for monitoring in
the EU ETS, the risk assessment as part of the control system, and examples
of control activities.
 Guidance document No. 6a: “Risk Assessment and control activities – ex-
amples”. This document gives further guidance and an example for a risk
assessment.
 Guidance document No. 7: “Continuous Emissions Monitoring Systems
(CEMS)”. This document gives information on the application of measurement-
based approaches where GHG emissions are measured directly in the stack,
and thus helps the operator to determine which type of equipment has to be
used and whether he can comply with specific tier requirements.
 Guidance document No. 8: “EU ETS Inspection”: Targeted at competent au-
thorities, this document outlines the role of the CA’s inspections for strength-
ening the MRVA system of the EU ETS.

The Commission furthermore provides the following electronic templates:

 Template No. 1: Monitoring plan for the emissions of stationary installations
 Template No. 2: Monitoring plan for the emissions of aircraft operators
 Template No. 3: Monitoring plan for the tonne-kilometre data of aircraft opera-
tors
 Template No. 4: Annual emissions report of stationary installations
 Template No. 5: Annual emissions report of aircraft operators
 Template No. 6: Tonne-kilometre data report of aircraft operators
 Template No. 7: Improvement report of stationary installations
 Template No. 8: Improvement report of aircraft operators

There are furthermore the following tools available for operators:

 Unreasonable costs determination tool;
 Tool for the assessment of uncertainties;
 Frequency of Analysis Tool;
 Tool for operator risk assessment.

The following MRR training material is available for operators:

 Roadmap through M&R Guidance
 Uncertainty assessment
 Unreasonable costs
 Sampling plans

11
  Data gaps
 Round Robin Test

Besides these documents dedicated to the MRR, a separate set of guidance

documents on the AVR is available under the same address. Furthermore, the
Commission has provided guidance on the scope of the EU ETS which should
be consulted to decide whether an installation or part thereof should be included
in the EU ETS. That guidance is available under
https://ec.europa.eu/clima/system/files/2016-11/guidance_interpreta-
tion_en.pdf .

Monitoring for free allocation purposes:

For phase 4 of the EU ETS, the rules for determining the amount of allowances
allocated for free pursuant to Article 10a of the EU ETS Directive also require the
monitoring and reporting of installation data. Those rules build to some extent on
the MRR, but other data sets are involved (such as sub-installation level activity
data and “attributed emissions”), and the monitoring and reporting is dealt with
separately13. Relavant guidance documents and templates are presented on the
Commission’s website:
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/free-allocation_en
In terms of monitoring, “Guidance on Monitoring and Reporting in Relation to the
Free Allocation Rules (GD5)” is the most relevant, and “Verification of FAR Base-
line Data Reports and validation of Monitoring Methodology Plans (GD4)” for ver-
ification of the relevant reports.

All EU legislation is found on EUR-Lex: http://eur-lex.europa.eu/

The most important legislation is furthermore listed in the Annex of this document.

Also competent authorities in the Member States may provide useful guidance
on their own websites. Operators of installations should in particular check if the
competent authority provides workshops, FAQs, helpdesks etc.

13
In addition to the monitoring plan under the MRR, a so-called MMP (Monitoring Methodology Plan)
is required. Several other types of reports are relevant: A “Baseline Data Report” (BDR) every 5
years for the calculation of the free allocation, an annual”ALC” (Allocation Level Change) Report,
and in case of new entrants, a “New Entrant Data report” – all of them are to be verified in accord-
ance with the AVR.

12
 3 THE EU ETS COMPLIANCE CYCLE

3.1 Importance of MRV in the EU ETS

Monitoring, reporting and verification (MRV) of emissions play a key role in the
credibility of any emission trading system. Without MRV, compliance would lack
transparency and be much more difficult to track, and enforcement compromised.
This holds true also for the European Union Emission Trading System (EU ETS).
It is the complete, consistent, accurate and transparent monitoring, reporting and
verification system that creates trust in emission trading. Only in this way can it
be ensured that operators meet their obligation to surrender sufficient allow-
ances.
This observation is based on the twofold nature of the EU ETS: On the one hand
it is a market-based instrument. It has allowed a significant market to evolve, in
which market participants want to know the monetary value of the allowances
they get allocated, they trade and they have to surrender. On the other hand it is
an instrument for achieving an environmental benefit. But in contrast to other en-
vironmental legislation, the goal is not to be achieved by individuals, but the whole
group of EU ETS participants having to achieve the goal jointly. This requires a
considerable level of fairness between participants, ensured by a solid MRV sys-
tem. The competent authorities’ oversight activities contribute significantly to en-
suring that the goal set by the cap is reached, meaning that the anticipated emis-
sion reductions are delivered in practice. It is therefore the responsibility of the
competent authorities together with the accreditation bodies to protect the integ-
rity of the EU ETS by supervising the well-functioning of the MRV system.
Both, carbon market participants and competent authorities want to have assur-
ance that one tonne CO2 equivalent emitted finds its equivalent of one tonne re-
ported (for the purpose of one allowance to be surrendered). This principle has
become known already from the early days of the EU ETS as the proverbial pos-
tulation: “A tonne must be a tonne!”
In order to ensure that this is achieved in a robust, transparent, verifiable and yet
cost-effective way, the EU ETS Directive14 provides a solid basis for a good mon-
itoring, reporting and verification system. This is achieved by Articles 14 and 15
in connection with Annexes IV and V of the EU ETS Directive. Based on Article
14, the Commission has adopted the Monitoring and Reporting Regulation15”
(MRR), which has been amended several times (and replaced by a new one in
2018) since its start of application on 1 January 2013.
However, it has always been recognised by the Commission as well as by Mem-
ber States that a complex and technical legislation such as the MRR needs to be
supported by further guidance, in order to ensure harmonised implementation
throughout all Member States, and for paving the way to smooth compliance
through pragmatic approaches wherever possible.

14
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003
establishing a scheme for greenhouse gas emission allowance trading within the Community and
amending Council Directive 96/61/EC including all amendments.
15
Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018 on the monitoring
and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European
Parliament and of the Council and amending Commission Regulation (EU) No 601/2012.

13
 Furthermore a Regulation for verification and accreditation of verifiers has been
adopted (the Accreditation and Verification Regulation (AVR)16, also revised for
the 4th phase of the EU ETS), for which a separate series of guidance documents
has been developed by the Commission.

3.2 Overview of the compliance cycle

The annual process of monitoring, reporting, verification of emissions, surrender

of allowances, and the competent authority’s procedure for accepting emission
reports are often referred to as the “compliance cycle”. Figure 1 shows the main
elements of this cycle.
On the right side of the picture there is the “main cycle”: The operator monitors
the emissions throughout the year. After the end of the calendar year (within three
months17) he must prepare the annual emissions report (AER), seek verification
and submit the verified report to the competent authority (CA). The verified emis-
sions must correlate with the surrender of allowances in the Registry system 18.
Here the principle “a tonne must be a tonne” translates into “a tonne must be an
allowance”, i.e. at this point the market value of the allowance is correlated with
the costs of meeting the environmental goal of the EU ETS. Thereafter the mon-
itoring goes on, as shown in the picture. More precisely, the monitoring continues
without any stop at the end of the year.
The monitoring process needs a firm basis. Resulting data must be sufficiently
robust for creating trust in the reliability of the ETS, including the fairness of the
surrender obligation, and it must be consistent throughout the years. Therefore
the operator must ensure that the monitoring methodology is documented in writ-
ing, and cannot be changed arbitrarily. In the case of the EU ETS, this written
methodology is called the Monitoring Plan (MP) of the installation (see Figure 1).
It is part of the permit19, which every installation in the EU ETS must have for the
emission of greenhouse gases.
The figure also shows that the monitoring plan, although very specific for an indi-
vidual installation, must follow the requirements of the EU-wide applicable legis-
lation, in particular the Monitoring and Reporting Regulation. As a result, the MRV
system of the EU ETS is able to square the circle between strict EU-wide rules
providing reliability and preventing arbitrary and undue simplifications, and allow-
ing for sufficient flexibility for the circumstances of individual installations.

16
Commission Implementing Regulation (EU) 2018/2067 of 19 December 2018 on the verification of
data and on the accreditation of verifiers pursuant to Directive 2003/87/EC of the European
Parliament and of the Council.
17
According to national legislation, this period may be shorter, see footnote 22.
18
For the purpose of simplification, the surrender of allowances has not been included in the picture.
Similarly, the picture also ignores the processes of free allocation and trading of allowances.
19
This permit pursuant to Article 4 of the EU ETS Directive is usually referred to as the GHG emission
permit. Note that for simplifying administration, according to point (c) of Article 6(2), the monitoring
plan may be treated separately from the permit when it comes to formal changes of the monitoring
plan.

14
 Monitoring plan
Legislation
(installation
(MRR) specific)

Monitoring
throughout
the year
Improvement
suggestions

Competent Submit Annual

Authority Compliance report Report
checks

Verification

Picture by

Figure 1: Principle of the EU ETS compliance cycle

Figure 1 also shows some key responsibilities of the competent authority. It has
to supervise the compliance of the operators. As the first step, the CA has to
approve every monitoring plan before it is applied. This means that the monitoring
plans developed by the operator are checked for compliance with the MRR’s re-
quirements. Where the operator makes use of some simplified approaches al-
lowed by the MRR, this must be justified by the operator, for example, based on
the grounds of technical feasibility or unreasonable costs, where otherwise re-
quired higher tiers cannot be achieved.
Secondly, the CA may carry out inspections at installations, to gather assurance
that the monitoring plan is well aligned to the reality of the installation. The CA
may, for example, check if the installed meters are of the type laid down in the
monitoring plan, whether required data is retained, and written procedures are
followed as required.
Finally, it is the responsibility of the competent authority to carry out checks on
the annual emission reports. This includes spot checks on the already verified
reports, but also cross-checks with figures entered in the verified emissions table
of the registry system, and checking that sufficient allowances have been surren-
dered.
Moreover, the compliance cycle has a wider perspective. As Figure 1 shows,
there is a second cycle. This is the regular review of the monitoring plan, for which
the verification report may provide valuable input. Besides, the operator is re-
quired to continuously strive for further improving the monitoring methodology.
Any inspections by the CA should also inter alia aim at identifying elements of the
monitoring methodology which are not appropriate any more, for example, after
technical changes have been made to the installation.

15
 3.3 The importance of the monitoring plan

From the previous section it becomes apparent that the approved monitoring plan
(MP) is the most important document for every installation participating in the EU
ETS. Like a recipe for a cook and like the management handbook for a certified
quality management system, it serves as manual for the operator’s tasks. There-
fore it should be written in a way that allows all, particularly new staff to immedi-
ately follow the instructions. It must also allow the CA to understand quickly the
operator’s monitoring activities. Finally, the MP is the guide for the verifier against
which the operator’s emission report is to be judged.
Typical elements of a monitoring plan include the following activities of the oper-
ator (applicability depends on the specific installation’s circumstances):
 Data collection (metering data, invoices, production protocols, etc.);
 Sampling of materials and fuels;
 Laboratory analyses of fuels and materials;
 Maintenance and calibration of meters;
 Description of calculations and formulae to be used;
 Control activities (e.g. four eyes principle for data collection);
 Data archiving (including protection against manipulation);
 Regular identification of improvement possibilities.

Monitoring plans must be drafted carefully ( chapter 5), so that administrative

burden is minimised. Since the MP is to be approved by the competent authority,
it goes without saying that changes of the MP are only allowed with the consent
of the CA. The MRR reduces the administrative efforts here by allowing two ap-
proaches which should already be taken into account when drafting monitoring
plans:
 Only changes which are “significant” need the approval by the CA (Article 15
of the MRR, see section 5.6 below);
 Monitoring activities which are not crucial in every detail, and which by their
nature tend to be frequently amended as found necessary, may be put into
“written procedures”, which are mentioned and described briefly in the MP, but
the detail of which are not considered part of the approved MP. The relation-
ship between monitoring plan and written procedures is described in more de-
tail in section 5.4.
Because of the importance of the monitoring plan, the Commission is also provid-
ing templates for monitoring plans. Some Member States might have provided
customized templates based on the Commission’s templates, other Member
States use a dedicated (usually web-based) electronic reporting system (that
must also meet at least stated Commission requirements). Before developing a
monitoring plan, operators are therefore advised to check their competent author-
ity’s website or make direct contact with the CA for finding out the concrete re-
quirements for submitting a monitoring plan. National legislation may also state
specific requirements.

16
 3.4 Milestones and deadlines

3.4.1 The annual compliance cycle

The EU ETS compliance cycle is built around the requirement that monitoring is
always related to the calendar year20, as shown in Table 2 and Figure 2. Opera-
tors have three months after the end of the year to finalise the emission reports
and to get them verified by an accredited verifier in accordance with the AVR.
Thereafter operators have to surrender the corresponding amount of allowances.
Subject to national legislation, the competent authority may or shall perform (spot)
checks on the reports received, and must determine a conservative estimate of
the emissions, if the operator fails to submit an emissions report, or where a re-
port has been submitted, but it is either not compliant with the MRR or not (posi-
tively) verified in accordance with the AVR (Article 70(1) of the MRR). When the
CA detects any kind of errors in the submitted reports, corrections to the verified
emissions figure may be a result. Note that for such corrections no deadline is
given by EU legislation. However, there may be some requirement given in na-
tional legislation.

Table 2: Common timeline of the annual EU ETS compliance cycle for emissions in
year N.

When? Who? What?

1 January N Start of monitoring period
By 28 February N CA Allocation of allowances for free (if applicable) on
the operator’s account in the Registry
31 December N End of monitoring period
by 31 March21 Verifier Finish verification and issue verification report to
N+1 operator
By 31 March22 Operator Submit verified annual emissions report to CA
N+1
By 31 March N+1 Operator Enter verified emissions figure in the verified emis-
/ Verifier23 sions table of the Registry
March – April N+1 CA Subject to national legislation, possible spot
checks of submitted annual emissions reports. Re-
quire corrections by operator, if applicable. N.B.
Subject to national legislation, there is no obliga-
tion for CAs to provide assistance or acceptance of
operator reports either before or after 30 April).
By 30 April N+1 Operator Surrender allowances (amount corresponding to
verified annual emissions) in Registry system

20
Article 3(12) of the MRR defines: ‘reporting period’ means a calendar year during which emissions
have to be monitored and reported […].
21
Footnote 22 applies here as well.
22
According to Article 68(1), competent authorities may require operators or aircraft operators to
submit the verified annual emission report earlier than by 31 March, but by 28 February at the
earliest.
23
This may be regulated differently in the Member States.

17
 When? Who? What?
By 30 June N+1 Operator Submit report on possible improvements of the MP
to the CA, if applicable24
(No specified CA Carry out further checks on submitted annual
deadline) emissions reports, where considered necessary or
as may be required by national legislation; require
changes of the emissions data and surrender of
additional allowances, if applicable (in accordance
with Member State legislation).

Figure 2 also suggests indicative timings for the verification process. Experience
has shown that the availability of verifiers may be a bottleneck in some Member
States, especially if the whole verification process is performed in the first three
months of the year. However, several parts of the verification process can be
performed well before the end of the reporting year. Therefore, the advice to the
operator is to contract a verifier early in the reporting year, ideally soon after the
previous report has been submitted in March. The verifier is then able to plan and
perform much of the required work throughout the rest of the year, leaving only
the final checks and the issuing of the verification report for the first quarter of the
following year.
Finally, it has to be mentioned that further requirements apply which are not listed
here. In particular, as discussed in section 5.6, the operator has to update the
monitoring plan throughout the year where relevant, and the competent authority
has to assess and approve it where relevant.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
1 Start of the period
2 CA issues allowances
3 Operator carries out monitoring
4 Operator contracts verifier
5 Verifier starts analysis
6 Operator compiles annual report
7 Verifier finalizes verification
8 Operator submits report to CA
9 CA assesses reports
10 CA issues allowances
11 Operator surrenders allowances
12 Operator reports on improvements
13 Monitoring of following year
Picture by

Figure 2: Example timeline for the EU ETS compliance cycle. Please see Table 2
for explanation of deadlines. Note in particular that subject to national
legislation, the timeline may differ.

24
There are two different types of improvement reports pursuant to Article 69 of the MRR. One is to
be submitted in the year where a verifier reports improvement recommendations, and the other
(which may be combined with the first, if applicable) every year for category C installations, every
two years for category B, and every four years for category A installations. For categorisation, see
section 4.4 of this document. The CA may set a different deadline, but no later than 30 September
of that year.

18
 3.4.2 Preparing a new trading period
In order to make the compliance cycle work, the monitoring plans of all installa-
tions need to be approved by the competent authority before the start of the mon-
itoring period. For new entrants to the EU ETS, the MP must be approved before
the start of operations. For the start of the new trading period, some Member
States may require that the monitoring plans of all installations be revised and
adapted to the new requirements. Other MS only request an update of monitoring
plans where this is necessary due to changes in the MRR. For the fourth trading
period, most MP updates will relate to biomass, where the new requirements
come into force only in 2022. This means that the majority of MP updates will
have to take place before the end of 2021 instead of 2020.
Based on experience from previous ETS phases, such a general revision process
may require several months and should be well prepared. For the purpose of
providing additional guidance, a (legally non-binding) timeline is presented here.
Relatively long timescales are assumed for an idealised timeline, as required for
the most complex installations, as follows: Preparation of the monitoring plan by
the operators can take up to several months, depending on the complexity of
installations. However, for simple installations, the monitoring plan may be com-
piled within a few working days. In the same way, most MP updates for the fourth
trading period will be small, and will require only few days.
Because the CAs also need a few weeks or months for assessing all submitted
MPs (depending on current workload) and because operators then need some
weeks for finally implementing the new approved MP, it can be envisaged that
the CA should start early with workshops and other information for operators as
considered appropriate. Operators in turn should prepare the new monitoring
plans early enough for submission of MPs in time according to the deadline set
by their competent authority, which shoud be at the latest by end of September25.
An idealised example timeline for the start of a new trading period is shown in
Table 3.

Table 3: Idealised model timeline for preparing the EU ETS compliance cycle for the
start of a new trading period. Note that deadlines may significantly differ
according to the Member States. Y is the year in which the new trading
period starts (e.g. Y=2021 for the fourth trading period, or 2022 for changes
regarding biomass issues).

When? Who? What?

May – Sept. Y-1 Operator Check existing MP for required updates against
MRR requirements, or develop new MP, as appli-
cable
July – Sept. Y-1 Operator Submit new or updated MP to CA, if relevant
(deadline set by CA)
July – Dec. Y-1 CA Check and approve MPs
Oct. – Dec. Y-1 Operator Prepare for implementation of approved MP
1 January Y Start of monitoring period using the approved MP
based on the new MRR requirements

25
Note that the concrete deadlines set by competent authorities in the Member States may differ
from this assumption.

19
 3.5 Roles and responsibilities

The different responsibilities of the operators, verifiers and competent authorities

are shown in Figure 3, taking into account the activities mentioned in the previous
sections. For the purpose of completeness, also the accreditation body is in-
cluded. The picture clearly shows the high level of control which is efficiently built
into the MRV system. The monitoring and reporting is the main responsibility of
the operators (who are also responsible for hiring the verifier and for providing all
relevant information to the verifier). The CA approves the monitoring plans, re-
ceives and checks the emission reports, is in charge of inspections and may
make corrections to the verified emissions figure where errors are detected. Thus,
the CA is in control over the final result. Finally, the verifier is ultimately answer-
able to the accreditation body26. Note that based on Article 66 of the AVR, Mem-
ber States must also monitor the performance of their national accreditation bod-
ies, thereby fully ensuring the integrity of the EU ETS system of MRV and accred-
itation.

Operator Competent National

Verifier
(installation) Authority Accreditation Body

Check and approve

Prepare monitoring plan monitoring plan / Apply for accreditation
Issue GHG permit
Year N-1
Open registry account Open registry account

Annually repeating ‘compliance cycle’

Year +1
1 Jan Maintain
Year N accredi-
tation

Carry out Inspection and

Accredi-
monitoring enforcement
tation
process

Prepare
Verify
31 Dec annual Surveil-
emissions
Year N emissions lance
Report report
report
allocation
changes
31 Mar Submit verified
Year N+1 emissions report

Carry out
spot-checks

30 Apr Accept report or

Surrender allowances
Year N+1 prescribe emissions

30 Jun Submit
Year N+1 improvement report

Graphic by

Figure 3: Overview of responsibilities of the main actors in the EU ETS. Regarding

“Accreditation body” see also footnote 26.

26
The AVR also allows in exceptional cases verifiers (if natural persons) to be certified and
supervised by a national authority appointed by that Member State (in accordance with AVR Article
55).

20
 4 CONCEPTS AND APPROACHES
This chapter is dedicated to explaining the most important terms and concepts
needed for developing a monitoring plan.

4.1 Underlying principles

Articles 5 to 9 of the MRR outline the guiding principles which the operators have
to follow when fulfilling their obligations. These are:
1. Completeness (Article 5): The completeness of emission sources and source
streams is at the very core of the EU ETS monitoring principles. In order to
ensure completeness of emissions monitored, the operator should take into
account the following considerations:
 Article 4 of the MRR requires that all process and combustion emissions
from all emission sources and source streams ( section 4.2) are to be
included, which belong to activities listed in Annex I of the EU ETS Directive,
or which are included in the EU ETS by “opt-in” (pursuant to Article 24 of the
Directive, as e.g. some N2O emitting activities during the second ETS
phase).
 Annex I of the EU ETS Directive states that all combustion activities of an
installation are to be included in the EU ETS, if the capacity threshold of any
of the other activities is exceeded. Due to the definition of “combustion” in
the Directive27, this includes process emissions from flue gas scrubbing in
these cases, too.
 Further specific points to be considered for each activity can be found in
Annex IV of the MRR, under the heading “Scope” for each activity.
 Article 20 requires emissions from regular operations as well as from abnor-
mal events including start-up, shut-down and emergency situations to be
included.
 Emissions from mobile machinery used within the installation are generally
excluded.
 Operators should also be aware of the guidance 28 issued by the Commis-
sion regarding the interpretation of Annex I of the EU ETS Directive.
2. Consistency and comparability (Article 6(1)): Time series 29 of data need to
be consistent throughout the years. Arbitrary changes of monitoring method-
ologies are prohibited. This is why the monitoring plan has to be approved by
the competent authority, such as also significant changes to the MP. Because
the same monitoring approaches are defined for all installations, from which
they may choose using the tier system ( see section 4.5), the data created
is also comparable between installations.

27
Article 3(t) of the EU ETS Directive defines: “‘Combustion’ means any oxidation of fuels, regardless
of the way in which the heat, electrical or mechanical energy produced by this process is used,
and any other directly associated activities, including waste gas scrubbing“.
28
https://ec.europa.eu/clima/sites/clima/files/ets/docs/guidance_interpretation_en.pdf
29
This does not imply a requirement to produce time series of data, but assumes that the operator,
verifier or competent authority may use time series as a means of consistency checks.

21
 3. Transparency (Article 6(2)): All data collection, compilation and calculation
must be made in a transparent way. This means that the data itself, the meth-
ods for obtaining and using them (in other words: the whole data flow) have
to be documented transparently, and all relevant information has to be se-
curely stored and retained allowing for sufficient access by authorised third
parties. In particular, the verifier and the competent authority must be allowed
access to this information.
It is worth mentioning that transparency is in the own interest of the operator:
It facilitates transfer of responsibilities between existing and new staff and re-
duces the likelihood of errors and omissions. In turn this reduces the risk of
over-surrendering, or under-surrendering and penalties. Without transpar-
ency, the verification activities are more onerous and time-consuming.
Furthermore Article 67 of the MRR specifies that relevant data is to be stored
for 10 years. The minimum data to be retained is listed in Annex IX of the
MRR.
4. Accuracy (Article 7): Operators have to take care that data is accurate, i.e.
neither systematically nor knowingly inaccurate. Due diligence is required by
operators, striving for the highest achievable accuracy. As the next point
shows, “highest achievable” may be read as where it is technically feasible
and “without incurring unreasonable costs”.
5. Integrity of the methodology and of the emissions report (Article 8): This
principle is at the very heart of any MRV system. The MRR mentions it explic-
itly and adds some elements that are needed for good monitoring:
 The monitoring methodology and the data management must allow the ver-
ifier to achieve “reasonable assurance 30” on the emissions report, i.e. the
monitoring must be able to endure a quite intensive test;
 Data shall be free from material31 misstatements and avoid bias;
 The data shall provide a credible and balanced account of an installation’s
emissions.
 When looking for greater accuracy, operators may balance the benefit
against additional costs. They shall aim for “highest achievable accuracy,
unless this is technically not feasible or would lead to unreasonable costs”.
6. Continuous improvement (Article 9): In addition to the requirement of Article
69, which requires the operator to submit regularly reports on improvement
possibilities, e.g. for reaching higher tiers, this principle also is the foundation
for the operator’s duty of responding to the verifier’s recommendations (see
also Figure 1 on page 15).

30
Article 3(18) of the AVR defines: “‘reasonable assurance’ means a high but not absolute level of
assurance, expressed positively in the verification opinion, as to whether the operator’s or aircraft
operator’s report subject to verification is free from material misstatement.” For more details on the
definition this term, see guidance documents on the A&V guidance, in particular the AVR
Explanatory Guidance (EGD I). Section 2.3 provides a link to those documents.
31
See footnote 30.

22
 4.2 Source streams, emission sources and related terms

Emission source: The MRR defines (Article 3(5)): “‘emission source’ means a
separately identifiable part of an installation or a process within an installation,
from which relevant greenhouse gases are emitted or, for aviation activities, an
individual aircraft”. Thus, an emission source can be considered either as a (phys-
ical) part of the installation, or rather a virtual construction which defines the sys-
tem boundaries of a process which leads to emissions.

As will be outlined below, different monitoring methodologies may be applied as

defined by the MRR. For these methodologies, two other concepts have been
found useful for ensuring the completeness of the emissions monitored:
 Source streams; and
 measurement points.
Source streams32: This term refers to all the inputs and outputs which have to
be monitored when using a calculation-based approach (section 4.3). The
wording is the result of the attempt to quickly express “fuel or material entering or
leaving the installation, with a direct impact on emissions”. In the simplest case it
means the fuels “streaming” into the installation and forming a “source” of emis-
sions. The same is true for raw materials which give rise to process emissions.
In some cases, process emissions are calculated based on a product, such as
burnt lime. In this case this product is the source stream. Furthermore, the term
includes also mass streams going into and coming from the system boundaries
of mass balances. This is justified by the fact that mass streams entering and
leaving the installation are treated in principle by applying the same require-
ments33 as for other source streams, as can be concluded from sections 4.3.1
and 4.3.2 below.
Measurement point (Article 3(43)) means “the emission source for which con-
tinuous emission measurement systems (CEMS) are used for emission meas-
urement, or the cross-section of a pipeline system for which the CO 2 flow is de-
termined using continuous measurement systems”. Briefly, this is the position
(e.g. in the waste gas duct) for which the measurement data are obtained (where
the probing for a continuous measurement system takes place).

The following terms are only relevant for the description of the installation, which
has to be included in the monitoring plan:
Emission points: The term is not defined explicitly by the MRR. However, it be-
comes clear when checking where the term is used by the MRR: Annex I, section
1 of the MRR requires under point (4)(b) that the monitoring plan contains: “a list
of all relevant emission points during typical operation, and during restrictive and

32
MRR Article 3(4): ‘source stream’ means any of the following:
(a) a specific fuel type, raw material or product giving rise to emissions of relevant greenhouse
gases at one or more emission sources as a result of its consumption or production;
(b) a specific fuel type, raw material or product containing carbon and included in the calculation
of greenhouse gas emissions using a mass balance methodology”
33
The same requirements are valid for activity data, while other calculation factors (carbon content
instead of emission factor) are used. However, as is shown in section 4.3.2, emission factor and
carbon content can be calculated from each other. In terms of analytical chemistry, it is always the
carbon content which is to be determined.

23
 transition phases, including breakdown periods or commissioning phases, sup-
plemented by a process diagram where requested by the competent authority”.
In other words, the description of the installation in the monitoring plan should list
all emission points by describing the points where the greenhouse gases are ac-
tually released from the installation, including for fugitive emissions, if applicable.
Technical units: For completeness purposes, it is useful to mention that the term
“technical unit” is used by the EU ETS Directive for referring to parts of the instal-
lation, in particular in the chapeau of Annex I of the Directive. The term is used
for explaining the aggregation rule for determining whether an installation is to be
included in the EU ETS or not34. Therefore it will help the competent authority to
have a listing of those units. It can therefore be considered best practice to in-
clude such list in the MP as well.

4.3 Monitoring approaches

The MRR allows the operator to choose monitoring methodologies from a build-
ing block system based on different monitoring approaches. All types of combi-
nations of these approaches are allowed, under the condition that the operator
demonstrates that neither double counting nor data gaps in the emissions report-
ing will occur. The choice of methodology needs the approval of the CA, which is
given usually implicitly as part of the monitoring plan approval.
The following methodologies are available:
1. Calculation-based approaches:
a. Standard methodology (distinguishing combustion and process emis-
sions);
b. Mass balance;
2. Measurement-based approaches;
3. Methodology not based on tiers (“fall-back approach”);
4. Combinations of approaches.
Note that the calculation-based approaches are also requiring measurements.
However, the measurement here is usually applied to parameters such as the
fuel consumption, which can be related to the emissions by calculation, while the
measurement-based approach always includes measurement of the greenhouse
gas itself. These approaches are briefly outlined below.

34
For more information, see guidance on the interpretation of Annex I of the EU ETS Directive,
https://ec.europa.eu/clima/sites/clima/files/ets/docs/guidance_interpretation_en.pdf

24
 4.3.1 Standard methodology
The principle of this method is the calculation of emissions by means of activity
data (e.g. amount of fuel or process input material consumed) times an emission
factor (and further factors). Figure 4 illustrates this. Those further factors are the
oxidation factor for combustion emissions and the conversion factor for process
emissions. Both are used for correcting the emissions numbers in case of incom-
plete chemical reactions.

Emissions =
= Input  Emission factor

Fuels

Products and waste

accounted for
Process inputs by further factors

Picture by

Figure 4: Principle of the standard methodology for calculating emissions

Under this methodology, the following formulae are applied for CO 2 emissions35:
1. Combustion emissions36:
Em  AD  EF  OF (1)
Where:
Em ...... Emissions [t CO2]
AD ....... Activity data [TJ, t or Nm 3]
EF ....... Emission factor [t CO2/TJ, t CO2/t or t CO2/Nm3]
OF ....... Oxidation factor [dimensionless]
Factors with units in tonnes are usually to be used for solids and liquids. Nm 3 are
usually used for gaseous fuels. In order to achieve numbers of similar magnitude,
values are usually given in [1000 Nm3] in practice.

Activity data of fuels (including if fuels are used as process input) has to be ex-
pressed as net calorific value:

35
N2O emissions are determined using measurement approaches, and for PFC special requirements
are applicable. They are therefore not covered by this section.
36
Article 3(11) of the MRR defines: ‘combustion emissions’ means greenhouse gas emissions oc-
curring during the exothermic reaction of a fuel with oxygen;

25
 AD  FQ  NCV
(2)
Where:
FQ ....... Fuel quantity [t or Nm 3]
NCV .... Net Calorific Value [TJ/t or TJ/Nm3]
Under certain conditions (where the use of an emission factor expressed as
t CO2/TJ incurs unreasonable costs or where at least equivalent accuracy of the
calculated emissions can be achieved) the CA may allow the operator to use an
emission factor expressed as t CO2/t fuel or t CO2/Nm3 (Article 36(2)). In that
case, activity data is expressed as tonnes or Nm 3 fuel, instead using equation (2),
and the NCV may be determined using a conservative estimate instead of using
tiers, unless a defined tier is achievable without additional effort (Article 26(5)).
The EU ETS Directive allows that the emission factor of biomass is set to zero
(according to the MRR the precondition therefore is the compliance with the cri-
teria set out by the Renewable Energy Directive, see section 6.3.6). This applies
for accounting purposes only, while physically, still CO2 is emitted from the instal-
lation. Therefore, and for transparency purposes, where biomass is involved, the
emission factor must be determined from the preliminary emission factor and the
biomass fraction of the fuel:

EF  EFpre  (1  BF ) (3)
Where:
EF ....... Emission factor;
EFpre .... Preliminary emission factor (i.e. according to Article 3(36), “assumed total
emission factor of a fuel or material based on the carbon content of its biomass
fraction and its fossil fraction before multiplying it by the fossil fraction to produce
the emission factor”);
BF ....... biomass fraction [dimensionless].
Note: Equation (3) is valid because the emission factor of biomass (if it
complies with the “RED II criteria”, see sections 6.3.5 and 6.3.6) is zero. For
a mixed material this formula requires that the EFpre is the weighted average value
for the whole mixture. In that case, “determining the biomass fraction” means
“determining the fraction of carbon in the mixture which is from biomass that com-
plies with the RED II criteria”. The part of biomass which does not comply with
those criteria has to be reported separately, but for emission calculation the
above formula is correct. For reporting purposes, FF + BFnon-REDII + BF = 1, where
FF is the fossil fraction, BFnon-REDII the fraction of biomass carbon which is not
complying with the RED II criteria, and BF the biomass fraction of carbon which
is zero-rated. Section 10.17 contains an FAQ on how to report emissions from
mixed fuels.

Therefore, the overall standard formula for combustion emissions is:

Em  FQ  NCV  EFpre  (1  BF )  OF
(4)

26
2. Process emissions37 are calculated as:
Em  AD  EF  CF (5)
Where:
Em ...... Emissions [t CO2]
AD ....... Activity data [t or Nm3]
EF ....... Emission factor [t CO2/t or t CO2/Nm3]
CF ....... Conversion factor [dimensionless].
Note that the activity data may refer to either an input material (e.g. limestone or
soda ash), or to the resulting output of the process, e.g. the cement clinker or
burnt lime. In both cases activity data is used with positive values due to the direct
correlation with the emission value. Annex II, section 4 of the MRR introduces for
this purpose Method A (input based) and Method B (output based). Both methods
are considered equivalent, i.e. the operator should choose the method which
leads to the more reliable data, is better applicable with his equipment, and avoids
unreasonable costs.
While the MRR 2012 only gave tier definitions in Annex II explicitly only for car-
bonate-based (inorganic) process emissions, the MRR 2012 clearly required the
inclusion of organic carbon where relevant, in particular expressed in the sector-
specific provisions of Annex IV sections 9 (Cement clinker), 10 (lime), 12 (ceram-
ics)38. Section 4 of Annex II of the MRR 2018/2066 now contains clearer provi-
sions on the treatment of organic and mixed carbon contained in process mate-
rials. These special rules are explained in section 6.3.8.
Note: The original MRR 2018 (i.e. Implementing Regulation (EU) 2018/2066) con-
tained a specific section 5 in Annex II for dealing with “non-carbonate process
emissions”. However, that section has been deleted by the 2020 amendment (Im-
plementing Regulation (EU) 2020/2085) at the same time as updating section 4
of Annex II. The current version of this guidance explains the current (i.e.
amended) MRR.
Further activity specific details are listed in Annex IV of the MRR. Note that in
case of more complex processes, the mass balance will usually be the more suit-
able monitoring approach. Furthermore it is to be mentioned that N 2O process
emissions always require a measurement-based approach39. PFC process emis-
sions are determined using a calculation-based approach, which is discussed in
section 6.4.

37
Article 3(31) of the MRR defines: ‘process emissions’ means greenhouse gas emissions other than
combustion emissions occurring as a result of intentional and unintentional reactions between sub-
stances or their transformation, including the chemical or electrolytic reduction of metal ores, the
thermal decomposition of substances, and the formation of substances for use as product or feed-
stock;
38
E.g. in Section 12, the MRR 2012 required “Other carbonates and organic carbon in the raw
material shall be taken into account, where relevant.” The MRR rephrases the same point to “Other
carbonates and non-carbonate carbon in the raw material shall be taken into account, where they
are relevant for emission calculation.”
39
As an exception, N2O from temporary occurrences of unabated emissions are estimated based on
calculation, see section 8.2.

27
 More details on the MRR’s requirements for monitoring using the standard meth-
odology are given in chapter 6.

4.3.2 Mass balance approach

Like the standard approach, the mass balance40 approach is a calculation-based
method for determining the emissions of an installation. The standard approach
is straightforward to apply in cases where a fuel or material is directly related to
the emissions. However, in cases such as integrated steelworks or sites of the
chemical industry, it is often difficult to relate the emissions directly to individual
input materials, because the products (and wastes) contain significant amounts
of carbon (e.g. bulk organic chemicals, carbon black, etc.). Thus, it is not enough
to account for the amount of non-emitted carbon by means of an oxidation factor
or conversion factor. Instead, a complete balance of carbon entering and leaving
the installation or a defined part41 thereof is used (see Figure 5).
The following formula is applicable for mass balances:

Em MB    f  AD i  CCi 
(6)
i

Where:
EMMB ... Emissions from all source streams included in the mass balance [t CO2]
f ........... factor for converting the molar mass of carbon to CO 2. The value of f is
3.664 t CO2/t C (Article 25(1)).
i ........... index for the material or fuel under consideration.
ADi ...... Activity data (i.e. the mass in tonnes) of the material or fuel under con-
sideration. Ingoing materials or fuels are taken into account as positive,
outgoing materials or fuels have negative activity data. Mass streams to
and from stock piles must be taken into account appropriately in order to
give correct results for the calendar year.
CCi ...... The carbon content of the component under consideration. Always di-
mensionless and positive.

40
For clarity reasons this document uses the term “material balance” for determining activity data
based on batch metering (see section 6.1.2), while “mass balance” is strictly used for the
calculation approach discussed in this section and in Article 25.
41
As will be shown in an example on page 32.

28
 Emissions = f ( CInput -  COutput)

C C
Input
Output

Picture by

Figure 5: Principle of mass balance approaches

If the carbon content of a fuel is to be calculated from an emission factor ex-

pressed as t CO2/TJ, the following equation is used:

CCi  EFi  NCVi / f (7)

If the carbon content of a material or fuel is to be calculated from an emission
factor expressed as t CO2/t, the following equation is used:

CCi  EFi / f (8)

The following remarks should be considered when setting up a monitoring plan

using a mass balance:
 Emissions of carbon monoxide (CO) are not counted as outgoing source
stream in the mass balance, but are considered as the molar equivalent of CO 2
emissions (Article 25(2)). This is easily accomplished by just not listing the CO
as outgoing material.
 Where biomass materials or fuels are included in a mass balance, the CCi is
to be adjusted for the fossil fraction only. Where biomass is assumed to belong
to output streams, the operator should provide a justification to the competent
authority for this assumption. The methodology proposed must avoid underes-
timations of emissions.
 It is important to comply with the principle of completeness of the monitoring
data, i.e. all input materials and fuels must be taken into account, if not moni-
tored by an approach outside the mass balance. However, in some cases it
may be difficult to determine smaller amounts of carbon precisely. In this situ-
ation the operator should explore whether the material may be considered a
de-minimis source stream (see section 4.4.3). In particular, assuming the
amount of carbon leaving the installation in slag or wastes as zero may be
considered an applicable estimation method for such de-minimis source
streams. This would be similar to assuming a conversion factor of 100% in
case of the standard methodology.

29
 More details on the MRR’s requirements for monitoring using a mass balance
methodology are given in chapter 6.
Note that it may be useful to combine the mass balance approach and the stand-
ard approach, as the following example shows:

In this installation, two clearly separable parts exist: A gas-fired CHP plant,
and a non-integrated steel production (electric arc furnace process). In such
a case it is useful to combine the calculation-based approaches:
 CHP plant: standard methodology; Source streams:
 Natural gas (for simplicity it may be useful to include here all natural gas
streams, including those belonging to the steel plant)
 Steel plant: Mass balance; Source streams:
 Ingoing: scrap, pig iron, alloying components
 Outgoing: products, slag

4.3.3 Measurement-based approaches

In contrast to the calculation-based approaches, the greenhouse gases in the
installation’s off-gases are themselves the object of the measurement in the
measurement-based approaches. This is difficult in installations with many emis-
sion points (stacks) or indeed impossible where fugitive emissions42 have to be
taken into account. On the other hand, the strength of the measurement-based
methodologies is the independence of the number of different fuels and materials
used (e.g. where many different waste types are combusted), and their independ-
ence of stoichiometric relationships (this is why N2O emissions have to be moni-
tored in this way).

Emissions

Concentration

Flow meter

CO2(e)

Picture by

Figure 6: Schematic description of a continuous emission measurement system

(CEMS).

42
Fugitive emissions are emissions which are not led through a duct, such as emissions from open
furnaces, or leakages from pipeline systems.

30
The application of CEMS (Continuous Emission Measurement Systems43) always
requires two elements:
 Measurement of the GHG concentration44; and
 Volumetric flow of the gas stream where the measurement takes place.
According to Article 43 of the MRR, the emissions are first to be determined for
each hour45 of measurement from the hourly average concentration and the
hourly average flow rate. Thereafter all hourly values of the reporting year are
summed up for the total emissions of that emission point. Where several emission
points are monitored (e.g. two separate stacks of a power plant), this data aggre-
gation is done first for each source separately, before adding the emissions of all
sources to result in the total emissions46.
The MRR of 2012 assumed that it is not possible to continuously measure the
biomass fraction of the emitted CO2 with sufficient reliability. Therefore the MRR
required as default approach that emissions from biomass should be determined
by a calculation-based approach, for subtracting them from the total emissions
determined by measurement. However, the 2018 revision allows for more flexi-
bility47. Article 43(4) allows:
 Calculation-based approaches;
 Methods that use radiocarbon analyses of samples taken from the flue gas by
continuous sampling (e.g. according to EN ISO 13833). Note that formally this
is a calculation-based approach in MRR terminology, as it does not rely on
continuous measurement;
 The “balance method” (based on ISO 18466), which is an estimation method
in MRR terminology;
 Other estimation methods published by the Commission 48.
Further requirements for using CEMS are given in chapter 8 of this document.

4.3.4 Fall-back methodology

The MRR provides a very broad set of methodologies for monitoring, and tier
level definitions which have been proven in recent years to be reasonably appli-
cable in nearly all installations in the EU ETS. Nevertheless it is recognised that
special circumstances may exist in installations under which applying the tier sys-
tem is technically not feasible, or leads to unreasonable costs for the operator.

43
Article 3(40) of the MRR defines: ‘continuous emission measurement’ means a set of operations
having the objective of determining the value of a quantity by means of periodic measurements,
applying either measurements in the stack or extractive procedures with a measuring instrument
located close to the stack, whilst excluding measurement methodologies based on the collection
of individual samples from the stack.
44
This may need additional corrections, such as for moisture content.
45
Pursuant to Article 44(1), operators shall use shorter periods than an hour, where this is possible
without additional costs. This takes account of the fact that many measurement systems generate
automatically half-hourly values due to other requirements than the MRR. In such case, the half-
hourly values are used.
46
“Total” here means total of all emissions determined by CEMS. This does not exclude that further
emissions from other parts of the installation are determined by calculation approaches.
47
See guidance document No. 3 on biomass issues for further options to determine the biomass
fraction.
48
At the time of updating this guidance, no such methods have been published.

31
 Although there might be other reasonably precise methods of monitoring, these
circumstances would render the operator non-compliant with the MRR.
In order to avoid such unwanted “pseudo-non-compliance”, the MRR (Article 22)
allows the operator to apply non-tier methodology (also known as “fall-back meth-
odology”), if:
 a calculation-based approach using at least tier 1 for at least one major or
minor source stream ( see section 4.4.3), is not possible without incurring
unreasonable costs; and
 a measurement-based approach for the correlated emission source using tier
1 is also not possible without incurring unreasonable costs.
Note that this section is not applicable for de-minimis source streams ( see
section 4.4.3), because no-tier estimation methodologies are allowed for these
anyway.
Where the above conditions are met, the operator may propose in the monitoring
plan an alternative monitoring methodology, for which he can demonstrate that it
allows achieving the required overall uncertainty level for the emissions of the
total installation49. In other words: Instead complying with the uncertainty levels
for individual source streams, one common uncertainty level for the emissions of
the total installation is to be complied with. However, such individual monitoring
approach has the drawback that it can’t be easily compared with other ap-
proaches. Consequently, the operator must:
 every year carry out a full uncertainty assessment50 for the installation’s emis-
sions and provide evidence that the required uncertainty level is met;
 submit the result together with the annual emissions report (including for veri-
fication); and
 provide a justification for using the fall-back methodology demonstrating un-
reasonable costs or technical infeasibility in the regular improvement reports
( see section 5.7) pursuant to Article 69. If the conditions are not met any-
more, the operator has to modify the monitoring plan and use a tier-based ap-
proach henceforth.
Note: Due to the increased administrative effort required for fall-back methodolo-
gies, operators are advised to carefully check whether a tier-based approach is
still possible for all major and minor source streams or emission sources. In par-
ticular, operators should strive to use “standard” tier approaches for as many
source streams and emission sources even if in the end a fall-back methodology
is required for a limited part of the installation’s emissions.

4.3.5 Combinations of approaches

Except where Annex IV requires specific methodologies to be applied for some
activities, the MRR allows the operator to combine seamlessly the different ap-

49
This overall uncertainty is less than 7.5% for category A installations, less than 5.0% for category
B installations and less than 2.5% for category C installations. For categorisation of installations
see section 4.4.
50
ISO Guide to the Expression of Uncertainty in Measurement (JCGM 100:2008) is to be applied
here. It is publicly accessible under http://www.bipm.org/en/publications/guides/gum.html.

32
proaches outlined above, on the condition that no data gaps and no double count-
ing occur. Where different approaches would lead to similar tier levels, the oper-
ator may use other criteria for choosing the methodology, such as:
 Which methodology gives the more reliable results, i.e. where are the more
robust measurement instruments used, fewer observations needed, etc.?
 Which method has the lower inherent risk? ( section 5.5) I.e. which method-
ology is easier to control by a second data source, where are fewer possibilities
to make errors or omissions?

As an example, the following fictitious installation might use all possible ap-
proaches simultaneously. It consists of the following elements:
 A coal-fired boiler: A measurement-based methodology is used (Note: if this
were monitored using the standard approach, combustion emissions from
coal and the associated process emissions from the use of limestone in the
flue gas desulphurisation would have to be monitored separately).
 Production of iron & steel (electric arc furnace):
 Natural gas used for heating: simplest approach is the standard method-
ology;
 Steel making: A mass balance is used (Ingoing: scrap, pig iron, alloying
components; Outgoing: products, slag).
 In addition, that installation operates a recycling plant (activity non-ferrous
metal production and processing), where scrap stemming from electronic
devices are burned in a rotary kiln. All scrap is treated as one (major) source
stream. Due to the big heterogeneity of that material a fall-back methodology
has to be used (the carbon content might e.g. be estimated from a combined
heat and mass balance of this kiln).

4.4 Categorisation of installations, emission sources and

source streams

It is a basic philosophy in the MRV system of the EU ETS, that the biggest emis-
sions should be monitored most accurately, while less ambitious methods may
be applied for smaller emissions. By this method, cost effectiveness is taken into
account, and unreasonable financial and administrative burden is avoided where
the benefit of more efforts would be only marginal.

4.4.1 Installation categories

For the purpose of identifying the required “ambition level” of monitoring (details
will be given in section 5.2), the operator has to classify the installation according
to the average annual emissions (Article 19(2)):
 Category A: Annual average emissions are equal to or less than 50 000 tonnes
of CO2(e);

33
  Category B: Annual average emissions are more than 50 000 tonnes of CO2(e)
and equal to or less than 500 000 tonnes of CO2(e);
 Category C: Annual average emissions are more than 500 000 tonnes of
CO2(e).
The “annual average emissions” here mean the annual average verified emis-
sions of the previous trading period. As for annual reporting, emissions from sus-
tainable51 biomass are excluded (i.e. zero-rated), but contrary to annual reporting,
CO2 transferred out of the installation, if any, is counted as emitted, in order to
give a better indication of the size of the GHG amounts occurring at the installa-
tion.
Where the average annual verified emissions in the trading period immediately
preceding the current trading period for the installation are not available or no
longer representative for the used installation category, the operator shall use a
conservative estimate (Article 19(5)). This is in particular the case where the in-
stallation boundaries change due to an extension of the scope of the EU ETS
Directive.

Example: For the fourth EU ETS phase (starting in 2021), the operator deter-
mines the installation’s category as follows:
 Average annual verified emissions in 2013-2020, excluding biomass, have
been 349 000 tonnes CO2(e). The installation is category B and there was no
transfer of CO2.
 In 2023, the installation starts up an additional CHP plant, which is designed
to emit around 200 000 t CO2 per year. Therefore the emissions of 349 000
tonnes CO2(e) are not representative any more, and the operator has to
make a conservative estimate of future emissions. The new estimate for the
annual emissions is 549 000 t CO2 per year, so the installation becomes
category C. As a consequence, the operator has to revise the monitoring
plan (higher tiers may be required) and submit an updated MP to the com-
petent authority for approval (see section 5.6).
 In 2025, the installation starts a pilot project for CO 2 capture and transfers
on average 100 000 t CO2 to an installation for the geological storage of
CO2. However, in this case the category of the installation does not change
to B, because the transfer of CO2 is not to be taken into account. However,
due to the significant change of the installation’s functioning, a revision of
the MP is clearly needed.

The MRR 2018/2066 allows that an installation which exceeds one of the men-
tioned thresholds only once in six years does not have to change its categorisa-
tion. For example, a category A installation that emits 51 000 t CO2 in one year
only, does not have to change its category if the emissions were below 50 000 t
CO2 in the five preceding years. What is more important, this also means that the

51
This means that the biomass – if used for combustion – must comply with the sustainability
and GHG savings criteria established by the RED II in order to be “zero-rated”. For further details
on biomass see section 6.3.6. Note that this requirement only applies from 1 January 2022.

34
applicable minimum tiers do not change due to this one year of higher emissions,
and the operator does not have to submit an updated monitoring plan for ap-
proval. Instead, the operator only has to provide evidence “to the satisfaction of
the competent authority that this threshold has not already been exceeded within
the past five reporting periods and will not be exceeded again in subsequent re-
porting periods” (2nd subparagraph of Article 19(2)). On the other hand, if the
threshold is exceeded a second time within the next five years, the MP will have
to be modified so as to comply with the more stringent conditions of the higher
category.

4.4.2 Installations with low emissions

Installations which on average emit less than 25 000 t CO2(e) per year can be
classified as “installations with low emissions” in accordance with Article 47 of the
MRR. For these, special simplifications of the MRV system are applicable in order
to reduce administrative costs (see section 7.1).
As for other installation categories, the annual average emissions are to be de-
termined as average annual verified emissions of the previous trading period,
with exclusion of CO2 stemming from sustainable51 biomass and before subtrac-
tion of transferred CO2. Where those average emissions are not available or are
no longer applicable because of changes in the installation’s boundaries or
changes to the operating conditions of the installation, a conservative estimate is
to be used concerning the projected emissions for the next five years.
A special situation then arises if the installation’s emissions exceed the threshold
of 25 000 t CO2 per year. In that case it is necessary to revise the monitoring plan
and submit a new one to the CA, for which the simplifications for small installa-
tions are not applied any more. However, the wording of Article 47(8) allows that
the operator may continue as an installation with low emissions provided that the
operator can demonstrate to the competent authority that the 25 000 t CO2 per
year threshold has not been exceeded in the previous five years and will not be
exceeded again (e.g. due to limitations in installation capacity). Thus, high emis-
sions in one single year out of six years may be tolerable, but if the threshold is
exceeded again in one of the following five years, that exception will not be ap-
plicable any more.

Example: An older and less efficient reserve boiler has to be used in only one
year due to a longer maintenance shut-down of the main boiler. The emissions
exceed the 25 000 t CO2/year threshold in this one year, but the operator can
easily demonstrate to the CA that after these maintenance works it will not
happen again in the next 5 years.

4.4.3 Source streams

Within an installation, the greatest attention is and should be given to the bigger
source streams. For minor source streams, lower tier requirements are applicable
from the MRR (section 5.2). The operator has to classify all source streams for
which he uses calculation-based approaches. For this purpose, he must compare
the emissions of the source stream with the “total of all monitored items”.

35
 The following steps have to be performed:
 Determine the “total of all monitored items”, by adding up:
 The emissions (CO2(e)) of all source streams which are determined using the
standard methodology (see section 4.3.1);
 The absolute values of all CO2 streams in a mass balance (i.e. the outgoing
streams (e.g. carbon contained in steel products) are also counted as posi-
tive! See section 4.3.2); and
 The emissions of CO2 and CO2(e) of all emission sources which are deter-
mined using a measurement-based methodology (see section 4.3.3).
 For this calculation, CO2 from fossil sources as well as “non-sustainable51
biomass” is taken into account.
 Transferred CO2 is not subtracted from the total.
 Thereafter the operator should list all source streams (including those which
form a part in a mass balance, given in absolute numbers) sorted in descend-
ing order.
 The operator may then select source streams which he wants to be classified
“minor” or “de-minimis” source streams, in order to apply reduced monitoring
requirements to them. For this purpose, the thresholds given below must be
complied with.
The operator may select as minor source streams: source streams which jointly
account for less than 5 000 tonnes of fossil CO2 per year or to less than 10% of
the “total of all monitored items”, up to a total maximum contribution of 100 000
tonnes of fossil CO2 per year, whichever is greater in terms of absolute value.
The operator may select as de-minimis source streams: source streams which
jointly correspond to less than 1 000 tonnes of fossil CO2 per year or to less than
2% of the “total of all monitored items”, up to a total maximum contribution of
20 000 tonnes of fossil CO2 per year, whichever is the highest in terms of absolute
value. Note that the de-minimis source streams are no longer part of the minor
source streams.
All other source streams are classified as major source streams.
Note: The MRR does not specify a reference time span for these classifications,
such as the previous trading period in the case of installation categorisation. How-
ever, Article 14(1) requires the operator to regularly check if the monitoring plan
reflects the nature and functioning of the installation and whether the monitoring
methodology can be improved.
This check should be performed at least once per year (e.g. when the annual
emission report has been compiled, as there it becomes evident if source streams
have exceeded the relevant thresholds). Best practice is to have a procedure
which connects such check to the regular performance of control activities such
as monthly horizontal or vertical checks (see section 5.5). Furthermore the check
should be automatically triggered by any change of the capacity or operations of
the installation.
The MRR 2018/2066 allows that an installation which exceeds one of the men-
tioned thresholds only once in six years does not have to change its categorisa-
tion. This means that the applicable minimum tiers do not change due to this one
year of higher emissions, and the operator does not have to submit an updated
monitoring plan for approval. However, the operator has to provide evidence “to

36
the satisfaction of the competent authority that this threshold has not already
been exceeded within the past five reporting periods and will not be exceeded
again in subsequent reporting periods” (2nd subparagraph of Article 19(3)).

Example: The source streams of the fictitious installation described in section

4.3.5 are classified using the approach outlined above. The result is shown in
Table 4.

Table 4: Categorisation of source streams of a fictitious installation.

Source stream / Emis- CO2 Absolute % of Source stream

sion source equiva- value total category al-
lent lowed
Coal fired boiler (CEMS) 400 000 400 000 71.6% (not a source
stream, but an
emission source)
Natural gas 100 000 100 000 17.9% major
Recycled material (fall- 50 000 50 000 8.9% minor
back)
Pig iron 5 000 5 000 0.9% de-minimis
Alloying elements 2 000 2 000 0.4% de-minimis
Iron scrap 1 000 1 000 0.2% de-minimis
Steel products52 -1 000 1 000 0.2% de-minimis

4.4.4 Emission sources

In contrast to phase 3, the MRR now also provides for a categorisation of emis-
sions sources for which a measurement-based methodology is applied (Article
19(4)). Similar to source streams in the previous section, the operator may clas-
sify minor emission sources where the emission source emits less than 5 000
tonnes of fossil CO2 per year or less than 10% of the “total of all monitored items”,
up to a total maximum contribution of 100 000 tonnes of fossil CO2 per year,
whichever is the highest in terms of absolute value. All other emission sources
are major emission sources.
Note: If the installation does not use CEMS, this categorisation can be omitted.

4.5 The tier system

As mentioned earlier, the EU ETS system for monitoring and reporting provides
for a building block system of monitoring methodologies. Each parameter needed
for the determination of emissions can be determined applying different “data
quality levels”. These “data quality levels” are called “tiers”53. The building block

52
This is a product stream, i.e. contributing to the mass balance as output. Therefore the CO2
equivalent is a negative number.
53
Article 3(8) of the MRR defines: ‘tier’ means a set requirement used for determining activity data,
calculation factors, annual emission and annual average hourly emission, and payload.

37
 idea is illustrated by Figure 7, which shows the tiers which can be selected for
determining the emissions from a fuel under the calculation-based methodolo-
gies. The descriptions of the different tiers (i.e. the requirements for complying
with those tiers) are presented in more detail in chapter 6.
In general it can be said that tiers with lower numbers represent methods with
lower requirements and being less accurate than higher tiers. Tiers of the same
number (e.g. tier 2a and 2b) are considered equivalent.

Net (Prelim.) Biomass

Fuel Oxidation
calorific Emission fraction
quantity factor
value factor

Tier 1
Tier 1 Tier 1 Tier 1 Tier 1

Tier 2
Tier Tier
Tier 2 Tier 2
2a/2b 2a/2b
Tier 3

Tier 3 Tier 3 Tier 3 Tier 3

Tier 4

Picture by

Figure 7: Illustration of the tier system for calculation-based approaches

(combustion emissions).

Higher tiers are considered, in general, more difficult and costly to meet than
lower ones (e.g. due to more expensive measurements applied). Therefore, lower
tiers are usually required for smaller quantities of emissions, i.e. for minor and
de-minimis source streams (see section 4.4.3) and for smaller installations (for
categorisation see section 4.4.1). A cost effective approach is thus ensured.
Which tier an operator must select according to the requirements of the MRR is
discussed in detail in section 5.2.

4.6 Reasons for derogation

Cost effectiveness is an important concept for the MRR. It is generally possible

for the operator to get permission from the competent authority to derogate from
a specific requirement of the MRR (such as in particular the required tier level), if
fully applying the requirement would lead to unreasonable costs. Therefore, a
clear-cut definition for “unreasonable costs” is required. It is found in Article 18 of
the MRR. As outlined in section 4.6.1 below, it is based on a cost/benefit analysis
for the requirement under consideration.

38
Similar derogations may be applicable if a measure is technically not feasible.
Technical feasibility is not a question of cost/benefit, but whether the operator is
able to achieve a certain requirement at all. Article 17 of the MRR requires that
an operator provides a justification where he claims something to be technically
not feasible. This justification must demonstrate that the operator does not have
the resources available to meet the specific requirement within the required time.

4.6.1 Unreasonable costs

When assessing whether costs for a specific measure are reasonable, the costs
are to be compared with the benefit it would give. Costs are considered unrea-
sonable where the costs exceed the benefit (Article 18).
Costs: It is up to the operator to provide a reasonable estimation of the costs
involved. Only costs which are additional to those applicable for the alternative
scenario should be taken into account. The MRR also requires that the equipment
costs are to be assessed using a depreciation period appropriate for the eco-
nomic lifetime of the equipment. Thus, the annual costs during the lifetime rather
than the total equipment costs are to be used in the assessment.

Example: An old measuring instrument is found to not function properly any

more, and is to be exchanged for a new one. The old instrument has allowed
reaching an uncertainty of 3% corresponding to tier 2 (±5%) for activity data
(for tier definitions see section 6.1.1). Because the operator would have to ap-
ply a higher tier anyway, he considers whether a better instrument would incur
unreasonable costs. Instrument A costs 40 000 € and leads to an uncertainty
of 2.8% (still tier 2), instrument B costs 70 000 €, but allows an uncertainty of
2.1% (tier 3, ±2.5%). Due to the rough environment in the installation, a depre-
ciation period of 5 years is considered appropriate.
The costs to be taken into account for the assessment of unreasonable costs
are 30 000 € (i.e. the difference between the two meters) divided by 5 years,
i.e. 6 000 €. No cost for the working time should be considered, as the same
workload is assumed to be necessary independent from the type of the meter
to be installed. Also the same maintenance costs can be assumed as approx-
imation.

Benefit: As the benefit of e.g. more precise metering is difficult to express in

financial values, an assumption is to be made following the MRR. The benefit is
considered to be proportionate to an amount of allowances in the order of mag-
nitude of the reduced uncertainty. In order to make this estimation independent
from daily price fluctuations, the MRR requires a constant allowance price of 20 €
to be applied. For determining the assumed benefit, this allowance price is to be
multiplied by an “improvement factor”, which is the improvement of uncertainty
multiplied by the average annual emissions caused by the respective source

39
 stream54 over the three most recent years55. The improvement of uncertainty is
the difference between the uncertainty currently achieved 56 and the uncertainty
threshold of the tier which would be achieved after the improvement.
Where no direct improvement of the accuracy of emissions57 data is achieved by
an improvement, the improvement factor is always 1%. Article 18(3) lists some of
such improvements, e.g. switching from default values to analyses, increasing
the number of samples analysed, improving the data flow and control system,
etc.
Please note the minimum threshold introduced by the MRR: Accumulated im-
provement costs below 2 000 € per year are always considered reasonable, with-
out assessing the benefit. For installations with low emissions ( section 4.4.2)
this threshold is only 500 €.
Summarizing the above by means of a formula, the costs are considered reason-
able, if:

C  P  AEm  U curr  U new tier 

(9)
Where:
C ......... Costs [€/year]
P ......... specified allowance price = 20 € / t CO2(e)
AEm .... Average emissions from related source stream(s) over the three most
recent years [t CO2(e)/year]
Ucurr ..... Current uncertainty (not the tier) [%]
Unew tier . Uncertainty threshold of the new tier that can be reached [%]

Example: For the replacement of meters described above, the benefit of “im-
provement” for instrument A is zero, as it is a mere replacement maintaining
the current tier. It cannot be unreasonable, as the installation cannot be oper-
ated without at least this instrument.
In case of instrument B, tier 3 (threshold uncertainty = 2.5 %) can be reached.
Thus, the uncertainty improvement is Ucurr – Unew tier = 2.8% – 2.5% = 0.3%.
The average annual emissions are AEm = 120 000 t CO2/year. Therefore, the
assumed benefit is 0.003 ·120 000 ·20 € =7 200 €. This is higher than the as-
sumed costs (see above). It is therefore not unreasonable to require instrument
B to be installed.

54
Where one measuring instrument is used for several source streams, such as a weighbridge, the
sum of emissions of all related source streams should be used.
55
Only the fossil emissions are considered. Transferred CO2 is not subtracted. Where the average
emissions of the most recent three years are not available or not applicable due to technical
changes, a conservative estimate is to be used.
56
Please note that the “real” uncertainty is meant here and not the uncertainty threshold of the tier.
57
The 2020 amendment of the MRR clarifies that any emissions data used for determining unrea-
sonable costs have to take into account the RED II criteria for biomass, see also footnote 51.

40
Further guidance can be found in the training event material on “unreasonable
costs” published on DG CLIMA’s MRVA website
(https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en). An Excel-
based “unreasonable costs determination tool” can also be downloaded there.

4.7 Uncertainty

When somebody would like to ask the basic question about the quality of the
MRV system of any emission trading system, he would probably ask: “How good
is the data?” or rather “Can we trust the measurements which produce the emis-
sion data?” When determining the quality of measurements, international stand-
ards refer to the quantity of “uncertainty”. This concept needs some explanation.
There are different terms frequently used in a similar way as uncertainty. How-
ever, these are not synonyms, but have their own defined meaning (see also
illustration in Figure 8):
 Accuracy: This means closeness of agreement between a measured value
and the true value of a quantity. If a measurement is accurate, the average of
the measurement results is close to the “true” value (which may be e.g. the
nominal value of a certified standard material58). If a measurement is not ac-
curate, this can sometimes be due to a systematic error. Often this is can be
overcome by calibrating and adjustment of instruments.
 Precision: This describes the closeness of results of measurements of the
same measured quantity under the same conditions, i.e. the same thing is
measured several times. It is often quantified as the standard deviation of the
values around the average. It reflects the fact that all measurements include a
random error, which can be reduced, but not completely eliminated.
 Uncertainty59: This term characterizes the range within which the true value
is expected to lie with a specified level of confidence. It is the overarching con-
cept which combines precision and assumed accuracy. As shown in Figure 8,
measurements can be accurate, but imprecise, or vice versa. The ideal situa-
tion is precise and accurate.
If a laboratory assesses and optimizes its methods, it usually has an interest in
distinguishing accuracy and precision, as this leads the way to identification of
errors and mistakes. It can show such diverse reasons for errors such as the
need for maintenance or calibration of instruments, or for better training of staff.
However, the final user of the measurement result (in the case of the ETS, this is

58
Also a standard material, such as e.g. a copy of the kilogram prototype, disposes of an uncertainty
due to the production process. Usually this uncertainty will be small compared to the uncertainties
later down in its use.
59
The MRR defines in Article 3(6): ‘uncertainty’ means a parameter, associated with the result of the
determination of a quantity, that characterises the dispersion of the values that could reasonably
be attributed to the particular quantity, including the effects of systematic as well as of random
factors, expressed in per cent, and describes a confidence interval around the mean value
comprising 95% of inferred values taking into account any asymmetry of the distribution of values.

41
 the operator and the competent authority) simply wants to know how big the in-
terval is (measured average ± uncertainty), within which the true value is probably
found.
In the EU ETS, only one value is given for the emissions in the annual emissions
report. Only one value is entered in the verified emissions table of the registry.
The operator can’t surrender “N ± x%” allowances, but only the precise value N.
It is therefore clear that it is in everybody’s interest to quantify and reduce the
uncertainty “x” as far as possible. This is the reason why monitoring plans must
be approved by the competent authority, and why operators have to demonstrate
compliance with specific tiers, which are related to permissible uncertainties.
More details on the definition of tiers are given in chapter 6. The uncertainty as-
sessment which is to be added to the monitoring plan as supporting document
(Article 12(1)) is discussed in section 5.3.

Low uncertainty
High accuracy

High uncertainty

High precision
Picture by

Figure 8: Illustration of the concepts accuracy, precision and uncertainty. The bull’s
eye represents the assumed true value, the “shots” represent
measurement results.

Further guidance can be found on DG CLIMA’s MRVA website

(https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en ):
 Guidance Document No. 4 (“Guidance on Uncertainty Assessment”) and No.
4a (“Exemplar Uncertainty Assessment”);
 Materials from training events on “uncertainty assessment”;
 Excel-based “Tool for the assessment of uncertainties”.

42
 5 THE MONITORING PLAN

This chapter describes the way an operator can develop a monitoring plan from
scratch. This will be the case for few installations only, i.e. for new installations.
However, due to the transition from the MRR 601/2012 to the MRR 2018/2066,
operators may have to revise the monitoring plans of their installations, in order
to identify gaps or relevant improvement possibilities. Some Member States may
request such reviews for all installations in their territory. Therefore this chapter
is considered valuable for existing installations, too. Where significant changes
compared to the “old” MRR 601/2012 have been introduced, this is highlighted in
the text specifically with the usual “new” icons.

5.1 Developing a monitoring plan

When developing a monitoring plan, operators should follow some guiding prin-
ciples:
 Knowing in detail the situation of their own installation, the operator should
make the monitoring methodology as simple as possible. This is achieved by
attempting to use the most reliable data sources, robust metering instruments,
short data flows, and effective control procedures.
 Operators should imagine their annual emission report from verifier’s perspec-
tive. What would a verifier ask about how the data has been compiled? How
can the data flow be made transparent? Which controls prevent errors, mis-
representations, omissions?
 Because installations usually undergo technical changes over the years, mon-
itoring plans must be considered living documents to a certain extent. In order
to minimise administrative burden, operators should be careful which elements
must be laid down in the monitoring plan itself, and what can be put into written
procedures supplementing the MP.
Note: for installations with small emissions and some other “simple” instal- small

lations, this chapter is only partly relevant. It is advisable to consult first

chapter 7 of this document.

The following step-by-step approach might be considered helpful:

1. Define the installation’s boundaries taking into account the provisions on the
scope of each Annex I activity in the EU ETS Directive60.
2. Determine the installation’s category ( see section 4.4.1) based on an es-
timate of the installation’s annual GHG emissions. Where the boundaries of
an incumbent installation are unchanged, the average verified annual emis-
sions of the previous years can be used. In other situations, a conservative
estimate is needed.

60
See the Commission’s guidance document on the interpretation of Annex I:
https://ec.europa.eu/clima/sites/clima/files/ets/docs/guidance_interpretation_en.pdf

43
 3. List all emission sources and source streams ( for definitions see section
4.2) in order to decide on calculation or measurement based approach. Clas-
sify the source streams as major, minor and de-minimis as well as the emis-
sion sources as major or minor, as appropriate.
4. Identify the tier requirements based on the installation category and the
source stream/emission source category (see section 5.2).
5. List and assess potential sources of data:
a. For calculation-based approaches, activity data (for detailed require-
ments see section 6.1):
i. How can the amount of fuel or material be determined?
 Are there instruments for continual metering, such as flow me-
ters, weighing belts etc. which give direct results for the amount
of material entering or leaving the process over time?
 Or must the fuel or material quantity be based on batches pur-
chased? In this case, how can the quantity on stock piles or in
tanks at the end of the year be determined?
ii. Are measuring instruments owned/controlled by the operator avail-
able?
 If yes: What is their uncertainty level? Are they difficult to cali-
brate? Are they subject to legal metrological control61?
 If no: Can measuring instruments be used, which are under the
control of the fuel supplier? (This is often the case for gas me-
ters, and for many cases where quantities are determined
based on invoices.)
iii. Estimate uncertainty associated with those instruments and deter-
mine the achievable tier associated. Note: For uncertainty assess-
ment several simplifications are applicable, in particular if the meas-
uring instrument is subject to national legal metrological control. For
details see guidance document No. 4 (see section 2.3).
b. Calculation factors (NCV, emission factor or carbon content, oxidation or
conversion factor, biomass fraction): Depending on the required tiers
(which are determined based on installation category and source stream
category):
i. Are default values applicable? If yes, are values available? (Annex
VI of the MRR, publications of the competent authority, national in-
ventory values)?
ii. If the highest tiers are to be applied, or if no default values are ap-
plicable, chemical analyses have to be carried out for determining
the missing calculation factors. In this case the operator must

61
Some measuring instruments used for commercial transactions are subject to national legal
metrological control. Special requirements (simplified approaches) are applicable to such
instruments under the MRR. See guidance document No. 4 (for reference see section 2.3) for
details.

44
  Decide on the laboratory to be used. If no accredited labora-
tory62 is available, establish evidence on the equivalence to ac-
creditation (see section 6.2.2);
 Select the appropriate analytical method (and applicable stand-
ard);
 Design a sampling plan (see guidance document No. 5 (for ref-
erence see section 2.3)).
c. For measurement-based approaches, if applicable:
i. Collect the necessary information (see section 8.1 and Guidance
Document 7 for details on CEMS requirements) on the measure-
ment instruments involved, in particular on the uncertainty levels
achieved when carrying out the relevant Quality Assurance Level
(QAL) tests;
ii. Check whether the placement of the probes allows for representa-
tive measurements;
iii. Select the method to determine the flue gas flow.
6. Can all required tiers be met for calculation-based approaches? If not, can a
lower tier be met, if allowed in accordance with technical feasibility and un-
reasonable costs ( section 4.6)?
7. If measurement-based approaches (CEMS, see section 8) can or have to be
used63, can the relevant tiers and other requirements (see section 8) be com-
plied with?
8. If answers for points 6 and 7 are negative: Is there a way of using a fall-back
methodology (see section 4.3.4)? A full uncertainty assessment for the instal-
lation is required in this case.
9. Next the operator should define all data flows (who takes which data from
where, does what with the data, hands over the results to whom, etc.) from
the measuring instruments or invoices to the final annual report. The design
of a flow diagram will be helpful. More details on data flow activities are found
in section 5.5.
10. With this overview of the data sources and data flows, the operator can carry
out a risk analysis (see section 5.5). Thereby he will determine where in the
system errors might occur most easily.
11. Using the risk analysis, the operator should:
a. If applicable, decide whether CEMS or calculation-based approaches are
more suitable;

62
„Accredited laboratory“ is used here as short form of “a laboratory which has been accredited
pursuant to EN ISO/IEC 17025 for the analytical method required”.
63
CEMS must be used for N2O emissions, and may be used for CO2 emissions. If the requirements
for calculation-based methods for CO2 cannot be reached, CEMS should be considered as equally
valid alternative.

45
 b. Assess which measuring instruments and data sources to use for activity
data (see point 5.a above). In case of several possibilities, the one with
the lowest uncertainty and lowest risk should be used;
c. In all other cases which need decisions64, decide based on the lowest
associated risk; and
d. Define control activities for mitigating the identified risks (see section 5.5).
12. It may be necessary to repeat some of the steps 5 to 11, before finally writing
down the monitoring plan and the related procedures. In particular, the risk
analysis will need update after having the control activities defined.
13. Then the operator will write the monitoring plan (using the templates provided
by the Commission, an equivalent template by a Member State or a dedicated
IT system provided by the Commission or a Member State), and the support-
ing documents required (Article 12(1)):
a. Evidence that all the tiers noted in the monitoring plan are complied with
(this requires an uncertainty assessment, which can be very simple in
most cases, see section 5.3);
b. The result of the final risk analysis (section 5.5), showing that the de-
fined control system is appropriately mitigating the identified risks;
c. Further documents (such as installation description and diagram) may
need to be attached;
d. The written procedures referenced by the MP need to be developed, but
do not need to be attached to the MP when submitting it to the CA (see
section 5.4 on procedures).
The operator should make sure that all versions of the monitoring plan, the related
documents and procedures are clearly identifiable, and that the most recent ver-
sions are always used by all staff involved. A good document management sys-
tem is advisable from the beginning.

5.2 Selecting the correct tier

The system of defining the minimum required tiers is laid down in Article 26 for
calculation-based approaches (i.e. for standard methodology and mass bal-
ances). The overarching rule is that the operator should apply the highest
tier defined for each parameter. For major and minor source streams within
Category B and C installations this is mandatory. For other source streams and
smaller installations, the following set of rules defines the exceptions from the
rule:
1. Instead of the highest tiers defined, category A installations are required to
apply at least the tiers specified in Annex V of the MRR for major source
streams.

64
E.g. where several departments could handle the data, choose the most suitable with the lowest
number of error possibilities.

46
2. Regardless of the installation category, the same tiers of Annex V are appli-
cable for commercial standard fuels 65 with regard to calculation factors.
3. Where the operator demonstrates to the satisfaction of the competent author-
ity, that applying the tiers required by the previous points leads to unreason-
able costs ( section 4.6) or is technically not feasible ( section 4.6), the
operator may apply to major source streams a tier which is
 one tier lower in case of category C installations;
 one or two tiers lower in case of category B and A installations;
Tier 1 is always the lowest possible tier.
4. Where the tier levels required by the previous point are still technically not
feasible or involving unreasonable costs, the CA may allow the operator to
apply an even lower tier (with a minimum of tier 1) for a transitional period to
be agreed with the CA, if the operator provides a suitable plan for necessary
improvement within this period.
The above is applicable to major source streams. For minor source streams,
lower tiers are allowed in general. The operator should select the highest tier that
is technically feasible and not incurring unreasonable costs, with a minimum of
tier 1. This means that the operator should first investigate which tier level is ac-
tually applied or can easily be applied. This tier is then laid down in the monitoring
plan66.
Operators are expected to apply tiers equal to or higher than 1 also for de-mini-
mis source streams where this can be achieved “without additional effort” (i.e.
without any notable costs). However, cases may exist where even tier 1 will in-
volve significant or even unreasonable costs. For those cases the MRR allows
that the operator applies a conservative 67 estimation method (this is a “no-tier
method”). The operator should describe this method in the monitoring plan.
Special rules are applicable to calculation factors in some cases:
 For oxidation and conversion factors, the operator may apply in all types of
installations tier 1 (i.e. setting the factor to a value of 100%) 68.
 For some methodologies, the net calorific value (NCV) of fuels is not required
for the calculation, but is to be reported for consistency reasons only. Accord-
ing to Article 26(5) this is the case for:

65
Article 3(32) defines: ‘commercial standard fuel’ means the internationally standardised
commercial fuels that exhibit a 95% confidence interval of not more than 1% for their specified
calorific value, including gas oil, light fuel oil, gasoline, lamp oil, kerosene, ethane, propane, butane,
jet kerosene (jet A1 or jet A), jet gasoline (jet B) and aviation gasoline (AvGas).
Commercial standard fuels are considered easy to monitor. Therefore Article 31(4) allows the same
treatment also for other fuels which exhibit similar constant composition: “Upon application by the
operator, the competent authority may allow that the net calorific value and emission factors of
fuels are determined using the same tiers as required for commercial standard fuels provided that
the operator submits, at least every three years, evidence that the 1 % interval for the specified
calorific value has been met during the last three years”. The FAQ in section 10.9 gives further
instructions how this rule can be applied.
66
It is to be noted that the monitoring plan always has to reflect the tier actually applied, not the
minimum one required. The general principle is that operators should attempt to improve their
monitoring systems wherever possible.
67
“Conservative” means that the method shall not lead to underestimation of the emissions.
68
This is the “translation” of the MRR text of Article 26(4), which requires “the lowest tiers listed in
Annex II, as a minimum”.

47
  Fuels where the CA has allowed to use emission factors expressed as t CO2
per tonne (or Nm3) instead of t CO2/TJ;
 Fuels which are used as process input (if the emission factor is not ex-
pressed as per TJ);
 Fuels which are part of a mass balance as described in section 4.3.2.
In these cases the NCV may be determined by using conservative estimates
instead of using tiers. However, the highest tier which does not involve ad-
ditional efforts should be applied.
The full system of tier selection requirements for calculation-based approaches
is summarized by Table 5.
Note: If not even tier 1 can be achieved for either activity data or a calculation
factor of a major or minor source stream, the operator may consider applying a
measurement-based approach ( section 8). Where this also cannot even reach
tier 1, a “fall-back methodology” ( section 4.3.4) may be considered.

For measurement-based methodologies a similar hierarchy of approaches is

laid down in Article 41: For major emission sources in category B and C installa-
tions, the highest tier is to be applied. For category A installations, tier 2 may be
used (see section 2 of Annex VIII). Where the operator demonstrates unreason-
able costs ( section 4.6.1) or that such tier is technically not feasible, an even
lower tier (minimum is tier 1) may be applied.
Again, if not even tier 1 is possible, the operator may have to use a fall-back
methodology.

Important note: The monitoring plan always has to reflect the tier actually ap-
plied, not the minimum one required. The general principle is that operators
should attempt to improve their monitoring systems wherever possible.

48
Table 5: Summary of tier requirements for calculation approaches. Note that this is only a brief overview. For detailed information the full text of this section should be
consulted.

Installation Source stream Tier required** Minimum tier Absolute minimum tier If not at least tier 1 is possi-
category category (if tier required technically not (if technically not feasible or un- ble
feasible reasonable costs for transi-
or unreasonable costs) tional period of up to three
years)

Category C* Major highest tier in Annexes II & IV highest tier in Annexes II & IV tier 1 Fall-back approach
(> 500kt) minus 1 (minimium tier 1)

Minor highest tier in Annexes II & IV tier 1 n.a.

de-minimis conservative estimates unless tier is achievable without additional effort n.a.

Category B* Major highest tier in Annexes II & IV highest tier in Annexes II & IV tier 1 Fall-back approach
(50kt < x ≤ minus 2 (minimium tier 1)
500kt)
Minor highest tier in Annexes II & IV tier 1 n.a.

de-minimis conservative estimates unless tier is achievable without additional effort n.a.

Category A Major tier in Annex V tier in Annex V minus 2 tier 1 Fall-back approach
(≤ 50kt) (normally tier 1)

Minor tier in Annex V tier 1 n.a.

de-minimis conservative estimates unless tier is achievable without additional effort n.a.

Installation Major tier 1 unless higher tier is achievable without additional effort Fall-back approach
with low
emissions Minor tier 1 unless higher tier is achievable without additional effort
(< 25kt)
de-minimis conservative estimates unless tier is achievable without additional effort n.a.

* for calculation factors (emission factor, net calorific value,..) of source streams that are commercial standard fuels the same tier requirements as for category A installations apply
** for oxidation and conversion factors the minimum requirement is to apply the lowest tier in Annexes II & IV (normally tier 1 = 100%)

49
 Table 6: Summary of tier requirements for measurement-based approaches. Note
that this is only a brief overview. For detailed information the full text of this
section should be consulted.

Installation Emission Tier required Minimum tier If not at least

category source (if tier required technically tier 1 is
category not feasible or unreason- possible
able costs)

Category C Major highest tier in Annex VIII highest tier in Annex VIII
(> 500kt) minus 1 (minimium tier 1)

Minor highest tier in Annex VIII tier 1

Category B Major highest tier in Annex VIII highest tier in Annex VIII
(50kt < x ≤ minus 2 (minimium tier 1)
500kt)
highest tier in Annex VIII tier 1 Fall-back
Minor
approach
Category A Major tier 2 tier 1
(≤ 50kt)
Minor tier 2 tier 1

Installation with Major tier 1 unless higher tier is achievable without addi-
low emissions tional effort (not applicable for N2O)
(< 25kt) Minor

5.3 Uncertainty assessment as supporting document

5.3.1 General requirements

As shown in section 6.1.1, the tiers for activity data are expressed using a spec-
ified “maximum permissible uncertainty over a reporting period”. When submitting
a new or updated monitoring plan, the operator must demonstrate the compliance
of his monitoring methodology (in particular of the measuring instruments applied)
with those uncertainty levels. Pursuant to Article 12(1), this is done by submitting
an uncertainty assessment as supporting document together with the monitoring
plan. (Note: installations with low emissions ( section 4.4.2) are exempt from
this requirement).
This supporting document should contain the following information:
 Evidence for compliance with uncertainty thresholds for activity data;
 Evidence for compliance with uncertainty required for calculation factors, if ap-
plicable69;
 Evidence for compliance with uncertainty requirements for measurement-
based methodologies, if applicable;

69
This is applicable only where the sampling frequency for analyses is determined based on the rule
of 1/3 of the activity data uncertainty (Article 35(2)). For more information see section 6.2.2.

50
 If a fall-back methodology is applied for at least part of the installation, an un-
certainty assessment for the total emissions of the installation is to be pre-
sented.
It is advisable that the operator designs at the same time a pragmatic procedure
for repeating this assessment regularly70.

For activity data, the assessment shall cover (Article 28(2), by way of analogy
also required by Article 29):
 the specified uncertainty of the applied measuring instruments,
 the uncertainty associated with the calibration, and
 any additional uncertainty connected to how the measuring instruments are
used in practice.
 Furthermore the influence of the uncertainty related to determination of stocks
at the start/end of the year are to be included, if relevant. They are relevant if:
 fuel or material quantities are determined based on batch measurements
rather than continual metering, i.e. mostly when invoices are used,
 storage facilities are capable of containing at least 5% of the annually used
quantity of the fuel or material considered; and
 the installation is not an installation with low emissions ( section 4.4.2).

5.3.2 Simplifications
As mentioned above in this section and in section 4.7, uncertainty encompasses
several sources of uncertainty, in particular errors which are caused by a lack of
precision (in principle this is the meter’s uncertainty as specified by the manufac-
turer for use in an appropriate environment, and certain conditions for installation,
such as length of straight piping before and after a flow meter) and a lack of
accuracy (e.g. caused by aging or corrosion of the instrument, which may result
in a drift). Therefore the MRR calls for the uncertainty assessment to take account
of measuring instrument’s uncertainty, as well as influence from calibration and
all other possible influencing parameters. However, in practice such uncertainty
assessment is very demanding, and exceeds the possibilities of many operators’
resources. The MRR therefore provides for several pragmatic simplifications.

5.3.2.1 Simplification based on ETSG approach

For the second EU ETS phase, the so-called ETSG71 guidance document pro-
posed a simplified approach, which allowed the overall uncertainty for a source
stream’s activity data to be approximated by the uncertainty known for a specific
type of instrument, under the condition that other sources of uncertainty are suf-
ficiently mitigated. This is considered to be the case in particular if the instrument

70
Such procedure is to be referenced in the monitoring plan in accordance with Annex I, section 1,
point 1(c)(ii), and is needed for compliance with Articles 28(1), and 22, if applicable.
71
ETS Support Group (a group of ETS experts under the umbrella of the IMPEL network, who have
developed important guidance notes for the application of the MRG 2007)

51
 is installed according to certain conditions. The ETSG note contains a list of in-
strument types and installation conditions which helps the user applying this ap-
proach.
The MRR has picked up the principle of this approach and allows the operator to
use the “Maximum Permissible Error (MPE) in service”72 specified for the instru-
ment as overall uncertainty, provided that measuring instruments are installed in
an environment appropriate for their use specifications. Where no information is
available for the MPE in service, or where the operator can achieve better values
than the default values, the uncertainty obtained by calibration may be used, mul-
tiplied by a conservative adjustment factor for taking into account the higher un-
certainty when the instrument is “in service”.
The information source for the MPE in service and the appropriate use specifica-
tions is not further specified by the MRR, leaving some room for flexibility. It may
be assumed that the manufacturer’s specifications, specifications from legal met-
rological control, but also guidance documents such as the Commission’s guid-
ance are suitable sources.

5.3.2.2 Relying on national legal metrological control

The second simplification allowed by the MRR, is even more simplifying in prac-
tice: Where the operator demonstrates to the satisfaction of the CA, that a meas-
uring instrument is subject to national legal metrological control, the MPE (in ser-
vice) allowed by the metrological control legislation may be taken as uncertainty,
without providing further evidence73.

5.3.2.3 Installations with low emissions

small Article 47(4) and (5) exempt operators of installations with low emissions ( sec-
tion 4.4.2) completely from delivering an uncertainty assessment, where activity
data is based on purchase records.

5.3.3 Further guidance

The topic of uncertainty assessment, and related topics such as default values
for MPEs and use conditions of frequently used instrument types, are dealt with
by guidance document No. 4 (for reference see section 2.3).

5.4 Procedures and the monitoring plan

The monitoring plan should ensure that the operator carries out all the monitoring
activities consistently over the years, like according to a recipe book. In order to

72
The MPE in service is significantly higher than the MPE of the new instrument. The MPE in service
is often expressed as a factor times the MPE of the new instrument.
73
The philosophy behind this approach is that control is exerted here not by the CA responsible for
the EU ETS, but by another authority which is in charge of the metrological control issues. Thus,
double regulation is avoided and administration is reduced.

52
prevent incompleteness, or arbitrary changes by the operator, the competent au-
thority’s approval is required. However, there are always elements in the moni-
toring activities, which are less crucial, or which may change frequently.
The MRR provides a useful tool for such situations: Such monitoring activities
may (or even shall) be put into “written procedures”74, which are mentioned and
described briefly in the MP, but are not considered part of the MP. These proce-
dures are tightly linked to, but not part of the monitoring plan. They must be just
described in the MP with such level of detail that the CA can understand the con-
tent of the procedure, and can reasonably assume that a full documentation of
the procedure is maintained and implemented by the operator. The full text of the
procedure would be delivered to the competent authority only upon request. The
Operator shall also make procedures available for the purposes of verification
(Article 12(2)). As a result, the operator has the full responsibility for the proce-
dure. This gives him the flexibility to make amendments to the procedure when-
ever needed, without requiring update of the monitoring plan, as long as the pro-
cedure’s content stays within the limitations of its description laid down in the
monitoring plan.
The MRR contains several elements which are by default expected to be put into
written procedures, such as:
 Managing responsibilities and competency of personnel;
 Data flow and control procedures ( section 5.5);
 Quality assurance measures;
 Estimation method for substitution data where data gaps have been found;
 Regular review of the monitoring plan for its appropriateness (including uncer-
tainty assessment where relevant);
 A sampling plan75, if applicable ( see section 6.2.2), and a procedure for
revising the sampling plan, if relevant;
 Procedures for methods of analyses, if applicable;
 Procedure for demonstrating evidence for equivalence to EN ISO/IEC 17025
accreditation of laboratories, if relevant;
 Procedure for uncertainty assessment in case of fall-back methodologies (
section 4.3.4) applied;
 Procedures for use of measurement-based methodologies, including for cor-
roborating calculations and for subtracting biomass emissions, if relevant;
The MRR furthermore outlines how the procedure must be described in the Mon-
itoring plan. Note that for simple installations also the procedures will usually be
very simple and straightforward. Where the procedure is very simple, it may be
useful to use the procedure text immediately as “description” of the procedure as
required for the monitoring plan.

74
Article 11(1) 2nd sub-paragraph: “The monitoring plan shall be supplemented by written procedures
which the operator or aircraft operator establishes, documents, implements and maintains for
activities under the monitoring plan, as appropriate.”
75
Containing information on the methodologies for preparation of samples, including information on
responsibilities, locations, frequencies and quantities and methodologies for the storage and
transport of samples (Article 33).

53
 Example for a procedure:
An operator might use different fractions of municipal or industrial waste as
fuel. If every type of waste were to be considered as individual source stream,
the operator would have to update the monitoring plan every time a new waste
type is delivered. The competent authority would be required to issue an
approval of the monitoring plan each time. Thus, such situation cannot be
considered practical, in particular if the monitoring method is always the same
(e.g. same balance used, same sampling and analyses methods applied).
Note: This example is without prejudice to other legal requirements regarding
burning of waste, such as requirements under the Industrial Emissions
Directive (IED, Directive 2010/75/EU). This example assumes that the different
types of waste mentioned do not infringe any permit conditions or other legal
requirements. The focus here lies purely on the EU ETS monitoring aspects.
Solution for monitoring: The operator uses a procedure for checking if the
waste delivered fits into the boundaries of the defined source stream before
applying the monitoring approach defined in the monitoring plan. The
procedure could be outlined like this:
1. The shift personnel at the entrance gate is instructed to report every
delivery of a waste material to the RSM (ETS Responsible Shift
Manager)76.
2. RSM checks if waste delivered complies with quality standard as defined
by <procedure x.y.1>. That procedure defines that:
a. only waste of certain waste catalogue numbers are permitted by the
CA,
b. only certain net calorific values, humidity and particle size can be
used in the installation;
c. in case of doubt, RSM will request the on-site laboratory to perform
adequate analyses.
3. If the waste does not comply with <procedure x.y.1>, it has to be put on
storage until the calculation factors have been determined. In this case this
waste is put on a list of new materials, which will be notified to the CA every
year in the first week of November.
4. Thereafter the waste can be used in the installation. The mass noted down
on the delivery note, as well as the calculation factors are entered in the
ETS data log, filename “E:\Raw data\SourceStreamData.xls”, sheet
“WasteLog” by RSM.
<End of procedure>

Table 7 and Table 8 outline the necessary elements of information required to

be put into the monitoring plan for each procedure (Article 12(2)), and give
examples for procedures.

76
Note that not the name of responsible staff, but the name of the post is to be used, in order to avoid
necessary updates whenever staff changes.

54
Table 7: Example related to the management of staff: Descriptions of a written
procedure as required in the monitoring plan.

Item according to Article 12(2) Possible content (examples)

Title of the procedure ETS personnel management
Traceable and verifiable reference for ETS 01-P
identification of the procedure
Post or department responsible for im- HSEQ deputy head of unit
plementing the procedure and the post
or department responsible for the man-
agement of the related data (if differ-
ent)
Brief description of the procedure77  Responsible person maintains a list
of personnel involved in ETS data
management
 Responsible person holds at least
one meeting per year with each in-
volved person, at least 4 meetings
with key staff as defined in the annex
of the procedure; Aim: Identification
of training needs
 Responsible person manages internal
and external training according to
identified needs.
Location of relevant records and infor- Hardcopy: HSEQ Office, shelf 27/9,
mation Folder identified “ETS 01-P”.
Electronically:
“P:\ETS_MRV\manag\ETS_01-P.xls”
Name of the computerised system N.A. (Normal network drives)
used, where applicable
List of EN standards or other standards N.A.
applied, where relevant

Table 8: QM-related example for a description of a written procedure in the

monitoring plan. The installation of the example seems to be a rather
complex one.

Item according to Article 12(2) Possible content (examples)

Title of the procedure QM for ETS instruments
Traceable and verifiable reference for QM 27-ETS
identification of the procedure
Post or department responsible for im- Environmental officer / Business Unit 2
plementing the procedure and the post
or department responsible for the man-
agement of the related data (if differ-
ent)

77
This description is required to be sufficiently clear to allow the operator, the competent authority
and the verifier to understand the essential parameters and operations performed.

55
 Item according to Article 12(2) Possible content (examples)
Brief description of the procedure  Responsible person maintains a cal-
endar of appropriate calibration and
maintenance intervals for all instru-
ments listed in table X.9 of the moni-
toring plan
 Responsible person checks weekly
which QM activities are required ac-
cording to the calendar within the
next 4 weeks. As appropriate, he re-
serves resources required for this
tasks in the weekly meetings with the
plant manager.
 Responsible person orders external
experts (calibration institutes) when
required.
 Responsible person ensures that QM
tasks are carried out on the agreed
dates.
 Responsible person keeps records of
the above QM activities.
 Responsible person reports back to
plant manager on corrective action
required.
 Corrective action is handled under
procedure QM 28-ETS.
Location of relevant records and infor- Hardcopy: Office HS3/27, shelf 3, Folder
mation identified “QM 27-ETS -nnnn”.
(nnnn=year)
Electronically:
“Z:\ETS_MRV\QM\calibr_log.pst”
Name of the computerised system MS Outlook calendar, also used for stor-
used, where applicable ing documents as attachments chrono-
logically
List of EN standards or other standards In the instrument list (document ETS-
applied, where relevant Instr-A1.xls) the applicable standards are
listed. This document is made available
to the CA and verifier upon request.

5.5 Data flow and control system

Monitoring of emissions data is more than just reading instruments or carrying

out chemical analyses. It is of utmost importance to ensure that data are pro-
duced, collected, processed and stored in a controlled way. Therefore the oper-
ator must define instructions for “who takes data from where and does what with
the data”. These “data flow activities” (Article 58) form part of the monitoring plan
(or are laid down in written procedures, where appropriate (see section 5.4). A
data flow diagram is often a useful tool for analysing and/or setting up data flow
procedures. Examples for data flow activities include reading from instruments,
sending samples to the laboratory and receiving the results, aggregating data,
calculating the emissions from various parameters, and storing all relevant infor-
mation for later use.

56
As human beings (and often different information technology systems) are in-
volved, mistakes in these activities can be expected. The MRR therefore requires
the operator to establish an effective control system (Article 59). This consists of
two elements:
 A risk assessment, and
 Control activities for mitigating the risks identified.

“Risk” is a parameter which takes into account both, the probability of an incident
and its impact. In terms of emission monitoring, the risk refers to the probability
of a misstatement (omission, misrepresentation or error) being made, and its im-
pact in terms of annual emissions figure.
When the operator carries out a risk assessment, he analyses for each point in
the data flow needed for the whole installation’s emission monitoring, whether
there would be a risk of misstatements. Usually this risk is expressed by qualita-
tive parameters (low, medium, high) rather than by trying to assign exact figures.
He furthermore assesses potential reasons for misstatements (such as paper
copies being transported from one department to another, where delays may oc-
cur, or copy & paste errors may be introduced), and identifies which measures
might reduce the found risks, e.g. sending data electronically and storing a paper
copy in the first department; search for duplicates or data gaps in spreadsheets,
control check by an independent person (“four eyes principle”)…
Measures identified to reduce risks are implemented. The risk assessment is then
re-evaluated with the new (reduced) risks, until the operator considers that the
remaining risks are sufficiently low for being able to produce an annual emissions
report which is free from material misstatement(s)78.
The control activities are laid down in written procedures and referenced in the
monitoring plan. The results of the risk assessment (taking into account the con-
trol activities) are submitted as supporting documentation to the competent au-
thority when approval of the monitoring plan is requested by the operator.
Operators are required to establish and maintain written procedures related to
control activities for at least (Article 59(3)):
(a) quality assurance of the measurement equipment;
(b) quality assurance of the information technology system used for data flow ac-
tivities, including process control computer technology;
(c) segregation of duties in the data flow activities and control activities and man-
agement of necessary competencies;
(d) internal reviews and validation of data;
(e) corrections and corrective action;
(f) control of out-sourced processes;
(g) keeping records and documentation including the management of document
versions.

78
The operator should strive to produce “error-free” emission reports (Article 7: Operators “shall
exercise due diligence to ensure that the calculation and measurement of emissions exhibit the
highest achievable accuracy”). However, verification cannot produce 100% assurance. Instead,
verification aims at providing a reasonable level of assurance that the report is free from material
misstatements. For further information see the relevant guidance document on the A&V Regulation
(see section 2.3).

57
 small Installations with low emissions: Article 47(3) exempts operators of installa-
tions with low emissions ( section 4.4.2) from submitting a risk analysis when
submitting the monitoring plan for approval by the competent authority. However,
operators will still find it useful to carry out a risk assessment for their own pur-
poses. It has the advantage of reducing the risk of under-reporting, under-surren-
der of allowances and consequential penalties, and also over-reporting and over-
surrender.
Note that dedicated documents containing more detailed information on the data
flow activities and control system (including risk analysis) has been published
(GD No. 6 and 6a, tool for operators’ risk assessment; for reference see section
2.3).

5.6 Keeping the monitoring plan up to date

The monitoring plan must always correspond to the current nature and function-
ing of the installation. Where the practical situation at the installation is modified,
e.g. because technologies, processes, fuels, materials, measuring equipment, IT
systems or organisation structures (i.e. staff assignments) are changed (where
relevant for the monitoring of emissions), the monitoring methodology must be
updated (Article 14)79. Depending on the nature of the changes, one of the fol-
lowing situations can occur:
 If an element of the monitoring plan itself needs updating, one of the following
situations can apply:
 The change to the monitoring plan is a significant one. This situation is dis-
cussed in section 5.6.1. In case of doubt, the operator has to assume that
the change is significant.
 The change to the monitoring plan is not significant. The procedure de-
scribed under 5.6.2 applies.
 An element of a written procedure is to be updated. If this doesn’t affect the
description of the procedure in the monitoring plan, the operator will carry out
the update under his own responsibility without notification to the competent
authority.
The same situations may occur as a consequence of the requirement to improve
the monitoring methodology continuously (see section 5.7).

79
Article 14(2) lists a minimum of situations in which a monitoring plan update is mandatory:
“(a) new emissions occur due to new activities being carried out or due to the use of new fuels or
materials not yet contained in the monitoring plan;
(b) a change in the availability of data, due to the use of new types of measuring instrument,
sampling methods or analysis methods, or for other reasons, leads to higher accuracy in the
determination of emissions;
(c) data resulting from the monitoring methodology applied previously has been found to be
incorrect;
(d) changing the monitoring plan improves the accuracy of the reported data, unless this is
technically not feasible or incurs unreasonable costs;
(e) the monitoring plan is not in conformity with the requirements of this Regulation and the
competent authority requests the operator or aircraft operator to modify it;
(f) it is necessary to respond to the suggestions for improvement of the monitoring plan contained
in a verification report.”

58
The MRR in Article 16(3) also defines the requirements for record keeping about
any monitoring plan updates, such that a complete history of monitoring plan up-
dates is maintained, which allows a fully transparent audit trail, including for the
purposes of the verifier.
For this purpose it is considered best practice for the operator to make use of a
“logbook”, in which all non-significant changes to the monitoring plan and to pro-
cedures are recorded, as well as all versions of submitted and approved monitor-
ing plans. This must be supplemented with a written procedure for regular as-
sessment of whether the monitoring plan is up to date (Article 14(1) and point 1(c)
of section 1 of Annex I).
Note: From 2021, a simplification80 introduced in Article 19 helps to avoid a po-
tentially large number of monitoring plan updates. In principle, every time an in-
stallation’s emissions exceed the threshold for its classification (Category A, B, C
or installation with low emissions), the operator would have to evaluate if all tiers
applied still confirm with the requirement (see section 5.2). The same would apply
to individual emission sources or source streams, if their emissions exceed the
relevant threshold for their classification. The new simplification clauses in Article
19 now allow the operator to avoid such reclassification of the installation, emis-
sion source or source stream, if he provides evidence to the competent authority
that the relevant threshold was not exceeded during the 5 years before the ex-
ceedance, and is unlikely to exceed it again.
Note: Any change of the monitoring plan under the MRR may have an impact on
the “Monitoring Methodology Plan” (MMP) required by the Free Allocation Rules
(FAR) Regulation81. If the installation receives free allocation under the FAR, the
operator is responsible to keep also the MMP up to date82.

5.6.1 Significant modifications

Whenever a significant modification to the monitoring plan is necessary, the op-
erator shall notify the update to the competent authority without undue delay. The
competent authority then has to assess whether the change is indeed a signifi-
cant one. Article 15(3) contains a (non-exhaustive) list of monitoring plan updates
which are considered significant83. If the change is not significant, the procedure

80
The simplification for installation classification is found in the 2nd subparagraph of Article 19(2): „By
way of derogation from Article 14(2), the competent authority may allow the operator not to modify
the monitoring plan where, on the basis of verified emissions, the threshold for the classification of
the installation referred to in the first subparagraph is exceeded, but the operator demonstrates to
the satisfaction of the competent authority that this threshold has not already been exceeded within
the past five reporting periods and will not be exceeded again in subsequent reporting periods.”
Similar wording is found in Article 19(3) for source streams and in Article 19(4) for emission
sources.
81
For reference see footnote 5.
82
See the guidance document No. 5 (“Guidance on Monitoring and Reporting in Relation to the Free
Allocation Rules”) of the guidance series on free allocation rules:
https://ec.europa.eu/clima/sites/default/files/ets/allowances/docs/p4_gd5_mr_guidance_en
.pdf
83
Article 15(3):
3. Significant modifications to the monitoring plan of an installation include:
(a) changes to the category of the installation where such changes require a change to the
monitoring methodology or lead to a change of the applicable materiality level pursuant to Article
23 of Implementing Regulation (EU) 2018/2067;

59
 described under 5.6.2 applies. For significant changes, the competent authority
thereafter carries out its normal process of approving monitoring plans84.
The approval process may sometimes need longer than the physical change of
the installation (e.g. where new source streams are introduced for monitoring).
Furthermore the competent authority may find the operator’s monitoring plan up-
date incomplete or inappropriate and may require additional amendments of the
monitoring plan. Thus, monitoring according to the old monitoring plan may be
incomplete or lead to inaccurate results, while the operator is not sure whether
the new monitoring plan will be approved as requested. The MRR provides for a
pragmatic approach here:
According to Article 16(1), the operator shall immediately apply the new monitor-
ing plan where he can reasonably assume that the updated monitoring plan will
be approved as proposed. This may apply e.g. when an additional fuel is intro-
duced, which will be monitored using the same tiers as comparable fuels in that
installation. Where the new monitoring plan is not yet applicable, because the
situation in the installation will change only after the approval of the monitoring
plan by the competent authority, monitoring is to be carried out in accordance
with the old monitoring plan until the new one is approved.
Where the operator is unsure whether the CA will approve the changes, he shall
carry out monitoring in parallel using both the new and the updated monitoring
plan (Article 16(1)). Upon receiving the approval of the competent authority, the
operator shall use only the data obtained in accordance with the new monitoring
plan as approved (Article 16(2)).

5.6.2 Non-significant modifications of the monitoring plan

While significant updates of the monitoring plan are to be notified without undue
delay, the competent authority may allow the operator to delay the notification of
non-significant updates in order to simplify the administrative process (Article
15(1)). Where this is the case and the operator can reasonably assume that
changes to the monitoring plan are non-significant, they may be collected and

(b) notwithstanding Article 47(8), changes regarding whether the installation is considered an
‘installation with low emissions’;
(c) changes to emission sources;
(d) a change from calculation-based to measurement-based methodologies, or vice versa, or from
a fall-back methodology to a tier-based methodology for determining emissions or vice versa;
(e)a change in the tier applied;
(f) the introduction of new source streams;
(g) a change in the categorisation of source streams – between major, minor or de-minimis source
streams where such a change requires a change to the monitoring methodology;
(h) a change to the default value for a calculation factor, where the value is to be laid down in the
monitoring plan;
(i) the introduction of new methods or changes to existing methods related to sampling, analysis
or calibration, where this has a direct impact on the accuracy of emissions data;
(j) the implementation or adaption of a quantification methodology for emissions from leakage at
storage sites.
84
This process may differ between Member States. The usual procedure will include a completeness
check for the information provided, a check for the appropriateness of the new monitoring plan in
regard of the changed situation of the installation, and a check for compliance with the MRR. The
competent authority may also reject the new monitoring plan or require further improvements. The
competent authority may also come to the conclusion that the proposed changes are not significant
ones.

60
submitted to the CA once a year (by 31 December), if the competent authority
allows this approach.
The final decision on whether a change to the monitoring plan is significant is the
responsibility of the competent authority. However, an operator can reasonably
anticipate that decision in many cases:
 Where a change is comparable to one of the cases listed in Article 15(3), the
change is significant;
 Where the impact of the proposed monitoring plan change on the overall mon-
itoring methodology or on the risks for error is small, it may be non-significant;
 In case of doubt assume it is a significant change and follow section 5.6.1.

Non-significant changes do not need the approval of the competent authority.

However, in order to provide for legal certainty, the competent authority must in-
form the operator without undue delay of its decision to consider changes non-
significant where the operator has notified them as significant. Operators can be
expected to appreciate if the competent authority acknowledges receipt of notifi-
cations in general.

5.7 The improvement principle

While the previous section has dealt with monitoring plan updates which are man-
dated as consequence of factual changes at the installation, the MRR also re-
quires the operator to explore possibilities to improve the monitoring methodology
when the installation itself is unchanged. For implementing this “improvement
principle”, there are two requirements:
 Operators must take account of the recommendations included in the verifica-
tion reports (Articles 9 and 69(4)), and
 Operators must check regularly on their own initiative, whether the monitoring
methodology can be improved (Article 14(1) and Article 69(1)-(3)).
Operators must react to those findings on possible improvements by
 Sending an improvement report to the competent authority for approval,
 Updating the monitoring plan as appropriate (using the procedures outlined in
sections 5.6.1 and 5.6.2), and
 Implementing the improvements, if relevant according to the time table pro-
posed in the approved improvement report.
“Improvement report” has two different legal bases and deadlines. However, both
reports may be combined if possible:
For the improvement report pursuant to Article 69(1) on the operator’s own
initiative (which may be combined with the one on verifier’s findings – see next
paragraph) the deadline is the 30 June.It has to be delivered:
 every year for category C installations,
 every two years for category B installations, and
 every four years for category A installations.

The deadline of 30 June may be extended by the competent authority up to

30 September of the same year.

61
 Where the operator can demonstrate that the reasons for unreasonable costs or
for improvement measures being technically not feasible will remain valid for a
longer period of time, the competent authority may extend the periods above to
a maximum of 3, 4, or 5 years for category C, B, or A installations, respectively.
For the improvement report responding to a verifier’s recommendations
(Article 69(4)), the deadline is 30 June (or as late as 30 September, if the CA
sets such later deadline) of the year in which the verification report is issued,
irrespective whether an improvement report under Article 69(1) is also due this
year. However, if the operator has already submitted an updated monitoring plan
for approval, which addresses all the issues reported by the verifier, the improve-
ment report pursuant to Article 69(4) may be omitted (see Article 69(5)).
small Operators of installations with low emissions ( section 4.4.2) have to take into
consideration the verifier’s recommendations in their monitoring, but are ex-
empted from providing a corresponding improvement report to the competent au-
thority (Article 47(3)).

The improvement reports pursuant to Article 69(1) have to contain in particular

the following information:
 Improvements for achieving higher tiers, if the “required” tiers are not yet ap-
plied. “Required” here means “those tiers which are applicable if no unreason-
able costs occur and if the tier is technically feasible” 85.
 If the operator applies a fall-back methodology ( section 4.3.4), the report
shall contain a justification as to why it is technically not feasible or would incur
unreasonable costs to apply at least tier 1 for one or more major or minor
source streams. If this justification is not applicable any more, the operator has
to report how at least tier 1 for those source streams is to be applied.
 The report should contain for each possible improvement either a description
of the improvement and the related timetable, or evidence regarding technical
non-feasibility or unreasonable costs, if applicable ( section 4.6).
Note: The Commission has provided harmonised templates for improvement re-
ports.

85
Those “required“ tiers are:
(a) for calculation approaches (first sub-paragraph of Article 26(1)): the highest tiers defined in
Annex II of the MRR for category B and C installations, and the tiers laid down in Annex V for
category A installations and for calculation factors for commercial standard fuels;
(b) for measurement-based approaches (Article 41(1)): for each major emission source, the
operator shall apply, at least the tiers listed in section 2 of Annex VIII in the case of a category A
installation and in other cases, the highest tier listed in section 1 of Annex VIII.

62
 6 CALCULATION-BASED APPROACHES
This chapter gives further details which must be considered when applying cal-
culation-based monitoring methodologies. The principles of the methodology
have been outlined already in sections 4.3.1 (standard methodology) and 4.3.2
(mass balance). All calculation-based approaches have common elements which
need to be defined in the monitoring plan. They will be discussed in this chapter
as follows:
 For the monitoring of activity data, amounts of material or fuel need to be mon-
itored, with tiers being defined according to the uncertainty of metering ( sec-
tion 6.1).
 Calculation factors have to be determined either as default values (section
6.2.1) or have to be determined by analyses (section 6.2.2)
 For calculation factors, a few specific requirements are found in the MRR.
These are discussed in section 6.3.

6.1 Monitoring of activity data

6.1.1 Tier definitions

As discussed earlier, the tiers ( section 4.5) for activity data of a source stream
are defined using thresholds for a maximum uncertainty allowed for the determi-
nation of the quantity of fuel or material over a reporting period. Whether a tier is
met, must be demonstrated by submitting an uncertainty assessment to the com-
petent authority together with the monitoring plan, except it is an installation with
low emissions ( section 4.4.2). Elements of this uncertainty assessment have
been discussed in section 5.3. For illustration, Table 9 shows the tier definitions
for combustion of fuels. A full list of the tier definitions of the MRR is given in
section 1 of Annex II of the MRR.

Table 9: Typical definitions of tiers for activity data based on uncertainty, given for the
combustion of fuels as example.

Tier No. Definition

1 Amount of fuel [t] or [Nm3] over the reporting period86 is determined
with a maximum uncertainty of less than ± 7.5 %.
2 Amount of fuel [t] or [Nm3] over the reporting period is determined with
a maximum uncertainty of less than ± 5.0 %.
3 Amount of fuel [t] or [Nm3] over the reporting period is determined with
a maximum uncertainty of less than ± 2.5 %.
4 Amount of fuel [t] or [Nm3] over the reporting period is determined with
a maximum uncertainty of less than ± 1.5 %.

86
Reporting period is the calendar year.

63
 Note that the uncertainty is meant to refer to “all sources of uncertainty, including
uncertainty of instruments, of calibration, environmental impacts”, unless some
of the simplifications mentioned in section 5.3.2 are applicable. The impact of the
determination of stock changes at the beginning and end of the period is to be
included, if applicable.

6.1.2 Relevant elements of the monitoring plan

When developing the monitoring plan, the operator has to make several choices
regarding the way activity data is determined. In the case of fuels, “activity data”
includes the component of the net calorific value. However, the quantity of ma-
terial or fuel is discussed here specifically, to which the calculation factors are
related. For simplicity purpose, the term “activity data” is used here synonymous
to “quantity of material or fuel”, and the net calorific value is discussed together
with the other calculation factors in sections 6.2 and 6.3.2 below.

Continual vs. batch metering

In principle, there are two ways how the activity data can be determined (Article
27(1)):
(a) based on continual metering at the process which causes the emissions;
(b) based on aggregation of metering of quantities separately delivered (batch
metering) taking into account relevant stock changes.

Continual metering: In case (a), the material or fuel is directly passing the meas-
uring instrument before being fed to the GHG emitting process (or in some cases
coming from there). This is the case for e.g. gas meters or belt weighers. Simi-
larly, the metering may take place at the entrance to the installation, which is the
more usual case for natural gas supplies. The quantity of the reporting period is
read from the meter either as “value at the end of the period minus value at the
beginning of the period” (this is usually the case for gas meters), or by summing
up (integrating) many readings (e.g. every minute, hour or day) over the whole
reporting period. The uncertainty assessment has to deal primarily with the un-
certainty of this one instrument.
Note that cases may exist where part of the material entering the installation is
not used within the installation, but exported to another installation or consumed
within the installation for an activity which is not covered by the EU ETS. Although
the latter situation will not occur as frequently as it did in the first two ETS
phases87, the metering of the amount of fuel or material exported must be taken
into account in the uncertainty assessment, and thus must be done using meas-

87
In particular, point 5 of Annex I to the EU ETS Directive is important: “When the capacity threshold
of any activity in this Annex is found to be exceeded in an installation, all units in which fuels are
combusted, other than units for the incineration of hazardous or municipal waste, shall be included
in the greenhouse gas emission permit.” This sentence significantly reduced the number of
occasions where part of the natural gas entering the installation is consumed in units considered
not part of the GHG emissions permit. For more details, see the Commission’s guidance on the
interpretation of Annex I.
(https://ec.europa.eu/clima/sites/clima/files/ets/docs/guidance_interpretation_en.pdf)

64
urement instruments which allow the total quantity used within the EU ETS instal-
lation to be determined with an overall uncertainty below the allowed threshold of
the applicable tier.

Batch metering: In case (b), the material quantity is determined using a material
balance (Article 27(2)):

Q  P  E  ( Sbegin  Send ) (10)

Where:
Q ......... Quantity of fuel or material applied in the period
P ......... Purchased quantity
E ......... Exported quantity (e.g. fuel delivered to parts of the installation or other
installations which are not included in the EU ETS)
Sbegin .... Stock of the material or fuel at the beginning of the reporting year
Send ..... Stock of the material or fuel at the end of the reporting year
This method is usually applied where invoices are used as the main data source
for parameter P. The operator should pay special attention to clarifying whether
exports88 occur at the installation. Furthermore the operator has to include in the
monitoring plan a description how the stocks are determined at the beginning and
end of the reporting year. Some simplifications are allowed in this regard, which
are discussed below within this section.
Method (b) is often applied where the operator does not dispose of measuring
instruments of his own. Therefore the requirements for “instruments not under the
operator’s control” are usually applicable for the uncertainty assessment. How-
ever, the operator must take into account the uncertainties associated with the
determination of the stock changes. Derogation is granted where the storage fa-
cilities are not capable of containing more than 5% of the annual used quantity of
the fuel or material considered. In such case the uncertainty of stock changes
may be omitted from the uncertainty assessment (Article 28(2)).

Note on stock determination:

The MRR (Article 27(2)) allows two simplifications to the determination of stocks
at the beginning and end of the reporting year:
1. Where it is technically not feasible or would incur unreasonable costs to de-
termine quantities in stock by direct measurement, the operator may use an
estimation method. Such situations may e.g. occur in tanks for heavy fuel oil,
where some solid fraction on top of the liquid oil prevents the exact metering
of the surface level.
Methods allowed by the MRR are:
a. data from previous years correlated with output for the reporting period;

88
Typical “exports” include the use of fuels for mobile machinery such as fork lifts, or where
neighbouring installations are supplied with one common gas meter, while at least one of those
installations does not fall within the scope of the EU ETS.

65
 b. documented procedures and respective data in audited financial state-
ments for the reporting period.
2. Theoretically, the stocks would have to be determined at midnight of the
31 December every year, which may not be possible in practice. Therefore,
the MRR allows89 choosing the next most appropriate day to separate a re-
porting year from the following one. Data must be reconciled accordingly to
the calendar year required. The deviations involved for one or more source
streams shall be clearly recorded, form the basis of a value representative
for the calendar year, and be considered consistently in relation to the next
year.

Operator’s instruments vs. supplier’s instruments

The MRR does not require every operator to equip the installation with measuring
instruments at any cost. That would contradict the MRR’s approach regarding
cost effectiveness. Instead, instruments which are under the control of other par-
ties (in particular fuel suppliers) may be used. In particular in the context of com-
mercial transactions such as fuel purchase, it is often the case that the metering
is done by only one of the trade partners. The other partner may assume that the
uncertainty associated with the measurement is reasonably low, because such
measurements are often governed by legal metrological control. Alternatively, re-
quirements on quality assurance for instruments, including maintenance and cal-
ibration can be included in the purchase contracts. However, the operator must
seek a confirmation on the uncertainty applicable for such meters in order to as-
sess if the required tier can be met.
Thus, the operator may choose whether to use his own instruments or to rely on
instruments used by the supplier. However, a slight preference is given by the
MRR to the operator’s own instruments: If the operator decides to use other in-
struments despite having his own instruments at his disposal, he has to provide
evidence to the competent authority that the supplier’s instruments allow compli-
ance with at least the same tier, give more reliable results and are less prone to
control risks than the methodology based on his own instruments. This evidence
must be accompanied with a simplified uncertainty assessment.
In many cases this uncertainty assessment will be very short and simple. In par-
ticular, if the operator has no alternative instrument available under the operator’s
own control, the operator does not have to compare the tier applicable using his
own instrument with the tier applicable to the supplier’s instrument. For demon-
strating the applicable tier for the supplier’s instrument, suitable evidence should
be added to the uncertainty assessment on the CA’s request.
Furthermore, the control risk may be low where invoices are subject to an ac-
counting department’s controls90.
In the case that invoices are used as primary data for determining the material or
fuel quantity, the MRR requires the operator to demonstrate that the trade part-

89
Under the condition that the exact time would be technically not feasible or would incur
unreasonable costs the operator.
90
Note that the existence of the accounting’s controls does not automatically dispense the operator
from including appropriate risk mitigation measures in the EU ETS related control system. The risk
assessment according to Article 59(2) must include this risk as appropriate.

66
ners are independent. In principle, this should be considered a safeguard for en-
suring that meaningful invoices exist. In many cases it will also be an indicator
whether national legal metrological control is applicable.
Note that there is a “hybrid” possibility allowed by the MRR: The instrument is
outside the control of the operator, but the reading for monitoring is done by the
operator. In such a case the owner of the instrument is responsible for mainte-
nance, calibration and adjustment of the instrument, and ultimately for the appli-
cable uncertainty value, but the data on material quantity can be directly checked
by the operator. Again, this is a situation frequently found for natural gas meters.

Information on further requirements regarding determination of activity data:

Within this section 6.1, all the topics surrounding uncertainty, including mainte-
nance, calibration and adjusting of measuring instruments have not been dis-
cussed. However, this is a very important topic which exceeds the scope of this
guidance document. Reference is therefore made to section 5.3, and in particular
5.3.3, in which further information sources are listed.

6.2 Calculation factors – Principles

Besides the activity data, the “calculation factors” are important parts of any mon-
itoring plan based on a calculation methodology. These factors are (as outlined
in the context of the calculation formulae in section 4.3.1 and 4.3.2):
 In case of the standard methodology for combustion of fuels, or fuels used as
process input: Emission factor, net calorific value, oxidation factor and biomass
fraction;
 In case of the standard methodology for process emissions (in particular de-
composition of carbonates): Emission factor and conversion factor;
 For mass balances: Carbon content, and if applicable: biomass fraction and
net calorific value.
According to Article 30(1) of the MRR, these factors can be determined by one of
the following principles:
a. As default values ( Section 6.2.1); or
b. by laboratory analyses ( section 6.2.2).
The applicable tier will determine which of these options is used. Lower tiers allow
for default values, i.e. for values which are kept constant throughout the years,
and updated only when more accurate data becomes available. The highest tier
defined for each parameter in the MRR is usually the laboratory analysis, which
is more demanding, but of course more accurate. The result of the analysis is
valid for the very batch from which the sample has been taken, while a default
value is usual an average or conservative value determined on the basis of big
quantities of that material. E.g. emission factors for coal as used in national in-
ventories might be applicable to a country-wide average of several coal types as
used also in energy statistics, while the analysis will be valid for only one batch
of one coal type.

67
 Important note: In all cases the operator must ensure that activity data and all
calculation factors are used consistently. I.e. where a fuel’s quantity is determined
in the wet state before entering the boiler, the calculation factors must also refer
to the wet state. Where analyses are carried out in the laboratory from the dry
sample, the moisture must be taken into account appropriately, for arriving at
calculation factors applicable for the wet material.
Operators must also be careful not to mix up parameters of inconsistent units.
Where the amount of fuel is determined per volume, also the NCV and/or emis-
sion factor must refer to volume rather than mass91.

6.2.1 Default values

When an operator intends to use a default value for a calculation factor, the value
of that factor must be documented in the monitoring plan. The only exception is
where the default value or its information source changes on an annual basis. In
principle, this is the case where the competent authority regularly updates and
publishes the standard factors used in the national GHG inventory. In such cases,
the monitoring plan should contain the reference to the place (webpage, official
journal, etc.) where these values are published, instead of the value itself (Article
31(2)).
The applicable type of default values is determined by the applicable tier defini-
tion. Sections 2 to 4 of Annex II of the MRR give a general scheme for these
definitions. The sector-specific monitoring methodologies in Annex IV further
specify those tiers, or sometimes overrule the tier definitions with more specific
ones. A complete listing of all tier definitions would significantly exceed the scope
of this guidance. However, a simplified overview of tier definitions given by Annex
II is presented in Table 10.

Table 10: Overview of the most important tier definitions for calculation factors, based
on Annex II of the MRR. The following abbreviations are used:
EF…Emission factor, NCV…net calorific value, OF…oxidation factor,
CF…conversion factor, CC…carbon content, BF…biomass fraction. The tier
definitions are further specified in the further text.

Source stream Fac- Tier Tier definition

type tor
Combustion EF92 1 Type I default values
emissions
2a Type II default values
2b Established proxies (if applicable)
3 Laboratory analyses or
empirical correlations

91
See section 4.3.1, in which conditions are mentioned under which the operator may use emission
factors expressed as t CO2/t fuel instead of t CO2/TJ.
92
According to section 2.1 of Annex II of the MRR, the tiers defined shall relate to the preliminary
emission factor, where a biomass fraction is determined for a mixed fuel or material.

68
 Source stream Fac- Tier Tier definition
type tor
Combustion OF 1 Default value OF=1
emissions
2 Type II default values
3 Laboratory analyses
Combustion NCV 1 Type I default values
emissions and
2a Type II default values
mass balance
2b Purchasing records (if applicable)
3 Laboratory analyses
BF 1 Type I biomass fraction

Combustion 2 Type II biomass fraction

emissions, pro-
cess emissions
3 Laboratory analyses
and mass bal-
ance
Process emis- EF 1 Type I default values
sions (Method A:
Input based)
2 Type II default values

3 Laboratory analyses and

stoichiometric values
Process emis- EF 1 Type I default values
sions (Method B:
2 Type II default values
Output based)
3 Laboratory analyses & stoichiometric
values
Process emis- CF 1 Default value CF=1
sions (Methods A
2 Laboratory analyses & stoichiometric
and B)
values
Mass balance CC 1 Type I default values
source stream
2a Type II default values
2b Established proxies (if applicable)
3 Laboratory analyses or empirical corre-
lations or
stoichiometric values for pure chemical
substances

As can be seen from Table 10, the lowest tier usually applies an internationally
applicable default value (IPCC standard factor or similar, as listed in Annex VI of
the MRR). The second tier uses a national factor, which is in principle used for
the national GHG inventory under the UNFCCC. However, further types of default
values or proxy methods are allowed, which are deemed equivalent. The highest
tier usually requires the factor to be determined by laboratory analyses.
The short descriptions of tier levels in Table 10 have to be read in full text as
follows:

69
  Type I default values: Either standard factors listed in Annex VI (i.e. in princi-
ple IPCC values) or other constant values in accordance with point (e) of Article
31(1), i.e. analyses carried out in the past but still valid 93.
 Type II default values: Country specific emission factors in accordance with
points (b), (c) and (d) of Article 31(1), i.e. values used for the national GHG
inventory94, more values published by the CA for more disaggregated fuel
types, or other literature values which are agreed by the competent authority95,
or values guaranteed by the supplier96.
 Established proxies: These are methods based on empirical correlations as
determined at least once per year in accordance with the requirements appli-
cable for laboratory analyses (see 6.2.2). However, these rather complicated
analyses are only carried out once per year, therefore this tier is considered a
lower level than full analyses. The proxy correlations may be based on
 density measurement of specific oils or gases, including those common to
the refinery or steel industries, or
 net calorific value for specific coal types.
 Purchasing records: Only in case of commercially traded fuels, the net calo-
rific value may be derived from the purchasing records provided by the fuel
supplier, provided it has been derived based on accepted national or interna-
tional standards.
 Laboratory analyses: In this case, the requirements discussed in section
6.2.2 below are fully applicable. This also includes the use of the 'established
proxies', if applicable and where the uncertainty of the empirical correlation
does not exceed 1/3 of the uncertainty value associated with the applicable tier
for activity data. Furthermore, the competent authority may accept the use of
the stoichiometric content of pure97 chemical substances as meeting the tier
that would otherwise require laboratory analyses.
 Type I biomass fraction 98: One of the following methods is applied, which are
considered equivalent:
 Use of values published by the competent authority or by the Commission.
 Use of values in accordance with Article 31(1), i.e. a "Type I/II default value".
 Type II biomass fraction98:

93
MRR Article 31(1)(e): “values based on analyses carried out in the past, where the operator can
demonstrate to the satisfaction of the competent authority that those values are representative for
future batches of the same fuel or material”. This is a considerable simplification for operators, who
do not have to carry out regular analyses as described in section 6.2.2.
94
MRR Article 31(1)(b): “standard factors used by the Member State for its national inventory
submission to the Secretariat of the United Nations Framework Convention on Climate Change“.
95
MRR Article 31(1)(c): “literature values agreed with the competent authority, including standard
factors published by the competent authority, which are compatible with factors referred to in point
(b), but representative of more disaggregated sources of fuel streams”.
96
New as of 2021, MRR Article 31(1)(d): “values specified and guaranteed by the supplier of a fuel
or material where the operator can demonstrate to the satisfaction of the competent authority that
the carbon content exhibits a 95% confidence interval of not more than 1%” – this is a similar
approach as for “commercial standard fuels” defined in Article 3(32).
97
The term pure is not defined in the MRR. It should however refer to best industry practices for
identifying this state of purity of the substance, e.g. when sold on the market labelled as “purum”.
98
Note that it is not discussed here how to determine whether the relevant sustainability and GHG
savings criteria are met (if applicable). A short overview is given in section 6.3.6. For biogas in
natural gas grids see section 6.3.7. More information on the treatment of biomass issues in the EU
ETS are given in guidance document No. 3 (for reference see section 2.3).

70
  Use of a value determined in accordance with the second subparagraph of
Article 39(2), i.e. use an estimation method approved by the competent au-
thority. For fuels or materials originating from a production process with de-
fined and traceable input streams, the operator may base such estimation
on a mass balance of fossil and biomass carbon entering and leaving the
process.
 Use of a further estimation method based on guidelines published by the
Commission, in accordance with the third subparagraph of Article 39(2). If
the Commission considers publication of such guidelines in the future, they
will be found or referenced in Guidance Document No. 3.
 Stoichiometrical values: In principle these are allowed in the same way as
other literature values, i.e. they have to be agreed with the competent authority
and can therefore be considered “Type II default values”. However, from 2021
onwards, under certain conditions (the substance must be pure, the use of that
value would be conservative, and the otherwise required laboratory analyses
would lead to unreasonable costs), the competent authority may approve that
those values suffice to comply with the highest tier 99. This in turn reduces the
cases where operators would have to submit an improvement report, as the
higher tier thereby has been achieved.

6.2.2 Laboratory analyses

Where the MRR refers to determination “in accordance with Article 32 to 35”, this
means that a parameter must be determined by (chemical) laboratory analyses.
The MRR imposes relatively strict rules for such analyses, in order to ensure a
high quality level of the results. In particular, the following points need consider-
ation:
 The laboratory must demonstrate its competence. This is achieved by one of
the following approaches:
 An accreditation in accordance with EN ISO/IEC 17 025, where the analysis
method required is within the accreditation scope; or
 Demonstrating that the criteria listed in Article 34(3) are satisfied. This is
considered reasonably equivalent to the requirements of EN ISO/IEC
17 025. Note that this approach is allowed only where use of an accredited
laboratory is shown to be technically not feasible or involving unreasonable
costs ( section 4.6).
 The way samples are taken from the material or fuel to be analysed is consid-
ered crucial for receiving representative results. Therefore, operators have to
develop sampling plans in the form of written procedures ( see section 5.4)
and get them approved by the competent authority. Note that this applies also
where the operator does not carry out the sampling himself, but treats it as an
outsourced process.

99
Article 31(5): Upon application by the operator, the competent authority may accept that the stoi-
chiometric carbon content of a pure chemical substance be considered as meeting a tier that would
otherwise require analyses carried out in accordance with Articles 32 to 35, if the operator can
demonstrate to the satisfaction of the competent authority that using analyses would lead to un-
reasonable costs and that using the stoichiometric value will not lead to under-estimation of the
emissions.

71
  Analyses methods usually have to follow international or national standards.
Preference is given to EN standards100.
small Note that laboratory analyses are usually related to the highest tiers for calcula-
tion factors. Therefore, these rather demanding requirements are rarely applica-
ble to smaller installations. In particular operators of installations with low emis-
sions ( section 4.4.2) may use “any laboratory that is technically competent and
able to generate technically valid results using the relevant analytical procedures,
and provides evidence for quality assurance measures as referred to in Article
34(3)”. In fact, the minimum requirements would be that the laboratory demon-
strates that it is technically competent and “capable of managing its personnel,
procedures, documents and tasks in a reliable manner”, and that it demonstrates
quality assurance measures for calibration and test results 101. However, it is in
the operator’s interest to receive reliable results from the laboratory. Therefore
operators should strive to comply with the requirements of Article 34 to the high-
est degree feasible.
Furthermore, it is important to note that the MRR in the activity-specific require-
ments of Annex IV allows the use of “industry best practice guidelines” for some
lower tiers, where no default values are applicable. In such cases, where despite
approval to apply a lower tier methodology analyses are still required, it may not
be appropriate or possible to apply Articles 32 to 35 in full. However, the compe-
tent authority should deem the following as minimum requirements:
 Where the use of an accredited laboratory is technically not feasible or would
lead to unreasonable costs, the operator may use any laboratory that is tech-
nically competent and able to generate technically valid results using the rele-
vant analytical procedures, and provides evidence for quality assurance
measures as referred to in Article 34(3).
 The operator shall submit a sampling plan in accordance with Article 33.
 The operator shall determine the analysis of frequency in accordance with Ar-
ticle 35.
More detailed guidance on topics related to laboratory analyses, sampling, fre-
quency of analyses, equivalence to accreditation etc. are given in guidance doc-
ument No. 5.

6.3 Calculation factors – specific requirements

In addition to the general approaches for determining calculation factors (default

values / analyses) as discussed in section 6.2 and the general overview given in
sections 4.3.1 and 4.3.2, some specific rules for each factor are laid down in the
MRR. These are discussed below.

100
For the use of standards, Article 32(1) defines the following hierarchy: “The operator shall ensure
that any analyses, sampling, calibrations and validations for the determination of calculation factors
are carried out by applying methods based on corresponding EN standards.
Where such standards are not available, the methods shall be based on suitable ISO standards or
national standards. Where no applicable published standards exist, suitable draft standards,
industry best practice guidelines or other scientifically proven methodologies shall be used, limiting
sampling and measurement bias.”
101
Examples for such measures are given in Article 34(3), point (j): regular participation in proficiency
testing schemes, applying analytical methods to certified reference materials, or inter-comparison
with an accredited laboratory.

72
 6.3.1 Emission factor
Article 3(13) of the MRR defines: “‘emission factor’ means the average emission
rate of a greenhouse gas relative to the activity data of a source stream assuming
complete oxidation for combustion and complete conversion for all other chemical
reactions.” Furthermore Article 3(36) is important for materials containing bio-
mass: “‘preliminary emission factor’ means the assumed total emission factor of
a fuel or material based on the carbon content of its biomass fraction and its fossil
fraction before multiplying it by the fossil fraction to produce the emission factor”.
Important: According to section 2.1 of Annex II of the MRR, the tiers defined in
the MRR shall relate to the preliminary emission factor, where a biomass fraction
is determined for a fuel or material. I.e. tiers are applicable always to individual
parameters.
The reporting of the preliminary emission factor is now mandatory for all source
streams (i.e. also for 100% biomass source streams)102, while it was required only
for mixed biomass source streams during the third phase of the EU ETS.
As reflected by the definition, the emission factor is the stoichiometry-based fac-
tor which converts the (fossil) carbon content of a material into the equivalent
mass of (fossil) CO2 assumed to be emitted. Adjustment for incomplete reactions
is handled via the oxidation or conversion factor. However, as mentioned in Arti-
cle 37(1), sometimes national inventories do not use oxidation or conversion fac-
tors (i.e. those factors are set to 100%), but have the adjustment for incomplete
reaction included in the emission factor. Where such factors are used as default
values in accordance with Article 31(1)(b), operators should consult with the com-
petent authority, if in case of doubt.
For combustion emissions, the emission factor is expressed in relation to the en-
ergy content (NCV) of the fuel rather than its mass or volume. However, under
certain conditions (where the use of an emission factor expressed as t CO2/TJ
incurs unreasonable costs or where at least equivalent accuracy of the calculated
emissions can be achieved) the competent authority may allow the operator to
use an emission factor expressed as t CO2/t fuel or t CO2/Nm3 (Article 36(2)).
Where the applicable tier requires the emission factor to be determined by anal-
yses, the carbon content is to be analysed. Where a fuel or material contains
organic as well as inorganic carbon 103, usually the total carbon content is to be
determined. Note that inorganic carbon is always considered fossil.
For fuels, the NCV must also be determined (depending on the tier, this may
require another analysis of the same sample).
If the emission factor of a fuel expressed as t CO2/TJ is to be calculated from the
carbon content, the following equation is used:

EF  CC  f / NCV
(11)

102
This is not a large administrative burden, since pure biomass source streams are always de-minims
source streams, so that a low tier may be applied. Most appropriate will be the use of default values
for the dry biomass, corrected for the moisture content. The latter may be estimated or measured.
More guidance is found in Guidance Document No. 3, which also contains some typical preliminary
emission factors in an Annex.
103
E.g. paper contains organic carbon (cellulose fibres, resins etc) as well as inorganic carbon
(carbonate fillers).

73
 If the emission factor of a material or fuel expressed as t CO2/t is to be calculated
from the carbon content, the following equation is used:

EF  CC  f
(12)
The variable names are explained in sections 4.3.1 and 4.3.2.

6.3.2 Net calorific value (NCV)

Because activity data of fuels is to be reported as energy content ( section
4.3.1), the NCV is an important parameter to be reported. This allows emission
reports to be compared with energy statistics and national GHG inventories under
the UNFCCC.

Note: Although the activity data of fuels is “NCV times the fuel quantity”, the tier
definitions for activity data refer to fuel quantity only, and the NCV is a separate
parameter (calculation factor), for which individual tiers are applicable.
However, under certain conditions, the NCV is not indispensable for the emission
calculation. This is the case:
 where emission factors of fuels are expressed as t CO2/t fuel or t CO2/Nm3
(Article 36(2)104);
 where fuels are used as process inputs; and
 fuels being part of a mass balance.
In those cases, the NCV may be determined using a conservative estimate in-
stead of using tiers (Article 26(5)).

6.3.3 Oxidation factor and conversion factors

These two factors are used to account for incomplete reaction. Thus, if they are
to be determined based on laboratory analyses, the factor would be determined
as follows (oxidation factor):

OF  1 Cash / Ccomb (13)

Where:
OF ....... Oxidation factor [dimensionless]
Cash ..... carbon contained in ash, soot and other non-oxidised forms of carbon
(excluding carbon monoxide, which is considered as molar equivalent of
CO2 emissions)
Ccomb ... (total) carbon combusted.
The two C variables are expressed as [tonnes C], i.e. quantity of material or fuel
times the concentration of carbon in it. Therefore not only the carbon content of

104
This may be allowed by the competent authority if the use of an emission factor expressed as t
CO2/TJ would incur unreasonable costs, or where at least equivalent accuracy can be achieved
with this method.

74
the ash has to be determined by analysis, but also the amount of ash must be
determined for the period for which the oxidation factor is determined.

Further points to be considered in line with Article 37:

 Unlike for other parameters, for all categories of installations and source
streams, tier 1 is the minimum applicable tier. This is equivalent to OF = 1 or
CF = 1, i.e. reflects a conservative assumption in any event.
 Competent authorities are allowed to require an operator to use that tier 1. As
outlined in section 6.3.1, this may be required because in some cases the ef-
fect of incomplete reaction has been included in the emission factor.
 Where several fuels are used in an installation and tier 3 (i.e. laboratory anal-
yses) is required, the operator may choose one of two options:
 Determination of one average oxidation factor for the whole combustion pro-
cess, to be applied to all involved source streams, or
 Attribution of the incomplete oxidation to one major source stream (i.e. using
an OF < 1), and use OF = 1 for the other source streams.
 Where biomass or mixed fuels are used, the operator must provide evidence
that an underestimation of emissions is avoided.

6.3.4 Carbon content in case of mass balances

Due to the close relation between the emission factor in the standard methodol-
ogy and the carbon content in case of the mass balance, the items discussed
under section 6.3.1 (emission factor) apply as appropriate. In particular, analyses
are applicable in the same way, and default values given in Annex VI of the MRR
can be converted into default values for the carbon content by using the formulae
given in section 4.3.2.

6.3.5 Biomass fraction

In order for biomass used for combustion to be zero-rated (i.e. for apply-
ing an emission factor of zero), the biomass must satisfy the sustainabil-
ity and GHG savings criteria defined by the RES Directive105 (Article 38(5)
of the MRR). From 1 January 2022, the MRR requires that biomass com-
plies with the criteria set out in the RED II 106.
An introduction to the topic is given in section 6.3.6. A separate guidance
document107 is provided explaining biomass-related topics in detail.

105
“Renewable Energy Sources Directive”, where until the end of 2021 this means Directive
2009/28/EC on the promotion of the use of energy from renewable sources (also referred to as
“RED I”), and from 2022 it means RED II (see footnote 106).
106
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on
the promotion of the use of energy from renewable sources (recast).
107
Guidance document No. 3. For reference see section 2.3.

75
 At the time of updating this guidance document, relevant implementing and del-
egated acts under the RED II are under development. Consequently it is envis-
aged to provide an update of MRR Guidance Document 3 (“Biomass issues in
the EU ETS”) once the relevant acts have been published.

The said guidance document No. 3 covers the following topics:

 Criteria for zero-rating of biomass (i.e. whether it is allowed to set the emission
factor to zero). From 2022, the new criteria of the RED II have to be applied. A
particularly important new element for the EU ETS is that such criteria
will then apply not only to liquids, but also to gaseous and solid biomass.
 Determining the biomass fraction (Article 39), in particular any guidelines for
applicable estimation methods (Type II biomass fraction);
 Simplifications, in particular regarding determining activity data (Article 38);
 A list of biomass materials;
 Guidance on how to apply the purchase record-based approach to determining
biogas in natural gas grids (see also section 6.3.7).

6.3.6 Applicability of RED II criteria

In most cases where “biomass” is mentioned in the MRR, it is added that “Article
38(5) applies”108. That article109 clarifies the relationship between the MRR re-
quirements and the RED II, and in particular how the sustainability and GHG sav-
ing criteria of the RED II are to be applied in order to allow the emissions from
biomass to be zero-rated. The following points are worth noting:
 As the RED II applies to renewable energy, the RED II criteria apply only to
energy uses of biomass in the EU ETS, i.e. to combustion emissions within the
meaning of the MRR110.

108
An exception is Article 18(2) on unreasonable costs. In that context, Article 38(5) applies only “pro-
vided that the relevant information … is available to the operator”. This condition is relevant be-
cause at the point in time when unreasonable costs are determined, it is often not clear yet whether
the biomass intended to be used will comply with Article 38(5) or not.
109
Article 38(5) of the MRR:
„Where reference is made to this paragraph, biofuels, bioliquids and biomass fuels used for com-
bustion shall fulfil the sustainability and the greenhouse gas emissions saving criteria laid down in
paragraphs 2 to 7 and 10 of Article 29 of Directive (EU) 2018/2001.
However, biofuels, bioliquids and biomass fuels produced from waste and residues, other than
agricultural, aquaculture, fisheries and forestry residues are required to fulfil only the criteria laid
down in Article 29(10) of Directive (EU) 2018/2001. This subparagraph shall also apply to waste
and residues that are first processed into a product before being further processed into biofuels,
bioliquids and biomass fuels.
Electricity, heating and cooling produced from municipal solid waste shall not be subject to the
criteria laid down in Article 29(10) of Directive (EU) 2018/2001.
The criteria laid down in paragraphs 2 to 7 and 10 of Article 29 of Directive (EU) 2018/2001 shall
apply irrespective of the geographical origin of the biomass.
Article 29(10) of Directive (EU) 2018/2001 shall apply to an installation as defined in Article 3(e) of
Directive 2003/87/EC.
The compliance with the criteria laid down in paragraphs 2 to 7 and 10 of Article 29 of Directive
(EU) 2018/2001 shall be assessed in accordance with Articles 30 and 31(1) of that Directive.
Where the biomass used for combustion does not comply with this paragraph, its carbon content
shall be considered as fossil carbon.”
110
Some borderline cases exist where it may not be clear if a material is a fuel or a process input,
such as pore-forming agents in the ceramic industry. In this case, section 3.5 of GD2 on free

76
 As the RED II itself does not contain a definition of the term “installation”, the
MRR clarifies that the definition of “installation” of the EU ETS Directive ap-
plies111.
 Not all the criteria given in Article 29 of the RED II apply. In particular:
 The “land-related” sustainability criteria of Article 29(2) to (7) of the RED
apply;
 The GHG saving criteria of Article 29(10) of the RED II apply;
 The additional efficiency criteria for electricity production (Article 29(11) of
the RED II) do not apply;
 Some provisions contained in Article 29(1) of the RED II are copied into the
MRR in order to clarify their applicability. In particular, this includes the simpli-
fication that for municipal solid waste the GHG saving criteria do not apply.
Furthermore, the RED II criteria apply irrespective of the geographical origin of
the biomass.

Figure 9 presents a “decision tree” to which an operator may adhere in order to

determine which procedures have to be included in the monitoring plan, and to
determine the emission factor of biomass. The numbered steps in this picture
mean the following:
1. The first step is to determine if the source stream consists exclusively of bio-
mass, or whether it is mixed with a fossil fraction. In the latter case, the rele-
vant analyses of the biomass fraction or the application of a reasonable de-
fault value is necessary (see section 6.2). The possibility to apply an emission
factor of zero applies only to the biomass fraction of the source stream.
2. Determine if the source stream is used for energy purposes. Only if this is the
case, the following steps are needed.
3. If the source stream is municipal solid waste, no further criteria need to be
taken into account. The biomass fraction may be zero-rated.
4. Determine if the source stream is any type of forest or agricultural biomass,
or “produced from waste or residues from agriculture, aquaculture, fisheries
or forestry, as for such source streams the “land-related” sustainability criteria
(Article 29(2) to (7) of RED II) apply112. For other residues or waste (including
all kinds of industrial wastes, if containing biomass), only GHG savings crite-
ria need to be complied with.

allocation rules may be used as guidance: Where the CO2 emissions stem from a process which
has a primary purpose other than the generation of heat, the competent authority may agree that
the source stream is not acting as a fuel. Hence, such source streams serve non-energetic
purposes and the sustainability criteria do therefore not apply.
111
Article 3(e) of the EU ETS Directive: ‘installation’ means a stationary technical unit where one or
more activities listed in Annex I are carried out and any other directly associated activities which
have a technical connection with the activities carried out on that site and which could have an
effect on emissions and pollution;
112
Second subparagraph of Art. 38(5) MRR: “However, biofuels, bioliquids and biomass fuels pro-
duced from waste and residues, other than agricultural, aquaculture, fisheries and forestry residues
are required to fulfil only the criteria laid down in Article 29(10) of Directive (EU) 2018/2001. This
subparagraph shall also apply to waste and residues that are first processed into a product before
being further processed into biofuels, bioliquids and biomass fuels.”

77
 Start for Mixed Need to analyse
biomass source Is X a mixed material fossil / biomass
stream X or only biomass? fraction
1
Biomass

Is X used for No
energy purpose?
2
Yes

Yes
Is X Solid Municipal
Waste?
3
No

Yes Agricultural or
forestry biomass?
4

No
Assess sustainability
criteria
5 Evidence under national or
voluntary scheme available?
If no, make own assessment

Assessed Yes Yes

Solid or gaseous
Criteria complied
(biomass fuel)?
with?
6 7

No Liquid
No
Installation started
after 2020?
8
Yes

Assess GHG savings

9 Evidence under national or

voluntary scheme available?
If no, make own assessment

Treat as fossil No Yes Assume EF = 0

GHG saving
fuel (use For the biomass
criteria met?
preliminary EF) fraction
10

Picture by

Figure 9: Decision tree for applying sustainability and GHG saving criteria of the
RED II to the monitoring of EU ETS source streams.

78
 Note, however, that for biomass stemming from animal wastes and residues
from aquaculture and fisheries, Article 29 of the RED II does not list specific
land-related sustainability criteria. There are also no default values found in
Annexes V and VI of the RED II. Therefore, for such materials operators will
have to determine only GHG savings based on the calculation methodologies
outlined in those Annexes. Therefore, go to step 7.
5. Depending on step 4, the (land-related) sustainability criteria for the produc-
tion of biofuels, bioliquids or biomass fuels are to be assessed.
In short, the operator can rely on the certification of the used material/fuel
under a national or voluntary scheme approved by the Commission.
Competent authorities may require the operator to use an approved scheme,
where one is available. If such certification is unavailable, the operator will
have to perform the assessment of the relevant criteria himself, and get the
verifier’s113 confirmation. More details will be given in the revised guidance
document No. 3 as soon as possible.
6. If the previous step shows that the relevant sustainability and GHG savings
criteria are not complied with, then the operator has to treat the material as if
it were fossil, i.e. the preliminary emission factor becomes the emission fac-
tor.
7. If the source stream is liquid, the assessment of GHG savings is mandatory
(i.e. the situation is like in the third phase of the EU ETS). Go to step 9.
8. As the additional requirement for “biomass fuels”, i.e. solid or gaseous bio-
mass, applies only to installations starting 114 from 1 January 2021, older in-
stallations (more exactly: installations which used biomass already before
2021) do not have to carry out further assessment.
9. According to Article 29(10) of the RED II, required GHG savings have to be
calculated in accordance with Article 31(1) of the RED II (more details are
given in Guidance Document No. 3). The required savings are:
a. For the production of biofuels and bioliquids: at least 50% if produced in
installations in operation before 5 October 2015, at least 60% for instal-
lations starting operation until 31 December 2020, and at least 65% for
installations starting operation from 1 January 2021.
b. For the production of electricity, heating and cooling from biomass fuels
(i.e. for the use of solid or gaseous biomass): at least 70 % for installa-
tions starting operation from 1 January 2021 until 31 December 2025,
and 80 % for installations starting operation from 1 January 2026.
10. If the GHG savings are above the applicable threshold, the biomass can be
zero-rated, otherwise it has to be treated as if it were fossil. With this step,
the assessment is finished.

113
Note that for compliance with RED II Article 30(3) (which is relevant pursuant to the 6th subpara-
graph of MRR Article 38(5)), operators have to “arrange for an adequate standard of independent
auditing of the information submitted, and to provide evidence that this has been done.“ The audi-
tors engaged in this step are not necessarily the EU ETS verifiers. However, if the verifier has the
relevant competence (as demonstrated by an accreditation or other means accepted by the MS),
there is no obstacle for the EU ETS verifier to carry out the relevant audit. In any case, the result
of the audit should be made available to the verifier.
114
Article 29(10) of the RED is to be applied: "An installation shall be considered to be in operation
once the physical production of biofuels, biogas consumed in the transport sector and bioliquids,
and the physical production of heating and cooling and electricity from biomass fuels has started."

79
 6.3.7 Special rules for biogas
From 2022, operators may make use of a special approach to the accounting of
biogas pursuant to Article 39(4). Where biogas is injected into natural gas grids
and purchased by an EU ETS operator connected to the same gas grid, the said
operator may report that purchased amount of biogas as consumed within his
installation, even if the biogas is not physically delivered to the installation. This
is done by determining and assigning a biomass fraction to the total gas (natural
gas plus biogas) based on the fraction of energy content of biogas in the total gas
consumption. Although not explicitly mentioned in the MRR, it seems appropriate
that such approach should be considered equivalent to tier 2 (like other estimation
methodologies).
The preconditions for that approach are:
 The quantity of biogas used is determined from purchase records;
 The operator demonstrates to the satisfaction of the CA that there is no double
counting of the same quantity of biogas. This can be done in particular by mak-
ing use of a “biogas registry” system or similar database, which also ensures
that there is no guarantee of origin disclosed to other users of biogas. This
means that the guarantee of origin (if it has been generated at all) must be
closely linked to the defined physical quantity of biogas and cannot be given
(“disclosed”) to another gas consumer;
 Producer and consumer of the biogas are connected to the same gas grid;
 The sustainability and GHG savings criteria laid down in the RED II are com-
plied with.
Further guidance to the application of these criteria will be given in an updated
version of MRR Guidance Document 3 (“Biomass issues in the EU ETS”).

6.3.8 Special rules for mixed process materials

Most CO2 process emissions stem from inorganic carbon, mostly carbonates.
However, in some cases elemental carbon (graphite) or even organic carbon can
be contained in materials that lead to process emissions. A prominent example
is the use of urea for flue gas cleaning (deNO x). As footnotes 36 and 37 clarify,
“process emissions” are basically all emissions which are not combustion emis-
sions. For pragmatic reasons, even if it is an oxidation which leads to the CO 2
emissions in those non-carbonate cases, the MRR allows emissions from such
materials to be monitored as process emissions. The detailed requirements are
given in Annex II section 4 of the MRR. They apply to all process materials lead-
ing to CO2 emissions, i.e.
 Inorganic carbon (Carbonates, elemental carbon);
 Organic carbon (e.g. urea) and biomass;
 Mixtures thereof.

Section 4 of Annex II of the MRR allows the following approaches:

 Input-based (Method A): Due to the fact that emissions are in a stoichiometric
relation to the carbon content of the input materials, this approach is allowed
for all process input materials;
 Output-based (Method B): This is allowed only if all the emissions stem from
the decomposition of carbonates.

80
In case of mixed materials where more than one type of carbon is to be analysed,
e.g. a clay that contains carbonates as well as an organic fraction, the MRR al-
lows two general approaches:
 The total carbon contained in the input material may be determined, giving a
mixed (preliminary) emission factor (if applicable, the biomass fraction is to be
determined, too), or
 The source stream may be split formally into two streams for reporting pur-
poses, so that one stream serves for the reporting of emissions from the inor-
ganic carbon and the other for the emissions from the organic carbon.
Any applicable conversion factor must be determined using an approach con-
sistent with the approach chosen for the emission factor.
Except for the above, in principle all rules mentioned in section 6.2 apply to pro-
cess materials and their calculation factors. There is only one exception: NCV
has to be reported only “if relevant”. The MRR clarifies “NCV is considered not
relevant for de-minimis source streams or where the material is not itself com-
bustible without other fuels being added. If in doubt, the operator shall seek con-
firmation by the competent authority on whether NCV has to be monitored and
reported.”

6.4 PFC emissions

Section 8 of Annex IV of the MRR describes the determination of PFC (Perfluoro-

carbon) emissions. PFC emissions are currently only covered by the ETS for the
activity “production of primary aluminium”. The gases to be monitored are CF 4
and C2F6 Emissions from anode effects as well as fugitive emissions are to be
included. PFC emissions not related to anode effects shall be calculated based
on estimation methods.
The MRR specifies that “the most recent version of the guidance mentioned un-
der Tier 3 of section 4.4.2.4 of the 2006 IPCC Guidelines shall be used.” That
guidance is the “Aluminium sector greenhouse gas protocol” published by the
International Aluminium Institute (IAI)115. This uses a calculation-based approach
which significantly deviates from the calculation-based approach outlined in sec-
tion 4.3.1. Two different methods are allowed by the MRR: The “slope method”
and the “overvoltage method”. Which method is to be applied depends on the
installation’s process control equipment.
While the MRR describes the principle requirements and calculation formulae,
other details on the applicable methods should be taken from the guidance men-
tioned above. Note that the IAI guidance is not applicable for CO 2 emissions from
primary aluminium production and from anode production. Instead the MRR’s
usual calculation methods are to be used.
For calculating CO2(e) emissions from CF4 and C2F6 emissions, the operator shall
use the following formula:

Em  Em(CF4 )  GWPCF4  Em(C2 F6 )  GWPC2F6 (14)

115
Download at http://www.world-aluminium.org/media/filer_public/2013/01/15/fl0000127.pdf

81
 Where
Em .............. emissions expressed as t CO2(e)
Em(CF4) ...... emissions of CF4 in tonnes
Em(C2F6)..... emissions of C2F6 in tonnes
GWP ........... Global warming potential as listed in MRR Annex VI section 3
Table 6.

7 SIMPLIFIED APPROACHES

7.1 Installations with low emissions

small For the definition of installations with low emissions, see section 4.4.2. For those
installations, several simplifications are found in Article 47 of the MRR. These
are:
 The installation may use a simplified monitoring plan (where a Member State
has provided an appropriate template), see section 7.2.
 The operator may apply as a minimum tier 1 for activity data and calculation
factors for all source streams, unless higher accuracy is achievable without
additional effort for the operator (i.e. no justifications regarding unreasonable
costs are required).
 The operator is not required to submit the supporting documents mentioned in
Article 12(1) when submitting a monitoring plan for approval, i.e. there is no
requirement for submitting:
 evidence that the required tiers are met (uncertainty assessment, see sec-
tion 5.3), and
 a risk assessment as part of the control system.
 The operator is exempted from reporting on improvements reacting on recom-
mendations by the verifier.
 The operator may determine the amount of fuel or material by using available
and documented purchasing records and estimated stock changes, without
providing an uncertainty assessment.
 He is also exempted from including the uncertainty of determined stocks at the
beginning and end of the reporting year in the uncertainty assessment.
 If the operator uses analyses by a non-accredited laboratory, simplified evi-
dence regarding the competence of the laboratory116 is needed.
All other requirements for installations are to be respected. However, because an
installation with low emissions may apply lower tiers, the overall monitoring re-
quirements are usually relatively easy to meet.

116
The operator may use “any laboratory that is technically competent and able to generate technically
valid results using the relevant analytical procedures, and provides evidence for quality assurance
measures as referred to in Article 34(3)”. See section 6.2.2 for further details.

82
 7.2 Other “simple” installations

The MRR aims to avoid unreasonable or disproportionate costs for installations,

wherever possible. The concept of “installations with low emissions” has been
found useful, but not enough, as there are many installations participating in the
EU ETS which are rather simple to monitor, but which could not make use of
some of the simplifications offered to installations with low emissions.
Before we discuss further elements of the MRR, we must ask how a monitoring
plan can be simplified in general, i.e. how can the administrative burden for op-
erators (of “simple” installations) be reduced? In principle, there are three areas
which have to be covered in the monitoring plan (assuming that “simple” installa-
tions always use a calculation-based methodology for monitoring):
 Monitoring of activity data,
 Determination of calculation factors, and
 Organisational issues, including data flow and control procedures.

When analysing the MRR’s possibilities for simplification, it turns out that its re-
quirements are largely proportionate anyway. I.e. if an installation is really simple,
the monitoring is also simple to perform. For monitoring of activity data, the most
obvious simplification is the use of invoices. For calculation factors, only the high-
est tiers require more effort due to the laboratory analyses to be performed, while
smaller emitters are usually entitled to use default values. The only remaining
area for simplification are the “organisational” issues (of which many require writ-
ten procedures). This is exactly where Article 13 of the MRR comes in.
The MRR provides a flexible approach to allow simplifications where deemed ap-
propriate by the competent authority. Article 13(1) of the MRR gives Member
States the possibility to allow operators to use standardised or simplified moni-
toring plans, for which the Member States may publish templates based on the
templates and guidelines published by the Commission. That Article mentions in
particular the possibility that such templates include (standardised) descriptions
of data flow and control procedures ( section 5.5).
Dedicated templates may solve two issues: Firstly, the minimum content of mon-
itoring plans, found in Annex I of the MRR as well as in the electronic templates
for monitoring plans provided by the Commission, aims at avoiding gaps in the
monitoring plans of complex installations. Fully responding to these needs may
result in unnecessary burden for operators of small or simple installations.
Secondly, there may be elements of monitoring plans which apply to many instal-
lations in a similar way. It would be a considerable simplification for operators if
there were standardised texts available which they may use where appropriate,
rather than developing everything themselves. An additional efficiency improve-
ment, in the process of approving monitoring plans, results where the competent
authorities themselves would disseminate information on text blocks which are
deemed appropriate in standard situations.

83
 7.2.1 Practical approach to simplifications
Bearing in mind the nature and functioning of the monitoring plan templates pro-
vided by the Commission, it seems most practical for Member States who want
to make use of Article 13 to provide modified versions of the Commission’s orig-
inal monitoring plan template. Those modified templates can be adapted to the
needs of simple installations in particular by two elements:
 Hiding sheets or sections of the template117 which are not relevant;
 Inserting standard text blocks in the template, for example for standard data
sources (national GHG inventory etc) or default values, simple data flow and
control procedures.
Such approach would also support those operators which can use only parts of
the simplified or standardised monitoring plan templates.
Note that the simplifications made in the templates must be appropriate for the
types of installations for which these templates are developed. The Commission
has published an exemplar simplified monitoring plan on its MRVA website
(https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en).

7.2.2 Determining the scope for simplified approaches

The central tool for determining the appropriateness of simplifications is the risk
assessment118. Competent authorities may allow any use of a standardised and
simplified approach in the monitoring plan only where this does not lead to an
undue risk of misstatements in the emission report. Because each installation is
different, it does not seem appropriate to define one single way of broad simplifi-
cation to a wide range of installations. Instead the MRR offers flexibility to com-
petent authorities, but requires that any simplification be justifiable based on a
simplified risk assessment.
It is acknowledged that a detailed risk assessment may be a disproportionate
effort for a competent authority. Therefore this guidance provides some indicators
based on which competent authorities may decide whether simplifications can be
allowed. It is proposed to classify installations into one of the three following
groups:
1. Installation types which are considered too complex for allowing simplifica-
tions under Article 13 ( indicators given in section 7.2.2.1),
2. Installations which are considered eligible for simplified or standardised mon-
itoring plans under Article 13 ( section 7.2.2.2), and
3. Installations where an assessment of the individual situation is required.

117
Note that the original template does not hide full sections due to transparency considerations.
Sections which are not relevant due to other data inputs are made automatically grey by the original
template, but are not hidden.
118
Article 13(2): “Before the approval of any simplified monitoring plan, as referred to in paragraph 1,
the competent authority shall carry out a simplified risk assessment as to whether the proposed
control activities and procedures for control activities are commensurate with the inherent risks and
control risks identified, and justify the use of such a simplified monitoring plan.
Member States may require the operator or aircraft operator to carry out the risk assessment
pursuant to the previous sub-paragraph itself, where appropriate.“

84
In the third case, competent authorities are encouraged to make use of the sec-
ond sub-paragraph of Article 13(2), i.e. that it should be the operator who per-
forms a risk assessment for his installation. In this particular case it may be most
appropriate to apply only some of the simplifications offered in standardised mon-
itoring plan templates.

7.2.2.1 Installations with potentially high risks

The following types of installations are considered too complex for allowing sim-
plified MPs:
 Installations applying measurement-based approaches (CEMS),
 Installations carrying out activities where PFC or N 2O are included in Annex I
of the EU ETS Directive,
 Installations for capture, transport and geological storage of CO 2, as included
in Annex I of the EU ETS Directive,
 Installations applying a fall-back methodology in accordance with Article 22 of
the MRR,
 Category C installations which apply other source streams than commercial
standard fuels119,
 Category B or C installations which have at least one major source stream for
which instruments are used which are not subject to national legal metrological
control,
 Installations which have to use laboratory analyses in accordance with Articles
32 to 35,
 Installations which have more than three major source streams to monitor, or
which apply several different monitoring methodologies (e.g. batch metering
as well as some continual measurements for activity data, several different
sampling plans, etc.)

7.2.2.2 Installations eligible for simplified monitoring plans

The following types of installations are considered generally eligible for allowing
simplified MPs:
 Installations of category A and B which have only natural gas as source stream,
 installations which use only commercial standard fuels 120 without process
emissions,
 installations which
 can use exclusively invoices for monitoring activity data,
 use exclusively default values for calculation factors, and
 which use a limited number121 of source streams with fossil carbon;
 Installations with low emissions, if

119
CAs may consider treating fuels in the same way if they have been accepted eligible for using the
same tiers as commercial standard fuels in line with Article 31(4) of the MRR, see Footnote 65.
120
See also Footnote 119.
121
As guidance, the CA should perform an individual assessment where the number of source
streams exceeds 10.

85
  only minor and de-minims source streams are not monitored using invoices
and default values,
 the installation does not use CEMS or fall-back approaches, and
 the installation does not carry out PFC or N2O emitting activities or capture,
transport or geological storage of CO2.
 Installations emitting fossil CO2 only from minor and de-minimis source
streams.
This list includes also all installations which comply with the above criteria, but
have to monitor one or more biomass source streams in addition. In other words,
biomass source streams do not affect the eligibility for simplified approaches, as
the following example shows.

 Assuming an installation of category A or B which has only natural gas as

source stream, and uses in addition various types of solid 122 biomass. This
could be e.g. a biomass plant for district heating, which uses natural gas for
covering peak load periods.
 If ignoring the biomass, it complies with the first criterion presented above.
It is therefore also eligible for simplified approaches as a whole.

The Commission has published an example of a simplified monitoring plan in

accordance with Article 13 MRR. It can be found under
https://ec.europa.eu/clima/system/files/2017-01/simplified_monitor-
ing_plan_exemple_en.pdf.

122
Note that from 2022 the installation would have to provide evidence for the sustainability and GHG
savings of the biomass consumed. Depending on the source of biomass (in particular the distance
it has to be transported), this may require additional efforts by the operator, and the example may
turn out to be not eligible for a simplified monitoring plan.

86
 8 CEMS

8.1 General requirements

In addition to what has been outlined in section 4.3.3 about measurement-based

methodologies, further points are to be taken into account:
 CEMS are put on equal footing with calculation-based approaches, i.e. it is not
necessary to demonstrate to the CA that using a CEMS achieves greater ac-
curacy than the calculation approach using the most accurate tier approach.
However, minimum tier ( see section 5.2) requirements have been defined
implying uncertainty levels comparable to those of calculation approaches are
applicable. Thus, the operator must demonstrate to the CA that those tiers can
be met with the CEMS proposed. Table 11 gives an overview on defined tiers
for measurement-based approaches.
 The measurement-based emissions must be corroborated using a calculation-
based approach. However, no specific tiers are required for this calculation.

Due to the non-stoichiometric nature of N2O emissions from nitric acid produc-
tion, no corroborating calculation is required for those emissions.
 Carbon monoxide (CO) emitted to the atmosphere shall be treated as the mo-
lar equivalent amount of CO2 (Article 43(1)).
 Concentration measurements may be difficult in gas streams of very high CO 2
concentrations. This is in particular important for measurement of CO 2 trans-
ferred between installations for the capture, pipeline systems for the transport
and installations for geological storage of CO 2. In such cases CO2 concentra-
tions may be determined indirectly, by determining the concentration of all
other constituents of the gas and subtracting them from the total (Equation 3
in Annex VIII of the MRR).
 Flue gas flow may be determined either by direct measurement, or by a mass
balance123 using only parameters which are easier to measure, namely input
material flows, input airflow and concentration of O 2 and other gases which
need to be measured also for other purposes.
 The operator must ensure that the measurement equipment is suitable for the
environment in which it is to be used, and regularly maintained and calibrated.
Nevertheless the operator must be aware that equipment may fail once in a
while. Therefore Article 45 outlines how data from missing hours are to be con-
servatively replaced. The operator has to make provisions for such data sub-
stitution when developing the monitoring plan 124.
 Operators must apply EN 14181 (“Stationary source emissions – Quality as-
surance of automated measuring systems”) for quality assurance. This stand-
ard requires several activities:

123
Article 43(5) allows the use of “a suitable mass balance, taking into account all significant
parameters on the input side, including for CO2 emissions at least input material loads, input airflow
and process efficiency andon the output side including at least the product output and the concen-
tration of oxygen (O2), sulphur dioxide (SO2) and nitrogen oxides (NOx)”.
124
In accordance with point (4)(a)(ii) of section 1 of Annex I of the MRR, the monitoring plan must
contain: “the method for determining whether valid hours or shorter reference periods for each
parameter can be calculated, and for substitution of missing data in accordance with Article 45”.

87
  QAL 1: Testing whether the CEMS is meeting the specified requirements.
For this purpose EN ISO 14956 (“Air quality. Evaluation of the suitability of
a measurement procedure by comparison with a required uncertainty meas-
urement”) is to be used.
 QAL 2: Calibration and validation of the CEM;
 QAL 3: Ongoing quality assurance during operation;
 AST: Annual surveillance test
 According to the standard, QAL 2 and AST are to be performed by accred-
ited laboratories, QAL 3 is performed by the operator. Competence of the
personnel carrying out the tests must be ensured.
 This standard does not cover quality assurance of any data collection or
processing system (i.e. IT systems). For those the operator has to ensure
appropriate quality assurance by separate means.
 Another standard to be applied is EN 15259 (“Air quality – Measurement of
stationary source emissions – Requirements for measurement sections and
sites and for the measurement objective, plan and report”)
 Standard to be applied for measurements of the flue gas flow is EN ISO
16911-2 (“Stationary source emissions – Manual and automatic determination
of velocity and volume flow rate in ducts”)
 All other methods applied in the context of the measurement-based approach
should be based also on EN standards. Where such standards are not availa-
ble, the methods shall be based on suitable ISO standards, standards pub-
lished by the Commission or national standards. Where no applicable pub-
lished standards exist, suitable draft standards, industry best practice guide-
lines or other scientifically proven methodologies shall be used, limiting sam-
pling and measurement bias.
The operator shall consider all relevant aspects of the continuous measure-
ment system, including the location of the equipment, calibration, measure-
ment, quality assurance and quality control.
 The operator shall ensure that laboratories carrying out measurements, cali-
brations and relevant equipment assessments for continuous emission meas-
urement systems (CEMS) shall be accredited in accordance with EN ISO/IEC
17025 for the relevant analytical methods or calibration activities. Where the
laboratory does not have such accreditation, the operator shall ensure that
equivalent requirements of Article 34(2) and (3) are met.

Table 11: Tiers defined for CEMS (see section 1 of Annex VIII of the MRR), expressed
using the maximum permissible uncertainties for the annual average hourly
emissions.

Tier 1 Tier 2 Tier 3 Tier 4

CO2 emission sources ± 10% ± 7.5% ± 5% ± 2.5%
N2O emission sources ± 10% ± 7.5% ± 5% N.A.
CO2 transfer ± 10% ± 7.5% ± 5% ± 2.5%
N2O transfer ± 10% ± 7.5% ± 5% N.A.

88
For determining biomass CO2, the MRR 2018/2066 allows for more flexibility. Ar-
ticle 43(4) allows not only calculation-based approaches, but also
 Methods that use radiocarbon analyses of samples taken from the flue gas by
continuous sampling. For this purpose, EN ISO 13833 “Stationary source
emissions – Determination of the ratio of biomass (biogenic) and fossil-derived
carbon 23 dioxide – Radiocarbon sampling and determination” is to be applied;
 The “balance method” (based on ISO 18466 “Stationary source emissions –
Determination of the biogenic fraction in CO 2 in stack gas using the balance
method”).

8.2 N2O emissions

Section 16 of Annex IV of the MRR deals with determining N 2O emissions from

certain chemical production processes, which are covered by Annex I of the EU
ETS Directive (production of nitric acid, adipic acid, glyoxal and glyoxylic acid),
or which may be unilaterally included pursuant to Article 24 of the Directive (pro-
duction of caprolactam). N2O emitted from the activity “combustion of fuel” is not
covered. N2O emissions usually have to be determined using a measurement-
based approach.
In addition to the points mentioned under sections 4.3.3 and 8.1, the following
specific points should be noted:
 In subsection B.3 of section 16 of Annex IV specific requirements for determin-
ing the flue gas flow are given. Where needed, the oxygen concentration must
be measured in accordance with subsection B.4.
 Subsection B.5 specifies requirements for calculation of N2O emissions in case
of specific periods of unabated N2O emissions (e.g. when the abatement sys-
tem fails) and where measurement is technically not feasible.

For calculating CO2(e) emissions from N2O emissions, the operator shall use the
following formula:

Em  Em( N2O)  GWPN2O (15)

Where
Em .............. emissions expressed as t CO2(e)
Em(N2O) ..... emissions of N2O in tonnes
GWPN2O ...... Global warming potential of N2O as listed in MRR Annex VI section 3
Table 6.

89
 8.3 Transferred / inherent CO2, N2O and CCS

8.3.1 Transferred CO2 and CCS

Where almost pure125 fossil126 CO2 is not emitted, but transferred out of an instal-
lation, it may be subtracted from that installation’s emissions only if the receiving
installation is one of the following (Article 49(1)):
 a capture installation for the purpose of transport and long-term geological stor-
age in a storage site permitted under Directive 2009/31/EC;
 a transport network with the purpose of long-term geological storage in a stor-
age site permitted under Directive 2009/31/EC;
 a storage site permitted under Directive 2009/31/EC for the purpose of long-
term geological storage;
 an installation where the CO2 is used to produce precipitated calcium car-
bonate (PCC), in which the used CO2 is chemically bound127.
In all other cases, the CO2 transferred out of the installation counts as emission
of the originating installation.
Monitoring in case of PCC production
For the PCC case, the MRR requires explicitly that a calculation-based approach
is to be used128, which can be simple, as discussed below. However, a difficulty
results where the installation of the PCC production is not in the EU ETS. An
outline of a monitoring approach could be as follows:
 If the PCC producer is in the EU ETS and independent of the CO 2 transferring
installation:
 The receiving and/or the transferring installation monitors the incoming CO 2
stream (e.g. using a CMS (see below) for gas stream and CO 2 concentra-
tion) – this quantity is to be shared and aligned between both installations
(see last paragraph of this section).
This continuous monitoring can be omitted if the complete CO2 mass stream
of the installation or of a clearly identifiable part thereof (e.g. the whole emis-
sions of a single lime kiln) are transferred. In such case the CO 2 quantity
can be calculated from the input source streams of that installation (part).

125
In contrast to “inherent CO2” which is part of a source stream and therefore only one of several
consitutents of a gas flow, “transferred CO2” is usually “overwhelmingly” composed of CO2.
126
In principle, also biomass CO2 could be deducted if transferred out of the installation. However, as
biomass CO2 is zero-rated (if applicable, see section 6.3.6), the amount to be deducted would be
zero, too.
127
Article 49(1)(b) can only apply if there is a transfer of CO 2 to another installation. However, there
are cases where the CO2 is chemically bound in PCC in the same installation. Also in this case the
bound CO2 may be counted as not emitted by the installation. This is now allowed because the last
sentence of section 10 of Annex IV of the MRR has been deleted. This sentence was “Where CO2
is used in the plant or transferred to another plant for the production of PCC (precipitated calcium
carbonate), that amount of CO2 shall be considered emitted by the installation producing the CO2.”
For monitoring of CO2 chemically bound in PCC, the most straightforward method would be the
‘mass-balance methodology’ in line with Article 25 of the MRR. If PCC is regarded as a “material
leaving the boundaries of the mass balance”, then the CO2 bound in it is not reported as emitted.
However, currently Annex IV section 10 does not mention the mass balance approach as
applicable. Therefore, even if the operator uses a mass balance in practice, it must be reported by
assigning the emissions from limestone calcination an appropriate conversion factor under the
standard methodology. In case purchased lime is used, so that the bound CO2 would be more than
what is emitted from actual lime burning, that CO2 can be taken into account by assigning an
appropriate conversion/oxidation factor to one or more other source streams, as necessary.
128
This will usually be a mass balance, as the amount of CO2 bound must be determined.

90
  The PCC producer monitors the quantity of CO2 bound in PCC by monitoring
the produced PCC quantity and calculating the amount of CO2 bound using
the appropriate stoichiometric factors.
 The emissions of the PCC producer are Em = incoming CO2 – bound CO2.
 If the PCC producer is not under the EU ETS and has no own MRV obligation,
the two connected installations will require some contractual agreement:
 Either the PCC producer monitors and reports the relevant CO 2 data to the
EU ETS operator (in principle the quantity of produced PCC is sufficient in-
formation) and grants access to the verifier; or
 The PCC producer grants the EU ETS producers’ personnel access to its
installation so that they can carry out the relevant monitoring tasks, including
access to the verifier.
The monitoring in this case is simpler: The total quantity of CO 2 transferred
does not require monitoring. The operator of the EU ETS installation which
transferred CO2 to the PCC producer just has to determine (with the stoichio-
metric factor) the quantity of CO2 bound, and subtract it from its own installa-
tion’s emissions.

Monitoring of CCS
In order to make the calculation consistent in the case of a “CCS chain” (i.e. sev-
eral installations together performing the capture, transport and geological stor-
age of CO2), the receiving installation has to add that CO 2 to its emissions (see
sections 21 to 23 of Annex IV of the MRR), before it may again subtract the
amount transferred to the next installation or to the storage site. Thus, CCS in-
stallations are monitored using a form of mass balance approach, where some of
the CO2 entering or leaving the installation (i.e. at the transfer points) is monitored
using continuous measurement systems.
For these continuous measurement systems (CMS) the rules specified for CEMS
(see section 8.1) apply mutatis mutandis (the word “emissions” has to be omitted
from CEMS). In particular the provision of “indirect” CO 2 measurement129 is ap-
plicable. The highest tier (tier 4) has to be used, unless unreasonable costs or
technical infeasibility are demonstrated. As a special provision, it is important to
clearly identify the transferring and receiving installations in annual emissions re-
port, using the unique identifiers which are also used in the ETS registry system.
For monitoring at the interface between installations, the operators may choose
whether the measurement is carried out by the transferring or receiving installa-
tion (Article 48(3)). Where both carry out measurements and where the results
deviate, the arithmetic mean shall be used. If the deviation is higher than the
uncertainty approved in the MP, a value with conservative adjustment is to be
reported by the operators, which needs the approval by the competent authority.

129
I.e. determining the concentration of all other constituents of the gas and subtracting them from the
total (Equation 3 in Annex VIII of the MRR).

91
 8.3.2 Transferred N2O
The MRR 2018/2066 contains also specific rules for treatment of N 2O that is
transferred to another installation (Article 50). The pre-condition for subtracting
the N2O from the transferring installation’s reported emissions is that the N 2O is
received by an installation that monitors and reports emissions under the MRR.
The latter installation has to treat the N2O as if it were generated within the re-
ceiving installation itself (i.e. monitor it by CEMS and report it).
If the N2O is not used within the receiving installation, or where there is no evi-
dence that the N2O is destroyed by relevant abatement equipment, i.e. where the
N2O is sold and emitted later outside the installation, it shall be accounted for as
emission of the installation where it originates.

8.3.3 Inherent CO2

While “transferred CO2” in the MRR means “more or less pure CO 2” (the CCS
Directive130 requires the CO2 stream to “consist overwhelmingly” of CO2), the term
“inherent CO2” in the MRR (Article 48) refers to CO2 which results from an Annex
I activity131 and is contained in a gas which is considered a fuel, such as waste
gases from a blast furnace or from some parts of mineral oil refineries, or a pro-
cess input (such as synthesis gas).
In order to ensure a consistent reporting of both receiving and transmitting instal-
lation, the following approaches are applicable:
 Where an EU ETS installation uses a source stream which contains inherent
CO2, the emission factor (or in case of mass balances, the carbon content)
takes into account the inherent CO2 (i.e. the CO2 forms a part of the source
stream, and the inherent CO2 counts as emitted by the installation which in-
deed emits the CO2).
 The EU ETS installation which transfers the CO2 to the other installation, sub-
tracts the CO2 from its emissions. Usually this is done using a mass balance.
The inherent CO2 is simply treated in the same way as any other carbon in that
outgoing source stream. An exception is applicable where the inherent CO 2 is
transferred to a non-ETS installation: In this case the inherent CO2 has to be
counted as emission from the ETS installation which transfers the CO2.
Regarding monitoring the point of transfer, the same approach as for transferred
CO2 is applicable, i.e. operators may choose whether the measurement is carried
out by the transferring or receiving installation (Article 48(3), see section 8.3.1
above).

130
Directive 2009/31/EC: http://eur-lex.europa.eu/legal-con-
tent/EN/TXT/?uri=CELEX:02009L0031-20120217
131
Or an activity included in the EU ETS pursuant to Article 24 of the EU ETS Directive (“opt-in”).

92
 9 ANNEX I

9.1 Acronyms

AER ............ Annual Emissions Report

AVR ............ Accreditation and Verification Regulation (A&V Regulation)
CA .............. Competent Authority
CCS ............ Carbon Capture and [geological] Storage
CEMS ......... Continuous Emission Measurement System
ETSG .......... ETS Support Group (a group of ETS experts under the umbrella of
the IMPEL network, who have developed important guidance notes
for the application of the MRG 2007)
EU ETS ....... EU Emission Trading System
IMPEL ......... European Union Network for the Implementation and Enforcement
of Environmental Law (http://impel.eu)
MP .............. Monitoring Plan
MPE ............ Maximum Permissible Error (term usually used in national legal met-
rological control)
MRR............ Monitoring and Reporting Regulation (M&R Regulation)
MRV ............ Monitoring, Reporting and Verification
MS .............. Member State(s)
Permit ......... GHG emissions permit

93
 9.2 Legislative texts

EU ETS Directive: Directive 2003/87/EC of the European Parliament and of the

Council of 13 October 2003 establishing a system for greenhouse gas emission
allowance trading within the Community and amending Council Directive
96/61/EC, amended several times. Download of the consolidated version:
https://eur-lex.europa.eu/eli/dir/2003/87/2020-01-01

MRR: Commission Implementing Regulation (EU) 2018/2066 of 19 December

2018 on the monitoring and reporting of greenhouse gas emissions pursuant to
Directive 2003/87/EC of the European Parliament and of the Council and amend-
ing Commission Regulation (EU) No. 601/2012. Download under: https://eur-
lex.europa.eu/eli/reg_impl/2018/2066/oj and latest amendment under:
https://eur-lex.europa.eu/eli/reg_impl/2020/2085/oj, consolidated version:
http://data.europa.eu/eli/reg_impl/2018/2066/2022-01-01

AVR: Commission Implementing Regulation (EU) 2018/2067 on the verification

of data and on the accreditation of verifiers pursuant to Directive 2003/87/EC of
the European Parliament and of the Council. Download of consolidated version:
https://eur-lex.europa.eu/eli/reg_impl/2018/2067/2021-01-01

RES Directive (or RED I): Directive 2009/28/EC of the European Parliament and
of the Council of 23 April 2009 on the promotion of the use of energy from renew-
able sources and amending and subsequently repealing Directives 2001/77/EC
and 2003/30/EC. Download: http://eur-lex.europa.eu/eli/dir/2009/28/

RED II: Directive (EU) 2018/2001 of the European Parliament and of the Council
of 11 December 2018 on the promotion of the use of energy from renewable
sources (recast). Download under:
https://eur-lex.europa.eu/eli/dir/2018/2001/oj

94
 10 ANNEX II – FAQS

10.1 What type of costs are included in or excluded from the

determination of unreasonable costs?

The last sentence of Article 18(1) of the MRR states that “the competent authority
shall consider costs unreasonable where the cost estimate exceeds the benefit.”
Besides the clarification that “costs shall include an appropriate depreciation pe-
riod based on the economic lifetime of the equipment” there is no further definition
of what kinds of costs are included or what kinds are excluded. In general, only
those costs that are additional to a reference system should be taken into ac-
count, i.e. higher costs compared to existing equipment or costs of a more ex-
pensive (but more accurate or reliable) equipment less the costs of equipment
that would have been purchased, i.e. without monitoring obligations under the EU
ETS.
The following type of costs can be considered relevant:
 Investment costs: Those costs shall be based upon an appropriate deprecia-
tion period. Where appropriate, a suitable interest rate may be applied.
 Operating & Maintenance (O&M) costs: Those costs include costs for any out-
sourced calibration or maintenance. It should also include, for the sake of equal
treatment, any internal labour costs related to O&M. Only those labour costs
shall be taken into account for which the operator can demonstrate to the sat-
isfaction of the competent authority that they can be clearly attributed to the
improvement under consideration.
 Costs related to changes in operations: Those costs may occur e.g. if the in-
stallation of measurement equipment requires a temporary shutdown of oper-
ations. Again, only those costs shall be taken into account for which the oper-
ator can demonstrate to the satisfaction of the competent authority that they
can be clearly attributed to the installation of the new equipment. If a shutdown
was planned anyway, it shall not be taken into account.
 Any other costs: Those costs may include, e.g. costs of sampling, costs for
additional analyses, etc.
In some cases some costs, e.g. costs related to maintenance shutdowns or in-
strument replacements may occur not every year. For such cases those costs
should be summed up over the whole depreciation period and divided by the
number of years of this depreciation period.
Example:
For assessing whether the acquisition of a measurement instrument incurs un-
reasonable costs, the operator wants to calculate the annual O&M costs. The
depreciation period of this investment has been agreed to be 10 years. In the
manufacturer’s specification of the instrument it is specified that special mainte-
nance is required every three years. Associated O&M costs are 3,000 € each.
What are the annual costs of this special maintenance?
The operator determines the annual costs to be 900 €/year since this special
maintenance will be necessary three times over the whole depreciation period
resulting in 9,000 €. Dividing by the depreciation period of ten years provides the
result. Alternatively, simply dividing those 3,000 € by three may also be an ac-
ceptable approach, where considered more appropriate, e.g. if the technical life-
time significantly deviates from the economic lifetime.

95
 To determine whether costs can be considered unreasonable you could consider
using the tool for unreasonable costs provided on DG CLIMA’s homepage:
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/monitoring-reporting-and-verification-eu-ets-emissions_en

10.2 Is it possible to apply a mass balance approach to

activities, for which the MRR does not explicitly allow a
mass balance approach?

No, the MRR does not allow a mass balance approach to be applied except for
activities for which it is an explicitly stated option. In particular for combustion
activities mass balance is only applicable if:
 The installation is a gas processing terminal (in this case Annex IV, section
1(B) allows use of a mass balance in accordance with Article 25);
 Another Annex I activity of the EU ETS Directive apart from the combustion
activity is carried out and Annex IV of the MRR allows or requires the use of a
mass balance in accordance with Article 25 for that specific activity; or
 The proposed mass-balance methodology is applied to de-minimis source
streams only. In this case the mass balance would qualify as an allowed esti-
mation method.
When the activity does not foresee monitoring using mass balance such an ap-
proach can in principle only be applied as a fall-back approach pursuant to Article
22. As a consequence, the operator has to check and report regularly in accord-
ance with Article 69(1) and (3) whether the monitoring method can be improved,
e.g. by installing measurement instruments. However, under specific circum-
stances the MRR also allows for a mass balance approach without explicitly men-
tioning it as such. Article 27(1), point (b) and Article 27(2), allow determination of
activity data based on aggregation of metering of quantities according to the fol-
lowing formula (also see section 6.1.2):
Q  P  E  ( S begin  S end )

Where:
Q ......... Quantity of fuel or material applied in the period
P ......... Purchased quantity
E ......... Exported quantity (e.g. fuel delivered to parts of the installation or other
installations which are not included in the EU ETS)
Sbegin .... Stock of the material or fuel at the beginning of the year
Send...... Stock of the material or fuel at the end of the year
The application of this approach is possible if all parameters, i.e. for S begin, Send,
P and E are referring to the same source stream.
Example 1:
An installation producing fine organic chemicals is using ethyl acetate as solvent
for chemical reactions. Part of this solvent evaporates during the reaction and is
combusted in an incinerator connected to the exhaust hood. The rest of the sol-
vent is sold (“exported from the installation”) containing only minor contaminants

96
with negligible impact on changing NCV or EF. In this case the amount of ethyl
acetate burned in the incinerator is determined by level readings from the storage
tanks, the purchased amounts and the amount sold. Therefore, this monitoring
approach is fully in line with the requirements of Article 27(1) point (b).
Example 2:
An installation similar to example 1 is also using other solvents. Now a mixture of
these solvents is exported from the installation. Mixing solvents impacts the NCV
and EF. Due to this interdependency between the activity data and other calcu-
lation factors, the materials entering and leaving the installation cannot be con-
sidered one source stream. Therefore this fuel / material balance cannot be con-
sidered to be covered by Article 27(1) point (b). Hence, a mass balance monitor-
ing approach can only be used here if the installation is approved to apply it as a
fall-back monitoring methodology under Article 22 or all the solvents involved fall
within the de-minimis threshold.

10.3 How to determine unreasonable costs when applying

no-tier (fall-back) monitoring approaches for activity
data?

General considerations
According to Article 22 of the MRR a no-tier (fall-back) monitoring approach can
only be applied if “applying at least tier 1 under the calculation-based methodol-
ogy [..] and a measurement-based methodology [..] is technically not feasible or
would incur unreasonable costs”.
Please note that the term “at least tier 1 under the calculation-based methodol-
ogy” implies that a no-tier approach is already applied for one source stream if
not at least tier 1 is applied for one single parameter, i.e. the activity data or any
calculation factor, except for de-minimis source streams. Therefore, a fall-back
methodology should only be applied to the specific part(s) of the calculation or
measurement-based methodology that does not meet at least tier 1. E.g. to the
extent possible, available default values should be used for calculations and the
no-tier approach should be limited to the parameters where no such factors are
available.
Example 1:
The amount of CO2 emitted from a refinery gas source stream cannot be deter-
mined by applying tiers due to unreasonable costs. Due to the availability of de-
fault values for NCV and EF in Annex VI (compliant with tier 1) the operator should
apply a no-tier approach only for activity data. Only where the operator can
demonstrate to the satisfaction of the competent authority that the default values
are not applicable (e.g. because they apply to another type of refinery gas com-
position), an estimation methodology for calculating directly the emissions by
other means may be developed.

97
 Activity data
For fall-back monitoring approaches for activity data it has to be assessed first if
the methodology applied really constitutes a no-tier approach. It can be distin-
guished between:
(a) Activity data is determined in accordance with Article 27 132 (i.e. continuous
metering or aggregation of metering of quantities) but the uncertainty related
to the measurement is higher than the uncertainty allowed under tier 1, OR
(b) Activity data is not determined in accordance with Article 27. Note here that
not complying with the requirements in this Article means that you don’t com-
ply with any tier. Therefore, any such methodology has to be considered as
a fall-back approach and can only be applied if the application of at least tier
1 is not technically feasible or would incur unreasonable costs.
For (a) please be aware that an indirect measurement of activity data, e.g. by
addition or subtraction of two or more fuel/material flows or batches can also be
considered as complying with Article 27. For determination of the applied tier for
such cases rules for error propagation must be applied (see Annex III of MRR
GD4 on Uncertainty). If the uncertainty achieved complies at least with the rele-
vant tier 1 requirements the determination of activity data is not a fall-back ap-
proach.
If assessment shows that the approach is actually a fall-back approach, it has to
be demonstrated that applying at least tier 1 of a “conventional” tier approach is
technically not feasible or would incur unreasonable costs. For the determination
of the incurrence of unreasonable costs when applying at least tier 1 for activity
data it has to be assessed whether the costs exceed the benefit. In order to cal-
culate the benefit the difference between the uncertainty currently achieved and
the uncertainty threshold of the tier must be used as the improvement factor. This
approach is relevant regardless whether (a) or (b) is the reason for deviation be-
cause both have a direct impact on the accuracy of activity data. The improve-
ment factor of 1% in Article 18(3) shall not apply here. Therefore, the uncertainty
related to the determination of activity data currently achieved has to be assessed
in any event and has to be used for calculating the improvement factor.
Note that the higher (the worse) the uncertainty achieved by a fall-back approach
the more likely it is that the costs do not exceed the benefit, i.e. the more difficult
it will be to demonstrate unreasonable costs. This is the case because the im-
provement factor feeding into the calculation will be higher. Improving the moni-
toring methodology of a fall-back approach in terms of reducing its associated
uncertainty (e.g. by applying a better estimation method) may lead to a lower
(better) uncertainty achieved. As a consequence, costs for meeting at least tier 1
(using measurement equipment to determine the activity data) may more likely
be unreasonable after such improvement.
Example 2 (assessing whether the approach proposed is to be considered a fall-
back):

132
Article 27(1): “The operator shall determine the activity data of a source stream in one of the fol-
lowing ways:
(a) based on continual metering at the process which causes the emissions;
(b) based on aggregation of metering of quantities separately delivered taking into account relevant
stock changes.

98
A fine organic chemical plant is burning contaminated organic solvents in an in-
cinerator with a heat recovery boiler (see the example in section 10.2). Installing
a measurement instrument for the solvent flow (minor source streams) would in-
cur unreasonable costs. The operator proposes calculating the activity data by
an energy balance taking into account the measurable heat (i.e. steam) produced
and the energy input from natural gas used for auxiliary firing. This approach is
clearly not complying with the requirements of Article 27 and should be consid-
ered as a fall-back approach. In this case the operator will have to demonstrate
pursuant to Article 22 that the application of at least tier 1 is not technically feasi-
ble or would incur unreasonable costs.
Note: Pursuant to Article 22(b) the operator has to assess and quantify each year
the uncertainties in accordance with the ISO guide to the expression of uncer-
tainty in measurement (JCGM 100:2008), or another equivalent internationally
accepted standard. Furthermore he must demonstrate that the uncertainty for the
total emissions of the installation is below 7.5% (the threshold for a category A
installation under Article 22(c)). For calculating the uncertainty for the total emis-
sions of the installation please consult “Example 9” of Guidance Document 4 on
Uncertainty.

10.4 To what extent are the tier requirements for minor

source streams different to those for major source
streams?

In accordance with Article 26(1) the required tiers are:

 at least the tiers listed in Annex V for category A installations, or where a cal-
culation factor of commercial standard fuels,
 the highest tier as defined in Annex II for all other cases.
Operators may deviate from applying those tiers where they are technically not
feasible or would incur unreasonable costs (a tier one level lower than required
for category C installations and up to two levels lower for category A and B instal-
lations, with a minimum of tier 1). Under certain conditions even lower tiers, with
a minimum of tier 1, may be allowed by the Competent Authority.
Article 26(2) specifies for minor source streams that the highest tier which is tech-
nically feasible and does not incur unreasonable costs, with a minimum of tier 1,
shall be applied. Therefore, also for minor source streams the use of a tier lower
than the required tier is allowed only if the operator demonstrates to the satisfac-
tion of the competent authority that the required tiers are technically not feasible
or would incur in unreasonable cost. Please note that no reference is made here
that there are any further derogations from paragraph 1. Therefore, for category
A installations and commercial standard fuels tiers in Annex V are also to be
considered as the required tiers for minor source streams.
As a consequence, the main difference between the tier requirements for major
and for minor source streams is that there is no threshold or time limit when de-
viating from the tier requirement. In any event this is true if at least tier 1 is applied
and applying the required tiers is technically not feasible or would incur unrea-
sonable costs (see examples below).

99
 Example 1: Category B or C installation, liquid fuel
Tier required (highest Minimum tier Absolute minimum tier
tier in Annex II) (technically not feasi- (transitional period to be
ble or unreasonable agreed with the CA)
costs)

3 (for Cat. C)
Major 4 1
2 (for Cat. B)

Minor 4 1 n.a.

Example 2: Category A installation, liquid fuel

Tier required Minimum tier Absolute minimum tier

(Annex V) (technically not feasi- (transitional period to be
ble or unreasonable agreed with the CA)
costs)

Major 2 1 n.a.

Minor 2 1 n.a.

10.5 Is it possible to apply tier 2a for net calorific value

(NCV) and tier 2b for emission factor (EF) or vice versa
for the same fuel?

No, unless the EF is consistent with the use of NCV and the corresponding oxi-
dation factor
Tier 2a and 2b are considered to be on the same accuracy level in the MRR,
hence there is no preference to choose one or the other. Furthermore, there is
no provision that the same tier, i.e. tier 2a or 2b or another tier, has to be applied
for NCV and EF for the same fuel.
However, Article 24(1) states: “Under the standard methodology, the operator
shall calculate combustion emissions per source stream by multiplying the activity
data related to the amount of fuel combusted, expressed as terajoules based on
net calorific value (NCV), with the corresponding emission factor, expressed as
tonnes CO2 per terajoule (t CO2/TJ) consistent with the use of NCV, and with the
corresponding oxidation factor.”
If the NCV or EF contradict this principle, this approach is not allowed. To avoid
such inconsistency please contact your competent authority regarding back-
ground information on certain default values (e.g. values from the National Inven-
tory used for tier 2a) or the IPCC Guidelines (tier 1).

100
10.6 What does “additional effort” mean in case of de-
minimis source streams or for installations with low
emissions?

When reading the MRR the term “additional effort” is encountered three times:
 Article 26(3): For de-minimis source streams, the operator may determine ac-
tivity data and each calculation factor by using conservative estimates instead
of using tiers, unless a defined tier is achievable without additional effort.
 Article 26(5): Where the competent authority has allowed the use of emission
factors expressed as t CO2/t or t CO2/Nm3 for fuels, and for fuels used as pro-
cess input or in mass balances in accordance with Article 25, the net calorific
value may be monitored using a conservative estimate instead of using tiers,
unless a defined tier is achievable without additional effort.
 Article 47(6): By way of derogation from Articles 26(1) and 41(1), the operator
of an installation with low emissions may apply as a minimum tier 1 for the
purposes of determining activity data and calculation factors for all source
streams and for determining emissions by measurement-based methodolo-
gies, unless higher accuracy is achievable without additional effort for the op-
erator, without providing evidence that applying higher tiers is technically not
feasible or would incur unreasonable costs.
In all three cases “additional effort” means effort in addition to monitoring systems
or monitoring methodologies already in place. This usually refers to systems or
methodologies already in place before considering improvements, or, where ap-
propriate, if there were no EU ETS monitoring obligations. Therefore, it should
not be considered to incur an additional effort to use available data for a second
purpose (i.e. GHG emissions monitoring), including any associated administra-
tive or bureaucratic effort (e.g. writing procedures or providing evidence).
Example 1:
An installation with low emissions is covered by the EU ETS from 2013 onwards
because of its production of bulk organic chemicals. For quality assurance and
for commercial purposes the installation is analysing (indirectly) the carbon con-
tent133 of each source stream involved in the reaction in accordance with Articles
32 to 35, i.e. compliant with tier 3 for the determination of the carbon content.
Although eligible to apply tier 1 under Article 47(6), compliance with tier 3 in effect
requires no additional effort because it is already being met. The requirement to
provide a sampling plan to the Competent Authority may be caused only by the
EU ETS monitoring obligations, but it should not be considered to cause addi-
tional effort because it requires only to lay down in writing what is already done.
Example 2:
The customers of this same installation are now only requiring that the main com-
pound of the product exhibits a purity of > 95 %. Due to the fluctuation of the

133
Explanation of the term “indirect analyses”: It is frequently found that the purity of substances must
be regularly analysed before the input materials can be used for the process, or before the products
can be sold. These are analyses which are done already without an EU ETS obligation. For this
example we assume that the purity of the substances are analysed by a suitable method, e.g.
HPLC. Furthermore also the nature of the main impurities are known. In many cases the impurities
are predominantly water or other solvents. Thus, as soon as the purity and the type of substances
are known, the carbon content can be determined by stoichiometry. This is what we refer to as
“indirect analysis” in the example. A “direct” analysis would be an elementary analysis for deter-
mining the (total) carbon content. The “additional effort” here is the mere application of one addi-
tional stoichiometric calculation, which can be easily assumed negligible effort.

101
 production process, the impurities are not constant and not identified for quality
assurance. In this case, the analytical results can not be considered to comply
with the requirements of Articles 32 to 35. Full compliance would require a more
demanding analytical method and should therefore be considered as requiring
additional effort. As a consequence, the operator will not be required to apply tier
3 but to use available default values instead. However, note that the lower the
purity the less appropriate it will be to assign this product to a certain material for
which default values are available. If default values are not available, the operator
will have to propose a fall-back approach demonstrating that improving his ana-
lytical method would otherwise incur unreasonable costs.

10.7 How to determine the oxidation factor by taking into

account the carbon content of ashes?

The annual emissions are calculated by:

Emissions  FQ  NCV  EF  OF
where:
FQ ....... Quantity of fuel [t]
NCV .... Net calorific value [TJ/t]
EF ....... Emission factor [t CO2/TJ]
OF ....... Oxidation factor
There are two possible approaches to calculate those annual emissions:
(a) Emissions are calculated for each batch or delivery period the analytical
value is representing. The total emissions are obtained by adding up all emis-
sions calculated.
(b) Determine annual weighted averages for each calculation factor and calculate
the annual emissions according to the formula above.
Where not all calculation factors represent the same batch or delivery period,
method (a) will not be applicable. For this case the following example gives guid-
ance on the calculation route (b).
Example:
An operator is burning lignite. Each analytical value for NCV and EF determined
in accordance with Articles 32 to 35 is representative for each batch of lignite.
Note that the EF will be calculated from the carbon content (CC) and the NCV
(f=3.664134) according to:
EF  CC  f / NCV

The OF is determined by analysis of the carbon content of the ash and by the
amount of ash obtained upon combustion in accordance with Articles 32 to 35 as
well. The oxidation factor will be obtained by:

134
Article 36(3): “For the conversion of the carbon content into the respective value of a CO 2 related
emission factor or vice versa, the operator shall use the factor 3.664 t CO 2/t C.”

102
 CC ash  Quantityash
OF  1 
CC fuel  Quantity fuel

The batches of ash used for analysing their carbon content do not correspond
necessarily with the fuel batches. Still, Annex VII requires to also analyse the OF
at least six times per year. Therefore, the OF can be calculated as follows.

FQ NCV EF CC FQ x CC
Batch
[t] [GJ/t] [t CO2/TJ] [t C/t] [t C]
1 20,000.00 11.9 101.6 0.3300 6,600
2 22,000.00 12.1 101 0.3335 7,338
3 25,000.00 11.95 101.3 0.3304 8,260
4 21,000.00 12.06 101.8 0.3351 7,037
5 23,000.00 11.85 102.3 0.3309 7,610
6 24,000.00 11.9 101.5 0.3297 7,912
7 23,000.00 11.93 102.2 0.3328 7,654
8 24,000.00 11.91 101.6 0.3303 7,926
Sum (=total amount of carbon in lignite) 60,335

Qash CCash Qash x CCash

Batch
[t] [t C/t] [t C]
1 1,589 0.0207 32.9

2 1,900 0.0180 34.3

3 2,108 0.0193 40.7

4 1,573 0.0243 38.3

5 1,764 0.0203 35.8

6 2,073 0.0229 47.4

Sum (=total amount of carbon in ash) 229.4

The weighted average annual NCV is calculated by:

 NCV  FQ i i
GJ
NCV  i
 11.95
 FQ t

The weighted average annual EF is calculated by:

 EF  NCV  FQ
i i i
tCO 2
EF  i
 101.66
 NCV  FQ
i
i i
TJ

The weighted average annual OF is calculated by:

103
 CC ash  Quantityash 229.4
OF  1   1  99.62 %
CC fuel  Quantity fuel 60,335

The annual emissions are calculated by:

Emissions  182,000 11.95 / 1,000 101.66  99.62%  220,260 tCO2

In principle, this approach for determining OF is based on a mass balance, but

not based on Article 25 of the MRR. Therefore, the quantity of ash is not consid-
ered a separate source stream and no dedicated uncertainty thresholds apply.
However, as a result of analogy, operators should strive to apply an uncertainty
level similar to the tier level which would be required, if the ash were a source
stream of its own. It must be noted that in most cases such “ash source stream”
would be a de-minimis source stream. The appropriate method for determining
the ash amount, and therefore the associated uncertainty, will be taken from suit-
able standards. For sampling and analysing Articles 32 to 35 (requirements for
analyses) apply.
Note that alternatively the oxidation factor can be determined using the carbon
content of the ash and ash content of the fuel (AC fuel, %) instead of determining
the amount of ash. This alternative does not require the ash quantity to be meas-
ured, only the percentage ash content of the fuel and carbon content of the re-
sultant ash.

CCash  AC fuel
OF  1 
CC fuel

The ash content of a fuel is commonly obtained by a loss on ignition method

where the fuel is burned until no more mass loss is observed. However, for this
method burning of the fuel is done under laboratory conditions which may lead to
different results than the fuel combustion in the boiler (e.g. due to different particle
sizes and morphology as well as different retention times). On the other hand,
accurate measurement of ash quantity can be problematic if water is used to
convey (and cool) the ash. Therefore, preference should be given to the method
giving higher accuracy and the operator has to ensure that emissions are not
underestimated.

10.8 How are emissions to be calculated if the emission

factor (EF) and net calorific value (NCV) are based on
analyses per batch?

The calculation is done according to the formula presented in section 10.7 above.
Based on the figures used in the example in that section, the calculation of EF
and NCV are done as follows. For simplicity reasons it is assumed that the oxi-
dation factor is 1, i.e. any carbon contained in ashes is not deducted.

Energy input
FQ NCV EF
Batch (FQ x NCV)
[t] [GJ/t] [t CO2/TJ]
[TJ]
1 20,000.00 11.90 238.00 101.6
2 22,000.00 12.10 266.20 101.0

104
 3 25,000.00 11.95 298.75 101.3
4 21,000.00 12.06 253.26 101.8
5 23,000.00 11.85 272.55 102.3
6 24,000.00 11.90 285.60 101.5
7 23,000.00 11.93 274.39 102.2
8 24,000.00 11.91 285.84 101.6
Sum or
weighted 182,000.00 11.95 2,174.59 101.66
average

The weighted average annual NCV, and subsequently the weighted average an-
nual EF, can be calculated by the following equations:

 NCV  FQ i i 20,000t  11.90

GJ
t
 22,000t  12.10
GJ
t
 ...24,000t  11.91
GJ
t  11.95 GJ
NCV  i

 FQ 182,000t t

GJ GJ
11.90 11.91
 EFi  NCVi  FQi 101.6
t CO2
TJ

1,000
t  20,000t  ..  101.6 t CO2 
TJ 1,000
t  24,000t
t CO2
EF  i
  101.66
 NCV  FQ
i
i i 2,174.59TJ TJ

10.9 Application of Article 31(4); clarification on how to

apply the 1% rule

Article 31(4) states that “upon application by the operator, the competent author-
ity may allow that the net calorific value and emission factors of fuels are deter-
mined using the same tiers as required for commercial standard fuels provided
that the operator submits, at least every three years, evidence that the 1 % inter-
val for the specified calorific value has been met during the last three years .”
An operator may now demonstrate to the competent authority that based on anal-
yses in the past the NCV or EF of a specific fuel was determined to be within this
1% interval. This may be done by calculating twice the standard deviation (a 95%
confidence interval) of those historic values and check whether it is lower than
1%. However, as Article 31(4) requires provision of evidence at least every three
years, an operator will have to start sampling and analysing again for the following
three years to demonstrate that the 1 % interval is not exceeded. Note that such
homogeneous fuels may only require lower frequencies of analyses than listed in
Annex VII due to application of the 1/3-rule or the incurrence of unreasonable
costs.
The most common cases for application of this Article will be fuels or materials
used by many operators, exhibiting such constant values for NCV or EF within
one Member State or region. In some countries natural gas will meet such re-
quirements and reliable historic analytical values will be available from e.g. net-
work distribution owner data on a Member State or regional level. Operators of
category B and C installations will then be allowed as well to apply e.g. tier
2a by using values from the National Inventory instead of analysing them-
selves.

105
 It can be considered good practice by CAs to publish the relevant findings on the
1% interval and respective default values for common fuels or materials, such
that all operators concerned can make use of Article 31(4) without making their
own investigation. In particular for default values determined for their use in the
National Inventory CAs may have a better knowledge about any regional devia-
tions than a single operator.

10.10 Article 26(3): What does a conservative estimate mean

in practice, what does it look like? Are there any
generic figures that could be used, for example
emissions from a typical diesel back-up generator?

Please see “GD 4a: Exemplar for Uncertainty Assessments” on DG CLIMA’s

homepage (see section 2.3), which describes inter alia an installation with low
emissions using Diesel.

10.11 Does an operator of an installation with low emissions

have to submit improvement reports?

Yes, but only under certain circumstances. Operators of installations with low
emissions must submit an improvement report in accordance with Article 69(1)
and in response to a verifier’s report noting non-conformities. They also have to
take into consideration the verifier’s recommendations in their monitoring, but are
exempted from having to provide a corresponding improvement report (under Ar-
ticle 69(4)) to the competent authority in this particular respect, as allowed by
Article 47(3).
Articles 69(1) and (2) require all operators to submit an improvement report if the
tiers required by Article 26(1) are not met. The MRR does not differentiate be-
tween low emitters and other categories with regard to use of highest tiers. How-
ever, Article 47(6)135 exempts installations with low emissions from the require-
ments in Articles 26(1) and 41(1) and allows application of tier 1 as a minimum.
Therefore, operators of installations with low emissions must submit an improve-
ment report:
 in response to verifier’s findings of non-conformities (Article 69(4)), AND
 every four years (category A installation) if they are applying fall-back ap-
proaches (Article 69(3)). Under certain circumstances this period can be ex-
tended to 5 years (see section 5.7).

135
Article 47(6): “By way of derogation from Articles 26(1) and 41(1), the operator of an installation
with low emissions may apply as a minimum tier 1 for the purposes of determining activity data and
calculation factors for all source streams and for determining emissions by measurement-based
methodologies, unless higher accuracy is achievable without additional effort for the operator, with-
out providing evidence that applying higher tiers is technically not feasible or would incur unrea-
sonable costs.”

106
10.12 Does the determination of unreasonable costs require
the use of a depreciation period? How is it determined
and how should evidence be provided?

For the determination of unreasonable costs the second subparagraph of Article

18(1) requires that the operator “shall include an appropriate depreciation period
based on the economic lifetime of the equipment.”
The economic lifetime is a term that is not defined in the MRR but refers to its
meaning used in taxation laws. For a lot of assets (e.g. measuring instruments)
national taxation laws or supplementing guidance (e.g. published by the respec-
tive Ministry of Finance) provide asset-specific depreciation periods for several
economic sectors.
Nevertheless, those values are not legally binding for the EU ETS but may be
considered as reference values. The operator’s justification for proposing a dif-
ferent depreciation period may be taken into account, e.g. where a measuring
instrument is used in a corrosive environment.

10.13 Do CO2 emissions stemming from the purification of

natural gas have to be monitored and reported?

They have to be monitored and reported only if the CO2 is released in a combus-
tion process by using either a standard combustion methodology or a mass bal-
ance methodology, where a calculation-based monitoring approach is applied or
by using CEMS. This means that there is no monitoring and reporting requirement
for CO2 that is part of the imported raw natural gas but is at no point in the process
fed into a combustion process. In the simplest case, CO 2 contained in any natural
gas will be reported by including this CO 2 when determining the emission factor
for applying it in a standard calculation method.
In upstream industries, the situation is slightly more complex: Natural gas usually
requires several purification steps after extraction to meet the specifications of
the gas network operator. Those purification steps are normally done in a gas
processing terminal and involve e.g. gas separation from liquid organic com-
pounds and water. If the CO2 or H2S (hydrogen sulphide) concentration (acid gas)
exceeds the thresholds of the gas network operator’s specification, a removal of
those impurities is also required. This is most commonly achieved by separating
those acidic gases from the main organic components in the natural gas by an
amine treatment system. In subsequent steps the CO 2 and H2S are separated
from each other as well. H2S will generally be converted into saleable products
(e.g. to sulphur in a CLAUS unit)136 and the gas flow containing very high CO 2
concentrations will be released to the air.
This gas flow containing CO2 in high concentrations often also contains some
VOC (volatile organic carbon) impurities and therefore can not be released di-
rectly to the atmosphere without a thermal conversion of those VOCs. Because

136
Note: The H2S enriched gas flow may still contain a signifcant concentration of CO2. If this gas flow
is also fed into a combustion unit (e.g. CLAUS unit), this CO2 needs to be monitored and reported
as well.

107
 this conversion is an oxidation of fuels this conversion qualifies as combustion
within the meaning of Article 3(t) of the EU ETS Directive 137, and the off-gas is
regarded a fuel. As a consequence, the CO2 contained in this fuel is inherent CO2
according to Article 48138 and needs to be monitored and taken into account for
the emission factor of this fuel.
It has to be noted that gas processing terminals are normally covered by the EU
ETS due to their combustion activities > 20 MW (e.g. steam production for the
purification process) and there is no special activity unlike for liquid fuel refineries.
However, section 1 of Annex IV also provides the opportunity for combustion pro-
cesses taking place in gas processing terminals to be monitored by a mass bal-
ance methodology in accordance with Article 25. In this case, the CO 2 emissions
may simply be calculated as the difference between the amount of natural gas
imported by the installation multiplied by the corresponding carbon content and
amount of natural gas exported from the installation multiplied by the correspond-
ing carbon content.

10.14 Do fuels stored in pressurised gas-bottles (e.g.

propane, acetylene, etc.) and used for certain process
steps within the installation have to be monitored and
reported?

In principle, yes they have to be monitored regardless of whether the fuel is stored
in tanks, in pressurised gas-bottles or is directly imported from an external fuel
network (e.g. natural gas). It is only relevant in which technical unit those fuels
are used and whether those units have a technical connection with the activities
carried out on that site139. If those units are stationary and have a technical con-
nection with the activities carried out (e.g. laboratory units), they have to be in-
cluded in the greenhouse gas permit. Hence all fuels combusted in those units
must be listed as source streams in the monitoring plan.

10.15 Do non-significant source streams (e.g. with single

digit annual emissions) and mobile sources need to be
covered by the Monitoring Plan?

Yes, all source streams need to be covered by the permit and the monitoring
plan. There is no threshold laid down in the MRR with respect to the annual emis-
sions stemming from each source stream.

137
Article 3(t) of the EU ETS Directive: “combustion means any oxidation of fuels, regardless of the
way in which the heat, electrical or mechanical energy produced by this process is used, and any
other directly associated activities, including waste gas scrubbing”.
138
Article 48: “Inherent CO2 that is transferred into an installation, including that contained in natural
gas, a waste gas (including blast furnace gas or coke oven gas) or in process inputs (including
synthesis gas), shall be included in the emission factor for that source stream.”
139
Article 3(e) of the EU ETS Directive: “installation means a stationary technical unit where one or
more activities listed in Annex I are carried out and any other directly associated activities which
have a technical connection with the activities carried out on that site and which could have an
effect on emissions and pollution”.

108
In contrast to that, mobile sources are in general excluded. In section 2.3.1 of the
“Guidance on Interpretation of Annex I of the EU ETS Directive (excl. aviation
activities)”140 it is clarified that “Excluded from the EU ETS is “true” mobile ma-
chinery (trucks, forklifts, bulldozers...), i.e. machinery which has the purpose of
being mobile at the moment of performing its tasks.” For instance, mobile flares
have to be monitored and reported because is it not their purpose being mobile
at the moment of performing its tasks. For further explanation please consult the
abovementioned Annex I guidance.
For emissions from non-significant sources related to stationary units it may not
be necessary to report emissions from individual emission sources, where these
can be grouped into combined source streams (i.e by fuel type).
Example 1: Natural gas is supplied to site via a main site gas meter; the gas is
consumed by a number of emission sources including boilers, canteen equipment
and laboratory units. In this case the emission sources can be grouped into one
source stream and fuel consumption determined via the single gas meter.
Example 2: A number of emergency generators are fuelled by gas oil; the gener-
ators may only be used for very small periods and so annual emissions are low.
Gas oil for the generators is taken from a storage tank which is used to supply
fuel to a number of other emission sources at the installation. Fuel consumption
for reporting purposes can therefore be based on deliveries and/or stock tank
measurements for this source stream.
In the case of small emission sources which cannot be grouped as they use
unique fuel streams then the monitoring approach should be appropriate to the
scale of emissions. It is likely that very small sources will fall into the de-minimis
category and therefore under the Monitoring and Reporting Regulation a no tier
approach may be applied using a conservative estimation method.
Example 3: Small heating units supplied from propane cylinders; this is the only
use of propane at the installation and represents a de-minimis source stream.
Emissions are determined using a conservative estimation method based on the
number of cylinders purchased each year.'

10.16 What is the difference between flares and post-

combustion units?

Identifying relevant units correctly impacts the effort which is necessary to comply
with the monitoring requirements in the MRR. Fuels combusted in post-combus-
tion units, also often named incinerators, need to be monitored like all other fuels
in combustion units whereas for flares less stringent requirements apply. Never-
theless, there is no clear legal definition of flares and post-combustion units, nei-
ther in the EU ETS Directive nor in the MRR.
However, the definition of safety flaring in Article 2(13) of the free allocation rules
Regulation (2019/331) can be used as a suitable starting point for this distinction.
In this Article safety flaring is defined as “the combustion of pilot fuels and highly
fluctuating amounts of process or residual gases in a unit open to atmospheric

140
https://ec.europa.eu/clima/sites/default/files/ets/docs/guidance_interpretation_en.pdf

109
 disturbances which is explicitly required for safety reasons by relevant permits for
the installation”.
In other words, flaring can be considered as safety flaring if all three following
conditions are met:
1. The flaring is required for safety reasons (in particular if required by a
relevant permit), AND
2. The combustion takes place in a unit open to atmospheric disturbances
(the combustion in other units is not covered), AND
3. The amounts and/or composition of process or residual gases are highly
fluctuating.
This definition implies that the predictability of the combustion activity is a relevant
parameter for the distinction. Flaring is often encountered for processes in which
combustible gas flows are transported under high pressure through ducts for
chemical reaction (e.g. production of polyethylene from pressurized ethylene gas)
or purification (e.g. refineries).
However, the MRR does not distinguish between flaring and safety flaring. For
flaring other than safety flaring often the criterion of high fluctuations is not met.
Therefore, criteria 1 and 3 above can only serve as indicators but the focus of the
assessment should be on criterion 2.
For further reading, please consult Guidance Document 8 accompanying the free
allocation rules. This document can be downloaded from the following website:
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-
ets/free-allocation_en
All other post-combustion processes not meeting the above-mentioned specifi-
cations can be considered as post-combustion units, in particular combustions
not taking place in a unit open to atmospheric disturbances 141. Post-combustion
is often encountered in processes where the combustible gas is transported using
a carrier gas (e.g. solvents for the production of fine organic chemicals, solvents
in painting resins, etc.) in combustion units which are not open to atmospheric
disturbances. Note that units equipped with a heat recovery steam generator are
indicating that this unit is not open to atmospheric disturbances and are therefore
to be considered as post-combustion units.

10.17 How to report emissions from mixed (fossil-biomass)

materials

How should the fossil and biomass-related emissions of the following (hypothet-
ical) mixed fuel be determined and reported? An installation produces mixed pel-
lets before using them in a boiler that was formerly fired by coal.
The Installation uses the following raw materials for producing the pellets:
 Plastic waste (mostly polyethylene) – 25% of the total input by weight, fossil.

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Note that this also includes "shrouded flares", i.e. flares where combustion is "open to atmospheric
disturbances" but a shroud is provided to hide the flame.

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 Imported forest residues (small cut branches from hard wood) – 40% of input
by weight. The operator receives these residues from a cheap source in a third
country without evidence whether the land-related sustainability criteria are
met. Therefore the operator has to consider them as non-sustainable biomass.
 Residues (bark) of locally harvested wood – 35% of input by weight; certified
by a voluntary scheme, therefore counted as sustainable biomass and zero-
rated.
The input materials have the following properties:
Raw material Fossil or Input to Mix Moisture C content NCV (dry)
biomass? (water con- (dry) GJ / t
tent) t C / t fuel
Polyethylene fossil 25% 0% 86% 40.2
Hard wood non-sust. 40% 30% 50% 18
residues biomass
Wood wastes sustainable 35% 45% 46% 17
(bark) biomass

During processing to pellets, the mixture is dried such that the wood components
contain only 8% water in the end (the polyethylene is assumed to remain com-
pletely dry). The operator calculates the properties of the components in the final
pellets as follows:
Dried Mixture Content in Moisture C content NCV EF
mix GJ / t t CO2 / TJ
Polyethylene 32.7% 0% 86.0% 40.2 78.4
Hard wood 39.9% 8% 46.0% 16.4 102.8
residues
Wood wastes 27.4% 8% 42.3% 15.4 100.6
(bark)

Note: For this calculation it is taken into account that the total mass decreases
due to the drying. Therefore the relative quantities of the materials in the mix
change. For calculating the NCV based on the moisture content, the following
equation is used:
𝑁𝐶𝑉 = 𝑁𝐶𝑉𝑑𝑟𝑦 ∙ (1 − 𝑤) − ∆𝐻𝑣 ∙ 𝑤
Where NCVdry is the NCV of the absolute dry material, w is the water content
(mass fraction) and ∆𝐻𝑣 = 2.4𝐺𝐽/𝑡 𝐻2 𝑂 is the evaporation enthalpy of water.
Using the above individual components, the operator can calculate the emissions
and energy input from 1000t of these pellets; The percentage in the total emis-
sions can be used to calculate the carbon content percentage attributed to each
component:
Emissions Energy % of emissions =
t CO2 TJ % of C content
Polyethylene fossil 1030.4 13.1 48.4%
Hard wood non-sustaina- 672.5 6.5 31.6%
residues ble Biomass
Wood wastes Sustainable 424.7 4.2 20.0%
(bark) Biomass
Total 2127.6 23.8 100%

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 In the annual emission report the operator may choose to report these three com-
ponents separately, which has the advantage of transparency and avoiding the
need to calculate with different moisture contents. Instead, the operator may use
directly emission factor and NCV of the moist (as received) biomass.
Alternatively, there is also the possibility to calculate weighted carbon content /
emission factor and NCV from the final pellets (in particular useful if e.g. the op-
erator also sells part of the pellets and wants to inform the customers of their
properties).
From the above, the operator may calculate (using f = 3.664 t CO 2/tC):
 The weighted NCV = 23.8 GJ/t pellets
 Carbon content: CC = 2127.6 t / 1000 t / f = 58.1%
 Weighted emission factor EF = CC × f / NCV = 89.39 89.39 t CO2 / TJ

Using these calculation factors and the percentages of the fossil and biomass
fractions given in the previous table, the operator can fill the annual emissions
report using one single source stream:
1 F1. Solid - Other solid fuels; Mixed plastic/Wood pellets Combustion CO2 fossil: 1.702,0 t CO2e
Combustion: Solid fuels CO2 bio: 425,5 t CO2e

Tier tier description Unit Value error

iii. AD: 3 ± 2,5% t 1.000,00
iv. (prelim) EF: 2a Type II default values tCO2/TJ 89,39
v. NCV: 2a Type II default values GJ/t 23,8
vi. OxF: 1 Default value OF=1 - 100,00%
vii. ConvF:
viii. CarbC:
ix. BioC: 2 Type II biomass fraction - 20,00%
x. non-sust. BioC: 2 Type II biomass fraction - 31,60%

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