Transport Fuels Technical Advisory Group (TF TAG) Notes of 1st meeting held on 27 February 10:00 – 12:00 at the Ministry of Transport
(including follow-up meetings held on 4 March by teleconference with some members)
Present: Andrew Campbell (Chair), Frank Wong, David Jacobson, Geoff Davis, Barry Blackett, Ian Twomey (Expert advisor).
By videoconference in Auckland: Dave Bodger and Paul Kelway
By teleconference (in part): Kirstine Hulse, Greg Visser
Note - due to technical difficulties with the teleconferencing facilities, David White, Kirstine and Greg were disconnected half way through.
Officials: Sara Arhaim, Roger Fairclough, Leah Murphy.
Apologies: Ian McDonald
1. Introduction of officials took place followed by a welcome to members present by way of video conference and conference call.
The following opening comments were made:
- Officials were applauded for making the videoconference facility available due to the time saved by out-of-town members using it.
- Meeting-relevant papers should reach TAG members 48 hours prior to the meeting if officials are seeking informed comment on them during the meeting. In principle it was agreed that late papers would be held over until the next meeting.
- The delayed started was noted and members agreed that they would endeavour to be ready to start meetings at the appointed time.
2. Adoption of Terms of Reference (refer to attachment 1)
Roger Fairclough (‘MED’) spoke to the Draft Terms of Reference that had been circulated and briefly outlined the main points, including:
- The purpose of the methodologies and regulations;
- Highlighting the opt-in provisions;
- That the secretariat functions will be fulfilled primarily by the Emissions Trading Group (‘ETG’);
- Noting that there are no specific deliverables for the TF TAG and that its primary role is to provide advice to the ETG.
- The various meeting processes and noting comments from members on the importance of punctuality at meetings and early distribution of meeting papers (at least 48 hours before a meeting);
- That all participation by members and officials are conducted in good faith.
The group unanimously passed a motion to accept the Terms of Reference.
3. Regulation making process- Update on progress of Climate Change (Emissions Trading and Renewable Preference) Bill and Regulation process (attachments’ 2 and 3)
Leah Murphy explained the current status of the Climate Change (Emissions Trading and Renewable Preference) Bill (‘the Bill’). Specifically she noted the following key points-
- Bill tabled on 4 December 2007 and had its First reading on 11 December 2007 where it was referred to Finance and Expenditure Committee (‘FEC’). Written Submissions to the FEC close 29 February 2008. Noted that the timing of deliberation and report back are in the hands of the FEC. However, officials anticipate enactment of Bill in approximately June 2008.
- Draft forestry and transport regulations published early February 2008, and feedback on these draft regulations will be accepted up to 31 March 2008. This feedback is being sought outside of TF TAG.
- The draft regulations do not presuppose outcomes of the FEC’s consideration of the Bill. And it is noted that if the Bill changes in a way that relates to the regulations, the regulations will also need to change. Officials expect promulgation of these regulations shortly after enactment of the Bill, in approximately June/July 2008.
- Other regulations will be developed that will cover other sectors and allocation including stationary energy and industrial processes, it was noted that officials are aiming to have final regulations by the end of 2008. This is important to ensure that they are in place in time to enable voluntary reporting one year ahead of mandatory reporting.
4. Relationship with other Groups- The Stationary Energy and Industrial Processes (‘SEIP’) TAG and the Ag TAG
Roger Fairclough discussed the purposes and work streams of the SEIP and Ag TAGgs. It was noted that whilst there are no direct relationships with either of these TAGs that methodologies should be broadly consistent. There was a general discussion around the importance of ensuring consistency, commonality and integration between the various methodologies of each sector within the emissions trading scheme. It was noted that as the ETG will be operating as a common denominator across all sectors that they would be responsible for ensuring consistency.
It was noted that both these TAGs are dealing with longer timeframes and with issues that are comparatively more complex, especially allocation.
5. Supporting the TF TAG:
Roger Fairclough outlined the various support mechanism that will be available to support the TF TAG, including a discussion on the expert advisor, budget and shared workspace.
Roger informed the group that Ian Twomey of Hale and Twomey will be the expert advisor for the TF TAG and that he will be attending today’s meeting from 11am today. The group discussed how work to Ian would be managed, and it was decided that all work to Ian would be co-ordinated through the Chair.
The TF TAG does not have a budget per se but the group will be supported by the ETG. The ETG will cover reasonable costs of the secretariat, expert advisor, communications support (i.e. to facilitate the public release of reports, minutes, papers etc), video links and teleconference calls (within reason).
The possibility that the TF TAG could have a shared workspace on the climate change solutions website was discussed. It was initially noted that due to the short life of the group that it should be kept simple and email circulations would suffice. However, some members expressed the need for a backup option should email not work in the first instance (due to attachment size issues etc). It was also noted that it is likely that some documents relating to the group would be made available to the public on the climate change solutions website in any case.
It was also agreed by the group to follow a standard subject line format for all email correspondence to allow easy retrieval and searched. All email subject lines should start with TF TAG.
Action: Leah to investigate a shared workspace.
6. Tasks and expected outputs from the TAG in 2008
Leah Murphy outlined the key tasks and outputs of the TF TAG. TF TAG will still have two key tasks, including:
- Review of and comments on transport regulations and related commentary
- Review of any work commissioned, by the TF TAG to Ian Twomey as expert advisor, in respect of regulations and commentary
The discussion then turned to the required number of meetings to fulfil these tasks. It was noted that officials believe that 3 meetings would be sufficient. The aim of each meeting was discussed, namely:
- Today’s meeting: for introduction.
- 2nd meeting: around end of March/early April, to discuss the technical issues raised in the draft Climate Change (Liquid Fossil Fuel) Regulations 2008 and associated commentary contained in Emissions Trading bulletin no 2 or at the first meeting and to review a technical report by Hale and Twomey that addresses these issues.
- 3rd meeting: around early May, to finalise the draft Climate Change (Liquid Fossil Fuel) Regulations 2008 and associated commentary contained in Emissions Trading bulletin no 2.
It was possible that a further meeting may be required should there be unresolved issues after the 2nd meeting.
7. Release of Information
Meeting notes will be written in summary form and will not attribute any comments to any persons (Chatham House Rules). It was agreed that this should be put into the Terms of Reference. It was agreed that draft meeting notes would be circulated to the group for comments 2 working days after the meeting. All comments are to be received within 3 working days of receiving the draft notes. Once the meeting notes (summary) are finalised they will be publicly available.
The procedures around the public release of information were discussed; including that all meeting summaries and reports commissioned (e.g. Ian Twomey’s work) should be publicly available. Officials noted that all documentation, including emails to and from officials, are subject to the Official Information Act. The public release of commissioned reports and minutes (including the timing) will be facilitated by the Chair.
The use of subgroups was discussed and there was agreement that they could be a useful mechanism in certain circumstances.
Actions:
- Leah Murphy to update the Terms of Reference to include a comment about the style of meeting notes and the use of the Chatham House Rules.
- Leah Murphy to check how the SEIP TAG releases their meeting notes.
8. Review of and Initial comments on the following: All (refer attachments’ 4 and 5)
Leah Murphy took the group through the draft transport regulations and commentary. It was noted that the commentary does not form part of the legal regulations and therefore does not have any legal backing. It is intended that the commentary be a guidance document that its contents would be managed initially by the Emissions Trading Group and in the long term by the Ministry for the Environment as the agency responsible for emissions trading scheme policy. Key comments and points raised are summarised below
Key points on the regulations
- Section 4 & 5 of the regulations relate to charging of fees. However, while policy decisions have not been taken yet, at present officials do not expect fees to be charged in respect of transport. This section is needed for the forestry regulations which will include some fees.
- The importance of ensuring that all relevant fuels are included, and correctly defined in the current definition of obligation fuels.
- Section 7 relates to the information that is required to be collected and held by participants. It is envisaged that not all of this information will be required to be provided to the monitoring agency at the time of annual reporting. However this information is required to be held because the monitoring agency could require this information for audit purposes as outlined in the Bill.
- The calculation sections 8 and 9 were discussed. A new issue was raised, namely what is the definition of a litre? Is it the volume at ambient temperature or at 15 degrees Celsius (the latter is referred to in the Customs and Excise Act and will therefore be applicable to all fuel when imported or when it leaves a refinery)? Members indicated a preference for to use a definition of a litre as a litre at 15 degrees Celsius. The impact of this definition on litres of fuel that are to be deducted from obligation fuel ie fuel that is either exported or sold to participants who have opt-ed in was discussed. Members agreed to find out how sales of jet fuel were managed in this regard, with the possibility of adopting the same protocol. It was suggested that some further analysis of the materiality of any differences arising should be investigated.
- Noted that sections 9 and 10 may not currently clearly reflect that exported jet fuel should be excluded.
- Discussed point of obligation- point of excise versus point of sale. Confirmed point of excise as the most appropriate point of obligation as is reflected in the regulations.
- Noted that in schedule 2 of the commentary the emission factor for aviation gasoline had too many significant numbers.
- Discussed how to define bunker fuel oil and power station fuel oil, agreed that it would be best to amalgamate these fuels into the heavy hydraulic oils definition in 6(i).
Actions:
- The 5 oil companies are to look at how they define a litre for the purposes of sales to airlines (i.e. is it at ambient or 15 degrees?). Barry Blackett to coordinate, and provide the information to the Chair.
- Ian Twomey to look at the materiality of using 15 degrees for all transactions relating to the calculation of emissions under the regulations vs using ambient temperature or some other measure and report back to the group, through the Chair.
- Officials to ensure that sections 9 and 10 of the regulations do not currently inadvertently include fuel used for international trips (i.e. exported) as obligation jet fuel.
- Officials to remove extra zeros from the emission factor for aviation gasoline in schedule 2.
- Officials to amend the definition heavy hydraulic oils definition in 6(i) to include bunker fuel oil and power station fuel oil.
Key points on the Commentary
- Due to time constraints the commentary was not discussed in great detail.
- The difference between the emissions factors used for New Zealand’s national inventory reporting under the United Nations Framework Convention on Climate Change and the Kyoto Protocol and the proposed emission factors for the ETS was discussed. The tension between precision versus certainty was noted. The group agreed that they would favour certainty over precision and were therefore happy with the proposed methods for arriving at emission factors for the ETS.
- Noted that the factors are unlikely to change in the next 5 years. Group agreed that if they did need to change should change as at 1 January (and not mid year) to avoid confusion with accounting and tracking.
- Noted that the excise definitions do not have the right split between regular and premium petrol.
Actions:
- Officials to investigate the feasibility of amending the relevant schedules in the Customs and Excise Act to ensure that the split between regular and premium petrol are reflected correctly.
Ian Twomey then briefly spoke to the list of issues he identified (refer ‘Further issues for discussion at TF TAG meeting 27 February 2008’). Major points to note-
- Items 1 and 2 were already discussed.
- Item 3: The oxidation factor should only apply to the CO2 emission factor, and that the calculation contained in the commentary would be amended to reflect this (as would the regulations which reflect the final emission factors). This was agreed to by the group.
- Item 4: The difficulties of accounting for the biofuels component. Agreed that oil companies would report back to the Chair on whether they would prefer to use a biofuel component factor or whether they would prefer to use full litres of fossil fuel and biofuels in their calculations.
- Items 5 and 6 were noted, members did not express any discomfort with the recommendations.
- It was noted that a mass/energy balance flow diagram of the fuel supply chain and the calculation of emissions should be prepared to ensure that no double counting occurs.
Actions:
- All oil companies to report back to the Chair regarding their preference for how to treat biofuels when calculating emissions.
- Ian Twomey to prepare a flow diagram of the fuel supply chain and the calculation of emissions.
9. Next meeting
Members expressed a preference to have the next meeting one day before or after the Biofuels Conference to be held in Wellington by EECA on the 2nd April. [Officials note after the meeting: suggest that the afternoon of Thursday 3 April as a potential date. This is suggested because there is a carbon markets workshop being planned for Friday 4 April by the Ministry for the Environment (details to come) and this would enable out of town members to attend all three events in one trip if they wish.]
It was noted that the third meeting will be held in early May. [Officials note after the meeting: suggest morning of Friday 2 May].
The Chair commented that no information would be publicly released until it had been approved by the Chair.
The Chair closed the meeting at 12:10 pm.
10. Notes from follow-up meetings
On 4 March, follow-up meetings were held with some members who were not able to attend the full meeting on 27 February. Follow-up meetings were held with Greg Visser, Kristine Hulse and David White.
- Noting that if the definition of a fuel is determined by its octane rating there could be confusion in the case of ethanol blends. I.e. and E10 fuel that is a mixture of regular and ethanol would have an octane rating higher than 91 – but the emission factor for 90% of the fuel should be the regular emission factor not the premium emission factor.
- Action arising from point above: Officials to ensure drafting of regulations means that obligation fuels are categorised according to their pre-blending characteristics.
- Action: attending member of the TF TAG agreed to re-read the regulations to ensure that they stand alone (i.e. without the bulletin)
- Action: NZRC agreed to advise the group of whether the obligation fuel list is complete and includes all fuels that they use on site (i.e. may be pre-commercial fuels). (Officials note: need to clarify how the part 3 of schedule 3 of the Bill interacts with list of obligation fuels).
- It was noted that there is jet fuel left in an airplanes tank when it refuels – either after an international flight or a domestic flight. Should this fuel be accounted for under the ETS? It is likely that this fuel does not need to be accounted for, but it is a matter that should be investigated just in case there is a material difference between fuel purchased vs. fuel used on international vs. domestic flights. Fuel burn rather than fuel purchased is an alternative accounting method that is being used in Australia for corporate reporting purposes.
- Action: Airlines to analyse if the effect of fuel that remains on aircraft at the time it is refuelled would make fuel accounting under the ETS as proposed (according to fuel that is purchased and is determined as being domestic or international depending on the nature of the flight the fuel sale relates to) materially inaccurate. Can airlines report back at the next TF TAG meeting?
Last updated: 15 September 2008
