More attention will be paid in the future to the origin and production of materials used in energy production, as well as the environmental impact of transport. This is also demonstrated by the new RED III Directive on renewable energy use, which entered into force in November 2023.
The RED III Directive replaces the RED II Directive, which entered into force in 2018, and it brings sustainability criteria requirements to an increasing number of energy operators in the EU. This means that the industry has to report more accurately on the environmental impacts of its activities, which underlines the importance of effective reporting. While reporting in the past was commonly done using Excel, as requirements and controls become more stringent, the easiest and most reliable way is now to automate supply chain reporting with a dedicated system. Effective and reliable information management also increases the credibility of operations.
Collecting data manually is not only challenging, but, in many cases, impossible without additional staff and resources. Especially for larger operators, the amount of data required for sustainability reporting is so large that the work involved in collecting and reporting data needs to be automated. Reporting must also comply strictly with the regulations, so there is no room for error.
The RED III Directive puts pressure on sustainability reporting
The sustainability criteria defined by RED III and existing legislation oblige operators to demonstrate the sustainability of the biomass fuels used. The number of operators subject to reporting obligations is increased by the fact that the RED III Directive lowers the reporting threshold for plants using solid biomass fuels from an overall thermal power of 20 MW to 7.5 MW. Going forward, plants that started operating before 2021 will also be covered. At the same time, compliance with the cascade principle will be monitored more closely: forest biomass should be used primarily for industrial purposes, such as products and materials, rather than for energy use.
Under the RED III Directive, the overall thermal threshold for installations using solid biomass fuels has been lowered from 20 MW to 7.5 MW, increasing the number of installations required to demonstrate biomass sustainability. In the transport sector, the number of operators subject to obligations also increases, as the transport sector target will apply to maritime and air transport in addition to road transport. The reduction of greenhouse gas emissions must also be demonstrated for the entire supply chain, covering not only the origin but also processing, cultivation, rearing, and land-use changes.
Reporting greenhouse gas emission reductions from biomass fuels, for example, creates challenges for energy sector operators in collecting data, as all data must be collected in one way or another, and entered into the sustainability system maintained by the operator. It is important to consider, among others:
- how to track individual loads or batches of material smoothly and reliably
- how to easily demonstrate and verify emission reductions.
In the daily lives of operators, such as power plants, this can mean an increased workload in data collection, management, reporting, and verification. Operators who have not previously been subject to the requirements of the Directive face a new reporting challenge as part of their business. If the reference information leading to the origin is incomplete, reporting can cause unnecessary problems, and, in the worst case, lead to sanctions.
Automated reporting with emerging technology
One of the main sustainability reporting criteria included in the RED III Directive is the demonstration of fuel origin information. With the RED III Directive, there may be new requirements for reporting origin, perhaps even along the entire supply chain. A system that meets the needs of sustainability reporting, such as Once by Pinja, makes the process of producing reports and verifying the accuracy of the data in the overall process much more straightforward.
As the requirements of RED III and sustainability reporting are constantly evolving and refining, Pinja’s systems are also continuously developed to meet the changing needs of clients.
In recent years, Once has introduced the capability to calculate and verify greenhouse gas reductions throughout the supply chain. In addition, the collection and production of information on the origin of fuels has been facilitated.
It remains to be seen what impact the RED III Directive ultimately has on sustainability reporting by energy operators and on national legislation. For many operators, the new requirements mean more work on mandatory reporting, at the latest with the implementation of the Directive. It is therefore worth improving and automating processes as much as possible up front.
Want to know more about RED III and sustainability reporting? Download the guide: RED III directive and sustainability reporting in the energy sector
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