The German Emissions Trading Authority as a Virtual Organisation Implementing Emissions Trading Using Modern IT Infrastructure

Editorial Information Publisher: German Emissions Trading Authority (DEHSt) at the German Environment Agency Bismarckplatz 1 D-14193 Berlin Telefon: +49 (0) 30 89 03-50 50 Telefax: +49 (0) 30 89 03-50 10 [email protected] Internet: www.dehst.de/EN

The German Emissions Trading Authority as a Virtual Organisation Implementing Emissions Trading Using Modern IT Infrastructure

Content Emissions Trading.....................................................................................5 DEHSt.......................................................................................................6 Functions...............................................................................................6

IT Infrastructure........................................................................................8 Workflow.................................................................................................10 DEHSt‘s Electronic Applications................................................................12 Government Site Builder.................................................................. 12 Forms Management System.............................................................. 13 Virtual Post Office............................................................................ 14 Installations Database..................................................................... 15 Business Objects............................................................................. 16 Union Registry................................................................................. 17 Ticket System for Customer Service................................................... 18 Central Address Management........................................................... 19 DOMEA Electronic Process Management ........................................... 20 ProMechG Database......................................................................... 21

Status and Outlook..................................................................................23

Emissions Trading The starting point for the emissions trading scheme is the Kyoto Protocol of 1997 to the UN Framework Convention on Climate Change, in which the participating industrialised countries, including the European Union (EU), undertook to reduce their greenhouse gas emissions by an average of five percent by 2012 compared to 1990 levels. To achieve these climate goals, the EU introduced the European Emissions Trading System at the enterprise level for energy installations and emission-intensive industrial installations in 2005. Around 12,000 industrial and energy installations of 31 European countries (the 28 EU countries plus Liechtenstein, Iceland

and Norway) participate in it in the third trading period from 2013 to 2020, and together they account for about 45 percent of Europe‘s carbon dioxide (CO2) emissions. Since 2012 the international aviation sector has also participated in emissions trading (in principle, all flights departing or landing in the EU Member States, Liechtenstein, Iceland and Norway). An annual ceiling (cap) is set for CO2 emissions in Europe above which more CO2 may not be emitted by all installations and aircraft involved. The Member States provide allowances to the participating companies – mostly for free, but some are auctioned. Each emission allowance grants emission of one tonne of CO2.

Therefore, a company must surrender as many allowances annually as the amount of CO2 it has emitted. If the allowances are not sufficient to cover emissions, the company must buy emission allowances in the market (for example on the stock exchange or from other companies that need less). This price in relation to other production costs signals to the company when investment in CO2 reduction is economically worthwhile. Emission reductions are therefore implemented where they are most favourable. Emissions trading is an instrument for taking account of the subsequent costs of CO2 emissions – and thus the costs of climate change.

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DEHSt The German Emissions Trading Authority (DEHSt) at the German Environment Agency is the competent national authority for the implementation of EU emissions trading in Germany and the flexible climate protection instruments of the Kyoto Protocol: intergovernmental emissions trading and project-based mechanisms. It assumes a wide range of tasks which are defined in the EU Emissions

Trading Directive, the EU Monitoring Regulation the Greenhouse Gas Emissions Trading Act (TEHG), in the Allocation Regulation (ZuV 2020), the EU Registry Regulation, the EU Auctioning Regulation, the Project Mechanisms Act (ProMechG), and in the Electricity Price Compensation Directive.

supports the work of the verifiers that verify the information provided by the participating enterprises. It works on the further development of emissions trading and flexible mechanisms, such as Joint Implementation (JI) and Clean Development Mechanism (CDM), both at national and international level.

DEHSt cooperates with companies whose installations or aircraft are subject to EU emissions trading and

Functions DEHSt is mainly responsible for issuing emission allowances to the participating operators and aircraft operators, controlling the auctioning of emission allowances in Germany, monitoring emissions reporting and annual surrender obligations and for the account management of the national section in the Union Registry. Unlike in many other EU Member States, the administrative

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responsibility for emissions trading in Germany is largely in one hand. DEHSt and its employees see themselves as a modern and service-minded authority. All procedures are fully software-supported and electronically managed and recorded. The enterprises are supported by a dedicated customer service on all issues relating to emissions trading.

Based on authorisation granted in Section 23 Greenhouse Gas Emissions Trading Act (TEHG), DEHSt has established a fully electronic two-way workflow between external users and authorities, thus assuming a pioneering role in the European emissions trading scheme.

E-government and Streamlined Management Modern information and communication technologies are used to redesign internal management processes and improve external relations of public administration to its customer groups and so enhance the efficiency and the service of authorities. When DEHSt was founded in 2004, the legislator made sure that all internal and external business processes were performed electronically from the outset. This made DEHSt a pioneer in the implementation of electronic administrative management (e-government), and, shortly after its foundation, DEHSt already fulfilled the essential criteria of the 2013 E-Government Act. DEHSt received the 6th eGovernment award for federal, state and local authorities in the „Best virtual organisation“ category for the full electronic flow of its business procedures. Business enterprises were obliged to submit their applications exclusively by electronic means in emissions trading for the first time. As a rule, DEHSt uses modern communication methods with its partners. The entirely electronic procedure between DEHSt and industry minimises the time requirement because it relieves the authority from the immense effort of manual data processing and simplifies quality assurance. In addition, transmission errors are avoided and the capacitive processing effort is considerably reduced.

DEHSt Functions in Detail:

▸▸ ▸▸ ▸▸ ▸▸ ▸▸ ▸▸ ▸▸ ▸▸ ▸▸ ▸▸

Allocation of emission allowances Controlling emission allowances auctions in Germany Monitoring emissions reporting and annual surrender obligation Authorisation and supervision of JI and CDM projects Account management of all accounts in the German section of the EU Emissions Trading Registry (Union Registry) Supporting and monitoring independent verifiers in the verification of emissions data Supporting the Federal Ministry for the Environment and the European Commission in the analysis and development of the EU Emissions Trading Scheme Fulfilment of national and international reporting obligations International cooperation with other institutions to build national and regional emissions trading schemes Providing financial assistance for energy-intensive companies to compensate for indirect CO2 costs (electricity price compensation)

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Since its launch the system of emissions trading has constantly been further developed and expanded by the Commission and the Member States. This dynamic European and national legislation puts great demands on implementation times and the flexibility of the IT infrastructure. International aviation was included in emissions trading in 2009. DEHSt has implemented complete electronic communication

IT

In fra st ru

Using many basic components of the BundOnline 2005 initiative, DEHSt had a series of individual applications developed, with modular

with all external users in this new application scope as well – even in countries outside of Europe. This enables uniform administrative procedures and thus saves time and money.

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When founding DEHSt, the short time between the implementation of the European Emissions Trading Directive (Directive 2003/87/EC) on 13/10/2003 and the start of emissions trading on 01/01/2005 required particularly effective use of all resources. DEHSt aimed to implement the most modern information technologies from the outset.

design that assembles into a complex structure. The management of the database and application servers is handled by external providers for predominantly service-oriented reasons.

VPS

secure data transmission

FMS

Data Collection Forms

Installations database Transport database Electricity price compensation database

Union Registry

EXTERNAL USERS

Public

Account holders

INTERNET

Website

Verifiers

Customer support

DOMEA

Address management ProMechG Database

INTERNAL PROCESSES

Enterprises

For effective electronic processing of all operations in the authority, data from the outside are already filed in electronic form. The DEHSt websites provides online form applications on the basis of the Forms Management System (FMS) to ensure structured acquisition of all relevant enforcement data. In procedures which involve a verification by external verifiers, the comments and verifiers‘ reports

can be recorded in the same web application. Verifiers save the entire data entry at the end of a process in a ZIP file containing the verified data in a PDF and machine-readable XML file.

equivalent). The transmission is encrypted and automatically recorded. Finally, operators send the original message signed by the verifiers together with the addition of their own electronic signature via VPS to DEHSt.

The ZIP file is then forwarded in the attachment of a message via the Virtual Post Office (VPS) to the operators. They sign the messages using a qualified electronic signature (QES, electronic writing

Data records at DEHSt are automatically imported in an IT workflow management system (DOMEA) and assigned to the processes. This ensures a mostly paperless processing.

Workflow Operator

VPS

FMS

Verifier

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The processing takes place in the respective specialised software: the installations database for emissions trading of stationary installations, the transport database for emissions trading in aviation and the electricity price compensation database. This software supports the processing staff in managing the processes through automated verifications. They also provide an overview of the trend of the application data compared to previous years or related processes.

The specialised software generates a decision on the processes which is based on the decisions and comments of the processing staff. Comprehensible and transparent decisions are thus generated in a uniform manner for the conclusion of the administrative procedure. Together with standardised verifications from the professional software, uniform execution is ensured by all the relevant DEHSt special units.

Decisions, approvals and additional claims are then filed in the IT workflow management system as parts of the administrative procedure and communicated to the operators via the virtual post office.

DEHSt VPS

IT process management

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GSB

Government Site Builder

Architecture

Java Fat Client and Webclient on workstations, web applications, application servers, database servers

Basic software

Adaptation of Coremedia CM

Server operating system

Linux

Server requirements

Apache Tomcat, Java

Programming language

Java

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC, Java JRE

Producer of software

Coremedia/Materna

The webpage www.dehst.de as an independent satellite webpage of the German Environment Agency is the central communication portal of DEHSt. DEHSt uses a BundOnline 2005 basic component to build its website: the Government Site Builder (GSB), the federal content management system. With GSB, all contents published by DEHSt, as well as action guides, software applications and documents in support of the business processes in emissions trading are provided to the public.

DEHSt‘s Electronic Applications 12

FMS

Forms Management System

Architecture

Web application, application server, database server

Basic software

Own design based on Lucom Interaction Platform/FFW

Server operating system

SUSE Linux Enterprise Server

Programming language

Java

Database

Oracle

Client operating system

All WWW compatible operating systems

Client requirements

Standard PC, equipped for the use of a web browser

Producers of software

Materna/Lucom

Another BundOnline 2005 basic component is applied for all significant enforcement procedures in which external customers supply data to DEHSt: the Forms Management System (FMS). The FMS is a server-based web application, accessible to all partners involved in the creation of a data record via a secure internet connection (HTTPS). It offers a number of modern features such as default catalogues and verifications of logical dependencies. It enables easy data entry and ensures high data quality. FMS completion instructions and input validations helps operators and verifiers to submit records as accurately and completely as possible. For the operation of FMS, DEHSt provides detailed guides and manuals and in many cases offers training events and telephone support from the customer service team. DEHSt provides individual FMS applications for each process in emissions trading; English and German versions of the software are available for aviation. DEHSt has made the use of the FMS applications mandatory pursuant to Section 23 of the Greenhouse Gas Emissions Trading Act (TEHG).

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VPS

Virtual Post Office

Architecture

Java Fat Client on workstations, application servers, database servers

Basic software

Governikus/adaptation of Governikus Communicator

Server operating system

Linux

Programming language

Java

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC with card reader, equipped for the use of a web browser, Java JRE

Producer of software

Governikus

A completely and exclusively electronic application process was implemented for the first time after adoption of the Greenhouse Gas Emissions Trading Act (TEHG). Section 23 of TEHG provides the basis for this procedure, empowering the competent authority to prescribe the use of electronic communication as well as a specific encryption for the purpose of communication. To meet the high demands of an electronically secure, comprehensible, binding and confidential communication between all parties, DEHSt established a Virtual Post Office (VPS) - the post office in the electronic network. The VPS is part of the „data security“ basic component in the BundOnline 2005 project. The VPS verifies signatures and provides a timestamp for each message together with the verification status of the signature to document the legal obligation and deadline of the electronic data communication. Unlike De-Mail, the VPS system provides restrictive end-to-end encryption. The use of modern cryptographic methods in addressing ensures that the sometimes very sensitive data can only be read by the recipient. VPS users require the Access Client VPSMail which is available for download on the DEHSt website and must be installed by the different players in emissions trading according to their role (operators, verifiers, state authorities, auditors, lawyers). Since the introduction of the new ID card (nPA) in November 2011, users can set up a VPS account based on identification with the new ID card which no longer has to be unlocked by DEHSt.

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xEM

Installations Database

Architecture

Web application, application server, database server

Basic software

Own design based on SAP Netweaver AS, xApp Emissions Management 1.0

Server operating system

MS Windows Server

Programming language

Java

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC, equipped for the use of Microsoft Internet Explorer

Producer of software

SAP Deutschland

Data communications in XML format, e.g. an application, emissions report or monitoring plan are transferred to the installations database (ADB) for internal data management. The ADB is an expert system that manages all data entries and applies the extensive and complex sets of legal stipulations. Uniform and comprehensible processing is ensured with the support of verification and calculation processes implemented within the ADB. ADB supports staff in assessing the data, administration of additional claims, preparation of decisions and sanction letters as well as in the approval of monitoring plans for all installations subject to emissions trading. The installations database is expanded and adapted according to respective demands for further processes and applications. Separate special applications (transport database VDB and electricity price compensation database SDB) that implement the relevant legal regulations were developed based on the same technological foundation for enforcement in the aviation sector and for grants for indirect CO2 costs (electricity price compensation).

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BO

Business Objects

Architecture

Fat Client and Webclient on workstations, web applications, application servers, database servers

Basic software

SAP Business Objects

Server operating system

MS Windows Server

Programming language

Java

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC, equipped for the use of a web browser, Java JRE

Producer of software

SAP Germany

SAP Business Objects (BO) is a business intelligence solution that enables database and cross-application evaluations such as for the processing status of a procedure or for creating an overview of the data of all installations subject to emissions trading. BO is also used as a reporting tool for the creation of notifications.

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UR

Union Registry

Architecture

Web application, application server, database server

Basic software

Own design of the European Commission

Server operating system

Windows 2000

Programming language

Unknown

Database

Unknown

Client operating system

Independent of operating system

Client requirements

Standard PC, equipped for the use of a web browser

Producer of software

Unknown

In June 2012, the emissions trading registry previously operated nationally was transferred to the Union Registry developed and operated by the European Commission – the administrative and technical procedures are thus to a great extent in the hands of the Commission. However, the account and user management still remains the responsibility of the Member States. The Union Registry is a database application which can best be compared with an online banking system. It records who owns which emission allowances, and all transactions (bookings) are performed and recorded through the Registry. The Union Registry is an internet application which can be accessed through a standard browser (e.g. Internet Explorer) via a secure internet connection (HTT PS Protocol). As with online banking, authorised representatives can retrieve account balances, execute transactions and surrender emission allowances to the national account. Authentication occurs through a two-factor authentication method via a mobile phone (TAN procedure). Other security mechanisms (transaction delay, trust accounts list), strict control of market participants (know-your-customer-checks) and active monitoring of the transactions in terms of possible criminal offences (transaction analysis) ensure a safe and legally compliant execution of emission allowance trading. Transactional analysis is a method developed by DEHSt in cooperation with Great Britain and France to detect evidence of crime (e.g. VAT fraud, money laundering, terrorist financing) in the Union Registry.

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CRM

Ticket System for Customer Service

Architecture

Web application, application server, database server

Basic software

Adaptation of BMC Remedy

Server operating system

MS Windows Server

Programming language

Java

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC

Producer of software

BMC

E-mail and telephone inquiries for the customer service are recorded in the CRM ticket system, assigned to employees for editing and then answered from this system. CRM offers the possibility to evaluate requests from certain categories or frequently asked questions. This helps to detect the information requirements of operators, verifiers or the interested public early on and meet these requirements through targeted mailings or with a list of frequently asked questions on the DEHSt website.

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ZAM

Central Address Management

Architecture

Fat Client and Webclient on workstations, web applications, application servers, database servers

Basic software

ZAM

Server operating system

MS Windows Server

Programming language

C#

Database

MS SQL Server

Client operating system

MS Windows

Client requirements

Standard PC

Producer of software

Dr. Lauer and Karrenbauer

The Central Address Management (ZAM) consolidates the addresses which DEHSt accumulates in the course of implementing its tasks. ZAM matches addresses, institutions and individuals with each other, thus enabling redundancy-free address management. DEHSt has implemented an interface between the IT process management DOMEA and ZAM to enable a simple addressing of the letters created in DOMEA. The ZAM address database is the basis for topic-specific information e-mails (mailings) and for invitations to information events.

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VBS

DOMEA Electronic Process Management

Architecture

Fat Client on workstations, application servers, database servers

Basic software

Further development of OpenText DOMEA

Server operating system

MS Windows Server

Server requirements

Java

Programming language

C++

Database

Oracle

Client operating system

MS Windows

Client requirements

Standard PC

Producer of software

OpenText

The management of DEHSt‘s internal business processes is entirely electronic. All implementation records are kept and processed exclusively paper-free in the electronic process management (VBS) DOMEA (DOcument Management and Electronic Archiving in electronic business). With the help of DOMEA all fixed and free operations are automatically supported and recorded in the form of pre-specified and user-specified processes. This ensures quick location of all relevant information about a case, a consistent approach in administrative action and auditable record keeping. All paper inputs are scanned and transferred to DOMEA and then further processed for operations that are not subject to electronic processing. Electronic process management guarantees integrity, traceability and the legal validity of DEHSt’s administrative actions.

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JI/CDM-DB

ProMechG Database

Architecture

Fat Client and Webclient on workstations, web applications, application servers, database servers

Basic software

Own design based on Scopeland

Server operating system

MS Windows Server

Server requirements

IIS

Programming language

C++, C# / JAVA

Database

MS SQL Server

Client operating system

MS Windows

Client requirements

Standard PC

Producer of software

Scopeland Technology

DEHSt commissioned the development of a database-founded special application, the JI/CDM database (JI/CDM-DB), to implement the Project Mechanisms Act (ProMechG). JI/CDM-DB supports DEHSt staff in the management, documentation and the legally required publication of project applications of project mechanisms and provides requirement-specific statistics. A major advantage of this applied basic system is that many simple changes such as alterations in data catalogues or adjustments to the user interface of the special application can be made directly by DEHSt staff.

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Status and Outlook DEHSt was established as a new Division of the German Environment Agency (UBA). Therefore, only the system specifications of the IT infrastructure and telecommunication standards of UBA had to be taken into account internally. Due to the short time frame and the requirements of systems availability, a decision was made to host the operation of the databases and possibly the application server in providers with particular experience in the respective applications. All of DEHSt‘s applications have been designed according to modern architectures customary in computer science. In addition, the same standards (XML) are consistently used as a basis for the data acquisition systems. DEHSt takes specific care that all of its specialist applications always meet the current demands on IT security and data protection in order to

reduce its own risks and those of external users as much as possible. Due to its modular and heterogeneous structure, DEHSt’s IT infrastructure offers excellent opportunities to adapt existing modules to new tasks and challenges and to integrate further applications. New requirements for specialist applications are constantly emerging through new procedural rules in European emissions trading. However, this also means that it is not easy to adapt the entire IT infrastructure apart from standard update and migration projects to new standards in IT without affecting the operation of ongoing processes. Nevertheless, the fast pace of innovation and the increasingly problematic security situation in the IT sector require revision the overall design of the expanded IT infrastruc-

ture. Approved features must therefore be maintained, but innovations in the information technology as well as experience in the design of IT systems for law enforcement must be considered in a very dynamic regulatory environment. One of several progressive and reliable options is the development of a portal solution which provides users with an invisible interface between the Forms Management System and Virtual Post Office and which connects DEHSt‘s internal process management and the ADB system.

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