Tritech Business Plan

Business Plan For an

EU Environmental Technologies Verification (ETV) Scheme October 2009

Report prepared by Beta Technology

Contact: Caroline Wadsworth Beta Technology Limited Barclay Court Doncaster Carr Doncaster DN4 5HZ

Tel: 01302 322633 Fax: 01302 388800 Email: [email protected] Website: www.betatechnology.co.uk

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Table of Contents EXECUTIVE SUMMARY................................ SUMMARY................................................................ ................................................................................................ ............................................................................... ............................................... 4 INTRODUCTION INTRODUCTION ................................................................ ................................................................................................ .......................................................................................... .......................................................... 6 1.

MISSION AND OBJECTIVES OBJECTIVES ................................................................ .............................................................................................. .............................................................. 7

2.1. MISSION -----------------------------------------------------------------------------------------------------------------7 2.2. OBJECTIVES ------------------------------------------------------------------------------------------------------------7 2.

DESIGN OF AN EU ETV SYSTEM ................................................................ ...................................................................................... ...................................................... 8

3.1. KEY LESSONS LEARNED FROM TRITECH-ETV -------------------------------------------------------------------8 3.2. CONCLUSIONS FROM THE INSTITUTE FOR PROSPECTIVE TECHNOLOGICAL STUDIES (IPTS) ---------- 10 3.

ORGANISATION AND MANAGEMENT MANAGEMENT ................................................................ ............................................................................. ............................................. 17

4.

MARKET ANALYSIS ANALYSIS ................................................................ ................................................................................................ ......................................................................... ......................................... 22

4.1. THE ENVIRONMENTAL TECHNOLOGIES MARKET--------------------------------------------------------------- 22 5.

STRATEGY ................................................................ ................................................................................................ ...................................................................................... ...................................................... 27

5.1. SCOPE ----------------------------------------------------------------------------------------------------------------- 27 5.2. OPERATION ----------------------------------------------------------------------------------------------------------- 30 5.3. PROMOTION ---------------------------------------------------------------------------------------------------------- 32 5.4. VERIFICATION METHODOLOGY ------------------------------------------------------------------------------------ 33 5.5. APPROVAL OF TEST CENTRES ------------------------------------------------------------------------------------ 35 6.

FINANCIAL PLAN ................................................................ ................................................................................................ ............................................................................. ............................................. 36

6.1. BACKGROUND-------------------------------------------------------------------------------------------------------- 36 6.2. EU-ETV BUDGET---------------------------------------------------------------------------------------------------- 38 7.

IMPLEMENTATION PLAN ................................................................ ................................................................................................ ................................................................. ................................. 40

APPENDIX 1: VERIFICATION VERIFICATION METHODOLOGY................................ METHODOLOGY ................................................................ ......................................................................... ......................................... 42 APPENDIX 2: COMPETENCE PROFILE FOR FOR APPROVED TEST CENTRES CENTRES .............................. 55

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EXECUTIVE SUMMARY Innovative environmental technologies are urgently needed to provide solutions to the major environmental challenges faced by Europe and the world, including: climate change, scarcity and unsustainable use of resources and loss of biodiversity. However, new technologies face difficulties in convincing the first customers and investors of their merits; their difficulty to penetrate the market or to be diffused to potential customers is a barrier to eco-innovative companies benefiting from their new technologies, to users in tapping into new technological solutions and to policy-makers in achieving policy goals rapidly and cost-efficiently. This Business Plan proposes a EU-wide Environmental Technology Verification (EU-ETV) scheme, based on the results of a recently completed pilot ETV scheme funded through the EU’s LIFE programme (Tritech ETV) and other recent studies of ETV schemes. The proposed EU-ETV scheme would provide independent and credible information on new environmental technologies, on a voluntary basis, by verifying that performance claims put forward by technology developers and vendors are complete, fair and based on reliable test results. The objectives are three-fold:




To help developers and vendors, especially SMEs, provide objective and reliable evidence on the performance of new eco-technologies arriving on the market, To support technology purchasers (public or private) base their decisions on sound information, and To facilitate the implementation of public policies and regulations in a more flexible way than traditional command-and-control mechanisms.

The EU-ETV system would begin in a few technology areas and would enlarge its scope progressively. It is proposed that the following areas will form the initial scope of the EU-ETV: 1. 2. 3. 4. 5.

Monitoring techniques Water and soils treatment technologies Renewable sources of energy and energy efficiency Air pollution abatement including GHG Clean technologies including waste and resource recycling

Together, these technology areas represent some 55% of the LCEGS industry. A management and organisation structure is proposed that is based on conclusions and lessons from recent studies and best practice. The EU-ETV will be operated on behalf of the European Commission by a publiclyfunded Central Verification Organisation (CVO), In this role, a public body would enhance the scheme’s credibility relative to a private sector body. The CVO will appoint a number of Verification Bodies (VBs) that will be thematically focused around the key technology areas listed above. These VBs could be private sector organisations and would require part public and part private financing – public financing for the general operation and overheads associated with the scheme and private financing in the form of a contribution by vendors to the costs of verification. Verification by the VBs will require the use of accredited experts in the form of Verification Panels. The size and key locations for each of the technology sectors within the scope of the EU-ETV will require a flexible approach to the establishment of thematic VBs. It is envisaged that the following numbers and locations of VBs would be required:

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Monitoring techniques Water and soils treatment technologies Renewable sources of energy & energy efficiency Air pollution abatement including GHG Clean technologies including waste & resource recycling

No. of VBs 1 2 to 3 4 to 5 1 4 to 5

Locations Central location, perhaps Belgium Germany, UK, France Germany, UK, France, Spain , Italy Central location, perhaps Belgium Germany, UK, France, Spain , Italy

The verification process in the EU-ETV scheme would not involve testing. The role of the VBs will be in verifying the data that are presented to the VB by the vendor. However, the VBs will have a role in accrediting Testing Centres and ensuring that they comply with quality and technical standards mandated by the CVO. The EU-ETV scheme will incorporate a high degree of stakeholder involvement through Technical Groups and Advisory Fora. Finally, it is envisaged that each Member State would have National Contact Points to act as an entry point for vendors, reducing geographical, language or administrative barriers by explaining to vendors the ETV concept and its benefits. The basic features of the EU-ETV would be fixed in EU legislation establishing the ETV scheme. The main documents defining the procedures followed by EU-ETV, in particular the list of technology areas covered by EU-ETV, the General Protocol and Quality Management System, and specific protocols where appropriate, should be adopted by the Commission using usual Committee procedures where Member States experts are involved. Technical standards (ISO, IEC, CEN, Cenelec) will be used extensively where available, in particular for testing methods. Standards development will be encouraged to accompany the development of EU-ETV and facilitate its wider recognition, including with non-EU programmes. A comprehensive methodology for the verification process has been developed as part of the Tritech-ETV project and it is proposed that this methodology be adopted in the EU-ETV scheme. The process would be web-enabled in order to ensure efficiency and ease of operation for the vendors and for the VBs. A budget for the operation of the EU-ETV has been estimated based on experience in non-EU ETV schemes and the Tritech-ETV pilot scheme. The EU Budget would cover the administrative cost related to the EU-ETV in the Commission (through the CVO), the costs associated with meetings of the Technical Groups and the Advisory Fora, Verification Bodies’ administration costs and subsidisation of verification costs, focused on facilitating the access of SMEs to the system. Based on the hypothesis that the number of verifications would increase progressively up to 200 over the first five years of implementation of the EU-ETV scheme (at a settled-down rate of 60 per year), the cost for the EU budget is estimated to be around €4 million Euros per year. year Finally, an outline implementation plan is presented, focusing on the key actions that are required to establish the EU-ETV scheme described in this Business Plan.

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INTRODUCTION Sustainable development is at the core of the European Union’s (EU) objectives. In October 2003, the European Council recognised the potential synergies between environmental protection and economic growth, and saw environmental technologies as the key to success in both of these areas. With this in mind, the EU adopted the Environmental Technologies Action Plan (ETAP) early in 2004. The action plan aims “to harness the full potential (of environmental technologies) to reduce pressures on our natural resources, improve the quality of life of European citizens and stimulate economic growth”1. Three main areas of action are proposed in the plan, including “Getting from Research to Market” – a priority action within this is “improving testing, performance verification and standardisation related to environmental technologies”. For a technology producer, particularly where they are an SME, it is often difficult to convince a potential investor or purchaser that their product does as they claim it does. To overcome these barriers, several verification programs have been adopted in countries outside of the EU in order to provide users of the technologies with greater certainty in their purchasing decisions. Such a mechanism, that independently and objectively validates the performance of a new product, would instil confidence in both purchasers and investors, and thus help vendors to make the step between pilot stage and commercialisation of technologies faster. These schemes have become known as Environmental Technologies Verification (ETV) systems. National verification programs have been running for almost ten years in the US, Canada and South Korea. Japan started a program in 2002, which is still in a pilot phase. Many other countries, mainly in Asia, have been contacted by the North Americans and, as a result, China is now about to launch a national verification programme based on the Canadian system. However, there is no similar technology verification approach established in Europe, despite the fact that most stakeholders consider such a scheme on a European level to be of significant importance for the dissemination of environmental technologies and for the competitiveness of this industry. As a response to this, the European Commission has been running a number of programmes to better understand how a robust ETV scheme can be best established across Europe. One such programme, Tritech ETV, has recently completed a pilot scheme for the verification of environmental technologies under funding through the EU’s LIFE programme. The main aim of Tritech ETV was to establish a working methodology for the verification of technologies in the field of waste water treatment, soil remediation and energy. A total of 15 technologies were verified during the project, the mechanisms established and evaluated and the results reported to the EC. An EU-wide ETV system would verify the performance characteristics of new environmental technologies through commonly recognised and transparent protocols. In this context, “to verify”

1

(Stimulating Technologies for Sustainable Development – An Environmental Technologies Action Plan for the European Union, 2004)

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means “to establish or prove the truth of the performance of a technology, under specific predetermined criteria or protocols and adequate data quality assurance procedures”. It is important to note that verification is not the same as certification; the scope of verification is the independent assessment of a vendor’s claims regarding the performance of their technology without making further value-based judgements of it. On the other hand, certification usually implies a guarantee that the technology meets specific standards. With new technologies, such standards may not yet exist and while certification in these cases would not be possible, verification of claims can still be made. This Business Plan draws from the lessons learned during Tritech ETV, together with lessons learned from other EU-supported projects in this area and from an examination of international best practice. The Business Plan proposes a model for an EU-wide ETV system and an outline strategy and plan for its implementation.

1. MISSION AND OBJECTIVES OBJECTIVES 2.1. Mission The mission of an EU-ETV scheme would be to provide: (i) users of environmental technologies with confidence in the technology they are investing in, and (ii) vendors of environmental technologies with an accreditation for their products. Ultimately, an EU-ETV scheme will make a substantial contribution to the competitiveness of the EU’s environmental technologies market and boost levels of investment in the development of new technologies.

2.2. Objectives The objectives of an EU-ETV scheme would be to: •

• • •

Remove key obstacles currently preventing the realisation of the full potential of environmental technologies for protecting the environment, while at the same time contributing to competitiveness and economic growth, Ensure that over the coming years the EU takes a leading role in developing and applying environmental technologies, Mobilise all stakeholders in support of these objectives, and Implement a scheme that has the minimum level of bureaucracy while assuring high technical and quality standards and engaging with a wide range of stakeholders at national and European levels.

These objectives support the overall aims of ETAP.

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2. DESIGN OF AN EU ETV SYSTEM The design of the EU ETV System described in this Business Plan is predominantly based on the outcomes of two key studies – the Tritech-ETV Pilot Scheme, of which this Plan is an output, and comprehensive analysis recently published by the IPTS. The EU ETV System described in the Business Plan draws from the key lessons learned in these two studies.

3.1. Key Lessons Learned from Tritech-ETV •

There is significant interest from technology developers and purchasers in ETV schemes based on a general lack of trust in new technologies.

•

It is imperative to understand the wider environmental, technical and commercial aspects of a vendor and their technology – i.e. to take a holistic view.

•

The expertise of the Verification Bodies and a competent Expert Group is critical during the claim definition process. In addition to the definition of the claims, there may be a need for expert s to comment on the test plan and verification report, especially if there is little or no experience of the verification of the similar technologies. A list of qualified experts of different technology areas should be produced.

•

To ensure the availability of competent experts, a system for compensation of their expenses should be developed.

•

It is important for all of the tests to have been completed prior to entering the ETV scheme.

•

Availability of suitable protocols should considerably shorten the time needed to complete the verification process. However, the range of technologies is wide and this may take a long time to achieve.

•

If the ETV system is to support a decision, technologies that serve the same function should be clustered into one protocol, not just technologies using the same technical principles.

•

The ETV system must be efficient and flexible to minimise the time required by the vendor to provide input into the process.

•

It is essential to communicate the benefits of the vendor being involved in verification.

•

At least small enterprises will need a national contact point. Some of them may have language barriers. It is also important that there is an opportunity for personal contacts and the information about the verification comes from a national organization. If possible, there should be accepted testing laboratories in all the countries involved in the scheme.

•

The benefits of EU-ETV as a European-wide verification scheme should be emphasized.

•

In addition to (or before) verification, the smaller technology vendors would need support in finding opportunities for technology piloting and/or demonstration.

•

Consideration should be given to providing additional support to SMEs.

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•

To enable a quantifiable assessment of the economic impact an ETV scheme there is a requirement to establish a baseline of information on the SMEs within a region. This information must be held centrally and periodically reviewed to understand the economic growth.

•

Impact assessment should be built into the EU-ETV scheme.

From the perspective of vendors:

•

National Contact Point (NCP) – small vendors will benefit from the network-type approach that a NCP can offer. It will also allow the vendor to interact more directly with the EU ETV governing body.

•

Offering incentives to the vendors – this could be achieved through part funding for the required verification trials. Vendors must be made aware and understand the benefits of an ETV scheme.

•

Route to verification – there should be a clear route to verification, mapped out from the start along with the perceived costs involved with the process. The time-scales involved in the process should not be prohibitive and should be well documented.

•

Administrative burden – vendors will be typically short on staff resources and therefore the administrative tasks involved should be minimised.

•

Marketing – verification certification and EU ETV logo will increase exposure for the vendor and the scheme in general.

•

International Harmonisation – ensure exposure to a wide range of markets.

From the perspective of end users:

•

Targeted marketing – making the buyers aware of the benefits involved in purchasing a verified technology.

•

Economic impact assessment – the buyer and vendor will benefit from understanding how an EU ETV has impact on growth.

•

Quality – the independent verification party and the test facility should be of high quality to ensure an EU ETV scheme demands respect.

•

Commercial credentials – the identification of wider impacts the technology has such as commercial and environmental impacts will help the end user with the procurement business case.

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Other key points arising from Tritech-ETV with regard to the design of a successful Environmental Technology Verification System are as follows: •

The government’s influential leadership is necessary at the beginning of environmental technology development. Small environmental businesses lack abilities to develop new technologies and ordinary enterprises are not active in investing in environmental technology development. Therefore, until the environment market grows to a certain size, the government’s intervention is needed to sustain the technological development.

•

Public support is important. Environmental technologies are not for manufacturing, they cannot produce visible results immediately and often quantified results are not meaningful. Without the support of civil society, it may be difficult to secure government funding.

•

Environmental technology development projects must reflect national demands as well as international demands for special environmental technologies and forecast future demands. Precise estimation of demands makes the efficient distribution and execution of budgets possible, contributes to the environmental solutions, and secures easily relevant budgets in the future. To get an accurate forecast for technology demand, specialists in broad areas must participate and share relevant information.

•

The environment market should be activated. Without this, technologies are useless. Therefore it is important to create market environment for developed environmental technologies to be utilized actively. This requires governmental intervention and support. For example, the size of the environment market can be extended by tightening environmental regulations, providing loans and tax exemption for the installation of treatment facilities, expanding the government’s purchase of environmentally friendly goods.

•

Policies for promoting environmental corporations are also important. Environmental businesses play a key role in forecasting demands for environmental technologies, developing them and selling them. However, most early-stage environmental companies are small in size and they have difficulties getting into the market. Therefore it is desirable for the government to promote various policies in order to enhance environmental companies’ own management and research capacities.

3.2. Conclusions from the Institute for Prospective Technological Studies (IPTS) The Institute for Prospective Technological Studies (IPTS) recently published a report on Environmental Technology Verification Systems2. The study undertook an analysis of international best practice and a European-wide survey amongst stakeholders. With regard to the existing, nonEuropean, programmes, these belong to either the USA (South Korea, Japan) or Canadian (China, 2

Spyridon Merkourakis, Ignacio Calleja, Luis Delgado (JRC/IPTS), Arlette Oçafrain, Sophie Laurent (JITEX), Environmental Technologies Verification Systems, JRC38236 (2007).

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Bangladesh, New Jersey) models. IPTS compared the operation of these two models, illustrated in Figures 1 and 2, and the key conclusions are as shown in Table 1. Figure 1: 1: Simplified view of the US ETV system

Figure 2: 2: Simplified view of the ETV Canada system

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Table Table 1: 1: Key conclusions from IPTS regarding the USA and Canadian models Focus

Verification Process

USA Model Market sector focus operated through specialized Verification Organisations (VOs) Verification occurs "inside" the system VOs decide, with stakeholder and vendor feedback, the type of tests that will be needed and the operational conditions that will be applied. The technology is tested, often together with other similar technologies under the same conditions. The resulting performance data are made publically available, along with the test protocols and test plans. There is no guarantee that the technology will perform to the same level under the same, or different, conditions of use.

Access to Results

Costs and Timescales

Additional

All verification related data – test plans, test protocols and verification results – are publicly accessible. The system is therefore transparent and enables comparisons to be made between competing technologies. Longer process and more expensive than the Canadian model as tests are performed within the system. However, the fee is subsidised by a governmental contribution (which varies from case to case).

The US model creates new knowledge and performance information for the market. There is extensive stakeholder involvement and, while this is time consuming, it does enhance the credibility of the system.

Canadian Model Technology focused.

The system only verifies pre-existing data, The system can give advice to vendors but it does not define the type of tests to be executed. The data would have been produced by an independent laboratory prior to submission for verification, The system can verify that the tests were done according to sound scientific and engineering practice. The system is more vendor-driven than the USA model as the verification is adapted to the vendor's claims. The technology data submitted by the vendor are examined by the system and the system verifies that the vendor’s claims are supported by those data. There is no guarantee that the technology will perform to the same level at the same or different conditions. Only the claims are published; the test protocols and the data supplied by the vendor are not made publically accessible.

As there are no tests performed, the whole procedure is faster, and the fee that the vendor pays is lower, than in the US model. However, the vendor would have already paid for the tests (or will pay for additional tests) that are not included in the costs of the verification procedure. The Canadian model does not produce new information – it simply uses previously established data in order to corroborate claims. Stakeholder input is minimal – the key interaction is between the vendor and the ETV system.

Key conclusions from the market survey conducted by the IPTS are as summarised in Table 2.

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Table 2: 2: Key conclusions from the IPTS market survey Usefulness of ETV in relation to existing systems harmonization

Feedback from respondents and Key Lessons An EU-ETV system would be useful provided: 1. Bureaucracy is kept to a minimum, and 2. A high technical level is guaranteed. A European-wide system would remove the need for technology approvals in each country. However, the meaning of verification and of the ETV logo would need to be clearly communicated to avoid confusion with current national and local technology approval systems around Europe.

Factors of success – requirements of ETV

Cooperation and collaboration with the existing verification programs in the world (USA, Canada) would be valuable. The scheme should be simple, fast and affordable for the vendors. The scheme should be widely recognised, both in Europe and worldwide, as a reliable tool to assess the quality and performance of an environmental technology and should be based on a procedure of technical excellence.

Prioritization of technologies and the question of prototypes

The EU-ETV scheme should be a public/private initiative – the public part helping achieve recognition and the private part providing the funds and assuring that the system is close to the market. The system should start off as a public initiative in which the EU and Member States take part. The program should be open to all technologies, but priority could be given to some environmental technologies on the basis that: • •

The technologies have environmental impact, There is a clear need in the market,

•

The technologies are new and innovative, and

•

The technologies are not covered by current standards of regulations.

However, heterogeneity in Europe needs be taken into account in defining priority technology areas.

SMEs versus large companies

Credibility – Market recognition

In addition to commercially-ready products, prototypes could be accepted. This could help small companies that cannot perform their tests in-house to learn about their product through testing done by a third party using well-recognised ETV test protocols. However, it is noted that testing prototypes is out of the scope of existing ETV schemes since prototypes are bound to evolve and nullify performance data gathered at earlier stages of development. Verification of a prototype also should not lead to awarding an ETV logo, and the verification report should not be published. The program should be open to all companies, SMEs or large groups, whether European or not. However, specific treatment could be applied to SMEs (through financial support and guidance) and to non-European vendors (who should not receive public funds). Recognition of the ETV scheme from the market is a crucial issue. The best ETV Team is generally considered to be a public body. A private body playing the role of the ETV Team could be credible provided it is totally independent.

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Testing laboratories must be accredited by the EU-ETV system, an essential criteria being their independence. For each technology group, there should be more than one accredited laboratory to avoid monopoly and delay in producing test data. For the Verification Organisation (VO), to be credible, it should not be directly involved in the performance testing itself, and it should have very good expertise in the technology area it is focused on. Practical considerations, or the availability of the adequate expertise, may justify the merger of the VO and the Testing Laboratory in one entity, duly audited by the ETV supervising organisation.

Test Protocols

Costs

Besides the vendors, it is important that the most relevant stakeholders of each technology category take part in the system: Member States, buyers, users, academia, trade associations, etc. The test protocols should be established by independent experts, using existing protocols as a starting point when possible. Their development should be paid for by the public part of the system (i.e. not by the vendor). However, this could be expensive for innovative technologies, which are the ones that would be expected to benefit the most from EU-ETV. Cost is a major issue for vendors who may go through the ETV program, A suggested price range between € 5,000 (not including tests – ETV Canadian-type verification) and € 25-30,000 (including tests – US ETV-type verification) was often cited. But it is a function of whether it is mandatory to go through ETV or not. A large source of the cost of verification for vendors is linked to the testing requirements. Generally, vendors feel that the verification should be subsidized, particularly for very innovative technologies since they contribute to the improvement of the environment.

The choice of the testing laboratory

Subsidies – financial support

A key issue is how to motivate vendors to go through the verification process, without its becoming mandatory. The ETV’s role in the market has to be made clear. Two opposing views were given regarding choice of the testing laboratories – either the vendor should or the vendor should not be able to pick the laboratory to do the testing. Behind this choice is the question of how the testing laboratories are accredited and monitored. Therefore it seems important to accredit testing laboratories and to regularly audit them. A strong VO (such as the US verification centre that sometimes performs most of the tests) is also a possibility. Financial help will be a strong incentive for vendors to go through the verification process. SMEs are a key target of ETV as they are often innovative but would find it difficult to pay for verification. However, whether SMEs should have special public support to go through ETV is questionable. However, size of company is not the only factor that should be considered as far as potential subsidies are concerned, with other factors being important such as: •

The environmental impact of the technology,

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• Mandatory versus voluntary schemes

Financiers

The innovative aspect, and

• The sustainable development quality of a technology. Any action by Member States that provides an advantage to verified environmental technologies would encourage the market and in effect make the scheme resemble a mandatory one. However, some vendors stressed that an EU-ETV should not be compulsory and, if it were, then it should be fully subsidized. All stakeholders should contribute financially: not only the Member States, the EC and the vendor, but also trade/industrial associations, users, regulators, environmental groups, public authorities etc. The contribution of stakeholders could take different forms from financing the verification to providing the facilities, equipment and staff for the tests.

The IPTS proposed a model for the implementation of an EU-ETV system, describing a potential organisational structure for an EU-ETV system, based on the principle that is should predominantly rely on existing structures. The model foresees a central EU-ETV team to lay the foundations of the system (scope, objectives, strategies and protocols). Although the IPTS do not judge whether this entity should be private or public, the market survey indicated that the credibility of the system would be enhanced if this entity were a public body. The vendor would interact at the level of the Thematic Verification Organisation (VO). A Network of National ETV contact points could be established to act as an entry point for vendors, reducing geographical, language or administrative barriers by explaining to vendors the ETV concept and its benefits. ETV contact points could be established in all Member States.

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Figure 3: 3: Model proposed by the IPTS • • •

EU-ETV Team

• • •

Thematic Stakeholder Group (SG)

• •

• •

Thematic Verification Organisation (VO)

If claim verification is required and if the Thematic VO does not have the necessary expertise

• • • • •

•

•

Examine the vendor data and verify if they support the accompanying claims, respecting the protocols and quality management procedures. Propose to the vendor that tests be repeated if the quality of the data is not sufficient. Write the verification report.

Help with the development and review of the verification tools, test protocols, test plans and quality management plans. Help the Thematic VO with technology prioritization and TC/VC selection.

Develop test plans and protocols. Identify technology vendors in their thematic areas that are potentially interested in the program. Review vendor applications Carry out tests, appoint other Testing Laboratories (TLs) to perform the tests, or designate Verification Centres (VCs) to verify the vendor claims. Verify the accreditation of any TLs or VCs utilised. Review and approve the verification reports. Collaborate with thematic stakeholders groups, for scientific or technical support, for guidance on market needs or selection of qualified testing laboratories, or for promotion or review purposes.

If technology testing is required and if the Thematic VO does not have the necessary expertise

Verification Centre (VC)

•

Coordinate and supervise the verification process, Be responsible for compliance with the objectives and quality management procedures, Designate thematic verification organisations (VOs), depending on the priority technology areas addressed by the program. Audit the VOs and verify that their procedures and outcomes comply with the program requirements. Communicate program activities, progress, outputs and recommendations. Award certificates and logos to successful vendors.

Testing Laboratory (TL)

•

•

•

Help in developing the specific protocols and test plans appropriate to their scope. Execute the tests, respecting the protocols and quality management procedures. Write the verification report.

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3. ORGANISATION AND MANAGEMENT MANAGEMENT The organisation of the EU-ETV described in this Business Plan has been developed along the lines of the conclusions from the studies summarised in Section 3. The verification structure is illustrated in Figure 4.

European Commission

Nominates VBs

Member States Nominate members, give mandate

Central Verification Organisation (CVO)

Applies

Technical Groups Accredits and monitors VBs

Verification Body VerificationBody Bodies Verification (VBs) Verification Panels

Peer-review, drafts joints procedures

Provide advice

Accredits

Advisory Forum: Technology purchasers and users, stakeholders Test Centres Figure 4: 4: Verification structure for the EUEU-ETV The basic features of the EU- ETV would be fixed in EU legislation establishing the scheme. The main documents defining the procedures followed by the EU-ETV, in particular the list of technology areas covered by ETV, the General Protocol and Quality Management System, and specific protocols where appropriate, should be adopted by the Commission using usual Committee procedures where Member States experts are involved.

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Technical standards (ISO, IEC, CEN, Cenelec) will be used extensively where available, in particular for testing methods. Standards development will be encouraged to accompany the development of ETV and facilitate its wider recognition, including with non-EU programmes. The role of each of the bodies identified in Figure 4 will be as follows:

Central Verification Organisation (CVO) The Central Verification Organisation (CVO) has the ultimate control of the EU ETV scheme for the whole of Europe and corresponds broadly to the EU-ETV Team identified in the IPTS model in Figure 3. While the Verification Body (VB) will gather all the necessary information and complete the verification process, this verification report will be sent through to the CVO for a final review and the verification certificate/stamp will then be issued where appropriate. The CVO will therefore: • • • • • •

Coordinate and supervise the EU-ETV scheme, Be responsible to the European Commission for compliance with the objectives and quality management procedures of the EU-ETV scheme, Designate VBs, depending on the priority technology areas addressed by the programme. Audit the VBs and verify that their procedures comply with the program requirements. Communicate program activities, progress, outputs and recommendations. Award certificates and logos to successful vendors.

The CVO will also have role in cooperating and collaborating with other verification programmes around the world.

Verification Body (VB) It is envisaged that several Verification Bodies will be set up to control the ETV scheme across individual European nations and across sectors (thematic focus). The VBs will liaise between the technology vendor and the CVO during the verification process (the vendor will not have direct communication with the CVO). The VB will be responsible for identifying and allocating appropriate test centres along with the verification panel of experts for individual technologies. All the vendor details and commercially sensitive information made available to the VB will remain wholly confidential and will not be available in the public domain. The VBs correspond broadly to the Thematic Verification Organisations identified in the IPTS model in Figure 3. Verification Bodies would be designated by Member States for a specific technology area, after accreditation by the CVO to ensure that the VBs meet the requirements of ETV, and monitoring continuously their qualifications. It should be stressed that there would not be necessarily one Verification Body per Member State: the aim is rather to have a small number of VBs, for example 2 or 3 for each of the technology areas addressed, competent for the whole European Union. Verification Bodies will operate Verification Panels. The role of the verification panels is to validate the vendor claims. The verification panel will be made up of (a minimum of three) experts selected from a predetermined pool, each having gone through a robust screening process. The experts

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selected will have particular expertise relating to the technology under verification. Within the panel there will be experts from industry (public sector and private sector) and also academic / technical experts. The role of the panel is to assess the environmental claims made by the vendor. The vendor may have included independent testing of the technology to support the claims made. The verification panel may deem that the testing information is not sufficiently robust or has not been undertaken by an ETV-approved test centre and may therefore request further testing to ensure that the claims can be verified. The Verification Bodies will therefore: • • • • • •

Develop test plans and protocols. Identify vendors in their thematic areas that are potentially interested in the program. Review vendor applications Operate Verification Panels to verify the vendor claims. Verify the accreditation of any Test Centres utilised by vendors. Review and approve the verification reports.

•

Collaborate with Technical Groups for scientific and technical support, for guidance on market needs and for promotion or review purposes.

Technical Groups In order to harmonise the procedures followed by VBs competent for the same technology area, Technical Groups would be set up by the Commission with Member State experts, in order to organise the peer-review of VBs and prepare technical guidance or protocols where appropriate. The Technical Groups correspond broadly with the Thematic Stakeholder Groups identified in the IPTS model in Figure 3. An Advisory Forum could give advice to the Commission and to the Technical groups, in particular from a customer's and stakeholder's perspective. The Technical Groups will therefore: • •

Help the VBs with the development and review of the verification tools, test protocols, test plans and quality management plans. Help the VB with technology prioritization and Test Centre accreditation.

Test Centres These must be both accredited (by the VBs) and independent. The technology vendor should identify ETV approved test centres at the early stages of their product’s development as this will minimise cost and avoid duplication of any testing down the line. The VB can help the vendor select the most appropriate test centre for their technology.

National Contact Point (NCP) NCPs will provide the vendor will an initial point of contact to obtain information about the ETV scheme, the structure, and the verification process that is undertaken. The NCP is a non technical contact that will provide pointers and an additional interface between the vendor and the appropriate VB.

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An overview of the operation of this structure is shown in Figure 5.

Figure 5: 5: An overview of the verification process

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The proposed system incorporates the key conclusions and lessons learned from the IPTS study and the Tritech-ETV pilot: •

The EU-ETV incorporates a central body, the CVO, to operate the scheme on behalf of the European Commission, similar to the ETV Teams in the US and Canadian models. It is proposed that the CVO be a publicly funded body dedicated to operating the scheme in line with the conclusions of the IPTS market study. A public body in this role would enhance the scheme’s credibility relative to a private sector body.

•

The EU-ETV will incorporate Verification Bodies that are thematically focused. These VBs could be private sector organisations and would require part public and part private financing – public financing for the general operation and overheads associated with the scheme and private financing in the form of a contribution by vendors to the costs of verification and in operating the Verification Panels. In common with the Canadian ETV model (and contrary to the US ETV model), the verification process in the EU-ETV scheme would not involve testing. The role of the VBs will be in verifying the data that are presented to the VB by the vendor. However, the VBs will have a role in accrediting Testing Centres and ensuring that they comply with quality and technical standards mandated by the CVO. The EU-ETV scheme will incorporate a high degree of stakeholder involvement through the Technical Groups and Advisory Fora. In this regard, the scheme draws from a key strength of the US ETC model relative to the Canadian model and also accords with the Thematic Stakeholder Groups in the IPTS model. It is proposed that the EU-ETV scheme accepts only commercially-ready technologies for verification, rather than prototypes. Although the IPTS survey identified some advantages in allowing prototypes to be verified, it is considered that prototype verification would generally be meaningless as prototypes evolve in a commercial product. In a similar fashion to the IPTS model, it is envisaged that each Member State would have National Contact Points to act as an entry point for vendors, reducing geographical, language or administrative barriers by explaining to vendors the ETV concept and its benefits.

•

•

•

•

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4. MARKET ANALYSIS 4.1. The Environmental Technologies Market A 2002 EC report on Environmental Technology for Sustainable Development3 took as the definition of eco-industries as “all activities which produce goods and services to measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as problems related to waste, noise and ecosystems”. Based on this definition, three categories of activities were defined: 1. Pollution management of both a preventive or remediative nature (such as reducing emissions, reducing environmental risk or clearing up environmental damage), 2. Cleaner (integrated) technologies and products - activities that continuously improve, reduce or eliminate the environmental impact of general technologies, and 3. Resource management (such as renewable energy and water supply). In 1999, the overall turnover of the EU-15 eco-industry sector was estimated at €183 billion (2.3% of EU GDP), employing some 1.6 million people. The turnover of the EU-15 eco-industries relating to pollution management, cleaner technologies and products was € 127 billion (equivalent to 1.6% of GDP), employing around 1 million people. From 1994 to 1999, turnover for the pollution management and cleaner technologies and products sectors in EU-15 grew by an average of 5% per annum in real terms (compared with an average growth of around 2.5% in GDP). Employment in this sector grew faster than turnover, at a rate of between 6 and 7% per annum4. The same report noted estimates of the size of the global market for environmental technologies of around €550 billion, with the EU making up approximately one third of this market. The USA, EU and Japan dominated the global environmental market accounting for 85% of it. A five-year update of these figures, from 1999 to 2004, has also been reported5. Total EU ecoindustry turnover in 2004 was estimated at €227 billion, from pollution management and resource management activities. Pollution management consists of nine eco-industry sectors that manage material streams from processes managed by humans (the technosphere) to nature, typically using “end of pipe” technology. It also includes cleaner technologies and products, which are mentioned in the definitions as “equipment”. In order of turnover: • •

Solid Waste Management & Recycling (€52.4 billion), Waste Water Treatment (€52.2 billion),

3

European Commission, “Environmental technology for sustainable development”, COM(2002) 122 final (2002) 4 Ecotec Research and Consulting Ltd, Analysis of the EU Eco-industries, their employment and export potential", (2002). 5 Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU, DG Environment, September 2006.

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• • • • • • •

Air Pollution Control (€15.9 billion), General Public Administration (€11.5 billion), Private Environmental Management (€5.8 billion), Remediation & Clean Up of Soil & Groundwater (€5.2 billion), Noise & Vibration Control (€2 billion), Environmental Research & Development (€0.11 billion), and Environmental Monitoring & Instrumentation.

Resource management includes five eco-industry sectors that take a more preventive approach to managing material streams from nature to the technosphere: • •

Water Supply (€45.7 billion), Recycled Materials (€24.3 billion),

• • •

Renewable Energy Production (€6.1 billion), Nature Protection (€5.7 billion), and Eco-construction.

Table 3: Total Turnover, Pollution Management and Resource Management Expenditures Expenditures by Country, 2004

Total employment, direct and indirect, in eco-industries in 2004 was estimated to be 3.4 million, 2.35 million from pollution management activities and 1.04 million from resource management activities. Overall, eco-industry jobs accounted for 1.7% of EU-25 employment.

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Total 2004 turnovers for the Pollution Management and Resource Management sectors by Country, are presented in Table 3. More recently, a study conducted by Innovas for the UK’s Department for Business Enterprise & Regulatory Reform (BERR) on the Low Carbon and Environmental Goods and Services (LCEGS) industry present some interesting figures6. The report defines the LCEGS sector as including solutions for problems such as air, noise, and marine pollution, land and water contamination, environmental analysis, waste management and recycling and now, renewable energy and emerging low carbon activities. The global market value for the LCEGS industry for 2007/8 was estimated to be around €3,350 billion, significantly greater than the figure for ‘environmental technologies, estimated in the Ecotec report for 1999. The global market is forecast to grow by 45% from 2007/8 to 2014/15, with a potential global market value of €4,860 billion. The international breakdown is shown in Table 4. Table 4: International breakdown of market value of the LCEGS industry Region

Market value €bn *

% global total

Asia and Far East Americas

1,263 1,008

37.7 30.1

Europe (incl. Non-EU) Africa Oceania

912 126 41 3,350

27.2 3.8 1.2 100.00

* Converted from UK Pounds Sterling at an exchange rate of 1.1 Euros to the Pound

Asia and the Far East have 37.7% of the value of the global LCEGS market. This is followed by the Americas and then Europe. Together, these three regions account for 95% of the global total. Africa and Oceania account for only 5% of the global total. The report further breaks down the global market value of the Environmental, Renewable Energy and Emerging Low Carbon sectors, as shown in Table 5. Table 5: 5: Global market value of LCEGS by sector

6

Market value €bn

% global total

Environmental sector Renewable Energy sector Emerging Low Carbon sector

723 1,034 1,593

21.6 30.9 47.5

Total

3,350

100.00

Innovas/BERR. Low Carbon and Environmental Goods and Services: an industry analysis. 6 March 2009.

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The traditional Environmental sector accounts for 21.6% of the global market value. This is a smaller share than either of the newer Renewable Energy and Emerging Low Carbon sectors, with 30.9% and 47.5% of the global market value, respectively. It is clear that the Renewable Energy and Emerging Low Carbon sectors are no longer on the fringe of environmental products and services, but are both larger and faster growing than the traditional Environmental sector. In terms of individual technologies, these are shown in Table 6. Table 6: Breakdown of market value of the LCEGS industry by technologies Market value €bn

% global total

Alternative Fuels

620.3

18.51

Building Technologies Wind Alternative Fuels for Vehicles Geothermal Water & Waste Water Treatment Recovery and Recycling Photovoltaic

429.5 386.6 374.1 304.0 260.3 205.3 156.2

12.82 11.54 11.17 9.07 7.77 6.13 4.66

Waste Management Biomass Energy Management Additional Energy Sources Carbon Finance Air Pollution

155.4 154.2 80.4 39.8 34.8 31.0

4.64 4.60 2.40 1.19 1.04 0.93

Contaminated Land Environmental Consultancy Renewable Consulting Carbon Capture & Storage Hydro Noise & Vibration Control Environmental Monitoring

29.5 25.9 16.7 14.6 14.0 6.9 4.8

0.88 0.77 0.50 0.44 0.42 0.21 0.14

Marine Pollution Control Wave & Tidal TOTAL

3.9 2.2 3,350

0.12 0.06 100.00

The smallest sub sector is Wave and Tidal with 0.06% of the global total, followed by Marine Pollution Control with 0.12%. Overall, manufacturing activities account for 32% of the global market value. The report focused on the UK market and found that the size of the LCEGS sector in the UK is £105.6 billion, with 54,835 active companies, of which 17,303 are involved in manufacturing, and 881,000 jobs. Around 91.5% of the companies in the sector are SMEs. The UK turnover for the LCEGS sector represents about 12.85% of that for Europe as a whole. Based on the assumption that the UK market structure is typical of that for Europe, we can estimate that the number of active Page 25

companies in the Europe in the LCEGS industry is around 427,000, of which 135,000 are involved in manufacturing. The breakdown of the LCEGS industry figures by EU country is shown in Table 7 and illustrated in Figure 6. About 60% of the industry is located in Germany, UK, France, Spain and Italy. European uropean country Table 7: Breakdown of market value of the LCEGS industry by E Country

Value €bn

%

Germany United Kingdom France Spain Italy Netherlands Poland Belgium Sweden Austria Greece Romania Portugal Czech Republic Denmark Finland Hungary Ireland Rest of Europe (Incl. Non-EU)

140 117 102 92 90 28 26 18 15 15 13 11 10 10 10 9 9 7 188

Totals

912 100%

Cum %

15.4% 15.4% 12.9% 28.3% 11.2% 39.5% 10.1% 49.5% 9.9% 59.4% 3.1% 62.5% 2.9% 65.4% 2.0% 67.4% 1.6% 69.1% 1.6% 70.7% 1.4% 72.1% 1.2% 73.3% 1.1% 74.4% 1.1% 75.5% 1.0% 76.5% 1.0% 77.5% 1.0% 78.5% 0.8% 79.3% 20.7% 100.0%

Figure 6: Distribution of the LCEGS industry by European country

Germany United Kingdom France Spain Italy

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5. STRATEGY 5.1. Scope The EU-ETV would accept technologies ready for commercialisation, ideally in the early stages of commercialisation, in business-to-business relations (not consumer products): industrial products, equipments and processes. Technologies at design or development stage would not be accepted as their performance may not be representative of commercialised technologies. As noted in Section 3, testing prototypes is also outside of the scope of existing non-European ETV schemes since prototypes are bound to evolve and nullify performance data gathered at earlier stages of development. The EU-ETV system would begin in a few technology areas and would enlarge its scope progressively. As highlighted in Table 2, priority should be given to some environmental technologies on the basis that: • • • •

The technologies have environmental impact, There is a clear need in the market, The technologies are new and innovative, and The technologies are not covered by current standards of regulations.

On this basis, the following areas (and examples) will form the initial scope of the EU-ETV: 6. Monitoring techniques
Air emissions sensors, analysers and monitors,
Water monitoring techniques, including test kits, probes, analysers,
Soils monitoring, pollution detection and measurement, sampling devices. 7. Water and soils treatment technologies
Drinking water techniques, such as filtration or disinfection,
Wastewater treatment, separation techniques, nutrient reduction, disinfection,
Soils remediation techniques. 8. Renewable sources of energy and energy efficiency
Micro-turbines, Fuel cells, Biomass burners and boilers,
Combined Heat and Power, Heat pumps, cooling systems,
Photovoltaic systems and equipments, solar water heaters,
Wind energy equipments, sea energy systems and equipments (tidal, wave). 9. Air pollution abatement including GHG
Abatement of pollution from stationary sources, indoor air quality products,
Technologies related to the combustion of fossil fuels (mobile sources devices),
Technologies related to the combustion of waste, Page 27


Technologies, equipments and systems for Carbon Capture and Storage. 10. Clean technologies including waste and resource recycling
Buildings materials, energy efficiency in buildings,
Cleaner or low-carbon industrial processes, coating equipments,
Environmental technologies in agriculture,
Separation or sorting techniques for solid waste (vehicles, plastics, metals),
Recycling techniques for batteries and accumulators, for chemicals. The global and European market values for these technology areas can be estimated from the figures given in Table 6, as shown in Table 8. Table 8: 8: Estimated market values values of the priority technology areas Global market value €bn Monitoring techniques Water and soils treatment technologies Renewable sources of energy and energy efficiency Air pollution abatement including GHG Clean technologies including waste and resource recycling Total * Based on 27.2% of the global market

4.8 289.8 713.2 45.6 790.2 1,843.6

Europe market value €bn* 1.31 78.83 193.99 12.40 214.93 501.46

Together, these technology areas represent some 55% of the LCEGS industry. Based on the company numbers estimated in Section 5, the number of companies in each of the priority technology areas in Europe would be estimated as shown in Table 9. Table 9: 9: Estimated numbers of companies in the priority technology areas No companies in Europe

Monitoring techniques Water and soils treatment technologies Renewable sources of energy and energy efficiency Air pollution abatement including GHG Clean technologies including waste and resource recycling Total

612 36,822 90,614 5,793 100,396 234,237 234,237

No of manufacturing manufacturing companies in Europe 193 11,619 28,593 1,828 31,680 73,913

It is therefore estimated that some 74,000 companies, those that are involved in the manufacture of LCEGS technologies in the priority technology sectors identified, could be targeted by the EU-ETV scheme. Of these, some 60% would be expected to be located in Germany, UK, France, Spain and Italy and some 90% of them would be expected to be SMEs. Based on these figures, and those presented in Section 5, the breakdown of numbers of companies by EU Member States is shown in Tables 10 and 11. Page 28

Table 10: Estimated numbers of companies in the priority technology areas Country Germany United Kingdom France Spain Italy Netherlands Poland Belgium Sweden Austria Greece Romania Portugal Czech Republic Denmark Finland Hungary Ireland Rest of Europe (Incl. Non-EU)

Priority Technology Areas No. Manuf. No. Companies Companies 36,059 11,378 30,163 9,518 26,257 8,285 23,541 7,428 23,174 7,312 7,312 2,307 6,775 2,138 4,689 1,480 3,841 1,212 3,742 1,181 3,332 1,052 2,725 860 2,679 845 2,561 808 2,442 771 2,326 734 2,326 734 1,868 590 48,425 15,280

Totals

234,237

73,913

These figures illustrate the fact that a flexible approach needs to be taken with respect to the specification, number and location of the Verification Bodies. In particular, the Monitoring Techniques technology area appears to be rather small (and this should, perhaps be validated further), and would warrant only a single VB covering the whole of the EU. On the other hand, the Clean Technologies area (including waste and resource recycling) is clearly a large theme that would warrant a number of VBs based in the key countries with large sectors in this area. Based on these analyses, the following suggestions can be made with regard to the numbers and locations of VBs. Where areas have multiple VBs, these could focus on sub-sectors of the technologies or take a comprehensive view of their sectors and be more geographically focused.

Monitoring techniques

No. of VBs 1

Water and soils treatment technologies Renewable sources of energy & energy efficiency

2 to 3 4 to 5

Air pollution abatement including GHG

1

Clean technologies including waste & resource recycling

4 to 5

Locations Central location, perhaps Belgium Germany, UK, France Germany, UK, France, Spain , Italy Central location, perhaps Belgium Germany, UK, France, Spain , Italy

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Table 11: Estimated numbers of companies in each of the priority technology areas Number of Manufacturing Companies in each Technology Area Water/ Soils Renewable Country Monitoring Air Pollution Clean Tech. Treat Energy 30 1,789 4,402 281 4,877 Germany 25 1,496 3,682 235 4,079 United Kingdom 22 1,302 3,205 205 3,551 France 19 1,168 2,874 184 3,184 Spain 19 1,150 2,829 181 3,134 Italy 6 363 893 57 989 Netherlands 6 336 827 53 916 Poland 4 233 572 37 634 Belgium 3 191 469 30 519 Sweden 3 186 457 29 506 Austria 3 165 407 26 451 Greece 2 135 333 21 368 Romania 2 133 327 21 362 Portugal 2 127 313 20 346 Czech Republic 2 121 298 19 330 Denmark 2 115 284 18 315 Finland 2 115 284 18 315 Hungary 2 93 228 15 253 Ireland 40 2,402 5,911 378 6,549 Rest of Europe (Incl. Non-EU) Totals

193

11,619

28,593

1,828

31,680

5.2. Operation From the point of view of the applicant, technology developer or vendor presenting a technology to ETV, the main relationship will be with a Verification Body (VB) competent for the relevant technology area (in his or another Member State). National Contact Points (NCPs), established by Member States, may facilitate the first contacts and advise applicants, especially SMEs, on the appropriateness and best use of ETV for their specific project. Test Centres will be involved if additional tests are required to verify the claim. From the perspective of the applicant, the general organisation of the scheme can be represented as in Figure 7. Two important aspects should be noted: •

The ETV process will be based on vendors’ claims, not pre-defined criteria, but the claims will be reviewed to ensure that they can be verified by quantitative methods, that they relate

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to the main environmental impacts in a life-cycle approach and that they are useful for technology users and purchasers (enabling comparisons), and •

The testing phase will not be included in the EU-ETV system (similarly to the Canadian ETV model); as such, the applicant would provide reliable, independent test results in the application phase; if further tests are needed, the applicant will be free to choose the Test Centre provided that quality and independence of tests are ensured (i.e. it has been accredited by the VB).

Commission

Contact point Verification Body

Optional (to establish contact)

Registration of verification statements

Verification procedures

Technology Vendor

Testing Laboratory If additional tests needed

Figure 7: An overview of the organisation of the scheme from the perspective of the applicant applicant

The general procedure envisaged for the EU-ETV system can be represented in Figure 8. The final result of verification would be a Verification Statement summarising the technology and performance claim that has been verified, the conditions under which the claim is valid and the procedures followed, and all information necessary to understand the Statement. This would be used in business-to-business relations and would be recognised in all EU Member States and by public administrations. In future, mutual recognition of ETV programmes could make it possible to have ETV Statements recognised globally. It is proposed that the EU-ETV scheme be a voluntary scheme, at least at the outset. This will enable the scheme to settle down to a large degree and for the CVO and VBs to better understand their capacity constraints in running the scheme. It is also considered that, once running, the EUETV scheme will impart a competitive advantage to verified technologies and therefore that market forces will encourage vendors to participate in the scheme as a matter of course.

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Contact phase Vendor contacts a Verification Body directly or through a contact point

Application phase Vendor provides all relevant information, including available test results and a draft claim If further tests are needed Claim definition and review Verification Body reviews claim, available data and assesses whether further tests are needed

Testing phase Elaboration of test plan Implementation of tests Test report

Assessment phase Final review of data Drafting and review of verification report

Publication phase Approval and publication of Verification Statement

Figure 8: An overview of the scheme from the perspective of the applicant

5.3. Promotion The promotion of the scheme will fall to several organisations and promotional activities would need to be coordinated carefully to ensure that consistent messages are presented to the market. In the first instance, promotion of the EU-ETV would be the responsibility of the CVO, acting on behalf of the European Commission. As the scheme becomes established, it is envisaged that the VBs will take a more proactive role in promotion in their areas of technology focus, acting in conjunction with the Technical Groups that will be set up. Finally, the NCPs in each Member State will have an important role to play in promoting the EU-ETV within their own geographical territories.

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5.4. Verification Methodology A comprehensive methodology for the verification process has been developed as part of the Tritech-ETV project and it is proposed that this methodology be adopted in the EU-ETV scheme. The process would be web-enabled in order to ensure efficiency and ease of operation for the vendors and for the VBs. 5.4.1. Introduction to the methodology The primary objective of the verification methodology is to gather the environmental claims for a specific technology which are made directly by the technology vendor. It will also be important to gather any evidence that the technology vendor may have obtained regarding a specific claim. In addition to capturing the environmental claims about a technology, the verification process will be set up to capture commercial, environmental and technical information relating to the technology undergoing verification. The vendor will be expected to complete a series of generic questions regarding the company and technology, and also input additional information regarding the commercial viability of their technology, the environmental impact, and the technical robustness. It is understood that some vendors will not be able to provide all the information that is requested in the questions, failure to complete every question will not result in overall failure from the verification process. In the first instance, the claims put forward and completion of the model will formally act as an application to the ETV scheme, and also provide information which is necessary to select whether the vendor is at the correct stage of development to participate. The core of the model will be a web-based document made accessible through a secure EU-ETV website and vendors will be given a username and password to allow the document to be completed over a number of visits. The commercial, environmental and technical information will be gathered as information to support the environmental claims made by the vendor and will remain under confidentiality throughout the process. The supporting information will be used by the expert Verification Panel as part of the necessary due diligence during technology verification. Gathering all the information at this stage will reduce the requirement for the vendor to be in contact with the Verification Panel therefore accelerating the validation process. The results from each section of the model give an overview of the overall commercial, environmental and technical credentials of the technology. The inherent commercial, environmental and technical aspects of the technology will be vetted during the verification process to ensure technologies that have an overall negative impact are flagged up to the Verification Body. 5.4.2. Selection To ensure that the robustness of the EU-ETV scheme is maintained, each technology vendor that is looking to enter the EU-ETV scheme will need to go through a pre-determined selection process.

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The selection process will ensure that technology vendors are only entering the scheme when they are at the correct stage of development and are commercially ready. The vendor will be required to complete a range of commercial, technical and environmental questions that are critical to the EU-ETV scheme. This forms the application on to the scheme while providing the Verification Body with the necessary information to select whether the vendor can enter the scheme. Once the vendor is successful they will be asked to complete more detailed probing questions about their company and the specific technology, the vendor will also be asked to document the environmental claims that they are looking to have verified. This information will then be used by the Verification Panel through the main claims-based verification process. 5.4.3. Process The model is designed to gather all the relevant supporting data that the Verification Panel require when assessing a technology; a fully populated model will accelerate the verification process as all information is available. Some vendors may not have all the data to comprehensively populate the model. This will not penalise the vendor but further information may be requested once the verification process is underway. The detailed process is described in Appendix 1. The model is made up of a series of questions that fall into four main categories: • • • •

Personal, Commercial, Environmental, and Technical.

Each set of questions has been designed to withdraw information about the vendor and the specific technology. Although the Verification Panel has the principal role of verifying the environmental claims associated with the technology, the questions relating to the commercial, environmental and technical attributes of the technology have been established to enable the Verification Panel to have a wider understanding of the vendor and technology as support through the verification of claims. The model has been developed with an element of scoring, to allow for an objective aspect to the model. Each vendor has different characteristics and, therefore, there is no desired score that must be met to be considered for the verification certificate. The vendor will be asked to complete as many questions as possible. A comprehensive model will generally reduce the required time for the Verification Panel to make a decision. Once the Verification Panel has been through all the information gathered within the model, a decision will be made as to the level of verification required for the environmental claims made. The vendor may have already been through significant testing at an accredited Test Centre and the data

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gathered in the model along with a test certificate may be sufficient to allow the Verification Panel to make a decision on verifying the environmental claims. The scoring matrix will be accessed only by the Verification Panel. The scoring matrix will be automatically populated when the vendor completes the sections of the model. The scoring matrix will automatically populate the answers to any questions that have a definitive answer. There are many questions that allow the vendor to enter free text. The scoring is not designed to take an objective view of all the answers given as the Verification Body will have the expected attributes to assess the answers accordingly. The scoring matrix gives details of how many points are available per question to allow the Verification Panel to assess the scoring capabilities. The scores assigned document will also be a closed document that can only be accessed by a Verification Panel. The scores assigned document is a simpler version of the scoring matrix, which will just give the scores that the technology has received, giving no reference to all the available results. The Verification Panel can use the scores assigned document as a quick reference point; this document also calculates the final scoring that the technology will receive. Adding certain weighting criteria to a question is a way to help identify to the Verification Panel the most pertinent questions which hold the most credibility. The weighting will be automatically applied to the scoring to give the vendor more credit for achieving a specific level.

5.5. Approval of Test Centres Test Centres will be accredited by the Verification Bodies (VBs) and the VBs will also undertake ongoing monitoring and audit of Test Centres to ensure that they continue to comply with quality and technical standards set by the CVO. The competence profile envisaged for Test Centres is given in Appendix 2. A process for calling for Test Centres to express an interest in being accredited for the EU-ETV scheme will need to be undertaken during the initial implementation phase.

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6. FINANCIAL PLAN 6.1. Background The IPTS study looked in detail at the costs of operating the US ETV scheme and some of the analysis is useful for informing the development of a financial model for the EU-ETV scheme. The total costs in the US ETV system over time are shown in Figure 9. Verification costs include:

technology solicitation and selection, development of technology specific test and quality assurance plans, technology testing, quality assurance and evaluation and development of verification reports and statements.

Centre support includes:

stakeholder activities and meetings, development and maintenance of the quality management system, technology prioritization, evaluation and outreach, privatization (i.e. subcontracting) and other general and management costs. The costs attributed to stakeholders do not include any remuneration, since the stakeholders volunteer their time. In some cases technology prioritization costs are included in the stakeholder related costs. Evaluation and outreach costs include information diffusion costs.

Figure 9: 9: Total costs and vendor contribution contribution in the US ETV system The rise in costs at the beginning relate to when the system was being set up and this was followed by a relatively stable period from 1999 to 2004. The fall in costs in the later period relate to a Page 36

diminution of the system's funds. The costs expended by vendors (excluding in kind contributions) vary between 10% and 18% of the verification costs. With regard to the EU-ETV scheme, the relevant period to focus on is that for the period 1999 to 2004, during which the costs were relatively stable. Figure 10 shows the average distribution of centre support costs during this period. On average, 33% of the costs were dedicated to information diffusion. 28% to stakeholder related expenses. 21% to general and management costs and the remaining 18% was shared between prioritization, quality management and privatization (i.e. subcontracting).

Figure 10: 10: Average distribution of centre support costs in the US ETV system

With regard to verification costs, Figure 10 shows how these are distributed across various activities in the US ETV system during the stable period. Testing was always the most expense element (35%), followed by the development of verification reports (20%), test plans (18%) and protocols (16%). Technology solicitation and selection, and audit costs were the least expensive, at 6% and 5% of total verification costs, respectively. The US ETV system is a useful comparison for the EU-ETV system due to the similar sizes of the US and EU economies and of the US and EU LCEGS industries. In particular, the centre costs for the EU-ETV system would be expected to be broadly similar to those experienced by the US ETV system, though the Member State structure in the EU may impose some higher overheads. Nevertheless, it is reasonable to assume that the centre costs (relating to the costs of the CVO and overhead activities of the VBs in the EU-ETV scheme) would be expected to total around €2 million per year.

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With regard to verification costs for the EU-ETV scheme, these cannot be immediately compared with the US ETV system since the latter scheme incorporated testing as part of the verification process whereas the EU-ETV scheme will not. In addition, the development of verification reports in the US ETV system would be expected to be higher than it will be in the EU-ETV scheme since the US scheme required very detailed verification reports that were edited and published and publicly accessible. Taking out the testing element (35%) and allowing for lower costs of the verification reporting, it can be seen that the verification costs are slightly higher than the centre costs, and it would be reasonable to assume that the verification costs would total around €2.5 million per year.

Figure 10: 10: Average distribution of verification costs costs in the US ETV system In total, by February 2007, more than 380 verifications had been completed in the US ETV system.

6.2. EU-ETV Budget Experience in the US ETV and Canadian ETV systems and in the Tritech-ETV pilot scheme has shown that the cost of verifications vary a great deal depending on the technology area, the complexity of the technology itself and the availability or not of test results of good quality from the beginning. Based on these experiences and on (non-ETV) systems in the EU, preliminary costs estimates are in the order of €50,000 to €90,000 €90,000 per verification. This includes all fixed costs of the system (costs of staff to run the system, cost of establishing protocols and quality systems) but it does not include testing, which would be undertaken outside of the system and with highly variable costs. Based on an average of €70,000 per verification, and assuming a bedded-down run rate of 60 verifications per year, the cost per verification excluding the centre costs would be around €40,000 €40,000 per verification. It would be expected that the applicants would make a contribution to these costs as

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a fee for the verification service. The objective is to limit this final cost to applicants to the order of €15,000 €15,000 per verification. Based on these figures, a budget for the operation of the EU-ETV can be estimated as shown in Table 12. This gives an estimate of the costs to the EU budget and it assumes that costs related to Member States’ administration (notifying and accreditation bodies, participation in EU-ETV committee and technical groups) and the setting-up of contact points for SMEs would be borne by Member States’ budgets. The EU Budget would therefore cover the administrative cost related to the EU-ETV in the Commission (through the CVO), the costs associated with meetings of the Technical Groups and the Advisory Fora, Verification Bodies’ administration costs and subsidisation of verification costs, focused on facilitating the access of SMEs to the system. Based on the hypothesis that the number of verifications would increase progressively up to 200 over the first five years of implementation of the EU-ETV scheme (at a settled-down rate of 60 per year), the cost for the EU budget is estimated to be around €4 million Euros per year. year Table 12: Estimated cost to the EU budget for the first five years of operation of EUEU-ETV Year 1 Number of verifications completed

Year 2 5

Year 3

Year 4

25

50

VERIFICATION COSTS Less contribution from vendors Net Verification costs

€ € €

200,000 € 75,000 € 125,000 €

1,000,000 € 375,000 € 625,000 €

CENTRE COSTS(CVO + VB Overheads) Initial set-up costs

€

1,000,000 €

500,000 €

Operational Costs Information diffusion Stakeholder management General management Prioritisation Quality management Sub-contracting Total Operational Costs

€ € € € € € €

825,000 700,000 525,000 200,000 150,000 100,000 2,500,000

Total Net Costs

€

3,625,000 €

€ € € € € € €

825,000 700,000 525,000 200,000 150,000 100,000 2,500,000

Year 5

€ € € € € € €

3,625,000 €

60

60

2,000,000 € 750,000 € 1,250,000 €

2,400,000 € 900,000 € 1,500,000 €

-

-

825,000 700,000 525,000 200,000 150,000 100,000 2,500,000

€

€ € € € € € €

3,750,000 €

2,400,000 900,000 1,500,000

-

€

825,000 700,000 525,000 200,000 150,000 100,000 2,500,000

€ € € € € € €

825,000 700,000 525,000 200,000 150,000 100,000 2,500,000

4,000,000 €

4,000,000

Support to the Verification Bodies could be provided through multi-annual grants, covering the establishment of EU-ETV procedures, participation in Technical Groups and the provision of support to SMEs for example through reduced fees or technical support. Initial set-up costs relate to one-off costs associated with establishment of the system, IT costs for creating the verification tool and procurement costs associated with selecting VBs etc.

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7. IMPLEMENTATION PLAN The outline implementation plan for the EU-ETV scheme is presented in Table 13. This plan remains at a high level and relates predominantly to the initial implementation actions. Annual plans would need to be developed by individual VBs recruited into the system as part of the procurement process and related to their specific technology areas.

Table 13: Outline implementation plan for the EUEU-ETV Activity Activity Initiation

SetSet-up of Central Verification Organisation (CVO)

Actions Required •

Implement EU instrument for establishing the scheme.

•

•

Develop the main documents defining the procedures to be followed by the EU-ETV.

•

•

Adopt EU-ETV procedures using usual Commission Committee processes, including engagement with Member States’ experts.

Months 4 to 6

Month 6 Months 6 to 8

•

CVO established.

•

Implement set-up actions for office and secretariat function.

•

Secretariat function implemented.

•

Develop detailed operational plans and procedures. Develop and implement verification tool.

•

Detailed operational plans and procedures. Verification tool developed and tested.

Months 6 to 9

•

Implement procurement process for recruitment of VBs.

•

Procurement process for VBs.

Months 6 to 7

•

Implement set-up actions for individual VBs.

•

VBs recruited.

•

Individual operational plans for VBs.

Month 8 Months 8 to 9

•

Develop individual operational plans for each VB that link into CVO overall operational plan.

Months 6 to 9

•

CVO and VBs to identify key stakeholders for membership in Technical Groups and Advisory For a.

•

Database of stakeholders for each technology area.

Months 6 to 9

•

Implementation of Technical Groups and Advisory Fora.

•

Technical Groups and Advisory Fora established.

Months 9 to 10

• Accreditation process for Test

Key procedures documented, in particular: o List of technology areas covered, o General Protocol and Quality Management System, and o Specific protocols where appropriate.

Establish CVO and recruit key staff.

•

Recruitment of Technical Groups and Advisory Fora

EU instrument implemented.

Timing Months 1 to 6

•

• Procurement of Verification Bodies (VBs)

Deliverables

•

Develop accreditation process for Test Centres.

Quarterly

Meeting minutes.

•

Accreditation process.

•

Expressions of interest

Months 9 to 10 Months 9 to 10

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Centres

•

• Promotion of scheme

•

•

•

•

Operation of EUEU-ETV

CVO undertake initial promotional activities among Member States at Commission level. Member States to identify National Contact Points and set-up contractual arrangements with NCPs. VBs to undertake promotional activities among their technology areas of focus. NCPs to undertake promotional activities within their geographical territories.

•

CVO operate according to CVO operational plan.

•

VBs operate according to individual VB operational plans.

•

Monitoring and evaluation of scheme and impacts

Individual VBs undertake expression of interest process to recruit Test Centres in their technology fields. Undertake accreditation process and select accredited Test Centres.

•

•

exercise completed. Network of accredited Test Centres.

•

• Promotional activities by CVO completed.

Months 6 to 12

• NCPs established in each Member State.

Months 6 to 12

• Promotional plans from each VB.

Months 8 to 12

• Promotional plans from each NCP.

Months 8 to 12

• Results from promotional activities by VBs.

Quarterly

• Results from promotional activities by NCPs. •

Deliverables according to CVO operational plan.

•

Deliverables according to individual VB operational plans.

•

Deliverables according to NCP operational plans.

NCPs operate according to plans agreed within their Member States.

Undertake a mid-term evaluation of the EU-ETV scheme, including preliminary measurement of impacts (environmental, social, and economic).

Months 11 to 12

Quarterly As per CVO, VB and NCP operational plans

• Mid-term evaluation of EU-ETV, including impacts.

Months 24 to 30

• Five year review of EUETV, including impacts.

Months 54 to 60

Undertake five year review of the EUETV scheme and its impacts.

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APPENDIX 1: VERIFICATION METHODOLOGY METHODOLOGY The methodology has been developed to provide supplementary information in addition to the independent testing reports. The methodology has been created with the intention of establishing a set of commercial, environmental and technical criteria by which future EU-ETV applicants can be assessed. This will provide the Verification Panel with a better understanding of the wider impacts surrounding the use of the technology in question. The responses will be scored using a combination of coded algorithm and expert judgement. It is important to note that the score is meant to provide a quantitative indication of the suitability for the company to pass through the ETV process, thereby forming a part in the final determination. The key elements and information required from the vendor in the EU-ETV methodology is detailed below: I.

Vendor Details This forms the first section of the model and the information given will be used to formally accept the vendor onto the ETV scheme. Country of Origin As the ETV scheme is European-wide, there will be an option for the vendor to select the country that the company is registered in, the language that is predominantly written for business practice and the currency used for business transactions. The origin of the company will also provide the EU with useful statistics allowing it to better understand the uptake of the project across Europe. Personal Details This section will give the vendor the opportunity to enter the name of the company, a contact within the company, the name of the technology entering the scheme and finally the contact details. This information will be kept confidential by the VB and will form the official application onto the EU-ETV scheme. Employee numbers The number of employees and a breakdown of the numbers with regard to the different departments within the company will be used by the Verification Panel to infer the size of the company. The size of the company will be used to determine the level of detail that will be expected from the vendor. The breakdown of employees will give an understanding of the team dynamics. Previous ETV engagement As there are currently ETV schemes in Canada, America, Japan and South Korea, it is possible that a technology could have applied to another ETV scheme. This will not affect the eligibility for the EU ETV scheme. Supplying the VB with a verification report from another ETV scheme will aid the Verification Panel in assessing the claims made by the vendor. Technology specific validations There are many European-wide and governmental schemes that a vendor can associate their new technology with to increase market exposure. For example, specific technologies could be represented on the Energy Technology List or certain product groups may have to conform to the European-wide CE mark. All these schemes have their place and therefore the model will ask for the vendor to document what schemes the technology is associated with or what validations the technology may have received.

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Technology Definition The vendor is to specify which technology area best describes the technology that is entering the ETV scheme. This information will be used by the VB to assign an expert Verification Panel and also suggest Test Centres that will be best placed to further assess the technology, if required. •

Technology Types The vendor will be asked to make a selection of Technology Types, which will depend on the VB being used.

•

Market Sectors The vendor will be asked to make a selection of Market Sectors, which will depend on the VB being used.

•

Definitions To ensure that the vendor selects the correct technology type and market sector, further definitions will be given. Definitions will be categorised by market sector, each sector will be defined and an example technology type relating to the market. The vendor will be required to select the best suited option from the drop down menus. The vendor can make a note in the ‘brief description’ section if their technology cannot be categorised.

Brief Description The vendor will be given a limited 150 words to briefly describe the technology that is to enter the scheme. This section should be utilised by the vendor to explain the technology to a level that the preceding questions have not reached. The vendor should be giving a general overview of the technology, what is new or novel about the technology, how it is beneficial to the market sector that has been previously selected and brief details of any existing demonstrations or case studies. There will be an opportunity for vendors to upload further technical documentation relating to the technology further into the model. The vendor will be encouraged to upload further documentation but this will be limited to 4MB. II.

Claims ClaimsClaims-Based Model The EU ETV scheme is a claims-based scheme which is dependent on the vendor providing rational and calculated environmental claims pertaining to the specified technology. The vendor claims must refer to the environmental benefits of using the technology. Any claims made that are not deemed to refer to the environmental benefits will not be considered by the Verification Panel during the process. Detailing Environmental Claim The vendor must enter clear and concise claims into the available predefined area, a single claim should not be spaced over two sections. Claims should be entered separately and should contain quantifiable amounts where appropriate. Any units used within the claims should be in accordance with the International System of Units or SI. A single claim must stay within the textbox available, the vendor should not go into great detail and it should remain concise ensuring only the pertinent information is displayed. The vendor will be given the opportunity to upload supporting documentation and therefore any further information should be uploaded.

Quantity of claims The vendor can make up to 10 environmental claims. It is not deemed necessary to use all the possible claims available, this is just a guide. The number of claims will be capped as verifying more than 10 claims will significantly increase the time and cost of the process as the verification panel will have to be employed to ensure each claim has been validated within optimum conditions available. An increasing number of claims will ultimately increase the cost to the vendor. Each claim will require the supporting test data to enable the expert panel to validate the claims. Supporting Documentation The vendor will be encouraged to upload any supporting documentation that they may have available. This may be independent testing which has been completed prior to application to validate the claims made. The supporting documents may also include any case studies of

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demonstrations that may currently be in the market. The case study may also show some in-situ testing that helps validate the claims made. The verification panel will use all the supporting evidence when validating the claim. Again, all data that is uploaded will be treated as confidential. The upload limit for supporting documentation will be capped at 2MB per claim. III.

Commercial Commercial The vendor will be asked to complete a series of questions relating to the commercial credentials of the company in relation to the specific technology. The commercial information is being gathered to give a very high level understanding of the commercial aspects of the company and / or technology. Many SMEs require external investment to enable market roll out. Therefore, an initial high-level review of the commercial credentials will benefit the vendor during the later stages of development. Innovative Innovative Technology Innovation is a key objective to the EU-ETV scheme, the vendor will be asked to document what makes their technology innovative. The question will give a range of drop down options but will also give the vendor the opportunity to add further information where appropriate. Technology Differentiator This question will give the opportunity for the vendor to give details on what sets their technology apart from competitors. This brief sentence should define the particularly novel aspects of the technology. Commercial Benefits The vendor will be asked to list up to three commercial benefits of their technology. Environmental benefits are core to the ETV scheme. However, there are very few situations whereby environmental technologies are purchased purely on their environmental credentials. Therefore, an organisation promoting an environmental technology must promote the commercial gains of the technology. Commercial gains can range from a better payback, reduced personnel requirement or improved productivity. Regulatory Approvals Some technologies require regulatory approvals prior to being used by the end user. The vendor will be asked to verify which regulatory approvals their technology has to meet. For example, many consumer products within the European Economic Area must conform to the CE marking regulation. This mandatory regulation ensures that products meet the EU health, safety and environmental requirements, ensuring consumer safety. Many vendors entering the scheme will not be required to meet a regulatory approval and therefore deem the question not applicable. The vendor will then asked to identify if the technology has achieved the required approval. The vendor will be asked to select what stage of approval the technology has reached with the regulatory body. There are a number of stages that a technology has to go through before being granted approval. The vendor must specify the stage of approval: -

All documentation has been received by the regulator and approved therefore the technology is within the approved status All documentation has been received by the regulator but the regulator has not yet verified therefore the technology status is pending The vendor may not have applied for regulatory approval therefore the technology is not commercially ready

If the technology has not been approved the vendor will be given the opportunity to estimate the length of time required to meet approval level which has a direct impact on the time frame to market.

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Intellectual Property Rights (IPR) Intellectual Property is the law raised to protect intellectual property such as invention, design, brand name or original creation. The standard route to protect intellectual rights of industrial or commercial creations is to apply for a patent. A patent may be granted for new, useful and non-obvious inventions, this gives the patent holder the right to prevent others from practicing the invention without a license from the patent holder. The vendor will be asked to advise the verification panel as to the status of the technology’s IPR. Commercially it is important to protect the intellectual property of an innovative technology, where appropriate. . Capital Expenditure Capital expenditure refers to the monies that an organisation has spent on items such as property or equipment to offer benefits such as an improved or new product / service. Commercially it is critical to understand how much investment a company has put forward for a specific technology. Investment to date includes the premises, personnel, equipment costs and costs of utilities. Generally there will be significant capital investment during the development and commercialisation stages of a new technology. The vendor will be asked to include the total amount of investment the technology has received to date. The vendor will also be asked the length of time the vendor has been developing the product, this will give an idea of the annual costs of developing the product and the sales required to make profit on the technology. The vendor will be asked to outline the number of person years that have been spent on the technology development. This may have been one person working 1 day a week for five years, which would equate to one person year, or 3 FTEs focussed on the development for 1 year. In this case it would equate to 3 person years. Operating Expenditure Operating expenditure refers to the continuing costs incurred by the end user of a technology during the asset life, costs such as maintenance and component replacement and utility costs. Commercially it is important to understand the operating expenditure requirements of a product as the initial cost may be commercially beneficial however annual operating costs may render the project unfeasible. The vendor will be asked to give the operating cost of component replacement, consumables and all utilities. Operating cost needs to be closely aligned with the capital costs of a technology therefore the vendor will be asked to calculate the operating costs (detailed above) as a percentage of the technologies capital cost (CAPEX). Target Sales To enable an organisation to understand overall projected financial targets annual sales need to be determined. Target sales refer to the number of units the organisation is seeking to achieve within a specified length of time, generally annually. The vendor will be asked to produce the annual sales target for three years, the vendor will be asked to supply unit quantity of sales alongside the total value of the target sales. Commercially target sales are important as the investor gathers a picture of the expected income each year through sales. Expected Payback Expected payback on investment refers to the length of time required for a company to recoup the CAPEX invested into a technology. The expected payback period can be calculated by using the target sales figures against the total monies invested to date. Payback period gives the investor a clear picture of how a technology is performing in the market.

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Asset Life Asset life refers to the length of time the technology will be of operational capacity once purchased by the end user. The vendor will be required to enter an approximation of the asset life of the technology. The asset life of a technology will put the CAPEX and OPEX in to context, as the customer can calculate the annual estimated costs. Business Model A business model is a strategic document that defines the route an organisation goes through to get units sold and ultimately make money. An organisation may have a number of different technologies each with a separate business model, and business models can change or differ depending on the customer. The vendor will be asked to select which business model fits their technology, the vendor can make multiple selections or specify another non generic business model. •

Direct Sales Direct sales are where the vendor sells their technology directly to the customer through either direct contact with the vendor or the vendor presenting the technology to a range of potential customers. Direct sales usually consist of a fixed fee arrangement.

•

Licence Licence sales are where the vendor keeps ownership of all IPR but a customer buys the licence to manufacture and practice with the technology. Licences are usually purchased for a specific length of time.

•

Lease Leasing a technology happens when a customer requires the technology for a short period of time and therefore the vendor will keep ownership of the unit and usually maintain the unit until the leasing period expires. CAPEX costs for the customer are removed when leasing is an option.

•

Design Build Fund Operate (DBFO) The DBFO model is attractive to customers where there are generally high CAPEX and OPEX costs. The vendor will design and build the technology and supply the funding and operational personal. DBFO models reduce the risk for the customer and give the vendor an opportunity to build up case studies at a commercial level. The vendor will make back money on savings made during the installation of the technology.

•

Design Build Own Operate (DBOO) The DBOO model is similar to the DBFO however the vendor will own all of the surplus operating profit that is made from the installation of the technology.

Delivery Capability Having the sufficient resources to deliver the target sales is a massive burden to SMEs. This section of the model will help to identify the background contracts that are in place to ensure when the order books fill the delivery capability is readily available.

Manufacturing Capability

•

When upgrading from prototype sales to commercial sales the organisation will require a huge scale up on the manufacturing capability. The vendor should describe what contracts they have got in place to match the requirements of sales forecasts.

•

Delivery Partners The vendor will require a number of delivery partners, such as material suppliers, utility contracts and logistical support. The vendor will be asked to give evidence of how they have addressed the required delivery partners.

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•

Sales & Marketing The vendor will have to ensure that there is a specific sales and marketing strategy for the new technology. This will include the vendor organising the marketing brochures and sales models. The vendor will be asked how they have addressed this delivery requirement.

Market Opportunities The market opportunities are areas where the vendor believes there are favourable demand trends, needs from end users and areas where the vendor can compete effectively. From a commercial perspective, it will be important that a vendor understands the market that they are looking to enter; this may be through experience or through business links. •

Target Market For an innovative technology to enter a market the vendor must target specific markets, the vendor must have completed market research and have a good understanding of the market potential. The vendor will be requested to input the target market of their innovative technology

•

Sector Specific If the target market can be further differentiated by sector, then this level of information would also be valuable.

•

Geographic region The vendor will be asked to enter the geographic region that they are looking to market their technology in. The model allows the vendor to select from four options, regional, national, EU and global. The question allows the verification panel to understand the marketing requirements depending on which geographic regions selected. There will obviously be more demand on resources if the vendor is looking to enter a global market.

Competitors The vendor will be asked to enter three competing technologies. This gives the verification panel indication that the vendor is commercially aware of the competitors in their technology area. Timeframe to Market The EU ETV scheme is directed at commercially ready environmental technologies therefore the vendor needs to specify the time frame to market that they are working to. Time frame to market refers to the length of time required for the vendor to organise their delivery capability, the vendor must be ready to meet the demand from the market inline with their sales target. IV.

Environmental The EU ETV scheme concentrates on the environmental claims that a vendor makes regarding a specific technology. This model looks further into the underlying environmental implications that the technology has on the environment. The integrity of the EU ETV scheme completely relies on the success of the technologies therefore this model aims to gather the environmental impacts of the technology throughout the life to unearth any issues that may impact the integrity of the ETV scheme. Most of the questions within the environmental section refer to technological products rather than technological services. The validation body asks for service vendors to complete the sections where possible. Life Cycle Assessment Assessment The completion of a Life Cycle Assessment (LCA) of the technology falls outside the scope of this model. However, it is the recommended route for an organisation to take if they require complete environmental impact details. An LCA is the investigation and valuation of the environmental impacts of a given product or service caused or necessitated by its existence. However the model gives

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credit to vendors that have evidence of completing a life cycle assessment. The model also gives the opportunity for the vendor to upload any data they have on the technology specific LCA. Environmental Management System An Environmental Management System (EMS) is a management tool which specific competencies, behaviors, procedures and demands for the implementation of an operational environmental policy of the organization are defined. The validation body understand that vendors entering the ETV scheme will be at varying stages of development, therefore an EMS is not expected from every vendor and vendors will not be negatively marked for not having an EMS is place. The model gives the opportunity for the vendor to upload details of their EMS. It is likely that vendors will have to work towards an EMS at future stages of their development therefore the questions posed during this model are in place to infer the environmental status of the vendor with regards to the specific technology. Raw Material Suppliers Raw material suppliers are the suppliers of the components or materials that make up the product. The vendor will be asked to detail the distance from the vendor’s assembly point to the location of their primary supplier for the specific technology. This information will be required to understand the distance that raw materials are travelling and thus the impact on the environment. The vendor will be asked to identify the number of raw material suppliers they require for the specific technology. Energy Consumption Energy consumption is a large burden on the environment and therefore the vendor will be asked to calculate the energy consumption that is required to manufacture one unit. This requires the vendor to calculate the total energy consumed during the manufacturing process and assembly process. The model requests that the vendor completes all questions relating to electrical use in Energy or kW rather than the more commonly used Carbon. Carbon gives a more holistic in depth figure however kW figures will be more accessible to the majority of SMEs. Weight of the Product The vendor will be asked to give details of the weight of the product in kg. The vendor can simply add weight of the unit as a complete entity. Some technologies may have a range of sizes / models, the vendor should only enter weight details specific for the model being verified through the ETV scheme. Product Materials The vendor will be asked to enter all of the materials that are included within the product by weight. The model requires that this information is gathered as certain materials are environmental less desirable than others and the verification panel is keen to understand the percentage of the product made from environmentally undesirable materials. When entering details the vendor does not have to get into the specific grade of metal or plastic, the common trade name for the material will be sufficient. Material Safety Data Sheets (MSDS) An MSDS is a form containing data regarding the properties of a particular substance. The data is provided to ensure the safety of the substance handlers and the environment. The substance manufacturer will provide a customer with the MSDS for the substance. The model gives the opportunity for the vendor to upload any MSDS forms, if appropriate to their technology. Units produced The model asks the vendor to insert the number of units that are forecast to be produced per annum. This will provide the verification panel with the information required to estimate the total

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materials used per annum along with the energy consumption per annum. The verification panel will be able to assess how heavily the technology affects the environment. Primary Market The vendor was asked to specify the geographical location of the target market in a previous section. The vendor will be now requested to specify the distance that must be travelled to reach this target market. The vendor will be given the options of four bandings that loosely range from regional travel to global travel. The model gives the option for the vendor to clarify their selection. Distribution Transport Transportation of products has a huge effect on the environment through emissions and also increased traffic. The vendor will be required to specify the primary mode of transport that is used for the distribution of the technology to customers. The vendor will be requested to select from sea, rail, road, air. The vendor has the option to select more than one option and include further details to clarify their selection. Production Cost Breakdown Production costs are a major component of any SMEs business, particularly during the early stages of commercialisation. The model has asked the vendor to give a breakdown of the production costs associated with the specific technology. The vendor will be asked to break the production costs down as a percentage assuming the total production cost of one unit is 100%. This information can be used to compare how the spend per unit correlates with the previous questions. Utility Cost Breakdown The vendor will be asked for a further breakdown of utility costs into four broad categories; water, electricity, gas and communications as a percentage of the total utility cost given earlier. Breaking down the utility costs gives an idea on how dependant the vendor is on certain services and how susceptible the pricing of the technology may be on changing utility costs due to environmental drivers. Post Manufacture During the post manufacture of a product there is a requirement for the vendor to distribute the technologies directly to customers or to holding warehouses. The vendor will be required to enter the distance from the vendor’s assembly plant to the primary location of their supply chain partners. The vendor will be given the option of four distances, ranging from regional to global locations. The vendor will be given the opportunity to clarify their selection if necessary. This question allows the verification body to understand the transportation distance from point of manufacture to the next step in the supply chain, be that the customer or a holding warehouse, allowing the verification body to assess transport dependency. The vendor will be also asked to specify the number of post manufacture partner they have. The vendor may distribute to a number of partners throughout their network. End of Life Assessment When a technology product has come to the end of its expected operating life it is essential that the component parts can be disposed of efficiently. An end of life assessment aims to determine the destiny of the component parts whether that be through recycling, reusing or disposal to landfill. •

Recyclable The vendor will be asked to determine how much, as a percentage, of the product can be recycled or reused once the effected life has expired. The vendor will be given a range of answers to choose from therefore an accurate calculation will be not required. Once a component has expired it is desirable for the materials to be recycled or reused rather than disposed of to landfill. The vendor can specify the ease of recycling i.e. has the technology been engineered to allow easy disassembly?

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•

Landfill The vendor will be asked to determine how much, as a percentage, of the product has to be distributed to landfill. The vendor will be given a range of percentages to choose from therefore an accurate calculation will not be required. It is not desirable for an organisation to send materials to landfill due to the environmental concerns and also the tax associated. However, in some instances landfill is the only option available.

•

Hazardous waste Some materials or components are deemed to contain hazardous waste and therefore methods of disposal change. Waste is hazardous when it has properties that might make it harmful to human health or the environment. There are regulations that apply to the disposal of hazardous wastes and therefore the vendor should be aware of these. The vendor will be asked to state whether the disposal of any of the materials fall under the hazardous waste category. The vendor will then be required to detail the treatment requirements for any hazardous waste.

•

Hours of operation The vendor will be required to input the expected hours of operation before the technology requires replacement. This refers to the amount of physical operating hours that the technology can complete before replacement is required.

•

Duty hours of operation It would be beneficial to have an understanding of the actual number of operational / duty hours the technology is expected to run each year.

•

Duty asset life This input relates to the number of years the vendor anticipates their technology will operate for before replacement, major refurbishment or upgrade is required.

V.

Technical The vendor will be asked to complete a series of questions regarding the technical aspects of the technology. The EU ETV scheme is aimed at innovative technologies and therefore this technical section gives the verification panel further information about the novel features of the technology. The technical section of the model aims to give the verification panel an understanding of the technical requirements of installing and operating the technology. Installation Many technologies require installing at the customer site. The introduction of an innovative technology may have installation impacts due to the internal skill set. The vendor will be asked to select the installation requirements of the technology. The vendor will be required to select from three potential installation situations and will also be given the option to clarify their selection as some innovative technologies may have bespoke applications. •

Unskilled An employee can simply install the technology with no other support than perhaps an installation guide.

•

Qualified A qualified installation team is required however the skills are readily available and therefore installation costs and timescales are competitive.

•

Specialist A specialist installation team is required with specialist training on the specific technology. Installation timescales are stretched and cost can be high.

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Commissioning Commissioning refers to the hard connection of any services that are required post installation; this may refer to electrical supply, compressed air and water but mainly refers to the onsite testing and certification of the technology prior to the first full scale run. The vendor will be asked to select from the same options available in the installation section above. Downtime Downtime is a major issue in competitive business, this section of the model asks the vendor to give an amount of downtime that is required to install and commission the technology. Downtime refers to the amount of time that normal operation has to cease due to the installation requirements of a new technology. The vendor will be asked to insert the total length of time required from stopping the production up to complete installation and commissioning of their technology. The vendor will be asked to enter two separate times, to show installation and commissioning downtime. The option will be given to choose not applicable if there is no requirement to have machine downtime. Personnel This section in the model refers the number of personnel required to operate a fully functional installation. The model refers to full time equivalent (FTE). This can be calculated by dividing the total number of operational hours required by the total number of operational hours per employee. Operational Intensity Operational intensity is the number of hours that the technology will be operating annually. This will give the verification panel an idea of the downtime required for maintenance, the reliability, and whether operation is round the clock or just daytime working hours. The vendor will be asked to select the operational intensity from three bands which are categorised as hours per annum. The operational intensity of a technology may differ greatly per application and therefore the vendor may find it difficult to come up with a generic/average operational intensity. Operational Skill Skill level is critical when a customer is looking at purchasing a technology. Customers will want to know the skill requirement for normal operation. The vendor will be required to band the operational skill requirements of their technology in one of three areas. •

Semi-skilled The operator does not have to have specific skills to operate the technology but must be aware of the industry and the requirements of the technology.

•

Skilled The operator has developed specific skills to be able to control the technology through normal operation.

•

Professional The operator has to be a professional in the technology area and requires constant operational attention during all phases of operation.

Training The burden training has of an organisation is significant in terms of man hours lost to train employees. The section is aimed at gathering the operator training requirement to be able to operate the technology to sufficient levels. The vendor will be asked to select the length of time that is required to become a competent operator. Operating Conditions The operation conditions can be broken down into hazardous or non hazardous; this refers to the working conditions that the operator must endure during normal operation. Hazardous operations usually require the customer to have certain regulations in place to ensure harm effects do not

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occur to the operator or the environment. The vendor will be asked to select whether the normal operating conditions are hazardous or non hazardous. Power Consumption Energy consumption is a huge burden on the environment therefore the vendor will be being asked to give details of the energy consumption of one unit during normal operation, rated in kilowatts. Energy Saved / Energy Generated This model is devised for energy related technologies which will either save energy at a more efficient rate compared to its competitors or will generate energy in a more efficient manner. The vendor will be asked to detail the level of energy saved/generated during normal operation. The vendor will be required to upload the data as £/kWh. Maintenance Maintenance can be a large operating expenditure, however a technology that requires a component replacement will be operating inefficiently and therefore will benefit from a maintenance visit. The vendor will be asked to estimate the number of planned maintenance visits that will be required on an annual basis, if the maintenance visits are in the region of one every two years the vendor should input 0.5 visits per annum. An earlier question referred to downtime during installation, generally downtime is required during maintenance, which ultimately reduces the productivity of the customer. The vendor will be required to input the number of hours of downtime per annum that is expected per unit during normal operation. Frequency of maintenance visits is important to understand the amount of operational time between visits. The vendor will be asked to enter the estimated number of days between maintenance visits. Component Replacement The purchase of an innovative technology is generally critical to the operational efficiency of an organisation. If there is a requirement to replace a component, or gather consumables the customer will need to have an understanding of the ease of obtaining these items. The vendor will be asked to select from three options as to the availability of component replacement. •

Off the shelf Components that can be purchased over the counter at a number of trade establishments

•

Made to order Component replacement is achieved by making an order in advance of replacement requirement; the component will then be manufactured and delivered.

•

Proprietary Component replacement can only be supplied by the initial vendor.

Additional Benefits The majority of the benefits of energy themed technologies will relate to the energy savings or energy utilisation that could be seen however a technology may have a number of additional benefits that have no energy related link. The vendor will be asked to list the additional benefits that a technology may offer the company. Technology Description The vendor will be given the opportunity to give a description of the technology focussing specifically on the operating conditions that the technology has endured during the period that the claims have been made. This gives the opportunity for the vendor to focus on the specific conditions that were seen when the environmental claims were raised for the EU ETV scheme.

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Engineering Principles The verification panel will include a sector specific expert and therefore the vendor will be given the opportunity to document the underlying scientific and engineering principles of the technology. This opportunity allows the vendor to explain the technology in more detail to give the verification panel a better understand of the technical aspects. Operations Manual To further increase the knowledge that the verification panel have of the technology the vendor will be asked to upload an operations manual or a process flow diagram, if appropriate. With this information the verification panel can gain a better understanding of the operation of the technology and be able to assess the technical sector of the model. Brochures The model gives the opportunity for the vendor to update any further information that they may have produced regarding the technology such as marketing brochures or sales presentations. The better that the verification panel understand the technology the easier they will be able to assess the relative environmental claims and it will also increase the efficiency of the panel as contact with the vendor will be reduced. Testing The vendor may have conducted internal testing or commissioned external testing to internally verify the environmental claims that are being made within the EU ETV scheme. The vendor will be given the opportunity to upload any test documents that have been produced. These may or may not have been obtained through approved ETV test centres. The scoring methodology is summarised in Table A1.1:

Table A1.1: Summary of Scoring Methodology

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The weighting for each criteria is determined using a pairwise matrix. The pairwise matrix for the scoring criteria is shown in Table A1.2 below. Here, the relative significance of each parameter is qualitatively determined (i.e. how important is one criteria in comparison to another?) and then ranked according to the number of times one criteria was chosen over another. For example, in Table A1.2 below, Payback/Cost (“C”) is considered more important than Uniqueness (“A”). Hence the letter ”C” was input into the A vs. C cell. Where two letters are shown in a single cell (e.g. Uniqueness vs. Time to Market), this indicates that both parameters are equally important during the assessment process. The number of times that a criterion appears in the matrix is summed. This is then converted into a percentage that comprises the weightings shown at the bottom of Table A1.2.

A1.2: Pairwise Table A1 .2: Pa irwise Matrix for Weightings

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APPENDIX 2: COMPETENCE PROFILE FOR FOR APPROVED TEST CENTRES CENTRES Criteria Track record

National Accreditations

Confidentiality Agreement

Conflict of Interest

ISO 14001 ISO 9001

ISO 17025 Time Scales

Description Organisation has a good track record in delivering high quality testing in its competence area (including method development where required) Organisation is to have relevant national accreditations. For example, UKAS and MCERTS in the UK, DAP in Germany. Organisations involved in testing within the ETV scheme must sign a confidentiality agreement to ensure vendors commercial advantage is protected Organisations involved in testing within the ETV scheme must agree to sign up to the Conflict of Interest policy. Organisation must have a current ISO 14001 accreditation. Organisation must have a current ISO 9001 accreditation to demonstrate Quality Management. Organisation must have a current ISO 17025 accreditation Organisation must be able to demonstrate how they will achieve the required timescales as set by the individual testing needs.

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