Focus moves to the drafting of the regulations for the setting up of the RHI scheme in 2012.

Mr Scoffield says that Ofgem - the scheme's regulator - advised DETI that the amendments were being made to the Great Britain RHI scheme and that it should wait until those were in place before putting its own initiative in place.

Image source, PA

Ofgem said the Great Britain scheme amendments would "negate risks" that the draft Northern Ireland regulations posed.

But it said that DETI recorded "the minister's wish to proceed without waiting or having reviewed the amendments to the GB RHI scheme". That minister was Arlene Foster (above).

Mr Scoffield says the funding position for the RHI scheme in Northern Ireland was "not entirely straightforward" and the inquiry will have to "grapple with" who knew what and when.

He that in mid-2012, DETI was more concerned about an underspend in the scheme than an overspend - money provided by the Treasury had not been used in time and had to be handed back.

Image source, RHI inquiry

There was therefore a desire to get the scheme up and running, Mr Scoffield says.

Whether that resulted in "decisions being rushed or sensible precautions not being taken" is another matter that the inquiry will have to examine, he adds.

On the subject of officials' knowledge of the danger of a potential overspend, Mr Scoffield says that there are several witnesses "who claim to have been, or who apparently were, confused about what exactly consequences would follow from an overspend".

Image source, RHI Inquiry

He quotes from the testimony of a Mr Mills, who said "people were never very clear on the budgetary position".

In evidence to the inquiry, the Department for the Economy, formerly DETI, has said: "With hindsight, it's difficult to see how recouping overspend would have been achieve.

"The full extent of the possible financial consequences were not fully understood at the time."

Image source, RHI Inquiry

Mr Scoffield says that the department's claim that Treasury official Mr Parker's email was clearly recognised and understood but the financial consequences were not understood "may be thought to sit rather uneasily wit each other".

He says it is important the officials understood "what they were getting themselves into".

"If they did not, the inquiry will want to assess who's fault that was," he adds.

How the RHI scheme was to be funded is one of the key questions the inquiry will look, and Mr Scoffield touches on email exhanges between the Treasury and DETI about that issue.

He refers to one email in April 2011 from Treasury official John Parker, who told DETI how the RHI scheme in Great Britain worked.

He said the Treasury was not footing any overspend, and instead there was a "risk-sharing arrangement" between it and the Department of Energy & Climate Change (DECC), which set up the Great Britain scheme.

Any overspend would need to be met by DECC in future years, he said, and those rules "would be applied in equivalent fashion in Northern Ireland".

In short, the money was "not a limitless pot" and any overspend would have to be repaid by the department in Norther Ireland, namely DETI.

Mr Scoffield explains that that is "one reading" of the email, and the inquiry will have to look at it in the context of other indications given by the Treasury at other times in the set-up of the scheme.

Mr Scoffield draws the inquiry's attention to sections of the DETI business case of March 2012.

He says that in considering the recommended tariff of 5.9 pence per kilowatt hour "you can easily see that the tariff was higher than the fuel cost".

However, Mr Scoffield explains that elsewhere on the document DETI says that "tiering is not included in the Northern IreIand scheme because in each instance the subsidy rate is lower than the fuel cost".

He says that this was "demonstrably not the case".

When proceedings finished yesterday, the inquiry's senior counsel David Scoffield QC (below) was outlining the work of the consultants Cambridge Economic Policy Associates (CEPA) in advising the Department of Enterprise, Trade and Investment (DETI) in the set-up of the scheme.

Particular focus was on the setting of the scheme's subsidy tariff - it was higher than the cost of the fuel used to operate their renewable heating systems, meaning that there was a burn-to-earn incentive.

Mr Scoffield says that evidence that CEPA has give to the inquiry is a "considerable retreat" from what it told Stormont's Public Accounts Committee investigation into the scheme last year.

Image source, RHI Inquiry

In evidence to the PAC, CEPA's Mark Coburn said his company should have "definitely raised the need for tiering" and not doing so had "negatively impacted on the value for money of the scheme".

But CEPA has now provided written evidence to the inquiry, which Mr Scoffield describes as a "considerable retreat" from what it told the PAC.

"In terms of overall responsibility, at the end of the day, this was DETI's scheme, not CEPA's," Mr Coburn has told the RHI Inquiry. "On reflection, we went too far in terms of assuming responsibility [in our evidence to the PAC]."

CEPA's role in the scheme will be one area that will be carefully examined by the inquiry, Mr Scoffield says.

BBC News Northern Ireland

The RHI Inquiry began its public hearings yesterday at Stormont's Parliament Buildings and it heard that the RHI scandal had struck at the heart of democracy in Northern Ireland.

Image source, Pacemaker

In his opening statement, the inquiry's senior counsel David Scoffield QC said public concern had reached "fever pitch" as outcry over the scheme grew last year.

Read our news summary from the opening day here, or you can go back over our live updates from that session here.

Public and political anger erupted when the scale of the overspend emerged.

The Democratic Unionist Party (DUP) leader Arlene Foster had been the minister in charge of the Stormont department that set up the RHI scheme in 2012 and she faced calls in to stand down as Northern Ireland's first minister in December last year.

Image source, AFP

She refused, and Sinn Féin's Martin McGuinness then quit as deputy first minister in protest at the DUP's handling of what had by then become a full-blown political crisis.

By doing so, he brought about the collapse of the Northern Ireland Executive. Now, nearing a full year on from that, Northern Ireland remains without a devolved administration.

The budget of the RHI scheme ran out of control because of critical flaws in the way it was set up - the most recent estimate for the overspend was set at £700m.

Claimants could effectively earn more money the more fuel they burned because the subsidies on offer for renewable fuels were far greater than the cost of the fuels themselves.

The massive overspend bill will have to be picked up by the Northern Ireland taxpayer.

Need a quick refresher on what the RHI scandal is all about? Here goes...

The Renewable Heat Incentive scheme - or RHI for short - came to the fore of the Northern Ireland public's knowledge in autumn last year... and the fallout from the scandal attached to it is still being felt in the region's politics today.

The scheme was set up by the Northern Ireland Executive in 2012, as a way of encouraging businesses to switch from using fossil fuels to renewable sources for generating their heat.

Those who signed up were offered financial incentives to buy new heating systems and the fuel to run them.

We're back up at Stormont for the second day of BBC News NI's live coverage of the Renewable Heat Incentive Inquiry - welcome along.

Proceedings are due to begin at 10:15 GMT, with the inquiry's senior counsel David Scoffield QC continuing the opening statement that he began yesterday.

And we'll be bringing you a live video stream and a text commentary of the happenings in the Senate chamber as the day goes on, so please stick with us and we'll keep you up to date.