Elements toward a High-Performance MRV Framework

7 June 2010

Welcome to this special supplement to ECO.  After a lively debate the first week of this session, we would like to  present elements of a balanced and comprehensive overview of the issues regarding MRV (monitoring, reporting and verification). While some would like to use the debate around MRV as an  opportunity to obscure their lack of ambition in other areas, we consider MRV as an essential element of a fair, ambitious and binding agreement including a dual obligation for developed countries and significantly enhanced actions by all countries. We believe Parties should aim to conclude negotiations on all elements of MRV at Cancún such that the requirements first set out in the Bali Action Plan are fully met and reflect the spirit of this new, innovative and collaborative approach to address the climate crisis.

To track the overall progress of emission reduction efforts, it is vital that accurate information be gathered and shared. This process – known as measurement, reporting and verification (MRV) – is fundamental to building trust amongst parties and ensuring environmental integrity.

MRV has emerged as a threshold issue in the negotiations on the road to COP 16.   Parties must agree in Bonn on a process to ensure that all the relevant guidelines are finalized by Cancún. This should include a mandate for the Chair to propose text on this issue at the August session based on submissions from Parties, as the current text on MRV is not sufficiently advanced.

What exactly is MRV? Here is ECO’s view:

Measurement includes both the collection and quantification of data.

Reporting involves regular, timely reports by parties using an appropriate format.

Verification refers to the technical assessment of the accuracy and reliability of reported information.

First, an overall caution: don’t confuse MRV with compliance! For developed countries, MRV serves as a building block to compliance, like teammates on a relay team.  MRV produces the information needed to determine a Party’s performance but leaves it to another process to keep score.

Differentiation

Developed nations became rich burning coal and oil – and emitting enormous amounts of greenhouse gases. According to the UN Human Development Report, rich countries are responsible for ‘about 7 out of every 10 tonnes of CO2 that have been emitted since the start of the industrial era’.

The guiding principle of the Convention, ‘common but differentiated responsibilities’ (CBDR), recognizes the vast differences among Parties with respect to their historical contribution and responsibility, as well as their respective capability – in other words, in accordance with this principle it is the developed countries that must act first.

The Bali Action Plan calls on Parties to agree to MRV of enhanced national and international action on mitigation.

This is firmly rooted in the CBDR principle.  It includes ‘measurable, reportable and verifiable nationally appropriate mitigation commitments or actions … by all developed country Parties’, and ‘nationally appropriate mitigation actions by developing country Parties … supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner’. Parties – and the world – have a common interest in the environmental effectiveness of measures taken to mitigate climate change.  MRV fundamentally involves gathering and reporting consistent, comparable and accurate information on these measures and their environmental outcomes.

Credible MRV can strengthen trust amongst the parties and confidence in the overall regime for climate response and enable a stronger collective effort.  But at all times we need to keep our eye on the ball.

ECO notes that the Bali Action Plan is part of a road map that envisions a science-based aggregate emissions reduction target and ambitious developed country reduction targets.   MRV without ambitious targets won’t get the job done.  And while MRV is a fundamental building block of compliance for developed countries, MRV for developing countries is about different commitments for different parties with different capacities and different responsibilities.

See the difference?  ECO would also like to recall for a few well-known Parties that Annex 1 countries already have well developed MRV rules and institutions, otherwise known as the KP.

Developed Country MRV

ECO shouldn’t have to remind anybody of the importance and history of  MRV of developed country action.  The system currently in use by most developed countries has some keystones that provide the foundation for the MRV system, and developed country MRV is a cornerstone of the international system – so don’t let that building fall apart!  Here are some key elements:

• Annual emissions inventories which fully cover sources and sinks using consistent guidelines, rules and methodologies.
• Frequent reporting — developed countries should complete their 6th National Communication by 2012.
• Accounting for progress of the country’s emissions against a common set of rules.
• Transparent, independent and scientifically based assessments by expert review teams of whether or not emissions and accounting actually show what the developed country says.
• Assessment of compliance against international commitments.

Let’s get one thing straight.  MRV does not equal compliance.  As we have pointed out time after time, reviewing progress towards a target is only the first step of ensuring compliance with legally binding commitments.  There has to be a process for dealing with problems detected by expert reviewers – and it can’t just be name and shame!

Compliance procedures for legally binding commitments, with a range of appropriate consequences, are vital to building an effective regime for addressing climate change.  This regime is not only important for assessing countries’ compliance with their commitments, but also for the consistency of carbon market rules to ensure environmental integrity.

Developed countries don’t have to start from scratch.  The world already knows how to MRV developed country commitments – they’re called Articles 5, 7 and 8.  Many years were spent negotiating the intricate details of the system, including the standardized methodologies and guidelines vital to effective MRV and the compliance procedures for developed country commitments.  After all that effort, it would be a waste to depart from these rules and procedures, instead of building on and improving them.

We have heard many times that the United States not only rejects the need for compliance procedures, it also does not wish to have common accounting methodologies.  Considering that the US was a leader in developing the KP rules on MRV and compliance in the first place, this is uncomfortable, ironic or both. Parties agreed in Bali on a dual obligation of developed countries MRV for both mitigation and support.  Within that framework, an MRV system for financial support must be able to answer key questions such as whether or not funds are:

(1) new and additional;

(2) allocated in a balanced manner between adaptation and mitigation;

(3) equitably distributed between countries and in particular, prioritized for the most vulnerable countries;

(4) respond to developing country needs for the required levels of financing;

(5) establish clear criteria and indicators (such as the work that the EGTT has done on performance indicators); and

(6) are reliable.

We aren’t there yet, but there are some building blocks which can be used.  The current system of MRVing climate finance from developed countries is decentralized and fragmented, and as a result does not completely meet the six criteria above. Parties must make significant improvements to the existing system by adopting common measurement, reporting and verification rules under the UNFCCC that create a comprehensive and comparable picture of finance from both developed countries and multilateral development banks.  Also needed are transparency and comparability on non-financial actions (which is important for technology and capacity building), as well as private financial flows to extend the current MRV system  implementation for public financial flows.

Developing countries have a critical need to adapt to and mitigate climate change – a need that cannot be met solely with their own resources. Support from developed countries is crucial and needs to be comparable, transparent, accurate, efficient and timely.  Implementing such a system will ensure that resources flow to essential needs and

build much-needed trust. While a reporting process is being finalized, all developed countries must be as transparent as possible in the delivery of fast track climate funds to developing countries, including through regular reporting.

Non-Annex I MRV

We need a strong compliance mechanism and strong MRV for developed countries for their dual obligations of reducing emissions and providing support.  But in addition, we also need to have progress on non-Annex I reporting and review, noting that review should respect national sovereignty and not be used as a back-door manoeuvre to force binding emissions reduction targets on them.

Let’s start with the reporting. Most developing countries should submit greenhouse gas (GHG) inventories every two years and a full national communication at least once in each 5-year commitment period. These reports should receive full financial and technical support by developed countries, including fast start funding. LDCs and SIDS should, as far as feasible, do this work voluntarily with appropriate developed country support. GHG inventories can be included in a biennial update on national communications that outlines new developments in the country.  The most updated guidelines of the IPCC should be used for  these inventories.

Now let’s move to the issue of verification. GHG inventories along with supported NAMAs should be verified internationally, while unsupported actions should be verified domestically according to international guidelines negotiated and developed by the COP.

International verification of inventories is fundamental for assessing whether the world is on track with overall emissions reduction and temperature targets.

For supported NAMAs, international verification must be linked to MRV of support to assure that adequate support for financial costs, technical needs and capacity building are provided. Developing countries will need time and support to develop robust inventories.  Don’t forget, it took time for the quality and timeliness of many developed country inventories to improve, and these improvements were facilitated in large part by the expert review process.

In-country reviews are likely to be the most helpful, and this option should be open to developing countries.  The output of expert review teams should feed into a facilitative process that ensures the provision of further technical, financial or other assistance as needed. In anticipating a paradigm shift towards a low carbon economy, developing country parties (except for LDCs and SIDS, who should be able to opt in) should elaborate indicative or aspirational low-carbon action plans (LCAPs). These plans, which will only be possible with developed country finance and support, should outline a low carbon strategy for mitigation and adaptation.