Measurement, Reporting, and Verification (MRV) refers to the multi-step process to measure the amount of greenhouse gas (GHG) emissions reduced by a specific mitigation activity. MRV allows tracking progress towards climate change-related targets. Stringent MRV contribute to ensure transparency, precision, trust and comparability on climate change information.
WHY MRV: MRV is vital in two areas: (1) mitigation, and (2) climate finance. Independent review and monitoring of the emission reductions achieved under Article 6(4) of the Paris Agreement is referred to as verification. MRV systems are used extensively in carbon pricing mechanism and trading schemes worldwide.
In order to reduce the adverse effects of climate change, it is necessary to reduce emission of GHG. In the Paris Agreement, there are obligations requiring parties to reduce carbon emissions. Article13 of the Agreement calls for reporting of information on GHG emissions by sources and removals as well as on the actions taken by the Parties to mitigate and adapt climate change. .
Under the UNFCCC, the international framework was developed for a structured approach to measurement, reporting and, and after COP 13 (Bali 2007) also to verification. Parties adopted a number of decisions elaborating guidance, among others, on the content and frequency of national communications, biennial update reports (BURs) and domestic frameworks for measurement, reporting and verification (MRV).
The Bali Action Plan introduced the principle of MRV for both developed and developing country Parties in the context of international and domestic efforts to mitigate climate change. For developing country Parties, the existing MRV framework encompasses submitting national communications every four years and biennial update reports (BURs) every two years. Among others, it also contains provisions for undergoing international consultation and analysis (ICA), setting up domestic MRV of domestically supported mitigation actions
TYPES OF MRV: MRV may be national or international. MRV is also applicable for Reducing Emissions from Deforestation and Forest Degradation (REDD-plus MRV (decision 14/CP.19). Financial incentives are made for the amount of reported and verified GHG emissions including carbon dioxide (CO2) reduction. This is applicable only for those developing country Parties seeking to obtain and receive results-based finance for outcomes from the implementation of REDD+ activities.
In other words, results-based actions need to be fully measured, reported and verified (MRV).
The MRV for REDD+ activities entails a two-step process:
– first, there is a technical assessment of the proposed forest reference emission level and/or forest reference level (FREL).
– Second, the actual results compared to the assessed FREL are submitted in a technical annex to the biennial update report (BUR) of a developing country Party seeking to obtain and receive payments for results-based actions. These results undergo a separate technical analysis. The assessment team undertaking the technical analysis check will be composed of land use, land-use change and forestry (LULUCF) experts selected from the UNFCCC roster of experts. The assessment team check whether data and information provided in the technical annex are transparent, consistent, complete and accurate consistent with the assessed FREL and guidelines for technical annexes with REDD+ results. The team also analyses if the results are accurate, to the extent possible. (Decision 14/CP.19 in FCCC/CP/2013/10/Add.1).
Measurement (for non-Annex I Parties) is applicable to efforts to address climate change and to the impacts of these efforts, including the level of GHG emissions by sources and removals by sinks, reductions of emissions and other co-benefits. Such measurement occurs at the national level (UNFCCC, 2014).The measurement results are subsequently reported in national communications. According to the decisions adopted at the COP 16 and 17, non-Annex I Parties need to measure the specific effects of national mitigation actions as well as the support needed and received, and to convey this information, including a national inventory report, as part of their BURs. In order to report to the UNFCCC, certain climate change related data such as GHG inventories have to be measured. And a country has to conduct regular international reporting e.g., submit National Communications (NCs).
MRV PREDOMINANTLY FOR MITIGATION: The overarching focus of MRV is on climate change mitigation actions and activities. MRV is essential to show progress on climate goals and the key for accessing climate finance.The proper use of climate finance is assessed through MRV. However, BURs require reporting on adaptation actions as well.
Monitoring and evaluation (M&E) is mainly used (not MRV) for climate change adaptation projects. Article 7(9) (d) of the Paris Agreement mandates the countries to monitor, evaluate and learn from adaptation plans, policies, programmes and actions. Countries use M&E approaches to assess adaptation policies, plans and report on national adaptation performance. The lack of a common metrics for adaptation results adds another layer to the complexity involved in ME of adaptation projects.
REPORTING: Reporting for non-Annex I Parties is implemented through the National Communications and Biennial Update Reports (BURs). Reporting is usually done on GHG emissions and removals by sinks, progress with implementation of the mitigation actions, constraints and gaps, support needed and received, and other relevant information.
Reporting on mitigation actions are made as per the guidelines for biennial update reports (decision 2/CP.17, annex III). For each mitigation action or groups of mitigation actions, name and description of mitigation actions, information on the nature of the action, coverage, progress of implementation of the mitigation actions (progress indicators), quantitative goals are to be mentioned (to the extent possible) in the report. Other issues that are reported include: methodologies and assumptions,
VERIFICATION. Verification is a process to increase the transparency of mitigation actions and their effects, and support needed and received. Verification, at the international level, is done through International Consultation and Analysis (ICA) of BURs. The ICA process consists of two steps, which are triggered by the submission of BURs from developing country parties: A technical analysis of BUR by a team of experts and a facilitative sharing of views in the form of workshop. The ICA process provides learning opportunity for Parties and stakeholders to better prepare for the Enhanced Transparency Framework (ETF).National communications are not subject to ICA. At the national level, verification is implemented through domestic MRV mechanisms to be established by non-Annex I Parties as per the general guidelines adopted at COP 19 in 2013.
MRV FOR CLIMATE FINANCE: Although MRV is mainly used for GHG emission, it is also important for climate finance elements to meet the information requirements of the UNFCCC and the Paris Agreement, inform donors/development partners on how their funds are used, and to inform policy makers on the effectiveness of expenditure and investments in climate change priorities. A Climate Finance MRV system is critical to generate a positive dynamism in attracting increasing flows of financing, using it efficiently to mitigate and adapt to climate change.
MEASUREMENT. For climate finance, Measurement is necessary for estimating the funds allocated, received, and mobilised for climate change purpose (i.e., for mitigation and adaptation actions) from a variety of financial sources (i.e., public and private, national and international). OECD methodology (Rio Markers) and Climate Public Expenditure and Institutional Review (CPEIR) are usually used in the absence of an official methodology.
In Rio Markers, ascoring system of three values is used as:
(i) a principal objective (score “2”): An activity can be marked as principal when the objective (climate change mitigation or adaptation) is explicitly stated as fundamental in the design of, or the motivation for, the activity.
(ii) a significant objective (score “1”): An activity can be marked as significant when the objective (climate change mitigation or adaptation) is explicitly stated but it is not the fundamental driver or motivation for undertaking the activity; or
(iii) not targeting the Convention (score “0”): The score “0” means that the activity was examined but found not to target the objective (climate change mitigation or adaptation) in any significant way.
An activity may target multiple objectives and qualify for more than one Rio marker. For example, a sustainable forest management project can contribute to biodiversity conservation, to capturing carbon (mitigation) and to reducing climate risk (adaptation).To avoid double or triple-counting the same activity, aggregate figures for biodiversity, climate change mitigation, and climate change adaptation should not be added up (OECD, n.d.). Rio markers allow for an approximate quantification of development finance flows that target the Rio Convention objectives. These marks indicate the policy objectives of members’ development finance activities.
In UNFCCC, national communication includes public and private funds including disbursed funds. This is a strength of UNFCCC National Communication. Institutional set up has to be in place to implement climate finance MRV activities including tracking the flow of climate finance. Different actors define climate finance in their own way in the absence of an agreed definition of climate finance. As such, there is no agreed basis or methodology for measurement (tracking) of climate finance.
In some cases, measurement becomes very difficult as there is no internationally agreed definition of what “new and additional” (in the case of climate finance) actually means. Similarly, there is a lack of provision as to how climate change funding is to be distinguished from development assistance supports. Numerous entities receiving climate finance at national level (public entities, private entities and NGOs). It is a challenge to track all finances received by such numerous entities in the absence of a centralized system to track and report climate finance.
Reporting is needed in climate finance to periodically report climate finance information (financial resources provided and mobilized by source and use)in a transparent way, straightforward and disaggregated way.
VERIFICATION OF CLIMATE FINANCE. Verification of climate finance is necessary to assess whether the climate finance information is correct and accurate. Verification is also necessary to evaluate the effectiveness and efficiency of climate finance. Verification aids to gauge the scale of support by comparing data from contributors and recipients. However, challenges such as lack of agreed definition of climate finance, lack of an official methodology for MRV, on what criteria support receive are to be considered as concessional loans, stand in the way to set up a robust MRV for climate change.
MRV AND BANGLADESH: Information on MRV and others are found in National Communication. Bangladesh submitted Third National Communication (TNC) in 2019. Submission of TNC is mandatory under UNFCCC provisions.
Bangladesh is yet to set up climate change MRV. Bangladesh needs national MRV to ensure value for money that we spend on projects under Climate Change Trust fund.
However, Bangladesh makes assessment of GHG emissions and GHG inventory by hiring experts from BUET, BIDS and other sources. Consultants, research institutions, universities, and statistical agencies may all support the measurement and reporting process. Domestic experts, certification bodies, and international experts usually carry out verification functions (at national level)
As climate change is a common concern of humankind, it is necessary to have an MRV in place to measure, report and verify progress on climate actions to reduce GHG emissions, and build resilience. It also helps to report on the use and effectiveness of climate change finance. The expenditure for an MRV system is to be seen as an investment, which is intended to achieve the highest possible return in the form of result-based payments (Kohl, Neupane &Mundhenk, 2020).
MRV system has to be simplified and streamlined for adequate participation of developing countries in carbon markets. To set up an MRV system for climate change, it is necessary to have a dedicated team. The team must combine Finance, IT, Communications and Climate Change Economics profiles. Further, the development of the MRV for climate change must be seen as a process of continuous and incremental improvement. We might also think and find plausible ways to differentiate ODA sources from climate-related finance in our MRV system (when it will be developed).
Dr. Mohammad Abu Yusuf, Joint Secretary, Finance Division, MoF. [email protected]
The opinions expressed in this paper are his own, and in no way reflect the views of the office he works for.