Transparency and Measuring Reporting Verification (MRV)

Non-transparency is regarded as one inherent defect of emission trading system.143 Nevertheless, the so-called opaqueness of emission trading could be overcome by measuring reporting and verification (MRV) mechanisms. In light of Article 12, the United Nations Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol, Parties to the Convention are obliged to communicate information on actions they have taken or will take to the Conference of the Parties (COP) through the secretariat. This constitutes ―a key implementation aspect of the Convention, as it allows Parties to inform one another of their national level actions and serves as a basis for the COP to assess the implementation of the Convention by Parties.‖144

141_Id. 142 Supra note 140, at 166. 143 Supra note 139. 144

Christiana Figueres, Executive Secretary, Handbook on Measurement, Report and Verification for Developing

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MRV was initially coined at Bali Action Plan at COP 13 in 2007.145 The Bali Action Plan introduced the principle of measuring, reporting and verification (MRV) for both developed and developing parties to make their enhanced mitigation actions

measurable reportable and verifiable. This principle was further elaborated through a number of subsequent COP decisions,146 such as COP of Copenhagen, Cancun, Durban, resulting in a comprehensive MRV framework under the Convention. For developing country Parties, the MRV framework before the Paris Agreement encompassed submitting national communications every four years and biennial update reports every two years, undergoing international consultation and analysis, setting up a domestic MRV of domestically supported nationally appropriate

mitigation actions (NAMAs), and undertaking MRV of REDD-plus activities for the purpose of obtaining and receiving results-based incentives.147

The Paris Agreement enhanced the MRV framework and made the framework more concrete for both developed Parties and developing Parties in a more balanced manner. Article 13 of the Paris Agreement requires each Party to regularly provide a national inventory report of GHGs emissions by sources, removals and by sinks, this

information related to nationally determined contribution (NDC) related to climate change impacts and adaptation. Developed country Parties are requested to submit information on financial, technology capacity-building transfer and support provided to developing country Parties; whereas developing country Parties are required to give information on financial, technology transfer and capacity-building support needed

145 _{Melissa Mucci, Measurement, Reporting and Verification: A note on the Concept with An Annotated}

Bibliography, International Institute for Sustainable Development (IISD) 3, Apr. 2012.

146

Supra note 144.

147

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and received.148 The above-mentioned information submitted by each party is to undergo ―a technical expert review‖ in accordance with decision 1/CP.21.149

In addition, the Paris Agreement established a mechanism of ―global stocktake‖ for the purpose of assessing the collective progress of the implementation of the agreement periodically. The first global stocktake will be undertaken in 2023 and every five years thereafter.150

This MRV framework is also designed to strengthen the transparency of the programs of emission trading, Clean Development Mechanism and REDD-plus. For instance, results-based REDD-plus activities seeking payments need to undergo international MRV. MRV for anthropogenic forest-related emissions resulting from the

implementation of REDD-plus emissions changes are required to be consistent with the methodological guidance for REDD-plus activities, and any guidance on MRV of NAMAs by developing country Parties.151

Implementation of MRV guidelines by all Parties increases the reliability of data for GHG emission reduction, produces consistency and transparency across project types, and enhances the credibility of the projects with stakeholders. One expert commented that ―implementing a comprehensive MRV framework under the Convention will enable Parties and the UNFCCC to fulfill a number of important objectives.‖152

Firstly and perhaps most obviously, accurate reporting and verification provides a framework for accountability. Secondly, an integrated MRV system provides

148

Paris Agreement, UNFCC, art. 13, Dec. 12, 2015.

149_Id. 150

Paris Agreement, UNFCC, art. 14, Dec. 12, 2015.

151

Supra note 144, at 52.

152

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international recognition to the different actions. Thirdly, MRV also facilitates implementation of low-carbon policies and actions at the national and local levels by establishing baselines and facilitating improvement from experience.153

MRV is intended to solve the transparency problem arising from emission reduction, and it is a building block in the climate change arena. Current MRV requirements for Parties reflect the nature of commitments and actions in light of the principle of equity, common but differentiated responsibilities, and respective capabilities, in the light of different national circumstances.154 The framework recognizes the special

circumstances of the least developed countries (LDCs) and small island developing states (SIDS), and is to be implemented in a facilitative, non-intrusive, non-punitive manner. It gives some flexibility for developing country Parties in order to avoid placing too much of a burden on them. However, establishing an independent third party MRV regime to oversee the regulated entities would be an important added provision to provide for reliable, consistent, accurate and transparent information relating to carbon emission reductions.

2.2 What role carbon emission trading can play after the Paris Agreement?