An effective system for monitoring, reporting and verification (MRV) is the cornerstone of any carbon emissions trading scheme (ETS). A key feature of a robust MRV system is that it should be built on general monitoring and reporting principles such as completeness, accuracy, consistency and transparency. Such a robust MRV system is essential for the functioning of the Chinese national ETS, which was launched at the end of 2017 and is expected to be operational for trading in 2020.

Some key challenges can be identified in the current MRV framework design that need to be overcome before a sufficiently robust MRV system can emerge. In an article just published in the latest edition of Climate Policy, we discuss four key challenges for establishing the MRV system in China’s national ETS. These key challenges are as follows:

  1. Ambiguity in the legal status of relevant policies and regulations;
  2. Unclear requirements on the content of monitoring plans;
  3. Lack of consistency and harmonisation in the monitoring and reporting guidelines; and
  4. Lack of information technology (IT).

Taking into account experience and lessons learnt from MRV systems in the European Union Emission Trading Scheme (EU-ETS) and China’s ETS pilots, the article provides suggestions for addressing these four key challenges:

  • It is crucial to create general framework legislation that is legally binding and of a sufficiently high legal status to facilitate legal enforcement of the MRV requirements and to ensure legal certainty.
  • Clear rules on the content of the monitoring plan and development of templates would harmonise approaches across regions and between reporting entities.
  • It is important for implemented regulations to include specific requirements on monitoring and reporting in order to ensure compliance with the main monitoring and reporting principles.
  • Use of IT should gradually evolve towards an integrated system that covers the whole compliance cycle, including monitoring plans, emission reports, verification and verification management, as well as multiple stakeholder access.

The article recognises that the suggestions mentioned above do not necessarily all have to be implemented at the same time. The establishment and improvement of the MRV system is a long process, which in general evolves over time. In future more stringent requirements may be necessary to ensure a properly functioning ETS. However, implementing the aforementioned suggestions gradually within two to three years would already have significant benefits.

About the Author

Guo Wei is Deputy-General Manager at SinoCarbon Innovation & Investment (SCII).

Additional authors to the CPJ article: Renhu Tang,  Machtelt Oudenes, Peng Li, Jun Wang, Jin Tang, Le Wang, Haijun Wang