Limited Incentives Exist to Monitor and Verify Green House Gas Emission Reduction for Nationally Appropriate Mitigation Actions in the Caribbean

February 28, 2017, by Saudia Rahat

A recent research into monitoring and evaluation systems that exist for climate change programs in the Caribbean discovered that there are almost no incentives to promote ‘domestic or national’ monitoring, reporting and verification (MRV) systems for climate change mitigation actions. This is particularly true for those mitigation actions undertaken outside of the UNFCCC mechanisms that are in place to promote mitigation. This can result in lost opportunities to benefit from learning and documenting of best practices for mitigation programs in the Caribbean; which in turn can reduce the effectiveness and efficiency of investments in mitigation.

“Climate change?!”, photo by Eric Wüstenhagen

Climate change mitigation is aimed at reducing greenhouse gas (GHG) emissions and the key policy framework for curbing GHG emission reduction is the Kyoto Protocol to the United Nations Convention on Climate Change, which was adopted in 1997, entered into force in 2005, and had its first commitment period set for 2008–2012, which primarily targeted developed countries.

There is now the Doha Amendment to the Kyoto Protocol with the second commitment period spanning 2013–2020 that sets increased ‘quantified emissions limitation and reduction objectives’ (QELROs) for developed countries; but it is also expected that developing countries would invest in efforts to advance mitigation (UNFCCC, 2014a) since it is estimated that “67% of GHG abatement potential is located in developing countries”. To facilitate emission reduction, the UNFCCC through the Kyoto Protocol introduced two mechanisms called the Joint Implementation (JI), which commenced in 2008, and Clean Development Mechanism (CDM), which commenced in 2006. The former is emission reduction through knowledge, capacity and/or technology exchange between developed countries and the latter is between developed and developing countries (USAID, 2000).

The global focus on measuring and tracking of emission levels and the evolving carbon market necessitated the development of rigorous methodologies for the estimation of GHG emission sources and sinks and the implementation of guidelines and procedures to allow for “measurable, reportable and verifiable” (MRV) GHG mitigation actions.

The MRV framework was articulated over the period 2004–2013 at the 10th -19th meetings of the Conference of Parties and is considered to be applicable in three instances:

  1. MRV for emissions related to national GHG inventories and National Communications — this is applicable to both developed and developing countries
  2. MRV for Nationally Appropriate Mitigation Actions (NAMA) — this is applicable only for developing countries, and
  3. MRV of financial support which examines “financial flows/technology transfer/capacity building and their impacts”– this is primarily applicable to those developed countries that support CCM overseas

The figure below illustrates the scope and requirements of the MRV system from a developing country perspective. It can be seen that developing countries MRV can exist at the international or national/domestic levels to support GHG emission reporting requirements — giving rise to the two classifications of MRV systems. As you can see, national or domestic MRVs are primarily required to support reporting on nationally appropriate mitigation actions (NAMA). NAMAs, which were introduced in 2007 and reflect the emission mitigation actions for developing countries to reduce their GHG levels through national or international funding (UNFCCC, 2014b), were not conceived to include CDM mechanisms since these are intended for developed countries to meet their QELROs. This means that developing countries engaged in CDM projects are required to have designated operational entity (independent auditors), which independently validates whether the CDM project is in keeping with the established CDM guidelines and methodologies and to verify that the stated emission reduction took place — that is, they need to meet the international MRV requirements. Furthermore, developing countries might also have Reducing Emissions from Deforestation and Forest Degradation (REDD+) initiatives, which promote the conservation and sustainable use of forest ecosystems. For developing countries to receive any payments for REDD+ projects they also need to subscribe to the requirements of international MRVs. Therefore, projects channeled through the CDM or REDD would ultimately undergo rigorous MRV systems since there are international requirements in place to ensure this (independent auditors etc.).

Elements of the MRV Framework for developing countries, Adapted from UNFCCC, 2014b: 15

The principles governing the establishment of the domestic MRV framework call for the use of existing domestic systems and capacities to promote cost effectiveness (UNFCCC, 2014b). But this is where this research has discovered that problems may arise — mainly as you will see in the ensuing sections that there are limited incentives to develop and maintain domestic MRV systems outside of the UNFCCC mechanisms such as the CDM and/or REDD+. As a result this will limit the development of national capacities in MRV systems and stymie national ownership.

Incentives undermined

Interviews with climate change focal points in a select few of the Caribbean islands indicated that mitigation activities through the UNFCCC mechanisms are still in the initial stages: no CDM projects have been implemented to date but REDD+ initiatives have gained more traction even though they are still in the initial start-up stages. This feedback was expected since the CDM mechanism has a rigorous approval mechanism in place and UNREDD provides more direct or complementary support for the design and execution of national projects (UNREDD, 2015). However, the interviews crystalized that there are private sector investments in mitigation-related projects, but the primary objectives of the private investors are to enhance efficiency and effectiveness of businesses and industries. This is so because, according to the World Bank’s Vice President for LAC, Jorge Familiar:

“Energy security is at the top of the agenda for Caribbean leaders […] with the average cost of electricity four times higher than in rich nations such as the United States [resulting in energy costs being] one of the key bottlenecks for unleashing economic growth and prosperity in the region”.

Further countries interviewed have reported that MRV frameworks are considered an additional expense and therefore not included in the budget for these private sector investments. Costs can become considerable in light of the fact that there are limited local expertise therefore outsourcing is required. Further, although verification in MRV plays a key role in the issuance of carbon credits, there are still no incentives for the privately funded mitigation investments to implement MRVs due to the currently low costs per ton of carbon. Therefore M&E of the effects of mitigation activities are not undertaken in most instances except when the member state is preparing the national communication (NC), which is every four years. But in this case, verification is not mandatory for developing countries since national communication plans are not subject to International Consultation and Analysis (ICA) verification processes. Only if the member state is preparing a BUR will the ICA be required.

Limited incentives for MRVs can result in best practices not being documented through evaluation and programs cannot be adjusted based on real-time findings. These current practices will also set the Caribbean behind in fulfilling the requirements in relation to the current international dialogue taking place in the climate change arena. For instance, the recently 2015 Paris Agreement that was adopted at the twenty-first meeting of the COP specifically calls for “a common system of transparency, reporting by all countries subject to review and by which all countries agree to track progress, in particular on actions to curb emissions”.

The scenario articulated in this article is more than likely applicable to SIDS in general since the UNFCCC provisions are the same for this geographic grouping, their contribution to GHG is minimal and capacity levels are similar.

What is needed?

Incentives for MRVs in the Caribbean need to be strongly promoted. Given that most of the private investments in mitigation are linked to the energy sector, the Caribbean Centre for Renewable Energy and Energy Efficiency (CREEE) is best poised to advance this dialogue. Whilst CREEE is now in its establishment phase and was endorsed in July 2015 by CARICOM Heads (CREEE, 2015), it is recommended that the institutionalization process includes roles and responsibilities for promoting MRVs given that the CARICOM energy policy, which will guide the mandate of CREEE, speaks to inter alia: the setting of regional and national targets for GHG emission, education and awareness on GHG emission reduction and mobilization of resources to advance GHG reduction strategies. These are all entry points for MRV systems.

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