How to construct an emissions reporting system

In preparing for a climate agreement in Paris, countries all over the world are planning their domestic strategies for cutting emissions. This often requires new policies to create incentives for low-carbon development, and for that, governments need accurate and comprehensive emissions data.

One important building block is a greenhouse gas reporting program, which a growing number of countries are working on. Mexico, for example, is gathering information from its newly established emissions reporting program to support its mitigation policies. The European Union’s and California’s reporting programs are essential to their emissions trading systems, and China’s reporting program will underpin its national trading system, planned for launch in late 2016.

At Carbon Expo today in Barcelona, the World Bank Group’s Partnership for Market Readinesswith the World Resources Institute released the Guide for Designing Mandatory GHG Reporting Programs. Drawing on 13 existing and proposed greenhouse gas emissions reporting programs, the report looks at successful ways to build a strong data collection system and showcases best practices. It provides step-by-step guidance on developing and implementing these reporting programs.

Reporting programs require companies or other emitters to monitor and report their emissions on a regular basis. Reliable information on emissions helps policy makers better understand the sources, drivers and overall trends of a country’s emissions.

That is key to designing effective and efficient mitigation plans and, ultimately, to setting robust carbon pricing policies. Reporting programs provide a uniform approach to monitoring, reporting and verifying the emissions that underpin a carbon price. They are the foundation for building a market for emissions.

For example, in the EU, carbon prices fell after the first compliance cycle when it became clear that a lack of accurate emissions data had resulted in an initial over-allocation of allowances. Regular reporting has helped to improve the functioning of that market.

The PMR, a global partnership that supports countries to assess, prepare and implement carbon pricing instruments in order to scale-up mitigation, is helping a number of countries design and implement monitoring and reporting programs. Nearly all of the 33 PMR partners have established or are moving forward with monitoring, reporting and verification (MRV) systems.

For example, Turkey has mandated that about 2,000 companies from the electricity, cement and refining sectors monitor, report and verify their emissions. The PMR is supporting Turkey to pilot the system with a trial-run of the full monitoring, reporting, and verification cycle prior to the launch of a full program. This is not straightforward. It involves detailed arrangements of how reporting will take place. As part of the pilot, companies prepare monitoring plans and emissions reports, which are then verified by local verifications agencies. This will hopefully create a smooth implementation of a full MRV system when it starts.

The Design Guide launched today describe four broad steps necessary to establish and implement an effective emissions reporting program.

• First, objectives need to be defined. This might range from the evaluation of new mitigation policies, to supporting policies like carbon pricing, to improving the quality of emissions data, to providing data for national reporting, and to help emitters to assess risks and opportunities.
• The second step involves creating a strong legal architecture, stakeholder engagement and making sure there is adequate institutional, human, technical and financial resources.
• The third step looks carefully at the program structure and requirements. It includes defining the program coverage – who reports what; how are emissions qualified – in order to calculate and measure emissions. It also includes specifying reporting procedures and schedules – what to report and how often. It includes establishing the reporting platforms and data disclosure – where to report and who has access to the reported information. It involves determining quality control and quality assurance measures– who verifies emissions data and how. And finally: enforcement measures – what do to in case of noncompliance.
• The fourth step involves the periodic review of the greenhouse gas reporting program to make sure the program’s effectiveness is assessed over time and modified when necessary.

The report is aimed at policy makers in countries who will develop emissions reporting systems to support their strategies for cutting emissions. As more and more countries start to put emission reduction plans in place, they will look for “how-to” technical guidance. The Design Guide will help governments get their monitoring, reporting and verification systems up and running faster.

This article is published in collaboration with The World Bank’s Development in a Changing Climate Blog. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Pauline Kennedy has 15 years of experience in economic policy analysis and advice and is a Senior Carbon Finance Specialist at the World Bank.

Image: A chimney in an industrial area of Sydney emits vapour. REUTERS/Tim Wimborne.