Digital MRV Systems for Carbon Credits

By Manu Bharadwaj
, 8 minute read

Quick summary: Verification and accuracy are very critical in validating Carbon offsets to generate carbon credits in carbon markets. MRV is a process of measuring the emission reductions of a specific mitigation activity and report the findings to an accredited third party and finally verify the reductions so that they can be certified, and credits can be issued. This reduces transaction costs and time to market hastening the issue of carbon credits.

Do you know that excel worksheets, pdfs still rule the Carbon offset market? Verification and accuracy are very critical in validating Carbon offsets to generate carbon credits in carbon markets. 

Several countries want to participate in carbon markets to address the problems on climate change. More than two thirds of countries are planning to use carbon markets to meet their NDCs to the Paris agreement. Some countries are developing digital infrastructures to ensure carbon reductions are accurately tracked and accounted for. Carbon markets help to mobilize the resources with reduced costs to help companies transit to a low carbon economy. 

It is estimated that trading in carbon credits can reduce the cost of implementing NDCs by $250 billion by 2030. 

Digital technologies can successfully reduce the global GHGs through carbon markets. They can keep the verified data secure and ensure that reductions are accurately racked and recorded.  

Monitoring, Reporting and Verification (MRV) of reductions in greenhouse gas emissions is the cornerstone of carbon markets. MRV is a process of measuring the emission reductions of a specific mitigation activity and report the findings to an accredited third party and finally verify the reductions so that they can be certified, and credits can be issued. 

With Manual verification, one officer can verify 100-150 projects a year 

With DMRV, one officer can verify 10 projects a day! 

Why is there a necessity for MRV? 

The importance of MRV is to collect and evaluate the information or data available on management of GHG emissions. Currently these processes are time-consuming, cumbersome with manual information or excels or in purpose surveys. Today, digital technologies streamline the data collection and bring in process and quality control in the MRV process. Companies can use MRV systems and processes to easily transit to decarbonization pathways. 

Digitization of MRV makes carbon markets to function better and the simplification of the processes will enhance efficiency in these markets. Such systems promote transparency, accountability and trust between the stakeholders and provide assurance globally that the efforts are yielding results in the fight against climate change. This in turn facilitates climate finance and carbon markets. These systems also help when investors, carbon credit buyers demand higher level of stringency in disclosures and the impact reporting. The latest advances in digital technologies in terms of Distributed Ledger technologies, IoT sensors and satellite imaging help in capturing data that are accurate and reliable. 

digital mrv solutions, digital mrv tools, dmrv tools, digital mrv system

DMRV systems establish the basic requirements by ensuring accuracy, consistency, traceability and integrity of the mitigation outcome data throughout the MRV process. This can then serve as the basis for certification of such systems by independent verification and validation entities. This reduces transaction costs and time to market hastening the issue of carbon credits. 

What are Digital MRV solutions? 

MRV has been using tools like spreadsheets, GHG inventory software systems, Life cycle inventory databases and LCA software, Emission factors databases, Remote sensing, Emission monitoring systems and online reporting and Registries, the next-gen MRV systems include knowledge base and standardized systems that can be more actively integrated with climate change strategies and solutions. 

digital mrv solutions, digital mrv tools, dmrv tools, digital mrv system, carbon credits

The end-to-end digitalization of MRV entails use of digital technologies and processes to automate collection of data, report GHG emissions and generate the mitigation outcomes to improve the functioning of carbon markets. These systems can be connected to national or international registries and the tradable outcomes can be tokenized by use of smart contracts. 

Measurement, Reporting and Verification of GHG emissions 

Measurement 

Automated data collection is done using AI, machine learning, satellite imagery, smart sensors, Blockchain, IoT and drones. The MRV system integrates these technologies into a single system using common standards for data exchange and APIs to ensure compatibility and interoperability across various systems. Technology and data management tools are used to quantify, communicate and authenticate the results in real-time. This improves the speed, consistency and accuracy of reporting and also reduces costs, thereby increasing scalability. This data is captured on blockchain ledgers which are time-stamped and tamper proof, assuring the security of data. 

Reporting 

These systems allow project implementers to monitor the data and connect it to a reporting and verification system. This helps international bodies to oversee reporting and verification. MRV systems can generate automatic reports on GHG emissions, and the emissions data can be analysed and reported. Deviations can be flagged relative to activities in the baseline scenarios. Algorithms can be programmed to ensure a repetitive process for reporting to be reproduced in different formats. 

Verification 

Verification and validation can be undertaken to ensure that it follows the GHG emission reporting standards. The GHG emission reports can be verified through remotely making the process faster and cheaper. Quality control can also be a pre-requisite to ensure screening of data. 

Measurement, Reporting and Verification of Mitigation activities 

Measurement 

The project performance data can be collected in real-time using sensors, smart meters, satellite data, smartphone applications and other tools. The data can be collected, recorded and analysed based on the performance parameters. 

Reporting 

Automatic reports can be generated based on the methodology adopted for mitigation. This data can be monitored, analysed and reported. 

Verification 

The Mitigation action reports from certified systems can be verified faster at less costs. The verification tools can be built into the system through dedicated user profiles. 

Challenges in MRV systems 

  • Lack of technical expertise while developing digital solutions 
  • Identifying the right technologies and devices for capturing data 
  • Since large amounts of data are collected, data privacy becomes an issue. 
  • Methodologies for emission reductions differ according to the mitigation activities 
  • Collaboration with the stakeholders is essential 
  • Alignment with governance and finance 

Benefits of MRV systems 

  • Reliable Monitoring and Measurement 

Manual data measurement is error prone and there is insufficient data collected. The inputting process is cumbersome and time consuming. 

The MRV systems increase the accuracy of recorded data with digital technologies and are able to collect, process and store the data in digital ledgers. This saves time and lowers risk of data loss. The real-time data collection reduces the need for sampling and accuracy is maintained. 

  • Automated Reporting 

MRV systems can automatically analyse the data, process and report the results in customized formats. The unit conversions, calculations and any statistical analysis used by the methodology can be programmed into the system. This eliminates errors. Also quality deviations can be monitored and duly reported. Standardized report formats can be built into the system which can be seamlessly integrated with other systems for the benefit of other stakeholders. 

  • Streamlined Verification 

Verification of data can be time consuming and costly. Large volumes of data that needs to be scrutinized can be avoided with digital technologies that streamline the entire process. They allow for remote verification and allow the improvement of accuracy and data quality. The overall time required to verify GHG inventories, and the mitigation activities are reduced and cost effective. 

Remote verification is facilitated that saves time. The robustness of the system ensures credibility to the data claims. Mitigation outcomes from a MRV system can claim a higher premium on account of their credibility and integrity in carbon markets. 

Blockchain Solutions for DMRV 

Climate action is about trust and blockchain provides that transformational change 

Blockchain technology is suitable positioned to scale the voluntary carbon markets. Blockchain based DMRV systems can provide real-time monitoring, reporting and validation of data. They help to optimize workflows and streamline processes bringing in credibility, accountability and transparency into the process. They also open carbon trade through asset tokenization. As blockchain can create records that are more credible and resistant to frauds, they can go beyond just measurement, reporting and verification. Through sustainable reporting they can help the world to inch towards the 1.5˚C goal.  

Verra and Gold standards are pioneers in qualifying the credibility of carbon offsets and they are scaling carbon markets with the aid of DMRV solutions. Verra plans to have operational DMRV platforms within a year starting with projects in renewable energy and forestry. An internal working group collaborates with many stakeholders to develop protocols and frameworks to enable third parties to develop DMRV platforms for use in various projects. 

TraceX is building DMRV platform as an extension to the existing blockchain traceability platform. This will assure the credibility of offsets generated and allow faster issuance of credits with verification standards in place. 

Get in touch with our Carbon Expert today!

Manu Bharadwaj
VP - Growth & Strategy

VP of Growth and Strategy of TraceX Technologies. An engineer turned entrepreneur and a Traceability expert.

food traceability, food supply chain

Please leave your details with us and we will connect with you for relevant positions.

food traceability, food supply chain

Please fill the form for all Media Enquiries, we will contact you shortly.

food traceability, food supply chain

Kindly fill the form and our Partnership team will get in touch with you!