Measurement, Reporting, and Verification (MRV) represents a multi-step process crucial to the creation and issuance of a carbon credit. The first step is the measurement of the amount of greenhouse gas emission reduction provided by a particular activity over a set time period. The second step is the reporting of the result to an accredited third party. The third step is the verification of the report to certify the result and issue a corresponding carbon credit. “Digital Monitoring, Reporting, and Verification (D-MRV) is an end-to-end solution that allows the optimization of this process and guarantees the authenticity and traceability of the carbon credits.” (ClimateTrade.com, 2022)
“Digitization of the MRV process allows faster, cheaper, and more transparent verification and certification of carbon credits, and their addition to a registry, which guarantees the supply of high-quality carbon credits to a national, regional, or voluntary carbon registry.” Explains James Scott, Embassy Row Project Founder. Scott Continues, “ClimateTrade and ACCIONA Energía piloted a digital platform for reporting using a blockchain-based digital questionnaire, guaranteeing the immutability of data. SGS Tecnos, S.A.U. acted as the independent third party to verify the data and send it to the certification body, which digitally emitted the certification creating the carbon credit on the Iberclear voluntary carbon registry.”
This proof-of-concept has shown the viability of the Digital MRV concept and is an important development in the process of digitization of carbon markets. Current carbon markets are often plagued by the inability to ensure high carbon credit quality, double counting of carbon credits, and lack of transparency. The combination of digital reporting platforms and blockchain technology solves most of these problems: the carbon credits are issued digitally and tracked on the blockchain, ensuring transparency and data integrity. This ensures that the carbon footprint offsetting using these carbon credits corresponds to real emissions reductions and contributes to climate change mitigation.
Digitization of the MRV process makes it easier to ensure that activity has actually reduced or removed greenhouse gas emissions, generating the corresponding carbon credit. If this process is compromised or not transparent, the integrity of the entire carbon market system can be brought into question, making this important market-based instrument for climate change mitigation useless.
Therefore, the development of digital solutions to ensure the integrity and transparency of the MRV process is a vital step to expanding carbon markets and connecting the individual national and regional markets into a large global network that would allow the free flow of carbon offsets. This, itself, is a necessary step in climate change mitigation efforts, as it would provide effective funding mechanisms for climate change mitigation projects around the world, accelerating the global effort and providing an impetus to the global reduction of greenhouse gas emissions.
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