What is MRV?

As its name suggests, MRV refers to broad set of processes to accurately monitor the amount of greenhouse gas emissions reduced or removed by an activity, report this evidence, and verify them through independent assessment from a third party. A BCG survey reveals that carbon credit buyers regard the MRV process, coupled with transparency, as the most critical indicators of quality.

Carbon credit registries, such as Verra and Gold Standard, have a standardized issuance process that requires third-party audits from accredited Validation/Verification Bodies (VVBs). The process is the same across all methodologies: the VVBs perform desk reviews and field visits to independently confirm that the projects are in line with the standards and that everything the project developer lays out in the submission documents is valid. 

While the process is the same for all projects, the actual MRV technologies used could vary quite significantly depending on the project type. The approach to validating the amount of emissions stored in newly planted trees looks very different from validating the emissions reduced by replacing traditional open-fire cooking with clean cookstoves. Traditionally, these verification methodologies are relatively manual and require onsite sampling, such as:

• Manual in-person surveys and assessments for energy transition credits involving decentralized energy infrastructure (such as solar home systems) or clean cookstove distribution, where surveys are distributed to communities that benefit from the project.

• Field measurements and sampling for forestry, agriculture, and blue carbon projects, where technicians measured tree height on sample plots to estimate the total biomass value in each tree and extrapolated that to the total CO2 value stored. This also applies to blue carbon projects (like mangrove projects) through estimating aboveground biomass.

• Geophysical survey and testing for carbon capture and storage (CCS) credits to monitor the injection rate and detect any potential leakage from the storage sites.

Why do current MRV technologies fall short?

The traditional verification methodologies illustrated above often rely on manual survey distribution and onsite sampling, which are costly, periodic, and fail to validate credit quality as marketed. Even Verra, the largest carbon credit registry, admits that the current process “significantly affects project development feasibility and creates challenges in ensuring consistency between projects”. 

The traditional MRV process involving regular field visits by VVB staff means that costs can amount to 20 to 30 percent of total credit revenue. This means project implementation could be prohibitive to small projects if the revenue generated is not enough to cover these costs. Based on our conversations with different stakeholders, we realized that these manual processes are also prone to inaccuracy and errors, especially when data is collected on pen and paper in remote areas with the most vulnerable populations.

How could the MRV process be improved through digital innovations?

 In response to these challenges, there are proactive efforts from project developers to deploy digital MRV technologies (dMRV) that aim to provide more proof points to validate the legitimacy of the credits. These are technologies, such as remote sensing and satellite imagery, that can provide real-time data on a digital native platform, streamlining and automating the MRV process to reduce cost and improve accuracy. Below are some examples of how dMRV can be applicable across selected project types.

It would take some time before registries like Verra and Gold Standard mandate the switch from manual MRV to dMRV processes. Verra, for example, is forming new dMRV working groups, such as the Forest Carbon Technology Working Group formed in January 2024 to develop frameworks on how to integrate dMRV across all Verra projects. 

However, given the buyers’ demand for transparency and quality, many project developers are increasingly choosing to adopt dMRV technologies, voluntarily providing more data visibility above and beyond what is required by the verifiers. Real-time data sharing helps differentiate projects and boosts buyers’ confidence, hence enabling project developers to secure a price premium on their credits. 

Implication for project developers 

These advancements add complexity for carbon project developers. Fragmented and emerging dMRV technologies create challenges in selecting the right provider, especially when official guidance from registries has yet to be developed. New innovations, such as in-situ soil carbon measurement, are still in relatively early stages and might take some time to build credibility for both buyers and developers to ramp up their understanding and acceptance. As we discussed in earlier blog posts, creating a carbon project itself is already challenging for many project developers. The complexity of dMRV technologies and the provider landscape makes it even harder for experienced developers to navigate. 

The economic aspect also adds complexity, as project developers weigh the cost increase of implementing MRV technologies against the potential revenue upside that can be achieved through data transparency. One study finds that the upfront costs of dMRV can be up to 6 times more expensive than conventional MRV processes. However, over a 10-year horizon, dMRV doubles the cost savings, even after accounting for the higher initial upfront costs. Nevertheless, for project developers who need to front the initial costs (or secure investors for these costs), there is a significant financial tradeoff to adopting dMRV technologies now, especially when they are still not mandated by registries. 

Concluding thoughts

Advances in dMRV technology are promising for increased reliability, accuracy, and cost-effectiveness when assessing carbon credit quality. They would address broader concerns around the validity and transparency of the carbon market and help rebuild the much-needed confidence for the market to achieve its full potential. However, many of these technologies are still nascent and expensive, with new dMRV providers joining the industry every day. The complex provider landscape adds complexity for carbon credit developers in the project design stage before getting into project development. 

If you are a project developer navigating these complexities, or a carbon credit buyer in climate-aligned organizations, our team at NetaCarbon is keen to help you out – we have evaluated many dMRV players out there and are happy to share our insights with you. Please reach out to us via our contact form, and a member of our team will get back to you shortly!