MRV and compliance

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Date produced: 21/11/2009

1. What is the exact difference between MRV and compliance?

2. Is it possible to make a clear distinction between a strong MRV system and a compliance system which only includes facilitative elements, but no enforcement?

3. Did the Senate raise legal/constitutional concerns when the USA accepted the compliance system of the Montreal Protocol?

Question 1:

“Measurable, reportable and verifiable” (MRV)

The Bali Action Plan 2007 (BAP 2007) called for the mitigation commitments and actions of both developed and developing countries to be measurable, reportable and verifiable. This was stated in paragraphs 1(b)(i) and 1b(ii) of the BAP 2007:

    “(b) Enhanced national/international action on mitigation of climate change, including, inter alia, consideration of:

(i) Measurable, reportable and verifiable nationally appropriate mitigation commitments or actions including quantified emission limitation and reduction objectives, by all developed-country Parties, while ensuring the comparability of efforts among them, taking into account differences in their national circumstances; and

(ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building in a measurable, reportable and verifiable manner.”

The concepts of measurable, reportable and verifiable as interpreted for the purposes of this note are described below.

“Measurable”

The concept of measurement is to describe a phenomenon in reasonably precise and objective terms. As such, it must be determined what in the first instance is “measurable”.

Although typically associated with quantifiable attributes, the concept of “measurable” can be applied to almost all phenomena.

“Reportable”

Reporting is key in any international agreement as it provides a foundation for assessing a party’s progress and as a foundation for further action. According to the PEW Center on Global Climate Change’s policy paper entitled “Measurement, Reporting and Verification in a Post-2012 Climate Agreement” (the “PEW Policy 1”) there are two factors which would impact on successful reporting:[1]

  (B) the precision and reliability of the reported information (which is closely linked to the issue of measurement); and

 (C) the degree to which information is presented in a transparent and standardized way that allows comparisons between reports and verification by others.

“Verifiable”

Verification refers to the “process of independently checking the accuracy and reliability of reported information of the procedures used to generate information…”[2].

Verification is a factual checking process whereby facts presented are diligenced to ensure accuracy. As such, verification in its purest form will not involve judging or drawing conclusions from a set of facts; it is simply a “checking” process.

Verification is used in many international agreements as a means of enabling parties to assess one another’s performance.

“Compliance”

The UNEP Guidelines on Compliance with and Enforcement of Multilateral Environment Agreements (Nairobi 2002) defines compliance as “the fulfilment by the contracting Parties of their obligations under a multilateral environmental agreement and any amendments to the multilateral environmental agreement”.[3]

The ordinary meaning of compliance is the action of complying[4], or being in a compliant state.

Assessing compliance involves legal judgment as to whether a party is in compliance with its obligations. Unlike verification (which is a factual process), compliance involves an actual assessment or judgment in order to come to a decision on whether a party has complied with its obligations.

Relationship between verification and compliance

Even though the concepts of verification and compliance are distinct and they each have different objectives, they are still closely related as verification can play a preliminary role by providing the factual predicate for later legal determinations. Factual verification is important as an inaccurate/incomplete verification would result in an inaccurate compliance decision as the facts on which the judgment is made is not accurate in the first place.

The key difference between MRV and compliance is therefore the objective of each process:

  •  The purpose of MRV is to ensure accountability by requiring the accurate reporting of a factual position.
  • The purpose of compliance is to assess the factual position in order to make a judgement as to whether or not the party is in a compliant state.

What can be concluded is that an MRV exercise does not necessarily need to be followed by a compliance process, but a proper MRV exercise should be carried out before a proper compliance process can be made.

Question 2:

According to the authors of the PEW Policy 1, an MRV system in a new climate change agreement would provide an important means of tracking parties’ progress individually towards the UNFCCC’s ultimate objectives. A strong MRV can strengthen mutual confidence in countries’ actions and enhance a stronger collective effort. Their views of an MRV are that:

  • the measurement process can facilitate parties’ actions by establishing baselines and help to identify mitigation potentials;
  • the reporting process can allow for international recognition; and
  • the review or verification of parties’ actions can enhance action through expert advice on opportunities for improvement.The PEW Policy 1’s view is that a new enhanced MRV system which builds on the UNFCCC and Kyoto Protocol’s existing process would be sufficient to achieve the goals in a new climate change agreement.

However, this is not the view adopted in another policy paper published by PEWCenter on Global Climate Change. The paper, entitled “Verifying Mitigation Efforts in a New Climate Agreement”[5]  (the “PEW Policy 2”)  calls for a rigorous MRV system, followed by a facilitative compliance system to ensure that the climate change agreements obligations are met by its participants.

Facilitative compliance

According to the PEW Policy 2, a new climate change agreement should include a rigorous system of MRV followed by a clear determination of whether a party is in compliance with its commitments.

The compliance regime should however, be facilitative in nature, rather than punitive in order to help identify and overcome obstacles to implementation. The view is that a facilitative compliance regime would encompass an independent determination of a party’s compliance status, and in cases of non-compliance, to provide implementation assistance.

The facilitative compliance process would see the formation of a new COP[6]-appointed Implementation Committee which will provide facilitative support and/or enforces market eligibility rules in cases of non-compliance.

This new Implementation Committee would have the following roles:

  •  Make determinations as to whether a party is in compliance with its commitments;
  • Determine whether a party has satisfied the agreement’s rules relating to mechanism eligibility (emissions trading, crediting, etc.); and
  • Work with non-complying countries to help them identify obstacles to implementation and take corrective measures.

The view adopted in PEW Policy 2 is that even though a punitive-based compliance regime might provide a stronger incentive for compliance, it could deter some parties from participating in the agreement in the first place.

Punitive compliance

Members of the NGO Community (including WWF, German Watch and Green Peace) produced a draft Copenhagen Climate Treaty and a narrative accompanying the draft treaty[7] (the “Draft Narrative”). Unlike the PEW Policy 1, the Draft Narrative has called for a punitive compliance system which includes, inter alia heavy financial penalties following a strict MRV process. This strict compliance regime would however include early warning mechanisms

The punitive compliance system would only apply to developed countries. The proposed penalties as noted in the Draft Narrative for developed countries who have failed the compliance process would consist of a bond insurance system. The bond should represent a portion of the penalties a party would be required to pay in the case of non-compliance.

A party would be required to make a pre-payment if it appeared that it could not be in compliance (this could act as another incentive to achieve compliance). At the end of a commitment period, the bond would be returned to the party in the case of compliance or forfeited in the case of non-compliance.

The interest accrued on the bond would not, however, be returned to the party and instead be transferred to a new body, known as the Copenhagen Climate Facility[8]. As such, the loss of interest is the penalty for poor planning and slow action.

Facilitative or punitive?

As already noted above, a punitive compliance regime provides a strong incentive to ensure compliance with a party’s obligations. However, it may deter participation in a new climate agreement in the first place as illustrated, for instance, by China’s current position in relation to a new, legally binding, climate change treaty.

On the other hand, a facilitative compliance regime may result in a lax implementation effort by the parties/countries as there are no punitive consequences for failure to comply. Contrary to that, they would be offered assistance to help them implement the required measures. Whilst a facilitative compliance regime may encourage more parties to participate in a new climate change agreement, it may be counter-productive if they have no strong incentive of later complying with their obligations under the same.

Strong MRV and Compliance

A strong MRV system is distinct from a facilitative compliance system; MRV is simply a means of tracking parties’ progress individually and collectively towards a new climate change’s ultimate objective through an accurate reporting system. A facilitative compliance system, (even though it does not impose any punitive measures) would encompass an assessment and legal judgement based on the MRV on whether the party in question is in compliance. In the event that it is decided that the party is not in compliance, then the relevant authority would provide assistance to facilitate the party’s compliance with its obligations. Strictly speaking, a pure MRV process (no matter how rigorous) would not be able to determine whether a party has complied with its obligations if it is not subject to a legal judgment of its performance.

Question 3:

As requested, we have researched whether the legislative history of the Clean Air Act Amendments of 1990 (which implemented the Montreal Protocol in the US) included any indication that Congress discussed the constitutionality of the Montreal Protocol.

The only discussion regarding constitutionality was contained in a report by the House Ways and Means Committee (excerpted below):

       “The Committee also believes that the fees that may be imposed by States on the import of products that contribute to the formation of ozone constitute restrictions on international trade and should be deleted from H.R. 3030 because they violate the General Agreement on Tariffs and Trade and raise serious Constitutional concerns.”

The ‘Constitutional concerns’ mentioned above were not discussed further. The language on imports identified above was deleted from the final bill:

Extract from original bill (section 182(g)(4):

“(A) An economic incentive program under this paragraph shall be consistent with rules published by the Administrator and sufficient, in combination with other elements of the State plan, to achieve the next milestone. The State program may include a nondiscriminatory system, consistent with applicable law regarding interstate commerce, of State established emissions fees or a system of marketable permits, or a system of State fees on sale, import, or manufacture of products the use of which contributes to ozone formation, or any combination of the foregoing or other similar measures” (emphasis added).

Extract from final bill (section 182(g)(4):

“(A) An economic incentive program under this paragraph shall be consistent with rules published by the Administrator and sufficient, in combination with other elements of the State plan, to achieve the next milestone. The State program may include a nondiscriminatory system, consistent with applicable law regarding interstate commerce, of State established emissions fees or a system of marketable permits, or a system of State fees on sale or manufacture of products the use of which contributes to ozone formation, or any combination of the foregoing or other similar measures”.

The only other expression of Constitutional concerns is in the statement of President Bush upon signing of the bill, in which he expresses concern about the constitutionality of the limitation imposed on his ability to remove members of the Chemical Safety Investigation Board and of the provisions providing for citizen suits for civil penalties.



[2] COP is the “supreme body” of the United Nations Framework Convention on Climate Change (UNFCCC) and is the highest decision-making authority. It consists of environment ministers who meet once a year to discuss the UNFCCC’s development.

[4] The Copenhagen Climate Facility would be a new and enhanced finance and technology mechanism operating under the guidance and authority of COP.

[5] “Measurement, Reporting and Verification in a Post-2012 Climate Agreement”, Claire Breidenich and Daniel Bodansky at page 5. Available at: http://www.pewclimate.org/docUploads/mrv-report.pdf

[6] See footnote 1, at page 6.

[7] Page 19 of UNEP’s “Compliance Mechanisms Under Selected Multilateral Environmental Agreements”. Available at: http://www.unep.org/pdf/delc/Compliance_Mechanism_final.pdf