Major Economies Business Forum:
Perspectives on Measuring, Reporting, and Verification
Key Messages•

Proposed policies and actions, especially those aimed to mitigate greenhouse gas emissions andpromote technology development and deployment, are likely to have important implications fornational and international economies, growth, jobs, competitiveness, and economic development, as
well as for the environment.

•Business supports the idea that governments should measure, report and verify, in a transparent
transparen way,
their efforts to implement climate policies, and that reports should be subject to some form of review.

•Measuring, reporting, and verification (MRV) have been interpreted in various ways. Current
negotiations in the Ad Hoc Working Group on Long
Long-Term Cooperative Action focus on MRV as a tool fortransparency, not enforcement.

•To minimize waste and duplication, countries should take advantage wherever possible of existing MRV
methodologies and practices developed and in use by business and national gov
governments.
ernments. However,new policy proposals, e.g.. Nationally Appropriate Mitigation Actions, may require development of newmethodologies.

•MRV should be acceptable to developed, emerging and developing countries.

•MRV should not be used as a tool to restrict ininternational trade.

•Business has much experience to draw on and is ready to assist.

Introduction
A new international climate change agreement has
the potential to impact significantly business
operations and markets. Therefore, businesssupports the idea that governments shouldmeasure, report, and verify, in a transparent way,
their efforts to implement climate policies, and thatreports should be subject to some form of review.
It is important to recognize, however, that there aremany different views on what constitutes
transparency, how it would be instituted, and what
the impacts on business might be. The following
paper provides business perspectives on these andother related issues.
Negotiations under the Bali Action Plan call formeasurement, reporting, and verification (MRV) ofactions undertaken by developed and developing
nations being negotiated by the Ad Hoc Working
Group on Long-term Cooperative Action (AWGLCA). The term MRV is also being used generically
now with reference to activities that may require
reporting under existing or proposed terms of theUN Framework Convention on Climate Change(UNFCCC) and Kyoto Protocol. These include, forexample, new or modified provisions for futurereporting by Annex I Parties and for procedures toqualify and report under proposed new offset
mechanisms.
It is important to note that the types of informationand their use in different arenas may be completelydifferent. Verification of reports may have distinctly
different purposes and implications in differentapplications. For example, verification plays a rolein compliance under the Kyoto Protocol, but it may
serve a different purpose—e.g., it may serve simply
to confirm the integrity and accuracy of reported
information—under an agreement reached in theAWG-LCA.
The following provides some initial businessperspectives that we believe could be of value togovernments as they consider the best way toapproach MRV.

December 7, 2010

Current reporting under the UNFCCC and Kyoto
ProtocolThe UNFCCC and Kyoto Protocol currently impose
reporting obligations. Both Annex I and Non-Annex
I parties file national reports on their activities
under the UNFCCC. The Kyoto Protocol places
additional, stronger requirements on participatingAnnex I Parties to report covered greenhouse gasemissions.
Annex I Parties are required to submit informationon their national emissions inventories annually,and to submit national communicationsperiodically.
Annex I Parties that have ratified the Kyoto Protocol
must also include supplementary information in
their national communications and their annual
inventories of emissions and removals of GHGs todemonstrate compliance with the Protocol'scommitments. The primary compliance obligationfor emissions from Annex I Nations under the Kyoto
Protocol is assessed with respect to annual nationalemissions inventories for the current Kyoto gasses(carbon dioxide, methane, nitrous oxide,hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride). Nations are expected to report using
Intergovernmental Panel on Climate Change (IPCC)
Guidelines for emissions inventories, andinventories are subject to expert review.
Annex I Parties have agreed to provide financial
support to Non-Annex I Parties preparing reports
under the UNFCCC. There are no fixed dates for thesubmission of national communications by NonAnnex I Parties, although it is expected that
documents will be submitted within four years of
the initial disbursement of financial resources toassist them in preparing their nationalcommunications.
In addition to information on greenhouse gas
emissions and removals, national communications
for both Annex I and Non-Annex I Parties contain
information on national circumstances, vulnerability
assessments, financial resources and transfer oftechnology, and education, training, public
2|Pageawareness, and, where appropriate, policies andmeasures. Annex I reviews are subject to an in—
depth review by the UNFCCC.
As applied to the Kyoto Protocol, national GHG
emissions inventories prepared under IPCC
Guidelines and subject to international review are
the primary instruments for MRV.
MRV in the Bali Action Plan
The Bali Action Plan calls for MRV of proposed
actions by developed and developing nations
agreed to under the mandate of AWG-LCA. MRV
aims to build transparency and confidence
regarding progress. Under AWG-LCA the “V” in MRV
is portrayed as a tool to report on theimplementation of national commitments andachievements. It is not intended as a tool to be usedin assessing compliance with anticipated outcomes.
The Bali Action Plan calls for MRV in three generalareas:financial aid from developed to developingnations;
technology transfer from developed todeveloping nations; andactions undertaken by developing nations.

Proposed actions by developing nations span a wide
range of efforts that will require a correspondingly
large set of methodologies, for which to date there
is little international experience. For example,
several proposals refer to deviations from Businessas Usual projections in a future year. Defining“Business as Usual” (BAU) may prove as difficult as
defining“additionality”
inproject-based
mechanisms. Other proposals refer to improving
sectoral energy efficiency, which may pose difficult
methodological issues, especially over baselines andthe wide range of national circumstances in which
sectors function.
Funding initiatives proposed by developed nations
include a variety of new sources and mechanismsthat may also pose challenges, particularly to
substantiate that such funds are new and
December 7, 2010

additional. As yet not agreed negotiating text could
place other conditions on financial aid, e.g.
adequate, predictable, or tied to other factors suchas a percentage of GDP. Presumably MRV would
need to judge aid according to these criteria.
While procedures to assess financial aid can well be
imagined based on experience using existing audit
and control approaches, it remains unclear what
MRV approaches or metrics developed nations
might use to address technology transfer todeveloping nations.
Because many of the potential actions andframeworks to assess them, for example intechnology transfer and Nationally Appropriate
Mitigation Actions—or NAMAs—remain poorly
defined, development of methodologies for MRV
may require significant effort.
BizMEF views on MRV
Policies and actions to tackle climate change willhave important economic implications forcompetitiveness, economic growth and jobs. These
policies and actions also may lead to immediate ortrickle down reporting requirements that willalmost certainly affect businesses. This supports theneed for efficient, reliable MRV procedures toassess the effectiveness and consequences of thesepolicies and actions.
Transparency is a key to open markets and tobusiness planning. Business will be reticent toparticipate in markets without strong MRV, whichhelps provide assurance that its investments inemissions reduction projects and offsets haveintegrity. Business-led solutions that are acceptableto both developed and developing countries areneeded.
Over the past two decades business has undertaken
significant effort to develop and implement
procedures to identify and report greenhouse gas
emissions from operations and from customers useof products, and to assess efficiency. Business also
has considerable experience dealing with official

3|Pagereporting relevant to international investment andtrade.
Negotiators and nations should consult withbusiness, as appropriate, to design reliable, efficientand effective MRV procedures, especially those that
may impose or lead to obligations on companies. In
particular business would like to be able to buildfrom existing experience and reporting procedures
and to avoid redundant, overlapping, ambiguous, or
needlessly expensive or burdensome requirements.
Procedures, as well as results, for MRV should be
subject to external review and audit with a view tofinding opportunities over time for improvements inreliability, effectiveness, and efficiency. Where
possible, MRV should depend on common andagreed protocols to promote consistency andcomparability.

MRV requirements should be acceptable todeveloped, emerging, and developing economies
and not create trade tensions. Many businesses areconcerned that MRV could be used as a vehicle toimpose border adjustments, or “carbon tariffs.” Ourorganizations have a strong interest in ensuring thatanewagreement
promotes
economicdevelopment, competitive business communities,
and a level playing field for industry. Using MRV toimpose unilateral border adjustments on imported
goods may invite retaliation that could restrict tradeflows sharply and slow the dissemination ofadvanced technologies and business practices. MRVshould not be used as a tool to erect barriers to freeand open trade and investment.
Business stands ready to contribute our experienceand expertise to the development of MRV in
national and international applications.

Australian Chamber of Commerce and Industry
Australian Industry Group
BUSINESSEUROPE
Canadian Council of Chief Executives
Confederation of British Industry
Confederation of Indian Industry
Dansk Industri
Confindustria
Federation of German Industries – BDI
Iniciativa para el Desarrollo Ambiental y Sustenable – IDEAS (Mexico)
Korea Chamber of Commerce & Industry
Mouvement des Entreprises de France
Nippon Keidanren (Japan Business Federation)
US Chamber of Commerce, Institute for 21st Century Energy
US Council for International Business

December 7, 2010

4|PageAbout BizMEF
The Major Economies Business Forum on Energy Security and Climate Change (BizMEF) is a partnership of major
multi-sectoral business organizations from major economies. Modeled after the government-to-government
Major Economies Forum, BizMEF is a platform for these groups to:promote dialogue and exchange views on climate change and energy security across a broad spectrumof business interests including major developed, emerging, and developing economies;highlight areas of agreement among participating organizations on the most important issues forbusiness in international climate change policy forums; and

share these views with governments, international bodies, other business organizations, the press, andthe public.

Organizations that have participated in BizMEF meetings represent business groups in Australia, Brazil, Canada,
China, the European Union, Denmark, France, Germany, India, Italy, Japan, Kenya, Mexico, the United Kingdom,
and the United States. Collectively, BizMEF organizations represent more than 25 million businesses of every
size and sector. Because BizMEF partnering organizations represent a broad range of companies andindustries—including energy producing and consuming companies as well as energy technology and service
providers—the partnership is able to provide robust and balanced views on a range of issues.
For more information on BizMEF, please visit our website at: www.majoreconomiesbusinessforum.org.

December 7, 2010

5|Page