This chapter brings together all the previous ones. Based on the detailed presentation and analysis of the MRV requirements of so many different carbon pricing and management mechanisms – hereafter “carbon pricing mechanisms,” it synthesizes and compares how they answered to the five cross-cutting questions identified in the general introduction to the book:

1. • What are the MRV requirements?

2. • What are the costs for entities to meet these requirements?

3. • Is a flexible trade-off between requirements and costs allowed?

4. • Is requirements stringency adapted to the amount of emissions at stake (materiality)?

5. • What is the balance between comparability and information relevance?

MRV requirements across schemes

The first cross-cutting question – what are the MRV requirements? – is too large to be answered in a synthetic way. This section thus focuses on two components of this question that have a major impact on MRV costs: requirements pertaining to third-party verification and those pertaining to monitoring uncertainty.

Verification requirements are broadly similar across the board

Most carbon pricing mechanisms impose a verification of the reports by an independent third party. Verification requirements are broadly similar across carbon pricing mechanisms:

1. • the third party must be accredited by a regulator for GHG emissions audits and this accreditation tends to be sector-specific;

2. • the third party must assess whether the methods used and the reporting format comply with the relevant guidelines;

3. • the third party must assess the accuracy, i.e., the absence of bias, of the reported figures;

4. • the regulator is allowed to question the opinion of the auditor, but seldom does so;• the third party tends to be paid directly by the verified entity. Although this creates a potential conflict of interest, the risk of losing the accreditation is a much stronger incentive and keeps auditors from being complacent with their client (Cormier and Bellassen, 2013).

Context

GHG emission data are critical to international efforts to mitigate anthropogenic influence on the planet. The EU ETS (Emission Trading System) offers two methods for the determination of these emissions, a calculation and a direct measurement approach. Direct measurement is the monitoring of the mass emission of these compounds to air. The procedures, requirements and implications of each method have distinct differences. Chapter 5 emphasized the more commonly used “calculation approach” in this chapter we discuss the direct measurement method or measurement-based approach as it is more commonly referred to in the MRR (Monitoring and Reporting Regulation) of the EU ETS. Through its course we will answer some key questions:

1. • What are the main principles behind direct measurement?

2. • What are the selection criteria for direct measurement monitoring systems?

3. • What are the MRR requirements on direct measurement?

4. • What are the challenges of its implementation?

5. • What are the associated uncertainties?

6. • How does it compare against the calculation method?

The answers to these questions will allow the reader to understand the process behind the choice of a direct monitoring methodology and what needs to be considered in order for the method selected to be suitable to industry and individual installation characteristics. The direct measurement uncertainty requirements and if and how these can be adhered to, will also be discussed within the context of this chapter. Due to the nature of how the EU ETS operates the allowances from each installation are surrendered and traded at an absolute value and with no uncertainty attached to them. However, in order to facilitate fair trade stakeholders within the scheme need to be confident that the traded allowances are comparable within specified limits. It is there - fore essential that the initial reported GHG figures are determined with an uncertainty value associated with them and that this value is as low as practically possible depending on the size and emissions of each participating installation.