Uncertainty in Greenhouse Gas Inventories:
Verification, Compliance and Trading
Warsaw, Poland, 24-25
September 2004
The assessment of greenhouse gases (GHGs)
emitted to and removed from the atmosphere is high on both political and
scientific agendas internationally. Under the United Nations Framework
Convention on Climate Change (UNFCCC), parties to the Convention have published
national GHG inventories, or national communications to the UNFCCC, since the
early 1990s. Methods for the proper accounting of human-induced GHG sources
and sinks at national scales have been stipulated by institutions such as the
Intergovernmental Panel on Climate Change (IPCC) and many countries have been
producing national assessments for well over a decade. As increasing international
concern and cooperation aim at policy-oriented solutions to the climate change
problem, however, several issues have begun to arise regarding verification and
compliance under both proposed and legislated schemes meant to reduce the
human-induced global climate impact.
Pilot and voluntary GHG emissions trading
schemes already exist in the US, UK, and Europe, and the European Union is expected to become the
world's largest legislated GHG emissions trading market with emissions trading
set to begin in 2005. Common to burgeoning market-oriented GHG reduction
schemes worldwide and global as well as national GHG inventory analyses is the
concept of single-point estimates of emissions and emission changes. This
accounting method raises a host of crucial questions either directly or
indirectly linked to the issue of uncertainty, especially in the context of
accounting for emission changes, the central focus of the Kyoto Protocol to the
UNFCCC.
The issues of concern at the International
Workshop on Uncertainty in Greenhouse Gas Inventories, held September 24-25, 2004, in Warsaw, Poland,
are rooted in the level of confidence with which national emission assessments
can be performed, as well as the management of uncertainty and its role in
developing informed policy. Jointly organized by the Systems Research
Institute of the Polish Academy of Sciences (http://www.ibspan.waw.pl/)
and the Austrian-based International Institute for Applied Systems Analysis (http://www.iiasa.ac.at/), the Workshop covered
state-of-the-art research and developments in accounting, verifying and trading
of GHG emissions and provided a multidisciplinary forum for international
experts to address the methodological uncertainties underlying these
activities. The topics of interest covered national GHG emission inventories,
bottom-up versus top-down emission analyses, signal processing and detection,
verification and compliance, and emission trading schemes.
Central to current international policy
concerns and the present discussion alike is the need for a well-defined
role - if in fact any role is to be played - of uncertainty analyses in national
GHG inventories at the country level, as well as in those falling under the
purview of international regulatory schemes. International schemes such as EU
emissions trading or as that set forth by the Kyoto Protocol - if they are to
function as binding agreements - must be able to demonstrate that estimates
regarding emissions changes are not only measurable, but also that they comply
with an objective and standard measure that ensures consistent treatment of the
uncertainty with which they are associated. The evaluation of multiple methods
through and reasons for which uncertainty analyses are incorporated into
national GHG inventories is thus of primary importance.
While uncertainty estimates are not
intended to dispute the validity of national GHG inventory figures, the
variability that they communicate underscores the lack of accuracy that characterizes many source and sink categories'
methodologies and thus makes for a difficult foundation on which to base
policy. This does not, however, imply that environmental agencies, corporate
environmental departments, and other stakeholders should simply do without
uncertainty estimates; to the contrary, a number of arguments illustrate the
importance of these analyses.
According to the IPCC Good Practice
Guidance and Uncertainty Management in National Greenhouse Gas Inventories, uncertainty
analysis is intended to help "...improve the accuracy of inventories in the
future and guide decisions on methodological choice..." Uncertainty analyses function
as excellent indicators of opportunities for improvement in data measurement,
data collection, and calculation methodology; only by identifying elements of
high uncertainty can methodological changes be introduced to address them. Currently,
most countries that perform uncertainty analyses do so for the express purpose
of improving their future estimates; this rationale is generally the same at
the corporate level. In either case, estimating uncertainty helps prioritize
resources and take precautions against undesirable consequences. Depending
upon the intended purpose of an inventory, however, this may or may not be the
extent of uncertainty analysis' utility. Another rationale for performing
uncertainty analysis is as a policy tool, a means to adjust inventories and
compare emission changes in order to determine compliance. While some authors find
the quality of quantitative uncertainty data associated with national
inventories insufficient to use for these purposes, a number of studies offer
justification for conducting uncertainty analyses to inform and enforce policy
decisions. Some proposals suggest revising the system of accounting on which current
reduction schemes are based, while others seek to incorporate uncertainty
measurements into signal analysis procedures that might offer policymakers the
advantage of bottom-up/top-down emissions verification procedures. Whether uncertainty
analysis can or should serve any of these varied purposes, however, continues
to be the subject of scientific debate, and an important element reflected in
the presentations, papers, and discussions of the Workshop. These discussions
attempted to bring to light further implications of and rationale for
quantifying uncertainty that in many cases have not yet received significant
attention from the international scientific or political community.
Single-point emission estimates that do not
account for the presence of uncertainty are not likely to be respected by the
scientific community as accurate assessments unless many input factors and
methodologies undergo some degree of scrutiny beyond that which has been
afforded by governments to date. It is generally understood that the current
scientific methods used to measure data, as well as those used to calculate
emissions, are only accurate within a range, or to a certain degree. It is
important to measure and communicate what this degree (of confidence) is in
order to encourage confidence in the accepted methods and practices. In the
realm of international cooperation and emission reduction efforts, especially
where market forces are involved, credibility is very important. This
criterion comes into play in determining whether country commitments have been
met, and is crucial if comparisons are to be made from one country to the next.
Bottom-up versus top-down verification, for example - comparing a
traditionally-estimated inventory with an alternative inventory that uses atmospheric
or remote sensing measurements - offers a significant opportunity through which to
improve credibility.
A more regulatory approach suggests using
consistent emission estimation algorithms between countries, seeking to
minimize the uncertainty inherent in the differences between national estimates
by isolating common uncertainties. Another approach introduces the concept of effective
emission permits. The value of an effective emission permit is determined
by the uncertainty associated with the measurements of the emissions that the
permit represents. Consequently, permits' market values increase as their uncertainties
decrease. This concept builds upon that of undershooting, according to which
entities can only prove compliance by reducing emissions to such a level as to minimize
the risk of non-compliance (i.e., emissions must be reduced far enough below
the target that with some degree of confidence it can be said the target was
actually met). Both of these approaches require an accepted reference
reduction or detectability level that is valid for all countries; the institutionalization
of either of them, however, requires that reliable quantitative uncertainty assessment
be incorporated into policy design, which - as noted above - remains a matter of significant
discussion.
Through combining emissions studies and
economic evaluation, it is possible to compare uncertainty levels in different
emissions trading schemes. It has been shown that the boundaries delimited by
legislation can significantly influence the credibility of the legislation's
results (i.e., achievements). For example, significant uncertainty is introduced
by a scheme covering all GHGs, such as that introduced by the Kyoto Protocol, compared
to the EU emission trading scheme (which covers only CO2). A more
rigid emission accounting system than that currently employed by national
inventory agencies might allow for country-specific flexibility while ensuring a
greater inter-country comparability of emission estimates and their
uncertainties.
The approaches to addressing uncertainty
discussed during the Workshop attempt either to improve national inventories or
to provide a basis for the standardization of inventory estimates to enable
comparison of emissions and emission changes across countries. Some seek to use
detailed uncertainty analyses to enforce the current structure of the emission
trading system while others attempt to internalize high levels of uncertainty
by tailoring the emissions trading market permits. These approaches all agree,
however, that uncertainty analysis is a key component of national GHG inventory
analyses. The issues raised by the authors and participants of the Workshop - and
the role that uncertainty analyses play in many of their arguments and/or
proposals - highlight the importance of such efforts. While IPCC clearly
stresses the value of conducting uncertainty analyses and offers guidance on executing
them, the arguments in favor of performing these studies go well beyond any
suggestions made by IPCC. Several potential reasons for national GHG inventory
teams to continue to improve and standardize the research and estimation
methodologies that lead to quantifiable estimates of uncertainty associated
with GHG inventories were identified during Workshop discussions and are noted in
the text box at right.
Prepared by
Daniel Lieberman
Climate Policy Group
Energy Policy and Programs
ICF Consulting
Washington, DC, USA
Zbigniew Nahorski
Systems Research Institute
Polish Academy of Sciences
Warsaw, Poland
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Matthias Jonas and Sten Nilsson
Forestry Program
Wilfried Winiwarter
Air Pollution Program
International Institute for Applied
Systems Analysis (IIASA)
Laxenburg, Austria
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