Towards improved cost estimates for monitoring, reporting and verification of carbon dioxide removal

Alongside actions to rapidly reduce greenhouse gas emissions, carbon dioxide will need to be removed from the atmosphere if the world is to meet the Paris Agreement climate goals. The proliferation of net zero targets, and by extension the use of carbon dioxide removal (CDR), has led to increased attention on the governance of CDR. Monitoring, reporting and verification (MRV) is a central component of the governance architecture.

This report examines the cost of MRV for different CDR methods, the extent to which the cost of MRV for different methods is perceived as a barrier to their upscaling, where opportunities lie to reduce the cost of MRV and what factors influence the choice of MRV protocol. It provides recommendations for the UK government but which are more widely applicable.

Main messages

• Collecting detailed and accurate information on the cost of MRV for CDR is a challenge. Little information is publicly available, and companies find it difficult to share what information they have.
• Approaches to MRV are currently in a dynamic phase of iteration.
• There are large variations in the cost of MRV within and between CDR methods. MRV can account for over 50% of costs for some techniques (e.g. ocean alkalinity enhancement, enhanced rock weathering and soil organic carbon) and up to 73% (for biomass sinking).
• For some methods, the cost of MRV could therefore be an important factor in determining long-run marginal costs of CDR.
• Not all CDR projects consider the cost of MRV to be a barrier to upscaling. Those that do typically have higher relative costs and relate to open-system marine CDR methods.
• Uncertainty about future government regulation and a lack of protocol standardisation are major barriers to assessing and reducing the cost of MRV.
• High operating expenses (OPEX), particularly those relating to labour costs for fieldwork and sampling, contribute significantly to the overall cost of MRV.
• Some uncertainty over quantifying net removal in MRV is inevitable.

High-level recommendations for the UK and other jurisdictions

1. The UK’s Department for Energy Security and Net Zero (DESNZ) should prioritise harmonising MRV practices and principles in the UK with jurisdictions such as the EU and US and develop common cross-jurisdictional MRV data collection and management practices.
2. Instilling greater transparency is a way to overcome information asymmetries that stymy market development and increase costs.
3. DESNZ should develop MRV support mechanisms that are adaptive and recognise the varying needs of different CDR processes by supporting MRV cost reductions. This could be in the form of targeted capital expenditure (CAPEX) support for advanced sensors, remote sensing applications and AI-driven data verification. For labour-intensive CDR pathways, OPEX support is also required.
4. Standard-developing organisations and jurisdictions should adopt conservative approaches to crediting, including considering if it is too premature to credit some methods today.
5. DESNZ and other relevant agencies in the UK should develop a framework that allows MRV protocols to be graded based on their performance against minimum standards. The protocols must not be so complex that they present a barrier to achieving desired outcomes or so stringent that they make MRV prohibitively expensive.
6. Economic approaches to valuing temporary storage should move towards method-specific MRV cost assumptions. This would be an important step forward, not least because it might change how the cost-effectiveness of temporary storage versus more durable CDR is currently perceived.