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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 ( and the Austrian-based International Institute for Applied Systems Analysis (, 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..."[1]  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.

Pole tekstowe: Rationale for Improving and Conducting Uncertainty Analyses:
1.	Only by carrying out research on uncertainties are we better equipped to handle uncertainties in the future.
2.	Uncertainty analyses provide a standard measure that can facilitate the process of comparing national GHG inventories to one another.
3.	Uncertainty analyses help to identify the most prudent opportunities for improvement in the methods and estimates of GHG emissions and emission changes in national assessments.
4.	Uncertainties play a role in determining whether or not commitments are credibly met. 
5.	Uncertainties must be considered if emissions trading markets are to function as intended.  Solid uncertainty assessments will result in higher, more stable prices.
6.	The Kyoto Protocol process will be made more robust in the future by setting targets (ex-ante) that explicitly account for the uncertainties associated with emission changes.  
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

Matthias Jonas and Sten Nilsson
Forestry Program
Wilfried Winiwarter
Air Pollution Program
International Institute for Applied
Systems Analysis (IIASA)
Laxenburg, Austria


[1] Penman, J., D. Kruger, I. Galbally, T. Hiraishi, B. Nyenzi, S. Emmanuel, L. Buendia, R. Hoppaus, T. Martinsen, J. Meijer, K. Miwa and K. Tanabe (eds.) (2000). Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories. Institute for Global Environmental Strategies, Hayama, Kanagawa, Japan, p. 6.5. Available at:


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