Evidence Quality and Carbon Credit Outcomes in a Methane Abatement Project

Methane-abatement projects are engineering systems whose finance-relevant outcomes are associated not only with physical mitigation but also with the quality of the monitoring, reporting, and verification (MRV) system used to document, validate, and support carbon-credit revenue claims [1], [2], [3]. In practice, the conversion of measured mitigation into carbon-credit revenue is constrained by evidentiary and institutional conditions. Carbon credits are more than environmental units; they are evidence-based claims whose value depends on the credible demonstration and defense of avoided emissions [1], [4], [5]. In this study, carbon credits are treated analytically as evidentiary claims that become financial assets only when they are defensibly supported.

These evidentiary weaknesses are especially visible at the project level because they are closely linked to finance-relevant project outcomes. While a methane-reduction project might create measurable physical reductions, the commercial realization of the revenues generated by such reductions is less certain when data gaps, a lack of proper audit-trail documentation, or poor MRV governance prevail. Verification agencies tend to exercise conservative practices when reviewing data that is either incomplete or hard to verify [1], [2], [6]. The lack of consistency in monitoring data, poor calibration documentation, lack of timestamps, or difficulty verifying evidence could make verifiers question the evidence and defer issuing or even issuing credits to avoid over-crediting [2], [3], [7], [8], [9], [10], [11]. Such issues are not merely procedural evidentiary problems but rather concern whether the measured reductions are defensible for issuance, can trade close to benchmark prices, and are financially viable.

The financial implications of the evidentiary issues above are often overlooked. In an environment where one party possesses more knowledge than another, the buyer might exercise discounts, contingency clauses, or other methods of mitigating risks, and this might have economic consequences [4], [12], [13], [14], [15], [16]. This issue is especially relevant in carbon transactions because settlement confidence often depends on the verification-readiness of technical records. Issuance delays may further increase financial uncertainty by extending the interval between mitigation and monetization. Credits remain illiquid until verification and issuance are completed [1]. Therefore, delays in verification and issuance may widen the gap between risk reduction and credit monetization, reduce present value, and elevate working-capital requirements, even when nominal credit volumes remain constant [17], [18]. From a project-finance perspective, MRV quality should therefore be viewed not only as a compliance requirement but also as part of the project's engineering and management architecture for revenue-risk control.

Prior research has made important contributions to carbon market integrity and MRV governance. Still, it offers only limited project-level explanations of how engineering evidence-management practices are associated with finance-relevant project outcomes. Two studies focusing on integrity most consistently find systemic over-crediting and identify fundamental structural vulnerabilities in crediting mechanisms [19], [20]. Governance-related research highlights the roles of transparency, disclosure, and institutional reform as preconditions for rebuilding trust [21]. Emerging work on digital MRV suggests that enhanced data infrastructures may improve traceability and auditability, while also noting that such advances do not necessarily address more fundamental issues such as counterfactual uncertainty, additionality, or baseline rigor [3], [22], [23], [24], [25], [26], [27]. For engineering project managers, the unresolved issue is not only whether mitigation has occurred, but whether monitoring records, calibration status, timestamps, and data lineage can be managed as a verification-ready system [10], [28], [29]. What remains underdeveloped is a transparent project-level mechanism for examining how evidentiary quality is associated with finance-relevant outcomes. Such a mechanism can connect monitoring continuity, calibration validity, timestamp coherence, and data traceability to project-finance-related indicators: the defensible fraction of measured reductions, realized settlement outcomes, and the timing of monetization.

In this analysis, a project-specific approach is adopted to examine the relationships among MRV system management, evidence defensibility, revenue-risk indicators, and finance-related project outcomes. The empirical setting involves a complete methane-abatement project in Indonesia, evaluated under two analytical MRV regimes: a legacy regime and an enhanced regime. Two MRV regimes are examined: a legacy regime and an enhanced regime. The research uses a within-project before-and-after design, with engineering activities and accounting practices held constant. In contrast, the evidence systems differ between the two regimes in monitoring consistency, calibration management, timestamp matching, and data traceability.

The analysis evaluates whether stronger MRV evidence is associated with a larger conservatively supportable portion of measured reductions, a smaller realized-price wedge, and a shorter lag from monitoring to issuance. The framework is analytical and does not replicate registry rules or serve as a substitute for verification. Its role is to make the gap between measured mitigation and defensible claims explicit.

The analysis is limited in scope. It does not state that improved MRV fixes higher-order integrity problems in carbon markets. A stronger evidentiary chain cannot address concerns about additionality, baseline construction, leakage, or permanence [19], [20], [30], [31]. Instead, stronger evidentiary conditions may be associated with lower project-level evidentiary uncertainty in the chain from quantified abatement to financially usable revenue. In doing so, the paper contributes to the discussion of MRV as part of the financial and institutional infrastructure through which evidence quality is associated with conservative issuability, settlement outcomes, and issuance timing within a project context.

Accordingly, the study is guided by three analytical expectations. Stronger MRV evidence is expected to be associated with a larger conservatively supportable share of measured emission reductions, a smaller realized-price wedge, and a shorter lag between monitoring closure and issuance. These expectations are evaluated within a single-project comparison under fixed engineering and accounting conditions.

An analytical single-project before-and-after case-study design was applied to compare two MRV regimes within the same methane-abatement engineering project, with engineering operations and accounting rules held constant [22], [29]. This frames the analysis as a project-management question: whether differences in the MRV evidence structure are associated with the degree to which measured mitigation can be defensibly supported, made transaction-ready, and linked to revenue realization on a reasonably predictable timeline [7], [19], [20], [32].

The analysis is limited to within-project associations and does not support cross-project generalization. Carbon credit outcomes are also influenced by factors beyond project-level MRV, including market conditions, contract design, verifier capabilities, and institutional procedures [8], [9], [33]. Neither is a single-site project design immune to these problems, yet such a design helps reduce variation in engineering processes, site-specific factors, and accounting criteria across MRV frameworks. The novelty is the application of a management-based concept whereby the quality of evidentiary material is considered a project variable that is related to certain revenue and risk signals downstream [7], [9], [10], [12], [20].

To keep the analysis clear, an attempt is made to distinguish between the observed and calculated data. The former includes monitoring statements, calibration validity periods, issuance dates, and settlement prices. The latter comprises emissions reductions from engineering calculations, conservative issuability assessed using the low-confidence adjustment metric (LCAM), price differential, and present value adjustment [7], [12].

The empirical context consists of a large-scale methane abatement project situated in Indonesia, using the UNFCCC methane recovery in wastewater treatment (AMS-III.H) guidelines on methane recovery from wastewater, as well as the CDM guidelines related to project emissions through flaring [8], [9]. These protocols define baseline emissions, project emissions, and monitoring requirements. The present study does not modify these methodological rules. Instead, it focuses on how project-level evidence management supports the implementation of those rules and how different MRV evidence conditions are associated with finance-relevant project outcomes.

The project examined in this study is the Utilization of Palm Oil Mill Effluent (POME) for Biogas Co-Firing project, implemented at PKS Lubuk Dalam in Siak Regency, Riau Province, Indonesia. The project captures methane-rich biogas from anaerobic POME treatment using a Covered in-Ground Anaerobic Reactor (CIGAR), a covered lagoon anaerobic biodigester. The captured biogas is directed to a boiler via a biogas co-firing system, while excess biogas is flared. The project is owned and operated by PT Perkebunan Nusantara IV Regional III, while PT SUCOFINDO ICS conducted validation and verification. Further project-context details are provided in Appendix A, Tablet A1.

The official monitoring period reported in the project documents is 19 November 2021 to 18 November 2024. For the within-project before-and-after comparison, this period was divided into two analytical MRV regimes. The legacy MRV regime covers the period from 19 November 2021 to 31 December 2023, comprising 773 daily observations. The enhanced MRV regime covers the period from 1 January 2024 to 18 November 2024, comprising 323 daily observations. These terms are analytical labels used in this study to distinguish earlier and later evidence-management conditions within the same official monitoring period. They are not official labels used in the project design, monitoring, registry, or verification documents.

The legacy MRV regime is described as the earlier evidence-management condition, involving greater evidence fragmentation in preparation, manual record reconciliation, less calibration management, and lesser integration between the operation record and verification evidence. The enhanced MRV regime is described as the latter evidence-management condition, involving greater continuity in monitoring, calibration register management, timestamp management, missing data management, record management, and linkage among the raw monitoring record, the project monitoring calculation sheet, and verification evidence. The comparative description of the two MRV regimes is presented in Appendix A, Table A2.

In a before-and-after research design, the comparative analysis needs to be conducted carefully because the design cannot control all time-varying external factors. The physical mitigation technology, project location, methodology, and overall project boundary can be considered constant across the two MRV regimes. However, other time-dependent variables, such as buyer traits, contractual provisions, market mood, registry handling, verifier workload, and institutional factors, cannot be controlled for in this research design. It would therefore be inappropriate to attribute the observed differences in the project's finance-relevant indicators solely to the shift from the legacy MRV regime to the enhanced MRV regime. This study aims to examine whether the enhanced MRV evidence condition is associated with higher conservative issuability, a lower realized-price wedge, and shorter issuance cadence [7], [20], [32].

The MRV process is considered an engineering management process consisting of seven interrelated steps: data acquisition, instrument calibration, recordkeeping, internal audit, verification inquiry management, issuance, and revenue realization [1], [10]. There is a management activity associated with each step of the MRV process as well as potential failure modes [10], [28], [29]. Data acquisition may fail because of missing data and faulty sensors. Instrument calibration may fail due to an expired certification or a lack of traceability for the instruments. Recordkeeping may fail due to record destruction and a lack of spreadsheet management controls. An internal audit may fail if gaps are not identified before verification. Verification inquiry management may fail because of an untimely response without proper documentation. Issuance may be delayed when the evidence package is difficult to assemble, while price reductions or cash-flow delays may affect revenue recognition.

This workflow frames MRV as a project risk-control infrastructure [1], [28], [34]. This interpretation is consistent with risk-management and project-management standards that emphasize integrating risk control, monitoring, accountability, and performance measurement into routine project decision-making [35], [36]. These indicators are therefore interpreted as management indicators that connect engineering performance to conservative issuability, price-wedge exposure, issuance cadence, and revenue forecasting. The MRV system-management framework and its connection to revenue-risk control are summarized in Figure 1.

The analysis combines observed project records with calculated analytical variables. To improve reproducibility, the study separates observed records from calculated constructs. Observed records include monitoring logs, activity data records, calibration certificates, instrument service records, verification process logs, issuance-related documentation, settlement records, and benchmark price references. Calculated constructs include engineering emission reductions, LCAM, the realized-price wedge, issuance cadence, and present-value adjustment. Detailed information on data sources, coverage, screening, exclusion and treatment procedures, cross-checking procedures, and confidentiality restrictions is provided in Appendix B, Table B1.

The observed data structure follows the operating boundary of the POME for Biogas Co-Firing project at PKS Lubuk Dalam, Siak Regency, Riau Province, Indonesia. Methane-related emission reductions were estimated using time-series monitoring data, including wastewater-flow activity data, untreated and treated chemical oxygen demand (COD) values, biogas combusted, methane fraction, temperature, pressure, flaring-related information, and operational logs recorded at regular intervals [8], [9], [37]. These records consist of timestamped operational measurements, logs, and quality indicators required to apply the relevant UNFCCC methodologies [8], [9]. For MRV systems, high-resolution and traceable data structures are necessary to support auditability and reproducibility [3], [17], [20], [24], [25], [38]. The project monitoring documentation reports ex post activity data for the monitoring period, including wastewater volume, untreated COD, treated COD, biogas combusted, methane fraction, temperature, and pressure, all of which are directly relevant to quantifying methane-recovery performance.

Instrument governance documentation was employed to assess the adequacy of evidence of monitored values. Instrument governance documentation is made up of calibration certificates, the validity of the calibration period, instrument service documentation, and instrument maintenance documentation [25], [30]. A measurement would be considered adequate evidence only if the instrument documenting it was traceable and its calibration or servicing documents were within the monitoring period. The methodology is consistent with the theory that the presence of data is not sufficient for the adequacy of evidence [2], [18], [25], [30]. Further, it corresponds to the verification scope of implementing monitoring, calibrating measuring instruments, and dealing with data gaps.

The records of the verification process were examined to document the path from monitoring closeout to report issuance. Such records include verifier query logs, correspondence, evidence-submission records, corrective-action records, verification opinions, and issuance-related timestamps. The verification report states that the verification process evaluated the completeness, accuracy, and credibility of the project monitoring data and monitoring sheets, the presence of double issuance, and any material differences between the project implementation and the validated design recognition and approval mechanism. The records were also used to analyze issuance frequency as a process output indicative of evidential friction and verification readiness [17], [20].

Transaction-level data were used in their anonymized aggregate form. The data includes settlement prices in Rp/tCO₂e, settlement timings, and contractual provisions. Transaction-level data are not part of technical project-design and monitoring datasets and contain commercially sensitive information. Thus, buyer identifiable terms, confidential contractual provisions, and commercially sensitive transactional data were filtered out before any analysis was performed. The benchmark price is used solely to illustrate the price wedge calculation and is not a reference for the universal market price.

In the intra-project comparison, the data collection period is 19 November 2021 to 18 November 2024, yielding 1,096 daily observations. The old regime spans 19 November 2021 to 31 December 2023, with 773 daily observations, whereas the new regime spans 1 January 2024 to 18 November 2024, with 323 daily observations. Observations were excluded from the evidence-supported dataset when they were missing, corrupted, duplicated, outside the applicable calibration-validity period, not traceable to a source file, or not reconcilable with the corresponding operational or verification record. If an evidentiary weakness was limited to one instrument, parameter, or time interval, exclusion was applied only to the affected record, instrument, parameter, or period, not to the entire project dataset. Detailed evidence-screening rules are provided in Appendix B, Table B2.

Because some project and transaction records are commercially sensitive, the study uses a layered disclosure approach. Information on technical aspects and monitoring is presented at a level sufficient to replicate the analytical process, whereas information related to specific buyers and contract conditions is anonymized. If the primary source of transaction information needs to be protected from disclosure, a template for anonymized transaction records is provided in Appendix B, Table B3.

To enhance notation consistency and clarity of analysis, a list of the principal variables considered in the analyses of engineering, evidence, prices, timing, and revenues is presented in Table 1. A more comprehensive list of variables, with details on their data sources and time resolutions, is provided in Appendix C, Table C1. The variables are grouped into those observed in project records, those that serve as reference values, and analytical constructs that have been calculated. This distinction is important because not all analytical constructs are treated as institutional outputs.

The notation provided in Table 1 will be used consistently throughout the following equations and tables. Price notation has been standardized, with $P_{\mathrm{bench}}$ denoting the benchmark price and $P_{\mathrm{real}}$ denoting the realized price. Similarly, timing notation has been standardized using the $\mathrm{Cadence}_{y}$ and $\Delta PV_{\mathrm{rel}}$ notations.

The variable $\mathrm{LCAM}_{y}$ should be interpreted with particular caution. It is not an official registry metric, does not reproduce formal issuance rules, and is not intended to replace verifier judgment. It is used only as an analytical proxy to make explicit the gap between engineering emission reductions and the portion of those reductions that is conservatively supportable under the specified evidence conditions. Similarly, $\alpha$ is interpreted as an illustrative realized-price wedge rather than as a causal estimate of MRV quality’s effect on carbon-credit pricing.

Annual engineering emission reductions [8], [9], [37] are calculated using the standard accounting identity:

where, $\mathrm{ER}_{y}$ denotes emission reductions; $\mathrm{BE}_{y}$ denotes baseline emissions; and $\mathrm{PE}_{y}$ denotes project emissions.

Baseline emissions are defined as [9]:

where, $\mathrm{BM}_{\mathrm{CH}_4, \text { baseline, } y}$ denotes baseline methane mass; $\mathrm{GWP}_{\mathrm{CH_4}}$ denotes the methane global warming potential.

Project emissions are expressed as [9], [37]:

where, $\mathrm{PE}_{y,\mathrm{flare}}$ is the emission related to flaring; $\mathrm{PE}_{y,\mathrm{residual}}$ is the residual emissions (without considering methane destruction) [8], [9], [37]. This provides the volume of engineering mitigation before evidentiary scaling. The separation of engineering assessment from evidentiary analysis is analytically important because it makes explicit the assumption that realized mitigation is not necessarily equivalent to defensible, financially usable mitigation. The numerical emission-reduction input used in the LCAM and sensitivity calculations is documented in Appendix D, Tables D1–D2.

Engineering emission reductions are translated into a conservatively supportable quantity using LCAM as an evidence-adjusted analytical proxy for conservative issuability. LCAM is not a registry metric, does not reproduce formal issuance rules, and is not intended to replace verifier judgment.

where, $f_{\mathrm{int}}$ denotes interval completeness; $f_{\mathrm{cal}}$ calibration validity; and $f_{\mathrm{sync}}$ timestamp coherence.

Interval completeness is defined as:

where, $T_{\mathrm{valid}}$ is the portion of the monitoring period supported by valid and usable monitoring records; $T_{\mathrm{total}}$ is the entire monitoring period considered.

Calibration validity is defined as:

where, $T_{\mathrm{calibrated}}$ is the portion of the monitoring period during which a documented in-date calibration status covered the relevant instruments.

Timestamp coherence is defined as:

where, $N_{\mathrm{aligned}}$ is the number of observations satisfying the predefined time-alignment rule; $N_{\mathrm{total}}$ is the total number of observations in the monitored dataset. Each factor is computed as the ratio of valid observations to total observations within the monitoring period. LCAM adopts a multiplicative form because the three evidence factors are treated as conjunctive conditions. A complete monitoring interval is less defensible if the relevant instrument calibration has expired, and calibrated measurements are less useful if timestamps cannot be aligned with operational records [41]. The multiplicative structure, therefore, reflects the conservative assumption that weakness in any critical evidence condition is treated as lowering the defensibility of the overall mitigation claim. The construct is deliberately conservative and does not reflect registry rules.

The equation is developed based on the multiplicative structure of emission estimation models, in which activity data or base emission rates are combined with multiple correction factors, as outlined in the UNFCCC CDM methodological tool for project emissions from flaring (version 04.0, 2022) [10]. Because this functional form is an analytical simplification, the robustness of the LCAM comparison is assessed using $\pm$5% evidence-factor sensitivity checks and alternative equal-weighted-average and weakest-link specifications. The base LCAM input values and multiplicative LCAM calculations are documented in Appendix D, Tables D1–D2, while the LCAM sensitivity calculations are reported in Appendix E, Tables E1–E2.

The same evidence-screening rules were applied to both MRV regimes to ensure that the before-and-after comparison used consistent data-acceptance criteria [2], [28], [29]. These rules were used to convert raw monitoring, calibration, operational, verification, and transaction-related records into evidence-supported observations. The purpose of the screening process was not to maximize the estimated issuability of emission reductions, but to identify the portion of monitored mitigation that could be defended under conservative evidence conditions.

The screening protocol follows the operating structure of the POME Biogas Co-Firing project at PKS Lubuk Dalam. The monitoring system contains records with mixed temporal resolutions. Logbook entries, anaerobic-process data, POME flow, COD, pH, temperature, methane fraction, and operating status were primarily recorded daily. In contrast, burner and biogas-supply parameters were recorded hourly during operating periods. Accordingly, daily records served as the primary monitoring unit, while hourly equipment-level records served as supporting traceability evidence for burner operation, biogas supply consistency, and verification of operating conditions.

Five screening rules were applied. First, to ensure complete monitoring, each record had to include the required activity-data field, a timestamp or a monitoring-period identifier, and a traceable source reference. Records were excluded when they were missing, corrupted, duplicated, or not traceable to an original monitoring file, operational log, project monitoring calculation sheet, or verification [2], [3], [17], [20], [25].

Second, calibration validity was assessed at the instrument-record level. A measurement was treated as evidentially valid only when the relevant instrument was supported by valid calibration or service documentation for the corresponding monitoring period. If the evidentiary weakness was limited to one instrument, parameter, or time interval, exclusion was applied only to the affected measurement and period, not to the entire project dataset. This rule was used to avoid both over-inclusion of unsupported measurements and over-exclusion of otherwise valid records [18].

Third, temporal coherence was assessed by reconciling daily monitoring records, hourly operating records, logbook notes, project monitoring sheets, and verification evidence. Because the project files do not specify a fixed minute-level tolerance, this study did not impose an unsupported tolerance such as $\pm$1 minute or $\pm$1 hour. Instead, records were retained only when they could be matched to the same monitoring day or operating interval and reconciled with the corresponding operational or verification record. Records that could not be temporally reconciled were excluded from the evidence-supported dataset.

Fourth, data traceability required each processed value to be linked to a source record, storage location, calculation file, or verification evidence. Manual entries, spreadsheet values, or derived figures without a source file, audit trail, or verifiable calculation pathway were not treated as evidence-supported observations [3], [25], [38]. This rule was applied to prevent unsupported processed data from being treated as equivalent to traceable monitoring evidence.

Fifth, verification readiness required the evidence package to be internally consistent before it was used in the analytical calculation. Monitoring values had to be supported by source records, calibration evidence where relevant, operational explanations for abnormal values, and verification-related documentation. Records linked to unresolved inconsistencies, missing supporting files, or incomplete query-response evidence were flagged and excluded until the inconsistency was resolved.

The screening rules were defined before calculation and applied consistently across the legacy and enhanced MRV regimes. This approach adheres to the principle of measurement control and risk-based project governance, which stipulates that the criteria for acceptance of data must be pre-specified and applied consistently to prevent selective treatment of data [35]. These rules are not meant to replicate all aspects of formal verification. Rather, they provide a consistent and conservative basis for assessing the association between evidence fragility and the defensibility of mitigation claims. The detailed decision criteria, exclusion conditions, affected data fields, and examples are provided in Appendix B, Table B2.

Settlement results are assessed by separating benchmark and realized prices:

where, $\alpha$ is the realized-price wedge defined as:

where, $\alpha$ represents the proportional difference between benchmark and realized prices. In this study, it is used as an illustrative revenue-risk indicator that is consistent with information and delivery-risk exposure, rather than as a universal pricing relation or a causal estimate of MRV impact on prices [4], [16], [31], [33], [38], [42]. The base price-wedge calculation and benchmark-price sensitivity are reported in Appendix E, Tables E3–E4.

Issuance cadence is measured as the duration between monitoring closure and issuance and is defined as:

where, $\mathrm{Cadence}_{y}$ denotes the duration between monitoring closure and issuance.

The present-value impact of earlier revenue recognition is calculated as:

where, CF is a cash flow; $r$ is the discount rate; and $t$ indicates the time to receipt, which is measured in days. Earlier issuance is represented as a relative present-value uplift from receiving the same nominal cash flow sooner, according to standard discounting principles [14], [18], [24], [39], [40].

To convert timing into a finance-relevant indicator, the study computes the relative present-value uplift from receiving the same nominal cash flow $\Delta t$ days earlier at an annual discount rate $r$.

Realized annual revenue is the following:

The present value of the realized annual revenue is defined as [42], [43]:

These three aspects can be classified into analytically distinguishable elements: mitigation [43], conservatively supportable mitigation (represented by LCAM), and monetary value ($R_{y}$). This identity separates engineering performance, evidentiary defensibility, and monetary value into distinct analytical components.

Under fixed engineering and accounting conditions, the enhanced MRV regime is analytically expected to be associated with three more favorable finance-relevant project indicators.

First, a greater share of engineering emission reductions is expected to be conservatively supported by the evidence-screening rules. This relationship is captured in larger values of $f_{\mathrm{MRV}}$ and $\mathrm{LCAM}_{y}$, which indicate that complete monitoring records, valid calibration evidence, and time-consistent documentation support a greater share of measured mitigation.

Second, the realized-price wedge is expected to be smaller under the enhanced MRV regime. A lower $\alpha$ would indicate that the realized settlement price is closer to the benchmark price. However, this indicator should be interpreted cautiously because realized prices may also reflect buyer characteristics, contractual terms, bargaining position, payment timing, and broader market conditions.

Third, the monitoring-to-issuance period is expected to be shorter under the enhanced MRV regime. A shorter $\mathrm{Cadence}_{y}$ would be consistent with lower timing friction between monitoring closure and issuance and may increase the relative present value of the same nominal cash flow.

This is not an automatic outcome, but it is consistent with the analytical mechanism presented here. Other factors, including market conditions and procedural constraints, may also influence the observed outcomes [21], [33]. The goal of this analysis is not to identify all possible causes, but to examine whether the observed patterns are consistent with stronger evidentiary conditions and lower evidentiary friction within the project.

The results are organized around four aspects of project management: emission-reduction engineering, conservative issuability, price-wedge realization, and issuance cadence. This categorization separates physical mitigation performance from evidentiary robustness, realized settlement outcomes, and cash-flow timing. The approach follows the principle of analytical separability across three dimensions: emission-reduction engineering, conservative issuability under evidentiary constraints, and financial realization through price and timing. Since the engineering and accounting systems are held fixed under the two MRV regimes, the results describe differences in evidentiary conditions rather than changes in physical mitigation performance [9], [19], [32].

Annual emission reductions were computed using the accounting relations in Section 2. The baseline emission was 21.53 ktCO$_2$e·y$^{-1}$, and the project emission was 2.845 ktCO$_2$e·y$^{-1}$, resulting in an annual engineering emission reduction of 18.69 ktCO$_2$e·y$^{-1}$ (21.53-2.845) (Table 2). The same engineering emission-reduction input is used in the base LCAM and sensitivity calculations reported in Appendix D, Tables D1–D2. This value is held constant across the legacy and enhanced MRV regimes, allowing subsequent differences in LCAM, the realized-price wedge, and issuance cadence to be interpreted as associated with evidentiary conditions rather than with changes in methane-abatement technology or accounting rules. Such differences are interpreted as being associated with variations in how identical quantified mitigation is supported, validated, and handled within the system of proof [19], [20].

Conservative issuability was quantified using LCAM. For the legacy MRV regime, interval completeness, calibration validity, and timestamp coherence were 0.93, 0.92, and 0.90, respectively. These values produced a composite evidentiary factor of 0.770 (0.93 $\times$ 0.92 $\times$ 0.90). When applied to the annual engineering emission reductions of 18.69 ktCO$_2$e·y$^{-1}$, this yielded a conservative estimate of issuability of 14.39 ktCO$_2$e·y$^{-1}$. For the enhanced MRV regime, the corresponding factors were 0.98, 0.97, and 0.96, yielding a composite evidentiary factor of 0.913 (0.98 $\times$ 0.97 $\times$ 0.96) and a conservative issuability estimate of 17.07 ktCO$_2$e·y$^{-1}$. The conservatively supportable fraction of engineering emission reductions therefore increased from 77.0% to 91.3%, equivalent to an increase of 2.68 ktCO$_2$e·y$^{-1}$ (17.07 - 14.39) in supportable mitigation. Table 3 reports the evidence factors and resulting conservative issuability under both MRV regimes. The detailed input values and multiplicative LCAM calculation supporting these results are provided in Appendix D, Tables D1–D2. This classification highlights the relationship between the quality of evidence and the share of engineering mitigation that can be considered with high confidence. The implication here is that equal engineering mitigation measures are not always supported by equal evidence quality [1], [2], [13], [14], [24], [25], [32].

From the perspective of project managers, each of the three LCAM criteria is reflected in tangible MRV key performance indicators. Completeness of intervals reflects the reliability of the monitoring system, validity of calibrations reflects discipline in the governance of measurements, and coherence of timestamps reflects the ability to compile verifiable evidence.

The benchmark price of Rp150,000/tCO$_2$e was taken from the SRN-PPI/IDXCarbon marketplace record for the same project: “POME for Biogas Co-Firing PT Perkebunan Nusantara IV (PTPN IV PalmCo Regional 3)” (Registration Number: SPE-11-PR-VI-2024-18003) [44]. In this study, this value is used as a project-specific registry reference price for the illustrative price-wedge calculation. It is not treated as a universal market price, nor as evidence that all methane-abatement credits should transact at that level.

With the benchmark price held at Rp150,000/tCO$_2$e, the realized settlement price was Rp105,000/tCO$_2$e under the legacy MRV regime and Rp132,000/tCO$_2$e under the enhanced MRV regime. This corresponds to a realized-price wedge of 0.300 for the legacy regime and 0.120 for the enhanced regime (Table 4). In terms of value capture, the project captured 70% of the benchmark value under the legacy regime and 88% under the enhanced regime. The base price-wedge calculation and benchmark-price sensitivity are reported in Appendix E, Tables E3–E4. This pattern is interpreted as an illustrative revenue-risk indicator rather than as evidence that MRV enhancement alone caused the pricing difference [4], [5], [31].

From a managerial perspective, the realized-price wedge can support buyer negotiations and revenue risk assessment. The lower wedge indicates that the realized settlement price is closer to the benchmark price in this within-project comparison. However, actual realized prices may also reflect buyer characteristics, contractual arrangements, settlement timing, bargaining position, and broader market conditions. The price-wedge result should therefore be read only as an illustrative within-project revenue-risk indicator, not as a general MRV price-premium estimate or a causal estimate of an MRV-driven pricing effect [4], [5], [31], [33].

The issuance cadence was shorter in the enhanced MRV period, declining from 130 days under the legacy MRV regime to 80 days under the enhanced MRV regime, a 50-day difference (Table 5). At a 10.41% annual discount rate, which represents the project's estimated WACC used for internal financial analysis, a 50-day reduction in issuance lag corresponds to a relative present-value uplift of approximately 1.36%–1.37%. The relative present-value uplift and discount-rate sensitivity are reported in Appendix E, Table E5. For project managers, issuance cadence is a liquidity and working-capital indicator because it is reflected in the timing of expected cash inflows, even when nominal credit volume and realized prices remain unchanged [10], [14], [31].

Annual realized revenue was examined under two analytical scenarios using the LCAM and realized-price inputs reported in Table 3 and Table 4 and supported by Appendix D, Tables D1–D2, and Appendix E, Table E3. Conservative issuability was fixed at 14,390 tCO$_2$e·y$^{-1}$ in the price-only case. Under this price-only scenario, the calculated revenue differs from Rp 1,510,950,000 (14,390 $\times$ 105,000) to Rp 1,899,480,000 (14,390 $\times$ 132,000), corresponding to a scenario difference of Rp 388,530,000 under the higher realized settlement price used for the enhanced-regime scenario. In contrast, both the conservative issuability and realized prices were allowed to vary by regime.

Under the full scenario, calculated revenue increases from Rp 1,510,950,000 to Rp 2,253,240,000 (17,070 $\times$ 132,000), corresponding to an aggregate scenario difference of Rp 742,290,000. This comparison separates the price-related channel from the combined effect of price and conservative issuability, allowing project managers to assess the potential financial relevance of MRV improvement scenarios relative to the costs of calibration systems, data management, personnel training, and verification-file preparation. The annual realized revenue under the alternative MRV scenarios is presented in Table 6.

Four sensitivity analyses were conducted to assess whether the underlying LCAM specification, benchmark price assumption, or discount rate assumption influences the project's central pattern. The detailed workings of these four sensitivity analyses are shown in Appendix E, Tables E1–E6. First, each LCAM evidence factor was adjusted by $\pm$5%. Second, alternative LCAM calculations based on weighted-average and weakest-link specifications were performed. Third, alternative benchmark prices for the price-wedge calculations were used, adjusted by $\pm$10%. Fourth, the uplift in relative present value was recalculated with discount rates of 6%, 8%, 10.41% and 12%.

The purpose of the sensitivity analyses is not to prove a cause-and-effect relationship but rather to assess whether this pattern holds under different assumptions. A summary of the sensitivity analysis is presented in Table 7.

Across all scenarios considered, the enhanced MRV regime remains associated with a higher conservative estimate of issuability, a lower realized-price wedge, and a positive relative PV uplift. These results are consistent with directional stability in the within-project pattern under the non-causal analytical design used in this study.

These results highlight an important distinction in carbon project management: engineered emission reductions do not automatically become financially usable carbon revenue [1], [4], [31]. The project's underlying engineering emission reduction remained constant across the two MRV regimes. Nonetheless, the conservatively defensible proportion increased from 77.0% to 91.3%, the realized-price wedge declined from 0.300 to 0.120, and the monitoring-to-issuance interval shortened by 50 days under the enhanced MRV regime. These calculations are reported in Appendix D (Tables D1–D2) and Appendix E (Tables E1–E6).

In other words, this indicates that engineering mitigation and financially usable carbon revenue are two distinct analytical outputs. The financial usability of a carbon project, therefore, depends upon the degree of completeness, calibration, temporal coherence, traceability, and verification readiness without much evidentiary friction [2], [3], [19], [20], [24], [32]. From a pragmatic viewpoint, the question of usability lies beyond whether the mitigation took place, but rather the possibility of verifying whether such evidence is reconstructible and defensible before trading [9], [19], [20].

From this perspective, MRV processes should be viewed as evidentiary infrastructure for the project rather than simply as an implementation-monitoring function [1], [2], [3], [19], [20], [24], [32], [38]. In essence, MRV evidence quality is associated with how defensible, transaction-ready, and timely the carbon-revenue claim is. At the same time, financial outcomes may also depend on market, contractual, buyer-related, and institutional factors [4], [5], [14], [17], [18], [23], [31], [33].

In particular, this point becomes evident when considering the effect of the engineering input on LCAM. With the same engineering emission-reduction input, LCAM rises from 14.39 to 17.07 ktCO$_2$e·y$^{-1}$. The rise suggests a larger share of the measured mitigation is defensible under the specified evidence-screening criteria. Therefore, it can be interpreted as further supporting the statement that the measured mitigation may not necessarily mean defensible mitigation in light of conservative evidentiary criteria [1], [2], [6], [25].

LCAM helps clarify which portion of the measured mitigation remains defensible under specified evidence conditions. This interpretation is consistent with verification-based approaches that emphasize traceability, documentation, and justified evidence [32]. This interpretation is also consistent with broader integrity studies showing that carbon-credit credibility depends not only on technical performance but also on sufficient supporting evidence. Rather than simply restating that evidence quality matters, LCAM provides a transparent analytical device for showing how evidentiary weakness affects the conservatively supportable fraction of measured mitigation [7], [32], [45].

Therefore, LCAM cannot be treated as a replication of the carbon-credit issuance procedure but as a deliberately conservative analysis. Its purpose is to illustrate how evidence deficiencies are associated with the defensible share of measured mitigation. Terms such as ``verified reduction'' may blur the distinction between measured mitigation and the conservatively defensible share of mitigation [12].

This distinction also raises an important practical issue for project developers. In addition to the general discrepancy between the credited and actual emissions reduction, there is also a difference between measured environmental performance and the portion of it that can be claimed with specified evidentiary considerations. From this perspective, conservative issuability can be understood as an indicator of how defensible measured environmental performance is within institutional and verification settings [6], [19], [20], [32].

The price-wedge result should be interpreted with particular caution. In the within-project comparison, the realized settlement price increased from Rp 105,000 to Rp 132,000 per tCO$_2$e, while the realized-price wedge decreased from 0.30 to 0.12. Although this pattern is consistent with lower information and delivery-risk exposure, the study design cannot rule out other explanations, including contractual terms, buyer characteristics, payment timing, bargaining position, and broader market conditions. The result should therefore not be interpreted as evidence that stronger MRV necessarily produces a market premium. Such a generalization would go beyond the scope of this single-project analysis and the observed variation in voluntary carbon-offset prices [4], [5], [31]. More cautiously, the within-project pattern indicates that stronger evidence is associated with smaller discounts relative to the benchmark, consistent with lower information and delivery-risk exposure [13], [14], [17], [18].

In particular, the decline in the realized-price wedge (0.30 → 0.12) may indicate lower perceived information and delivery-risk exposure in this within-project setting [15] When counterparties cannot fully assess the quality or deliverability of an asset, they may rely on discounts, contingencies, selective contracting, or conservative settlement practices to limit exposure [4], [15], [16], [18], [33]. This issue is particularly relevant for carbon-credit contracts because the underlying claims depend on technical data, procedural documentation, and verification records that counterparties may not be able to audit independently. In such situations, enhanced evidence does not mean a rise in the benchmark price, but it can rather reflect reduced uncertainty and less depressed price levels [4], [5], [16]. The result is therefore better interpreted through an information-risk lens than as evidence of a general MRV price premium [15].

A price-premium interpretation would imply that higher MRV quality consistently commands higher prices across settings, whereas a more restrained interpretation requires fewer causal assumptions. In this case, the pricing pattern associated with stronger evidence is better interpreted as convergence toward the benchmark price under information- and delivery-risk conditions [16]. This interpretation is consistent with studies suggesting that clearer, more complete environmental information may influence third-party assessments of climate-related claims [21]. This is also aligned with the governance literature that links disclosure quality, transparency, and market confidence [14], [17]. Nevertheless, realized prices may depend on many other factors, and the current design does not rule out these effects [13], [14].

Timing is an important dimension of liquidity and financial usability, and it provides a third project-management indicator in addition to conservative issuability and price realization [19]. In the enhanced MRV period, the monitoring-to-issuance interval was shorter, declining from 130 to 80 days. Although issuance cadence may appear administrative, it is financially relevant because credits remain illiquid until issuance is completed [1], [31]. A shorter issuance interval is therefore consistent with more favorable expected cash-flow timing and corresponds to an estimated present-value uplift of approximately 1.4% for the same nominal cash flow [14], [24], [40]. This timing channel extends the interpretation of MRV quality beyond defensible volume and realized price, because delayed revenue is not neutral in project-finance terms [14], [39], [40].

The cadence result is consistent with the broader mechanism proposed in this paper. If the analysis had shown higher conservative issuability without a shorter issuance cadence, the finding would have been largely procedural. Conversely, faster issuance without greater supportability would have provided weaker support for the relevance of MRV evidence. The observed pattern is instead coherent across supportability, settlement, and timing, suggesting that evidence quality is associated with the pathway from measured mitigation to usable revenue rather than only with isolated verification steps [12], [33]. This interpretation should still be treated cautiously, as faster issuance may also be influenced by registry backlogs, verifier workload, administrative timing, and other procedural factors [1], [2], [14], [31], [45].

Thus, while the analysis cannot claim that MRV accounts for all variation in issuance speed, the within-project evidence indicates that higher evidence quality is correlated with faster issuance and is consistent with lower evidentiary friction [1], [2], [14], [31], [45].

The findings indicate that MRV governance should be viewed as a project risk-management infrastructure [10], [28], [34]. This interpretation is consistent with project risk management principles, which emphasize integrating risk control into planning, monitoring, and management routines [35], [36]. For engineering project managers, MRV improvement should therefore go beyond the preparation of verification documents and be embedded in routine controls, including calibration registers, timestamp rules, data version control, internal evidence review, and verification-readiness checklists [2], [10], [28], [30]. In practical terms, project managers should maintain calibration registers with instrument ID, calibration date, expiry date, responsible officer, certificate location, and expiry warnings [25], [30]. Timestamp rules should be specified before the monitoring period begins. Monitoring records should be stored in a version-controlled repository linking raw data, processed datasets, calibration files, and verification submissions, and an internal verification-readiness checklist should be completed before external verification begins [3], [10].

Finally, MRV indicators should be integrated into carbon-revenue forecasting. Instead of forecasting revenue directly from engineering emission reductions, project managers should distinguish between engineering reductions, conservatively supportable reductions, expected realized price, expected issuance lag, and discount-rate assumptions [14], [39], [40].

This approach enables MRV weaknesses to be represented as revenue-risk scenarios before they appear in verification, settlement, or cash-flow timing [10], [28], [33].

These boundaries are important because the present study addresses evidence-management risk rather than the full environmental integrity of carbon offsetting [19], [27], [32], [46]. Neither the present results nor related studies imply that stronger MRV resolves fundamental structural critiques of offsetting. Issues such as baseline weakness, leakage, permanence, and strategic behavior remain outside the scope of the framework presented here [6], [19], [27], [46]. A project may be supported by strong evidence yet remain vulnerable to counterfactual bias, and improved documentation alone does not ensure environmental credibility when the underlying offset logic is weak [6], [27], [46], [47]. Accordingly, the findings should be interpreted as transferable analytical principles rather than transferable effect sizes.

Second, the research design is intended to identify mechanism-consistent patterns, not average financial-market effects. By relying on a within-project comparison, the study examines changes in evidence conditions while holding the engineering setting constant. Prices and issuance outcomes may still vary according to project-specific and institution-specific characteristics; therefore, the relationships observed here may be context-specific [13], [14].

Third, the analytical constructs are inherently conservative. It is important to emphasize that LCAM is neither registry-based nor verifier-oriented. The same applies to the realized-price wedge, which does not capture all transaction-specific determinants of settlement value. Such an approach has been chosen deliberately to preserve analytical simplicity and to demonstrate the link between the variables analyzed [4], [5], [31], [33].

The above constraints also point toward possible directions for future research. First, future research should test the replicability of this framework across project types, crediting standards, and transaction structures [4], [5], [31]. Such research could assess whether the LCAM–price-wedge–issuance-cadence pattern observed here is general, conditional, or context-specific. It could also clarify where evidence quality is most relevant, such as in projects with long monitoring chains, settings with lower buyer trust, or transactions where delivery risk is more salient [13], [33].

Second, future research could examine evidential fragility and counterfactual fragility more explicitly [2], [25], [27], [46]. In other words, projects might be characterized by the strength of their monitoring claim relative to that of additionality. Exploring this difference would help us understand why certain projects can face significant challenges of evidential contestation even when they present an extensive monitoring record. In contrast, others may appear less controversial despite weaknesses in the evidence supporting additionality [25], [30]. This distinction is important if future research is to avoid collapsing different carbon-credit quality problems into a single undifferentiated category.

A third direction concerns the financial architecture of carbon projects. The analysis indicates that evidence quality may be associated with the defensibility of mitigation quantity, realized settlement outcomes, and revenue timing. Future research could examine whether these associations are also reflected in financing terms, contract design, risk allocation, or project valuation under more complex cash-flow patterns [4], [5], [14]. Such work would extend the evaluation beyond revenue usability toward carbon-project bankability. In that sense, the present analysis identifies one manageable aspect of a broader institutional dilemma. It does not seek to determine the future trajectory of carbon markets. Rather, it illustrates, more narrowly and practically, how evidence quality may be associated with whether measured mitigation can be made supportable, saleable, and timely enough to be treated as project revenue [4], [5], [14].

This study examined how MRV system management is associated with conservative issuability, realized-price wedge, and issuance cadence in a methane-abatement engineering project. Under fixed engineering and accounting conditions, the enhanced MRV regime was associated with a higher conservatively supportable share of engineering emission reductions, a smaller realized-price wedge, and a shorter monitoring-to-issuance period. Under identical engineering emission reductions of 18.69 ktCO$_2$e·y$^{-1}$, the enhanced evidence condition was associated with a higher conservatively supportable fraction of mitigation (77.0% to 91.3%), a lower realized-price wedge (0.30 to 0.12), and a shorter monitoring-to-issuance interval (130 to 80 days). These differences correspond to an increase in conservative issuability from 14.39 to 17.07 ktCO$_2$e·y$^{-1}$ and a shorter revenue-realization interval, with an estimated present-value uplift of approximately 1.4%.

This distinction is especially important for interpreting LCAM. In this study, LCAM is used strictly as a transparent analytical proxy for conservative supportability under specified evidence conditions, not as an issuance rule, registry indicator, or substitute for verifier judgment.

From a project management standpoint, the findings indicate that higher-quality MRV evidence is associated with three complementary revenue-risk indicators: greater defensibility of mitigation volume, lower price-wedge realization, and a shorter interval between monitoring and credit issuance. These three factors appear together in the project-level comparison, indicating that MRV evidence quality is correlated not only with the defensibility of emission reductions but also with settlement- and time-based revenue-risk factors.

The contribution of this study is intentionally limited in scope. While it does not claim that MRV can resolve structural integrity problems associated with additionality, baseline uncertainty, leakage, and permanence, it provides a bounded analysis of the correlation between evidence quality and finance-relevant metrics. By focusing on MRV as a risk control system for engineering projects, the analysis highlights the importance of monitoring consistency, calibration validity, proper timestamp alignment, and chain-of-custody traceability as project-level factors for verification readiness, revenue estimation, and carbon trading.

Future research can extend this framework across multiple project types, crediting mechanisms, and market conditions to assess whether the relationships observed here are general, conditional, or context-specific. Further studies could also examine how evidentiary quality interacts with contract design, financing terms, and institutional procedures in shaping carbon-project bankability.