What is a baseline?
The baseline (or 'baseline scenario') for a CDM project activity is defined in 3/CMP.1, Annex, paragraph 44 as follows:
The baseline for a CDM project activity is the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases that would occur in the absence of the proposed project activity (3/CMP.1, Annex, paragraph 44).
In other words, a baseline for a CDM project activity is a hypothetical reference case, representing the volume of greenhouse gases that would have been emitted if the project were not implemented. Therefore, the baseline can be used to determine:
- whether a CDM project activity is additional; and
- the volume of additional greenhouse gas emission reductions achieved by a project activity.
Baselines must cover emissions from all gases, sectors and source categories listed in Annex A to the Kyoto Protocol that occur within the project boundary:
A baseline shall cover emissions from all gases, sectors and source categories listed in Annex A within the project boundary (3/CMP.1, Annex, paragraph 44).
The Executive Board has clarified that the baseline definition set out above, and its role in the determination of additionality, have been satisfactorily developed and require no further work (EB 5, Annex 3, paragraph 5).
A baseline is deemed to be accurate if it is derived using a baseline methodology covered by the modalities and procedures. This is set out in 3/CMP.1, Annex, paragraph 44, which states:
A baseline shall be deemed to reasonably represent the anthropogenic emissions by sources that would occur in the absence of the proposed project activity if it is derived using a baseline methodology referred to in paragraphs 37 and 38 above (3/CMP.1, Annex, paragraph 44).
Paragraph 37(e) provides that baseline and monitoring methodologies must comply with the requirements of:
- Methodologies previously approved by the Executive Board; or
- Modalities and procedures for establishing a new methodology, as set out in paragraph 38 below (3/CMP.1, Annex, paragraph 37(e)).
Paragraph 38 sets out the procedure for creating a new baseline and monitoring methodology.
Therefore, a baseline is deemed to reasonably represent the most likely alternative scenario to project implementation if it is developed using a baseline methodology that is:
- already approved by the Executive Board; or
- developed in accordance with the rules for developing new methodologies and then approved by the Executive Board.
What is a standardized baseline?
The "standardized baseline" for a CDM project activity is defined in -/CMP.6, paragraph 44 as:
A baseline established for a Party or a group of Parties to facilitate the calculation of emission reduction and removals and/or the determination of additionality for clean development mechanism project activities, while providing assistance for ensuring environmental integrity (-/CMP.6, paragraph 44).
A standardized baseline is not calculated on a project-by-project basis by applying the relevant baseline methodology, but is a single, standard estimation of the greenhouse gases that would have been emitted if certain types of CDM projects were not implemented. The aim of standardizing baselines is to reduce the time and costs associated with designing CDM projects and preparing the PDD.
At CMP6, the CMP decided that Parties, project participants, international industry organizations and admitted observer organizations may submit proposals for standardized baselines applicable to new or existing methodologies for consideration by the EB. Proposals must be submitted through the host country's DNA.
The EB will develop standardized baselines, prioritizing methodologies that are applicable to least developed countries, small island developing states, and Parties with 10 or less registered projects (-/CMP.6, paragraphs 44 – 49).
At EB 62 a Guideline for the Establishment of Sector Specific Standardized Baselines was approved. This allows Project Participants to submit proposals to the Executive Board for standardized baselines for particular sectors. The framework allows for the setting of baselines that do not need to be specific to one type of project activity in a sector, but can be applicable to most of the possible project activities in that sector.
When multiple measures are applied in a sector at the same time or in a section of the sector it is necessary to derive a baseline emission factor that integrates the combined effect of all the measures applied and other influencing factors. For example, the differences between fuel/feedstock and technology used across the sector needs to be accounted for. In such circumstances it is possible to encounter a situation where the sector as a whole may not be homogenous, however it is possible to break the sector down into homogeneous sections, which can have their own established baseline based on the variable factors mentioned above (EB 62, Annex 8, paragraph 46).
The Procedure for the Submission and Consideration of Standardized Baselines outlines the process that parties must follow to have a standardized baseline approved. A party, project participant, international industry organization or admitted observer may propose a standardized baseline, which is submitted to the secretariat through the DNA of a Party for which the standardized baseline is proposed. A new standardized baseline ultimately requires board approval (EB 63, Annex 28, paragraph 34).
The development of standardized baselines is a data-intensive process. At EB 66 the Board approved the Guidelines for Quality Assurance and Quality Control of Data Used in the Establishment of Standardized Baselines, which specifies provisions and processes for ensuring data quality and provides guidance on practical aspects of data collection, processing, compilation and reporting.
At EB73, the Board agreed:
- to revise the regulatory documents relevant to standarized baselines;
- to develop a standard on the application of standardized baselines; and
- to develop guidelines on data vintage and frequency of update of standardized baselines.
What is a suppressed demand baseline?
Suppressed Demand Baselines have particular relevance in Less Economically Developed Countries (LEDCs), where basic energy needs are not being met. In such circumstances, demand for emissions is artificially suppressed by a lack of economic resources. In the future, it is likely that demand will increase along with development. The idea of crediting future increases in demand, where it is currently being suppressed, has a basis in the original negotiations of the CDM rules during the UNFCCC process. Paragraph 46 of the Marrakech Accord states that:
The Baseline may include a scenario where future anthropogenic emissions by sources are projected to rise above current levels, due to the specific circumstances of the host.
The Guidelines on the Consideration of Suppressed Demand in CDM Methodologies provide the methodological approach for establishing a baseline in circumstances of suppressed demand. Under these Guidelines the concept of a 'minimum service level' was established. The minimum service level is a baseline of emissions where minimum human needs are met. Basic human needs include physical and physiological needs such as basic housing, basic energy services, sanitation and transportation. A supressed demand baseline is appropriate when basic human needs are not being met at the time of the implementation of the PoA.