Baseline emissions
Baseline emissions refer to the estimated greenhouse gas emissions that would occur without any emission reduction efforts or policies in place. Often described as the "business-as-usual" scenario, these emissions serve as a benchmark against which the effectiveness of various mitigation projects or policies can be evaluated. By comparing actual emissions resulting from a project to baseline emissions, stakeholders can determine the amount of emissions reduced, which is crucial for issuing carbon offset credits.
These credits are significant in emissions-offsetting schemes, particularly under frameworks like the United Nations Framework Convention on Climate Change. Entities can trade these credits, allowing them to meet or exceed their allowable emission limits. However, establishing baseline emissions is inherently complex and requires expert judgment, as they represent a counterfactual scenario that cannot be directly measured.
The potential profitability of emission-reduction projects often hinges on the baseline emissions set for them. A low baseline can diminish project profitability, while a high baseline may lead to excessive credits being issued, potentially undermining the environmental integrity of the offsetting system. As such, the processes for determining baselines are critical to ensuring fairness and effectiveness in emissions reduction efforts, with some suggesting standardized or sector-based approaches to streamline this challenging task.
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Baseline emissions
Definition
Baseline emissions are the greenhouse gas emissions that would take place in the absence of emission mitigation policies or projects. Sometimes referred to as the emissions in the “business-as-usual” scenario, emissions are often compared with the actual emissions brought about by a project or policy in order to determine how effective the project or policy was at reducing emissions. This information is often used to award carbon offset credits to the project’s sponsor.
Significance for Climate Change
Determining baseline emissions is an important part of emissions-offsetting schemes, in which nations, corporations, or other entities receive tradable credits in return for reducing their emissions. Most notably, the “project-based mechanisms” under the United Nations Framework Convention on Climate Change (UNFCCC)—joint implementation (JI) and the clean development mechanism (CDM)—award carbon credits by subtracting the actual emissions of a project from the baseline emissions. The resulting quantity is the reduction in emissions generated by the project when compared to the business-as-usual scenario. Carbon credits may then be purchased by entities that expect to exceed their minimum negotiated emission levels. They may also be used by the recipient to offset high emission levels elsewhere in the country.
Baseline emissions cannot be measured. They are counterfactual, involving what would have happened had a project not taken place, and thus require expert judgment to be ascertained. In the CDM, the executive board, with the help of a methodologies panel, approves methodologies for determining baseline emissions for various types of projects.
Baseline emissions are directly tied to the profitability of specific emission-reduction projects and to the environmental integrity of emissions-offsetting mechanisms. If the baseline emissions of a given project are low, fewer credits will be awarded for the project sponsor to sell or use to offset emissions elsewhere. The project becomes less profitable, and fewer investors are drawn to invest in emission-reduction projects. If the baseline is high, more credits may be awarded to the project, allowing the project sponsor, or whoever buys the credits, to emit more elsewhere. The project becomes more profitable, but awarding more credits than were “actually” reduced threatens the environmental integrity of the mechanism. Because of the stakes involved, the entity awarding carbon credits generally implements procedures to help prevent “gaming” the baseline—that is, manipulating the baseline to change the number of credits awarded in order to benefit certain parties.
The cost, effort, and uncertainty associated with setting the baseline for emission reduction projects is sometimes so great that it makes projects unprofitable or unattractive. In response to this, some have suggested standardizing baselines to streamline the process. Another suggestion has been to move from project-based to “sectoral” offsetting, in which baseline emissions for an entire sector would be calculated and compared to actual emissions in order to award credits to mitigation strategies on a scale larger than individual projects.
Gillenwater, Michael. "What Is a Baseline?" GHG Management Institute, 14 Mar. 2022, ghginstitute.org/2022/03/14/what-is-a-baseline/. Accessed 21 Dec. 2024.
"How and When to Rebalance Carbon Emissions: Guidance for Apparel and Footwear Brands." Carbonfact, 14 July 2024, www.carbonfact.com/blog/knowledge/carbon-emissions-re-baselining. Accessed 21 Dec. 2024.