What is a baseline?
The baseline (or 'baseline scenario') for a small-scale CDM project activity is defined in 4/CMP.1, Annex II, paragraph 27 as follows:
The baseline for a [small-scale] 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 (4/CMP.1, Annex II, paragraph 27).
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.
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 being 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 negotiated in 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."
At EB 62, Guidelines on the Consideration of Suppressed Demand in CDM Methodologies were approved, which 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 such as basic energy services (including lighting, cooking and drinking water supplies) are met. A Suppressed Demand Baseline is appropriate when basic energy services are below the minimum service level at the time of implementation of the CDM project activity.