Climate finance

Baseline scenario

A reference description of what would happen without the assessed intervention.

Example

Project reductions are often calculated against emissions in this scenario.

The catch

An inflated baseline can inflate credited benefits.

Related terms

Abatement cost, Additionality, Beyond value chain mitigation, Buffer pool, Carbon allowance, Carbon credit

In more depth

Baseline scenario, explained.

The baseline scenario sets how many credits a project earns. Credited reductions equal baseline emissions minus project emissions, less any deduction for leakage, so each extra tonne assumed in the baseline becomes a tonne that can be sold. Methodologies try to discipline that arithmetic by prescribing how baselines are built from historical data, performance benchmarks or projected trends, and by requiring them to reflect laws already in force.

Inflation usually creeps in through assumptions. A baseline might draw on an unusually dirty historical period, assume that no new regulation will arrive, or borrow a deforestation rate from a region clearing forest faster than the project area ever did. Programmes defend against this with conservative defaults, periodic updates and independent validation, and the ICVCM's Core Carbon Principles expect quantification to rest on conservative approaches. When you cite a baseline, say what it assumes and when it was last revised.

Two confusions recur. A baseline scenario is a hypothetical path, while a base year is a real historical period used in corporate inventories. Figures stated against a baseline also compare two futures. The IPCC's finding that demand-side measures could cut end-use emissions by 40 to 70% by 2050 is measured against baseline scenarios, so it describes a gap between pathways, which is a different claim from a fall below today's levels.