Determination of baselines and additionality for the CDM: a crucial element of credibility of the climate regime

The Clean Development Mechanism (CDM) allows countries without emission targets to invest in greenhouse gas reduction projects and thus create Certified Emission Reductions (CERs). CERs are calculated by comparing emissions of the CDM project with emissions of a hypothetical ‘baseline scenario’ (see Figure 7.1). The baseline shall reflect the business-as-usual scenario (Michaelowa and Fages, 1999). There is a wealth of baseline literature (see reference list in Probase, 2002), particularly several discussion papers of the OECD. For a good summary of these, see OECD (2001). This chapter looks, at the way baseline and additionality issues which will define the environmental credibility of the CDM therefore the amount of investment, and public support, it is likely to attract. It focuses, in particular, on the experience gained from the early experience with methodologies submitted to the Executive Board of the CDM.