126.96.36.199. Business-as-Usual Baseline
Activities undertaken under Articles 6 and 12 of the Protocol are eligible
for credits toward national commitments if they result in net emissions reductions
that are additional to any that would have occurred in the absence of the activity.
In essence, this provision specifies that, for activities undertaken under Joint
Implementation (JI) and the Clean Development Mechanism (CDM), "business-as-usual"
emissions act as a baseline, and credits accrue when net emissions fall below
This same approach-that is, defining a business-as-usual baseline and awarding
credits only when the actual path of emissions falls below this baseline-could
be used for Article 3.4 activities to provide rewards for improved behavior.
Defining a meaningful business-as-usual path of emissions-a measurement of a
counterfactual path that never exists-presents significant problems (see Section
5.2.3). The last sentence of Article 3.4 suggests the possibility of using
different reference systems for the first and subsequent commitment periods.
A business-as-usual baseline might be used when activities are used to meet
commitments during the first commitment period, but a different reference system
might be applied at the beginning of subsequent periods for which commitments
have yet to be negotiated. For carbon sequestration, credits would accrue when
the change in stocks over the commitment period is greater than the change in
stocks for the business-as-usual scenario.
Business-as-usual is only one of a variety of baselines that might be chosen.
Other possibilities include giving credit for any practice that improves on
existing practice or for continuation of current levels of adoption of a mitigation
practice that improves on some practices still in use; giving credit for any
practice that improves on "standard management practice;" or using a performance
standard so that any practice that exceeds the standard could receive credit.
These baselines are not unique to the land-use change and forestry sector; they
are listed (though not elaborated) here to emphasize that if a baseline is desired,
there are several ways it might be defined.
188.8.131.52. Additional Implications of the Choice of Baseline
or Reference Measure
Article 3.4 establishes that any decision on incorporation of additional activities
"shall apply" in the second and subsequent commitment periods. It states that
a Party "may choose to apply" this decision in the first commitment period.
It does not stipulate that the activities will be governed by the same MRGs
in the first commitment period as in subsequent periods; in fact, it implies
the contrary by establishing that the "since 1990" rule will apply during the
first commitment period but not necessarily during subsequent periods. Thus,
in arriving at a decision regarding Article 3.4 activities, Parties may be able
to prescribe different selection criteria, different activities, and different
MRGs for individual commitment periods. It seems possible, then, to phase in
over commitment periods either the breadth of activities included or the breadth
of the accounting rules. This phasing-in could accommodate changes in available
data, development of methodologies, or compatibility between commitments and
opportunities for emission reductions.
Decisions yet to be made by the Parties will determine which specific forestry
practices will qualify for inclusion under Article 3.3 (see Chapter
3). All practices not included under Article 3.3 will be eligible for incorporation
under Article 3.4. Under the broadest definition of the term "activities," most
practices that are excluded from Article 3.3 are likely to fall into the "forest
management" activity. If "activity" is defined more narrowly, care will be required
to ensure that practices that are defined out of Article 3.3 will be considered
under Article 3.4. Even if there is a seamless fit between activities included
under Article 3.3 and those included under Article 3.4, however, there will
be an accounting misfit unless both activities are governed by the same MRGs.
If a business-as-usual baseline is adopted for Article 3.4, for example, activities
under Article 3.4 would likely generate fewer credits than under Article 3.3
for the same total change in carbon stocks, and it would be necessary to continue
to distinguish between the two for accounting purposes.