January 2020 – New Paper Proposes Alternative Baseline Setting Concept.
A decisive difference between the Paris Agreement’s Article 6 and the Kyoto Protocol’s project-based mechanisms is that activities under the latter did not have to take into account new national mitigation policies involving financial support for their additionality determination. The dynamic nature of the Paris Agreement, however, and the requirement to increase ambition over time, imply that this practice cannot continue.
Against this background, a new Policy Paper revisits the question of baseline setting. It proposes a novel approach for developing a crediting baseline for activities credited under the future Art. 6.4 mechanism. Under the so-called Situation-Ambition Approach approach the crediting baseline is calculated as a weighted average of the IS margin representing the status quo of current (insufficient) levels of climate performance in the relevant area and the OUGHT margin representing the transformative ambition that is required to meet the Paris objectives. A dynamic element is introduced by shifting the relative weight from the IS margin towards the OUGHT margin in the course of the crediting period.