Baseline as the Critical Issue of CDM: Possible Pathway to Standardization

Discussion Paper

The issue of baseline setting is a critical issue for designing CDM regime in terms of
determining incentives (credit generation) for investors. Despite the clarity of its
concept, the methodologies of baseline setting are technically difficult. This issue can
be construed rather as the problem of how to define the additionality. This paper
clarifies the criticality of baseline setting in the whole CDM regime, classifies various
methodology concepts, and identifies the cross-cutting issues. Based on these
studies, The potential for “standardization” which will be critical for reducing transaction
costs is also discussed.
Furthermore, by contemplating on phase-by-phase development for CDM, a menu of
potential approaches to overcome technical difficulties stated above is considered in
addition to searching for practical resolutions, thereby projecting on possible options for
future negotiation process.


Workshop on Baselines for the CDM
25-26 February 1999, Tokyo Japan