What Is Baseline Setting in Article 6.4? (As per the May 2025 Standard) - A Common-Sense Guide

1. Why Set a Baseline in the First Place?

When countries or companies run climate projects (like renewable energy or forest protection), they need a way to prove their efforts are making a real difference. That’s where the baseline comes in.

A baseline is like saying: “Here’s what the emissions would have looked like if we did nothing.”

Only the reductions below this line count toward earning carbon credits.

2. What This Standard Covers

This standard explains how to set that baseline correctly for any project under Article 6.4. It helps define:

• What kind of project is eligible,
• How to measure what “normal” emissions would be,
• And how to show clearly that your project made things better.

It applies mainly to individual projects for now, but later it might expand to bigger things like whole sectors or policy-level actions.

3. What Must a Good Baseline Follow?

There are nine key principles to follow. In simple terms, your baseline must be:

• Accurate and based on real data,
• Conservative to avoid exaggerating impact,
• Consistent so it can be compared with other projects,
• Transparent, with all data and assumptions openly shown,
• And encouraging ambition—you should aim to do better over time.

4. How to Set the Baseline – Step by Step

Step 1: Choose your approach

• Use the best available technology (BAT),
• Use a top-performing benchmark,
• Or use actual/historical emissions data from the site.

Step 2: Apply it

• Define your project area and estimate what emissions would happen without the project.

Step 3: Adjust it downward

• Bring that baseline below business-as-usual levels to avoid over-crediting. (This is called a “downward adjustment” and is key to ensuring ambition.)

For example, when setting baselines using past or current emissions data, the baseline must be at least 10% lower than what would normally happen without the project. Additionally, the baseline must be lowered by at least 1% every year after that.

These rules encourage continuous improvement and prevent projects from getting too many credits by making sure the starting point (the baseline) keeps getting stricter over time. This way, only real and increasing emission reductions are rewarded.

Step 4: Compare to a realistic scenario

• Build a conservative version of what "normal" would look like—called the Business-as-Usual (BAU) baseline.

Step 5: Choose the lower number

• The final crediting baseline must be whichever is lower—your adjusted baseline or the BAU estimate. If your adjusted one isn’t low enough, revise it.

5. Where Does the Data Come From?

You can use data from:

• Government reports,
• Scientific studies,
• International bodies like the IPCC,
• Or even reliable internal company data—as long as it’s trustworthy and appropriate.

You also need to explain your data sources, why they’re reliable, and how you handled any gaps or uncertainties.

6. Making the Baseline Fair and Reliable

• Your assumptions must be backed by facts.
• You need to account for uncertainties using accepted methods (like IPCC guidance).
• You must explain your decisions in a way that’s understandable and honest.
• You are encouraged to use standardized methods like benchmarks or default values to reduce bias and make comparisons easier.

7. Special Considerations

• In the first year, some types of projects (like BAT or benchmarks) may skip the downward adjustment, but they’ll need to apply it in later years.
• If your project is based on historical emissions, the adjustment starts immediately.
• The standard also considers local realities like suppressed demand or economic challenges.

8. Avoiding Overlaps or Mistakes

You must:

• Define the project boundaries clearly,
• Align with national climate goals (like NDCs),
• Avoid double counting (e.g., with domestic carbon markets),
• Account for side effects like rebound (e.g., more use of efficient tech),
• And ensure the project—not external changes—is what caused the emission cuts.

9. Final Baseline Use

After all this, you compare your results during project planning (ex-ante) and after implementation (ex-post). If your project didn’t stay below the BAU baseline in any year, you don’t earn credits for that period.

In Short: Why It Matters

The baseline isn’t just a technical detail—it’s the foundation of climate credibility. If it’s set too high, projects get rewarded for doing nothing. If it’s done right, only real, additional, and lasting emission cuts get rewarded.

That’s what this standard under Article 6.4 is all about.