7.3.2.3 Baseline Scenario Concepts
Figure 7.2: Greenhouse gas emission profiles of different baseline case
approaches. |
The literature reports several different baseline scenario
concepts, including (Sanstad and Howart, 1994; Halsnæs et al., 1998; Sathaye
and Ravindranath, 1998):
- efficient baseline case, which assumes that all resources are employed efficiently;
and
- “business-as-usual” baseline case , which assumes that future
development trends follow those of the past and no changes in policies will
take place.
These different baseline scenario concepts represent different expectations
about future GHG emission development trends, as well as different perspectives
on the trade-offs between climate change mitigation policies and other policies.
The costs of a given GHG emissions reduction policy depend in a very complicated
way on numerous assumptions about future GHG emissions, the potential for emissions
reductions, technological developments and penetration, resource costs, and
markets.
The different GHG emission profiles of the alternative baseline-scenario approaches
depend on a number of assumptions. These include economic growth, mix of products,
GHG emissions, intensity of energy production and consumption, and other material
use. A “business-as-usual” baseline case is often associated with
high GHG emissions, particularly if current main GHG emission sources, such
as the energy industry, run at low efficiency. Such a baseline case can reflect
the continuation of current energy-subsidy policies (which implies relatively
high energy consumption and thereby high GHG emissions) or various other market
failures of particular importance for GHG emission intensive sectors, such as
capital market constraints. An efficient baseline case that assumes properly
functioning markets, all other things being equal, can be expected to reflect
relatively high energy efficiency and thereby lower GHG emissions than a business-as-usual
baseline case. GHG emission profiles of the different baseline case approaches
are illustrated in Figure 7.2.
The GHG emission reduction potential of a given policy is to be measured as
the difference between the GHG emissions in the baseline case and the GHG emissions
after the implementation of the policy. Clearly, this difference depends on
both the baseline and the options chosen for the mitigation. High baseline-scenario
GHG emissions based on a business-as-usual scenario approach in some cases can
imply that the net mitigation costs measured per unit of GHG emission reduction
are relatively low. Such a result, for example, can reflect that the mitigation
scenario is assumed to imply a general efficiency improvement of the energy
systems compared with the baseline wich both reduces GHG emission and generates
fuel cost savings. The total costs of achieving a given GHG emission level (e.g.,
defined in relation to 1990 emissions), however, can be relatively high when
the mitigation strategy is assessed in relation to a business-as-usual baseline
scenario that has a large growth in GHG emissions. Conversely, GHG emission
reduction costs per unit of emission can be relatively high in relation to an
efficient baseline case, but total reduction costs of meeting a target can be
low.
It is important to emphasize consistency and transparency in the definition
of baselines, and in the reporting of any costs associated in moving from a
given baseline case to a climate change policy case. Furthermore, when reporting
the range of cost estimates for the different baselines, it is important also
to provide information about the assumptions that underlie each baseline.
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