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3.2.3 Project boundary [PDD section B.3]
As defined in the Glossary of CDM terms, project boundary shall “encompass all GHG emissions
under the control of the project participants that are significant and reasonably attributable to the
CDM project activity”. Project boundary is defined in AMs, usually with regard to the spatial extent
and gases to be included. To illustrate the spatial extent included in the project boundary, it is
useful to include a schematic of the project site and relevant equipments, delineating the project
boundary. As for the gases to be included, use the table format in the CDM-PDD. If the methodology
gives an option to include or exclude certain sources and gases from the project boundary, project
participants should explain and justify the choice.
3.2.4 Baseline identification [PDD section B.4]
Baseline, a fundamental concept in the CDM, is defined as “the scenario that reasonably represents
the GHG emissions that would occur in the absence of the proposed project activity” [CDM M&P,
para. 44]. A baseline shall cover emissions from all gases (CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 ), sectors
and source categories listed in Annex A of the Kyoto Protocol within the project boundary. Project
participants must identify a baseline scenario for the proposed project activity, according to the
methods and steps specified in the baseline methodology that is applied to the project activity.
A baseline shall be deemed to reasonably represent the GHG emissions that would occur in the
absence of the proposed project activity if it is derived using an approved baseline methodology or
a proposed new baseline methodology that has been approved by the EB. Different scenarios may
be elaborated as potential evolutions of the situation existing before the proposed CDM project
activity. The continuation of the current activity could be one of them; implementing the proposed
project activity may be another; and many others could be envisaged. Baseline methodologies shall
require narrative descriptions of all reasonable baseline scenarios. Based on the selected baseline
methodology, which could be either a methodology already approved by the EB or a proposed
new methodology, project participants must describe how a baseline scenario is identified among
possible baseline scenarios in the CDM-PDD. To elaborate the different scenarios, different elements
shall be taken into consideration, including related guidance issued by the EB. For instance, the
project participants shall take into account national/sectoral policies and circumstances [EB22, Annex
3], ongoing technological improvements, investment barriers, etc.
EB16 agreed on clarifications on the treatment of national and/or sectoral policies and regulations in
determining a baseline scenario. The EB acknowledged that there should be differentiated ways to
address types of national and/or sectoral policies in determining a baseline scenario and had agreed
to a number of definitions. EB22 agreed to revise the clarifications provided at EB16 as outlined below:
(a) A baseline scenario shall be established taking into account relevant national and/or sectoral
policies and circumstances, such as sectoral reform initiatives, local fuel availability, power
sector expansion plans, and the economic situation in the project sector.
(b) As a general principle, national and/or sectoral policies and circumstances are to be taken into
account on the establishment of a baseline scenario, without creating perverse incentives that
may impact host Parties’ contributions to the ultimate objective of the Convention.
(c) Type E+: National and/or sectoral policies or regulations that give comparative advantages to
more emissions-intensive technologies or fuels over less emissions intensive technologies or
fuels.
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