Setting greenhouse gas emission targets under baseline uncertainty: the Bush Climate Change Initiative

Abstract

There is substantial uncertainty regarding baseline greenhouse gas (GHG) emissions forecasts—i.e., how GHG emissions will grow over time in the absence of policy intervention. Thus baseline uncertainty should be a key consideration in setting GHG emissions targets as a mitigation strategy to respond to global climate change. At a minimum, the emissions target must be less than the baseline level to induce changing behavior and new investment. Despite this fundamental policy criterion, baseline considerations have played only a minor role in target setting under international climate policy. Baseline uncertainty applies to both absolute and intensity based emissions targets. It is demonstrated that one advantage of intensity targets is reduced uncertainty in the projected baseline, however there will always be some residual uncertainty in model projections. To illustrate the importance of considering baseline uncertainty in GHG target setting, the Bush Climate Change Initiative is analyzed against its projected baseline as a case study of a modest intensity target. Based on comparison with historical data, the range of projections by major energy-economic models, past discrepancies in the accuracy of model projections and the added complexity of sector-specific drivers for non-CO2 GHGs, it is shown that the Bush Initiative cannot be guaranteed or even expected to deliver actual reductions against an uncertain baseline. This finding emphasizes the importance of setting a target that accounts for baseline uncertainty to achieve genuine mitigation of GHG emissions.