Base Year GHG Emissions
This is a year for which verifiable emissions data are available and companies must specify their reasons for choosing that particular year. Companies should choose as a base year the earliest relevant point in time for which they have reliable data. Some organizations have adopted 1990 as a base year in order to be consistent with the Kyoto Protocol. However, obtaining reliable and verifiable data for historical base years such as 1990 can be very challenging.
Most companies select a single year as their base year. However, it is also possible to choose an average of annual emissions over several consecutive years. For example, the U.K. ETS specifies an average of 1998–2000 emissions as the reference point for tracking reductions. A multi-year average may help smooth out unusual fluctuations in GHG Emissions that would make a single year’s data unrepresentative of the company’s typical emissions profile.
The inventory base year can also be used as a basis for setting and tracking progress towards a GHG Emissions Target in which case it is referred to as a target base year.
If a company continues to grow through acquisitions, it may adopt a policy that shifts or “rolls” the base year forward by a number of years at regular intervals. A fixed base year has the advantage of allowing emissions data to be compared on a like-with-like basis over a longer time period than a rolling base year approach. Most emissions trading and registry programs require a fixed base year policy to be implemented.
- GHG Mitigation Goals that target the absolute reduction of Base Year emissions
Companies shall develop a base year emissions recalculation policy, and clearly articulate the basis and context for any recalculations. If applicable, the policy shall state any “significance threshold” applied for deciding on historic emissions recalculation. “Significance threshold” is a qualitative and/or quantitative criterion used to define any significant change to the data, inventory boundary, methods, or any other relevant factors. It is the responsibility of the company to determine the “significance threshold” that triggers base year emissions recalculation and to disclose it. It is the responsibility of the verifier to confirm the company’s adherence to its threshold policy. The following cases shall trigger recalculation of base year emissions:
- Structural changes in the reporting organization that have a significant impact on the company’s base year emissions. A structural change involves the transfer of ownership or control of emissions-generating activities or operations from one company to another. While a single structural change might not have a significant impact on the base year emissions, the cumulative effect of a number of minor structural changes can result in a significant impact. Structural changes include:
- Mergers, acquisitions, and divestments
- Outsourcing and insourcing of emitting activities
- Changes in calculation methodology or improvements in the accuracy of emission factors or activity data that result in a significant impact on the base year emissions data
- Discovery of significant errors, or a number of cumulative errors, that are collectively significant.
In summary, base year emissions shall be retroactively recalculated to reflect changes in the company that would otherwise compromise the consistency and relevance of the reported GHG emissions information. Once a company has determined its policy on how it will recalculate base year emissions, it shall apply this policy in a consistent manner. For example, it shall recalculate for both GHG emissions increases and decreases.
Significance thresholds for recalculations
Whether base year emissions are recalculated depends on the significance of the changes. The determination of a significant change may require taking into account the cumulative effect on base year emissions of a number of small acquisitions or divestments. The GHG Protocol Corporate Standard makes no specific recommendations as to what constitutes “significant.” However, some GHG programs do specify numerical significance thresholds, e.g., the California Climate Action Registry, where the change threshold is 10 percent of the base year emissions, determined on a cumulative basis from the time the base year is established.
- The Greenhouse Gas Protocol, A corporate accounting and reporting standard, Revised Edition 2008