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"Instead, the mechanism is designed to allow emissions baselines to be adjusted to accommodate most foreseeable activities that could give rise to an increase in emissions.
"With emissions baselines declining from high point levels, we anticipate many large coal-fired generators would remain under their baseline due to factors such as falling electricity consumption," Grossman said.
That mechanism has already been in force, and sets emissions "baselines" for 140 of Australia's biggest polluters, which are supposed to cap their emissions, but is currently so generous it will not lead to a cut in carbon emissions.
The so-called safeguards mechanism within the policy (which sets emissions "baselines", or limits, for big polluters) can be tightened so it becomes a type of emissions trading scheme.
Under the "grand bargain" plan, developed in consultation with Danny Price, who was chosen by Hunt as an "eminent economist" to co-chair the expert reference group advising him on the Direct Action scheme, companies could be credited for beating emissions baselines and risk financial penalties for exceeding them.
Different types of discounting of the value of the forest carbon sink compared with emissions abatement are suggested in the literature for management of most design problems, together with optimal contract design and emissions baselines for managing additionality and permanence in carbon sequestration.
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This is calculated by using an approved methodology to subtract the estimated emissions of a given project from a hypothetical 'business-as-usual' emissions baseline.
In part, that is because Pacala and Socolow built their scenario on a business as usual (BAU) emissions baseline based on assumptions that do not appear to be coming true.
"The software helps us understand the factual emissions baseline," says Doug Richards of SunPower.
Evaluating reductions requires assigning an emissions baseline for a counterfactual that cannot be measured.
The UK has a legally binding commitment to reduce CO2 levels by 80% by 2050 relative to the 1990 emissions baseline.
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