Contents lists available at ScienceDirect Applied Energy journal homepage: www.elsevier.com/locate/apenergy On energy and climate change policies: The impact of baseline projections Duy Nong a,b, ⁎ , Paul Simshauser c,d a Institute for Food and Resource Economics and Center for Development Research, University of Bonn, Germany b Agriculture and Food, The Commonwealth Scientific and Industrial Research Organisation, Australia c Griffith Business School, Griffith University, Australia d Energy Policy Research Group, University of Cambridge, England, United Kingdom HIGHLIGHTS • Baseline scenarios are essential and important in forward-looking studies. • Carbon tax policy impacts are found to be highly diverse across baseline sce- narios. • Output levels can change dramatically (e.g. −19% to −64% for power output in India). • Real GDP can also change signifcantly (e.g. −0.66% to 1.54% in China). • Baselines with honed renewable pro- jections facilitates fewer economic trade-ofs. GRAPHICALABSTRACT Baseline Scenario 1 (S1) (Macroeconomic projectons: GDP + Populaton growth) Baseline Scenario 2 (S2) (Baseline Scenario 1 + speci fic renewable power development) Baseline Scenario 3 (S3) (Baseline Scenario 2 + primary factor input technology growth) Energy & climate policy assessment (e.g., a carbon tax) Industrial impact Macro impact Household impact Effect magnitude (highly diverse) Trade-offs & economic costs S3 S2 S1 Increasing from using S3 => S1 ARTICLEINFO Keywords: Baseline projection Computable general equilibrium (CGE) Partial equilibrium (PE) Climate change policy Carbon tax GTAP-E-Power ABSTRACT As a result of statistical contingencies, research frequently employs aged databases to examine the impacts of energy and climate change policies in contemporary situations, or in forward timeframes out to 2050 or even 2100. These forward-looking studies require a base case scenario in order to assess the impacts of a policy. In this article, we hypothesise how a baseline is ‘rolled forward’, and specifcally, how this process can materially alter the apparent performance of an energy or climate change policy. In the literature, we fnd a variety of methods are used to update databases and project forward base case scenarios, some which scale an entire economy to a general trend of growth, whereas others account for sectoral diferences. We extend a global electricity-detailed model (GTAP-E- Power) to examine our hypothesis. We evaluate impacts of a world-wide carbon tax policy ($50/t of carbon dioxide equivalent) using three diferent baselines, with varying levels of specifcity relating to macroeconomic projections and sectoral developments and constraints. Results show the impact on sectors and the overall economy in all countries are highly diverse when diferent baselines are used. For example, fossil-based power output in the United States declines between 36.7 and 65.5% while Real GDP in China declines between −0.66 and −1.54% for an identical policy, depending on which baseline methodology is used. Above all, we fnd that stronger development of renewable energy and technology in the baselines results in lower costs of a climate change mitigation policy. https://doi.org/10.1016/j.apenergy.2020.115062 Received 20 January 2020; Received in revised form 8 April 2020; Accepted 17 April 2020 ⁎ Corresponding author at: Agriculture and Food, The Commonwealth Scientifc and Industrial Research Organisation, Australia. E-mail addresses: duy.nong@csiro.au (D. Nong), p.simshauser@grifth.edu.au (P. Simshauser). Applied Energy 269 (2020) 115062 0306-2619/ © 2020 Elsevier Ltd. All rights reserved. T