Tuesday, March 13, 2007

A question of Metrics: Total Greenhouse Gas emissions or Greenhouse Gas emissions intensity?

There has been great criticism of late toward using intensity-based targets to gauge our performance in reducing Greenhouse Gas emissions. This well known argument tells us that given Alberta’s growth and its seemingly endless potential, intensity-based targets would allow us to produce more Greenhouse Gas emissions.

In the world of Business Intelligence & Key Performance Indicators, we are taught that metrics are chosen so that actions and decisions, which move the metrics in the desired direction, also move the organization’s desired outcomes in the same direction. In this case, our objective is to decrease our total Greenhouse Gas emissions at the Federal and Provincial levels. If we choose to measure our performance based on Greenhouse Gas emission intensity then our actions and decisions may not produce the desired outcome.

However, our objective is also to grow the economy and generate wealth. This leads some to conclude that a ratio between these two objectives is the ideal, but the selection of metrics is seldom that simple. The reality is that emission of total Greenhouse Gases is a hard boundary that as a country and a province we must adhere to, and must learn to grow our economy within. Transitioning to this new reality will range in difficulty in each industry. The Oil Sands industry will be particularly challenging, and we will need a collaborative approach between government and industry to achieving the needed emission reductions (see here for an incentive followed by emission caps approach).

From a political perspective, an intensity-based metric has a great appeal because they can show an immediate (although purely artificial) emission reduction. Alternatively, a total emissions metric will most likely show net emission increases over the next 3-7 years before reductions are achieved under a “reasonable yet challenging” Greenhouse Gas emissions reduction plan.

The $64K question is whether we, the electorate, want to stomach more total emission increases in the short-term for significant total emission reductions in the long-term, or have the wool pulled over our eyes?

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