Redefining Climate Action Metrics: The Urgent Need for Time Weighted Impact

A Wake-Up Call from Nature permalink

We live in an era where effects of climate change ^[1] are now witnessed first-hand, and are no longer merely predictions or contained within scientific journals - the hurricanes, the floods, the droughts, they are all realities now.

“Climate change is real; it is happening right now. It is the most urgent threat facing our entire species, and we need to work collectively together and stop procrastinating. Let us not take this planet for granted.” – Leonardo DiCaprio ^[2]

Rethinking Metrics for a Warming World permalink

“What gets measured, gets done” ^[3] has never been more pertinent, as quantifiable goals are crucial for driving action. The adage is simple, yet tricky in practice: Measure the wrong things, and the wrong things get done. Measure incorrectly, and things get done wrong ^[3:1]. The stakes of climate change are high for our species - nothing less than our collective future. In fact, today’s children are likely to witness its potentially catastrophic outcomes in their lifetimes. Metrics create incentives that drive our behaviours. Thus it follows that we must think critically about them, and avoid being led astray by poorly designed metrics.

The unit kilograms of carbon dioxide equivalent (kg CO₂e) serves as the universal gauge for greenhouse gas (GHG) emissions ^[4]. This is where the various GHGs are given a global warming potential factor, and weighted accordingly. For example methane has a factor of approximately 30, therefore about 0.033 kg of methane counts as 1 kg of carbon dioxide equivalent ^[4:1].

While this is still the main unit of account that matters in scientifically calculating and forecasting the temperature of Earth, it is not the most useful unit of account for the actions that we take to curb further temperature increases. The singular focus on quantity overlooks a critical factor: Time.

The Proposal: kg CO₂e / year permalink

The impact of our GHG emissions is not static, but rather cumulative - akin to compound interest in finance. Immediate reductions are exponentially more valuable than the same quantity of reductions years from now.

“Early action is key to addressing climate change.” – Project Drawdown ^[5]

This makes clear the case for us to rethink metrics for our GHG reduction actions. Thus, this article proposes a new unit of account which inherently reflects the urgency required: Kilograms of carbon dioxide equivalent per year – kg CO₂e / year. This would be calculated by dividing the amount of GHG emissions reductions by time to calculate an estimated average value.

While the use of this unit may seem novel at first, it gives us a fresh perspective of the goal, and yields valuable new ideas around how to attain it.

The cumulative nature of GHG emissions mean that while the rate of the emissions reductions matter, how soon these reductions begin also matter. One way in which to incorporate these into calculations using the new metric is to define an epoch (a universal start time) ^[6]. For example, we could set the epoch to the year 2000. If one were to start an activity that removes 1000 kg CO₂e / year in the year 2025, that should be considered as effective as starting an activity that removes 2000 kg CO₂e / year in the year 2050. To reiterate: Early action is key to addressing climate change.

The following sections illustrate how this new metric could be applied, and reshape the thinking and processes in various sectors that have high potential for impact on curbing greenhouse gas emissions.

Investments: Prioritising Timely Impact per Dollar permalink

Both governments and venture capital have been making increasing investments, collectively known as “Climate Capital” ^[7]. Adapting the new proposed metric, we have: Dollars per kilogram of carbon dioxide equivalent per year ($ / kg CO₂e / year).

Consider a hypothetical decision between plugging methane leaks ^[8] at an oil refinery which takes weeks, and adding carbon capture and storage ^[9] at the same oil refinery which takes years. If both can deliver the same amount of GHG reductions and cost the same, in our current thinking based on the kg CO₂e metric, the same amount of capital is likely to be allocated to both projects.

However if we were to use the new metric instead, $ / kg CO₂e / year, the methane leaks option would be allocated much more capital compared to the carbon capture and storage option. Additionally, if the project plugging methane leaks can be implemented this year, but the project adding carbon capture and storage can only be added in about 15 years; and we apply the epoch logic, the capital allocation would skew even further towards the methane leaks option. This new way of prioritising capital allocation would have a much bigger impact on cumulative GHG emissions.

The new metric proves its inherent value, by demonstrating that it leads to better allocations.

Climate positive investments tend to be good investments too, with the “Carbon Clean 200”, an index tracking “companies leading the way with solutions for the transition to clean energy”, significantly beating the returns on broad market indices from 2016 through 2023 ^[10].

“It is now cheaper to save the world than destroy it. But is capitalism up to the challenge of preventing the climate crisis?” – Akshat Rathi ^[11]

Maximising Utility per Emission in Key Sectors permalink

The UN Environment Program has identified several key sectors^[12] which need to curb their GHG emissions in order to limit Earth’s temperature rise to under 1.5°C.

The new metric, kilogram of carbon dioxide equivalent per year (kg CO₂e / year), can also be adapted to these sectors, following the pattern used for investments above. To do so, we take the baseline unit of measure of production in that sector (for example, kilowatt hours in the energy sector), and use that to make a sector-specific variation of the new metric. The table below does this for several sectors that have high potential impact on curbing GHG emissions.

Each of these sectors should view the new metric as an opportunity to refactor their priorities. In essence, each sector should collectively ask itself how it can maximise the utility it provides to its customers in the shortest amount of time with the largest GHG reductions possible. This exercise is likely to yield a radical shift in priorities, and a redesign of processes.

Emissions by sector: Where do greenhouse gases come from? – Our World In Data ^[13]

The Role of Governments permalink

Governments and regulators have a tremendous role to play here too. By and large, markets today fail to price the negative externalities from GHG emissions accurately. As a result, in most cases pollution remains profitable. Policies, legal/ regulatory/ tax frameworks can (and should) be created to incentivise or compel these critical sectors into climate optimal action within shorter time frames.

The nation of Norway has shown that this is possible. Its industrial sector has reduced GHG emissions by 40% while increasing production by 37%, and its buildings sector is responsible for only 2% of its GHG emissions (world average is 40%) ^[14]. It has accomplished this primarily through mass electrification plus ambitious government regulations on GHG emissions. Noteworthy: Norway has demonstrated that technologies, regulations, and processes that are available today are capable of the scale required to reduce GHG emissions on a national scale. Furthermore, they serve as a concrete example that reducing pollution can also be profitable.

A Call to Action: Aligning Metrics with Our Climate Goals permalink

We stand at a pivotal moment in history, where our actions can still alter the course of climate change. In COP21, we collectively agreed to limit temperature increases to 1.5°C above pre-industrial levels ^[15]. Yet we have regrettably marched in the wrong direction for the next 9 years, with our GHG emissions still increasing in 2024 ^[16]. We believe that the focus on metrics that do not factor in time has a large part to play in this.

“In the face of impending catastrophe, whose warning signs are already unbearably disastrous, weak action is unwise; no action is dangerous. At this point in the progression of this calamity, we have few choices and little time. Our discourse must focus on delivery, and our conversation must be centred on our commitments.” – William Ruto, President of Kenya ^[17]

It is not too late to steer back on course ^[18] by embracing new metrics that guide our efforts towards the actions that yield the most significant immediate benefits. When we put the right metrics in place, two key outcomes result:

• Simply showing the metrics to people automatically changes their behaviour, nudging them to improve those metrics.
• The actions needed to change those metrics are made much clearer.

While kg CO₂e is an appropriate unit for measuring climate impact, kg CO₂e / year is a more appropriate unit for measuring climate action.

Here is our clarion call: If you develop strategies or lead organisations in key sectors - energy, agriculture, industry, transportation, and buildings - you have the steering wheel. If you know someone in such positions, bring the matter up with them, and influence them to steer in the direction of timely climate optimal action.

Timely impact should be prioritised over eventual impact. Timing matters. Let us measure what really matters.

Thanks to Owanate Amachree, Graham Lally, Berwyn Powell, and Gunnstein Lye for reviewing this article.

Banner image ^[19].

Footnotes, with additional commentary.