Commentary: What if governments and firms measure the one thing that matters most – carbon productivity?

Commentary: What if governments and firms measure the one thing that matters most – carbon productivity?

Labour productivity is less important than you might think. People are not a finite resource, but allowable carbon emissions are, says an expert.

carbon emissions
(Photo: Unsplash/veeterzy)

BRISBANE: Ask any economist any question, and you will usually get an answer that includes this word: “Productivity”.

The winner of the 2008 Nobel Prize in Economics, Paul Krugman, set the standard in 1994 when he said, "Productivity isn’t everything, but, in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”

In the same vein, the new head of Australia’s treasury, Steven Kennedy, said: 

The most important long-term contribution to wage growth is labour productivity.

For my money, they could say the same about “carbon productivity”, an idea that is going to matter to us more.

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Labour productivity is notoriously hard to measure; measuring changes in it is harder still.

It is relatively easy to measure in the jobs we are doing less of these days, such as making washing machines; harder to measure in the jobs we are doing more of, such as caring for people.

And it is less important than you might think. People are not a particularly finite resource. Allowable carbon emissions are.

CARBON IS THE INPUT THAT MATTERS

The Intergovernmental Panel on Climate Change says net carbon emissions will have to be reduced to zero by 2050.

That means we have a carbon budget; a limited amount of greenhouse gases we can emit from here on. It would make sense to use it wisely.

IPCC
The Intergovernmental Panel on Climate Change (IPCC) at their 48th session in Incheon, South Korea, 1-5 October 2018. (Photo: AFP)

What I am proposing is a target for “carbon productivity” – the amount of production we achieve from each remaining unit of emissions – as a means of helping us cut overall carbon emissions.

It is easy to calculate: Gross domestic product divided by net emissions. We already measure GDP, and we already measure emissions in tonnes, albeit unevenly.

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We are going to need huge increases in carbon productivity, much more so as a result of cutting emissions than increasing production.

Things that are good for labour productivity might well be bad for carbon productivity. For example, replacing a sweeper with an air blower is good on the first count, bad on the second.

MEASURING CARBON PRODUCTIVITY

A target, or at least a widely published measure, could be introduced at a national level to focus government minds on what is important and what is not, and assist in allocating resources. Solar farms would become more likely to gain support than coal-fired power plants.

Regulatory resources might be redirected in surprising ways. While a small number of large emitters constitutes an easy target for policymakers, if those large emitters are efficient, the government might find it has to move its focus to the larger number of small inefficient emitters.

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It could also help us think about how we resolve the conflict between the perceived need for economic growth and the need to substantially cut emissions. Both would be important, but the measures that achieve both would be the most important.

Accounting debates about whether to carry forward international credits would be rendered meaningless.

David Peetz is Professor of Employment Relations in the Centre for Work, Organisation and Wellbeing at Griffith University. This article first appeared in The Conversation.

Source: CNA/el

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