The Time Horizon Problem

LinkedIn Post 06: The Time Horizon Problem

UK carbon budgets operate on five-year cycles. Your AI decarbonisation system plans on 1-3 year horizons.

This creates a perverse incentive.

The system schedules cheap interventions now (they fit annual capital budgets) and defers expensive ones later (they don't). Over five years, you might have four cycles of LED retrofits while never investing in deep retrofit. You've hit every annual target. At the end of the budget period, you're 30% behind where you need to be.

The system didn't fail. The governance structure did. The planning horizon was misaligned with the statutory obligation.

Solution: constrain your AI system's planning horizon to five-year carbon budget periods. Ask it: "What mix of interventions is required to meet our five-year target?" Not: "What's the cheapest retrofit we can do this year?"

Make it plan relative to budget period boundaries, not annual capital cycles. This forces a conversation about what's actually needed to comply, rather than hoping that quarterly optimisation will add up to five-year success.

It usually doesn't.

#Governance #StrategicPlanning #CarbonBudgets #SustainabilityStrategy #Decarbonisation