Webdiary - Founded and Inspired by Margo Kingston

John Pratt: "We ignore these scientists at our peril."

Two bucks? They're not prepared to spend two bucks to fix the problem? Talk's cheap, John. Rudd won't do anything.

A group of top level climate change experts has written a letter to the Prime Minister arguing that cutting greenhouse gas emissions by only 10 per cent would be dangerous.

The Federal Government's climate change adviser, Professor Ross Garnaut, will release his final report on climate change tomorrow.

Professor Garnaut recently flagged a target of 10 per cent reductions by 2020, drawing criticism from the scientific community for not being high enough.

But he also said a 25 per cent cut would be more effective.

Professor Matthew England from the University of New South Wales says he and 15 of his peers are urging Kevin Rudd to decide on a 25 per cent cut in emissions.

"This is unprecedented for a group of scientists to write a letter to the Prime Minister of a nation advocating a certain emissions trajectory," he said.

Eliot, people have been focused on the collapse of the US financial system but those with eyes on the long term know that a stitch in time saves nine. We ignore these scientists at our peril.

A survey by the Lowy Institute that  has "revealed that a majority of people are unwilling to pay more than $10 extra per month for greener electricity."

That's, what, $2 a week? Not worth it?

The Lowy Institute surveys the attitudes of Australians to foreign policy issues every year.

This year, climate change has slipped in ranking from first to fifth most important.

That's undoubtedly due to Kevin Rudd's "leadership", Peter Garrett's "towering intellect" and Penny Wong's "relevance" to "working Australians".

Anyway, I told you so:

"Anyone can pitch posters with cute animals and pretty sunsets over valleys and ask people whether they think those things are "worth keeping".

I watched footage of Garnaut's report and Rudd's response.  The camera panned to Bob Brown's face and his expression said it all.

Mass protest?  There may be no other option.

I think this is why the NSW Police bought that water cannon. 

If we let bureaucrats like Rudd run the show they will keep an immaculate record of ecological collapse in the same way that, around the world, various so called 'green' agencies have kept a superb record of species extinction.  Did nothing about it, mind you, but knew exactly when the last breeding pair died off.

The most salient point that Stuart makes is the urgent need to build new infrastructure based on renewables before the cost of oil becomes prohibitively expensive.  That is, before it is too late to actually make a mass transition to other forms of energy use.

 The ecological crisis is the crisis of capitalism and the ultimate contradiction of capitalism in that it has actually eroded the ecological conditions of its own existence.

Coal gasification is a cleaner more efficient process.

Converting coal to a synthetic gas -- "gasification," which involves heating it alongside oxygen to 2,000 F -- has its advantages.

Coal gasification is the cleanest method for converting coal's energy potential into electricity. The process takes coal and turns it into a hydrogen-rich synthesis gas which in this case will facilitate the separation of the carbon dioxide pre-combustion in the turbine generators. It is this factor which offers a lower cost approach to carbon capture. The hydrogen rich stream could also potentially be used in clean transportation and in substitution of natural gas, as well as electricity production on site.

Here in Australia companies like carbon energy are at the forefront of this technology.

https://private.broking.westpac.com.au/do/secure/getAnnouncement?resource=20080908%2f00877953.pdf&securityCode=CNX

Basically the energy is extracted from coal deposits with none of the environmental impact.

See here also.

What are your thoughts on this procedure, Ian?

"The OPEC oil group has agreed to cut its real output by 520,000 barrels per day in the next 40 days, OPEC's President and Algerian Energy Minister Chakib Khelil said on Wednesday."

Falling oil prices have been a problem.

Ian MacDougall: "What about cars driven by electricity generated in fuel cells from photolysed water? (See the new MIT process.)"

Is this the "MIT process" you're talking about?:

This might have been a story of how a couple of MIT scientists happened upon a breakthrough discovery in the electrolysis of water; but they didn't (and so it isn't). This might also have been a story about an informed media which correctly and skeptically reports on such scientific discoveries -- in the midst of a public relations barrage from a leading university -- but nobody really expects such journalistic vigilance anymore. Instead, this story will try to examine what (if anything) was discovered, and how this news affects the landscape of the looming energy crisis. In addition, given that a number of encouraging research reports have surfaced suggesting a seamless transition to a hydrogen economy, I will revisit the fundamental challenge posed by moving to alternate liquid fuels: getting used to the idea of diffuse energy.

30 years ago we were told that hydrogen cars were 30 years away from commercial production. Today, hydrogen cars are 30 years away from commercial production. This story is just another example of the energy illiteracy (not to mention mass delusion) of the general public. We will colonise Jupiter before we see millions of hydrogen cars driving around the same way that we drive petroleum fuelled cars today (hint: we will never colonise Jupiter).

Eliot, you seem to have missed the point regarding the SMH article on peak oil that you quoted. One of the lines you quoted was:

Labor is set to introduce an emissions trading scheme in 2010, which the report estimates will cost between 10 cents and 25 cents extra for a litre of petrol.

This is assuming a carbon price ranging from $40 to $100 a tonne.

What you didn't quote was the substance of the article, titled "Peak oil: petrol to reach $8 a litre":

PETROL could hit $8 a litre within a decade as oil production begins to dwindle and demand continues to soar, a CSIRO study to be released today says.

The study, Fuel For Thought, warns this would add up to $220 a week to the cost of running a medium-sized passenger vehicle by 2018, resulting in severe social and economic consequences.

... It finds the oil shock will have a far greater impact on petrol prices than an emissions trading scheme.

... The report bases its worst case scenarios on the assumption the world will reach peak oil within the next five years. Peak oil is when oil production hits its maximum annual rate, then starts to decline and is no longer able to match demand.

If the decline in production was abrupt, petrol would hit $8 a litre by 2018, it says.

It also warns technology alone would not be enough to meet the fuel supply gap and "reduced travel across freight and passenger transport will be necessary". If oil supply declined slowly, travel would be reduced by 5 per cent.

"However, if reduction in oil supply is rapid and alternative fuel vehicles are slow to become available, then passenger and freight travel may be reduced by up to 40 per cent," it says.

This would have "significant social and economic impacts" and reduce the nation's economy by at least 3 per cent. "Transport-intensive activities such as tourism and mining are expected to be the most vulnerable," it says.

The catch is that there is compelling evidence that world oil production will peak within two to five years, if not already, for example here, here, here, here, here, here and here. In other words, the CSIRO's 'worst case scenario' is already being realised.

So, while the Rudd Government and the Opposition are in a lather about an ETS that might increase the price of fuel by 10c a litre (less than the weekly price cycle fluctuation) and the so-called conservation movement endorsing the "invisible hand" as the saviour of the polar bear, the vast majority of Australia's political, scientific, academic and media elite are completely ignoring the reality that fuel prices will likely increase fivefold within the next decade, passenger and freight travel will likely decline by as much as 40%, and GDP will likely decline by as much as 3% per annum, causing "severe" social and economic consequences. Go figure. Am I the only one who finds this situation a little odd?

My point is well illustrated by your reply.

Thanks.

Anthony Nolan: "Sometimes images carry the message more clearly than many thousands of words."

That's why they use images like that to sell cars. And not national parks.

Ian MacDougall: "No matter how much you bang on about cost, it will never trump nature."

No matter how much you bang on about nature, carbon trading is still going to cost billions, probably trillions. And there's a political cost to pay, too.

Anyone can pitch posters with cute animals and pretty sunsets over valleys and ask people whether they think those things are "worth keeping".

Everyone will say "yes", every time. Because talk is cheap.

But try taking someone's car or air-travel or plasma television off them and see what happens.

The greenies keep on about these 'choices" as if they were painless, or at any rate, will involve very little pain.

They're continually saying how "easy" it will be, and how by massively increasing the costs of energy utilities we will create "wealth opportunities".

So, how come "peak oil" won't also create "wealth opportunities"? Or droughts?

Or why don't we create "wealth opportunities" by radically increasing the cost of other factors of production by imposing massive taxes on them?

Because it's complete nonsense to say that we are going to "increase wealth" by massively increasing costs.

The convoluted logic around this debate reminds me of how the anti-technology panic merchants of the early eighties kept arguing that since computers would "displace labour" we should get rid of them in favour of "labour intensive industries" instead (like, I dunno, pulling rickshaws or winding rope or something).

A similar argument was used against mineral resource extraction industries.

They were "uneconomic" because they weren't "labour intensive" .

Putting up the cost of coal to the point where it kills off the coal industry won't "create wealth". It is a deliberate attempt at destroying wealth.

You will create wealth by creating cheaper, not more expensive technologies.

More expensive technologies push costs up, not down.

I don't expect the greenies to all of a suddent start telling the truth about that (or anything else). But we should stop lying to ourselves at any rate.

Don't you think?

Sometimes images carry the message more clearly than many thousands of words.  This is my favourite pro-nature poster titled Nature - It'll grow back.

Cheers

John, the proposed Rudd/Garnaut ETS is a complete crock, just as any other proposal to address a problem of this magnitude by tinkering around the edges of the current paradigm then waiting for "invisible hands" and other supernatural forces to do the work.

The real problem with the Garnaut report, which is remarkable given that its author has gone to great lengths emphasising that it is "based on science", is that it ignores the fact that there are insufficient fossil fuel reserves to realise the IPCC emissions scenarios on which the ETS is based. Indeed Garnaut explicitly rejects the idea that limits to fossil fuel production will in any way constrain growth in the first half of this century. The ink will hardly be dry on his final report before it is completely discredited by real world events and the CPRS is thrown to the ducks, probably before the next election.

Ian M (Ed): Welcome back, Stuart.

Just a point about Dr Cameron Hepburn's observation that "Prices in Europe are now about $40 a tonne."

Do you remember this?

As part of any emissions trading scheme, a price will be put on carbon. Research done by the Brotherhood of St Laurence estimates that even a comparatively low price for carbon of say, $25 a tonne, could push a further 200,000 Australian households and nearly half a million people below the poverty line.

And this?

Labor is set to introduce an emissions trading scheme in 2010, which the report estimates will cost between 10 cents and 25 cents extra for a litre of petrol.

This is assuming a carbon price ranging from $40 to $100 a tonne.

However, Labor is likely to start a scheme with a price less than that, meaning the impact on a litre of petrol will be less than 10 cents and Labor is looking at ways to offset any net increase in the petrol price.

So, Labor is aiming at the same $40 a tonne figure they have in Europe.

Millions in poverty in Australia, and gigantic taxes on top of it to "compensate" the impoverished masses it will create in the process.

And this today:

The Federal Government is being warned that the community welfare sector, local governments and itself will all need to be compensated to the tune of two and a half billion dollars for the effects of an emissions trading scheme."

...

But the think tank, the Australia Institute, says there are many more losers - charities and community groups like the scouts and surf life saving clubs - which are more likely to miss out on adequate compensation.

Carbon trading will be an unmitigated disaster for this country's poorest.

Richard:  Ninth for the day, Eliot!

John Pratt: "It seems that even with a cap and trade policy the economy will continue to grow."

Here's a good example of the logic that underpins the Carbon Trading fantasy in today's Sydney Morning Herald from Dr Cameron Hepburn of the Smith School of Enterprise and the Environment talking about how Carbon Trading provides "extraordinary opportunities for wealth creation".

With so much at stake, business has demanded a clear policy framework on which they can develop the new, clean technologies that will dominate in coming years. They want long-term carbon prices that are high enough to make alternative technologies profitable, not just for energy production and transmission, but also for energy efficiencies in buildings, transport, agriculture, mining and manufacturing.

Did you get that? Extraordinary opportunities for wealth creation will be created by pushing costs up. Unilaterally. In a global market.

Then there's this choice tip:

Don't cave in to industry, as the EU did. It gave out too many pollution permits, their price crashed to zero and the scheme failed. Prices in Europe are now about $40 a tonne.

Make industry pay. The EU gave away almost all of permits for free - and still business passed on higher prices to consumers.

Make the commitments long-term - because short-term carbon trading offer no confidence that investments made now will still generate returns when the scheme ends.

Did you note that? Businesses passed on their higher costs to consumers "because"  government gave out "too many pollution permits". Whose prices crashed to zero.

And the same industry that wants "a clear policy framework on which they can develop the new, clean technologies" will pass on higher costs only when they get free permits.

Yet, they'll pass on the "benefits" of the "clean technologies" at a lower price  if they cost more .

Oh, and where will the "extraordinary opportunities for wealth creation" be?

And where is the discussion about leveraging new opportunities? New York and Chicago are battling it out to become the dominant carbon financial centre in the US. London has largely won the fight in Europe, in part due to the co-ordinated approach of the energy companies, utilities and banks, and partly through a constructive relationship with government. Sydney should have become the carbon finance capital of Asia years ago; instead the title is still up for grabs.

Wealth creation will be in trading the permits.

Keep in mind, this guy's one of the leading intellectuals in the field.

John Pratt: "It seems that even with a cap and trade policy the economy will continue to grow."

No it won't, it's a disaster both economically and politically. The UK Government (soon to be ex) no longer even mentions it - outrageous taxes are always unpopular. Mr Rudd should take notice of this, and he would realize the policy is a dog.

There are any number of ways a company can avoid the problems this scheme will cause - and those ways won't be nice for the general population. Under investment will be the worst of the problems coming home to roost for Australia. Such under investment will continue until a new government is elected to scrape the, by then, unpopular imposts.

Mr Rudd is seemingly already making noises about concessions, and would be wise to maybe have an ETS without really having an ETS. I don't know if this could be politically achievable, it would though, be the most sensible route to take. The other routes a littered with disaster.

Would the Lieberman-Warner plan, or even a more aggressive cap-and-trade policy, slow economic growth? How much? The answer is not altogether clear and depends heavily on the responsiveness of innovation to higher carbon or energy prices.

The EPA estimates suggesting that cap-and-trade will cause a cumulative reduction in GDP growth of between 0.9% and 3.8% by 2030 reported by the editors are quite alarming. But those estimates need to be examined critically and put into context. First, the Congressional Research Service (CRS) described the upper range of the EPA's estimates as an outlier, quite different from the estimates produced by the seven other models the CRS examined. Among the other models, 2.7% was the largest projected decline in GDP, and five of the seven models projected a loss of 1% of GDP or less.

On top of that, the models' predictions of U.S. GDP in the year 2030 under business as usual (i.e., without cap-and-trade) vary far more than their projections of the economic impact of a carbon cap. When Nathaniel Keohane and Peter Goldmark of the Environmental Defense Fund examined these same studies, they found that each of them projects average U.S. economic growth of 2.5% to 3% a year over this period, and each predicts the U.S. economy will be more than twice as large in 2030 as it was in 2005 even after taking into account whatever dampening effect cap-and-trade has on economic growth.

It seems that even with a cap and trade policy the economy will continue to grow. All the gloom and doom put forward by the BCA is just an effort to get more compensation for their particular industries.

At least 100 conventional coal-fired power plants have been proposed or are under construction across the country, and environmental advocates have made it a priority to reduce their potential impact on the environment.

“This landmark agreement sets a new industrywide precedent that will force companies to disclose the true financial risks that climate change poses to their investors,” Mr. Cuomo said in a statement. “Coal-fired power plants can significantly contribute to global warming and investors have the right to know all the associated risks.”

The agreement with Xcel requires the company to analyze the likely effects on its business of current and future legislation or regulations in the states and countries where it operates and to disclose that information in its filings to the S.E.C. Several states, as well as Congress, are considering global warming legislation.

Under the agreement, Xcel will disclose the financial risks of lawsuits and of federal or state court decisions that would affect its business. The company will also analyze the risks to itself associated with global warming, like drought — coal plants are prodigious users of water — or rising sea levels.

In a statement, the chairman of Xcel, Richard C. Kelly, said the company had already voluntarily reduced carbon emissions and planned to continue to do so in the future.

“We previously provided detailed information concerning the expected impact of climate change and greenhouse gas emissions regulations on our operations, and under this agreement we will make even more detailed disclosures,” Mr. Kelly said. “This agreement will enhance our already aggressive efforts to be responsible environmental stewards.”

Paul and Eliot will be interested in this. Just like James Hardie and the tobacco companies, companies that are causing climate change will be liable to law suits for the damage they are inflicting on the planet.

I hope Australian companies are taking this into account. Exporting coal may be liable to law suits.

Looks like there may be lots of hidden costs to companies that still go on pumping the noxious gases into the atmosphere and to companies that continue to export dangerous pollutants globally.

All our major trading partners are switching to solar and wind and geothermal energy and are all completely abandoning coal and other fossil fuels.

Also, all our competitors in foreign trade have already done so, and its just crazy talk to think that our import substitution industries will be disadvantaged in any way whatsoever by carbon trading.

There are no downsides or extra costs at all associated with carbon emissions trading, in fact its cheaper. I've got the proof right here.

Darn, where is it?

It was right here just a moment ago...

Awww, shucks. We don't need proof, anyway.

If our business leaders got a simple point through their thick skulls and acted today the whole thing would be moot.

They will only pay if they pollute. Most of them can easily switch to wind and solar and simply don't want to, they would rather whine and try and blackmail the government into believing they will pack up their resources mines and leave the country to go and pollute somewhere else.

Lazy, ignorant and ugly.

"AUSTRALIA has no ability to environmentally dispose of the batteries from the Toyota Camry hybrids whose production has been championed by Kevin Rudd.

Labor in Victoria, where the cars will be built, has conceded a "current hole" in the nation's recycling policies means there is no capacity to environmentally dispose of the nickel-metal hydride car batteries from the 10,000 hybrid cars to be produced by Toyota every year from the start of 2010."

The New Political Center on Climate

Both Romm and Manzi deserve credit for helping to move the debate away from a narrow focus on global warming and toward a debate over solutions. Now liberals and conservatives need to come together around an agenda grounded in the Principle of Climate Uncertainty and the Principle of Climate Politics. Congress may already be moving in this direction. Before the vote on cap and trade, ten Democratic Senators — the Technology Ten — sent an open letter to Senate President Harry Reid saying that they supported action on climate but that it needed to be focused on containing energy costs and on technology. Then, just last week, another group of ten Senators introduced compromise legislation on oil drilling, calling for expanded drilling and tens of billions in new government investments to make clean energy cheap and electrify the transportation sector. All of this has the makings for a new political center and, we hope, a political breakthrough.

A political breakthrough will be needed for us to develop solutions to the problems of climate change? We will need bipartisan support to make the necessary decisions. We need to develop energy sources that are cheap and clean. It is also hard to make an argument that we should not make our society more energy efficient. Currently a lot of energy is wasted. The government needs to regulate for efficiency. This will save money and help the economy. Moving to a cleaner economy does not always come at a cost.

John, as I understand it, Garnaut prefers direct, straight out carbon taxation over emissions trading, but Rudd has overruled him. The first is paying for having polluted, while the second is buying a right to do so.

As I see it, emissions trading will be a nightmare to administer and police. I think the would-be rorters are rubbing their hands right now, saying 'bring it on!' A whole thread could be devoted to ways and means of rorting.

Just one: I run a business that belches smoke. I apply for an emissions permit. I also buy enough land on which to plant enough permanent vegetation to soak up my emissions. So with CT I break even financially. I plant the land down with radiata pine, and watch its value increase. As time passes I sell the first thinnings, then the second to whoever wants them. Eventually I clear fell the lot, have it sawn up, and start over again. My argument will be in the unlikely event that the Federal Government of the day takes issue: 'The wood went into sawn lumber, chipboard and mulch. It is still so much carbon sequestered.' Who will prove me wrong in the unlikely event that I am even asked to justify myself?

As the polluting fuels - coal and oil - are so easily taxable, why not just tax them up front and invest the proceeeds in renewables? The purchasers of Australian coal pay up front, as does the oil company selling the imported or locally produced petrol.

Carbon trading is set up to fail economically and environmentally, but is more likely to succeeed politically. Carbon taxation would need to be heavily sold politically, against the inevitable short sighted and opportunistic Liberal Party and Family First opposition.

However, as climate change bites, such will be seen for what it is. The Liberal Party could even split on the issue.

Mr Rudd says he expects robust discussion with the BCA as the government talks through their concerns.

"I'd say to them, as I say to other business, that this will not come cost-free because if you roll the clock ahead 10, 20 years, 30 years, overall across Australia what people are saying is this: 'We have wasted enough time, it's time to act'," he said.

"If we fail to act, the economic cost to Australia will be huge.

"I'd say to our friends in the business community; 'Yep, we're up for a discussion, we're up for a debate, we're up for a robust engagement but this is not going to come cost-free'."

For all those that have complained about the lack of action since the Rudd government picked up the reins of power, don't suddenly start to complain at the rate of change we are about to see. The time for action is now and we should support the Rudd government as it fights an almighty battle with the BCA. We need change and we do not have the time to pussyfoot around.

The longer we wait the greater the costs will be. 

Make no mistake, the Rudd Government is now trapped by its pledge to proceed with an emissions trading scheme by 2010, before most of the rest of the world and, in particular, ahead of most of our trading partners. It faces a dilemma with no escape: it must either alienate the green lobby and climate-change believers to whom it has pandered, or proceed without sufficient support from corporate Australia in the teeth of warnings about corporate financial risk.

The second option is unthinkable. The entire point of emissions trading is not to combat greenhouse gases, it is to establish a reduction trajectory at minimum harm to Australia's economy and competitiveness.

Paul Kelly in the Australian.

Kelly seems to think that an emissions trading scheme is not to combat greenhouse gases, but that its purpose is to cause minimum harm to our economy.

Surely the scheme it is to reduce greenhouse gases and, at the same time, to cause minimum harm to our economy - both equally important to our future.

If it does not combat greenhouse gases what is the point?

Industry called for this policy.

In a dramatic development in the local debate on global warming, Australia's power industry is calling on the Federal Government to introduce a national carbon emissions trading scheme.

We are not leading the way. Already the EU and many states in the US have emission trading policies.

At this stage the core decision facing Government is not how to spend this revenue but what the emission “cap” or target will be implemented under the trading scheme. Until this is known it is not possible to comprehensively assess the size of the emissions trading dividend or consider or how it might be most appropriately used.

Indicative estimates suggest that Australia’s emission trading dividend could be a multi-billion dollar revenue stream comparable in size to current expenditure on education or defence.

In distributing this revenue, high priority must be given to managing impacts on low income communities. Unless the revenues are distributed in a way that is perceived to be equitable the long-term sustainability of emissions trading, and action on climate change, will be undermined.

The cap is the important part of the policy - a limit to the amount of greenhouse gas we will emit. That is the key, the economy will have to come second to the planet. Rudd is not trapped, he is moving the country into a new era, an era where the planet and it occupants come before fat cats with large with large brown paper bags.

Let's hope Rudd has the courage and the wisdom to take us to the brave new world. The whole point of an emission trading scheme is to reduce our emissions and give a better future to our kids. We are not leading the rest of the world but joining the rest of the world. The economy will grow and the planet will stay green.