Category Archives: Climate Change

I’m shocked – shocked: I had no idea things were this bad!

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ALAN JONES: Look, it’s a harsh thing to say on these matters of carbon tax and global warming and carbon dioxide that your national government is telling you lies.

But The Australian newspaper leads today with a story that no major coal-producing country currently imposes a direct charge on greenhouse gas emissions from coal mines. Yet there was Wayne Swan announcing that a Productivity Commission report into international climate regimes would show that seven of Australia’s top 10 trading partners had adopted major policies to reduce pollution.

Well, the Australian Coal Association have had a gutful. They’re going to raise money to attack all of this argument by the government. And they are saying that not one of Australia’s top four competitors in the 13 key commodities – we’re talking about iron ore, gold, nickel, aluminium, coal – not one of them has a carbon pricing scheme except Poland which exempts emissions from coal mining processes.

But, you see, these people simply tell lies in order to try to win their case. They’re desperate.
Only the other night on television Wayne Swan was asked, what was the government’s greatest investment in productivity. He was rabbiting on about productivity. His answer: the National Broadband Network.
[Laughter]

It’ll be obsolete – yeah, people are just laughing here. It is laughable isn’t it? It’s laughable. It’ll be obsolete before it’s built. It’s a bureaucratic nightmare. It’s costing taxpayers a fortune. It’s become a gravy train to be exploited by greedy unions. It’ll hardly improve business efficiency beyond what could have been done for a fraction of the cost. And this is his greatest productivity reform. Continue reading →

A graphical challenge

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When I floated the idea of an infographic wiki the other day I said this.

The problem of course is that infographics are created by graphic designers, who are trained to do what they do. Someone in the policy crowd might want to offer their knowledge on an issue in an infographic but they wouldn’t be able to create one easily. Just a few weeks ago I was trying to give a plain English explanation on why compensation was possible with a carbon price to submit to The Drum. Miraculously as I was struggling with the final draft Jess Irvine did a great job on the same topic, but the ability to do an infographic would have been a blessing.

Which brings me to the placard at right by Martin Jones at the SayYes rally on Sunday. I think is clever, very insightful and full of applied knowledge. I also suspect it’s completely and utterly impenetrable to anyone who doesn’t know the subject matter.

But I have no idea how I’d improve it so it would inform rather than bewilder.

This is important since confusion about compensation is rife, despite the importance of the issue. Take this example in the Australian. I’ll give PvO the benefit of the doubt and assuming he’s merely ignorant rather than actively disingenuous (though this distinction is distressingly difficult to make in the News Ltd press). A sincere commentator would benefit greatly by infographics that provide access to specialist knowledge, and subsequently their non specialist readers who aren’t prone to access the wiki themselves.

Does anyone have any ideas how something that is easy to explain given time – such as the distinction between income and substitution effects – can be expressed concisely and graphically to the majority whom have no sat through Microeconomics lectures? Because the alternative seems to be schoolboy errors echoed and magnified.

Continue reading →

Environmental performance

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Amongst developed countries, we’re nothing special, ranking 51st. This is from the Yale Environmental Performance Index. Though plenty of caveats need to be kept in mind, and the report itself is full of the implicit assumption that everything is always and everywhere better when it’s quantitatively measured (something that isn’t true), it seems to be about as thorough as these things can reasonably be.

Here’s their map of the world. If you’re keen on the environment head to Scandinavia (with France being an honorary Scandinavian for these purposes)  and better still North West Scandinavia (Iceland), which also seems to be making a better fist of recovering from it’s GFC meltdown than other countries (hint: if things get too bad, default). Antarctica and Greenland are also in pretty good shape, though I hear they can get quite cold.

 

The winner’s curse, power station edition

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Ian Verrender in the Sydney Morning Herald recently wrote of Victoria’s two oldest power stations that they were bought by their owners “when the issue of climate change was well known”.  Though he made that remark in the middle of a longer article focused on different issues, the point is important. The winners of Australia’s power station privatisation auctions all knew they might someday face a carbon price. And the losers knew it too. It’s one of the reasons they lost.

Since some appear to doubt this – for instance, commenter Patrick in this Ken Parish post – it should be made clear.

Patrick argued: “Anyone in 1996 who seriously envisaged carbon trading/caps/etc would have been considered delusional. Can you remember how long ago 1996 was?”

In fact, 1996 was not that long ago in the climate change debate, which is more than 30 years old. Dr Sinclair was teaching my Year 10 science class about the greenhouse effect back in 1979; the first substantial federal political discussion of a carbon tax occurred in 1990. The prospect of a carbon tax or trading scheme was very real by the time the Victorian electricity assets came up for sale in the mid-1990s. And the prospect of a carbon tax was particularly real for the community of people trying to figure out what a brown coal power station was worth. The conversations I had with keen potential buyers (or more often, their investment bankers) at the time could be summed up like this: “Carbon pricing will come. One day. But there’s plenty of money to be made before that happens.”

Now step back a bit and take a careful look at the potential buyers who made it to the final stages of the Victorian power auction. They were by definition the biggest optimists about the industry’s prospects. They could see the greatest opportunities, and had the greatest myopia about the risks. Fifteen years later, what I remember most is their intense optimism. In contrast, people who were worried about carbon pricing couldn’t justify the sort of prices that were being talked about, kept their wallets in their pockets, and didn’t even bother flying to Melbourne. Continue reading →

Seeking alternatives to nuclear and fossil fuels

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The latest situation with damaged Japanese nuclear power plants seems if anything more potentially dire and apocalyptic than what prompted my comment on Don Arthur’s post:

Seems to me that whatever now happens the nuclear power option is almost certainly a dead duck in all western nations with free media. Whatever may be the wholly utilitarian risk/benefit analysis, the images and sense of Armageddon we’re seeing coming out of Japan will be imprinted on people’s minds permanently, meaning that politicians from now on simply won’t be able to propose nuclear power solutions without facing terminal electoral consequences.

The images coming out of Japan mean that it’s game, set and match to the Greens on the nuke power issue and we need to get on and develop other sustainable, low carbon baseload power options.

However, it appears that currently feasible non-nuclear and non-fossil fuel baseload power options (i.e. commercially deployable in the near future) are by no means obvious.

Nuclear pebble bed reactors seemed to hold some hope of cheaper nuclear options that didn’t carry the risk of overheating and meltdown so evident in Japan. However, trial reactor programs have largely been abandoned as unpromising.

Hydrogen fuel is fraught with problems that haven’t been solved, mostly related to its volatility, lightness and very low energy/volume ratio.  Compressing or liquefying it are both extraordinarily expensive.

Solar thermal might be capable of development to something approaching baseload constant availability with storage of energy generated during the day (e.g. superheated water) but certainly isn’t ready to be deployed on a large scale.  Moreover cost appears almost prohibitive:

Due to the nature of technology and the electricity market, says BZE, the carbon price would need to be above $70 a tonne before it could begin to have benefits for any new form of renewable energy generation. Between $70 and $200 a tonne, the signal is for extra growth in wind power combined with (what Wright calls) ”fossil gas”. More than $200 a tonne is needed to make baseload solar thermal viable at current prices.

“Clean coal” is almost certainly an expensive fantasy at least in most parts of the world, because very large underground storage caverns for the Co2 extracted to make “clean” coal just don’t exist.

So what else is there?  I’d be most interested in readers’  thoughts.

I note that the Green lobby is arguing that you really don’t need any baseload power sources at all, and that enough continuous electricity can be delivered by a patchwork of renewable but non-continuous sources, perhaps supplemented occasionally by reserve LNG plants.  Mark Diesendorff is a leading local proponent of that approach, and a retired scientist Dr David Mills claims that the US could meet all its current electricity needs with such a patchwork approach and without relying on either nuclear or fossil fuels.  Somehow I have my doubts, but again I’d be interested in readers’ thoughts (especially those with some relevant knowledge/expertise).

Roosters, feather-dusters and high stakes poker

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A lot of nonsense is being written by pundits about Julia Gillard’s supposedly terminal leadership situation in the light of the carbon tax issue. The reality is that if she manages to broker a deal that gets through Parliament this year, then she’ll be seen as a strong leader who had the determination to force through a solution to an extraordinarily difficult issue where others have failed. Moreover, as with Kim Beazley in the wake of implementation of Howard’s GST, everyone will realise that it was no big deal and that Abbott was lying to them. On the other hand, if she fails to nail down and implement a carbon tax, Gillard is almost certainly dead meat whatever happens.

In the meantime, all Gillard can do is take the fight up to her opponents and seek to persuade as many people as possible about the facts and the necessity of a carbon price as part of the solution. She won’t achieve a decisive majority in that time, because it’s just too easy to sow doubt, fear and confusion about any proposal that hasn’t actually been implemented (or in this case even spelled out in detail). Look at the Republic Referendum a few years ago. A more innocuous constitutional change would be hard to frame, but monarchists had no difficulty in totally confusing an electorate that had little time for the Royal Family but equally saw little compelling reason for change. Fortunately Gillard doesn’t have to carry a clear majority of Australians with her at this point, just the Greens and Independents in Parliament. If she can do that the people will follow in due course after the carbon tax is in place. I’m sure Tony Abbott knows that too. Both leaders are playing high stakes poker.

So far I think Gillard is doing well. 11. KP: Leaving aside the fact that, as I argued in a recent post, she would be much better advised to flesh out more of her proposal now with enough qualifiers to allow for the detailed negotiations that certainly need to take place before any policy is finalised. [↩] Her performance on Q and A the other night was very impressive despite a quite skeptical audience. She was strong, persuasive and well briefed on all issues. To me this was the money passage of the evening:

AUDIENCE MEMBER: Prime Minister, isn’t the whole point of having a carbon tax to affect the prices that consumers pay? If there’s no change in consumer behaviour, you’re not going to achieve what you’re trying to achieve to reduce carbon pollution. So if it’s compensating households, aren’t you simply undermining the effect that your tax is going to have and ultimately make no change?

JULIA GILLARD: That’s a very perceptive question and I think a lot of people are thinking about his, about how does it work? If I’m getting compensation, what’s actually changing? Let me just explain that. The carbon price affects the big polluters. Yes, they will cause some price impacts for consumers. That’s true. We will then assist consumers and I can understand why people then intuitively go, well, how does all of this work? Isn’t, you know, sort of money going in and money going out? What’s the effect? Well, the effect is that in the shops when you come to buy things, products that are made with relatively less carbon pollution will be cheaper than products that are made with more carbon pollution. So you’re standing there with your household assistance in your hand. You could still keep buying the high carbon pollution products if you want to or what you’re far more likely to do is to buy the cheaper, lower carbon pollution products. That means that the people who make those things will get the consumer signal, gee, we will sell more, we will make more money if we make lower pollution products. That drives the innovation. So I want you to have that household assistance in your hand but I also want you to see price effects which make cleaner, greener things cheaper than high pollution commodities. That’s why it works.

Quite so. Now let’s hear more of it.

Shorten and the cake

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Three things emerged from qanda last night.

The first was that Malcolm Turnbull is out of control, and thinks he can undermine Tony Abbott at will. So there’s some fun in store.

The other two are closely related. One is that, whatever Bill Shorten learned in his MBA at the Melbourne Business School, it didn’t equip him with basic economic intuition. The other is that, despite the lessons of Rudd’s failed greenhouse legislation, the Government still hasn’t has figured out how to explain the concept of carbon pricing to the electorate.

An audience member had the inspired idea of posing the John Hewson question: What will the carbon tax do to the price of a birthday cake?

Shorten’s answer, to paraphrase only slightly, was: waffle, waffle waffle; waffle waffle, waffle. It might have been that he wanted to avoid a truthful answer, but one couldn’t rule out the possibility that, like Hewson, he simply couldn’t figure it out on the spot. Continue reading →