TTKD October meeting: The Story of Stuff

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October 2013 TTKD Meeting

The Story of Stuff

Thursday October 17

7.15pm for a 7.30pm start

Kenmore Library Meeting Room

International Energy Agency: the door to 2°C is closing

These are the words from the 2011 World Energy Outlook recently released by the International Energy Agency (IEA). Although a conservative organization the IEA take climate change very seriously and included in their report detailed investigations of potential energy senario's and how they will affect climate change.

Here's their most salient conclusions (emphasis mine)

We cannot afford to delay further action to tackle climate change if the long-term target of limiting the global average temperature increase to 2°C, as analysed in the 450 Scenario, is to be achieved at reasonable cost. In the New Policies Scenario, the world is on a trajectory that results in a level of emissions consistent with a long-term average temperature increase of more than 3.5°C. Without these new policies, we are on an even more dangerous track, for a temperature increase of 6°C or more.

Four-fifths of the total energy-related CO2 emissions permissible by 2035 in the 450 Scenario are already “locked-in” by our existing capital stock (power plants, buildings, factories, etc.). If stringent new action is not forthcoming by 2017, the energy-related infrastructure then in place will generate all the CO2 emissions allowed in the 450 Scenario up to 2035, leaving no room for additional power plants, factories and other infrastructure unless they are zero-carbon, which would be extremely costly. Delaying action is a false economy: for every $1 of investment avoided in the power sector before 2020 an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.

For a more detail discussion see Skeptical Science, basically the IEA looked at 3 future scenario's:

Business as usual = 6°C warming
New Policies (governments meet all pledges made to date) = 3.5°C warming
450ppm (requires much greater action) = 50% chance of limiting warming to 2°C.

2°C warming is seen at the red line we don't want to cross, therefore it is clear much more world action is required.

Time is of the essence to take action to meet a 450 ppm target because existing polluting infrastructure (power plants, factories etc) is almost at the level that uses up all our "carbon budget". The implication of this is that unless action is taken now then worldwide by 2017 any new infrastructure will need to replace those already existing or be zero carbon, or we blow the budget. This is why some news stories have reported we have "5 years" to act on climate change before it is too late.

This is also why those who claim they support climate action, just not now, are misguided. Such a "strategy" is not only far more expensive in the long run, but runs the risk of beginning too late because the "locked in" polluting infrastructure is already great enough to cause dangerous climate change. The fact is a coal plant will operate/ pollute for 50 years, while new but inefficient buildings built today could be around for even longer.

The good news (from Australia's point of view) is that with the passage of the carbon price, we'll be getting started on action. One of the early effects (and perhaps one that is already being felt) will be that new power generation in Australia probably won't include coal plants and that more efficient buildings, factories and appliances will become the norm.

I'll leave the last word to the IEA:

“If we don’t change direction soon, we’ll end up where we’re heading”

Tony Abbott, Carbon Pricing and Epistemic Closure

Another day, another group of experts report that if you are going to act on climate change then carbon pricing "is the most effective way of achieving least-cost abatement".

One might think that when practically all the experts in a particular field are confident that one course of action is the best one, you should at least give them the benefit of the doubt, be they doctors recommending treatment, climate scientists saying we're warming the planet or economists saying a carbon price is cheaper and more effective than direct action.

But not Her Majesties leader of the opposition. Faced with this latest report Tony Abbott has responded by claiming that the experts are wrong and probably incompetent.

Last year there was a lot of talk in American conservative political circles about Epistemic Closure, which in this case was taken to mean close-mindedness and/or an ideological attraction to an idea despite the evidence.

Previously I had assumed that Abbott's opposition to any form of carbon pricing and favoring of "direct action" was a purely political position. Whatever Labour is for, he is against, a rather cynical position with no real interest in what policy might be best for the future of this nation. But comments like this make me wonder if actually he does believe he is correct, despite the fact all the experts tell him he is wrong. A diagnosed case of epistemic closure?

PS: Abbott's citing of Bjorn Lomborg in support of his position is hardly inspiring. Lomborg to put it simply, is not credible.

PPS: The opinions in this piece are solely my own.

Garnaut recommends a starting carbon price of $20-30 a tonne

Earlier today the government's climate change advisor Prof Ross Garnaut released his carbon pricing proposal. It was part 6 of a series of updates he has been making to his 2008 climate change report. Garnaut's report is not government policy but it likely to be influential in deciding how to proceed in implementing a carbon price.

There is a good description of the main points here (though the headline is perhaps a little inaccurate), the report can be found here.

Here are some of the key points:

• It is in Australia's interest to play our part in limiting climate change by reducing our emissions and working to secure global agreements to reduce emissions.
• A market based mechanism is the cheapest way to reduce our emissions.
  
• The effect of carbon pricing on the economy will be "modest".
  
• Garnaut has endorsed the plan to start with a fixed price (the carbon tax) before moving to an emissions trading scheme (price set by the market ie: supply and demand).
  
• Starting with a fixed price provides more certainty and stability when the scheme starts, allowing everyone to get used to a world where carbon pollution has to be paid for. Emissions trading is favoured in the long term for its ability to direct money for reducing emissions to the cheapest means of doing so.
• The carbon price should start at $20 to $30 per tonne and rise every year before being set by supply and demand under an ETS.
• A large amount of assistance (free permits) to business that produce products for overseas markets is favoured, this will be phased out over time (Nb: this is similar to in the EU ETS)
• Garnaut recommends household assistance should be mainly via tax cuts focusing on low and middle income earners, with some more targeted assistance for low income earners.
  

Not everyone will agree with all of Garnauts' recommendations, but he does provide some details policy people can now start to debate. For the average person the big picture remains the same: Polluters start paying for pollution, people are compensated for price rises.

Jill Duggan: Lessons from the EU emissions trading scheme

Jill Duggan is an expert in carbon pricing, having been involved in the UK and European Union (EU) emissions trading schemes (ETS) as well as advising regional schemes in the USA. She has been visiting Australia and yesterday she gave a talk at UQ on the EU emissions trading scheme, how it's been going and lessons they have learned. There was plenty of jargon on offer but also some take home messages.

• The EU is on track to meet is carbon pollution reduction targets of a 20% cut from 1990 levels. (The cuts required of different countries vary and some like Germany have an individual targets of ~40%, which is pretty impressive).
• Before a carbon price was introduced, there was a lot of nervousness about the effects of carbon pricing on the EU economies. However as the scheme has been implemented and improved this was subsided and many now view the various EU climate change policies as positive measures to move the EU countries to a low carbon economy.

As the for the scheme itself Jill emphasized the importance of:

• Keeping the carbon pricing scheme simple and transparent
• Strong regulation of carbon pricing
  
• Not allowing too many overseas offsets (although these had initially seemed attractive because of the perceived low cost of emissions cuts, they don't help move your economy to a low carbon future and both business and government in the EU were seeking to limit their use)
• The effect of having a carbon pricing scheme and enforcing strict compliance with the emissions caps can cause a larger decrease in emissions than you would expect just from the carbon price alone. Ie: You can get more emission reductions than expected based solely on how much a ton of carbon costs the polluter.
• Carbon pricing is not a magic bullet, other complementary policies are very useful but carbon pricing underpins the multiple policies used to reduce emissions of greenhouse gasses. (Ie: Complementary policies are useful at a more local level to target specifically areas, an example of this is improved building standards in the UK to increase the current poor energy efficiency of buildings).
  

Would Australia going it alone by instituting a carbon price?

Well no, actually:

A European Union climate expert has described Australian opposition to a carbon tax as bizarre, diplomatically pointing out Britain's Conservatives were more co-operative in opposition.

Jill Duggan, who managed Britain's initial emissions trading scheme (ETS), said there was an incorrect perception that Australia would be going it alone if it put a price on carbon.

"The thing that struck me is how the debate has changed here and also that wide perception that I keep hearing that Australia shouldn't go first," she told reporters in Canberra today.

"Coming from Europe, that sounds slightly bizarre because there are 30 countries in Europe that have had a carbon price ... since the beginning of 2005."

Unlike Australia the EU has been making progress in cutting carbon emissions and switching to clean energy. Their carbon pricing hasn't been without its hitches (since they were the first) but their experience does provide countries starting later (like Australia) with plenty of lessons in how to design an effective scheme. Of course it isn't just the EU with carbon pricing, even our little old neighbour New Zealand has an emissions trading scheme.

Why power bills are rising

The Brisbane launch of the Beyond zero emissions plan to transition Australia to 100% renewable energy by 2020 was a really interesting event with an almost full house of around ~800 people.

What was also interesting were the comments made by John Daley, the Grattan Institute's chief economist. From an economists point of view he described the BZE plan as requiring a lot of money but "doable". In conversation after the event he told me that the advantage of the plan was that it took a technological approach, asking: could current technology switch us over to 100% renewable energy by 2020? And if so how could it be done? Instead of immediately getting mired in questions about what conventional wisdom said was politically palatable and politically affordable.

John also gave a clear description of why we are currently experiencing steep power price rises, which unfortunately isn't well understood, but as a hint, it has little to do with government greenhouse policy.

Over the next 7 or 8 year we can expect power prices and therefore power bills to double, even if we take no action on global warming, because (as also reported in the courier mail):

"It is a not-well-understood political fact that within the next six or seven years that is likely to double as a result of investing in transmission because of rising airconditioner use and as gas prices are likely to double as Australian gas prices achieve parity with world prices," Mr Daley said.

The cost of transmitting electricity is about half of your electricity bill and the increased use of appliances like air conditioners (which can use several kilowatts of power) means that peak daily demand for power is increasing. To prevent brownouts you need enough wires to meet peak electricity demand and so lines companies are spending billions of dollars upgrading transmission lines, which of course, we have to pay for. There is also a sad piece of irony that a robust response to climate change (like the BZE plan) would also involve massive increases in energy efficiency, lowering peak demand and therefore decreasing the need for some grid upgrades and actually put some downwards pressure on prices (at least in this area).

So there you have it, power prices are rising because of infrastructure investments in an upgraded and expanded grid and the rising prices of fossil fuels.


PS: ENERGEX is starting up "Energy conservation communities" in an attempt to reduce peak demand. My guess is they think it will be cheaper to reduce household power usage at peak times than continually add more wires to the grid. If you live in the Centenary Suburbs (and surrounds) and have aircon or a pool filter you can sign up and they'll give you some goodies. See their website (linked above) for all the details.

Want global economic growth? Put a price on carbon.

Aka The Wisdom of Stiglitz

It’s not everyday you get to hear a lecture from a Nobel prize winning economist, but I got the chance to see Joseph Stiglitz at the University of Queensland yesterday and I'm glad I did.

Stiglitz's talk covered the reasons behind the GFC, the good and the bad things governments have done since then (summary: stimulus good, austerity bad and risks a return to recession) and some thoughts on how to get the global economy moving again. This presents a problem because we don't want another bubble, debt driven consumer consumption is out and monetary policy has little room to move (ie: you can't reduce interest rates below zero).
So, how to stimulate global aggregate demand and do so in a way that reduces the impact we have on the planet? What we want are policies that provide stimulus in the short term and sustainable growth in the long term.

One answer is a price on carbon.

Why?

Because, Stiglitz explained, a price on carbon will drive massive business investment in low carbon technology and products; and business investment is what we need to stimulate global demand (and I would imagine, to create jobs). Except this time we will be growing the economy by retooling for a low carbon future.

Whenever you hear that businesses are waiting for "certainty" on a carbon price before investing, this is what they are talking about. A carbon price makes investments in low carbon tech both necessary and profitable. The earth's atmosphere, as Stiglitz said, is a scarce resource, there is only so much pollution it can handle, but right now that pollution costs nothing so markets are "free" to pollute and damn the long term consequences.

To give an example of this business investment what we are all missing out on, here's an excerpt from Thomas Friedman's column in the New York Times from the weekend.

Lew Hay, the C.E.O. of NextEra Energy, which owns Florida Power & Light, one of the nation’s biggest utilities, e-mailed to say that if the Senate would set a price on carbon and requirements for renewal energy, utilities like his would have the price certainty they need to make the big next-generation investments, including nuclear. “If we invest an additional $3 billion a year or so on clean energy, that’s roughly 50,000 jobs over the next five years,” said Hay.

This is from the US, but I imagine something similar would apply here and it's just one company, imagine if it was the whole economy.

Post Peak Living - Peak oil and what it might mean for all of us

Post peak living is a website dedicated to looking at what effects peak oil could have on the economy and our lifestyles and how best we can prepare and adapt to a future with a lot less oil.

The website by André Angelantoni, who also runs online courses on post peak living, contain several videos where André outlines the history of oil, rebuts what he sees as myths around the future supply of oil and also considers the enormous impact passing peak oil could have on our way of life and possible actions we can take.

Importantly our responses to peak oil and climate change are closely linked. A rapid response to climate change and a shift of the economy off fossil fuels would substantially blunt the impact of peak oil. However, since the world is not rapidly responding to either climate change or peak oil, André articulates that he believes we have left it too late to avoid substantial impacts on our economy and living standards.

Of course, even if he is correct, that doesn't mean we are helpless. Noticeably André has been promoting the Transition Movement as a positive way to build community resilience to a post peak world. A reminder to everyone involved in TTKD to keep up their efforts.

The videos Post Peak Living have created are informative and also challenge us to consider impacts of declining oil availability that normally we might not think about. If you have time, follow the link and have a look.

The Coalition's climate change policy

Various scientific and economic experts have weighed in on The Coalition's recently released climate change policy.
You can read some of their responses on the CCNQ site: "Tinkering around the edges" "wishful thinking" "manifestly inadequate" - Scientific and economic experts weigh in on Coalition Climate Plan

There is also a useful post gathering a variety of scientific, economic and environmental opinion here at A Climate For Change

You can see the full roundup of comments from the scientific and economic experts go here

ETS forum

For those who are puzzling over the government's ETS plan, whether there are other alternatives and how our position will play out internationally, here's a forum at University of Queensland, 13 October 2009, with some excellent speakers who should be able to clear up some of these issues for you.

This forum covers the government’s proposed ETS scheme, alternatives and how the government’s proposal will play out internationally.

Speakers
Dr Jane O'Sullivan: The merits of a carbon tax, more specifically a consumption-based tax rather than a production-based tax. That is, the cost of embodied emissions is added to the product like the GST, not at the point of manufacture. She will address the advantages like price stability, administrative ease and the incentives for individuals to change their purchasing behaviour.

Dr Martin Weber, Lecturer in International Relations: Copenhagen and the ETS: the diplomatic ramifications of Australian policy for the Copenhagen summit, especially whether our position could help or hinder a positive outcome.

Professor John Quiggin: Will the current proposed ETS be effective? Is the current ETS compromised by the "free permits" for large polluters? Does the current proposed scheme set 2020 reduction targets which are too low to achieve our 2050 goals? Will the proposed scheme be more stable in price than the EU or North-West US scheme? Will there be sufficient reinvestment of the proceeds from permits into emissions reduction measures?

This event is the first for the new UQ Greens club, and looks pretty good. Please arrive by 6pm for a 6:15 start at building 24, room S302.