Ross Garnaut, heading the emissions trading review that Rudd pre-emptively commissioned before the election, has caused quite the fuss with comments on short-term emissions targets. According to news reports, he’s not particularly fussed about short-term emissions reductions: The Age reports:
More than six months before the report is due, Prof Garnaut said it was more important to achieve a long-term greenhouse gas reduction target - for example over 40 years - than to meet short-term targets in particular years.
The market should decide how quickly to cut emissions, he said.
“By focusing on a particular date you may diminish the environmental impact of what you’re trying to do and you may increase the economic costs of it,” he told ABC Radio.
The question seems to come out of the second discussion paper that Garnaut has released in the course of his inquiries, relating to the financial risks associated with climate change and how they might best be tackled. The issue of short-term targets is a complex one, at the intersection of technology, economics, and politics, and Garnaut has a point. But it’s probably not one that should be taken to its logical extreme, and the evidence so far suggests that Garnaut isn’t going to recommend anything so simple as “the market” exclusively deciding to cut emissions.
The fuss seems to have come out of a front page article on the Fin Review, which I unfortunately don’t have access to (bloody AFR - you can’t even get access to it through my university’s online news archive). But Garnaut’s responses to the AFR’s questions have been posted on the Review’s website.
Essentially, it comes down to how much flexibility the carbon permit market allows in precisely when those permits can be used. At one extreme is a scheme where permits are allocated for particular years - or even shorter periods, theoretically. At the other extreme is a scheme where emissions permits are allocated out to, say, 2050, and can used at any time between now and then. One places the trajectory of Australia’s emissions entirely in the hands of the government, the other leaves it entirely to the market.
If you take the view that the sole point of emissions trading is to ensure that, by 2050, only a certain amount of greenhouse gases will be released into the air from Australian sources, and that amount can be fixed in stone as of 2008, the second option - letting the market rip - has a certain appeal. While markets don’t always get things right in the short run, for what it’s worth I think there is a pretty strong case that markets are a better method of resource allocation for many purposes than government or other fiat. As previously noted, governments have been appallingly inefficient in targeting their own carbon abatement efforts - solar panels on school roofs cost an huge amount per tonne of emissions avoided compared to less glamorous but more sensible techniques.
But, of course, there are other issues. If there is too much flexibility in carbon emissions trading, there might be a temptation to simply let a “carbon debt” accumulate and then scream at a future Nick Minchin-led coalition government for relief from this crushing burden on the economy - a point described slightly less cynically as moral hazard at the blog Oikos. Even if the government held the line, the sudden shock of having to make good on carbon promises might be rather disruptive to the broader economy. Furthermore, emissions trading is not just about reducing emissions in Australia. It’s about meeting internationally negotiated Kyoto targets, and encouraging the rich world to subsidise the development of low-emissions technology which can then be adopted throughout the developing world. Garnaut, in the transcript of his interview, explicitly makes this point.
However, there’s a couple of points where I think Garnaut might indeed be missing the boat a little. While it might be getting beyond Garnaut’s brief, this submission to the inquiry from scientist Barrie Pittock summarises some of the latest climate science, which leaves two conclusions:
- The 60% cut by 2050 is almost certainly not deep enough, nor soon enough, to avoid the possibility of catastrophic consequences from global warming.
- That there are “positive feedback” mechanisms at play, which means that warming now may result in higher CO2 concentrations, resulting in yet more warming later
Both of these suggest that a) either the targets initially announced for the trading scheme will have to be much tighter than previously announced, or will have to be tightened again reasonably soon, and b) that treating emissions too far apart as equivalent is not supported by the science.
That said, there are perfectly good reason why some flexibility in the date of emissions reductions is desirable. A fair whack of Australia’s emissions are from a relatively small number of coal-fired power stations. Hazelwood Power Station in Victoria releases 5% of Australia’s total CO2 emissions on its own; its part of the emissions dealt with under the emissions trading scheme is probably closer to 8-9%. Obviously, shutting down Hazelwood, or fitting it with carbon capture technology, will make a massive step change in Australia’s emissions profile. A slight over-use of permits in the last years of its emitting life, provided there is a compensating underutilization of permits after it shuts down, might save a lot of money without any significant environmental impact.
In this context, the submission of the Energy Supply Association, representing the big generators, is interesting. They very much doubt that the long-term targets will remain unchanged, and they also are not particularly excited about the possibility of borrowing future allocations:
Thirdly, allocating a long term emissions budget upfront and then allowing the market to determine the timing of use, is equivalent to allowing unlimited banking and borrowing of annual emissions permits over the period. In this context it is worth noting that both the NETTS and PM’s Taskforce recommended that banking be allowed but not borrowing. The PM’s Taskforce observed that ‘borrowing increases the pressure on a future government to weaken the credibility of the scheme through an opportunistic additional issuance of permits in order to avoid sharp increases in the cost of permits’4. Conversely, borrowing may increase social pressure to interfere in the market if limited early abatement results – even if the market is actually optimizing the depletion rate.
Given all this, I’d expect that Garnaut will recommend that there will be some level of year-to-year flexibility in the emissions targets. If borrowing is permitted, there will be fairly strict controls and a reasonably high interest rate, probably administered by a hands-off body akin to the Reserve Bank. But what Garnaut will recommend with regards to his preference for relatively fixed and long-term targets versus the political and scientific reality that the target will change over time, is not yet clear.
One way to square the circle, of course, is to bite the bullet now and recommend to the government that the current 60% target is insufficient. We’ll see if Garnaut is prepared to do so…
Thanks, Rob, an important issue to examine.
I note Penny Wong was quoted in the Fin today saying Garnaut’s views don’t represent the views of the government.
Meh. It doesn’t matter if we fall in line with ideology. We’re only doing it for political currency anyway.
We could tighten our belt to notch number two, and the Chinese belch-quota will still hold back our rivers, play with rainfall, etc.
When the Climate Change science was first firmed up in the early 90s, it was pointed out that, had all emissions stopped then or the day before, the effect would still continue for at least a decade. Then came Rio which begat Kyoto and the brave, far thinking pollies decided to set targets at the (then) current levels…
Also bear in mind that at Rio, the US rep - NOT a delegate despite the (allegedly Dem Prez) put it quite clearly “teh US lifestyle is NOT negotiable”.
The commitment and inertia of the systems are much MUCH more entrenched than that. The oceans take several decades to catch up with the atmosphere and ice sheets take centuries to catch up with surface temperature.
Thanks for the post, Robert. Plenty to digest there…
Excellent post, Robert. Thanks for the link to the Pittock submission (actually three papers by him) which I hadn’t caught up with. Here’s a quote (from p26):
Frankly, if we want a half-decent planet to live on at a time not all that far away when I won’t be around we’ll need to go hard after targets. Economics will need to be a secondary consideration.
Ross Garnaut is an economist, not a scientist with expertise in climatology. ‘Nuff said, really.
Cheers…
does anyone know of a good reason why we should not do a find/replace for ‘carbon capture technology’ with ‘carbon capture magic’ ? as far as I know this is shorthand for ‘we will stick it up a wizard’s sleeve’.
The DPI in conjuction with Landcare and the National Heritage trust are running a course in NSW titled Farming for Climate Change.Interested persons can contact the DPI through their website.
Part of the information under discussion when I went yesterday was about the economics of carbon trading.
For a farmer this can be a source of income if they devote effort into making their enterprises carbon sequesters.Primarily this will be done via forestry and carbon capture in soils. The figures for carbon /ton emmission are currently about $6 . This figure was $12 but it was explained to us the past fed govt caused some confusion in the market when it overrode the NSW plans by announcing a federal system which then didn’t eventuate.
Forestry it was pointed out has a couple of risk management problems - particularly fire . As it is forecast that bushfires will be more intense and frequent in future insurance against their occurrence will possibly be problematic.
There has been an arbitrary figure of 100 years set as the period for the carbon to be stored .If a fire destroys the forestry the landholder / forester loses the value of the carbon captured in most current contracts.
The figures we were given were that forestry can capture about 11 tons of carbon /Ha per year.
Soil capture through mulching and techniques to aerate and decompact the soils can lead to up to 15 ton/ year /Ha being held. The carbon levels are measured each year and the proof of an elevated carbon level will generate a credit for the farmer. These levels can be raised by 1-2 % a year but it was felt there was limit to the amounts the soil can hold - probabaly reached after 10 years or so.
With regard to this thread it was the course presenters opinion that more action is urgently needed .The next 20 years are a period when we must capture as much carbon as possible and this will allow time for the adjustments that have to come in energy use and generation efficiency.
Apart from the two methods mentioned above there seem few other readily available methods to remove carbon but the course was focused on farming so this may be an incorrect perception.
The relationship between the farmer and the emmitter was also outlined. The emmitter buys credits from a broker who in turn approaches a “carbon pool” manager. It is the “carbon pool” manager who aggregates the carbon credits from smaller enterprises.
While I would love to see a bit of disintermediation
in this arrangement it would seem to be dangerous to allow brokers to deploy their usual arsenal of derivative products in this market. Farmers may lose the incentive to modify their methods if the price is deflated through manipulation , insurance may impose prohibitively costly premiums to protect the carbon, limited liability companies could end up bankrupt but holding huge carbon obligations and overall the focus of efforts is probably being directed too far into the future.
It is possible for the carbon captured to be measured annually so the balancing of accounts could also be expected to be done annually.
Carbon capture technology isn’t magic. We do it right now to process natural gas and make soft drink.
It can be done, the question is at what cost it can be done, and how the CO2 is disposed of afterwards (and, even here, there are high-cost backup options which are guaranteed to work and be safe).
Forgive me if this has been posted already, but I found this a fascinating aproach to climate change mitigation: [link]
Yes, I’ve heard that before, my problem is that to me this sounds rather a lot like:
‘we will solve the issue of co2 by using fusion power, just look at my lovely fission reactor’
alternatively
‘we will solve the issue of co2 emissions by using monopole magnets, just look at my maglev train’
For the amount of time this has been promised as a solution you would think there would be at least something to use as an example of this plan working on remotely the same scale or efficiency as will be required.
may I ask: if I could throw another one on the pile:
“we will solve the issue of CO2 by using renewable energy, just look at my lovely solar panel”.
You cynics. If we had the problem solved already, there’d be no need for all this discussion.
I still think solar is the future, once we get a battery to store the energy…
Totally agree with you, at best we have a situation where they are used in a manner similar to a water tank - not with the intent of totally removing each building from the grid, but enough to reduce the peak load and provide some flexibility on capacity. I think we are being sold on the promise of a whiff of a scent of a silver bullet in a decade, anything, absolutely anything to avoid any serious examination of the fundamental structure of transport and agriculture and urban design and industry or a million other things we are so heavily invested in right now. We’ll put a sock on a power plant and give you a hot water heater, don’t worry mate. That’ll keep us below a 2c rise.
“I think we are being sold on the promise of a whiff of a scent of a silver bullet in a decade, anything, absolutely anything to avoid any serious examination of the fundamental structure of transport and agriculture and urban design and industry or a million other things …”
May I ask what the fundamental structure of agriculture is ?
Effort is being made to address the issue of carbon emissions and their reduction and by doing this fundamental changes will develop. Planning the future in advance of observing the effects of the changes we will make is odd.
amphib, the quote ““teh US lifestyle is NOT negotiableâ€?, is actually George Bush snr at the 1992 Rio earth summit.
In terms of - how much power, water, oil actually goes into producing any given weight or energy value of food? What is a sustainable level within a given carbon budget, a set lead time for storage and the requirement to set aside water and arable land for carbon sinks? What integration can take place along this chain of events (which is now compartmentalised into different companies with different balance sheets and different business incentives) to reduce the total carbon output and water usage required to clothe and feed a given population of australians? Are there crops that simply need to go, period, as even their wildest theoretical efficiency gains in the time period we have will still represent a hugely disproportionate drain on our resources? What is currently transported in road trains that could go on rail? And so on…
and incidentally, I would suggest that a failure to plan in advance of actually observing the changes effected would nicely describe how we got here, given the lag time on emissions to temperature increase. If the market had this problem solved already, there would be no need for this discussion.
May I ask…well actually, you can ask, but answers might take a while.
There was an interesting post at the Oil Drum recently on the effect of peak oil on agriculture. There were two conclusions: 1, that CO2-sensitive parts of of a farmer’s costs are a smaller proportion of total costs that you might think, and secondly that higher energy costs seem to help big, industrial agriculture more than small farms.
Very interested in the DPI/Landcare/NHT take on carbon storage by agriculture Murph. It’s a great initiative but from my experience with Landcare it will possibly attract 6 - 10 percent of farmers. And the range of disincentives - insurance, intermediaries (middlemen), backsliding governments - make it even more difficult for those innovators. Perhaps off the subject but the recent huge fish kill in the northern rivers is a repeat of another kill a few years ago. The NSW Government knew the need for natural vegetation barriers to prevent oxygen depleting runoff but nothing has happened to get farmers the incentive to act.
My fear is that the great bulk of farmers - we use to refer to them as the ‘dogs’ - will never respond to any incentive unless they get it all for nothing.
“higher energy costs seem to help big, industrial agriculture more than small farms.”
Is this right? Sounds like either ‘higher’, ‘help’ or ‘more’ should be inverted.
“In terms of - how much power, water, oil actually goes into producing any given weight or energy value of food? What is a sustainable level within a given carbon budget, a set lead time for storage and the requirement to set aside water and arable land for carbon sinks? What integration can take place along this chain of events ”
What is the idea of the “given carbon budget” ? Does this mean for example , the commitment the Australian Govt may make to honour international treaties? If the entire economy can become carbon efficient and we achieve these emission targets is that going to be satisfactory ? If you can’t agree to a goal at the outset who is going to enter into long term planning and make these changes?
I also think it may not be necessary to set aside arable land to be used as carbon sinks. Carbon can be stored in all soils ( with varying degrees of success) and forestry is often very efficient on land unsuitable for cropping.Water is needed for the growth of pastures and trees but usually doesn’t have to be set aside.In fact the limits on water harvesting ensure 90% of rain moves back to waterways - in NSW anyways.
Sustainability is also somewhere outside the emissions debate. All agriculture will in future be focused on sustainability as to not do so means you won’t be farming for long. I appreciate your idea that certain foods require large amounts of inputs and they may produce greater amounts of consumable food deployed in other ways- the costs of beef versus grains is a good case .
But if beef can be shown to be produced in a way that is carbon neutral do you think prohibition on it’s consumption would be necessary or possible ?
“Are there crops that simply need to go, period, as even their wildest theoretical efficiency gains in the time period we have will still represent a hugely disproportionate drain on our resources?”
Perhaps on this point the educated consumer will have to drive those market forces. If you don’t want to eat the products of carbon emitting enterprises how does this help the national balance of carbon emissions when the same businesses may be running large carbon sequestration enterprises?
One point missed sometimes is that the carbon moves in a cycle- as long as we don’t have excessive emissions relative to captured amounts the contribution to the atmospheric carbon is not significant. The historical build up of CO2 means we have to act promptly but we need to start with the infrastructure we have .Calling for all the action to be focused on reductions misses half the cycle.
“I would suggest that a failure to plan in advance of actually observing the changes effected would nicely describe how we got here, given the lag time on emissions to temperature increase.’
The point I’m clumsily trying to make is that we have to respond flexibly to uncertain outcomes .
And it is a bit cute to argue that we could have planned our way out of the current situation - it’s a big world and it has taken too long for even basic consensus to be recognised about the effects of human activities.
Who would have been doing the planning for us ?
FDB: What I meant to say is that small farms are hurt more by higher energy costs than big farms.
So far the sun has been abnormally quiet given the supposed start of a new solar cycle.
Russian scientists are predicting a new ice age, a Dalton minimum based on loweer solar activity.
And like all political schemes the carbon taxes, when they finally get rolling are going in the wrong direction. Har.
The USA is not falling for such stuff - at least in a big way.
Not only that. We may be bringing in Fusion a lot sooner than ITER contemplates:
WB-7 First Plasma
Well, that’s basically what I thought you meant - I was going to say this is surprising…
I guess I was imagining “small” and “big” farms in terms of differences in farming practices, but I guess the economies of scale trump that.
I’ve heard large farmers say that they can simply allocate a fairly small percentage of their land (way less than we used to need to feed our horses) to grow all the biodiesel they need, which seems to be a low tech, easily entered thing capable of being set up on a small scale.
Brian - yep. And if they grow something for the biodiesel that fixes nitrogen in the soil, they save on inputs in other ways too.
I would suggest the carbon budget is the amount of carbon produced versus the amount of carbon recovered as a total of all activities. Once you drop below or exceed this balance you are then into international treaty territory. Any consensus based system for figuring out a global budget is going to provide huge incentives towards, well, let’s call it farnarkling around, with delay on any action seen as the most desirable outcome for just about any and all suited by the status quo. Or at least, right up until it doesn’t. I am sure there will be many interesting discussions and much back and forth over who needs to cut what to make up their ’share’, versus who tipped things this far to begin with and which emissions are actually the result of the manufacture of goods for which markets, who’s in what role in this game of ‘f*ck you buddy’, and so on. Ultimately the result of pushing further than is sustainable is an uninhabitable planet and I think this provides us with an incentive to come in as close to neutral - even attempting to operate as a sink - as we possibly can.
I use the term ‘arable land’ given the percentage of the continent we inhabit that is entirely unsuitable for both crops and plantations, unless we have worked out a way to do this in a large collection of deserts. Bear in mind that the more energy we trap around our planet the greater the likelihood of alteration of existing weather patterns and the frequency, location and violence of adverse weather events. If we blow through any tipping points that local conditions over our plantation - average and peak rainfall, how much cloud cover it receives, if the climate changes and the temperature variation takes that plantation out of its peak efficiency zone as a carbon sink, in fact if just about anything changes on that land at all, we will need a plan B. It’s not just - it might burn down in a fire - there are a whole bunch of things that will affect the sinks performance (and god help us if we manage to push, say, the GBR out of its optimum efficiency).
As for beef - well, you could pick anything that shows up near the top of usage - beef, cotton, aluminium, cars, whatever. I think we need to work on the wisdom of ‘if’ they ‘could’ operate as a sink ‘in future’ given that we are looking at things to bring us under in a relatively short term scenario. I think we - species level ‘we’ - are likely to go over despite any other efforts and given this there is space for ‘when’ rather than ‘if’ on measures that push us towards blowing it. We might discover magical moon rocks that fix all our problems. We might find that penny wong has the wizard’s sleeve. There is perhaps a case to be made for at least dropping subsidies that are not tied to reduction in emissions from industries, animals, crops, etc, that are currently, well, just killing us long term.
I think the educated, conscientious, long term planning consumer is an endangered beast and one that we have a few industries dedicated towards eliminating altogether. Don’t depend on that guy, he’s a total bastard.
No matter what Garnaut recommends, and whatever the eventual design of the trading scheme: Coal is with Australia (especially Victoria) for some time.
Even if we meet the 20% renewable target by 2020, we’ll still have 60-70% energy from coal (the balance from gas). By 2020 the ETS will be in force and carbon price will be making Carbon Capture and Storage (CCS) commericially viable.
If we don’t get CCS working, then the cost of buying permits under an ETS may seriously threaten the viability of many energy providers (unless they get enough free permits). Which is not an option Govt wants to entertain, hence the funding into these new CCS technologies.
Some of which are outlined here and as they are at large demonstration stage, could be put into practice by 2020 say.
Which of course still too late in some ways, but solar and wind will simply not pick up the slack in the interim.
Michael: you’re leaving out one proven low-carbon energy option…which may be the only option if CCS doesn’t work.
Proven - maybe
Acceptable to public - maybe
Ready by 2020 at acceptable cost - unlikely.
Plus given the current issues associated with Desal plant in wonthaggi and dredging of the bay - good luck!
m
Michael: nukes are expensive. Clean coal is expensive - even new-build dirty coal is expensive as all hell these days. Gas will get more and more expensive. Solar and wind are very expensive, particularly when you take into account the cost of backup power.
Your implied assumption that the alternatives are going to be any more acceptable in cost is in my view unjustified.
Robert Merkel: Your statement about costs of backup power is very misleading, are you unfamiliar with CST?
Concentrating Solar Thermal has built in energy storage and is apparently directly cost competitive with coal today at GigaWatt size plants. The energy storage is achieved using molten salts at 565 degrees. This permits continuous generation during night and cloudy days, although one expects there would be an eventual limit. By distributing 25 CST Gigawatt plants over the continent and feeding them into a connected grid you would further reduce the incidence of concurrent cloudout. The CST turbines can be compatible with gas or coal for backup heating if necessary. CST heated steam could run into existing coal turbines, for a nominal efficiency cost as compared with a completely optimal setup.
Cloncurry is building a small (30MW) plant to be completed soon. CST is technology that could be in place decades before and more cheaply than the mooted 25 fission reactors could be built and without the long term toxic waste storage issue or the unproven CO2 sequestration and attendant risks.
Are you aware of recent papers suggesting peak coal may hit in 2070. These papers reveal the profound and disturbing unreliability of previously accepted figures suggesting we have centuries of coal in hand. Proper accounting for the possibility of peak coal undermines the expected payoff from investment in CO2 sequestration.
Gilbert: if you check the LP archives you’ll note that CST has been extensively covered.
As I’ve also noted many times, what startups promise and what they deliver are two very different things.
Robert Merkel:
There seems to be a apparent glaring inconsistency in your comments as follows:
1) You seem to deny the possibility that CST can store energy on the basis that of your claim that it is a “startup” technology.
2) And on the other hand you seem to promote nuclear apparently without concern for the unproven capacity for safe storage of waste for thousands of years.
3) And you seem unbothered by the fact that sequestration is unproven.
If you are prepared to take comfort in the vapour of the points 2) & 3) then dismissing the existance of actual functioning heat storage systems with CST is bizzare.
CST technology has been in use since the 1970’s and in principle is hardly more complex than Watts original steam engine. To characterise it as a startup and thereby dismiss its relevance is surprising.
Decades before we have a nuclear design acceptable to Australians the world will have Gigawatt scale CST systems with heat storage that will comprehensively demolish the ignorant belief that renewables cannot have a role in supplying a meaningful portion of baseload.
Penny Wong has stated that Labor would set an interim target, as it promised before last year’s election.
Gilbert, just from memory when I was reading some stuff about CST with molten salt last year my impression is that the types of mirrors used were more expensive because of the high temperatures required and in practical terms the salt tank would supply power for up to 24 hours only. To extend beyond that you would need a bigger vat or would need to install gas backup.
All that largely redundant spare capacity costs money, which pushes the cost up beyond where coal is.
The idea of a network similar to the TREC concept in Europe is fine in theory, but would require a huge amount of coordinated investment starting from where we are now.
If you have any specific information we can link to that would be helpful.
Thanks for the info about Cloncurry. I googled and found reports in the Oz and the SMH. It seems that they are using 50 10-tonne graphite blocks perched atop 15-metre towers, rather than molten salt. It’s not clear how much storage that would provide.
Hello Brian, for brevity I only mentioned molten salt as one example, there are others as you mention. 24 hours is a long time to store high capacity energy ready for conversion to electricity and extremely impressive when compared with a conventional battery backup system. Vanadium flow batteries are also very interesting and would be well suited for further storage extension. Pumped hydro is already in existance and is well suited to storage of renewable energy.
I also mentioned the possibility of a fossil fuel fired backup system (or possibly hot rocks) which could supply heat into turbine during extended solar downtime.
The compatibility of CST (as compared with PV or wind) with existing coal or gas fired generation dramatically increases the power supply backup options, so we need to move out of the renewables are a sideline paradigm.
My comment about the network was illustrative, however to address your concern we do already have meaningful grid connection in the eastern states (where bulk of load exists). That grid already gives us significant geographical separation already to minimise risk of concurrent cloudout affecting distributed generation.
Brian, I see you already agreed with my comment about gas backup. You raise the cost however we need to penetrate a little deeper and consider that many elements in the plant will be common, (e.g. we don’t need two turbines, or electricity management and distribution sections), and the ongoing gas fuel costs will only apply for that small percentage of the time that we have extended periods of diminished solar capacity.
So the plant lifetime cost of the built-in gas backup component is at most a fraction of the cost of a dedicated gas system.
In any event we cannot ignore the ongoing costs and risk of safe storage of nuclear waste and with this in mind a fractional cost for gas backup seems exceedingly reasonable.
Gilbert: By the way, I’m seriously hoping that solar thermal power become widely available and reasonably priced, and I think they’re amongst the sounder renewable energy ideas out there.
But as somebody who has actually worked for a startup and currently works as an academic, the road from “great idea” to “saleable product” to “profitable company selling product” is a long and very winding road, and doesn’t always pan out.
Just to support that last para, I haven’t worked for a startup, but I’ve invested in a few and learnt the hard way, especially those involving new technologies.
Concentrated solar thermal power looks good in the long run and Australia has a higher percentage of it’s land mass classified as having premium CST potential than any other continent.