Mr Costa outlined two scenarios based on the modelling for the impact of Professor Garnaut’s recommendations in cutting greenhouse gas emissions. If the 80 per cent cut to greenhouse gas emissions signalled by Professor Garnaut by 2050 was to be achieved, it would cost the economy $430 billion by 2030. Australia has a $1.3 trillion economy at present.

Mr Costa said that based on NSW Treasury modelling, the proposed sharp reduction in greenhouse gas emissions would wipe 4 per cent off the size of the Australian economy over the next 20 years.

These two statements seem to contradict each other. $430 billion over 22 years is a hell of a lot less than 4 per cent of cumulative GDP over that time.

Here’s the blurb: Understanding the Fascinating Development of the EU ETS

(13.03.2008) A new FNI book digs deep to find out why the EU changed its position from leading skeptic to leading proponent of greenhouse gas emissions trading, how it managed so rapidly to establish the world’s first international emissions trading scheme (ETS), and what its consequences so far are.

“This book is also an important tool to understand the background for the Commission’s January 2008 proposal for a revised ETS post-2012, and to reason soundly about the determinants for the decision-making process ahead,” says co-author Jørgen Wettestad.

$430b: how much greenhouse gas cuts will cost, says Costa (SMH, 4 April 08)

MAKING the cuts to greenhouse emissions recommended by the nation’s economic adviser on climate change would cost hundreds of billions of dollars and slash the size of Australia’s economy by 4 per cent, modelling by the NSW Treasury shows.

[link]

Labor in attack on Garnaut (The Australian, 4 April 08)

THE NSW Labor Right has fired a shot across the bows of climate-change “true believers” within the Rudd Government, with NSW Treasurer Michael Costa warning that their approach could mug the economy and scare away foreign investors.

[link]

Oh, yes. It’s inevitable. Consumption driven capitalism is inevitable. Fukuyama told me so, so it must be true.

Of course it’s not inevitable. I mean, the Socialist Revolutions in Russia and China have shown clearly that consumption driven capitalism is neither inevitable or even necessary as a stage in the long-run historical trend toward Communism.

Communism is Soviet power plus the electrification of the entire country….We must show the peasants that the organization of industry on the basis of modern, advanced technology, on electrification which will provide a link between town and country, will put an end to the division between town and country, will make it possible to raise the level of culture in the countryside and to overcome, even in the most remote corners of land, backwardness, ignorance, poverty, disease, and barbarism

- VI Lenin

No doubt, Tony, you are right Comrade. Marxism is the answer…

But that’s quibbling. Ramsay is right that population growth is the main problem we face in the effort to avoid CCC. It’s too large a problem to solve however, so reduction in emissions per capita is the best we can do.

It’s not looking good.

… [splutteringly]… but… but… but… the greeny-commo-watermelon from the socialist alliance (who I found hiding under my bed) told me it would fix everything! You mean they lied? Oh Noes!!!11one

More people having kids will inevitably result in them having plasma TVs, hummers and air-cons.

Oh, yes. It’s inevitable. Consumption driven capitalism is inevitable. Fukuyama told me so, so it must be true. And Bloody Boarders too, why not. Hey mabye it’s historical inevitability!

Most Australians could reduce home energy use by up to 20% and make virtually no changes to lifestyle with some fairly minor investments(home insulation, timer switches, energy saving globes, etc).

That’s undoubtedly true Kevin. And should be encouraged. But what’s our population growth rate? Oh, look - it’s 0.824% per year . (2007 est.)

That means, in less than 20 years any gains made from such a 20 percent reduction in home energy use would be completely wiped out. Completely.

Broad swathes of the Green movement are in complete denial about this or otherwise are too afraid, or perhaps too dishonest politically to address that simple fact.

Desipis right on cue asks…

Huh? Having a plasma TV, a hummer and blasting the air-con makes people have more kids?

No. More people having kids will inevitably result in them having plasma TVs, hummers and air-cons. At an exponential rate in this country alone of 0.824% per year. Assuming no per capita econonomic growth!

That’s why we have global warming. Any level of population growth over our rate of consumption of the earth’s energy resources, any, contributes to global warming.

It doesn’t have to be sophisticated technology. For example, as the Nature Geoscience article points out;

One way or the other, it’s pretty clear that cooking on dried dung and firewood, the norm for about 2 billion people, will be hard to sustain as populations in south Asia and Africa climb.

I can tell you, Earth Hour and Ross Garnaut aren’t going to fix that problem. It’s a stunt.

I’d be curious to know if soot actually stayed around in the atmosphere indefinitely like carbon dioxide does.

The short answer is that it doesn’t, but I can’t give you the numbers.

Not all the CO2 persists for centuries, but a significant amount does, whereas aerosols/particulates are mostly short term, I think.

Wikipedia has some info on atmospheric lifetime of GHGs (GWP = global warming potential).

I’ve never really got all this completely sorted, but soot seems to be black carbon. NASA gives a fairly complicated categorisation of sources and effects.

Wiki calls soot a subcategory of airborne particulates) which are mostly washed out by rain in hours or weeks.

So I’d reckon hours or weeks vs virtually forever for many of the GHGs.

Population growth is entirely dependent on energy consumption.

Huh? Having a plasma TV, a hummer and blasting the air-con makes people have more kids?

In other words, even if we went back to the pre-industrial modes of production featured in so much eco-fantasy, we’d still be warming the globe.

It’s not about going pre-industrial. De/reforestation is considered an important part of the carbon trading system. There are plenty of greenhouse gases we should focus on as well as carbon dioxide, however I’d be curious to know if soot actually stayed around in the atmosphere indefinitely like carbon dioxide does.

I doubt very much that they are concerned with the Garnaut report per se - after all, they will just pass on the increased costs.

However, they do not have a lot of confidence in the Garnaut report actually ’sticking’ - ie if the increased prices actually do cause political pain, will the policy results of Garnaut remain or be neutered. If neutered, what will the new policy be? Will their previous investments become redundant? If a reduction in power production is predicted, then their new power stations will be smaller capacity than otherwise. What happens if that lower capacity is not enough because (surprise surprise) the energy demand IS inelastic? Who is going to cough up the extra money to then build more power stations when even the newer and more expensive ones are not enough?

Till the time those questions are answered, power companies are not going to invest in any new technology unless they have to - and all costs passed on. As pointed out, it is those on lower incomes that will bear the brunt of this. Not only via the increased $$ cost, but also on any system constraints. (If my rich insulated and airconditioned mansion with its diesel backup has a power failure, I am not going to sweat nearly as much as the working fambly in a poorly insulated house/flat when the power goes off).

For power companies to ask for subsidies is pretty crude in my view though. What they should be doing is to point out the uncertainties that could lead to political and policy trouble and ask for guarantees for cost recovery if policy is changed. (ie no subsidy for the policy as presented to them, but a cost recovery if that policy is found to be flawed and needs to be changed after they have built new infrastructure).

For example, let’s say the Govt sets a target of say, 20% reduction in projected power demand over the next twenty years, and power companies build new clean generating facilities to cover that target. Let’s say then that the power demand does not go down by 20% - is the Government going to fine the power companies because of a generation shortage? Or is it going to allow them to have rolling outages without penalty? If not, then what is the policy going to be? I see little chance of any company board allowing the spending of the hundreds of millions of dollars needed without some sort of policy clarity.

Really, the eco-fantasists are in no position to accuse others of being in denial.

In another comment on Robert’s post, he mentioned the problem of trade-exposed energy-intensive industries, for example aluminium.

It’s interesting that at the recent G20 meeting in Tokyo Japan proposed an industry sectoral approach:

Japan pushed at the conference for a “sectoral” approach — setting energy efficiency goals for each industry — but met with scepticism from developing countries.

I think the logic behind this is that the world can than prioritise major industries and rationally decide where certain activities should be located for optimum efficiency. But there was no traction for the idea at the meeting.

South Africa was particularly vocal against the Japanese proposal.

“It is clear that developed and developing countries are still far apart on sectoral approaches,” South African Environment Minister Marthinus van Schalkwyk said.

I sense national interest trumping rationality and the general good here. Developing countries are no doubt interested in picking up facilities that developed nations can’t fit under their reducing emissions caps.

…then you are going to be consuming energy.

The point isn’t to consume no energy, the point is to consume a sustainable amount of energy and use a market mechanism to determine the optimum way of limiting consumption.

And even if you manage to reduce average fuel consumption by, say, half over the next 20 years, since populations insrease exponentially, then fuel consumption will continue to rise at an accelarating rate.

Population growth is something that will be important to address, however just because there are other factors influencing the total consumption rate doesn’t make any individual factor not worth consideration. Besides, halving the average consumption will half the total consumption, it’s not as if population growth is dependent on energy consumption (although if people can’t afford to go out or turn on the TV, maybe they’ll resort to more er… natural past times).

He’s frankly acknowledging by that that people won’t be able to reduce their energy consumption to any significant degree.

He’s acknowledging that some people won’t be able to adjust in the short term and that it’s probably not fair to throw them to the wolves. He addresses these people with the subsidy, while using the trading/auction system to create the economic incentives for the people that can make the change, driving the market towards sustainable behaviors.

Peter Wood:

Therefore a way to manage carbon leakage would be to have some sort of tax on [exports of] emissions intensive fossil fuels (primarily coal). This may be more appropriate than assistance to trade exposed emissions intensive industries.

I think it would also be worth considering taxing imports based on an approximate carbon footprint. By doing so in a coordinated effort with other willing countries, you could create a large enough trading block that would provide economic incentives to draw other countries in.

Which leaves two options: privatisation or regulation of those resources.

Privatisation would be severely impractical as enforcement of commercial rights are impossible (oi, fishies, stay in that patch of sea! Cloud, you come back here!). Though in a sense this is what we do currently within the nation state system. And hasn’t it worked well?

Which leaves regulation. Like, say, some international agreement to manage the scarcity of those resources.

Of course you could take the perspective that schemes like carbon/emmissions/etc trading form an attempt to quantify the commons (to an extent), and work them into the global economic system.

We can increase the price-elasticity of demand for electricity by better labelling of electrical goods and technologies such as smart meters.

Yes, and remembering to shut the fridge door so the little light doesn’t come on.

Alister says:

Fuel is only inelastic where there is no alternative. In many places, there are alternatives, including public transport, cycling, walking or planning your travel to minimise petrol use.

And in many places there are few, if any alternatives.

You can walk home instead of catching the bus or driving a car. But unless you burn candles instead of using electric lights; have a wood-fired stove, don’t consume any products transported by anything other than donkey carts, never travel past the end of your street and generally live to a standard above that of the early Middle Ages, then you are going to be consuming energy.

And even if you manage to reduce average fuel consumption by, say, half over the next 20 years, since populations insrease exponentially, then fuel consumption will continue to rise at an accelarating rate.

Fuel is inelastic because at any given time it is a complementary good tied to other forms of economic activity.

That’s why the Garnaut Food for Oil programme is going to impact most heavily on lower income groups.

If fuel prices were elastic, instead of inelastic, you wouldn’t need a subsidy. The increase in prices would disproporinately reduce consumption of energy.

But since that’s not going to happen, Garnaut suggests a system of credit transfers. He’s frankly acknowledging by that that people won’t be able to reduce their energy consumption to any significant degree. Hence we have to compensate them for the higher costs they’ll face.

I mean, it’s simple enough logic.

Robert, I’ve been wanting to thank you for this post. It’s a very neat summary of the essentials. I don’t think there has been a link to Garnaut’s document yet which can be found here (pdf file).

I don’t pretend to fully understand carbon trading but one of the central points was that Garnaut had opted for quantity controls. Surely that means that quantity can’t go up so price will if the commodity becomes scarce in relation to demand. This then makes low carbon or carbon free sources more competitive.

Relevant here may be an interview with ethicist Professor Michael S. Northcott of Edinburgh University on RN’s The Religion Report. He’s written a book called A Moral Climate, about treating global warming as a moral and ethical issue. In it he claims that free markets are a structural sin. Ditto for carbon trading schemes. It seems to me that quantity controls should satisfy Prof Northcott because the public good over-rides individual indulgence.

“Therefore a way to manage carbon leakage would be to have some sort of tax on emissions intensive fossil fuels (primarily coal). This may be more appropriate than assistance to trade exposed emissions intensive industries.”

I should have said “a way to manage carbon leakage would be to have some sort of tax on exports of emissions intensive fossil fuels (primarily coal).”

Re #26: Some discussion about the contents of the report would be more interesting and appropriate than irrelevant comments the title. The Climate Code Red report is well written, well referenced, and very relevant.