As Peter Wood notes, the Treasury modeling for the Carbon Pollution Reduction Scheme contains some rather dodgy assumptions: as he puts it: “There is no way in hell that the international community could accept a 5% reduction from Australia that corresponds to a 550 ppm target, or 15% corresponding to a 510 ppm target. These targets would involve Australia free-riding on other countries emission reductions.” On that basis, you’d have to agree with Peter that Australia’s standard approach to climate change negotiations – attempt to negotiate a position that involves doing as little as possible – is likely to continue.
However, there is a fair bit of good news in the Treasury report. As previously noted, paying developing countries for permits is likely going to be a major source of “our” emissions reductions for some time. I don’t have a huge problem with this; emissions are a global problem, and paying for clean technologies in developing countries is likely to be a win for both us and those developing countries. So getting a deal that ensures the largest pool of permits available for purchase is in Australia’s direct financial interest. But there’s more: the Treasury modeling seems to indicate that it’s not only Australia who benefits from joining a deal now, rather than later. According to Box 5.4 of the Treasury report:
Subsequently, when these developing economies join the global emissions trading scheme, their mitigation costs are higher than if they had joined earlier. A larger part of the economy now has to adjust to the emission price, resulting in larger distortions or allocative efficiency losses in the economy and larger declines in returns to capital.
In contrast, those that join the global trading scheme at or near the beginning receive a relative benefit once all regions join. As a result of the larger declines in returns to capital experienced in delayed-entry economies, early-entry economies receive relatively more investment, leading to higher levels of capital stock.
Another interesting point from the Treasury modelling: it seems that, even just from a strict economic perspective, choosing a high stabilization level now, and cutting it later, is considerably more costly than simply going for the lower stabilization level straight away. From Box 5.5:
The costs and benefits of revising the stabilisation level are not evenly distributed, raising the issue of how to discount the costs. The net present value from 2013 to 2050 of the data in Chart 5.10 is discounted by a range of discount rates (Table 5.9). The net present values of the downwards revision scenario are negative across all discount rates, suggesting erring on the side of lower stabilisation targets is better. These modelling results imply that, at a discount rate of 4 per cent, the world could pay US$5.3 trillion today to avoid having to revise the target down at a later date.
The inescapable conclusion from all of this is that the Treasury modeling suggests that it is in Australia, and the world’s, best economic interests to sign up to a global deal with the lowest stabilization target possible. Treasury has not given the government an excuse to soft-pedal at Copenhagen (if you’ll pardon the bicycle reference…).
Robert you make a really good point in the post above that we’ll be paying developing countries to reduce carbon emissions and that this is a good thing… a point that hasn’t really crystallized in the MSM.
That said, I take the treasury modeling with a teaspoon of salt. These guys can’t accurately predict budget surpluses a year ahead of time.
Thanks for trawling through all that econo-speak Robert.
I’m very heartened to read the Treasury recommendation for a stiffer target. Let’s see how often we hear that one come out of Greg Hunt’s mouth…..
This sounds uncomfortably like the denialists’ claim that climate models can’t predict next week’s weather, let alone next century’s climate. However, I’m inclined to agree, as I suspect the economists’ models are derived from empirical observations of the past rather than physical laws.
I’ve always been deeply suspicious of Treasury’s models, or at least since the “$9B Beazely Black Hole”. I reckon that was mostly an artifact of changing the estimated growth rate of the economy rather than anything real.
Still, as long as it persuades the govt that it’s OK to go ahead with doing something about global warming, I’ll supress my doubts for the time being.
Harry Clarke made the point that highly detailed economic modeling extending out a century is a bit silly. Heck, an equivalent model from a century ago would probably include allowances for horse-drawn freight and phrenologists.
But the point of the exercise is political cover for the government actions. And the action that this document provides political coverage for is going in and doing the strongest deal possible.
David @3, if the modeling showed the economy tanking due to an ETS then the denialists would be singing the report’s praises from the rooftops!
I guess we in regard to predicting a carbon market there is lots of information on how markets work and there is the experience of the European model which we are imitating so I guess some of the consequences are predictable. I haven’t heard any reports in the media of what industries if any in Europe have gone offshore. I would also be interested in seeing what the relocation costs of moving a business to say China versus the cost of an ETS.
Indeed, Chumpai, and at the same time they’d still be scornful of the climate models. There’s room for an awful lot of cognitive dissonance in the average RWDB’s thinking.
I hope in our rush to meet emissions targets by buying permits from developing countries that we ensure the money goes where it ought. I dont want to sound churlish but the potential for all that dosh to disappear into anonymous Swiss bank accounts goes against the very real need for transparency all round in carbon trading. Maybe instead of national treasuries receiving permit money it could be handled through some international agency that would ensure it goes to good purpose. After all it is the under development of the common folk and their low carbon footprint that is being rewarded not the ruling elite.
I wonder if anybody has considered – if we plan to buy some 64% of our emissions reductions from overseas by the middle of the century – who will we be buying the from, and how come they will have so many permits to sell???
If we really are planning on targeting 450 ppm (or preferably lower), and Australia isn’t going to pull its weight, either on our domestic target (as Peter Wood points out) or on our domestic action to meet that target, presumably most other countries around the world will need to be working damn hard to meet their own targets!
So who is going to have permits to sell?
The leadership of Indonesia, PNG, the Solomons, etc etc must be rubbing their hands together and looking at mercedes catalogues.
Brilliant – new taxes based on dodgy modelling that supports funneling my hard earned to third world corrupt politicians and bureacrats.
Any more good ideas?
You sound like a commie, pablo. Don’t you understand that it’s a Market, so it doesn’t need no stinkin’ regulation (or oversight).
Yes, verifiability is a big issue.
Don’t need to be a commie DI just hopefully keying into the ‘new economics’ post the market meltdown of 2008. As Robert adds, verifiability (or transparency to me) will be a big issue. The chance to re-write the rule book on international aid, or at least do it differently to what currently too often passes as ‘aid’ ought to be a basis of international carbon emission permits.
One of the few useful things that the previous government did was introduce the National Greenhouse and Energy Reporting (NGER) bill, which will be very important for implementing Australia’s emissions trading scheme when it is introduced. I’m not an expert in this piece of legislation, it is quite possible that it could be improved. The more developed and developing countries that introduce similar legislation the better, provided that there is sufficient international verification. This would facilitate better accounting of countries emissions, useful information about sources of emissions, trading of permits, and carbon pricing.
Whether international trading of permits is credible or not is a huge issue. Project based mechanisms, such as the clean development mechanism, have absolutely massive problems. The international trading of permits that is proposed by arrangements such as contraction and convergence is different, and has similarities to cap-and-trade schemes. Countries are allocated emission allowances according to some international agreement, and then may or may not reduce their emissions, and buy or sell allowances so that they meet their targets. Developing countries and low per-capita emitters have an incentive to participate if they can sell allowances. Whether the international agreement allocates these allowances equitably is a huge issue. Achieving an international agreement will be very difficult if rich high per-capita emitters think that they have special reasons why they don’t need to do their fair share of emissions reductions.
Peter W,
I heard a talk by a National Greenhouse spokesperson several years ago. She blithely cited carbon storage figures for various natural habitats. When pressed to give “error estimates” for each of these figures, she sulked. Not impressive.
At least Garnaut recognises the large uncertainties that are still there, in his agriculture section.
Ambigulous: one thing I haven’t really figured out yet about econometricians is how they do error bars.
From what I can tell they don’t seem to do so in nearly as rigorous a fashion as, say, climate modellers.
Robert,
that’s an interesting and pertinent point. If an error bar were cited as (say) 1.5 times as large as a datum:
x = 160 +/- 240, where x represents a quantity that cannot (by definition) be negative, then the reader might have little faith in the whole report, after initial head-scratching. And yet my guess is that “error estimates” (error bars) in predictive modelling must be very large, oui?
A couple of possibilities occur to me:
i) the economic “system” trundles along and continually renews and “self-corrects” by large or small adjustments [hence current trends never continue, neither linear nor exponential nor cyclical]; these adjustments follow intelligible paths, constrained by or with impetus from influences such as scarcity, supply/demand, current cost, optimising and planning, risk-taking, etc. But the outcomes are only “intelligible” afterwards.
ii) there are so many parameters (including ‘unknown unknowns’) in an economic system, that a modeller could not possibly present ALL feasible scenarios. There’s a technique in hydrology [Keith Beven et al, GLUE method] which attempts to exclude non-physical scenarios, and uses observational data to test the performance of a model, using likelihood estimates. They run huge numbers of scenarios, but don’t assign equal weights to each scenario. Beven writes “another approach to estimating prediction limits is to estimate the degree of belief we can associate with different models and parameter sets…. many [models and parameter sets] we may be able to reject because they clearlty do not give the right sort of response for an application.” {“Rainfall-Runoff Modelling – The Primer”, Wiley, 2001}
I suppose econometricians have tried similar approaches??
cheers
You’re very wrong about econometricians and error bars, Robert, though these days a lot of serious econometrics is Bayesian so the frequentist “confidence interval” paradigm doesn’t fit very well. Maximum likelihood estimation a la Ambigulous’ description is commonly used.
But I’ve always found Treasury’s reluctance to release proper sensitivity tests annoying. I know they do it, but they never publish it – and that’s not just in this case but seems to be long-standing practice. Without some form of formal testing you’ve no hope of assessing the reliability of the point estimate (which, of course, may be what their masters want).
DD: thanks for that, and pointers to useful introductions on the topic appreciated.
As to Treasury’s reluctance to release such modeling, it might be time to call them on it…
DD: thanks!
I had a month without computers recently and still haven’t caught up with Garnaut and Treasury.
Penny Wong said the other night on Lateline that a 5% cut by 2020 from 2000 was the equivalent of a 27% cut in per capita emissions for Australia. Can anyone verify this?
Also the usual base around the world is 1990. How much is Australia advantaged by using 2000?
Most major European countries have the advantage of falling populations. Also Germany has an advantage in that it’s 1990 figure included the rust belt industrial sector of East Germany, which largely collapsed.
I’m not suggesting that what the Government seems to be contemplating is adequate, I’d just like to see the comparisons made on equivalent terms.
Australia’s population in 2000 was 19.15 million, according to the ABS. Population projections vary, obviously, but the figure I got for the ABS’s middle-of-the-road estimate for 2020 was 25.28 million. That’s a 32% population increase. So Penny Wong might well be underestimating.
Australia is not overly advantaged by using 2000 rather than 1990 figures; according to the AGEIS system. Using Kyoto account, Australia’s emissions were all but static over that period. Large increases in emissions from electricity generation were compensated by reductions in land clearing (yes, the Australia clause at work).
Thanks, Robert. It seems to be clearly in Australia’s interest to pursue a per capita based regime together with some version of contraction and convergence when negotiating internationally. Are there any signs you’ve seen that that is the way they’ll go?
Brian, re Contraction and Convergence.
What do you think of these two paragraphs from the Garnaut Draft Report?
and
These pargraphs interest me. In particular, Garnaut notes that “If emissions entitlements and targets are framed in per capita terms, countries with growing populations will receive greater absolute allocations” .
So doesn’t this favour developing countries which have increasing populations, particularly as the developed world population is expected to remain virtually unchanged around 1.2 billion over the next 40 years, while the developing world population could almost double to 10.6 billion if family planning isn’t increased? (Hopefully the US might start doing more on funding family planning now…)
The original Contraction and Convergence website I came across (link supplied by Brian) suggested that developed countries would be treated as stable from 2000 onward, and that developing countries would be treated as stable from the Convergence year onward, in that case 2045.
(This GCI site also notes: “We are not here implying or advocating population policy per se.” Why not I wonder? Why not advocate “population policy” if population increase is having a negative impact on the environment?)
I know the developed world has to consider the impact of its over-consumption and per capita emissions (so what do you think about the Government’s $10 billion handout eh?)
But the increasing population of the developing world is also impacting on the environment. The increasing population also means per capita emissions have to decrease further and further for everybody…
I mean, have I interpreted this correctly? As I’ve asked a number of times now, shouldn’t we also be considering the impact of global population increase as well, on the environment in general as well as on emissions? It seems to me some people are eager to punish and demonise developed countries for their over-consumption, but they stay decidedly silent on the topic of population increase in developing countries. How about some balance?
On the Penny, Peter, Marn and the Professor thread, Aubrey Meyer appeared to overrule the original Contraction and Convergence example of 2000 / 2045 when he noted:
If the concept of Contraction and Convergence is adopted, I wonder what population base years will be specified and whether they will differ for each country, “developed”, “developing” or whatever?
Elizabeth, I don’t have enough wisdom to know what we should do, but I’d make a couple of comments. If you leave population increase out of consideration Australia’s possible 5% target is disgraceful.
If OTOH you consider it in per capita terms, it is exemplary and ahead of most comparable countries.
I think that sea level rise and the drying out of some of the major grain belts is likely to make questions of population and population movements extreme. Gwynne Dyer says that the security boffins in major countries are seriously thinking about the implications already.
I short I think we desperately need a population limiting policy world-wide, but I don’t have any idea how that might be achieved, though in practice the best results seem to come from empowering women and leaving it to their good sense.
Brian, re your comment:
I haven’t read through it yet, but the recently released UNFPA State of World Population 2008 report http://www.unfpa.org/swp/ looks interesting. It includes information on “Human Rights”, Promoting Gender Equality and Empowering Women”, “Reproductive Health and Reproductive Rights” etc, etc…balanced with “cultural sensitivity” of course…
The world is going to have to move beyond motherhood statements about “empowering women” and really consider how we’re going to cope with the increasing global population and its impact on the environment.
Some people might derive satisfaction from wearing a hair shirt about Australia’s contribution to the world’s environmental problems, but the reality is the impact of our small population is just part of the picture. There’s a “big picture” that, in my opinion, seems to be deliberately ignored in what passes for “debate” in Australia…
(See for example Christine Milne on Contraction and Convergence. Milne reckons that “contraction and convergence is the only truly equitable model for international action”, but is it still “fair and equitable” if , as I’ve already referred to on a number of LP threads, the population of “developing” countries possibly doubles from 5.4 billion to 10.6 billion in the next 40 years, while the population of “developed” countries remains stable around 1.2 billion? Milne also lauds the Europeans as leaders on addressing climate change, but since they were partly responsible for omitting forest protection from the Kyoto Protocol (you know, deforestation, responsible for 20% of global emissions…) I don’t put them on a pedestal.)
It seems to me the international and domestic climate change / environment “debate” is more about snide political point-scoring and one-upmanship than actually finding practical solutions to the world’s environmental problems.
Where are the people with authority and credibility who will tell it like it is, the whole picture? Where are those special people who will strive to foster cooperation that will produce solutions, rather than play political games that create division and cause continued delay?
For example, who in Australia is concerned about taking greater steps to protect tropical rainforests in the period up to 2012? Who in Australia is working to increase family planning aid to developing countries?
We need world leaders to tell us about the whole picture, to acknowledge the impact of the increasing global population, and put it on top of the agenda for an effective and co-ordinated response.
We need a new and effective global agreement that considers all the human impacts on the environment, not just those of fossil fuel emissions, historical or otherwise.
Any future global climate change/environment agreement that doesn’t acknowledge and react as a matter of priority to the potentially explosive population growth in the developing world in the next 40 years is going to be a failure.
I left a response (with only two links) for Brian #24 a few minutes ago, but it seems to have disappeared into the ether…maybe it’s in the spaminator?
Elizabeth, you need your own blog.
Really need your own blog.
Trust me, it’s that simple.
Have a look at the freebies on offer from Typepad, Wordpress and Blogger. If you can post a comment, you can start a blog.
I’ve left two more comments…probably in the spaminator…
Elizabeth, the spaminator has been emptied. That’s not to say they weren’t in there once, they probably were. You’ll need to email us and send a copy, I think.
Thanks for the advice Helen.
Not sure if it’s a well-intentioned suggestion to provide another outlet for my opinions, or a “subtle” hint for me to shove off and take my unwanted comments with me?
I’m disappointed nobody has commented on my queries re contraction and convergence and the Garnaut Report. I’m genuinely interested to know if I’ve interpreted things correctly.
I recently came across an article by Juliette Jowit which was published by The Observer in March: “No one is willing to address the accelerating growth in the world’s population” http://www.guardian.co.uk/commentisfree/2007/mar/18/comment.comment
Jowit negotiates the political minefield that surrounds the controversial topic of population growth and concludes:
The recently released National Intelligence Council report Global Trends 2025: A Transformed World also contains many reference to population impacts.
For info, here’s a few quotes from recent articles about the world’s increasing population. The forecast population increases are mind-boggling.
Some quotes from articles about population increase in The Philippines:
Some quotes from articles about population increase in Africa:
Some quotes from articles about population increase in India:
It’s the poor people of the world who are suffering the consequences of population increase, and the consequences of deforestation, soil erosion, desertification and food and water shortages.
See for example these links which include references to problems in Haiti, another country which has high population growth:
People pressure on land has a telling effect
http://www.nst.com.my/Current_News/NST/Sunday/Focus/20081115170602/Article/index_html
How Haiti hopes to break the cycle of disaster: restoring its lost forests
http://www.guardian.co.uk/environment/2008/nov/23/forests-flooding
It’s time that world leaders gave the topic of population increase prominence on the climate change / environment agenda. There really needs to be a concerted effort to promote family planning and encourage reproductive responsibility.
Brian, I’ve just reposted my comments.
Eliz
@Elizabeth Hart:
I don’t know what Helen’s intent is, but here’s my take. Why don’t you put up these link collections in a blog post and then leave a comment here that provides a single link to that post full of topical links?
You have been told which behaviour (lots of links in a comment) triggers the spaminator, yet you insist on repeating that behaviour and asking us to fish your comment out manually. As this often means a delay (because we’re not sitting here just waiting to leap into action against the spam-bucket, which is a tedious exercise that naturally tends to be put off until it can no longer be overlooked), the discussion has moved on by the time your comment is published. The discussion moving on is probably the prime reason that few people respond to your comments.
If you want a timely response, then don’t deliberately engage in behaviour that triggers the spaminator. If you choose to continue triggering the spaminator, then don’t complain that people don’t respond.
tigtog
You accuse me of “deliberately engag(ing) in behaviour that triggers the spaminator”. The insinuation seems to be that including links to sources in my comments is “bad” behaviour on my part.
I am not a scientist or economist and I am very conscious of my “amateur” status when commenting on environmental issues. I include links in my comments in an attempt to share information and to illustrate and back-up my arguments. I am not indulging in wilful “bad behaviour” just to annoy you or others on LP. (I’m not a software expert either so I don’t understand the bizzo with your spaminator.)
As my previous posts on LP have demonstrated, I am frustrated about the exclusion of protection for forests, and consideration of the impact of the increasing global population, from the current climate change agreement. I’m also frustrated about the political shenanigans associated with these exclusions, something we don’t hear much about in the mainstream media. And I’m even more frustrated that some people seem reluctant to promote practical solutions for environmental damage, such as financial support to protect rainforests and additional funding for family planning in developing countries. (I’d also like to see more funding for education in developing countries.)
It is my belief that protection for forests and consideration of population impact should be prominent in any future climate change / environment agreement, hence my activism over the past couple of years, including letters to politicians and newspapers, comments on various website forums, and submissions to the “Bringing down the axe on illegal logging” discussion paper, the 2020 Summit and the Garnaut Review. We should be acting on these issues now, not delaying until 2012.
My comments on this thread were in response to matters raised by Robert Merkel and his reference to Peter Wood. My comments included quotes from the Garnaut Draft Report and referred to developing countries, contraction and convergence, and population. I believe my comments and links are directly relevant to the issues raised by Robert, Peter and Brian and I don’t understand why I shouldn’t post them directly on LP. (I don’t know if I’ve completely misunderstood contraction and convergence, but there you go, nobody has responded to me.) I know I leave long posts, but I don’t post here very often and I think with only one exception (the My ideal state schools thread), I confine myself to the environmental topics.
While I appreciate you and Helen suggesting I start a personal blog, there’s no point in me maintaining a blog that nobody else will ever read. It’s more practical for me to participate directly in discussions where I can support practical solutions for environmental problems. When appropriate opportunities have arisen, I’ve posted comments on forums on many websites including the Economist, the Guardian, the BBC, EU Commissioner for the Environment Stavros Dimas’s blog, the Telegraph (UK), On Line Opinion, The Australian, the ABC and numerous other media and specialised blogs.
I started posting on LP earlier this year when a reference to the rainforest-emissions thread popped up in my Google Alerts. I’ve continued posting on LP occasionally as there are many environmental threads prepared by Robert and Brian that may be influential in the Australian context.
It’s been a weird experience posting on LP because, even though in some ways I might fall into the category of what The Australian calls “deep green activist”, I don’t seem to “fit in” on LP, perhaps because I look at environmental (and other) issues from a different perspective.
I guess I’ve been spoilt by website forums like those on the Economist and the Guardian etc which welcome all comers and are willing to accept long posts inclusive of links. It’s great that they are willing to give concerned people a forum to air their views. (And I acknowledge that these media organisations have the staff and financial resources to maintain and monitor these forums).
I particularly like the Guardian’s “Comment” section, popularly known as “Comment is free…” or “Cif”. This website forum covers a very broad range of topics and welcomes comments from a diverse readership. Anybody can register and freely post their views. Posts are not delayed by waiting for moderation, they’re posted immediately (including active links). Comments include a “report abuse” button so offensive comments can be removed by a moderator – a note is retained of any deleted post. Clicking on a contributor’s name provides access to a record of their previous comments which is also a useful feature.
The term “Comment is free…” comes from an essay written by CP Scott to celebrate the centenary of the Guardian and his 50th anniversary as editor. The Guardian website notes: “The essay’s famous sentence ‘Comment is free, but facts are sacred’ has endured as the ultimate statement of values for a free press and continues to underpin the traditions of the Guardian newspaper today.”
Here’s the relevant paragraph containing the sentence from the essay:
It’s great to see the Guardian promote these noble ideals on its “Comment is free…” forum.
Free and open debate is essential in a democratic society, don’t you think?
(The essay can be found on the Guardian website. I haven’t provided a link to it as you do not welcome links to sources).
I left a response for tigtog (without links) at 7.34 am, but it is awaiting moderation.
Re my comment # 23, particularly “Hopefully the US might start doing more on funding family planning now…”
This looks promising: Clinton Picked to Oversee Population Policies
President Obama is picking a pretty good team by all accounts. Agree with Elizabeth that population is a topic for which the time has come.