In my 2009 submission to the Senate Select Committee on Climate Policy I ripped into the Rudd Government for commissioning Ross Garnaut

to analyse two specific stabilisation goals: one at which greenhouse gases are stabilised at 550 ppm CO2-e (strong global mitigation) and one at which they are stabilised at 450 ppm CO2-e (ambitious global mitigation).

I then castigated Garnaut for accepting the brief:

This is sad and actually outrageous. Garnaut, had he acted responsibly at this point, would have gone back to those who commissioned the report and asked for the reference to be changed so that he could develop a strategy for a safe climate.

When the 2050 target was changed from a 60% reduction in emissions relative to 2000 to 80% I wondered whether the assumptions about the science had changed. If you go to the Treasury Report on modelling a carbon price it becomes clear that nothing has changed.

Treasury modelled two scenarios, one called “medium” and the other “ambitious”. The medium scenario is then called “core”. If adopted worldwide, it aims to stabilise greenhouse gas concentration levels at 550 parts per million. The ambitious scenario aims at 450ppm.

Treasury then blithely tell us that 450ppm will give us a 50:50 chance of keeping the average global temperature at less than 2C above pre-industrial levels, while 550ppm raises that figure to 3C. Stabilisation at 2C, they say, is the threshold for “dangerous” climate change. They then calmly tell us the likely implications of a 3C rise:

20 to 30 per cent of all species are projected to face a 50 per cent likelihood of extinction under this scenario (IPCC, 2007b), involving total realignment of ecosystems across Australia. Coastal communities, agriculture and infrastructure would all face significant risks, including frequent or permanent coastal inundation for parts of the Australian coastline, a substantial increase in extreme weather across the nation, and substantial restructuring of the rural sector (Pearman, 2008). (p41)

Martin Nicholson notes that the figures Gillard cites are actually from the core scenario. This seems to be true for the Government generally. So that’s what our ‘clean energy future’ officially looks like, folks.

My impression is that the CEF is calibrated to mesh with the global mitigation effort. We are not out in front, we’ve fallen into line and will do what we assess as our share. Certainly Treasury’s approach takes no account of the climate budget approach, where high per capita emitters would be called upon to make a larger effort in the near future.

Accessing international markets is a key feature of the scheme, as can be seen from this graph:

So we are banking on the restraint of developing countries rather than achieving cuts by our own direct efforts.

Lest you think mitigation is a waste of time, the report tells us that we will have 1500ppm of CO2 by 2100 and a temperature rise of 7C under a do-nothing scenario.

Nicholson’s piece is pushing nuclear, but he does make the point that the Treasury modelling of future energy sources includes technologies which are as yet unproven. Here is the relevant graph:

To spell out the percentages, we’ll have 7.9% black coal, 0.1% brown coal, 15.1% coal CCS, 21.9% gas and oil, 14% gas CCS and 41.1% renewables, which are further subdivided into 4.5% hydro, 13,7% wind, 3.2% solar, 1.9% biomass and 17.8% geothermal. That’s just on 47% from unproven technologies. CCS is assumed to be available from 2021.

The particular mix of renewables is not so much a worry, I think, as the reliance on CCS, which seems brave, to say the least.

It is assumed that the carbon price will rise to US$100 under the core policy, and to US$200 if we are ambitious. Curiously the 2050 target remains at 80% for both scenarios. In that case we’ll have 50.7% renewables, with 21.1% geothermal, 5.6% coal CCS and 25.5% gas and oil CCS.

Tapping into international markets is said to be a way of lessening the cost of mitigation. It also synchronises our effort with that of the rest of the world. The underlying strategy is that we will proceed as the world proceeds.

In my senate submission I spelt out at some length why stabilising at 450 or 550 ppm was inadequate. Here I’ll just mention two reasons. (Warning: scary stuff coming up.)

One is that the midpoint temperatures represent short term feedbacks only, and as conceived in the literature carry unacceptable risk on the upside. I repost here the graph from the Stern Review (2006):

The solid horizontal lines indicate the 5% to 95% range based on the IPCC 2001 report and a 2004 Hadley ensemble study. The dashed lines represent the 5% to 95% range based on 11 “recent” studies (Meinshausen, M. 2006). You’ll notice that at 450ppm and above the 95% values are off the page on the upside, meaning that even for 450ppm there is a better than 1 in 20 chance of a 6°C outcome.

That’s not just dangerous, it’s catastrophic.

We need to remember that the above is based on calculated on short term feedbacks. A recent paper by Hansen, Sato and Kharecha (see pp10-17) outline what they think happens when you take slow feedbacks into account. You need to define exactly which feedbacks are included, but the temperature implications are significantly higher.

We also need to bear in mind the possibility of dangerous tipping points, now thought by some as an issue below 2C.

The important point is that we appear to be committing the planet to a very dangerous future, especially in the second half of this century. We are not shooting for a safe climate.

The second is our commitment to sea level rise. Hansen et al remind us that the ice sheets began to form 34 million years ago, when CO2 levels were about 450 to 500ppm. In warming from where we are now you probably need to reckon on an average of 15 metres for every degree temperature rise – eventually. This is what Australia would look like when the ice is gone, from a talk given by David Spratt at the Climate Action Summit, 31 January, 2009:

Australia when the ice is gone

Sorry, couldn’t resist!

The CEF is a better-than-nothing start which aligns us with the level of ambition of those countries taking action or making pledges on climate change mitigation. Unfortunately when seen against the real problem it remains a half-hearted and anaemic attempt.

Clean Energy Future launch

Frustration at the nonsense purveyed on Madonna King’s program inspired me to send her an email, stating the main features of the Clean Energy Future (CEF) package in three simple points. In this post I give an expanded version so you can check and let me know if I’ve got it right. The scheme does seem to me to have an elegant simplicity about it together with a flexibility that bespeaks careful design.

First, the government is selling permits to pollute, not imposing a tax. About 500 of the biggest polluters will have to buy permits to dump their waste carbon into the atmosphere. Annabel Crabb quotes Gillard as saying:

“Around 500 big polluters will pay for every tonne of carbon pollution THEY put into OUR atmosphere.”

As Crabb says:

WE are getting those polluters to pay for what THEY do to US.

You have to get your head around this aspect if you want to understand what’s going on.

Second, as the scheme proceeds each year there will be fewer permits available. That’s why pollution is sure to decrease. It WILL WORK.

Third, the 80% target by 2050 says that we are serious about climate change and want to go where the rest of the world is going. It is important, not an “empty gesture” as stated by Bernard Keane. 80% is becoming an international norm. Investors in power stations need to consider a 40-year time frame. They won’t build new coal-fired stations under these circumstances unless they are completely daft.

Those are the three points I made to Madonna King. To those I’d add a fourth: institutional arrangements have been set up to take the politics out of the scheme, to give it the scientific/economic/technical inputs it needs, and to adjust it as we proceed.

Back in this post I said that Garnaut saw these as the most important feature he would look for when the scheme was announced. He identified three – one to administer the scheme, one to decide on compensation and one to review targets periodically as we go.

To administer the scheme we have the Clean Energy Regulator. The Productivity Commission will decide on compensation after the initial period. The Climate Change Authority will decide on targets and caps, the government having to justify itself if the Authority’s recommendations are not accepted.

Garnaut was well-pleased with the outcome:

This is a strong climate change policy package. It will allow Australia to do its fair share in an effective global effort to reduce the risks of climate change, and to do so at reasonable cost.

And:

I congratulate the Prime Minister and her colleagues in the Multi-Party Climate Change Committee for the sound process and on the good outcome for Australia and the international community.

That to me is the broad outline. Even if you grasp the first two – we are selling permits to dump waste carbon and over time the number of these permits will reduce – you will be ahead of 98% of people, including, unfortunately, many of the scheme’s advocates.

Of course, there are many other important features. Going beyond compensation of households affected, I’d briefly nominate four.

First, the clean energy initiatives. From 2013-14 there will be a Clean Energy Finance Corporation to invest $10 billion over five years in renewables and low emissions technologies (but not CCS). Any dividends from this will be added to the $3.2b renewable energy fund overseen by the Australian Renewable Energy Agency (ARENA).

Second, decommissioning dirty energy and providing for energy security. An Energy Security Fund will pay for the closure of up to 2000MW of dirty power generation capacity by 2020, and provide $5.5 billion in free permits and cash to the sector to 2016-17 through an Energy Security Council. (From Crikey.)

Third, international trading will be introduced after 2015, when entities will be able to purchase up to 50% of permits internationally. I understand this will limit costs, deepen the market and provide a bridge into international trading.

Fourth, the land use scheme, of which Garnaut says:

The treatment of the land sector will encourage new forms of carbon sequestration that create important opportunities for rural Australia. Here our pioneering role in measuring and rewarding sequestration in soils, pastures, woodlands and forests is likely to have international influence.

Ben Eltham at New Matilda rates Gillard’s achievement very highly seeing it as “the defining accomplishment of Gillard’s political career” and “every bit as significant in Australian terms as the passage of health reform was for Barack Obama and the Democrats in the United States last year.”

Abbott, on the other hand, will become a bit of historical detritus, even if he does become prime minister for a time, unless he succeeds in unpicking the package. Then he will be remembered as an opportunistic destroyer.

In Australia for a conference, German leading climate scientist Hans Joachim Schellnhuber has his eye on us. We need stronger targets (Germany is aiming at complete decarbonisation by 2050) and a greater focus on renewables. Australia has influence beyond its size internationally but in closed ministerial meetings “Australia seems to be less progressive than the world needs it to be.”

Malte Meinshausen says Australia’s had the snooze button on until now. But, he says Australia is now:

sending a very powerful message with the carbon pricing. That signal is going to be a very positive one for the internal US debate and could have a huge knock on effect in terms of emission reductions worldwide.

Well done us. At least it is a beginning.

Ross Garnaut

The central task arising out of the findings of climate science,
according to Ross Garnaut, is “breaking the connection between economic growth and greenhouse emissions”.

In bowing out of his role as the Government’s climate advisor, he did take a swipe at the media which he described as irresponsible and “somewhat rabid”.

“Much of the media and public discussion of climate change policy over the past nine months has been about the crudest and most distorted discussion of a major public policy in my experience,” Prof Garnaut said.

“Facts are ignored, the rules of logic violated and it’s rare for people expressing very strong opinions on particular issues to go back and actually read the document on which they are commenting.”

In the Oz we got this:

His comments followed an appraisal by The Australian’s Foreign Editor Greg Sheridan yesterday that Professor Garnaut’s last report was “astoundingly poor, relying on various sleights of hand, misrepresentations and propaganda techniques”.

Sheridan said Professor Garnaut had “sacrificed his reputation as a serious policy intellectual and will be remembered for having produced a shoddy report in the interests of partisan campaigning”.

Sheridan would be qualified to know, of course!

Garnaut is firm that an ETS is what is required in spite of wobbles in the EU scheme.

And he thinks now is a good time for such a major reform:

Prof Garnaut said Australia’s climate of economic prosperity, a time when average incomes in this country exceeded those of Americans for the first time in 100 years, was ideal for structural change.

“A time when terms of trade are at record levels is the best of times for structural change – certainly the best of times economically,” he said.

Back in 2009 in my Senate submission (you might find it interesting just to read the pictures) I quoted Garnaut’s first draft report as saying:

The Review’s terms of reference require it to analyse two specific stabilisation goals: one at which greenhouse gases are stabilised at 550 ppm CO2-e (strong global mitigation) and one at which they are stabilised at 450 ppm CO2-e (ambitious global mitigation).

Then Garnaut says:

A stabilisation target of 450 ppm CO2-e gives about a 50 per cent chance of limiting the global mean temperature increase to 2°C above pre-industrial levels (Meinshausen 2006), a goal endorsed by the European Union (Council of the European Union 2005) among others.

Garnaut had obviously seen this in the Stern Review:

Eventual temperature ranges for various emission levels (relative to preindustrial levels)

Describing the acceptance of a brief with these odds as “sad” and “outrageous” I said:

Garnaut, had he acted responsibly at this point, would have gone back to those who commissioned the report and asked for the reference to be changed so that he could develop a strategy for a safe climate. By engaging in the exercise as specified he tended to reinforce the false notion that the project was in fact sane.

That was just the beginning of my outrage. But Garnaut soldiered on.

On his way out, in an interview with Giles Parkinson of Climate Spectator, Garnaut says:

But the thing I’ll be most concerned about is the governance arrangements because they will determine the quality of the scheme going forward.

For Garnaut, the institutional arrangements are more important than the carbon price or compensation, and by inference the targets set initially. In the earlier post we saw that in his latest update five governance bodies were identified. Garnaut is stressing three: one to administer the scheme, one to decide on compensation and one to review targets periodically as we go.

If this ABC story about what Christine Milne said is correct, he may have achieved his aim. It’s worth reading in detail in the Parkinson interview what Garnaut said about the EU situation. It seems as you decarbonise the price of carbon credits can fall unless you lift the level of your ambition. It seems also that the EU is not well placed to do this. Setting the targets required a lot of detailed and patient diplomacy when Angela Merkel had the EU presidency back in 2007. Now the polluting Poles are taking over the presidency for the next year, with no interest in moving the targets.

What I called for in 2009 was a change in mindset:

I will argue that a change of mindset is necessary, FROM doing what seems appropriate to avoid dangerous climate change in a manner that as an overriding and determining condition does not upset the economy TO doing what is necessary as a matter of urgency to achieve a safe climate.

I was well aware that wouldn’t happen short of something like a big storm hitting New York and drowning a couple of million people.

Garnaut, the former diplomat, may now have charted an evolutionary path starting from where we are now to where we’ll need to go, at the same time removing deliberations from the immediate political sphere. If that’s what’s happened, I dips m’lid!

Elsewhere Wayne Swan spoke of the challenge of “growing the economy without growing carbon pollution”, but unfortunately only gave us glimpses of the reference modelling of the economy without a carbon price. I hope we get to see the full picture when the details of the scheme are released.

Abbott says all those economists who believe in a price on carbon are wrong. John Quiggin, “regarded as one of the nation’s most respected economic theorists” tells why they are not.

The only certainty that has emerged from this week is that by treating this as politics and policy as usual, Rudd has been utterly foolish. Anna Rose has an excellent summary of the scheme design itself. Anybody who thinks it should pass the Senate in its current shape is either being paid to say that, living in an unreality so loopy that I’ll drop out and have what they’re having dude, or never thought we would be able to get organised in time to do anything about the problem. And to the latter, I say screw you emo. Go home and listen to some whinging depressed crooner and let the adults get on with it. For the purposes of this post I’ll leave aside the question of whether, according to some deft Machiavellian logic it’s in Australia’s long term interests to have a scheme so riddled with loopholes, striving for such a pathetic target as to render it worthless in driving appropriate investment and behavioural change.

The Kyoto Protocol ratifying, Stolen Generation Apologising (don’t hear much about Teh Intervention these days, do we?), 2020 Summiting Kevin07 is a very distant memory now. We were expecting a fiscally conservative Kevin08, but this has translated into a blinkered and tawdry managerialism.

The White Paper epitomises this mentality, not just in substance, but in process. Consider, for example:
1) The release of the 800+ page, impenetrable tome of bureaucratese 10 days before Xmas
2) $130m in greenwash funding to advertise it during the silly season
3) The top down, lack of substantive public consultation outside ‘the submissions’.

This whole process is a damning indictment on the Canbureaucracy’s role in the praxis of government in our efforts to come to terms with the problem over the past 20 years – when the director of Toronto Conference declared “The time to act on these problems is now”. Few will remember the National Greenhouse Response of the Hawke era, the valuable discussion papers that emerged from the Australian Greenhouse Office in the late 1990s and numerous interventions at the state level. Of course, all of these hugely expensive processes are quickly forgotten by the myopic public sphere as we wait for CCS, a China+America deal, the end of the commodity boom, the end of the slowdown, Godot or whatever else the lobbyists, shills and emos pick as flavour of the month.

The political Realists in both the Green and Denialist/Emo camps have been focusing on the most obvious processes of politics: questions like ‘will it get through the Senate?’ ‘How much danger are Turnbull, Albo, Tanner and Plibersek in of losing their seat?’ But I think these sort of questions miss the real question of politics here, which is why the government is ostensibly driving for a single carbon price as the centrepiece of its policy at all?

The carbon price really is front and centre of the Canbureau’s response, with expanded Renewables Target and CCS bringing up the rear (excellent topics for later discussion). I took up the question of voluntary response and a secondary market with Blair Comley at the White Paper information session in Sydney on Wednesday. His response was basically: it’s more efficient for us to have a single carbon price. Now I understand the basic economic theory: allocate property rights, create the market structure with appopriate legislation = drive more abatement for less cost. But behind these are epistemological, sociological and essentially political questions about who has the resources, time and expertise to certify that, for example, soil carbon, fugitive emissions for coal mining, forestry plantations, brown coal burnt for power (( interesting aside – until very recently Loy Yang had no idea how much its emissions were – it just dug, shipped and burned ))

Loy Yang pit mine, Latrobe Valley, Vic. Photo credit: author’s own.

If the CPRS is a failure of governance, these processes behind building a form of equilibrium through a carbon price within the polity should be thought of as front and centre to politics rather than at the peripheries or simply a matter for scientists. Our experience with voluntary carbon markets to date should be instructive to policy makers on two fronts: firstly, concentrating on the supply side, the market for emissions reductions (at least when working according to textbooks) renders the uncertainties about the authenticity or permanence of the reductions as ‘risks’ and prices them accordingly. On the demand side, projects are valued by buyers according to very specific marketing criteria. What kind of story does this project tell? How can this story relate to my brand?

Bracketing out these questions of values and evaluation of the socio-technical nature of ‘emissions reductions’ from the regulatory market design process is setting it up for failure. Because in many ways, the White Paper represents the apotheosis of Neoliberal theory at a time when everyone is beginning to once again feel thoroughly alienated from claims that the ‘Free Market’ will liberate us. Witness in the White Paper:

• The rejection of any secondary market for voluntary emissions reductions because it would be ‘inefficient’. True in theory, but why not establish mechanisms to actually drive behavioural change explicitly? The price signal will be far too weak for this.
• The weird international linkages based on the assumption that if we throw our weight behind the CDM process it will somehow become less dodgy. The sheer idiocy of market-like (project based) mechanisms providing any kind of efficient transfer without clearly delinated and enforceable property rights should be a cause for considerable concern
• The horrendously inequitable EITE clauses effectively creating two carbon prices: Anyone who support this in its current uncapped form either has rocks in their head, is a mouthpiece of industry or too emo to take seriously. This creates a basket case culture of industry handouts which may prove extremely difficult to remove the trainer wheels from. Their carbon price is effectively zero because, with banking and borrowing clauses, they’ll be able to hedge their position effectively with the hope of getting a more sympathetic ear in Canberra down the track, deferring any effective decision-making.
• Provisions to keep coal fired power running under the auspices of ‘supply security’. What was wrong with Garnaut’s proposal to provide structural adjustment assistance to the effected communities? This is market fundamentalism in the form of the National Electricity Market whose sole, perverse efficiency is providing Kilowatt hours of power instead of what people actually need: energy services

This dialectic between the unleashing of market forces and the horror at their divisive social effects is the story of the Great Transformation; and I suspect the response to the White Paper we’re seeing unfold will demonstrate its explanatory power in much the same way as the EU ETS Phase I caused great cynicism amongst the population there. The difference is that we’ve allocated property rights but not backed them up with effective governance arrangements. They are treating emissions trading as a rolling series of experiments from which social and institutional learning should feed into each phase of the scheme design, we’re treating it as a problem with essentially a techno-economic fix. Any market will have winners or losers that emerge according to the rules written into its function.

So who are the winners and losers in the current proposal:

Winners:

1. The biggest winners are industry that gets over the line to qualify for EITE assistance, or has cooked their books sufficiently to get them there. Movements in commodity or currency prices will see them have a field day, generating permits for deviations from a historical baseline intended to drive change but simply creates a whole new raft of uncertainties
2. The big financiers and traders. We’re establishing a market, remember. ‘nuf said
3. Consultants. The f*ckin’ thing is 800+ pages of, often impenetrable bureaucratese.

Corresponding Losers:

1. Those suckers (us) who have to pay for their permits one way or another
2. The 900 odd medium sized firms who scraped into the NGER threshold but don’t qualify for EITE. Prepare to get taken to the cleaners by the big end of town, boys
3. Generalists/the public writ large/future generations. This is where the whole thing comes full circle and the challenge is to find avenues of engagement where people can link their actions to effective technological changes.

So far, these avenues appear to be (a) basically to buy permits through some kind of intermediary exchange (linked to solar panel purchase, for example) only if they will retire or bank without using official permits. This will push the permit price up, creating scarcity etc. Just pray we don’t hit the domestic price cap too quickly [edit: I should emphasise that I fully support community projects like putting solar on the surf club etc., but it must somehow incorporate the retirement of permits to be additional] (b) a bloody coup with the emergent carbon elites first against the wall (c) if you’re feeling adventurous, this kind of thing (d) exerting an unprecedented level of civil pressure on sitting members to reform this thing before it’s legislated.

Elsewhere: Guy Beres on Mr 5%, John Quiggin on PPPs, Deltoid: as long as we beat New Zealand.