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.

The idea is that there’d be no need for handouts or compensation to rent seekers, and that households and businesses could be compensated according to their needs. The article notes that a full range of market based solutions was never really contemplated, because the international momentum had previously been towards a production based ETS.

Despite the near absence of any reporting in Australian media, and its dissonance with the ‘narrative’, Copenhagen was not without result, and there will still be advantage in, and pressure for, Australia to establish a carbon price.

I’m no expert on the design or implications of these sorts of mechanisms, and I’d welcome input from commenters who can elucidate the nature of a consumption based ETS.

Politically, I’ve been commenting for some time that it’s highly likely that the Rudd government will seek to put something substantive in place on climate change before the election. The challenge will be to explain away the backflip on the CPRS in a more convincing manner, and why a replacement model wasn’t proposed earlier (and here The Greens’ support for an interim Garnaut Carbon Tax should have been leveraged).

Kevin Rudd is said to be disillusioned with the purported strategic geniuses from the NSW Right (Mark Arbib, Karl Bitar, Bruce Hawker, Graham Richardson, et al) whose bright idea it was to dump the CPRS in the first place. This mob never met a focus group they didn’t run in fear from, and their sole solution, aside from policy cave-ins, is leadership change. Worked well for the NSW government, didn’t it?

A substantive ETS which avoids some of the political and policy problems of the CPRS would be just the tonic the government needs, and would usefully focus attention back on Tony Abbott’s ‘Direct Action’ tokenism and denialism. But the challenge will still be to fix the mess already made with the CPRS, which has been exemplary of the government’s tendency to shoot itself in the foot.

Elsewhere: Richard Green at Troppo.

Details of times, places, how to book (please note the small fee in Brisbane) are here.

This is from the blurb:

Australia’s response to climate change must truly baffle outsiders. Why do our leaders pretend that they are leading the world in the battle against global warming? When do environmental risks outweigh economic benefits? Why dig deeper when the rest of the world is looking for alternatives to coal?

This is an essay about “quarry vision,” the belief that Australia’s greatest asset is its mineral and energy resources – coal above all. How has this distorted our national politics and stymied action on climate change? In this powerful essay about the national interest, Guy Pearse dissects the Rudd government’s climate change response: from the Garnaut report to the silver bullet of “clean coal” and beyond. He exposes the shadowy world of the carbon lobbyists; how they think, operate and advance their agenda. He discusses the future of the coal industry and challenges the economic orthodoxy. Quarry vision, he argues, is a trap and a blind faith we can no longer afford.

Here is an interview on the ABC in Melbourne.

I haven’t read the essay yet but I note that he seems to regard the notion of meeting our targets by buying credits in the developing world as a shonky way of going about it. Garnaut says the a tonne of carbon emitted anywhere has the same effect and hence buying such credits is quite legitimate.

Barack Obama’s victory represents a watershed in American history, but it will also have ramifications around the world. Before I head out to celebrate I thought I’d just bash out a few quick notes on some of the policy implications for Australia of this momentous turnaround in the state of US politics:

Climate change

Today’s election result heralds the rise of Green Keynesianism. The US economy is in the toilet and smart economists are advocating direct investment over a more consumer-based fiscal stimulus. Democrats in Congress got a head start last year with the Green Jobs Act, and elements of the President-elect’s energy and environment policies look a lot like a ‘Green New Deal’. This from Time Magazine:

He wants to launch an “Apollo project” to build a new alternative-energy economy. His rationale for doing so includes some hard truths about the current economic mess: “The engine of economic growth for the past 20 years is not going to be there for the next 20. That was consumer spending. Basically, we turbocharged this economy based on cheap credit.” But the days of easy credit are over, Obama said, “because there is too much deleveraging taking place, too much debt.” A new economic turbocharger is going to have to be found, and “there is no better potential driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office.”

Calls for a Green New Deal are also starting to gain traction in the UK – and the UN. This can only help the chances of Australia’s version of the Apollo alliance, which released the ‘Green Gold Rush’ report last week calling for investment in green-collar jobs growth.

The Obama campaign’s target for emissions cuts was 80% by 2050 – a fair way ahead of Oz Labor’s as-yet-unaltered election promise of 60% by 2050. With the Arctic ice-sheet melting rapidly even an 80% target is too low for a developed country like the US, but it should certainly give Professor Ross Garnaut reason to revise his pessimism about the likely outcome of the Copenhagen round of climate negotiations. It’s worth noting that the Obama campaign’s climate and energy platform specifically called for 100% auctioning of permits.

Afghanistan

I might leave the analysis of this point for one of our more foreign-policy inclined fellows. Suffice to say that Obama’s win means that US activity is likely to be ramped up in Afghanistan, and given that we’re still there, that will have implications for Australia.

Behavioural economics and ‘choice architecture’

Obama has quoted the ideas put forward by behavioural economists Thaler & Sunstein in Nudge, which looks at ways in which a more nuanced understanding of how humans behave in markets can enable policies which are more flexible than top-down regulation, yet better at addressing common market failures than a free-market approach. Sunstein and Thaler have both been consulted by the Obama campaign. This from the Guardian on Thaler and the Dems:

He “talks a lot” to Obama’s camp, especially the chief economics adviser, Austan Goolsbee. “We gave Goolsbee the book when it was still in proof. He read the whole thing and just lifted some parts.”

Of course, as this post argues, its important to remember that the policy tools informed by behavioural economics can be used towards either progressive or conservative ends.

Multilateralism might get inspiring again

The amazing Ben Brandzel sent an email around a few days before the election listing 43 policy proposals from the book of Obama that kept him motivated while working on the campaign in North Carolina. This was his favourite:

“Save millions of lives and win allies around the world by doubling foreign assistance to cut extreme poverty in half by 2015, and accelerate the fight against HIV/AIDS, tuberculoses and Malaria.”

I can imagine that some UN staff might feel a lot like John Robertson did after the election of the Rudd government – i.e. ‘at least this lot don’t want to kill us’. Regardless, the US’ newfound commitment to multilateral cooperation on serious global problems is about to make the lives of everyone working in international development a little more (there’s that word) hopeful. And that’s got to be a good thing.

Just as an aside, it will be interesting to follow the relationship between progressive think tanks & the new administration. Expect to see the traditional influx from conservative think tanks to Republican administrations mirrored on the Democrat side this time around. John Podesta has been put in charge of the transition phase, which means he’ll play a key role in building the new government. Former Whitehouse chief of staff under Clinton, John is the founder and CEO of DC-based think tank the Centre for American Progress. I met a bunch of very switched-on CAP people when I was in Washington earlier this year – they’re an absolute ideas-factory. Check out their policy platform for signs of things to come.

What does regime-change in the US mean for Australia, and the world? I’d love to hear your thoughts in the comments…

Elsewhere: Peter Browne writes at APO:

A new [previously reported by Mark] analysis of the attitudes of people who swung to Labor at last year’s election suggests that acting to reduce climate change can be a vote winner – in fact, according to the data, it might be the vote winner. In two quite different surveys [including one where "young people were under-represented in [the] sample”], the single most important issue nominated by vote-changers was global warming. In both cases, it rated ahead of the other issue generally regarded as a vote-changer, industrial relations.

The first is around corporate culture. The ‘Anglo-American’ model of capitalism, as Martin Wolf usefully calls it, is a collection of deeply culturally assumptions about how a business should operate: their goal (profit maximisation), the ‘commodfiability’ of businesses themselves, and so forth. Assuming WP operates within this culture, who do we blame if the solar thermal plant is not found to be ‘financially viable’? The government for not studiously applying Coasean theory in time and getting Emissions Trading going? The market for not sufficiently pricing the carbon efficiency of the project – ie. another market failure after years of warnings? These are as much questions about our expectations of governments in designing an emissions trading scheme (and sending appropriate signals during the consultation phase) as businesses, but I think worth asking.

The second is around the broader policy context of projects like this. As Robert’s various posts of late have demonstrated, there’s no shortage of daring engineering projects and neat technical fixes. However, as I argue in a co-authored piece in the current issue of the Australian Review of Public Affairs, such proposals are not enough. We also need to start discussing energy demands as social things, rather than simply a matter of correct pricing or installing a well timed deus ex machina, if we’re going to make any real headway on climate change. As we point out, quoting Nicholas Stern and Cameron Hepburn, ‘[c]limate change policy … raises questions that are fundamentally and inescapably ethical’…”

Any comments, criticisms or feedback on the piece itself would be appreciated, as we’ll be turning it into a longer ‘Journal’ article. (I’d particularly appreciate comments from some of the self described ‘marketdroids’