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Castles and Henderson, again

January 27th, 2006

People who’ve been following the debate about global warming closely will be aware that the economic modelling used in projections of future climate change by the IPCC has been severely criticised by former Australian Statistician Ian Castles and former OECD chief economist David Henderson. The critique emerged in a rather confused form, with a number of letters and opinion pieces before finally being published in contrarian social science journal Energy and Environment. Responses, including mine, have been similarly partial and sporadic.

I’ve finally prepared a full-scale response to the main claim made by Castles and Henderson, that the use of market exchange rates, rather than “Purchasing Power Parity” conversion factors for national currencies, biases estimates of future emissions upwards. My conclusion is that although PPP measures are preferable in comparisons of national welfare, the biases introduced by using market exchange rates are not important in modelling emissions and will, on average, cancel out. You can read it all here.

Update: Ian Castles has sent a response which I’ve posted here. It doesn’t seem to me that Ian responds to my argument except to deny that the MER/PPP issue was the main point of the critique.

I should also note that Holtsmark and Alfsen (2004), whose paper I’ve just found, present much the same argument as mine.

Further update In the comments discussion, a fair degree of common ground has been reached. Ian clarifies that he and Henderson object to MER conversion factors, but not because they bias projections of emissions, saying

I agree that these arguments (about the errors in GDP growth and emissions intensity reductions cancelling one another out) are sound as a first approximation.

Ian makes the valid point that use of MER conversion produces the incorrect conclusion that the energy-intensity of LDCs is about the same as prevailed in developed countries when their income was similar. This could lead to misleading policy inferences, for example with respect to mitigation policy and should be corrected.

I agree with Ian that it is better to use PPP measures consistently, and that the sooner the IPCC does this the better. On the other hand, I think it’s important to make the point that the widely-repeated claims that IPCC projections of emissions are fundamentally erroneous because of the choice of exchange rate are not supported by careful analysis.

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  1. Willis Eschenbach
    January 30th, 2006 at 09:48 | #1

    JQ, thank you for your reply. I look forward to seeing your paper when it is complete.

    While I agree that on average the biases introduced by MER may “cancel out” as you say, I do not agree that the choice of conversion factors “doesn’t much affect projections of emissions.”

    This is because the GCMs are not driven by the average emissions. Rather, they are driven by the amount and location of projected individual emissions from individual countries. These do not “cancel out”, and thus there will be an effect on the GCM results even though the average may be less affected.

    In particular, the MER overestimates the growth in the developing world, much of which is in the Southern Hemisphere. I don’t see how this overestimation can be balanced by an underestimation of the Northern Hemisphere emissions.

    All the best to you, thank you for having this blog to encourage discussion of all of these issues.

    w.

  2. January 30th, 2006 at 09:55 | #2

    John,

    I am puzzled by your conclusion that there is no substantive difference whether you use PPP versus MER assumption. We find that emissions are 20% higher by 2050 and 40% higher by 2100 if using initial gaps based on MER rather than PPP. We are careful to do this correctly in a general equilibrium model that deals with teh issues you raise

    http://www.lowyinstitute.org/PublicationGet.asp?i=129

    The argument that a 20% difference doesn’t matter implies that any policies that can get a 20% reduction in emissions don’t matter because they are within the range of scenario uncertainty. This implies no policy action on climate because all policies will be swamped by the uncertainty about the future – which I disagree with. When is a marginal number ever large enough in your view to justify action when you compare it with the range of uncertainty?

    Warwick

  3. January 30th, 2006 at 10:07 | #3

    Willis – I put up a couple of graphs that summerise the current state of oil discoveries.

    http://stevegloor.typepad.com/sgloor/2005/12/a_couple_of_gra.html

  4. Mike Hart
    January 30th, 2006 at 10:50 | #4

    JQ thanks for succinctly restating the problem ,

    “..the choice of conversion factors doesn’t much affect projections of emissions…”

    Willis, the reserve issue has been debated now for probably forty years, however what is in the reserve and what is recoverable is problematic, marginal utility costs mean a some point what may be calculated as a reserve has to be left there because it is uneconomic to recover. From my limited understanding of thermodynamics and geology it has to do with field pressures and temperatures, thus for instance you can pump saltwater into arabic desert sands to lift the basin pressure but you have to use heated steam in artic areas as the fields deplete. Anyhow I digress.

    I would be interested to hear from JQ, Ian Castles or yourself as to what you think of Hubbert’s energy-population correlation argument as a reliable predictor of emissions. He postulated that there was a correlation between energy consumption (oil, coal, shale) and population increases in deriving an estimation for fossil fuel depletion. Hubbert seemed to suggest that this correlation was fairly robust over time.

    In reference to the subsidy issue, I am not persuaded that additional government revenue via tax represents a subsidy, unless we are referring to cross-subsidisation of other govement activity. If I recall the introduction of the original excise taxes by the Fraser Liberal Government was a counter to depleting Australian energy reserves and the 1970′s Oil Shock. The fact that the first warning signs of an oil dependent economy were ignored by subsequent policy makers does not make the tax itself a bad one. I am just particularly unimpressed that the money never went were eventually it was supposed to, to fostering a clean energy future, but then that’s politics for you.

    Similarly I am unimpressed by the arduous efforts by various interests to deny or minimise such changes and particularly when specious economic theorem are juggled about to distract all of us from the (de)pressing reality, its getting hotter, its becoming drier and the weather systems are moving to a new equilibrium which may be more serious for us as a species than we care to comtemplate.

    So as to PPP and MER, I am curently predisposed to the notion of a per capita energy certificate argument given that any efficencies from electricity generation or internal combustion engine improvements are immediately negated by increased consumption (the airconditioner problem or SUV issue), which means it does not matter how efficient I try and become, I have to indirectly pay for people and industries that do not change as utilities add extra capacity, more roads are created and the efficencies of pooled transportation systems are neglected. Similarly I am predisposed to going to a worst case measure for future emissions based on energy production curves and I can live with the errors from reserve measurement inequalities.

  5. Willis Eschenbach
    January 30th, 2006 at 11:37 | #5

    Mike, thanks for your interesting post. A couple of points.

    First, I am not taking a stand on peak oil. For example, Enders referred me to a graph (of unknown origin) saying that there have been no discoveries as big as the Gwahar field in the last 30 years. However, the Alberta tar sands contain much more oil than that field … which is why there is a (black) gold rush going on there as we speak.

    Regarding subsidies, what I said was that taxes on energy, which subsidize the various governments imposing the taxes, were the largest subsidy. As you point out, it would make sense to apply this money to discovering and encouraging both conservation, production, and alternatives, but that’s the gummint for ya …

    Hubble’s energy-population equation? I haven’t a clue, let me go do the calculations … OK, it holds since about 1975, but not before that. In 1965, we used about 1.2 tonnes of oil (equivalent)/capita/year. By 1975, this had risen to about 1.5 tonnes/cap/yr, and has remained about the same (~1.5-1.6 t/c/yr) since then.

    The wild card in all of this, of course, are new sources of energy — fusion being the known possibility, and who-knows-what being the unknown possibilities. It would surprise me greatly if new sources do not come on line during this century, with unknown effects.

    w.

  6. January 30th, 2006 at 12:29 | #6

    Willis – I had to do a quick scramble to my entry because I had thought I had left off the refererence however Willis has managed to do it again. This is the entry:

    “As I said in a previous post I attended the lecture of Professor Kjell Aleklett in Perth. I thought that I would share two graphs from his slide presentation that to me tell the story of Peal Oil better than most.”

    Complete with misspelling – clearly the slide is from a presentation from Professor Kjell Aleklett.

    “However, the Alberta tar sands contain much more oil than that field … which is why there is a (black) gold rush going on there as we speak.”

    The Tar Sands are not oil like Gwahir – including them in known reserves is wrong as you may as well include coal reserves as oil. Actually coal is a little bit easier to convert to coal than tar sands.

  7. Terje Petersen
    January 30th, 2006 at 12:35 | #7

    I would be interested to hear from JQ, Ian Castles or yourself as to what you think of Hubbert’s energy-population correlation argument as a reliable predictor of emissions. He postulated that there was a correlation between energy consumption (oil, coal, shale) and population increases in deriving an estimation for fossil fuel depletion.

    Is there a web link to more information on this theoretical correlation. I have read much about how Hubbert’s suggestion that supply will peak but I have not seen much about how he projects demand will change over time. I assume it is the same Hubbert.

  8. Willis Eschenbach
    January 30th, 2006 at 13:20 | #8

    Ender, while you are right that the slide is from a presentation by Professor Kjell Aleklett, that’s not the question I was pointing to. The question was, where is the data from?

    This is the normal, everyday understanding of the question about a source. When I post information on the blog, and someone asks “where is that information from”, I don’t reply “It’s from a presentation by Willis Eschenbach.” I give the data source.

    The common understanding, in other words, is that the question refers to the source of the data, and not to the presenter of the data. My apologies if this was not as clear as I had assumed it would be.

    Your comment on this, that “Willis has done it again”, is un-necessary, untrue, and unpleasant. Can’t you just ask for clarification if you don’t understand something I’ve said, without stopping to roll in the gutter along the way? Remember, you’re not giving up your opportunity, you can always abuse me later if the clarification is unclear …

    Finally, let me quote from your last post, where you say:

    Actually coal is a little bit easier to convert to coal than tar sands.

    At this point, should I now say “Ender has done it again, posting total nonsense”? Or would it be preferable for me to say “What did you mean by that, it makes no sense?”.

    w.

    … heck, I didn’t even know you could convert tar sands to coal …

  9. January 30th, 2006 at 14:28 | #9

    Willis – true enough and I apologise. I also realised that my post did not contain the source of the data. Revisiting the presentation it would seem that this slide was compiled by Professor Aleklett himself from various sources including the USGS. As Prof Aleklett has researched and worked on the subject of Peak Oil extensively he can, I believe, be considered an authority on the subject.

    “At this point, should I now say “Ender has done it again, posting total nonsenseâ€?? Or would it be preferable for me to say “What did you mean by that, it makes no sense?â€?.”

    And yes it does make no sense. That should have read “it is a bit easier to convert coal to oil that tar sands to oil.”

    Tar Sands are just that tar mixed with sand – it is not oil in any sense of the word. Conventional crude oil bubbles or is pumped out of the ground in the form that it goes to the refinery to be cracked.

    Tar sand and shale have to be MINED. This mineral is then washed, producing toxic tailings, and then heated and converted to something approaching crude oil consuming massive amounts of natural gas. Even then special refineries have to be built or converted from existing to handle this ‘crude’ oil. Alternatively steam can be piped under the ground converting the tar to almost crude ‘in-situ’. However this consumes even more natural gas – about 1000 cu feet per barrel.

    By contrast coal to liquids is an established technology that consumes about half a ton of coal per barrel of oil. The fact that tar sands is not a resource like crude oil precludes it from being included in the crude oil known reserves. Tar sands should be viewed more as a method of converting natural gas to oil. The natural gas supplies are the limiting factor – crude oil exploitation does not suffer from this limitation. Because tar sand and shale have to be mined thay are far more akin to coal than crude oil.

  10. Ernestine Gross
    January 30th, 2006 at 14:53 | #10

    W.E., Thank you for your reply: ” I mean when shale oil begins entering the marketplace in significant quantities, as has happened recently with the Alberta tar sand oil”

    I understand this to mean that the word ‘practical’ means financial profitability.

  11. Willis Eschenbach
    January 30th, 2006 at 14:59 | #11

    Ender, than you for your most gracious posting.

    The only comment I would have on it is on your interesting note where you say:

    Tar sands should be viewed more as a method of converting natural gas to oil. The natural gas supplies are the limiting factor – crude oil exploitation does not suffer from this limitation. Because tar sand and shale have to be mined thay are far more akin to coal than crude oil.

    In fact, tar sands are a way to convert, not just natural gas, but any other energy source to oil. Waste heat from a nuclear reactor or a conventional power plant would do just as well as natural gas. In fact, we could burn part of the tar sands themselves to turn the rest to oil …

    Which of course highlights the fact that in some sense all fossil fuel sources are energy limited … it takes energy to get the oil itself out of the ground, or to mine coal, or to convert coal to oil, or tar sands or oil shale to oil.

    And this, of course, highlights in turn the fact that the amount of oil we can acquire from natural sources is not fixed, but is a function of how much energy we have available to spend on the project.

    I find it highly unlikely that we will not have new energy sources, including fusion, and perhaps such odd-ball sources as methane clathrates, or solar-generated hydrogen, by the middle to late 21st century. And these sources, of course, will in turn allow us to get more oil out of the earth …

    And all of this makes it extremely difficult to say when we’ll run out of oil.

    w.

  12. Simonjm
    January 30th, 2006 at 15:01 | #12

    Fischer-Tropsch Coal Gas Cost Effective With Current Oil Prices?
    http://www.futurepundit.com/archives/2005_12.html

  13. January 30th, 2006 at 15:15 | #13

    Willis – “Waste heat from a nuclear reactor or a conventional power plant would do just as well as natural gas”

    The capital costs of tar sands is bad enough without adding a nuclear reactor into it. Also why build one at the ends of the earth in Alberta when you can just build one close to you and run electric cars from it.

    As you say all energy sources have an EROI. Crude oil was 100:1 however that has dropped to 20:1. Tar Sands is at best 5:1 and shale oil is 3:1. The question is do we just want to throw energy at a resource because we are familiar with it despite all the ecological problems or do we switch.

  14. Andrew Reynolds
    January 30th, 2006 at 16:11 | #14

    Ender,
    Surely the question is “when do we switch?” If we switch now and that is premature, we will leave considerable oil in the ground and move to a less efficient technology. This, if it is premature, would be silly. If we leave it until the point where we need to switch, there may well be another technology, not currently available to us now, that is much more efficient. Not many people here are arguing that oil will never run out (the abiotic argument aside) but the time horizon is a critical consideration. If you are right we need to do something now. If you are not, then we need to investigate carbon reduction strategies, but we can safely leave the oil replacement question until later.
    So the question of the reserves is the critical consideration.

  15. January 30th, 2006 at 16:17 | #15

    Andrew – Delaying will leave us with a gap period. Early switching could result in a more seamless switch over. I posted an analysis of different scenerios in previous discussions on this topic however for anyone else it is on the same page that I posted before.

  16. Willis Eschenbach
    January 30th, 2006 at 19:01 | #16

    Ender, thanks for your thoughts on the energy return on investment (EROI) of the various fuels.

    One thing that analysis doesn’t touch, however, is that it is (to pick one example) very difficult to run a car on nuclear power, but easy to run it on gasoline. So trading abundant nuclear power for scarce oil may make sense.

    This is particularly true if we can use (as I suggested above) waste heat to do some or all of the heating of the tar sands. That way, it’s money for jam, as they say …

    Best wishes,

    w.

  17. January 30th, 2006 at 19:36 | #17

    Willis – It is not question of waste heat because a nuclear reactor in Alberta would be a dedicated unit specifically designed for the job. Waste heat is not hot enough plus there is very small electricity demand in Alberta other than the tar sands.

    It is extremely easy and efficient to run cars on nuclear power. Electricity is a very efficient energy carrier and existing battery technology is such that a 300 or 400km range electric car is becoming viable with mass production. Electric motors and inverters are up to 90% efficient and can power the grid when necessary. New rapid charge batteries are just being developed that can charge 50% of their capacity in 5 mins.

    Really to help mitigate global warming I think it is best to start with transport. Millions of plug in hybrids and battery electric cars have millions of batteries that can power the grid as well as charge from it. Millions of batteries provide the missing storage that renewable power, wind/solar, needs to be reliable. The fuel for plug in hybrids can be coal to liquids or ethanol.

  18. Ernestine Gross
    January 30th, 2006 at 21:15 | #18

    Hm, convergence – a tricky one.

    Warrick McKibbon’s et al. G-Cubed model is a partially disaggregated non-Walrasian equilibrium model which has the special feature of allowing for wage rigidities but, as far as I can tell, does not allow for discontinuities in financial markets (bankruptcies and stock-exchange busts) or major natural disasters. For reasons I don’t understand at present, this non-Walrasian model converges to a Walrasian model ‘in the long run’ (finite time? What happens to money? Market completion?). The data belongs to geo-politically defined countries.

    I am not convinced by PPP as a relevant ‘conversion factor’ because the choice of this measure implies an important contradiction.

    1. It is given that a conversion of monetary values is required because of the convergence requirement.

    2. PPP is said to be the preferred conversion factor over MER at t=0 (decision time).

    3. The models in the policy papers in question propose to solve unequal development (ie achieve convergence) through ‘economic growth’ defined as increases in GDP, which is a market price weighted sum of all market transactions. (G-Cubed allows for some technological changes and relative price changes that plausibly affect emissions but this does not change my argument.)

    4. Observation: Financial markets, including foreign exchange markets, are part of the economic system in reality which produces the accounting numbers GDP and the disaggregated industry numbers. These markets are important for raising financial capital used to finance physical capital, some of which produce emissions.

    4. MER is a ratio of market prices (exchange rates).

    I am being asked to accept the proposition that convergence is brought about by a system where resources are allocated by market prices but I must replace actual market prices (MER) at t=0 (decision time) by an artifical construct called PPP. Why? If MER is ‘wrong’, then all other prices are ‘wrong’ at t=0 and if actual market prices at t=0 are ‘wrong’ then they were wrong at t= -1 ……. (financial markets)…..

    I am not saying that therefore the existing MER conversion projections are ‘right’. I am saying there is something wrong somewhere and it is important.

  19. Andrew Reynolds
    January 30th, 2006 at 21:34 | #19

    Ender,
    Delaying will only leave us with a gap period if your figures on the oil remaining are correct or close to correct. The Economist article casts doubt on that. I am not saying it is right – that is beyond my knowledge – but I am saying that, if it is correct, your analysis is incorrect.

  20. jquiggin
    January 30th, 2006 at 21:46 | #20

    Responding to Warwick, I think the theoretical analysis establishes that the bias can go either way. In saying that 20 per cent doesn’t matter I’m responding primarily to those who’ve claimed that the MER/PPP question discredits the whole IPCC modelling process.

    I don’t buy this. I agree that using PPP instead of MER would be an improvement, but only one among many potential improvements.

    As an aside, note that a 20 per cent gap in 2050 emissions corresponds to a smaller gap in the derived projection of temperature increases.

  21. Waratah
    January 30th, 2006 at 21:48 | #21

    And so you did too Ian. My oversight and my sincere apology. I have read some of the papers. Given the intimate lengths one must go to make sense of the matters under controversy and assess the degree to which they informed the political decision on Kyoto, I was desiring some straightforward explanations, minus the posturing and lengthy quoting which, when interspersed among a minimum of direct responses, gives the impression of an attempt to further ‘cloud’ the issue and generates suspicion. Some of your subsequent posts above have been more straightforward and illuminating, thankyou. (I acknowledge that you were responding to John, not writing for a non-expert like myself. I also appreciate the importance of referring to important papers, but there are methods of doing so that make a response seem less politically charged).

    Louis Hissink hasn’t responded though. My question: Can you explain your point about mantle derived, abiotic hydrocarbon production (in simple language or link to a website that does this); and can you explain why the Second Law of Thermodynamics would need to be repealed for oil to be principally biogenic? What’s the problem with current estimates or assumptions?

  22. Mike Hart
    January 31st, 2006 at 07:55 | #22

    Terje, et al, the Hubbert hypothesis on energy and population was published in his paper presented to the American Association for the Academy of Science, Feb 4 1949, “Energy from Fossil Fuels”. I have lost the link but it is available in PDF format on the web. Cheers.

  23. Willis Eschenbach
    January 31st, 2006 at 10:16 | #23

    JQ, thanks for your reply to Warwick. You say:

    Responding to Warwick, I think the theoretical analysis establishes that the bias can go either way. In saying that 20 per cent doesn’t matter I’m responding primarily to those who’ve claimed that the MER/PPP question discredits the whole IPCC modelling process.

    Can I take classes from you? I just want to be in an environment where a 20% error is perfectly fine …

    Out here in the real world, a 20% error in any of the work I do would get me fired.

    w.

  24. Ernestine Gross
    January 31st, 2006 at 10:43 | #24

    WE:

    Where is your real world? Have you heard of Enron, HIH…………..Bond Corporation………………….

    What about the real world of financial market bubbles? Never heard of it?

    There are accountants who have the type of quality data you want, namely accurate records of past events (as recorded on invoices) and they still make ‘huge’ errors.

    Mind you, had accountants been in charge of business planning and investment decision making, we still might be dwelling in caves etc. ….

  25. Terje Petersen
    January 31st, 2006 at 14:16 | #25

    Where is your real world? Have you heard of Enron, HIH…………..Bond Corporation………………….

    All three corporations got fired so to speak (ie went bell up).

  26. Ernestine Gross
    February 1st, 2006 at 10:31 | #26

    Not quite, Terje. But you provide food for thought.

    Surely, according to the ‘labour productivity theory’ which underlies the recent IR law changes, ‘the employer’ wouldn’t wish to fire ‘an employee’ with a marginal product as high as the wages payed to ‘the employees’ in question. Wages are but another name for prices for labour services. Since we are talking about non-union labour in these cases, it seems to me that either the ‘market prices’ paid to these employees in question were ‘wrong’ or these employees were ‘wrongfully dismissed’.

    Now, shareholders are supposed to be ‘the empolyees’ in the cases in question. But the shareholders’ didn’t dismiss ‘their employees’. It was the debt-holders who did it.

    From the debt-holders’ perspective, it is quite clear that there was no ‘wrong-ful dismissal’ because the employees of the shareholders’ defaulted on their financial commitments.

    It is only in a round-about way that ‘the market’ (debt and equity) reveal that there is something not working according to the ‘marginal productivity theory’. While I don’t have detailed knowledge of the G-Cubed model, on the basis of the information available to me, the ‘marginal productivty theory’ equation is in it – at least in the long-run. The non-Walrasian model assumes ‘labour market rigidities’. Well, we foud a few cases where this is true, haven’t we? But, note, the problem we have discovered cannot be solved by removing unions. (I am not saying that there is no problem with union involvement. I am saying the solution doesn’t match the problem discovered.)

    Incidentally, and only tangential to the topic, the residual losses were ‘socialised’ – at least in the case of the insurance companies – and government intervention was involved to organise this. Of course I can’t be sure what would have happened without government intervention but one of the possible outcomes is that ‘nobody’ would have ‘bought’ insurance. To the best of my knowledge, there is nothing in the G-Cubed model which captures the coordinating role of the government; ie to salvage the insurance industry by means of spreading the risk in a manner different from the original risk diversification in the financial markets.

    Let me know whether or not there is any ‘ism-word’ or ideological colour involved in the foregoing. I’d be more than happy to try harder to remove any taint of whatever colour.

    Regards
    Ernestine

  27. Ernestine Gross
    February 1st, 2006 at 10:36 | #27

    Correction: Shareholders are supposed to be ‘the employers’ (not employees)

  28. Terje Petersen
    February 1st, 2006 at 11:01 | #28

    Ernestine,

    What you say makes sence, and I don’t see any “isms”. However I thought that the reason companies now went into “administration” instead of “liquidation” when the creditors wanted their money back was precisely because we were previously scrapping otherwise productive entities.

    Also a man is more productive with a shovel and the organisational structure of a firm is in many ways like a shovel. If the firm collapses then it is like a broken shovel. The productivity of the worker rapidly declines and they become overprices. Usually it is not a workers fault when his shovel breaks but it does impact his productivity. Unhappy creditors is a sign that the structure of the firm is breaking.

    Building a firm is in many ways just an exercise in creating a form of social capital. This was the bit Karl Marx missed. He could see the banker brought finance and the worker brought labour but he was not convinced that the entrepreneur brought anything to the table. The answer is structure. And structure if done correctly is worth an awful lot. A good example would be the way Henry Ford restructured production.

    I started my own firm nearly eight years ago and I have thought about this issue of structure for a long time.

    Regards,
    Terje.

    P.S. Ironic that todays capitalists (shareholders) are mostly people of average means and we fret about their rights, while some in the working class (eg CEOs and trade union officials) have become the new social villians that apparently threaten the wellbeing of the capitalists. The game has been turned on its head.

  29. Ernestine Gross
    February 1st, 2006 at 12:08 | #29

    Terje, thanks for your reply. I understand that you do not criticise what I said on the grounds that there is an ideological bias underlying it. And, you acknowledge that ‘ism-words’ are not involved.

    In one of my early posts I mentioned that I am not suitable for ‘debates’ involving, in one way or another, going over past ground and, in my opinion, much of these ‘debates’ involve more sophisticated forms of name-calling, playing the players rather than the ball and I stay out of it. May I ask you to accept this in response to what else you wrote.

  30. Terje Petersen
    February 1st, 2006 at 15:11 | #30

    not suitable for ‘debates’ involving, in one way or another, going over past ground

    Most debates go over past ground simply because old ground is new to some people. You must find very few debates that suit you.

    May I ask you to accept this in response to what else you wrote.

    You can always ask. And I am happy to accept the response you have just given. If I understand you correctly you are saying that you don’t wish to engage in further discussion of the matter. Nothing wrong with that.

  31. Ian Gould
    February 1st, 2006 at 15:57 | #31

    >I would think that there is actually an incentive on the part of oil producing nations to minimise market knowledge about reserves. That way the price is likely to be higher.

    Conversely, reserves and production capacity are used in setting OPEC quoatas so OPEC members have incentives to overstate both.

  32. Ian Gould
    February 1st, 2006 at 16:06 | #32

    Louis hissink: “Your last question is easy to answer – no one has been looking elsewhere, hence there is no data, and hence no theory.”

    Yes because as we all know there is absolutely no mining for metalliferous ores or other minerals outside of sedimentary basins and no civil engeering or other tunnelling in areas of igneous rock.

  33. Ernestine Gross
    February 2nd, 2006 at 18:13 | #33

    Terje, you tried to change the subject matter. Good luck on your journeys.

  34. February 5th, 2006 at 08:42 | #34

    Hi , just discovered this thread. All the debate about GDP glosses over one important parameter in the formula (energy) = a + b*GDP.

    Global warming will only happen if the fossil fuel component in (energy) is greater than 0. Oil prices get higer due to depleting cheap oil and increasing market demand, on a given point alternatives will be really cheaper than fossil fuels, market demand will drop, oil price will drop until production cost is reached. No oil company will produce against a loss.

    The mercury metal price is a good example.

    The SRES A1FI scenario will therefore never happen.

  35. February 5th, 2006 at 15:05 | #35

    Hans – “Oil prices get higer due to depleting cheap oil and increasing market demand, on a given point alternatives will be really cheaper than fossil fuels, market demand will drop, oil price will drop until production cost is reached.”

    Sure – and every car, truck, bus etc in the world will be instantly converted to run on these alternatives by market forces.

  36. February 5th, 2006 at 20:46 | #36

    You can run already sunflower oil in your diesel car.
    However, you’ll smell like a donut van.

  37. February 6th, 2006 at 07:58 | #37

    Hans – yes you can however there is not 83 million barrels per day of sunflower oil available – unless of course you want to stop eating so that you can run your car.

  38. February 6th, 2006 at 20:53 | #38

    The average age of a car in holland is eight years.

    So not instantly, but only in eight years time 50% of the dutch will drive a car manufactured after 2005. New technology spreads fast.

    Take the refrigerator: at the start of the 20th century, a refrigerator was a luxury product as it operated on harvested ice during winter. There was a complete ice harvesting industry north of New York providing the city with refrigerating ice (you may remember a Charlie Chaplin slapstick on the topic.
    Electric refrigerators took over and today you can’t image a household without one. The ice harvesting industry melted away.

  39. February 6th, 2006 at 22:04 | #39

    Hans – I completely agree however the average half life of the transport fleet is 10 or more years when you consider heavy transport as well that is commonly kept for a lot longer that the average car.

    Eating is not a luxury. Urban populations depend implicitly on oil based transport to supply them with food. At the moment there is no other alternative. The coal that we use to generate most of our electricity is mined with oil based machinery. No oil – no coal. If you started today it takes on average 4 or 5 years to bring on stream a coal to liquids plant. If there is a serious interupption to oil supplies because China is more successful at cornering oil shipments than us then do we just do without eating and electricity for a while?

    How long do you think the economy would stand an oil supply interruption? If we wait until the market gets the signal to change then it is quite likely there could be a gap of 5 to 10 years while the alternatives are brought on line.

  40. February 6th, 2006 at 23:13 | #40

    ?? What ghosts are you seeing now? End of oil? Nah, end of cheap oil !

  41. February 7th, 2006 at 08:15 | #41

    Hans – I also like the time of cheap food and water as well. Not really a ghost but a coupled problem with global warming.

    Fix transport first, now, and then we reduce 30 or 40% of greenhouse emissions. Widespread electric transport makes renewable energy viable reducing greenhouse gases further.

  42. February 27th, 2006 at 09:08 | #42

    jquiggin said:

    January 30th, 2006 at 9:46 pm
    Responding to Warwick [McKibbin], I think the theoretical analysis establishes that the bias can go either way. In saying that 20 per cent doesn’t matter I’m responding primarily to those who’ve claimed that the MER/PPP question discredits the whole IPCC modelling process.

    I don’t buy this. I agree that using PPP instead of MER would be an improvement, but only one among many potential improvements.

    As an aside, note that a 20 per cent gap in 2050 emissions corresponds to a smaller gap in the derived projection of temperature increases.

    I say.

    Great, so we can do without the IPCC since whether emissions without Kyoto may be plus or minus 20% by 2050, there will be a “smaller gap in the projection of temperature increases” [of say 2C + or - 10%?, or 1.8C or 2.2C?]. Kyoto II is unlikely to embody a 20% emissions reduction target by 2050, so why bother?

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