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Climate change roundup

May 28th, 2007

There’s so much happening on climate change that it’s hard to keep up, but I’ll try and note some points down, as much for the record as anything else. I’ll update this roundup with more as I get time.

* There was talk in the Oz last week of a Sydney declaration of a regional emissions trading agreement, to emerge (very conveniently timed) from the APEC meeting in September. Now the idea is dead, reflecting the same Bush Administration intransigence on display in the leadup to the G8 meetings. Howard is discovering, like Tony Blair, that loyalty to Bush is its own reward.

* Also in the Oz, Alan Oxley doesn’t know the difference between levels and growth rates.

* And, yet again in the Oz, a classic example of the fallacy of composition (unless its a particularly egregious case of special pleading). To be fair, the author finally gets around to the point that we have to do something even if our role is a relatively small one. Although it’s not strictly relevant, Australia’s share of international emissions is about the same as that of the UK or France (even though they have larger populations).

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  1. May 29th, 2007 at 11:01 | #1

    Howard is discovering, like Tony Blair, that loyalty to Bush is its own reward.

    Howard is also discovering that climate change denial is a failed strategy, and he won’t be able to claw back any credibility on the issue before the election.

  2. Tom N.
    May 29th, 2007 at 15:54 | #2

    As an economist, Alan Oxley makes a terriffic former trade ambassador.

  3. SimonJM
    May 29th, 2007 at 23:10 | #3

    Something is out of whack I can post here but not on the Global Warming statement thread.

    Andrew I’ve more to ask you but will be away tomorrow so I hope you can wait til then. In the mean time read up on Peter Singer’s Drowning Child essay.

  4. May 30th, 2007 at 10:45 | #4

    Alan was wrong to say that Stern predicted a 1% decrease in growth per year. But he wasn’t wrong to say that a 1% decrease in GDP now is costly.

    While the size of the loss doesn’t increase every year, the initial loss exists for every year. If you use a 0.1% time value of money, then this adds up to a very large number.

    Even if you use a normal time value of money it adds up to quite a bit.

    And I note that ABARE (and JQs previous back-of-the-envelope) analysis estimates more than a 1% cost.

  5. gordon
    May 30th, 2007 at 14:51 | #5

    In the Count Our Blessings Dept, we should all be grateful that at least in Australia we don’t have a coordinated campaign by coal interests to subsidise liquid fuels made from coal, as is happening in the US. Yet.

  6. Ian Gould
    May 31st, 2007 at 21:03 | #6

    So wasn’t the long-awaited emissions trading paper due out today?

  7. Ian Gould
    June 1st, 2007 at 00:46 | #7

    Well the report is apparently out but I can;t seem to find a copy.

    Here’s the ABC story:

    “The Prime Minister’s carbon emissions task force says a trading scheme could be up and running by 2012, and efforts to cut emissions will lead to higher energy prices.

    The ABC understands the report recommends a cap and trade system, in which polluters are issued permits and trade them according to their emissions.

    Setting a carbon price would be up to the market, and instead of recommending a target of greenhouse gas reduction the report simply urges the Government to take a cautious approach.

    It says the setting of goals should be done with great care and more research.”

    http://www.abc.net.au/news/newsitems/200706/s1939358.htm

  8. gordon
    June 1st, 2007 at 10:26 | #8

    The logical limits of permit trading are explored by anne at Economist’s View:
    “anne says…

    What we could do is set up a sort of carbon trading system for trading, well, women. Company A can discriminate against women, and happily trade for discrimination rights with company B. Of course, company A can discriminate against women secretly and if the women fail to notice in the first few days of working for company A, well, too darned bad for the women.

    So, why not a trading system in discrimination against, well, women?”

    Obviously, this is just the tip of the iceberg. Why not set up a permit trading system for any sort of crime? Many crimes are punishable by fines, so if I haven’t committed a fineable offence recently, I could sell my “offence permit” to somebody who wants to commit such a crime. He/she effectively pays the fine in advance.

    And of course it could be taken much further; if I haven’t murdered anybody recently, I could sell my unused murder permits to a professional assassin. If the number of permits issued were slightly below the number of murders committed last year, the crime rate would still fall. We would need to get the Institute of Criminology to calculate a sustainable murder rate in order to fix our cap, of course.

  9. Ian Gould
    June 1st, 2007 at 11:44 | #9

    The Emissions taskforce proposal – no international trading; a fixed government-determined price for emissions permits and no firm limit on emissions – sounds an awful lot like the McKibbin-Wilcoxen proposal.

    I have some reservations about the M-W model but trialling it in one country would have some benefits – if produces clearly superior results to the Kyoto model (in both economic and environmental terms) other countries could follow suit.

  10. Peter Wood
    June 1st, 2007 at 16:08 | #10

    The report is at

    http://www.pmc.gov.au/publications/emissions/index.cfm

    It does not specify an emissions trajectory or target, and has “a ‘safety valve’ emissions fee designed to limit unanticipated costs to the economy and to business, particularly in the early years of the scheme, while ensuring a continuing incentive to abate”. It also has the expected free permits for trade-exposed energy intensive industries and long term free permit allocations for “businesses identified as likely to suffer a disproportionate loss of value due to the introduction of a carbon price.” The rest of the permits are to be auctioned.

    Because of the safety protections for industry, it would possibly work well if it had an aggressive reduction trajectory and high safety valve emissions fee, provided that not too many free permits are given out. The long term allocations are a particularly serious concern.

    A weak emissions cap or target or too many free permits will be likely to result in a similar situation to the Phase I of the EU ETS (where the price of a tonne of carbon is now less than one euro).

  11. rs
    June 6th, 2007 at 06:36 | #11

    The John Gava piece is pretty repetitive and I don’t like the style all that much, but the point he’s making is one I think that fits in the middle as far as making it. Something for the middle-of-the-roaders, perhaps? It’s something like:

    The debate is unrealistic, because we’re debating about the wrong thing. We have to be realistic and realise that even if we cut our emissions to 0 there’s still 99% of it out there, we just don’t produce enough for it to make a huge difference, as far as that aspect goes.

    If we want to have useful action, let’s ignore that, and look at why we need to do something, and think about this some. We need the experts to determine mechanics and cost/benefits of abatement, but anyone can see our production is small. That argument is that if we went to 0 and nobody else did anything, it would matter about as much as if we did nothing and they were agressive in reducing GHGs.

    But should we do nothing or make more money by producing a lot of dirty energy? No! Bad idea for 3 reasons:

    1. It’s morally right to reduce GHGs.
    2. We could miss out on many good possible business opportunities related to it.
    3. The rest of the world economy could retaliate against us.

    We don’t want to be penalised for being a bunch of free-riders. That’s the reality. The unreality is debating if what we’re going to do is important or not. We should just do it.

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