AARES

February 7th, 2008

I’ve been at the annual conference of the Australian Agricultural and Resource Economics Society for the last few days. I’ve been coming to these for nearly 30 years, and it’s always good to catch up with old friends and colleagues. For many, it’s the first time they’ve seen me without a beard, and quite a few failed to recognise me until I accosted them.

The big change in 30 years has been the rise of environmental and resource concerns at the expense of old-style agricultural economics. Most of my early papers dealt with now vanished policies like the wool price stabilisation scheme, and the analysis of production systems needed to inform such policies. Now the conference has continuous sessions on both water and climate change, and only a handful of papers on production economics.

Ross Garnaut spoke on Tuesday and his talk was pretty sobering. Short version – as regards the likely consequences of business as usual, Stern was an optimist. Unless the world acts decisively, and well before 2020, we’ll have emissions higher than the highest of the IPCC scenarios Stern looked at. What’s worse new information on feedbacks suggests that the models relating emissions to temperature change are also likely to be on the conservative side, as the capacity of sinks to absorb emissions declines.

The positive side of this, I guess, is that the problems arise from China (and to a lesser extent India) growing fast, and that means China has more resources to address the problem, if we can only get the politics right.

One aspect of the latter is the near-certainty that we won’t be able to get away much longer with the notion of historical rights for high-emission countries like the US and Australia. By 2050, under any plausible agreement, we’ll have uniform emission entitlements per person, for everyone in the world, at a level well below our current emissions.

Categories: Economics - General, Environment Tags:
  1. Ian Gould
    February 11th, 2008 at 21:14 | #1

    “The trees you plant will take 50 years to undo the damage you do in 24 hours, and you have no guarantee whatsoever that the trees will survive past next week.”

    Actually most reputable offsets operations purchase insurance and are bound by contract to replant the same number of trees if the first planting is destroyed by drought or forest fire.

    Not to mention all the various offsets not based on planting trees.

    I’m really getting tired of people attacking offsets or emissions trading or nuclear power or alternate energy or carbon taxes or geosequestration or energy efficiency or any other alternative to what they’ve decided is THE ANSWER.

    Ever stop to think there is no single answer, folks?

  2. February 11th, 2008 at 23:00 | #2

    Please God, save me from the libertarians.

    We were sent by God to test your patience. If you pass the test you get extras in the after life. In the interum please try to suffer a little more silently. ;-)

  3. mugwump
    February 12th, 2008 at 01:56 | #3

    I like my incandescents. Unlike CFLs (Compact Fluorescent Lamps), when they break they don’t constitute an immediate health hazard due to the evaporation of mercury into the atmosphere.

    Mostly only a health hazard to children though, so I guess that’s ok, since the environmentalists tell us procreation is the single greatest injury we can do to GAIA.

  4. wizofaus
    February 12th, 2008 at 06:39 | #4

    carbonsink, I’ll trust the scientists involved in the organisation thank you very much. And it’s irrelevant whether the trees absorb the polluton from my particular flight – what matters is that they are trees that would not have been planted anyway.

    The trip is at the insistence of my employer. I have already talked him out of 3 previous trips.

  5. Ken Miles
    February 12th, 2008 at 08:55 | #5

    Stop kidding yourself. Flying is the single most environmentally damaging thing you can do. Admit it yourself and deal with it. The only to fly carbon-neutral is not to fly.

    I disagree strongly with the sentiments behind this statement. We should be looking for ways to reduce our CO2 emissions which have the minimum cost. Given the massive contribution which aviation makes to our standard of living (and if the alternative to flying is not flying [a not totally true statement]), then rather than not flying we should look at cutting carbon dioxide emissions in other areas where it can be done more cheaply (power generation, land management, car efficiencies etc).

  6. February 12th, 2008 at 10:05 | #6

    He he … good to see I’ve stirred up some discussion :)

    Three points:

    1. I didn’t suggest that we stop flying. In fact, jet aviation is the one place where we have very little opportunity to reduce emissions because there is no low emissions alternative on the horizon. So I agree with Ken that we should be looking to cut emissions in other areas, but we should also be looking at curtailing the exponential growth in aviation.

    2. Any carbon offset organisation could go out of business tomorrow, as many did recently in NSW when the carbon price collapsed. The timescales involved in mass tree planting (50 years+) are so long that any “contract” is essentially meaningless. Hey, if we don’t take serious action soon I’m not confident that western democracy will survive the next 50 years, let alone tree planting contracts honoured. Oh and FYI, the offset schemes that invest in low emission energy are much more worthwhile, and I’m not opposed to nuclear power, carbon taxes, emissions trading, alternative energy, and certainly not energy efficiency. What I am opposed to fraudulent carbon offset schemes that offer to alleviate carbon guilt.

    3. Terje. Love Ya, wouldn’t come here if it wasn’t for your pearls of wisdom.

    P.S. I just bought an offset from Jetstar for $0.82 each way on a flight to Brisbane. I planted 500 trees on my property last year, and I couldn’t buy a rainforest tube for that!

  7. wizofaus
    February 12th, 2008 at 10:32 | #7

    Carbon, which is why I’m donating to a not-for-profit organisation that doesn’t depend on carbon trading schemes. I intend to donate several hundred dollars. I have no idea what 82c as a carbon offset is supposed to achieve.

  8. February 12th, 2008 at 10:59 | #8

    wizofaus, you said:

    I’m confident that the organisation I found offering carbon credits is genuine. The main problem is being confident that they’ll remain around long enough to ensure any planted trees remain protected.

    You might be better off putting the several hundred dollars into insulating your house, or replacing an inefficient appliance (like electric storage hot water). At least then you can take personal responsibility for emissions avoided.

    If you want to plant some trees, go volunteer an afternoon with the local Landcare group.

    I have no idea what 82c as a carbon offset is supposed to achieve.

    I don’t either, but I checked the box for a laugh!

  9. wizofaus
    February 12th, 2008 at 13:44 | #9

    carbonsick, insulating the house is definitely on the list, but not something we can afford at this point, and we’re not sure how long we’re staying here.
    We have no electric storage hot water, and our electricity and gas usage are already well below the state average.

    For me to personally plant enough trees and care for them long enough to make up for the emissions our flight would be responsible for is hardly realistic.

  10. February 12th, 2008 at 15:39 | #10

    wizofaus, so you don’t have any inefficient appliances, an old fridge, an electric heater or two, a gas guzzling car, or any other way of reducing your carbon footprint?

    Pretty much any of these measures would be better than planting trees. It is much better to not emit the carbon in the first place than try to undo the damage over 50 years with some offset scheme.

    You know I’m talking sense.

  11. rog
    February 12th, 2008 at 16:14 | #11

    We use minimal lighting – solar tubes illuminate dark corners by day and dimmable downlights reduce the glare by night with flouros as the workhorses.

  12. wizofaus
    February 12th, 2008 at 16:15 | #12

    Not that I can realistically fix with a couple of hundred dollars, no. And how could I know that such an action would actually make up for the emissions from my flight?

  13. gerard
    February 12th, 2008 at 17:41 | #13

    …Nor can certain harmful effects of deforestation, or of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation of the price mechanism.

    Friedrich von Hayek, 1944

  14. February 12th, 2008 at 19:03 | #14

    Not that I can realistically fix with a couple of hundred dollars, no. And how could I know that such an action would actually make up for the emissions from my flight?

    It won’t. Nothing can make up for the emissions from your flight, short of locking yourself in a box for a year and starving yourself. I’m not trying to be a hair shirt here, but them’s the facts.

    Why not keep your money and start saving for insulation or solar hot water? At least then you know you will reduce your carbon footprint even if you move house. With a tree-planting scheme you have no guarantees about anything.

    The trees will only start absorbing significant amounts of CO2 after several years. If you’re lucky the treed will store the carbon for a few decades, then die and release it again, around 2050 when TSHTF. And that’s if the trees are actually planted, if they survive past a few years, if they don’t get burnt down in a bushfire, and if they didn’t replace some other vegetation.

  15. Brian Bahnisch
    February 12th, 2008 at 23:18 | #15

    On Geodynamics, They’ve drilled two holes 500m apart and established that they are hydrologically connected. As we speak they are trying to establish ‘proof of concept’ by pumping water down one well and drawing it up out of the other after heating by passing through the hot fractured rocks. I’m thinking it is not working out all that well because otherwise why is the share price sliding gently by the day? Still it can’t be a disaster, otherwise the share price would fall out of bed.

    The plan is to then build a 1MW pilot plant to power the site, followed by a 50MW plant and transmission lines, followed by a commercial base-load operation requiring 6 rigs drilling 81 wells with power to come on stream in 2016.

    The rig they use weighs about 900 tonnes, costs over $30m and was made to order in Texas.

    Origin Energy has farmed in with a 30% stake in the joint venture.

    The concept involved two closed loops linked to a heat exchanger. I understand that water is not a problem, there is plenty down there. They just have to strain out the dreck so that it doesn’t chew out the pump.

    Like Robert M I’ve invested in a few shares which I consider speculative.

  16. Brian Bahnisch
    February 13th, 2008 at 00:19 | #16

    Ian Gould at #28 gives some very stark figures on the reductions of emissions necessary. My figuring is slightly starker.

    Most figures given for total emissions leave one or more categories out. This chart, dated October 2006, gives total emissions at 41,755 MtCO2e. From memory IPCC4 gave 43 Gt. The CIA World Fact Book gives the world population as 6.6 billion. This gives a per capita figure of 6.5 tonnes of CO2e per person.

    Monbiot in his book Heat projects forward to 2030 when the population is expected to be 8.2 billion. The amount that the planet can absorb safely is given as 4 billion tonnes of carbon, which, because of failing carbon sinks is expected to fall to 2.7 billion tonnes by 2030.

    2.7 billion translated into CO2e becomes 9.9 billion tonnes. For a population of 8.8 billion this provides an allowance of 1.2 tonnes per person.

    The next step is to look at this Wikipedia list of countries ranked by per capita CO2 emissions. You’ll find China at 3.84 and India at 1.2.

    There are two things wrong with this list. First it is out of date (2004).

    Second, it lists CO2 rather than CO2 equivalent, and probably leaves some categories out. Australia, for example, is at 16.3 rather than 25.6 as cited by Ian. If Australia’s emissions have to shrink from 25.6 per capita to 1.2, that is roughly 95%, but by 2030 rather than 2050 in Ian’s post. By 2050 the sinks would be even more disabled and the world population higher.

    If you think about the convergence theory for a nanosecond you will surely see that it is a disaster because it involves no net reduction of emissions until we all meet at the average and then go down together.

    Any comments?

  17. mugwump
    February 13th, 2008 at 03:04 | #17

    As we speak they are trying to establish ‘proof of concept’ by pumping water down one well and drawing it up out of the other after heating by passing through the hot fractured rocks. I’m thinking it is not working out all that well

    …no pun intended? My guess: the water goes down hole #1 never to be seen again.

    otherwise why is the share price sliding gently by the day? Still it can’t be a disaster, otherwise the share price would fall out of bed.

    Seen that one before. An alternative explanation: insiders know it is a disaster and are selling off. Outsiders have yet to catch on, so are still picking up the insiders’ stock.

  18. February 13th, 2008 at 08:29 | #18

    Ian #28 and Brian #66:

    I couldn’t agree more. The task is mammoth.

    Anyone who hasn’t read Monbiot’s Heat should read it now, especially the “one percenters” (i.e. those who think bringing emissions down to a level that will stabilise the climate will cost ~1% of GDP) ProfQ included.

    I note that many of the one percenters fall into the same group who believe that developed nations need to make the biggest cuts (again, ProfQ included). No arguments there, but if you take that position you must also accept that developed nations need to reduce emissions not by the oft-quoted 60% by 2050, but more like 95% by 2050 (or earlier) as Brian and Ian point out.

    In Heat Monbiot outlines a plan to reduce the UK’s emissions by ~90% by mid century. Its a stupendous effort, requiring huge changes to lifestyle and major restructuring of society. Monbiot’s arguments are convincing and sobering, and are starkly different to the one percenters don’t-worry-emissions-trading-will-fix-it view.

    Now for my favourite spanner in the works:

    If there is a peak in oil production in the next 5-10 years much of the decline in conventional crude will be met by oil sands, coal-to-liquids and palm oil plantations in tropical forests. All of which will significantly increase CO2 emissions per barrel of oil produced.

    Anyone who believes we’re all going to be zipping around in electric vehicles by 2030 powered exclusively by wind and solar is seriously deluded.

  19. wilful
    February 13th, 2008 at 08:41 | #19

    Brian, (taking all your figures at face value) if the target is 1.2, then Australians have to step down from 25.6 to that figure starting today, while China doesn’t get to go up at all, it just has smaller steps (like 50% not 95%).

    If all of your figures are correct, then we’re in for a pretty wild ride. And it’s all our fault – we can’t say we wern’t warned.

    But there will be a specially warm place in hell for John Howard, Andrew Bolt, George Bush etc.

  20. wizofaus
    February 13th, 2008 at 09:19 | #20

    carbonsink, I’ve already concluded that geo-engineering will be attempted, just to buy us some more time. We better hope it works.

  21. Brian Bahnisch
    February 13th, 2008 at 17:26 | #21

    Wilful, I’ve been working the figures over and over again since I read Heat and I can’t get it to come out any other way. I agree with carbonsink that anyone who hasn’t read Heat should do so. He did his research before Stern or IPCC4 came out and I think ended up with a better bead on the problem.

    Wilful, if China has to reduce from 3.84 to 1.2 tonnes per person they need to shed about 70% unless they shed some people. That’s if the 3.84 figure is right, and it’s probably a fair bit higher.

    Nic Gruen had an interesting article in today’s AFR which he has just posted at Troppo. He favours a country per capita allocation for all countries, developing countries included, and some sort of WTO-like organisation to sit above countries on the issue.

    The Europeans have shown how there can be considerable variation between countries within an overall target.

    The situation as it is emerging, however, seems to be far more urgent than the European official policy currently admits. In Climate Code Red which someone linked to above the authors work through the implications of recent research and developments such as the 22% collapse of Arctic ice cover in 2007 as compared with the previous record of 2005.

    They make a very cogent (though very repetitive) case, I think for targeting a “climate-safe zoneâ€? of 0.5C above pre-industrial levels and CO2e ppm levels of 320ppm or less. Don’t just throw up your hands, have a read. They have fully taken on board the latest climate observations, the peer-reviewed climate literature, and applied ‘normal’ risk criteria. That is, they have taken seriously the problems Weitzman was addressing (without addressing Weitzman as such.)

    I’m still reading, but where they seem to be heading is putting the world economy on a war footing and decarbonising it within 10 years. Otherwise the risk of it getting right out of control is unacceptably high.

    So what do you reckon our chances are?

    Not good, I’d say unless something dramatic happens like a storm surge overwhelming the low-lying parts of New York, or similar. That is not entirely outside the realms of possibility.

  22. February 13th, 2008 at 19:05 | #22

    So what do you reckon our chances are?

    Buckleys to none. We live in a world where politicians win elections by promising inquiries in to petrol prices.

    Honestly, I don’t know why people kid themselves that any serious action will be taken. We’ll just keep accelerating towards the cliff until we fall off.

  23. Ian Gould
    February 13th, 2008 at 19:39 | #23

    “If there is a peak in oil production in the next 5-10 years much of the decline in conventional crude will be met by oil sands, coal-to-liquids and palm oil plantations in tropical forests. All of which will significantly increase CO2 emissions per barrel of oil produced.”

    This depends on a couple of factors: one is how quickly output declines once we’re past the peak, the other is the relative availability of the other two realistic short-term large volume replacements for conventional oil – biofuels and GTL (Gas to Liquid).

    GTL (converting natural gas to liquid fuels) is likely to play a bigger part in substitution for conventional oil than sands and tars – at least until we hit peak gas.

  24. February 13th, 2008 at 22:37 | #24

    GTL (converting natural gas to liquid fuels) is likely to play a bigger part in substitution for conventional oil than sands and tars – at least until we hit peak gas

    Well that’s not what the EIA says. In this 2006 paper they forecast the following for 2030 (million barrels per day):

    Reference case:
    Oil Sands: 2.9
    CTL: 1.8
    GTL: 1.1
    Biofuels: 1.7

    High oil price case (duh!):
    Oil Sands: 4.9
    CTL: 2.3
    GTL: 2.9
    Biofuels: 3.0

    But I agree GTL will have a role to play. Of course, it would make a lot more sense just to burn the gas directly in a CNG vehicle, but I fear we won’t see much sense in years to come.

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