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Treasury on the cost of saving the planet

October 31st, 2008

I’ve been too busy to do more than read the summary of the Treasury’s estimates of the cost of an measures to reduce greenhouse gas emissions, most importantly an emissions trading scheme. Of course, there have been quite a few exercises of this kind, but what’s striking about this one is that it looks at a much wider (and more realistic, if we want to save the planet) range of options, going all the way to a 90 per cent reduction in emissions relative to 2000 levels, achieved by 2050. This is a contract and converge scenario where all countries accept a common emissions entitlement per person.

Treasury estimates that, under this scenario, GNP per person in Australia will average $78 000 in 2050 compared to $50 000 at present. By contrast in the reference scenario which has an 88 per cent increase in emissions, 2050 GNP is estimated at $83 000, or about 6 per cent higher (I don’t think this takes account of costs avoided through climate mitigation).

When I get a bit of time, I’ll report more on the details and assumptions. But the quibbles coming from predictable rentseekers, and their tame consultants, look like just that, quibbles.

Treasury’s estimates are, not surprisingly, quite consistent with the arguments I’ve made for a long time on this blog. That’s because any competent economist doing the analysis must come up with estimates of a comparable order of magnitude. If you want to make the case that saving the planet requires reducing living standards, or even a big reduction in the rate of growth of living standards, you need either to invent a whole new economics or wave your hands vigorously enough to conceal the fact that you don’t have any economic analysis to support you.

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  1. observa
    November 2nd, 2008 at 15:36 | #1

    And if you think I’m a shill for McCrann, then when he says- “TENTATIVELY, very tentatively, it might be time to get back into the market. .”, all I can say is in your bloody dreams Terry and ring Simsmetal too.

  2. Donald Oats
    November 2nd, 2008 at 19:42 | #2

    Wind farm technology is still relatively new. Much innovation and creative thinking remains to be done.

    For example: So far the really big ones have a horizontal axis of rotation; there are small ones with egg-beater type blade design and a vertical axis of rotation which is up the support tower. Quite probably these ones will ultimately be more scalable than the current favourite propellor design. No doubt some thoughtful souls are investigating the engineering and economic feasibility of this somewhere now.

    Then there is the question of the density of packing into a wind field. Place them too close to each other and they cop some of the wash, losing efficiency. Perhaps computer monitoring of the wind field in realtime could allow dynamic changes in pitch, blade torsion, or bladetip shape. Obviously the current blades are not designed for this sort of thing; perhaps the physical constraints mean it can’t be done (with current wind turbine design), but then again perhaps it can. I’m sure lots of other ideas better than that are out there looking for research cash to support them.

    PS: Snowtown in SA officially opened its new wind farm today. People are waking up to the fact that windfarms aren’t *that bad* afterall.

  3. Donald Oats
    November 2nd, 2008 at 19:48 | #3

    Oops in #52 I missed the last bit just before PS…

    I think windfarms have a great future. Especially when the economics of investment over time are taken into account. For example, a traditional coal or nuclear electricity station has lumpy capital costs, ie go/no go decision at the beginning of the build phase of the project. Once committed, it is very hard to retreat. And if demand proves to exceed the plant capacity, another go/no go decision for another coal/nuclear station is hanging in the air.

    With a windfarm there is an initial discrete capital outlay. Once in place, if demand grows beyond the windfarm’s current capacity, then turbines may be added as needed, in a more incremental fashion than the coal station alternative. Plenty to think about.

  4. TerjeP
    November 2nd, 2008 at 20:01 | #4

    The thing I like about the enviromission idea (solar chimney) is that the system makes it’s own wind and the wind it creates blows 24 x 7.

  5. wilful
    November 2nd, 2008 at 21:12 | #5

    What are effectively underwater windfarms, tidal power, has got a massive future. While we don’t have infinite locations, we’ve got more than ample, and to the best of my knowledge tidal flows haven’t stopped since the oceans filled.

  6. Damocles
    November 4th, 2008 at 07:44 | #6

    http://www.spacemart.com/reports/EU_nations_agree_to_push_back_CO2_auto_limits_to_2015_999.html

    In the first sign that the global economic panic is actually having an effect on climate policy, the EU has decided to defer the start of new tighter car emission standards from 2012 to 2015.

    Honestly, given the progress of electric and hybrid vehicles, that three year delay is probably going to radically reduce the cost of compliance.

  7. November 6th, 2008 at 09:36 | #7

    All the ecconomists in here should be well versed in judging risk and reward but what you fail to factor into the equation while predicting a drop in living standards from climate action is the intangibles relating to inaction.
    What price do you put on our way of life or 3rd world starvation?
    From your comments I gather it’s $5000 (but is that pretax or after tax?).

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