Home > Economics - General, Environment > Quiggin and Bolt agree

Quiggin and Bolt agree

July 4th, 2012

As I mentioned a little while back, I’m going to refrain (or at least try to refrain) from polemics on the subject of climate change in the future. As a first step, I’m happy to say that I’ve found a post by Andrew Bolt which I can recommend. Bolt links to this estimate by Damon Matthews that each tonne of CO2 emitted into the atmosphere changes the equilibrium temperature by 0.000 000 000 0015 degrees, that is 1.5*10^-12 in scientific notation. Noting that the carbon price is expected to reduce emissions by 160 million tonnes per year by 2020, Bolt makes the straightforward calculation that the emissions avoided in the year 2020 will reduce equilibrium temperature by 2.4*10^-4 or 0.00024 degrees.

Bolt stops there, perhaps having run out of time, so I’ll complete the calculation for him. Obviously to compute the impact of the carbon price we need to estimate the effect, not just for the year 2020 but for the entire period the policy is in place. That’s a complicated task, but let’s simplify by supposing that the policy stays in place until 2100 and that the 2020 reduction in emissions is maintained over this period. That gives a reduction in equilibrium temperatures of about 0.02 degrees, which coincidentally or not, is exactly what I estimated using a different method in a recent comments thread.

Of course, as we all know, this is a collective action problem – any one jurisdiction acting alone is not going to achieve much. Fortunately, most countries are doing something, even if they have adopted inefficient approaches like direct regulation in the US. So, let’s calculate what would happen if everyone adopted measures with effects comparable to those of the carbon price.

Australia accounts for about 2 per cent of the global economy, and about 2 per cent of total emissions (the latter depends a lot on which emissions are imputed where, but these estimates are imprecise anyway). So, if Australia’s effort with the carbon price is about average for the world as a whole, and these policies are sustained without change, Bolt’s calculation implies that the reduction in equilibrium temperature would be about 1 degree.

Bolt invites comments on whether such a reduction is worthwhile. Anyone who has looked at the impact of 1 degree of additional warming ought to agree that reducing warming by 1 degree yields a benefit far more than is needed to justify global adoption of policies like the current carbon price policy.

What this calculation shows is that we need to do more. Depending on your projections we need to reduce equilibrium temperatures by 2-4 degrees relative to Business as Usual. That will imply a carbon price at least twice as high as that implemented on Sunday. Comparing this week to last, I think we can probably bear the associated pain.

Bolt also links to this article by Michael Bachelard which states that the carbon price would reduce emissions by 5 per cent, relative to 2000, and gives an estimate by Roger Jones that this would reduce equilibrium temperature by around 0.004 degrees. As I’ve pointed out quite a few times now, the relevant comparison, and the one I’ve used in my calculations is between the carbon price and business as usual. That comparison yields a reduction of 25 per cent, and an impact of 0.02 degrees using Roger’s sensitivity assumptions. So, it looks like agreement all round.

(H/T John Humphreys)

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  1. Hermit
    July 4th, 2012 at 11:41 | #1

    There’s no legit way barring severe recession that Australia can lose 159 Mt of emissions between 2000 and 2020. We can of course fudge the figures by spending billions on foreign offsets, a slight problem being that the EU has enough doubts about them they may be disallowed in the third phase of their ETS.

    There are also impediments any carbon pricing bandwagon. Some of the schemes are intranational like BC within Canada and California within the US. Laws preventing restraint of interstate trade will stop regions imposing carbon tariffs on goods and energy flows from other parts of their host nations. An extreme weather scare such as now in the US could change attitudes nationally. Here El Nino is tipped to return in a few months. The absolute or relative oil price has to escalate within 5 years with the start of the global oil production downslope. That could drag coal use with it. A lot could happen even without artificial carbon pricing.

  2. John Quiggin
    July 4th, 2012 at 12:16 | #2

    To repeat a point I’ve made many time now, this is relative to business as usual projections of a 20 per cent increase. So, in the electricity context, we would need no net additions of fossil fuel power, along with additional retirements of coal-fired power equal to 5 per cent of total emissions. There is nothing infeasible about this.

    The big problem is that, so far, the government has been unwilling to bite the bullet on petrol prices and transport emissions more generally. But, we could easily achieve the required reductions if we adopted the right policies.

  3. TerjeP
    July 4th, 2012 at 13:55 | #3

    So when will you get an interview on the Bolt Report?

  4. Hermit
    July 4th, 2012 at 14:34 | #4

    However they are defined Australia’s emissions targets are woeful and it will be embarrassing if we pat ourselves on the back for weak results. Our 2000 emissions were 551 Mt net CO2e and last year they were 546 Mt. To cut a mere 5% in absolute terms 2000-2020 is a bit pathetic, not excused by saying they would otherwise have increased under assumed growth. I think a better approach would be to aim for a per capita target, say 10t per person year. Thus 22m X 10t = 220 Mt. Now that’s an emissions cut as Crocodile Dundee might say.

    A few old small coal plants may retire soon (eg Playford, Munmorah, Brix) but that would have happened with or without CT. Hazelwood is still with us, perhaps for another 20 years. Subsidised renewables and gas will be expensive, which could be why governments are throwing money at the big power users like aluminium. Seems the rest of us with already slim waistlines have to do the belt tightening. In my opinion we must have several nukes in the mix.

  5. July 4th, 2012 at 14:48 | #5

    John, I’d like to see your underlying calculations re: “That gives a reduction in equilibrium temperatures of about 0.02 degrees” by 2100 from an annual reduction of 0.00024 degrees. This is a very problematic claim and will require far more (scientific) justification than a short para without clear details.

    Second, you suggest that “reducing warming by 1 degree yields a benefit …”.

    Has your assessment of costs/benefits considered the enormously enhanced increase in plant productivity through increased CO2 and various other benefits to human and animal life? In my view (based on various readings) increased CO2 seems to provide net benefits, not net costs. Pl. see some preliminary analysis at: http://sabhlokcity.com/2010/04/the-great-boon-of-co2/.

    I’d like to see a comprehensive cost benefit analysis on this subject. Haven’t yet seen any.

  6. Bring back Birdy at Catallaxy
    July 4th, 2012 at 15:05 | #6

    Sanjeev, the thing is that CO2 concentrations aren’t the only variable affecting plant productivity. Increased temperature, changes in rainfall, soil moisture, length of growing seasons, impacts of extreme weather events, changes in numbers and types of pests, etc., also need to be factored in. See the relevant section in:

    http://www.csiro.au/Outcomes/Climate/Reducing-GHG/Climate-change-impacts-on-Australia-and-benefits-of-early-action-to-reduce-global-greenhouse-gas-emissions.aspx

  7. Savvas Tzionis
    July 4th, 2012 at 15:10 | #7

    But wait, there’s more!

    Go to his website where he addresses you directly!!!

    http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/quiggin_overheated/

  8. rog
    July 4th, 2012 at 15:48 | #8

    @Bring back Birdy at Catallaxy On its own increased CO2 can be argued as a positive for plant growth however when considered as one of many elements within a changed environment the nett result is plant stress, which is a negative.

  9. July 4th, 2012 at 16:22 | #9

    I’m not sure why you are using reductions from BAU, when a stabilisation scenario requires real reductions. If the world needs to reduce emissions by 50%, that means Australia (as a developed country) would need to reduce emissions by about 80-90% (according to Garnaut) from current levels… not from BAU.

    Since BAU will see emissions more than double over the next few decades, if you reduce emissions by 50% from BAU then we will actually see an *increase* in emissions.

  10. Sam
    July 4th, 2012 at 16:27 | #10
  11. Mel
    July 4th, 2012 at 16:42 | #11

    I note that the right-libertarians at C@tallaxy are not too happy about the carbon price. Here is a random selection of death threats from regular commenters on the 29 June 2012 open thread:

    “Infidel Tiger: “I think executing Greens by electric chair using electricity from a brown coal fueled power plant is a wondrous idea that will inspire kids to greatness and herald in a new age of enlightenment.” 29 June 2012 at 6:15pm

    John Mc: “Doesn’t have the visual appeal of burning them alive on a tyre fire doused in diesel.” 29 June 2012 at 6:31pm

    Mk50 of Brisbane “Burning even greenfilth alive is too…. Druidic.

    Crucifixion, however, takes much longer (popcorn franchise opportunity there and TAB betting/workplace sweepstakes on how long they last) and was approved by the Romans. What’s not to like?” 29 Jun 12 at 7:30 pm”

    Some of the libertarians are also calling for a ban on Green parties.

  12. Ken Fabian
    July 4th, 2012 at 17:52 | #12

    @John Humphreys
    One could almost think you were advocating stronger action on emissions! But it doesn’t take much reading of what you have to say elsewhere to know that you are a staunch advocate for doing as little as possible. Do you want Australia to fail on climate and emissions and for Australia’s denial of responsibility to be cause for other nations to embrace failure as well?

    Until the Right in Australia drop the BS climate science denial along with their grovelling subservience to the dominant voices of Commerce and Industry – that choose to treat the costs of avoiding catastrophic climate change as costs to assiduously be avoided – all Government policy will be weak and compromised. For elected representatives with all that science based advice at their disposal, choosing to dismiss and ignore it on behalf of vested interests is a profound betrayal of the trust the wider community ought to be able to count on.

  13. July 4th, 2012 at 19:12 | #13

    @Ken — my preference is for the government to do nothing, and for people who care passionately about climate change to divert their resources into an “action fund” instead of political lobbying. That fund could be used to buy alternative energy and re-sell that energy onto the grid… thereby creating an implicit “carbon price” through community action.

    http://www.smh.com.au/opinion/politics/activists-should-stop-talking-about-global-warming-and-start-acting-20091222-lbpp.html

    If you insist that the government has to do something, I think they should introduce conditional legislation that says Australia will have a carbon tax (not an ETS, matched with other tax cuts) if and only if there is a global binding deal. We all know that there needs to be a global binding deal for mitigation to work… and so the real game should be trying to encourage such a deal. Conditional legislation increases the incentive for other nations to join up to such a binding deal.

    If you have noticed that the political system inevitably gives poor policy, then why do you continue to advocate for more political involvement? Your choices seem to be either (1) accept that political solutions will be very imperfect, and then do a benefit-cost analysis based on that reality; (2) dream about a world with nice politicians and fairies; or (3) suspend democracy and impose a wise dictator like Comrade Clive Hamilton who will lead us to the promised land.

    I have always thought we need to accept (1) and that has led me to be very skeptical about whether government policy will produce a net benefit. Note that even the Garnaut report showed that our ETS would fail a benefit cost analysis… and they assumed a 100% chance of a strong global binding deal.

  14. rog
    July 4th, 2012 at 19:38 | #14

    @John Humphreys Your first pref reads like a wonderful solution however in its absence what do you suggest to meet the objective?

  15. rog
    July 4th, 2012 at 19:42 | #15

    It doesn’t help that libertarians are in furious disagreement about everything incl global warming

  16. John Quiggin
    July 4th, 2012 at 19:45 | #16

    @Sanjeev Sabhlok
    If you multiply 0.00024 by 100 you get 0.024. You can fiddle with that in various ways, but it’s not going to change much.

    I’ve dealt with CO2 fertilization and related issues here, though you really want to check the IPCC reports (that is, assuming you want actual answers and not reaffirmations of rightwing tribal prejudices).

  17. John Quiggin
    July 4th, 2012 at 19:58 | #17

    @Sam

    I submitted a comment to Bolt’s blog, pointing out that John Humphreys, whom he cites had already noted that his calculation was for only one year, and linking back to the full calculation here. Sadly, it appears that due to an error in his moderation procedure, the comment was not published. I’ll print it here.

  18. Mel
    July 4th, 2012 at 20:25 | #18

    @John Humphreys could you please present the empirical evidence that demonstrates your plan is likely to be more efficacious than the alternatives. Since you’ve had this plan for at least 3 years, I’m assuming you’ve had time to accumulate an impressive body of supporting material.

  19. Hermit
    July 4th, 2012 at 21:56 | #19

    I think this needs to be stated bluntly
    - a 5% absolute emissions cut over 20 years is like a joke
    - helping coal exports to double is mind boggling hypocrisy.

  20. July 5th, 2012 at 02:54 | #20

    @rog — my second paragraph above answers your question — conditional legislation.

    @Mel — perhaps you and I approach public policy in a different way. I believe that the government should only act when the benefits of their actions exceed the costs of their actions. I do not believe that the government should act just because there is a loud interest group demanding action, irrespective of the evidence. The approach I suggest above is not a public policy — it comes from civil society and so can go ahead whenever people feel strongly about the issue.

  21. rog
    July 5th, 2012 at 03:33 | #21

    @John Humphreys Not sure that conditional legislation is constitutional but leaving aside the legal aspect, the notion that a sovereign nation such as Australia is not able to act on its own emissions without seeking agreement from every other sovereign nation seems weak.

  22. July 5th, 2012 at 04:00 | #22

    Seeming weak is a strange criteria to be worried about. We all know that only a binding global deal with have any chance of achieving noticeable mitigation. So the main game should be how we can increase the incentive for there to be a global binding deal.

    If we say “we will act irrespective of a global binding deal” — how does that help?

    In contrast, if we say “we will act if you all act” then we are creating a clear incentive for other nations to act. We will be improving the incentives for there to be a global binding deal. This also means that if there is a global deal, then we will play our part… but if there is no global deal, then we haven’t wasted our time & money.

  23. rog
    July 5th, 2012 at 04:46 | #23

    Anyway, despite the rather obvious attempts to frustrate a process already underway, according to this advisor Australia has it right

    The price being imposed in Australia is the decision of the government and has been reached on the basis of some objective that it wants to meet. Whether or not this is “right” in terms of emission reductions remains to be seen, but the argument that Australia is “out of line” with the rest of the world is questionable at best. The rest of the world is all over the place, with carbon prices ranging from just a few dollars to over one hundred Australian dollars. On that basis, the Australian price is probably about “right” in terms of starting the system, giving it some grit and getting everybody going. Full cap-and-trade isn’t far off with allowance auctions due to begin as early as 2014, after which a floating price will prevail.

    http://blogs.shell.com/climatechange/2012/06/australia23/

  24. Bring back Birdy at Catallaxy
    July 5th, 2012 at 07:04 | #24

    Mel @11, thank you for providing even further evidence of the absurdity and hypocrisy of Cataplexy’s ban on comments by Graeme Bird. Birdy, it is true, has advocated violence as a strategy against leftists and greens, but he has qualified this by advocating restraint to avoid grievous bodily harm, and he has done so under his real name, unlike the cowards you cite.

  25. Fran Barlow
    July 5th, 2012 at 08:25 | #25

    Just so @Bring back Birdy at Catallaxy … and although many see the timeline of 100 years for CO2 as some sort of guide to the negative effects, as Archer, D et al (2009) point out, the “long tail” of CO2 perturbation will endure (absent some astonishing piece of geo-engineering by humans in the interim) for between some tens of thousands of years and hundreds of thousands of years. i.e. somewhere between 6 and 14+ times the length of what might likely be called the span of human civilisation.

    Atmospheric Lifetime of Fossil Fuel Carbon Dioxide

  26. Ken Fabian
    July 5th, 2012 at 09:45 | #26

    John Humphreys – what you are proposing looks guaranteed to fail. What you propose will weaken what international agreement there is to act and I think that is precisely the outcome you want. A straight reading of what the consequences of global failure are likely to be suggests that it’s not something to be embraced enthusiastically yet you do. By dismissing and ignoring – or rejecting – the science on climate? The same interests that oppose action and have the Liberals and Nationals on their side in Australia oppose action internationally as much – or more – than they oppose action nationally. By insisting Australia should do nothing – this will lead directly to all-at-once binding international commitments how?

  27. Bring back Birdy at Catallaxy
    July 5th, 2012 at 11:03 | #27

    Mel @11, thank you for providing even further evidence of the absurdity and hypocrisy of Cataplexy’s ban on comments by Birdy. Birdy, it is true, has advocated violence as a strategy against leftists and greens, but he has qualified this by advocating restraint to avoid grievous bodily harm, and he has done so under his real name, unlike the cowards you cite.

  28. July 5th, 2012 at 12:41 | #28

    The problem with conditional action is that it fails the Kantian test, “What would happen if everybody did it?” Specifically, what would happen if every nation made their adherence conditional on everybody else doing it? We then have a standard “if the other two sign first, I’ll add my signature” situation, leading to inaction. Which I presume is that adherents of this scheme want.

  29. Fran Barlow
    July 5th, 2012 at 12:53 | #29

    @ChrisB

    We then have a standard “if the other two sign first, I’ll add my signature” situation, leading to inaction. Which I presume is that adherents of this scheme want.

    Precisely ChrisB. Indeed, the disinclination of others becomes the most compelling argument for inaction.

    The idea of “everyone agreeing” sounds appealing and isn’t obviously semantically paradoxical but there is no such entity as “everyone”. Everyone is simply a way of describing all of the individual decisions in aggregate, but of course if nobody can agree until everyone does, then the only possible decision is for everyone to decline.

  30. Fran Barlow
    July 5th, 2012 at 12:58 | #30

    One might add too that the “everyone must agree” standard effectively hands a power of veto to anyone in the group. If only one is recalcitrant, all must be. The Security Council works that way and it is a recipe for deadlock, though at least in that case, where resolutions leading to war might be taken by one power bloc one can see why this is warranted.

    A jury often functions that way, because we want the standard for conviction of a crime to be “beyond reasonable doubt” and are prepared to err on the side of caution. But it’s no way to conduct public policy. Here, a consensus ought to do.

  31. July 5th, 2012 at 13:24 | #31

    John thanks for your response. Here’s my detailed response:
    http://sabhlokcity.com/2012/07/john-quiggin-i-suggest-you-review-your-estimate-of-impact-of-australian-co2-reductions/.

    I’ll touch upon the cost-benefit issue separately.

  32. Troy Prideaux
    July 5th, 2012 at 14:06 | #32

    @Sanjeev Sabhlok
    I think it’s worth referencing in your response that Plimer is on the boards of Roy Hill Holdings and Queensland coal Investments courtesy of Australia’s most powerful and soon to be most influential climate skeptic.

  33. Mel
    July 5th, 2012 at 15:01 | #33

    Plimer has been thoroughly debunked and this is both well established and widely known. Anyone referencing Plimer is engaging in deceptive conduct..

  34. John Quiggin
    July 5th, 2012 at 15:34 | #34

    What Mel said

  35. Freelander
    July 5th, 2012 at 16:28 | #35

    I await the analysis proving that CO2 emissions are increased by a carbon tax. That we have not seen it can only be further proof of the power of the global warming hoax conspirators to supress research.

  36. Fran Barlow
    July 5th, 2012 at 16:48 | #36

    @Mel

    Very much so. If Plimer said the sun was bound to rise tomorrow, I’d seek a second opinion from someone better informed.

  37. July 5th, 2012 at 17:34 | #37

    Sanjeev’s confusion about CO2 lifetime is addressed here:

    http://www.skepticalscience.com/co2-residence-time.htm

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