Home > Environment > The carbon price: three months on

The carbon price: three months on

October 29th, 2012

The UQ Risk and Sustainable Management Group, which I lead, held a small workshop last week, looking at early experience with the carbon price. We plan to produce an edited volume from it, to be published early next year. A few items of information that were new(ish) to me;

* There’s been a lot of work going on to tighten up estimates of climate sensitivity (conventionally measured as the equilibrium response to a doubling of CO2). The news on this front has been moderately good. The worst case catastrophes are less likely and stabilization at 475 ppm would give a 90 per cent chance of holding the global temperature increase to 2C or less. This is excellent news, since, as I’ve argued previously, it will be a lot easier to get to 475 than to the internationally agreed target of 450. We’re adding about 2ppm/year, so the extra 25ppm more or less offsets the decade of delay we’ve just experienced.

* Just by selecting the right breeding stock, we might be able to reduce methane emissions (belches and farts) from ruminants by around 30 per cent

* Soil carbon storage, much beloved of Opposition climate spokesman Greg Hunt and others, is (almost) a complete furphy

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  1. BilB
    November 2nd, 2012 at 16:01 | #1

    A quote from Greece:

    “Vaxevanis said the trial was not about him, but “all about a corrupt oligarchy of businessmen, politicians and controlled media that have long acted against the interest of the nation and its people.””

    Says it all. We are blinded, as Ootz suggests, by infotainment and are oblivious to the many ways that we are subtly managed to service the interests of the 1%.

  2. MartinK
    November 2nd, 2012 at 18:35 | #2

    Re Bill Burrows #40,

    I still stand by the main point I was trying to make – that, on the sort of issues you and John D raise, I am confident that the relevant scientists, academics, generally government depts, NGOs and the like will have taken those issues into account and come to the right conclusion. You and John D have (and others too) brought up a number of facts but they are mostly irrelavent and neither of you make any case for where the experts have it wrong.

    So getting to some specific’s of your reply, the global warming potential of 25 is over a hundred years but it 70 over 20 years. Howvere, it is also a weight for weight comparison (see http://en.wikipedia.org/wiki/Atmospheric_methane) and it takes 3t C02 to produce 1t NH4. So for the purposes of considering the CO2 consumed it’s warming potential needs to be reduced to a third which is still over 20 (and actually a lot higher, as we need to consider the current potential of 1t of NH4 in the atmosphere not the potential over a period of 1t of released NH4). So the CO2 consummed is not significant. As for only 20% of vegetation being consummed, the rest will break down and realease the CO2 again. That makes it irrelevant. Also very liitle of the carbon in consummed pasture will be converted to NH4 but that is irrelevant too. (You actually seem to be assuming that the carbon in an pasure not consummed will automatically be stored in the soil, that is very wrong).

    Regarding John D’s comment about NH4 breaking down, having had a look at the the technical summary in the IPCC Fourth Assessment Report (find it at http://www.ipcc.ch) it seems that the NH4 cycle is not well understood but they have certainly taken into account that there is a cycle. And they seem to beleive that a reduction in NH4 production will give rise to a reduction in NH4 levels which is what matters.

    I really have no idea of the national herd size so I am no doubt wrong on that, though it surprises me considerring the increase in worldwide meat consumption. Perhaps we need to look at lonerg time frame. That also knocks of my arguments about methane but I stand by the above paragraph on that which is what really matters.

    On your paragraph about sinks and sources and flows, you still have not made it clear why any of this matters. The same for why we need to manage carbon flow. In order to claim carbon credits, all that is needed is a measurement of total carbon in vegetation and in the soil and compare that to the previous year. Just measure it at 2 points in time no need to worry about when and where it “flowed”. Such measurent is not necesarrilly easy but I think possible, and that also addresses your concerns about a “continuum”. I don’t think measurements would need to be highly accurate and would likely be done as an audit. And this is all not necessary if we can’t actually sequester much carbon in the soil as John Quiggin claims.

    You point about gaming the system is a completely new point not directly related to whether carbon accouting is dodgey, you wre not suggesting that in your first post. Even then it is not clear that just beacuse you can’t measure something accurately that it is rife for gaming. In fact, unless the goverment gives unchecked reign to independant auditors I can’t see any easy way to gane the system.

  3. MartinK
    November 2nd, 2012 at 18:39 | #3

    And please excuse my typos again. I really do proof read my stuff. (I should also point out that typos do not make my reasonign wrong. )

  4. Ootz
    November 2nd, 2012 at 23:07 | #4

    Tim Macknay :

    That is really what it has amounted to, old media is holding the planet and its inhabitant[s] to ransom.

    This strikes me as being just a tad hyperbolic.

    I am in good company Tim … CARBON TAX = ECONOMIC RUIN …. Cobra strikes … python squeezes .. octopus tangle …. rabbtos blood oaths … wombat farts …. the mining tax (any TAX) will rooon us …

  5. TerjeP
    November 3rd, 2012 at 07:01 | #5

    Hermit :
    @TerjeP
    The trouble with a CO2 tax is that brown coal is so absurdly cheap and there is so much of it that gas can’t compete. Brown coal is priced about $6/t for 10 GJ thermal value or 60c/GJ. East Australian gas is about $4.50 a GJ at moment (Link) but when Gladstone Qld starts selling LNG to Japan that price of eastern piped gas should double to $10 or more.
    Without doing the tricky calcs for electricity conversion $23 is just not enough. Of course a quantitative cap of x million tonnes of CO2 p.a. rather than a fixed tax would see brown coal struggle. How it would affect gas demand would require modelling. I reckon gas will be effectively used up by mid century but we’ll still have coal under suburbs. That’s one for Gen Z to solve let’s hope those pesky cyclones don’t get worse.

    What this says is that the carbon costs isn’t the only cost that will determine decisions. Nor should it be. If brown coal is cheap and so a carbon tax causes somebody to switch from black coal to gas instead of somebody else switching from brown coal to gas then job done and job done cheaply. The “job” being the reduction of some quantum of carbon emissions.

  6. November 3rd, 2012 at 10:46 | #6

    Hermit, the carbon price has increased the cost of brown coal by $84.40 for every tonne of carbon it contains, or very roughly, $60 per per 10 gigajoules of thermal energy, so it no longer costs most coal plants just a few dollars a tonne. Since the first of July the Yallourn brown coal plant has been shut down, the Playford B brown coal plant has been shut down, and the Northern brown coal plant has been switched to seasonal load following. The carbon price was a very important factor in these changes, but was not the only contributor. Demand for grid electricity is considerably below where it was expected to be thanks to a combination of improved efficiency, rooftop solar, higher retail electricity prices, and comfortable weather.

    before the first of July the marginal cost of brown coal was only a few dollars a tonne for most generators, but now for brown coal with a 60% carbon content the marginal cost is about

    Before the first of July the marginal cost of most brown coal used in Australia was only a few dollars a tonne. Now it is at leat $40 a tonne or over or over $85 a tonne for each tonne of carbon it contains. This is large difference.

  7. November 3rd, 2012 at 10:48 | #7

    Sorry, once again, due to rewriting, I have left two paragraphs at the bottom of my last comment that I meant to delete. I appologize for the mess.

  8. Bill Burrows
    November 3rd, 2012 at 13:59 | #8

    @MartinK
    Well Martin, I’m not too sure where to start or where to finish in replying to your comments. But first let me not disabuse you of your obvious faith in “government departments” and experts in “academia, NGO’s and the like”. If it helps you get a good night’s rest, far be it from me to challenge that. However it is only fair that you know where I come from too – although I do this reluctantly as I abhor arguments based ‘on authority’, especially on blog sites. Nevertheless I believe my 40 years of biological research, related tertiary qualifications and lifetime public service experience are pertinent to my comments. Also for many years I led a project team within the CRC for Greenhouse Accounting. It focussed on determining net sinks in land based systems.

    With respect to Global Warming Potentials all I was doing was clarifying your initial statement. Your latest comments have now addressed this. I am not privy to John Quiggin’s workshop discussions, nor what are the bases of his claims that carbon storage is (almost) a furphy. But could I just observe that his conclusions would come as a complete surprise (and be strongly challenged) by the organic farming industry, the huge area of crop land managed as “no-till” agriculture and the large numbers of consultancies pushing rotational grazing systems in Australia. Of course if his concern was based on acceptance of the difficulties in accounting for changes in soil organic matter then I would agree with him. [By the way, this latter is a sampling problem – not a technique one. This comes about because soil organic C is not evenly distributed within the soil, and we are essentially ‘blind’ as to its location. Yet measuring changes in soil C are an essential component of any dollars paid for carbon offsets or credits claimed by ‘C farmers’, or from permissible forestry activities].

    In the meta-analysis carried out by Conant et al. (2001) Ecological Applications 11: 343-355 improved management increased soil organic C in about 75% of studies. Grazing pastures at 20% utilisation leads to build up in soil organic C, and if I was being charged for methane emissions from my livestock I would want a discount for the former. [This is why it is important to know where the sinks, sources and fluxes are Martin. If you want an analogy, think of your electricity provider charging you for electricity consumed, but not paying you for your PV electricity when you export it back to the grid]. One estimate made by Ash et al. (1996) is that more sustainable grazing over northern Australia could sequester up to 315 Mt C in the 0-10cm soil layer alone, over an extended period. Perennial grass cover or basal area (x) of pastures improves with lighter stocking. One relationship is soil organic C (%), y = 0.22 x + 0.63 (R2 = 0.81). The actual amount will depend on the bulk density of the soil in question. Depth of soil to sample depends on the vegetation it supports and whether it is “leaky” or not.

    Money changes hands when the government or companies buy offsets or get charged for emissions Martin. So I hope it is your taxes or business and not mine that pays for it where, as you say, “I don’t think measurements would need to be highly accurate”. Your fuel supplier must love having a customer like you. Me, I want to see that the gauges are regularly calibrated and/or the scales checked on a routine basis. Sadly I have a suspicious mind I know, and I guess I would be even more paranoid if, for example, I was buying offsets from Nigeria and the like.

    Finally, although I claim to know of at least 25 ways to scam land based carbon accounts I’m not going to detail them here. Some people might just want to test them out in a real market, and we don’t want that. But, given the previous discussion, I guess there is no harm in alluding to a couple of ways of boosting sinks on grazing land. First, whatever paddock you are going to put up for C monitoring make sure it has been heavily stocked for several years beforehand (the baseline measurement). Second, lightly stock it once monitoring commences. This will boost soil organic C, while at the same time reducing methane emissions over the baseline figure. Apply your results to the remainder of the landholding, or apply them to the land system, region, State or country if you are estimating net emissions for the latter. [I would not do it, but it is an example of how we could manipulate the 'results' at any particular level if you like].

  9. murph the surf.
    November 3rd, 2012 at 15:36 | #9

    @Ikonoclast
    Tax all animal products? Duck meat? pork ? Didn’t you see the stories about the major pork producer who is earning income using methane to produce energy?Tax what then?
    Tax for fish consumption?
    Let’s say you mean ruminants- then will producers get credits for careful and C soil building use of their pastures especially in organic systems?
    The C cycle needs to be taken into account throughout the cycle and excess taxed – no doubts about that but simplistic solutions will be gamed.
    At a recent AFI talk in Armidale they stated clearly that they had found no way to make a positive return either financially or through the current protocols for Soil C storage. Howver they were very keen to encourage blue gum forestry and it would be quite rewarding to set one up.
    Other than that Bill Burrows is someone to read and appreciate his comments . Full of info and balance- well done!

  10. November 5th, 2012 at 10:05 | #10

    On reducing livestock methane emissions through selective breeding, generally speaking, a digestive system that produces less methane is a more efficient digestive system, so this could be one of the many emission reduction stratagies that pays for itself.

  11. Bill Burrows
    November 5th, 2012 at 12:45 | #11

    @Ronald Brak

    What I find most intriguing is that we are relying so much on the CFI to drive abatement, mostly through reduced emissions from livestock and improved savanna fire management practices. See http://www.climatechange.gov.au/~/media/government/aep/AEP-20121022-Agriculture.pdf .

    As I have earlier suggested I have more faith in improved feed quality, rather than selective breeding, as the route to follow to reduce enteric emissions. But in any case how do you express any such improvement at the farm gate? How do you ‘reward’ or ‘punish’ the farmer for his particular outcome? You could only do this equitably by measuring net emissions on each livestock holding. Who is going to do this for c. 26 M head of cattle and c. 80 M sheep? And as I previously noted you could not ignore the pasture and underlying soil organic C content on which the animals grazed. To do so would be analogous to judging someone’s financial position solely on the basis of expenditure, while ignoring their income. Surely we are not that silly – or do we want our “peasants” to be revolting?

    While we are on aspects of the CFI could I respectfully request that people who want to drive the CFI through reduced savanna burning first take some time off to do some reading? Here is a suggested list: Stephen J. Pyne (1991) “Burning Bush: A Fire History of Australia”; Tim Flannery (1994) “the Future Eaters: An ecological history of the Australiasian Lands & People”; Darrell Lewis (2002) “Slower than the Eye Can See: Environmental change in Northern Australia’s cattle-lands” and Bill Gammage (2011) “The Biggest Estate on Earth: How Aborigines Made Australia”. Ask your local library to obtain them on loan, if you have not read them already. All good reads I can assure you.

    The only conclusion one can reach from these books and their reference citations is that fire keeps the Australian bush open. By corollary, reducing fire (to reduce GHG emissions), especially in the northern savannas, will encourage the shrubs and trees to thicken up. This will inevitably reduce livestock production, as well as exposing the new woodlands to ‘holocaust’ fires, as already occur in southern Australia from time to time. Darrell Lewis’s book provides a good photographic record of this process. And the monitoring of stable soil carbon isotope signatures provides irrefutable proof of the switch from open savanna to closed woodlands e.g. Krull, E. S. et al. (2005). Recent vegetation changes in central Queensland, Australia: Evidence from delta13C and 14C analyses of soil organic matter. Geoderma 126, 241-259. It seems to me that as far as agriculture is concerned, too much of what we want to do to lower GHG emissions, involves “not seeing the wood for the trees”.

  12. November 5th, 2012 at 19:26 | #12

    Bill, no, you can totally ignore the pasture and underlying soil organic C content on which the animals grazed. It is completely possible to assume that carbon in pasture/soil is constant and just focus on reducing methane emissions. The neat thing is, that while precision is nice, we don’t need precision to achieve our goal of reducing greenhouse gas emissions. For example, instead of a $23 a tonne price on CO2 we could have just put a 2 cent tax on coal and a one cent tax on gas per kilowatt-hour of electricity produced from them. This would be pretty blunt and woud not be as efficient, but it would still do most of the work of our current $23 a tonne carbon price. When it comes to methane from livestock, if it’s too expensive to be precise, or not possible to be precise, we can use blunter approaches and still get the job done.

  13. Bill Burrows
    November 5th, 2012 at 22:26 | #13

    @Ronald Brak

    Wow Ronald! Surely to be consistent it would be equally logical to likewise assume methane emissions were constant, and just focus on ‘crediting’ the build up or decline of carbon in pasture/soil? But this just reinforces my initial point i.e. that accounting for one “box” while ignoring all interconnected “boxes” (carbon pools & flows) over a grazed paddock lends the system for rorting and scamming. Frankly, you would be on stronger grounds if you did put a tax on coal or gas as you suggest, and ignored the biosphere. At least then you would be targeting fossil fuels and there would be little argument as to the weight or volume consumed, as we have rigorous and reliable systems of weights and measures in place for gauging these. Under your proposal who would sign off (audit) the alleged methane emissions from a landholder’s livestock? On a particular property emissions could vary from 100-1300 g CH4 per kg of live-weight gain, depending on the class of stock, paddock, stocking rate, feeding regime and season, inter alia. Given this wide range of potential emissions it is incredible that you believe that you can “get the job done” without any concern for the accuracy and precision of methane measurement. ———- I shudder to think what your “blunter approach” would be!

  14. November 6th, 2012 at 09:42 | #14

    Bill, read back through what I wrote, find where you’ve misunderstood me and then acknowledge the misunderstanding. (Hint: Look at what you wrote about what I believe.)

  15. Bill Burrows
    November 6th, 2012 at 17:15 | #15

    @Ronald Brak

    Ronald, you are being a bit too cryptic for me. I would welcome further enlightenment. Meanwhile I will focus on the final sentence of our respective ‘last’ posts, as in my case this is where I wrote about what “you believe” and you hinted that is where you think I misunderstood you. You suggested there were “blunter approaches” to “get the job done” if it was “too expensive to be precise, or not possible to be precise” about methane (emissions?) from livestock. I must admit that in my own mind I conflated this with your previous comment that “we don’t need precision to achieve our goal of reducing greenhouse gas emissions”. And not being sure whether you appreciated the difference between accuracy and precision I spelt out that both measures were important in methane assessment. Please disabuse me if I have wrongly implied that you appear to have a somewhat cavalier attitude to this problem confronting methane measurement – especially when estimating levels of that gas emanating from grazing ruminants on Australian pastures. The potential errors are huge, as indicated by the range of possible values which I detailed. As a scientist I have measured biological matter all of my professional life. If I can’t do this with acceptable accuracy and precision, so that my peers are confident of my statement of amounts, trends and error then I refrain from generalisations. Rightly or wrongly your statements appear to place yourself in that camp where “near enough is good enough” or in bush vernacular “near enough for a sheep station”. My apologies if that is a complete misreading. Finally, if near enough is good enough for you (on the subject in question), I am happy for us to leave this discussion and go our separate ways. Cheers!

  16. November 6th, 2012 at 19:26 | #16

    Sorry if I’m being too cryptic, Bill. You appeared to think that I was without concern for the accuracy or precision of methane measurement when my point was that if the cost of being accurate is too high, or not simply possible, we can still take action to reduce greenhouse gas emissions. Personally, I would love to know exactly what is passing in and out of each cow in Australia, but for practical purposes we are forced to assume that at least some cows are spherical. I could give some examples of simple measures to reduce methane emissions that don’t rely on a great deal of accuracy if you like, but I’d probably just embarrass myself as this is the blog of an economist and they specialize at this sort of thing where as my ideas will be more or less off the top of my head.

  17. rog
    November 7th, 2012 at 06:08 | #17

    PriceWaterhouseCoopers have a new report out saying that things are worse not better;

    http://www.pwc.com/en_GX/gx/low-carbon-economy-index/assets/pwc-low-carbon-economy-index-2012.pdf

  18. rog
    November 7th, 2012 at 09:34 | #18

    I had heard that next IPCC report was going to be conservative but apparently not, it is to be shocking http://m.smh.com.au/environment/climate-change/former-un-official-says-climate-report-will-shock-nations-into-action-20121106-28w5c.html

  19. Jim Rose
    November 7th, 2012 at 09:51 | #19

    @rog The Stern report tried that approach and shot itself in the foot.

  20. rog
    November 7th, 2012 at 12:47 | #20

    @Jim Rose What approach are you referring to?

  21. Jim Rose
    November 7th, 2012 at 13:14 | #21

    @rog shock people with scary numbers

  22. rog
    November 7th, 2012 at 13:47 | #22

    @Jim Rose Are you suggesting that numbers be altered to be less “scary”?

    This would be consistent with the conservative approach of making the facts fit the story.

  23. Jim Rose
    November 7th, 2012 at 14:10 | #23

    @rog the Stern Review produced numbers on the cost of global warming that were so far outside the range of the previous published literature.

    In a tribute to yes minister, these much larger numbers in the report still broadly confirmed existing UK policy targets.

  24. BilB
    November 7th, 2012 at 14:57 | #24

    Well, Jim Rose, I think that I can now say …out loud…that Mitt Romney is a Climate Change casualty. I’m prepared to predict that the missing topic of the re-election campaign will now become the primary objective of Obama’s second term spliced into an economic rejuvenation built on sustainable technologies.

    We’ll see.

  25. Ootz
    November 7th, 2012 at 14:58 | #25

    “Too late for two degrees?”: asks PricewaterhouseCoopers.

    Quote
    “The PwC Low Carbon Economy Index evaluates the rate of decarbonisation of the global economy that is needed to limit warming to 2°C. This is based on a carbon budget that would stabilise atmospheric carbon dioxide concentrations at 450 ppm and give a 50% probability of limiting warming to 2°C. This report shows that global carbon intensity decreased between 2000 and 2011 by around 0.8% a year. In 2011, carbon intensity decreased by just 0.7%.

    The global economy now needs to cut carbon intensity by 5.1% every year from now to 2050 to achieve this carbon budget. This required rate of decarbonisation has not been seen even in a single year since the mid-20th century when these records began. Keeping to the 2°C carbon budget will require unprecedented and sustained reductions over four decades.

    Governments’ ambitions to limit warming to 2°C appear highly unrealistic.”

    http://www.pwc.com/en_GX/gx/low-carbon-economy-index/assets/pwc-low-carbon-economy-index-2012.pdf

    Time to call a spade a spade.

  26. Jim Rose
    November 7th, 2012 at 15:10 | #26

    @BilB Obama did not fight for cap and trade even when he could have won.

    there were 5 republican senators who would have voted for cap and trade in April 2010: Lindsey Graham, Susan Collins, Olympia Snowe, Scott Brown, and George LeMieux.

    Obama could have fought harder to get a Bill passed by the House though the Senate but he did not. He lacked the political skills to build the coalitions even within his own party to deliver.

  27. rog
    November 7th, 2012 at 16:19 | #27

    @Jim Rose Those large numbers are still there and still standing, 2% GDP.

    You still deny that insurance is taking a hit;

    “The Insurance Council of Australia reports that weather related incidents accounted for 32% of all general insurance claims in 2007, as compared to 12.3% in 2000. The trend in weather related claims pose an escalating risk for the general insurance industry and community as a whole, given the expectations of increased severity of weather events.”

  28. Jim Rose
    November 7th, 2012 at 16:33 | #28

    @rog same thing is happening for hurricane insurers. the value of beach front property and property values in general are rising fast despite the threat on rising sea levels.

  29. Newtownian
    November 7th, 2012 at 16:42 | #29

    @Jim Rose

    Re your scary numbers concerns – Just thought you’d like to know that Price Waterhouse Coopers have joined the great global greeny science conspiracy.

    http://www.guardian.co.uk/environment/2012/nov/05/climate-change-carbon-emissions

    Maybe you could enlighten us further on which evil forces are involved that we cant guess at. I’d most like to hear your views on the possible involvement of the illuminati, Bildebergs, Knights Templar and Emperor Xenu – Swiss Re of course is a given.

  30. rog
    November 8th, 2012 at 04:30 | #30

    Annual Geological Society conference has some interesting research relevant in that they are seeing sea level rises in the higher not lower bands.

    Also touches on moral and ethical issues.

    https://gsa.confex.com/gsa/2012AM/finalprogram/session_30943.htm

  31. rog
    November 8th, 2012 at 04:33 | #31

    @Jim Rose Which beachfront property has fast rising values? I put it to you that they have globally taken a hit. You need to get your facts sorted.

  32. Ootz
    November 8th, 2012 at 09:18 | #32

    Sandy’s havoc makes planning a priority – by Dr Andrew Ash, director of CSIRO’s Climate Adaptation Flagship

    “Since Hurricane Sandy, far more media attention and debate in Australia has focused on the causation argument than on the need to better adapt to these extreme weather events, particularly in our coastal cities and settlements where most of Australia’s population resides.
    This issue is especially important when you also consider Australia’s population growth and that more people are living in potentially vulnerable locations in settlements and cities on flood plains or near the coast.

    This urbanisation has led to a much greater investment in infrastructure in these areas.
    Consequently, the damage bill resulting from extreme weather events has been increasing rapidly in the last few decades in both economic and social terms.
    ….

    This trend is set to continue. In south-east Queensland the number of dwellings at risk from a 1-in-100 year storm tide is expected to nearly double by 2030 based on current development patterns.

    Most of this increased risk is from a rapidly growing population occupying vulnerable areas though a small amount of the increased exposure is due to the modest amount of sea-level-rise expected by 2030.”

    Read more: http://www.smh.com.au/environment/climate-change/sandys-havoc-makes-planning-a-priority-20121107-28y9g.html#ixzz2Ba5fGPP0

    In reality the over arching problem we are facing is far more complex than most are willing or even capable to acknowledge.

  33. alexinbogota
    November 10th, 2012 at 02:32 | #33

    This suggests climate sensitivity is actually higher than previously estimated – http://www.sciencemag.org/content/338/6108/792

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