Stern report previewed

With the major issues in the scientific debate over climate change having been resolved, attention has now turned to the economics of stabilising the climate and to the costs of doing nothing. Following the House of Lords economic committee inquiry last year, which spent most of its time promoting denialist attacks on climate science, and had little of value to say on the economic issues, the UK government commissioned Sir Nicholas Stern, former chief economist of the World Bank to look at the issue properly.

His report is about to be issued in the UK today, and previews have given the major conclusion – it’s much more costly to do nothing than to do something. According to the reports, the estimated cost of stabilising CO2 emissions is 1 per cent of GDP by 2050. This is at the low end of the range of estimates I’ve obtained from back-of-the-envelope exercises.

The striking feature of the reported findings relates to the potential costs of doing nothing, from 5 per cent to 20 per cent of GDP. I assume the latter estimate is based on worst-case scenarios, which have relatively low probability but are nonetheless important in working out an expected cost of doing nothing.

The credibility of the report has been enhanced by the first critical responses noted in the press. One is from Exxon shill Steven Milloy, who repeats the discredited attacks on climate science he’s been pushing for years, with a few new variations. He even drags out cosmic rays. The Guardian mentions his affiliation with the Cato Institute, apparently unaware that they dumped him a year ago over his unethical behavior.

Even more interesting is the reference to “a group of nine rightwing economists”, including the former chancellor Nigel Lawson, who criticised Stern’s discussion papers in January. What’s not noted here is that it was Lawson who launched the House of Lords exercise, rigged the process to ensure that most of the witnesses were denialists and drafted the carefully ambiguous discussion of the scientific issues which, on the one hand, correctly disclaimed any relevant expertise on the part of the committee, and on the other hand, dishonestly promoted the denialist view that the debate is still wide open. Now that this exercise has turned out to be a massive own goal for Lawson and his allies, they are naturally upset.

More tomorrow (or maybe later today) when the report is released. In the meantime, responses to Stern’s earlier discussion paper, including mine, are here

65 thoughts on “Stern report previewed

  1. Well I can’t wait for John Howard’s strong, unequivocal leadership on this issue.

    Oh who am I kidding.

  2. wilful he will probably use this to push nuc’s more.

    After all leadership from the right is argue, do nothing, then when forced one foot forward 10 back and apply the spin.

  3. “With the major issues in the scientific debate over climate change having been resolved”

    And which major issues would they be? It is an easy thing to say, but far harder to justify.

    It is noteworthy that Nicholas Stern has never held a job that was not funded by the taxpayer. So we should hardly be surprised when he concludes that global warming represents the “greatest and widest-ranging market failure ever seen” [quote is wikipedia].

    Those of us who generate the taxes funding the likes of Stern (and JQ) should therefore approach this report with great care.

  4. Hard to justify, yes, but justified none-the-less, according to 100% of the reputable experts. Nobody has made a substantive criticism of the basic theory and facts behind ACC since the satellite data was reconciled. Sure, you can argue over the model inputs and a whole bunch of small but important details, but no one with a clue thinks it’s fundamentally wrong. If you do think so, you’re a sad, deluded, anti-science paranoiac who’s probably equally worried about the UN being infiltrated by communists.

    How many economists have worked in private enterprise? Does this matter one whit? I strongly suspect not.

  5. “Nobody has made a substantive criticism of the basic theory and facts behind ACC since the satellite data was reconciled.”
    Bollocks. There’s plenty of criticism of the facts. Hop over to for a taste. And if by “basic theory” you mean that CO2 is a greenhouse gas, then sure, no disagreement over theory there. But when it comes to climate modeling and attribution of warming, there’s still plenty of disagreement.

    Plenty of economists work in private enterprise. Way more than in the public sector, I am sure.

    One should treat all potential bias due to funding sources the same way. Just as you discount an Exxon-funded AGW sceptic, so too should you discount a 100% taxpayer funded AGW alarmist. Both have much to gain from their respective positions.

  6. proust – “Hop over to for a taste.”

    Why go a mining engineer for facts on climate change?

    “Just as you discount an Exxon-funded AGW sceptic, so too should you discount a 100% taxpayer funded AGW alarmist”

    Absolute crap. What would you call a CSIRO scientists like Barry Pittock or Will Steffen. They are employed by CSIRO so what they say does not affect the CSIRO funding one way or another. In fact with the coal mining Howard government in control of the purse strings speaking out about climate change is not a career extending move.

    The skeptics pathetic attempts to turn around the argument that fossil fuel companies are providing cash for scientific opinions is just ridiculous. No one gets rich from working in science with public grants.

  7. “No one gets rich from working in science with public grants.”

    No-one is talking about getting rich. No-one gets rich from being a “paid shill” of the oil companies either. But if you have spent your entire life dependent on taxpayer largesse for your livelihood, it would be an act of almost suicidal cognitive dissonance to advocate policies that reduce the role of government.

  8. if you have spent your entire life dependent on taxpayer largesse for your livelihood…

    As has, for example, John Howard.

  9. proust – “But if you have spent your entire life dependent on taxpayer largesse for your livelihood,

    What??? So publically funded science is now taxpayer largesse????? Have you any idea of how much of the computer that you are using is the result of taxpayer largesse???? Now when you don’t like the implications of the science that this largesse is producing it is suddenly not valid.

    “it would be an act of almost suicidal cognitive dissonance to advocate policies that reduce the role of government.”

    So now you are saying climate scientists are not getting rich from public funds but are in league with the government to extend government powers so they get some sort of reward. Reaching for the tinfoil hat now ………..

    I am dead sure that if the solution to climate change was to eliminate all governments altogether 99.9999999% of climate scientists would jump at it in a heartbeat. Remember they live and eat and breath and have kids too. If this was the price to pay for a better future I would take it. You really need to get your head out of climateaudit – folks are funny over there 🙂

  10. As has, for example, John Howard.

    Oh, wouldn’t that be a sight to behold! All the lefty academics in the country forced to go to the electorate every three years to keep their jobs. Bring it on!

  11. I am dead sure that if the solution to climate change was to eliminate all governments altogether 99.9999999% of climate scientists would jump at it in a heartbeat.

    And I am equally sure that the climate problem would still be “unresolved” if that were the case.

  12. Keep it up proust – right-wing postmodernism at its finest. I’ve long said that you can’t be an orthodox rightwinger without being an enemy of science, and you’re certainly providing plenty of evidence in that respect.

    To help us along, why don’t you tell us how lefty scientists have promoted evolution, which leads to socialism. Milloy can give you the details on how this question, like climate change, is unresolved, despite claims to the contrary by lefty academics.

  13. The denialists have already cost us a good decade by exploiting the journalistic practice of “get a comment from the other side even if they are shills”. That’s a decade of low cost changes that could have been done primarily through the market by government forcing for all costs to be accounted for (carbon trading) rather than corporations just racking up the “externalities”. And a decade of just redirecting subsidies to polluters to green companies to create jobs would have been nice.

    If there are going to be subsidies Proust (handed out by the Liberals no less) wouldn’t you rather they went to small businesses rather than large ones? Onshore businesses rather than foreign ones? Towards issues backed up by the science rather than the culprits?

  14. “plenty of criticism” ≠ “substantive criticism”

    I really am a bit gobsmacked by the contention that ACC is a left-wing plot. You’d have to be a fruitcake to advance that line of thinking.

  15. You’ve long said many things jquiggin, most of which are wrong. Had the country followed your political preferences we’d all have less than half the standard of living we have today.

    I know of no overtly political evolutionists, although no doubt there are some. But I’ve yet to meet a politically neutral environmentalist.

  16. JQ, quick back of the envelope calcs (taking into account the data projections on consumption of all world resources by the Global Footprint folk) suggest to me that catastrophe scenarios are limited by the lack of reference to planetary carrying capacity. The climate change issue is merely one layer on a very complex multifaceted problem. No argument with the logic or the math but the GF committees data suggests very strongly that we will hit the physical limits of no return by 2025. GF data suggest we passed the ‘tipping point’ ecologically 20 years back. Peak oil supporters suggest we passed the fossil fuel crest two to three years ago and current metereological data suggests very strongly to me that climate change is accelerating. What do you think about applying multiplier analysis to the economic probability analysis, factoring in reducing energy availability and planetary carrying capacity?

  17. It appears that critics/sceptics/denialists are barred from commenting on the soon to be published Stern report, others feel no such restriction;

    “What the Stern report will emphasise is that even if the world stopped all pollution tomorrow, the long-term effects of carbon already in the atmosphere would mean continued climate change for another 30 years, with sea levels rising for a century.

  18. I am not claiming it is a “plot”. That is far too coordinated. But if you have strong political views (as most environmentalists do, and as of course do lefty economists like this blog’s owner and Stern), you are naturally going to exploit any uncertainties in the science to further your political goals. You won’t even do it consciously. Just through what you choose to focus on.

    The recent post on the gun buyback was an instructive example. Quiggin so wanted to believe that there was a knockdown argument against a pre-existing trend he didn’t even bother thinking through the issues enough to realise the obvious flaws in that argument. In that case he argued against an obvious trend in the data. But he’s also very good at seeing trends in climate data that are not there.

  19. Proust since when is commonsense a leftist plot, you certainly inhabit a very strange place. You confuse ideology with empirical method continually, in your case ideology is always sound and empirical scientific based analysis always unsound. Your heuristic claims are simply ridiculous and when the claptrap you pass off as fact fails to impress your resort to the time honoured tradition of belittling your contradictors. So on that basis and borrowing from you for this once, may I say that I think your just a foolish bully.

  20. Proust I’m a swinging voter but wishes to live sustainably does that count? 😉

    Anyway I’m tired of wasting time on the eco skeptics could we look at positive steps, we have 10-15 years to turn it around, what do we do?

    I’ve already put forward a national energy and resource drive, increases in the cost of electricity and water, mandatory higher energy standards for housing and white goods, carbon tax, driving and air congestion tax no night flights and make plans for lower operating ceiling, improvements in public transport, rail etc real incentives for going solar eg pay them more for money sold into the grid etc, education and options for positive lifestyle changes.

  21. Mike Hart: on the contrary, I am *only* interested in the science. Yet every time one raises a substantive question, one is howled down as an “unbeliever”. There is no shortage of commenters happy to “play the man”, yet almost none willing to address the scientific questions. I suspect almost every commenter here is not qualified to do the latter, and yet holds very strong opinions on the subject.

    We did get somewhere on the “Browning Australia” thread, but only in that it showed a very poor understanding of the data. Since then we’ve had Lindzen dismissed not for errors in his scientific thinking, but because he is said to have once questioned the link between smoking and lung cancer. is summararily dismissed, when on my best judgement a lot of what is discussed over there is entirely correct. And so on.

    I guess I should be thankful heretics are no longer burnt at the stake!

  22. It is fascinating to observe the geopolitical manoeuvring ahead of the post-Stern Nairobi conference. The objective of the conference is to obtain international agreement on the future action to limit undesirable greenhouse gas emissions, mainly from burning fossil fuels to generate electricity, industrial activities such as cement manufacturing, and air and sea transport. The inclusion of the cement manufacturing industry has only appeared during the past few weeks.
    The WWF and similar organisations seem determined to bring South Africa to its knees. Their main targets are coal fired as well as nuclear power stations, the export of coal and now the cement manufacturing industry. South Africa has four million unemployed people. There will be at least another million out on the streets if the WWF and the South African climate alarmists have their way.
    US Senate press release
    The battle lines have been drawn and the US Senate has fired the first shots.
    Download the press release issued by the US Senate Committee on Environment and Public Works issued on 17 October:
    It effectively debunks the claims of scientific consensus on global warming that never existed in the first place. Its views are diametrically the opposite of the coming Stern Review. There is now no way that the official USA and EU positions can be reconciled.
    There are three points of particular interest to note when reading the press release. The first is the melting snows of Kilimanjaro and the Antarctic ice sheets. Both also appeared in yesterday’s Sunday Independent. The Kilimanjaro photo had a herd of elephants in the foreground and there was a spectacular photo of a group of Antarctic icebergs.
    These photos are meant to scare the hell out of the unsuspecting public. But they are fundamentally dishonest because they fail to mention the corresponding, beneficial increases of rainfall.
    The second item of interest is the frequent reference to the 60 scientists who wrote a letter to the Canadian Prime Minister on 6 April 2006. I was one of them. This is yet another blow to the false claims of scientific consensus.
    The third is the evidence that contrary to the views expressed by the South African alarmists, global temperatures in 2004-05 were not the highest in xxxxx years. There have been no substantial increases in global temperature since 1998.
    Stern review
    There have been some leakages ahead of the publication of the Stern report that is due later today 30 October.
    This is some comment from Brussels.
    The EU commission’s projections come ahead of Monday’s report by Sir Nicholas Stern, former chief economist at the World Bank, which will warn that climate change could push the global economy into the worst recession in recent history.
    Sir David King, the government’s chief scientific adviser, said this week that the Stern report showed that “if no action is taken we will be faced with the kind of downturn that has not been seen since the great depression and two world wars.�
    Call to arms
    Mention of two world wars sent shivers down my spine. It reminded me of the blackouts (the Royal Society’s tactics to suppress all research that does not acknowledge human causes of global warming); the air raid sirens (the pending global warming catastrophe); and the sound of the approaching enemy bombers with their desynchronised engines that warned us “—for you—for you—for you—“(the Stern review).
    In his rallying speech Winston Churchill promised: “We will fight them on the beaches, we will fight them on the landing grounds, — we will never surrender.â€?
    Sorry for the emotions but that is how I feel as I write these notes. I am a proud South African (who fought against Hitler & Mussolini in Italy in 1943-44) and I am not prepared to remain silent while these alarmist, unscientific and unpatriotic “scientists� continue making claims for which there is no believable evidence, and supporting action that will inevitably cause serious damage to our economy and the welfare of the people of this country.

  23. Will Alexander
    A passionate plea for your country and for common sense. Very well written.
    For us in Australia action against climate change means planting a tree, or one less joy-flight or timber sleepers vs concrete. In Africa it is life or death. As usual.
    Good luck

  24. Is Nigel Lawson,the British denialist ,the same former Thatcherite Minister,who was also one of the defenders of the mmurderer Pinochet during his British sojurn
    He denied Pinochet’s crimes too !!
    He’d be a poor judge of anything,

  25. An interesting view on Stern’s report (broadly favourable) from Bill Emmott, former editor of The Economist.

    Proust the following quote from Emmott is attached for your pleasure:

    The right approach to climate change has been to wait until the science and the scientific data have become clearer before taking drastic action. But that has now happened: while uncertainty can never be entirely eliminated, the scientific case that warming is occurring, that human actions are a principle cause, and that warming could produce damaging outcomes is so strong that complete denial of it now relies on either lunacy or the same sort of spurious claim to certainty of which deniers accuse greens. That wasn’t true 10 years ago. It is now.

  26. In an earlier post here and on other topics I have attempted to broaden out the debate from an unnecessary focus on ‘climate science’ to consideration of the circumstances that a uncritical adoption of ‘market capitalism’ and its economic theory underpins. I like many others have greatly benefited from modern technology and modern market operation but in enjoying those benefits we have lost sight of the ‘losers'(about 4 billion of us) and the negatives (we consume in nine months what the planet can only produce in twelve or environmental overshoot). To my mind the Stern Review has provided a clear philosophical, political and perhaps moral message that unfettered economic growth without taking into account the costs of such growth is not sustainable. To continually view the problems we face as merely economic merely hides the larger problem, the planet like a farm can only provide so much. The issue therefore of climate change is that it is one of the costs of our profligate use of very finite resources. We are all in this together and to debate or question assumptions and theories is appropriate as long as we recognise we have a problem.

    A changing climate merely compounds the troubles we are facing as a species. The politics of changing are the hard yards. A number of geo-political realities will confound us all. First, we (Angol-European-Americans) have lost the moral and political high ground we think we own and assume and western influence has waned considerably. Take the current American in dilemma in Iraq, fifty years of self interest and misguided enlightened American philanthropism has marginalised western opinion and merely antagonised non westerners. China and India have now regained their own sense of self importance and place in the world and Africa from North to South is a political, economic and environmental basket case. Mix in endemic Islamic mistrust (evidenced by its energetic and vicious terror campaign) of Christians, Buddhists and any other non Islamic religious society and you begin to appreciate that we in the west better get our own house in order first. If we reduce carbon use, waste and destruction of the environment, doing so in a positive and innovative manner then we may engage others world wide but we cannot wait for everyone to join the party, we need to show a valid vision of a better future and unbiased non ideological leadership.

    I cannot for the life of me understand the continued opposition to innovative change that increases our efficiencies and in the long term reduces our costs, increases the life of remaining resources and makes the world a better place to live, the economic and social benefits are self evident and the math shows the costs to be minimal over time or have we become so self centered and indulgent that only what I want and the profit a business may make is important!

    So we have literally only five years to have it up and running and another fifteen after that to produce results. After that the fat lady sings. I care enough to know even though I will be long dead, my children and my childrens’ children and those of my neighbours will not be, to have tried to change something is all the inheritance I can honestly give them.

    I care do you?

  27. Con, nothing personal, but I am not interested in second-hand quotes. We have the source, lets go straight there.

    I have done a quick skim of the first part of the Stern report that talks about the science. The whole house of cards is built on the results in Box 1.2 and surrounding reasoning, and drilling into Box 1.2 we find the following paragraph:

    Building on this work, modellers have systematically varied a range of uncertain parameters in more complex climate models (such as those controlling cloud behaviour) and run ensembles of these models, e.g. Murphy et al. (2004) and Stainforth et al. (2005). The outputs are then checked against observational data, and the more plausible outcomes (judged by their representation of current climate) are weighted more highly in the probability distributions produced.

    Consider what this means: the climate scientists have models with a large number of poorly understood parameters. For various plausible ranges of those parameters the models don’t correctly predict the climate. So they run their models, and pick the parameters that more accurately predict the climate.

    Sound reasonable? Well it’s not. If the scientists don’t understand why the models go wrong, why should they have any confidence in their predictions at all? I can easily come up with a heavily parameterized climo-matic model of the climate that is completely devoid of any physical basis yet has enough free parameters to be tuned to fit the current climate. Does that give it any predictive power? Not necessarily. It’s just curve-fitting.

    I need to dig deeper, but it seems we are proposing global action on the back of the work of a few (very few) scientists who apparently do not even have a rudimentary understanding of the statistical issues.

  28. Proust, your argument is absurd. There is a huge literature where thousands of – not a few – peer reviewed papers of have been published by scientists who understand the physical processes extremely well. (That doesn’t mean they understand everything perfectly. Nothing in science is understood perfectly.) Just because you can do no better than curve fitting doesn’t mean that others have the same problem.

  29. Will Alexander – “The WWF and similar organisations seem determined to bring South Africa to its knees. Their main targets are coal fired as well as nuclear power stations, the export of coal and now the cement manufacturing industry.”

    What a load of absolute crap – Ive seen some good stuff over the years however this one really takes the cake. So you think this is a plot to rob proud South Africans of their coal mines. Which ones are we robbing here? The rich ones that own the coal mines or the poor buggers who have to mine the coal. In Australia the policies are firmly made by the owners through a cooperative government. Get out of the bunker mate and have a look at the world – it is not about South Africa. 4 million unemployed? With some vision and leadership, both of which seek our current leaders totally lack, they could be building and exporting wind turbines and solar installations. Africa benefits the most from small renewables and people with vision have been quietly powering the place with small scale affordable solar.

    This is happening for the poor of Africa with similar programs. I am sorry I cannot shed a tear for the ultra rich owners of coal mines that cry poor.

    60 scientists – people who know counted 2 or 3 climate scientists – the letter may have as well been written by 60 veteneriams for all the authority on climate change that it had.

    1998 was a el nino year where you would expect higher temperatures – 2005 was just as warm without the el nino. Heard of the Australian drought and the fact that all the major cities of Australia are on water restrictions? We are heading into el nino now – god help the rural sector next year.

    “Sorry for the emotions but that is how I feel as I write these notes. I am a proud South African (who fought against Hitler & Mussolini in Italy in 1943-44) and I am not prepared to remain silent while these alarmist, unscientific and unpatriotic “scientistsâ€? continue making claims for which there is no believable evidence, and supporting action that will inevitably cause serious damage to our economy and the welfare of the people of this country.”

    This is an enemy you cannot fight with guns – despite that being the only refuge of people without vision. Patriotism does not come into it and if you think that these people are coming to get you then you should hunker down and wait for global warming to pass you by all the time clicking your heels together and repeating the mantra “there is no place like home” over and over again. This should ensure that climate change passes South Africa and only happens to lefty socialist countries.

  30. Uncle Milton, you misunderstand my point. Firstly, there are relatively few climate scientists running GCMs, out of the thousands overall. Secondly, I am not suggesting they don’t understand many of the physical processes, but they will be the first to admit they don’t understand all the physical processes: that is why their models have free parameters. For example, from Box 1.2 in Stern:

    The distributions share the characteristic of a long tail that stretches up to high temperatures. This is primarily because of uncertainty over clouds20 and the cooling effect of aerosols.

    Footnote 20:

    An increase in low clouds would have a negative feedback effect, as they have little effect on infrared radiation but block sunlight, causing a local cooling. Conversely, an increase in high clouds would trap more infrared radiation, amplifying warming.

    That lack of understanding is not a problem in and of itself. But it is potentially a big problem if they parameterize their uncertainty in the model and then tweak the parameters to fit observed data and then claim low uncertainty as a result of the fit between the model and observation.

  31. This isn’t getting anywhere, IMO we’ve been bogged down long enough with eco skeptic trolls we should stop feeding them.

    So far the best Howard has come up with is regardless of this report unless the developing nations join in on Kyoto we won’t sign.

    Eventually the public will begin to take this seriously and be informed that this was just one step with the acknowledgment the developed nations created the mess morally they should be the first to act.

    It appears holding out and forcing nuc’s on Australia will be the gov’s solution to climate change.

  32. simonjm, I am waiting for the day when you, quiggin, or any of your fellow travellers, address the criticism instead of playing the man. If I am an “eco skeptic troll” then you should be able to easily dismiss my arguments.

  33. Enough with the bogus scare quotes, proust. No one has called you an “unbelieverâ€?, and I certainly wouldn’t. You’ve stated above that you believe scientists have made up the whole idea of climate change to promoted the political views you’ve imputed them. You’ve now extended this belief to UK Treasury (not a remarkably leftwing outfit in my experience).

    Added to that, you believe you can set the whole field of climate science straight on the basis of comments in blog posts. When you’re pointed to the mountains of evidence on the topic, including the huge and well-argued report to which this post refers, you ignore it, and stick to your beliefs.

    Obviously, proust, you’re a believer.

  34. What scare quotes quiggin? Simonjm called me an “eco skeptic troll”. That was a direct quote.

    And where on earth have I stated that climate scientists or the UK treasury made up the whole thing? I have never thought that, and I have never stated that *anywhere*. In fact, I explicitly stated above that it is not a “plot” [direct quote].

    My claim is that political bias can influence interpretation, that most of the advocates of AGW have left-wing agendas, and there is boatloads of room for interpretation in climate science.

    BTW, I don’t think I can set the whole of climate science straight in blog posts – I have other channels for that. But you and your disciples are so certain seemingly without having investigated the issues for yourself, that this is a fun place to start.

    But once again, you fail to address my scientific criticism. If I am such an ignorant “believer”, you should be able to knock me over in a jiffy.

  35. proust – “that most of the advocates of AGW have left-wing agendas, and there is boatloads of room for interpretation in climate science.”

    What the hell is a left wing agenda?????? Are you suggesting that ALL climate scientists are in league to set up some socialist utopia where we all eat tofu under our solar LED lights????

    I live in Australia, mate, that is a pretty good blend of left and right. I would like to be able to raise my kids feed myself etc and have a reasonably comfortable life. No climate scientist I have ever communicated with is any different to this.

    Stop looking for reds under the bed and have a look at the spaceship you and I inhabit. We are really stuffing up the life support systems and there are some people that are attempting to fix it. When you are fixing a problem that is life threatening you do not ask a person’s political leaning. You fix the problem then go back to petty squabbles over left and right.

  36. OK, I know I’m as guilty as anyone, but no more feeding the trolls, please. To spell out, please don’t respond further to what proust has posted. Please do comment on the economics of mitigation the costs of doing nothing, and so on.

    Proust, if you have a dispute with climate science, please take it somewhere appropriate. If you have a relevant argument about the economic issues that are the subject of this post, feel free to post it, but anything else from you will be deleted.

  37. Given this will take some serious money, with no federal dept healthy surpluses one would think we are in a good position at least financially to undertake the necessary policy moves to bring this about.

    This would also be a good chance to start to set in motion policies to deal with Peak Oil.

    At the very least we should look at teh low hanging fruit of energy efficiency.

    As far as a carbon tax -excuse my lack economic knowledge- couldn’t a small increase at the start be used instead of a rise in interest rates to slow down inflation? Two birds one stone.

  38. “As far as a carbon tax -excuse my lack economic knowledge- couldn’t a small increase at the start be used instead of a rise in interest rates to slow down inflation? Two birds one stone.”

    It could, but then if the economy was too slow you’d want to cut the tax again, and your objectives would be pulling you in different directions. One target, one instrument is what won Tinbergen his Nobel prize.

  39. JQ my lay thinking was ok it looks like we will have to another rate rise anyway, why not start off with a small carbon tax to start with to ease into it?

    If we have to bite the bullet anyhow better to start with a small increase that could be used instead of rate rise, again two birds one stone.

    Hard to see anything being done while Howard is in I know, but do we want shock treatment or small incremental increases?

    The longer Howard stays in and puts things off the harder it will be, so I imagine we will be left with shock treatment. I wonder what it will take to really get this on the publics radar, a few more Katrina’s in the US or maybe a 10-15 year drought here?

    Secondly don’t just throw in a carbon tax by itself one would think sweeteners like tax rebates for more efficient plant, rebates for public transport or no taxes on hybrids or e-cars.

    BTW if that did slow the economy too much why wouldn’t you then just go back monetary policy and cut rates, wouldn’t a downturn have taken care of inflation?

    Then if it starts to pick up again another rise in the carbon tax and so on, or is that too simplistic?

    What is the best plan to introduce a carbon tax you have seen? Is there one?

  40. Simonjm – What is the best plan to introduce a carbon tax you have seen? Is there one?

    What about points 1 and 2 of this from George Monbiot(

    “1. Set a target for reducing greenhouse-gas emissions based on the latest science. The government is using outdated figures, aiming for a 60% reduction by 2050. Even the annual 3% cut proposed in the early day motion calling for a new climate change bill does not go far enough. Timescale: immediately.

    2. Use that target to set an annual carbon cap, which falls on the ski-jump trajectory. Then use the cap to set a personal carbon ration. Every citizen is given a free annual quota of carbon dioxide. He or she spends it by buying gas and electricity, petrol and train and plane tickets. If they run out, they must buy the rest from someone who has used less than his or her quota. This accounts for about 40% of the carbon dioxide we produce. The remainder is auctioned off to companies. It’s a simpler and fairer approach than either green taxation or the EU’s emissions trading scheme, and it also provides people with a powerful incentive to demand low-carbon technologies. Timescale: a full scheme in place by January 2009.”

    Seems to be a good scheme of personal responsibilty rather than just blaming the power companies.

  41. John,

    It seems to me that anyone who wanted to argue against Australia taking action to reduce our GHG emissions below their “business as usual” timne path would be better off using economic arguments rather than scientific ones. While I am not an expert on climate science, the consensus appears to be that there is indeed a problem (and, whats more, this has been the consensus for quite some time now). However, I seem to recall reading or hearing that Australia’s proportion of total world GHG emissions is tiny. In fact, so tiny that they have very little on global warming. As such, we are essentially in a prisoner’s dilemma type of game where “do nothing” might be a dominant strategy. Of course, this policy seems rather unequitable. If, like me, you belive that we should be doing something, how would you counter this argument? One possibility is that it will allow us to avoid penalties from the international community down the track. Another is that we might inspire others to do likewise. I suspect the former argument is more likely to be valid than the latter one!!!



  42. John,

    A couple of extensions to my previous comment. First, it seems to me that some enhanced version of the clean development mechanism will be an important part of any global agreement on GHG emission reductions. It seems rather unfair to tell less developed countries that they can’t develop because the industrialisation phase of the developed countries has already led to a problem. Ideally, clean technologies would be transferred to economies such as China and India, allowing them to leap over at least some of the dirtier technologies. Second, I wonder what you think about the idea of tying trade and environmental agreements? If the EU would like the US to ratify the Kyoto Protocol and the US would like the EU to reduce its level of agricultural subsidies, perhaps some agreement could be negotiated?

    Disclaimer: I used to work for the Emissions Trading Team at the Australian Greenhouse Office. (I should probably have mentioned this in my previous comment as well.)



  43. Ender I also like the energy bank idea, loan the price of a solar unit and them the user play it back with the savings + give them a better price for selling more energy back to the grid not like the substitution for dirty energy we have at the moment.

    Damien first the moral argument, we helped create the problem taking responsibility goes a long way in negotiations, and carrot and stick, penalties plus the chance to make money.

    What will have to happen is a mechanism for China India and the rest of the world where we acknowledge their right to develop and we help them get there.

    A global marshal plan for accelerated sustainable development.

    Not the pseudo aid that lines the pockets of local business and corrupt politicians. Maybe this will have to mean some tough medicine and a serious look at agricultural trade subsidies.

    A greater move on dept relief for conservation and cleaner development.

  44. You guys should read the Stern review. Particularly parts IV and VI. It covers the relative merits of taxation and cap-and-trade in great detail.

    He gets a little too excited about the revenue generating prospects of carbon taxes and/or allowance auctions, but otherwise it is a pretty instructive read.

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