Garnaut review

The Interim Report of the Garnaut Review is just out. Over the fold, I’ve attached the report and also a quick response from me for Crikey, largely based on hearing Garnaut a couple of weeks ago.

The interim report of the Garnaut Review on climate change shows how much thinking has changed in the year since the Prime Minister’s Task Force on climate change, led by Peter Shergold, examined the same issue.

In part, of course, this reflects the change in government. The Shergold report was tied to the Howard government’s rejectionist view on Kyoto, and spent a fair bit of time on spurious defences of positions that were obviously untenable at the time. This part of the report attracted a fair bit of attention, and was rightly derided.

But there was a serious component of the report, consisting of an attempt to balance economic and environmental risks. On the one hand, the report accepted the need for emission targets to manage the risk of dangerous climate change. On the other hand, the report was much concerned with the risk of economic damage if the cost of mitigation turned out to be high. As a result, it recommended both a leisurely start to emissions trading, delaying this until 2012, and an elaborate system of escape clauses designed to operate if the price of emissions rose too high.

As Garnaut’s interim report shows, the balance of risks has changed radically. Indeed, the thinking in the Shergold report, much influenced by US-based policy debates in the period immediately after Kyoto, was already out of date when the task force began its work.

Massive economic growth in China and India, at rates far higher than anyone anticipated when the Kyoto agreement was signed in 1997, have produced growth in emissions at or above the highest ‘business as usual’ projections of the IPCC. At the same time, the news from climate scientists has mostly been bad. The evidence in the Fourth Assessment Report killed off any remaining hopes that the problem of human-caused climate change would turn out to be spurious or significantly overstated.

At this point, the risk of moving too fast on climate change is non-existent. As Garnaut shows, even moving fast, it is going to be very difficult to divert the global economy from a path leading to ever-rising CO2 levels, and increases in global temperature far beyond anything our species (or most species currently in existence has ever experienced. The consequences of such a path are hard to predict in detail, but highly likely to be disastrous.

Where to from here? At a global level, nothing substantial will happen until the departure of the Bush Administration in January 2009. The rest of the developed world, including Australia, needs to press the incoming administration for a rapid and unconditional commitment to cut US emissions, followed by immediate negotiations with China and other developing countries to achieve an agreement that will deliver a halt to global emissions growth by 2020, followed by a substantial decline.

To say this will be a challenging task is an understatement. Of course, everything would be dramatically easier if the US and Australia had ratified Kyoto, instead of rejecting it after the election of the Bush Administration in 2001. Those who supported this course have been utterly discredited by the course of events. They will, no doubt, continue to advocate delay and indecision, but they should be left to jeer from the sidelines while others get on with the job.

Garnaut report
exec-summary.pdf

49 thoughts on “Garnaut review

  1. I calculate 70 years given current known Uranium deposits, and another 100 years after that using Thorium in fast breeder reactors, both of which Australia has the lion’s share. Australia should be pushing the nuclear option for all it is worth: we’ll be the next Saudi Arabia, but without the icky politics.

    170 years should be ample time to perfect fusion.

  2. #24 As various examples have shown, inflation can be redefined to overcome this kind of problem in general. Howard did it with the GST and the US Fed is doing it right now with energy prices, even though their rise is the product of demand pressure, not an exogenous or policy shock.

    All Rudd has to do is announce that he is targeting the underlying rather than the headline CPI.

    The trickier manoeuvre will be to raise petrol prices despite the silly rhetoric of the campaign . This will take a fair bit of political skill, but I wouldn’t estimate Rudd.

    My suggested line would be to impose a carbon price at the refinery level, then suggest that the oil companies should absorb some of it in those fat margins we’ve heard so much about. This wouldn’t be entirely unjustified – both the government and the fossil fuel industry deserve some pain, for different reasons.

  3. No mention yet of the cost effectiveness of curbing and reversing population growth for mitigation of future emissions.

    Reducing emissions while allowing population growth is like braking your car with the accelerator pedal flat to the floor.

    I didn’t see anything in the review about an import duty on non-carbon constrained goods.

  4. mugwump, we allready have a fusion reactor which transmits more power than we need from a nice safe 150 million km. Those who constantly tout nuclear as a solution are, in my opinion, compensating. They should all go rock-climbing without a rope or skydiving without a parachute.

  5. Observa – “However it doesn’t quite work that way, because during the day the fridge, clocks, standbys, microwave, stove, etc are working and they’re using up about 20% of that generation so they say. In other words 20% of 9kwhrs/day is only returning the 22c/kwhr peak price forgone.”

    You are missing the most important part of a renewable solution – demand reduction. Turn off the standbys, buy a more efficient fridge and aircon. Renewables need energy efficiency and that is one of their greatest attractions.

    “But here’s the O’s special rub and the typical problem for all such communard type controls. The O being of adequate means indulged himself and bunged on 3 phase power when expanding the leafy McMansion, just in case. Now solar panels produce single phase and that’s what the feed-in meter will read, so naturally it will be incumbent upon the O to hitch that to a dedicated phase for lighting only, or indeed a phase not used at all except if he uses 3 phase equipment, which he doesn’t.”

    Well that is not quite true. If you have 3 phase you can connect grid tie inverters to deliver 3 phase power.

    You also have to consider that electricity is not all the same. It’s value is critically dependant on the time of day and the weather conditions. One of the greatest advantages of roof top solar is that during times of greatest demand, hot sunny days, it is producing the greatest amount of power. For people with air conditioners, and the proliferation of these is the greatest threat to the existing grid, a rooftop solar panel will relieve the struggling grid of the effort of supplying the thousands of hard working aircons by supplying most of the energy required from the solar arrays. This in turn reduces the amount of peaking power the grid operator has to find from somewhere at the height of summer.

    While your rooftop solar plant may only produce a small average power the fact that is produces the most when you actually need it is one of its greatest advantages.

  6. If you keep the big picture in mind always here, you’ll keep coming back to the overarching need for almost total reliance on resource taxing. I’ve spelled out a blueprint for that previously and the various threads here show why that’s becoming more of an imperative.
    At present we’re simply cherrypicking and indulging in the whimsical, not to mention picking winners with subsidies, giving households like mine an offer we can’t refuse and at the same time enmeshing more and more administartive complexity in the process. SA has container deposit legislation, currently 5c and with returns dropping want to up that to 10c, but the ‘Seinfeld’ problem rears its head for recyclers near the borders. We’ll probably ban plastic shopping bags as a conscience salve for all the other packaging we guiltily drag home from the supermarkets. Without overall resource taxing of water (and some previous inherited handouts) cotton and rice growers carry on their merry way, ultimately forcing Adelaideans to build massive desal CO2 generators. Well nukes may be the answer here without a resource tax reflecting its ‘recyclability’, then in the next breath we’ll make a cap and trade nightmare that makes Leigh Creek coal and its downstream power resources, so bloody valuable in the longer term, carbon credit wise, that any enterprising nuke power consortium would swallow it now, just like sovereign wealth funds are beginning to stir on the Rios and BHPs right now. If silly communard quantity control freaks don’t begin to wake up to the bleeding obvious that it’s overall resource taxing stoopids, then we’re about to embark on all sorts of cap and trade handouts and the like, that will be as difficult for our grandkids to unwind as MD water licence quotas. We need to plan for level playing field, resource taxing, overall right now and stop all this whimsical, feelgood, cherrypicking drivel. Begin to tax all resource use and slowly get rid of all the other taxes to compensate. Then let market forces decide what we all do. It’s the constitution of our marketplace that’s the problem and it isn’t solved with more divine rights of elected kings and their daily whims.

  7. Regarding #26.

    If you want to cut CO2 emissions then raising petrol prices is hardly the first thing we should do. Firstly petrol is already highly taxed whilst coal generated electricity has no significant tax (other than the normal broad based taxes ie payroll tax + company tax + GST that apply equally to low emission alternatives). Secondly any move to plug-in hybrid or all electric vehicles is pointless in CO2 terms unless the electricity sector moves away from coal. Thirdly any desire to move towards greater use of public transport is better addressed through privatisation and/or direct investment.

    p.s. Check out “nanowire battery” on Wikipedia. We may have cost effective plug-in cars much sooner than expected.

  8. Ender, I appreciate all the issues with power reduction, particularly as we have the peakiest summer demand in Oz ans smart meter tech, etc can help deal with that. When you say

    ‘You are missing the most important part of a renewable solution – demand reduction. Turn off the standbys, buy a more efficient fridge and aircon. Renewables need energy efficiency and that is one of their greatest attractions.’

    energy conservation is best promoted by overall price(ie truer social cost) and we should all face that same social cost curve, rather than some being more equal than others.

    Actually I’ve just spoken to another solar installer in the know and the issue of gross vs net metering of solar output is yet to be decided before July1. Clearly the industry wants gross metering for its clients.

  9. observa, has anyone here ever actually strongly disagreed with you over carbon taxes?

    You keep banging on quite boringly and inaccurately about how it must be some evil plan of ‘teh Left’ to introduce subsidies and rebates etc. Why are you going on about this crap, no one really disagrees with you.

  10. Ender, I appreciate all the issues with power reduction, particularly as we have the peakiest summer demand in Oz ans smart meter tech, etc can help deal with that. When you say

    ‘You are missing the most important part of a renewable solution – demand reduction. Turn off the standbys, buy a more efficient fridge and aircon. Renewables need energy efficiency and that is one of their greatest attractions.’

    energy conservation is best promoted by overall price(ie truer social cost) and we should all face that same social cost curve, rather than some being more equal than others. Or to put it another way, subsidising me with cheap solar power allows me to be more profligate, although it’s true that would ultimately be offset by struggletown’s increased sacrifice.

    Actually I’ve just spoken to another solar installer in the know and the issue of gross vs net metering of solar output is yet to be decided before July 1. Clearly the industry wants gross metering for its clients. Hear, hear!

  11. “Why are you going on about this crap, no one really disagrees with you.”
    Funny how that’s not what we’re getting when it’s all been so agreeable. Should we all take to the streets or what?

  12. I’m sort of looking at Garnaut (which by the way has its own website here) in passing while doing other things, so I might do a few comments over a few days. I was delighted (read amazed) to see the recurrence of Shergold’s “trade-exposed, emissions-intensive industries� as a category of emitters to get special treatment. Sure, let’s give the major emitters special treatment, that’ll speed up the process of emissions reductions no end!

    I’m impressed also with Garnaut’s ingenuity in finding ways to reduce Australia’s carbon reduction target under virtually any scheme. One trick is to try to set targets having regard to per capita emissions, on the ground that Australia’s population is increasing through immigration whereas Europe’s isn’t, so over time a per-capita target will be easier for Australia to meet!

    Another wheeze is to claim credit (via a carbon trading mechanism) for emissions reductions somewhere else, like Indonesia or PNG. While you might think this is part and parcel of any global emissions trading scheme, Garnaut has come up with a suggestion for “supportive regional agreements� (p.42) under which Australia would be “showing willingness to provide developing countries with greater financial opportunity and assistance in return for them adopting appropriate targets� and over which Australia could exercise “more influence�. The proposed agreements sound like a deal between Australia and the Govts. of Indonesia and PNG under which Australia can buy an exclusive option over their emissions reductions (mostly from slower deforestation) at an agreed price. So much for global carbon trading and the supposed economic advantages of an open market for emissions permits!

  13. ‘socialism-averse’ readers ares advised to skip this post.

    roof-top solar cells are a social good, and should therefore be paid for by society. new houses must have a minimum area fitted, and a bonus paid for more. old houses should be retro-fitted at public expense. owners should volunteer their homes to be fitted. a bonus should be offered to compensate for whatever trouble arises from having a workman on the roof.

    power resulting should be fed into the grid, not the house. or, the home owner can pay for the installation and put the feed inside the meter.

    this won’t solve the base load question, but removing half the consumer load must be a good thing. in the long term, diffused power production has benefits over central production, line losses and damage limitation come to mind.

    consequently, the gummint should get busy in this area.

    solipsist readers may now stop squinting.

  14. Coal liquids? Synthetic coal-derived petroleum substitutes are pretty awful from a greenhouse point of view.

    This is from the Wikipedia article on the Fischer-Tropsch process: “Recent work by the United States’ National Renewable Energy Laboratory indicates that full fuel cycle greenhouse gas emissions for coal-based synfuels are nearly twice as high as their petroleum-based equivalent. Emissions of other pollutants are vastly increased as well, although many of these emissions can be captured during production. Emerging Carbon sequestration technologies have been suggested as a future mitigation strategy for greenhouse gas emissions”.

    The article discusses how the US military is beginning to use these synthetics, just as the Germans did in WWII. Obviously, peak oil trumps greenhouse for military applications.

  15. #40

    Carbonsink – I agree that if you want to cut CO2 efficiently the price you place on it should be the same for coal, gas petrol etc. However the existing fuel tax regime already places a price on CO2 emissions from petrol. As such there is no point adding further taxes or costs to petrol until such time as the taxes on coal, gas etc have been brought up to par.

  16. roof-top solar cells are a social good, and should therefore be paid for by society.

    If so, why wouldn’t the government just build vast solar collectors in the desert at taxpayer expense and pipe the electricity to the cities? That’s got to be way more efficient than a patchwork of rooftop solar cells.

  17. “That’s got to be way more efficient than a patchwork of rooftop solar cells.”

    Ever hear of transmission losses?

  18. “Ever hear of transmission losses?”

    Having worked for the local electricity utility a couple of summers as a student, yes. Transmission loss is inversely proportional to the square of transmission voltage, hence why long-distance transmission lines are high-voltage.

    There’s plenty of sunny, empty space reasonably close to most Australian population centers, so transmission efficiency shouldn’t be an issue.

    As for the efficiency I was talking about: that’s one of economies of scale. Installing, maintaining, and negotiating access to a gazillion solar roof panels spread out over the city will be ridiculously inefficient by comparison with a centralized facility.

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