Improving the CPRS

It seems virtually certain that the CPRS legislation will be reintroduced to Parliament later this year, and highly likely that it will be passed with the support of some or all Liberal Senators. The alternative, a double dissolution fought on an issue where the party is split down the middle, would be catastrophic, good reason for any party with an interest in long-term survival to avoid it. I’m guessing the Liberal Party still fits that description, or at least that enough of its members do to provide a Senate majority.

In these circumstances, it’s unlikely that we will see improvements on the current proposal, in fact the opposite. It makes tactical sense for Labor to offer the Libs some further modest concessions, enough to get their support while splitting off the Nationals and leaving the delusion, delay and do-nothing faction among the Libs deeply unhappy.

Undaunted, I’m going to suggest some ways in which the scheme might be improved.

First, I’ll look at a couple of proposals the government could conceivably adopt, that would remedy some of the most glaring flaws in the scheme as it stands. Then I’ll consider what might be done on the (not very likely) assumptions that one progressive Lib (Marise Payne?) might put planet ahead of party, and that the Greens would vote for a scheme that might be imperfect but would still be at least as strong as anything likely to be agreed at Copenhagen. Add Nick Xenophon, who usually comes good in the end, and you would have a bare majority.

Starting with the feasible improvements, the existing scheme has two notable problems aside from general questions about design, targets and so on. First, it makes voluntary action to reduce emissions ineffectual, since this just lowers the cost of emissions permits (I thought this had been fixed by the changes announced in March, but I was wrong on this point). A suggestion to fix this is the idea of an Additional Action Reserve, put forward by the Centre for Energy and Environmental Markets (described here).

Second, not only does it give out free permits to existing polluters (bad policy, but probably politically inevitable) it undermines the scheme by requiring that those receiving the permits should continue to pollute. This could be fixed by allowing holders of free permits to cash them in and use them to finance adjustment out of the industry in question. An even bigger improvement would be for governments to provide matching assistance to workers and communities affected by shutdowns of, for example, brown coal power plants. The current scheme has almost nothing in this respect.

Now consider the ideal scheme. As I said a while back, the targets the government announced in March are reasonable. The only thing that really matters is the global agreement coming out of Copenhagen, and Australia’s position should be strong enough to ensure that we contribute to the achievement of the strongest possible program (the likelihood of an agreement that is ‘too strong’ is, I think, near zero). A 25 per cent cut on our preferred baseline is at least as good as what any other country is offering. Raising this to a conditional offer of 40, as the Greens have suggested, would make no difference, since no one else is likely to match it.

An ideal scheme would involve hardly any free permits and would instead focus almost entirely on adjustment assistance.

A scheme with a target stringent enough to ensure a carbon price around $50/tonne by 2020 would largely obviate the need for a separate Renewables Target. With this kind of scheme, attention could be focused on research and development, ideally targeted at problems specific to Australia. For example, it seems likely that the optimal choice of solar technology would be very different in a sunny country with a highly dispersed population like Australia than in Europe or China where most of the development is taking place at present.

In addition, recent debate suggests an adjustment with little immediate cost, and probably not much cost for some time to come. Discussion so far has focused on stabilising global CO2 concentrations at 450 ppm by 2050. But there’s an obvious argument that, having gone this far, it would make sense to keep going after 2050 with the aim of restoring the pre-industrial level (278 ppm) by a combination of massive reforestation, improvements in land use and, if necessary, technological measures to remove CO2 from the atmosphere (there are some ideas about already and this would be the last cab off the rank, giving decades to turn them into workable options).

To propose this as a long-term goal, it’s not necessary to take a view on new and relatively untested research about long-run climate sensitivity. It’s reasonable to say that, if the generations alive in the next few decades are willing to give up, say 3 per cent of their income for a project which will deliver most of its benefits after 2050, those who will benefit from that (modest but not insignificant) sacrifice ought to be willing to give up a similar proportion of their (almost certainly much higher) incomes, to return the environment to something like the starting point, before the process of industrialisation that delivered all that wealth.

Also going beyond the CPRS, Australia should be making an explicit commitment to the principles of contract, converge and compensate. That is, we should be aiming for an agreement under which all countries agree to a common emissions entitlement per person, to be reached by 2050 at the latest, with compensation from developed countries to the poorest countries to assist them in reaching their development goals without reliance on cheap carbon-based energy.

49 thoughts on “Improving the CPRS

  1. @Fran Barlow
    Correction: If you cannot present an argument NOT based on the premise that your opponent is some kind of fundamentalist Christian…

    Although the context should have made this clear.

  2. @Sebastian

    For most of human history, since we first started building little lean-to’s, sticking some seeds in the ground and tossing a few meat scraps to the wolf pup outside the fire light, CO2 levels have been at around those PI levels, and temperature have only fluctuated by small amounts apart from short term perturbations like the Little Ice Age. Human civilisation developed in that environment. This is the temperature range all our major crops are best adapted to because they have had 11,000 years to adapt.

    We are now heading up into very dangerous territory. We will have to completely de-carbonise our economies and then work out how to sequester carbon to claw our way back down. If we survive and get back down we will have an economy that is independent of CO2 level, and we will have the means to set CO2 roughly where we want. Why not take it down to a level that is likely to be the optimum for the biological systems that we depend on for survival. Maximise our level of safety.

    As to Feudalism, Industrialism is evil etc – obviously you were having a dig at certain views. Feudalism was awful; Harmony, what harmony? The Industrial Revolution is what created our societies today. But unfortunately it came with a price tag and we have spent several centuries not paying the bill. And now its falling due.

    But once we have sorted out this mess (hopefully) we will have a world where our way of life – Feudalism vs Democracy or whatever – is totally disconnected from the CO2 level. Apart from what we need from the natural world, our survival will not depend on what the level is. But our survival does and always will depend on the Natural World being strong and vibrant. So why not set CO2 to the level that gives the Natural world we depend on the maximum safety level – for our benefit? Because the environment keeps us alive. Our Economy just keeps us comfy and entertained in life. And going to PI levels wont stop the Industrial Revolution!

  3. @Glenn Tamblyn
    Thankyou for answering my question and at least refraining from using the favoured tactic of the vast majority of the Quigginites here, which is to characterise any dissenting view as coming from some Bible-bashing, Howard-loving, environment-destroying, Aboriginal-hating redneck. Yes, you were correct to note that I was caricaturing the opinion, sadly held by many academics and a great number of my fellow students, that life was somehow more ‘pure’ prior to the industrial revolution, and that the moral overtones of the quest to become carbon-neutral should be a little disturbing, even to those who believe the science of climate change.

  4. @Sebastian

    And further to your comment about playing God. Yes, we don’t understand enough. The whole point is that we have already spent several centuries playing God, unwittingly. And it seems we haven’t understood what we are doing. So we need to be getting some Genie’s back in bottles (to mix my metaphors), try to get things back to where they were, and then stop playing God.

    What is being proposed is that we reverse the changes we have caused and let the system go back to doing what it does. It’s served us well enough for 10,000 years or so. The only ideas being considered that are us playing God even further are emergency measures, GeoEngineering type ideas that would only be used if we are in deep shit. If twiddling the knobs made the machine go haywire, put the knobs back to where they were. Only if that doesn’t work should we consider touching any more knobs.

  5. @Sebastian

    Sebastian

    There is however a moral tone to this. Each one of us has a certain moral duty to do everything we can to fix up the mess we and our ancestors have made. Not taking risks with the survival of Human Civilisation is a moral duty. And doing everything we reasonably can to that end is a moral duty. Should we sacrifice our lives to that? No. But should we consider giving up our IPod lives for it? Yes

  6. @Sebastian

    You’ll notice that I prefaced my third paragraph by saying that I did not wish “to invite the inevitable “flat-earther/birther/creationist” charges.

    That you did, but you will surely concede that what you want was in conflict with your subsequent commentary, which sought to equate controlling the climate with playing God. This was your characterisation as was your rage of Gaia proposition, references to carbon-based sins, the language of atonement etc. If you intended it as nothing more than an attempt to redux a cliched, offensive and defamatory strawman, you should have said so. Of course, that would have rather set a match to the poor thing wouldn’t it?

    So I was entitled to take your claim at face value, and not yield to your unreasonable request viz. the right to make metaphysical claims without being seen as some sort of mystic.

    You say that you wanted …

    to point out that we are assuming we can control a dynamic system, the intricacies of which we do not fully understand

    Your language is sloppy and also a piece of misdirection. In the first place, you and I are not a community on this issue, and to the best of my knowledge you are not a qualified climate scientist, or indeed even a name that might make Inhofe’s list of pretenders to scientific authority. You have no business using we at all in this context. Nor is the use of the term control in this setting anything more than a strawman. Those proposing mitigation of anthropogenic emissions of GHGs are not proposing to control the climate but to avoid forcing it into a configuration that the best qualified people understand even less that those of us lacking formal training in this field. What the poponents are proposing is an attempt to arrest a human-induced trend and to hope that that is enough to avoid catastrophic consequences. Some people, fearing that this effort will be insufficient, are now toying with geoengineering solutions, but even these would not amount to control of the climate but an attempt to subvert a human-induced climate anomaly. This is of course much more controversial precisely because, aside from attempts to reduce atmospheric Co2 by capture, modelling more direct effects at reducing near surface insolation (eg with sulfates in the stratosphere) very much raises the law of unintended consequences.

    If you cannot present an argument NOT based on the premise that your opponent is some kind of fundamentalist Christian, I don’t think you should be getting involved.

    I call tu quoque. Firstly, you opened the door and secondly if you were being disingenuous, implying that acceptance of the well-attested science associated with the current climate anomaly reflected the hijacking of science by faith, then you are guilty of the thing to which you now object. You pulled your weapon and are now troubled that I used it against you. Pathetic.

    It would be like me implying that you believe in climate change based on an underlying fondness for the eugenics movement.

    Not unless I’d given you some basis for such a claim. If you want to claim that existing climate science amounts to an act of faith, then you should redux the charlatan Ian Plimer or the late sci-fi novelist, Michael Crichton explicitly rather than engage in disingenuous and snide baiting.

  7. Tell me Sebastian my ex- mate, if there are ’15 major religious strains in the world, at least 14 of those strains are wrong’. What is the other one?

  8. @Fran Barlow

    “Those proposing mitigation of anthropogenic emissions of GHGs are not proposing to control the climate but to avoid forcing it into a configuration that the best qualified people understand even less that those of us lacking formal training in this field.”

    ??? (If they understand less [than?] us, why are they the best qualified?)

    Yes, there is mitigation of climate change, and then there is this idea of returning the earth to some pre-industrial paradise, in effect erasing this ‘mistake’ of progress and the ‘taint’ of humanity. So you believe the IPCC, you want to reduce carbon emissions, very well, I know a lot of people who want to do such a thing.

    But there is a puzzling symbolism in wanting to return to a pre-industrial level of emissions, as Quiggin suggests.

    “You pulled your weapon and are now troubled that I used it against you. Pathetic.”

    First of all, read Michael of Summer Hill’s post above, keeping in mind that I have given him no basis to believe that I am deeply religious (and having stated, quite clearly, that I am not). Also keep in mind that Quiggin previously posted on his ‘observation’ that climate change skeptics are the type of people who believe Obama is not a US citizen. I don’t believe it was me who pulled the weapon first.

    What I was showing is that it is just as easy for me to characterise climate change alarmists as nature-worshipping communist druids who believe in eugenics and who abhor technological progress. While I disagree with Glenn, at least he, unlike the rest of you, could offer a level-headed argument without calling me a religious nut. If the science is that strong, you should be able to make your case without tarring every dissenter as a creationist, a lackey of the oil companies or a free-market fundamentalist. Even then, I know many libertarians who believe the science and are interested in finding free-market solutions.

    Interestingly, if I’m not mistaken, the Pope is now on board the climate change movement, while this “charlatan” Ian Plimer is loathed by both the religious right for his attacks on creationism, and by the lunatic left for his dismissal of climate science.

  9. @Sebastian

    One small point. I loathe Ian Plimer for appallingly sloppy workmanship. Thats if it is unintentional. If intentional then charlatan is an appropriate description

  10. Sebastian, the Pope has a wright to have his say just like you but are you a member of the NRA?

  11. The NRA? Do you mean the National Retail Association, or the National Rifle Association? I am not in retail, and do not live in America (nor the UK), so neither is conceivable. Then again, I realised a while back that deductive logic wasn’t one of your strong points.

  12. @Glenn Tamblyn
    I didn’t expect much sympathy for Plimer to exist here, I simply mentioned him to show that being a creationist is not a necessary or sufficient condition for being skeptical of anthropogenic climate change, apropos Michael of Summer Hill’s continual implications that the two are inseparably linked.

  13. @Sebastian

    First of all, read Michael of Summer Hill’s post above, keeping in mind that I have given him no basis to believe that I am deeply religious (and having stated, quite clearly, that I am not). Also keep in mind that Quiggin previously posted on his ‘observation’ that climate change skeptics are the type of people who believe Obama is not a US citizen.

    MOSH probably thinks he is doing tit-for-tat and as to John Quiggin, I’ll allow him to defend himself, though the overlap is strong and the methodology familiar — hysteria and culture war.

    This is your strawman, but I will leave you to play with it. There’s a word for that sort of thing, but I’m too civil to use it.

    The thing is, Sebastian, I don’t need to make a case. The case has been made more comprehensively than I could possibly offer here, in thousands of peer-reviewed papers.

    And for the record, Plimer’s attack on religionists was also a very lazy and sloppy piece. Whatever one thinks of the conclusions, even a target as easy as religious nut jobs proved what a dilettante Plimer is.

    Yes, there is mitigation of climate change, and then there is this idea of returning the earth to some pre-industrial paradise …

    Nobody here has called it that and I’ve never read an advocate for mitigation make such a claim. Certainly, no communist would make such a claim. Pre-industrial society was no paradise.

  14. @Glenn Tamblyn

    charlatan n.
    A person who makes elaborate, fraudulent, and often voluble claims to skill or knowledge; a quack or fraud.

    2 : one making usually showy pretenses to knowledge or ability

    Check out Plimer’s defence to a debate with Monbiot — his ‘homework assignment’

    The shoe fits …

  15. @Sebastian

    I took your first couple of paragraphs as a parody of a particular stereotype. I wasn’t going to respond at first, but you are wrong to think that most of the posting readers resort to ad hominem attacks. But you have to expect a bit of frustration when you hit someone’s hot button topics.

    I also very much doubt that any of the regulars are of the belief that life before the industrial revolution was a bed of roses, and I’d be shocked if any regulars were advocating abrogation of all of the benefits of progress. On the other hand, why does anyone in the city need multiple vehicles or the monster SUVs? Life before they were mass marketed wasn’t that much different to now. So making the choice to make the next car an efficient low pollution vehicle isn’t going to impose great hardship on the would-be consumer. Realising that and pointing it out on this blog does not make the posting person a flower person.

    As for the religious stuff, I am an atheist as are quite a few bloggers on this site, and I have not ever remotely felt that there are gods or other deities, but I don’t mind reading literature that is religious in nature – although I draw the line at material created purely for indoctrination of minors into a given religion. While it isn’t exactly my view, the following line from Dire Straits “Industrial Disease” feels quaintly appropriate:
    Two men think they’re Jesus; one of them must be wrong.”

    Plimer’s H&E book is on my bookshelf; in 30 or 40 years from now (touch wood), when asked by the kids why we kept on emitting vast quantities of greenhouse gases long after we knew it would be big trouble, I will be able to hand them Plimer’s tome and let them draw their own conclusions.

    By the way, it is interesting to read some of the history of the discipline of geology. Many of the battles over various theories – based on evidence – that cast doubt on the biblical tale of the great flood are reminiscent of today’s battle b/n denialists and accepters of anthropogenic global warming and climate change. Ironically, the religious professors of geology from the 1800s would now be the AGW denialists, and the individual scientists whose field work contradicted the biblical tale would be the accepters of AGW today. The religious geologists had a habit of trying to bend reality to match their personal beliefs, while the ones who insisted on using the data to guide them did much better at matching theory to reality. Eventually reality prevailed, but not before ice ages and glaciation of continents had been vehemently denied, and same for plate tectonics, along with a number of other things we now take for granted (so to speak). Fascinating.

  16. I enjoyed the AFR piece and learnt a lot.

    I don’t get the point of the Additional Action Reserve. Do voluntary cutbacks include cutbacks cotrresponding to permanent conservation measures that are induced by the carbon price? Then the argument is that with reduced emissions the demand for permits will go down which will offset the impact of the initial conservation decision. Isn’t this just the reason that the level of emissions quotas will decline through time? Why the need for a specfic policy. I haven’t heard of AARs before so may have the story wrong.

    If you are saying you don’t favour some kind of special treatment for tradeables that will be adversely affected by carbon pricing then I don’t agree. Local producers who export can legitimately complain of loss of competitiveness and of carbon leakages that mean unilateral actions won’t benefit anyone. The charges in principle should be levied on consumption not production.

    I agree that there is no case for exempting non-traded goods such as power generation – but in fact the free quotas going to them are a small part of the total.

  17. Pr Q says:

    It seems virtually certain that the CPRS legislation will be reintroduced to Parliament later this year, and highly likely that it will be passed with the support of some or all Liberal Senators. The alternative, a double dissolution fought on an issue where the party is split down the middle, would be catastrophic, good reason for any party with an interest in long-term survival to avoid it. I’m guessing the Liberal Party still fits that description, or at least that enough of its members do to provide a Senate majority.

    If Pr Q says its “virtually certain” that the L/NP will support a revised CPRS then thats good enough for me. I assume he is more closely hooked into Canberra political insiders than the present little black duck. I rely on nothing more than late night blog trawls, Fermi-style BOTE calculations and gut-instinct to make my calls.

    Assuming Pr Q is correct then my prediction about the L/NP falling into line on CPRS policy will be confirmed. There is indeed no way that the L/NP can challenge the ALP on this issue without courting electoral suicide. This follows from the relentlessly centripetal nature of AUS politics, where parties that stray outside the mainstream tend to be severely punished by our ruthlessly moderate voters. I call this “the Great Convergence“. Thats why, on 05 JUL 08, I predicted

    The LN/P will fall into line with ETS…I predict that the LN/P will substantially fall into line with most Garnaut report reccommendations. Certainly the basic implementation of the cap and trade carbon pricing scheme. They have already caved into Kyoto.

    Its still too early for me to cash in my full bragging rights chips. But I see Malcolm Turnbull as a pretty decent and sensible fellow (republican sympathies aside). So I am fairly confident that he will lead the L/NP onto the side of reasonableness and electoral survivability on this issue.

    I correctly predicted that Rudd would offer an initially weak carbon emission cut target. In the immediate aftermath of the 2020 conference. On 04 MAY 08 I predicted that Rudd’s first carbon emission cutting policy would exploit Left-liberal dupes who had been suckered by all the political attention lavished on them:

    I see that the Left-liberal commentariat, in the wake of the 2020 summit, is now pretty much co-opted into the federal ALP’s political apparatus, going by the series of love letters to Rudd published that are flying back and forth accross the aether. He listens to you and, hey presto, you are eating out of his hands.

    Pretty cheap date.

    [snip]

    Rudd…will do nothing about King Coal.

    Sure enough, Rudd’s first cut at a CPRS was based on a derisive offer which pandered to the Greenhouse Mafia. On 15 DEC 08 Rudd published the White Paper offering only 15% cut in emissions.

    After having another think about it I guessed that this initial offer was a kind of low-balling expectations dampener combined with finger-in-the-wind, toe-in-the-water tester. I thought that Rudd would “swing to the Left” on carbon emission cutting policy, in the lead up to Copenhagen. On 11 MAR 09 I predicted that

    Rudd-ALP will swing sharply to the Left on carbon constraint over the next couple of years. By shifting Left I mean he will raise the target for emission level cuts. And probably increase the scope and scale of regulatory constraint, possibly including carbon tax.

    Sure enough, a couple of months later Rudd offered a major concession to the Left on climate change policy. On 05 May 09 Rudd increased the upper-bound 2020 carbon emission cut target from 15% to 25%.

    I will also make another prediction: that AUS will introduce a carbon tax will at some stage as the inherent rortablility of carbon trading becomes apparent. I dont have a clear sense on how long it will take the public to realise that carbon trading is likely to be scammed. But, going by the enourmous concessions in all these CPRS bills, it wont take all that long.

    I think I deserve recognition for this string of confirmed predictions. And I am hungry for credit. Please sir, I want some more…

    [brash boy nervously extends his begging bowl to stern and skin-flinted master, fearful of the consequences.]

  18. Jack Strocchi, my understanding is the CPRS will have to be amended after Copenhagen for the target will be set between 25-40%.

  19. September 11th, 2009 at 01:24 #44

    Jack Strocchi, my understanding is the CPRS will have to be amended after Copenhagen for the target will be set between 25-40%.

    If I understand your correctly you are saying Copenhagen will set a lower bound of (no agreement-unconditional) 25% cut and an upper bound of (agreement-conditional) 40% cut. Surely this is wrong?

    Why offer such massive lower-bound cuts in the non-event of an global agreement? We would only be cutting our nose to improve our image.

    And the upper-bound target of 40% cuts on 2000 baseline by 2020 is unachievable. At least not achievable with L/NP co-operation which wont be forthcoming.

    Also, wheres’s my credit?

  20. Jack Strocchi, nice try but you get no credit if your facts are wrong. More than 100 countries have adopted a global warming limit of 2 °C or below pre-industrial levels as a guiding principle in order to mitigate efforts to reduce climate change risks, impacts and damages. And now that Japan has pledged to cut greenhouse gas emissions by 25 percent in the next 10 years from 1990 levels this makes an agreement even more likely in Copenhagen.

  21. The opposition appears to be split between those who want the coalition to oppose any action at all on emissions and those who want the coalition to do nothing more than argue for a few modifications to the CPRS. Neither approach is likely to help them much if for no other reason than that both approaches will drive the debate into complex arguments about whose climate or economic modelling is using the best assumptions, data etc. The coalition is more likely to make gains by opposing all versions of ETS while presenting an effective alternative that is simple enough for mere mortals to understand.

    Alternatives that depend on “putting a price on carbon” will not meet this simplicity requirement. This is because a CPRS style system of exceptions and compensation will be required to minimize the impact of unproductive price increases that will have negligible impact on emissions. The opposition’s best hope of coming up with a simple, effective scheme is to concentrate initially on a very limited number of opportunities for reducing net carbon pollution. Other opportunities can be added to their scheme at a later date.

    Reducing the average fuel consumption of new cars and cleaning up electricty are two obvious starting points. In both cases clean alternatives are commercially available that could lower emissions by over 90%. Cars should be included because of the need to reduce the country’s exposure to future oil shocks. Electricity because it is responsible for approx. 50% of our emissions.

    In both cases putting a price on carbon is not the most effective way of driving change. In the case of cars, regulations could drive down the average fuel consumption of new cars without any need to change the price of fuel. In the case of investment in clean electricity, the rate of increase in the average price of electricity can be minimized by negotiating price and sales guarantees with potential investors in clean electricity while leaving the price of dirty electricity unchanged.

    The opposition needs to stop getting entangled by the government’s political games, support more challenging emission reduction targets and get on with developing serious alternatives to CPRS.

  22. Wilson Tuckey said today that there might be a conscience vote on the issue, maybe that would increase the likelihood of a Liberal voting with the Greens to improve the CPRS.

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