Copenhagen commitments

While Australia has been transfixed by the meltdown of the Liberal party, there have been a string of positive developments around the world, which make a positive outcome from Copenhagen, leading over the next year to an intermational agreement to limit greenhouse gas emissions, much more likely than it seemed two years ago, or even six months ago. Among the most important developments

* Obama’s commitment to a 17 per cent (rel 2005) target, which essentially puts the Administration’s credibility behind Waxman-Markey
* China’s acceptance of a quantitative emissions target, based on emissions/GDP ratios, but implying a substantial cut relative to business as usual
* The change of government in Japan, from do-little LDP to activist DPJ
* EU consensus on the need for stronger action
* Acceptance of the principle of compensation for developing countries, and acceptance by countries like India that they should take part in a global agreement and argue for compensation

A notable consequence has been the announcement by Canadian PM Harper that he will go to Copenhagen, having previously said he wouldn’t. Canada is a hotbed (coldbed?) of delusionism, and Harper has reneged on Canada’s Kyoto commitments. That was fine while Bush was in, but now he finds himself on the outer with Obama and threatened with suspension from the Commonwealth. More serious measures, such as trade sanctions, are being kept out of view for the moment, but they are already being discussed in both EU and US circles.

Harper’s embarrassing backflip is an indication of the silliness of the idea that Australia is in danger of “getting in front of the rest of the world”. If fruit loops like Abbott and Minchin get any share of political power in this country, even the partial veto associated with control of the Opposition, we run the risk of finding ourselves at the back of the pack, and paying a hefty price.

As with most international agreements, the outcome from Copenhagen will prove far short of ideal. But once the world is on the right track, and it becomes evident that the costs of stabilising the global climate are far smaller than the delusionist doomsayers have pretended, it should be possible to improve. With luck we will be in time not just to save ourselves from the worst-case disasters but to give vulnerable systems like the Great Barrier Reef a chance at survival.

50 thoughts on “Copenhagen commitments

  1. Perhaps we are looking at different news reports but my understanding regarding China is that they are only talking about reducing carbon intensity (carbon emissions per unit of GDP) not emissions per capita or total emissions. They can probably do this simply through investing in efficiency most of which will simply flow through to even higher GDP. I’d be interested to see some more detailed analysis of this.

  2. Reread the post, Terje. We are in agreement up to your penultimate sentence – an investment that reduces CO2 emissions by 50 per cent per unit of output (the target) is most unlikely to raise output by 200 per cent (the second-round effect required to leave emissions unchanged). In fact, assuming firms are maximizing profits at existing prices, efficiency improvements introduced in response to mitigation policies must reduce net GDP, though not by very much.

  3. Trade sanctions are a costly way for oneself to punish someone else. How is this going to work with a range of multilateral and bilateral trade agreements?

    We won’t get anything useful until a simple mitigation plan is drawn up. I just can’t see everyone agreeing to something like the CPRS.

  4. @Mark Hill
    Well, the EU, NZ and (assuming Waxman-Markey goes through, as now seems likely)) the US have all got “something like the CPRS”, Japan is going the same way, and ohers seem certain to follow. Of course, as Harper is finding out, it doesn’t matter if “everyone” doesn’t agree. The minority who don’t agree will just have to go along.

  5. I would even say that a positive outcome from Copenhagen is more likely now than it was a month ago. The latest positive development is the proposed “Copenhagen Launch Fund” from CHOGM 2009. It would start in 2010, and build up to $10 billion annually by 2012. The declaration also recognises the need for further funding streams and for funding to be scaled up after 2012. We still need specific commitments for funding from developed countries at Copenhagen but this is a good start.

    What will be interesting is whether a draft “Kerry-Graham-Lieberman Bill” gets released before CoP 15 starts.

  6. Mark,

    Rulings on issues such as the WTO’s “production and processing methods” are likely to increase.

    To the extent that this may reduce carbon emissions, is the degree to which it is unlikely to be a “costly way for oneself to punish someone else”.

  7. Copenhagen is important and it does not matter what is agreed to – as long as there is a recognition that people’s actions can affect climate – and we have to do something about it.

    It is pretty obvious that renewables is the way to go because if we forget about interest charges then renewable energy of just about any type is cheaper than producing energy by burning fossil fuel. We need not pay interest on money to build a new asset if the government is prepared to guarantee the money produced as loans to build the new asset. As the government is already guaranteeing the money for existing bank loans it is a small step for them to guarantee money for bank loans for new renewable energy assets.

    Failing that an alternative is to pre-sell the energy from renewable plants as a way of getting the funds to build them. We know that the energy from geothermal or solar thermal sources has an operational and maintenance cost of 1 cent per kwh. We know the same energy today sells for 6 cents so that is 5 cents profit without finance charges.

    We know that energy prices are likely to go up not down so it is my guess that we can presell the output of renewable energy plants to super funds for at least 6 cents per kwh. Super funds must be desperate for inflation proof assets.

    It costs today about $5 million per megawatt to build a geothermal power plant which will produce about $500,000 worth of power per year. Presell 10 years worth and you have enough money to build it. As it will last at least 50 years this is going to make someone very rich.

    To use price to encourage investment you have to increase the price of the renewable energy from 6 cents to 11 cents per kwh just to cover the interest.

    Reducing the cost of investment by reducing the cost of finance is a more effective approach than raising the price through emissions trading and I expect some countries will sooner rather than later catch on and then the investment rush will start.

    We need investment of about $30 billion per year for 10 years to give Australia 100% renewable energy or zero net emissions. As we spend 24billion each month on houses diverting a little of this money to renewables is not a big deal and obviously we can do it.

    If Australia can do it so can the rest of the world.

  8. I hope you’re correct John. I don’t really see how the laggards are going to be punished and that’s the real problem. Other than the intrinsic costs of their own domestic policies, how do the laggards in the WTO process lose out – from the agreement that is?

  9. Mark,

    A WTO ruling to effectively sanction against carbon intensive production and process methods will assist with reducing damage costs associated with carbon emissions.

    This isn’t a difficult point to grasp.

  10. @jquiggin it has surprised me just how long – how many years, in fact – the dissident countries have been able to pretend that there won’t be consequences if they don’t adopt some sort of measurable action. I guess with the MSM it wasn’t an issue they wanted to explore until the jig was up – which it is now. Hopefully the Liberals will work this out b/n tonight and tomorrow morning, and leave Malcolm “Not for Turning” Turnbull as leader of the opposition, and the CPRS agreement in place.

  11. @Mark Hill
    Mark Hill asked “How will new WTO rulings on production methods alter the relatively high domestic costs of trade barriers?”

    What damn domestic trade barriers Mark????. They got killed in the 1950s (trdae barriers and import restrictions). Have you, like Rumpelstiltskin been asleep for 60 years growing a beard?

    “relatively high domestic costs of trade barriers”.

    You dont know what you are talking about. Go away.

  12. I remember hearing earlier this year that the WTO was looking at treating carbon tariffs in a similar manner as sales taxes, such that countries can impose without compromising their commitments. This would seem to provide a relatively straightforward way of punishing the laggards.

  13. Alice,

    I do know what I am talking about.

    Free trade was not re-established in the 1950’s. The most significant trade liberalisation was in the late 1940s, the late sixties and late seventies (formation of GATT, Kennedy Round and Tokyo Round). The average tariff rate now is less than a third of what it was for the 1950s and until the Kennedy Round.

    Punishing laggards by trade sanctions imposes higher trade barriers. Trade barriers generally damage domestic economies more than their trading partners whom against the barriers are levied.

    Note that Prof. Quiggin did not take issue to this, but my disbelief that a general agreement can be entered into on a complicated policy like that of the CPRS, and not a simpler policy.

    The question is if enough countries will credibly commit to a workable and effective agreement and the trade effect of such barriers becomes that of a large nation (mitigators) tariff on a small nation (laggards).

  14. We not only need compatible targets but also uniform implementation rules. That applies particularly to free permits (which industries, how long) and escape clauses like offsets. For example the EU has said it won’t recognise tree planting offsets within its borders. A weird situation may arise whereby a country with lax rules imposes carbon tariffs on imports from a country with tough rules which are not quite met. Very tempting of course to use those tariffs as disguised protection.

    I have a horrible feeling that if Rudd goes to Copenhagen confident he can get the ETS up he will be lauded. However he might subsequently water it down several times more while China’s seemingly less ambitious target will be achieved with an iron fist. Worse still if there is a perception that climate policy or Peak Oil is killing global GDP then Copenhagen resolutions will be quickly forgotten eg to make synthetic fuel from coal. If we get the headline ‘Global climate agreement finally reached’ I’d give it as much credence as all those headlines that said ‘Peace in the Middle East’.

  15. Mark Hill

    You are asking the wrong question. Whether WTO rulings on production impact on domestic costs has to considered on risks and costs of retaining the status quo.

    Climate deniers, and coal lobbyists, see no or trivial risks within the status quo.

    They then get infatuated with essentially redundant questions – such as yours.

  16. The global post-Copenhagen consensus on climate change mitigation will probably be stronger still. Where would that leave Australia, in particular the Liberal Party, who would tend have to adopt some form of CPRS? At that stage the Liberals will presumably have abandoned a leader on the basis of climate change denial. They would be in a position of double take, double speak all over again. That would take some doing, some spinning. Could Joe Hockey massage the message lines? I doubt it, even with Minchivellian direction. So much for a Tuesday Pyhrric victory on the way to nowhere.

  17. Mark Hill :Iain,
    How will new WTO rulings on production methods alter the relatively high domestic costs of trade barriers?

    The ‘relatively high costs of trade barriers’ don’t seem relevant. A WTO ruling on production methods, which would take into account the full cost of using a method that is producing an uncosted global externality, wouldn’t have anything to do with any existing ‘relatively high cost of trade barriers’ and is not, itself, a trade barrier but is simply pricing the externality, and/or if used as a punishment, punishing the ‘evil doers’ for their bad behaviour in the interests of getting them to do the right thing.

    The WTO can do that, no problem. Of course, there are, no doubt, plenty of deniers working in the WTO, and one thing deniers are excellent at is not understanding things they do not wish to understand. But that is not a problem if we make the WTO’s labour market sufficiently ‘flexible’.

  18. @Mark Hill
    Free trade was not re-established in the 1950’s. The most significant trade liberalisation was in the late 1940s, the late sixties and late seventies (formation of GATT, Kennedy Round and Tokyo Round).

    You still dont know what you are talking about Mark. Your original point was local not international.

  19. John – I acknowledge your point about efficiency and growth.

    Does anybody think nuclear power won’t be a major part of how China and America achieve their emission intensity objectives? If indeed they do achieve them.

  20. John. Your observations regarding the “tribalism” of the AGW debate are some of the most interesting (to me )of the past few years.
    You are a recognised pundit on economics and politics. You run a globally recognised blog.

    John there is a new phrase in the lexicon “Climategate”.
    “Climategate” broke ten days ago.

    Since “Climategate” broke you offered the opinion Saturday that people who doubt AGW are, among other things “Lunatics and Looney Fruit Loops”
    In my opinion this was just ramping up tribal rhetoric.

    On Sunday you wrote on “a string of positive developments for Copenhagen”

    My take in your position on the science was that you would defer to the peer reviewed climatologists. A totally legitimate position in my opinion.

    O.K. I am not from your tribe. ( I have experienced living under socialist governments, and I don’t like it)

    But, really, are your two last columns really representative of your whole take on the scientific economic and poltical issues of AGW as at late November 2010?

  21. @TerjeP (say tay-a)

    I dont think the issue is whether or not China and the USA use nuclear power, but its clear that nuclear power is not appropriate for Australia. We have huge potential for renewable, and nuclear power wont be competitive with these sources without substantial government support. If the USA and China wish to use nuclear thats fine, whether its worth the costs to them is a different issue.

  22. @Sarah Palin Fan

    Climategate? Come on. The only people who read something signficant into the hacking stunt are AGW deniers. Don’t forget to check for Reds, Greens and other assorted monsters under your bed before you drift from one dream state into another.

  23. @Sarah Palin Fan
    In case tyou havent noticed SPF. Climate gate was an iillegal hack and then a tacky media smear campaign, characterised by snipped, cut, and wildy misinterpreted information (and I mean wildly).

    Climategate is nothing but a con by delusionists of which you appear to be one when you are not being a troll. They are the minority. They are very much the minority and they will increasingly become even more marginalised.

    You need to make absolutely certain you are not with the wrong tribe SPF – as for the reference to socialism – what has that got to do with the points on climate? Or are you really trying to fan fears of invisible enemies that dont exist (communists) just to obstruct good environmental policy initiatives because you dont give a damn what happens to the environment as long as you dont have to donate two cents to the cause. Its so transparently greedy and “bugger you Jack Im OK” – all of course couched in cloying sweet terms – its breathless but not convincing.

    If you didnt want to live in a socialist country you shouldnt have moved to Australia. Weve been a mixed socialist country since the convicts arrived. Try Somalia instead.

    We have heard it all before…. It is a waste of the vast majority’s time out there. You and your type are obstructive and destructive. We need change on this. It will happen. You people and your silly desperate ideas will be run over.

  24. @stuart
    Look at the facts. Australia is on about 1% renewables yet we are supposed to be on 20% in just 10 years time. Hydro is maxed out. Despite cash subsidies geothermal and wavepower have yet to achieve anything. As to windpower it failed to impress when the PM opened the Bungendore wind farm. It contributed less than 10% of capacity during Adelaide’s heat wave.

    Basically the alternatives to coal are gas or nukes. I think we should save gas for the long run, like powering trucks when diesel is prohibitive. Even Greenpeace has eased off criticising nuclear because when you leave it out the numbers don’t add up.

  25. We’ve been a mixed socialist country since the convicts arrived.

    Alice, don’t blame the convicts! From what I’ve read, sharing – with and without coercion – is a pretty universal feature of hunter-gatherer societies too.

  26. Alice :
    @Mark Hill
    Free trade was not re-established in the 1950’s. The most significant trade liberalisation was in the late 1940s, the late sixties and late seventies (formation of GATT, Kennedy Round and Tokyo Round).
    You still dont know what you are talking about Mark. Your original point was local not international.


    I was referring to international trade barriers. You are free to tell me you don’t think I know what I am talking about, but please do not profess to be able to read my mind.

    Nevertheless you are incorrect about Australian tariffs. Mc Ewen’s reputation and legacy was built on establishing or maintaining high tariff barriers during the 1950s. This lead to deteriorating export and productivity performance (and foreign investment remain as tariff hopping, resource seeking) until the 1970s when tariff liberalisation began with across the board 25% cuts (thanks Whitlam).

  27. Freelander,

    Please explain to me why the relatively high costs to domestic economies that impose trade barriers are irrelevant and why the large/small country effects of trade don’t matter.

    Perhaps you can explain first how a trade sanction that “properly prices the externality” doesn’t get enforced as a trade barrier?

  28. Mark Hill :Freelander,

    Perhaps you can explain first how a trade sanction that “properly prices the externality” doesn’t get enforced as a trade barrier?

    Last thing first, the cost of production (converted into the domestic currency), which if all markets are competitive and there are no trade barriers still has to be paid by someone paying for an imported good is not typically treated as a trade barrier. Simply because you pay for the full cost of a good is not a problem. If the production of a good is essentailly subsidised because the cost of an unpriced global externality is not being paid for, removing that subsidy by charging for the externality is not a problem or a trade barrier. It fixes the problem.

    As for the rest I will leave you to work that out.

  29. Correction to my comment several posts back. Renewable energy could now be up to 7% or so of the Australian energy mix
    Most of that by far is hydro so the next 13% will have to come from non-hydro. I could also have said that solar seems to need RECs, cash grants and feed-in tariffs three times the standard billing rate per kilowatt hour.

    If low carbon energy is a race I suggest we haven’t even yet arrived at the starting line.

  30. If you seriously want to debate the costs and virtues of different electricity production technologies then the blog of Barry Brook is a good place to do it. He has the numbers and does a good job of presenting them in practical terms.

  31. @Mark Hill
    You referred specifically to “the domestic costs of trade barriers” Mark. Domestic means domestic. Perhaps you need to explain what costs exactly you were referring to. Some firms gain and other firms lose when trade barriers are put in place or removed. To then waffle on about GATT and various international agreements was a vague non response.

  32. Alice,
    You are right that some firms gain and some lose when trade barriers are put in place. The point is that consumers, almost without exception, lose.
    If you want to support rent seeking firms (as you have supported other dead weight losses before) fine. I just cannot see how you can square that with your professed desire to help the poor.

  33. @Andrew Reynolds
    Your problem is Andrew you accept that unregulated unrestrained free market ideology will help the poor without any questions and without any examination of outcomes and without any doubts at all. That is religion Andy. The world is not quite that perfect and we need economists and politicians willing to examine outcomes for signs of weaknesses or failure, not to insist there wont be any, in advance.

  34. Alice,

    If you are unfamiliar with the political economy of protectionism, please do not make assertions about it in so far as my views on it are generally incorrect.

    I am referring of course to the differential between the costs of protectionism and benefits of liberalisation that accrue to domestic and foreign parties, as well as the differences in the benefits of trade and political economy of tariffs on large and small nations.

    From this basis, I find you characterisation of Andrew Reynolds as completely unfair.

  35. Fascinating that the “libertarian” – read right-wing free marketers – economically abstract human beings into “consumers” and posit their ability or no to be consumers as decisive in their ability to be non-poor.

  36. When and until anyone can prove to me the current warming is greater in acceleration that the MWP then you stick everything else sideways with a little help of your local endoscopy dept.

    So that excludes all hockey sticks, data from EAU, all discredited NON-scientists, who should be sacked at once.


    So we need urgently proper data and proper (no tricks) reconstructions, we also need firm DATA (you know that stuff that really matters that should be in the public domain) of just of much nature is absorbing CO2 (see freeman Dyson, opinion, he of REAL SCIENCE)

    I Think a lot of the problem here is the lack of academic quality, UEA are really a old polytechnic with no track record of rigorousness scientific research. The world is now full of make work institutions for second rate and psudo scientific interest, and in too many cases political interests.

    I look forward to seeing the real data as it comes on stream in the coming years, IN THE PUBLIC DOMAIN.

  37. Anyone want to find out what George Monbiot means, when he describes Canada as;
    “ climate what Japan is to whaling”?
    Go to today’s Guardian, read on and see what you make of this story, including in relation to Australia, especially were we to be governed by the sorts of nutters responsible for the destruction of the Liberal party here, ( eg, even worse than the ALP on ecology).
    Also wonder that the situation he’s describing hasn’t made it on to any Australian news outlet, as is the case with the passing in New Zealand by the conservative government there of, you guessed it, a carbon trading bill.

  38. @Sean Morris,
    You are perhaps unaware that “the data” is already freely available. Since I guess you have no idea what to do with it when you have it, I assume you will now await your next command from McIntyre the Voudon Zombi master. In the meantime, here is a poe-m for you, by Hans, about your situation, entitled “Data”.

    I demand some data,
    no, not that data,
    that other data,
    oh, you’ve already given me that Data…
    well now I want this other data, OK, smartypants?
    oh, I can get that too huh?
    How about…
    Could you give me some data about some other data that you have not given me and then I can want that data?
    I could really use that data.
    Come on, be reasonable!
    Data is really not much good to me unless I can’t have it.
    It is unethical of you to deny me this data about the data I haven’t got,
    because if I don’t have the data on the data I don’t have,
    I don’t know what data I want, that I can’t have, that you are denying me.
    Stop denying me.
    You are denying me data.
    Release the data on the data.
    I demand some data,

    I think there’s something in that for all of us, don’t you?

  39. An actual politician speaks: 4/12/09

    The president’s decision to attend the international climate conference in Copenhagen needs to be reconsidered in light of the unfolding Climategate scandal. The leaked e-mails involved in Climategate expose the unscientific behavior of leading climate scientists who deliberately destroyed records to block information requests, manipulated data to “hide the decline” in global temperatures, and conspired to silence the critics of man-made global warming. I support Senator James Inhofe’s call for a full investigation into this scandal. Because it involves many of the same personalities and entities behind the Copenhagen conference, Climategate calls into question many of the proposals being pushed there, including anything that would lead to a cap and tax plan.

    Policy should be based on sound science, not snake oil. I took a stand against such snake oil science when I sued the federal government over its decision to list the polar bear as an endangered species despite the fact that the polar bear population has increased. I’ve never denied the reality of climate change; in fact, I was the first governor to create a subcabinet position to deal specifically with the issue. I saw the impact of changing weather patterns firsthand while serving as governor of our only Arctic state. But while we recognize the effects of changing water levels, erosion patterns, and glacial ice melt, we cannot primarily blame man’s activities for the earth’s cyclical weather changes. The drastic economic measures being pushed by dogmatic environmentalists won’t change the weather, but will dramatically change our economy for the worse.

    Policy decisions require real science and real solutions, not junk science and doomsday scare tactics pushed by an environmental priesthood that capitalizes on the public’s worry and makes them feel that owning an SUV is a “sin” against the planet. In his inaugural address, President Obama declared his intention to “restore science to its rightful place.” Boycotting Copenhagen while this scandal is thoroughly investigated would send a strong message that the United States government will not be a party to fraudulent scientific practices. Saying no to Copenhagen and cap and tax are first steps in “restoring science to its rightful place.”

    – Sarah Palin

  40. Clarification a la Wiki

    A scandal is a very public incident which involves a claim of wrong-doing, shame, or moral offence. A scandal may be about a real event, an untrue event (often called a false allegation) or a mixture of both.

    Scandals may be told by whistleblowers, who have access to secrets and allow them to go public. A well-known scandal was the Watergate scandal, in which US President Richard Nixon was found to be supporting and hiding illegal burglaries. Untrue claims often lead to a loss of respect for that person, and can destroy their careers. Sometimes an attempt to cover up a scandal creates a bigger scandal when the cover-up does not succeed.

    So its a politcal thing more than a scientific thing

    In my opinion it’s a scandal

    Repeat after me

    Climategate is not a scandal!
    Climategate is not a scandal!

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