Economists call on climate change policy

I’ve just signed a statement drawn up by a group of economists from the Toulouse School of Economics and the Université Paris-Dauphine, in advance of the current COP21 international negotiation. The aim of the statement is to encourage the parties to aim for a more comprehensive and economically effective agreement that would ultimately supersede the patchwork of voluntary commitments being put forward at present. While the commitments being made for COP21 represent a huge advance on the vague aspirations that emerged from Copenhagen, we should not lose sight of the ultimate goal of decarbonizing the global economy in a way that minimizes the economic costs by taking advantage of the power of price mechanisms.

From an Australian viewpoint, the most important part of the Call is Part 3: “Free rider” behavior must be hindered. The current government’s attempts to position Australia as a free rider on the efforts of others cannot succeed in the end, and will only do Australia harm.

If you’re a professional economist and agree with Call, you can sign it here. More generally, it’s open for discussion in the comments thread.

68 thoughts on “Economists call on climate change policy

  1. BillB I said my background was in biodiesel, microhydro and wood heating not that other stuff and I’ve had PV since 2005. Reverse cycle aircons normally quote output ‘power’ which in cooling mode is EER X input power. Thus an aircon with a claimed output power of 2.5 kw with a EER of 3 has an input of power of 833w. That will flatten a Powerwall after one hot night assuming they are depth of discharge limited.

    I’m counting the days until BREE brings out their July energy bulletin. Then we’ll see if things are just as rosy coal wise as some imagine.

  2. @Megan

    “I tend to agree with Newtonian’s comment. If “economics” made the whole mess in the first place, then it seems odd to place it at the centre of finding a solution.”

    I don’t think it was just economics that made the mess; every other ‘discipline’ seemed to go along with or fall into the value system that neo-liberalism created; economic theory and ‘philosophising’ seems to have been a significant factor in the way that the solution to problems is always the “determined application of more and more rationally organised expertise”.

    The quote above and following are from John Ralston Saul’s book “Voltaire’s Bastards”. He argues that knowledge has become “divided into feudal fiefdoms of expertise” in which general understanding and co-ordinated action (is) not simply impossible but despised and distrusted.”

    There is an interesting site that I found at econtalk; probably google this paragraph to find the page with podcasts and transcripts.

    “Saul argues that the illegitimate offspring of the champions of reason have led to serious problems in the modern world. Reason, while powerful and useful, says Saul, should not be put on a pedestal above other values including morality and common-sense. Saul argues that the worship of reason has corrupted public policy and education while empowering technocrats and the elites in dangerous and unhealthy ways.”

  3. “Tradeable quotas imply a common price, …”

    If the global market opens and closes at the same time in ‘the global economy’ and does so only at pre-specified time interval such that the market is linked to only one geographically defined location and a pre-specified time at this location. Is this what is being considered?

  4. Hermit if ” biodiesel, microhydro and wood heating” is your expertise area why are you not sharing some of this knowledge with us here. I am extremely interested in biodiesel and wood heating. At present I am designing a bi fuel wood stove for my Yacht (not quite yet started) so that I can cook and heat energy storage oil with flotsam wood, else methylated spirits. It will be a diesel electric drive with most small movements powered from solar charged batteries and power motoring bringing in the (bio)diesel generator. Otherwise I am interested in the Rocket Mass Heater. More recently I have started to see what mechanisms there are for producing electricity from a log fire, and discovered a surprisingly large amount of work that has been done in that area.

    My family loves our log fire. Nothing else heats as well. Even though we don’t use it a huge amount of time, when you want that kind of warming the log fire is the only thing that works. I have one in the factory as well.

  5. BilB, for on-grid storage which is where it pays for itself, one can always dip into grid electricity if a Powerwall can’t provide enough power. But for those who have no choice other than to live off-grid, forsome people it could work out cheaper to cook with solar electricity than to transport LPG long distances. Of course, a wood stove could be better than either option. Personally, I rarely draw more than 4 kilowatts when cooking. One would have to be a really intense cook to draw 7.5. And since a lot of people have off-grid inverters that can put out 4.6 to 5 kilowatts of AC, they could cook electric if they wanted to. Of course, those rare people with 10 kilowatt off-grid inverters could get two or more Powerwalls and run every element on a large electric stove at once if they wanted to.

  6. RonaldB, a regular stove uses energy regulators with an unsynchronised method of metering electricity to the elements. An 8 inch element is 2100 watts and the 6 inch element is 1500. So a 4 element range top has a possible 6,600 watt possible power draw if all of the elements were on at the same time, even if the elements were set to simmer. That is before you count in the oven or the grill. The method of switching is via a wire wound bimetal strip which heats to switch off and cools to switch on. I went to some trouble in New Zealand to interest Fisher & Paykel and Simson appliances into changing to an electronic system that could regulate power to the elements in a synchronised power sharing manner, unsuccessfully. And I don’t know yet whether there is any company in the world that has made the change. When there is sufficient demand some one will, and then they all will. Perhaps Solar’s limitations may well be the trigger. Washing machines are a different situation. Soft start motors are now common following Fisher and Paykel’s lead with their very successful “Gentle Annie”.

    The reason why I like bottled gas predominately for cooking is because it is a stored energy which lasts for months. I don’t have an environmental problem with it as, in principle it can be produced from natural material waste via the gassification process, and so is sustainable.

    There is plenty of such waste material, sufficient for 12,000 kilowatt hours per household per year, more than enough to supply for cooking and energy backup for solar to cover those long stormy weeks that denialists just love to fetish over. So it is just a matter of getting our systems sorted out and Australia will be able to be zero emissions, or very near to it.

  7. With regards to economists pushing for greater action on climate change, that’s to be applauded; however, the potential of the threats is increasing, and our realisation of how significant these threats are is also expanding. A whole suite of research articles in the past year have shed light on a whole raft of consequences from Anthropogenic Global Warming, consequences we’d do well to avoid if possible. The window for avoiding many threats from eventuating has closed: this is the import of the most recent research articles investigating the Antarctic region, for instance. At some point soon, economics and market-based solutions won’t have the necessary fire power to accomplish what is required: that is the danger we face in pinning our hopes on economic systems to do the essential work for us. It would be interesting if that danger could be given more than just a qualitative dimension, so we’d know what we face. In our neo-liberal world, people don’t like direct government intervention (or say they don’t, anyway), but the longer it takes for decent economic policy to work on shifting gears away from GHG causes and toward renewable energy use, the bigger the government interventions that will be needed in the future.

    Still, if the economics experts can exert some decent pressure on the current government to be much more active in addressing AGW, I’d be a bit happier than present. I think getting rid of this government is probably a more helpful strategy, nevertheless.

  8. BilB, that’s why you pull a couple of knobs off the stove. It’s a very simple fix. I would gladly pull off a couple of knobs if it meant I didn’t have to drive to Cunnamulla for LPG bottles or muck around with a wood stove in the middle of summer.

  9. Good place for cycling, Cunnamulla, looking at the images, but I think, living there, I would be known as the crazy old man who built his own hill. So how far out of town do you live Ronald B?

  10. Well, I’m in Adelaide now, so you can see why I wouldn’t want to drive to Cunnamulla for LPG bottles, but I was more putting myself in the position of someone who might be tempted to use electric cooking while living off grid.

  11. Good that economists are getting on board. I’m not sure in Australia the public is well informed enough to be influenced much and the pathetic bunch of LibNatLabs even want to be.

    re Powerwall (with apologies if this is taking the discussion off topic) – it’s worth noting that an option to upgrade to 20 year warranty has been offerred. How much extra for that I don’t know. Normally that would be indicative of confidence by manufacturer that their product would last at least that long, but I suppose it’s possible there could be a marketing tradeoff between increased perceptions of long life for all purchases and some extra revenues from purchases of that option and a significant proportion of them not lasting that long. I’d like to think it does represent a real improved life expentancy. Length of service life is something that is not fixed in stone and what was true of previous versions may not be true of newer ones. Seems obvious that lifetime costs are strongly influenced by length of lifetime, and eg it sounds like large scale battery entrant, Alevo, is aiming for very long life as a major advantage and selling point.

    Ultimately grid connected large scale storage can counter the grid defection scenario from domestic storage with economies of scale, perhaps using technologies that may only suit larger scales. I’m inclined to thinking that may be the better option in the presence of a suitable grid and with industry to cater to, but it requires a level of foresight, planning and investment – and willingness on the part of encumbents – that so far seems lacking. I blame the well marketed politically expedient offerings of doing little to nothing, largely based on pretending the seriousness of the emissions problem into low priority insignificance; in a ‘market’ where that is on offer, that short term lowest cost option is likely to remain a ‘winning’ one.

    I think – a bit ironically given that the strongest opposition to serious climate policy and renewables comes from free market idealogues – the real battle in the presence of improving renewables that are intermittently and periodically cheaper than ‘baseload’ is keeping the electricity market free and open to those inconvenient entrants.

    Rather than the German model where renewables have priority, here we see fossil fuels given priority. We are seeing regulatory changes that allow them to be excluded, not because they are more expensive but because they are cheaper – but just not all the time. In other markets there would be serious repercussions for locking new entrants out such as is increasingly occurring with new and larger PV installations – frankly I don’t buy the ‘grid instability’ excuse for the option for the grid operators to refuse their contribution; it’s unfair, monopolistic practices in disguise that is being engaged in by companies with plant unsuited to intermittency, involving long established influence with people in high places. Shifting the balance of costs from usage to fixed charges is another way that PV – and efficiency – is being disincentivised.

    Storage changes the economics around PV and it doesn’t need to be sufficient for grid defection to be profoundly influential; enough for a home or business to self supply overnight following a sunny day shaves the top off – and the premium wholesale price off – both daytime and evening peak. During widespread and long lasting sunny weather plant that otherwise ramped up every afternoon does not need to – it is forced into intermittency. Not shut down, but used less – and as an interim state on the way to zero emissions, that’s a step forward, not back. Just not to the operators of such plant. Some planning for and accommodation of existing FF plant as backup may be necessary, even to the point of subsidy if load responsive gas plant for example, can take up more of non-responsive coal’s share to remain viable. And coal plant is shut down.

    Storage offers the potential to purchase off-peak in anticipation of overcast weather – another circumstance I suspect we will see hostile regulatory/pricing mechanisms to prevent; currently off peak is specific to particular applications, with others excluded. Yet with suitable agreements and smart technologies in place, some of that distributed storage could be available to grid operators for load levelling and emergency use. Even non-solar electricity users can find advantages in the presence of variabe, time of use pricing – although there’s no great rush to TOU. I think because it will increase incentives for storage as it becomes available at lower cost, and storage will increase incentives for installing more PV.

    I don’t know what the service of grid as everynight “backup” for solar fitted homes and businesses, or as less frequent overcast weather backup for solar and storage fitted ones should be priced at – it surely needs to be more explicit. What should not be allowed to slip under the radar is regulatory and pricing arrangements that disincentivises a shift to consumers adopting low emissions options (in the absence of major incumbents not doing so).

  12. This is a very good graphic representation of how the global warming experienced is a manmade problem; different contributing factors are shown, one at a time, and then as an aggregate, with their effects on temperature highlighted. It is only when the greenhouse effect from emitted greenhouse gases is taken into consideration that the computer simulated climate matches the observed time series. Email or message your pollies with the url, give ’em something to think about.

  13. In some ways it would be good if the power companies owned or leased batteries at the user premises. They could use them for frequency control and via smart inverters export power to the grid when needed as an alternative to costly peak power. The home or business owner then gets the installation then the batteries serviced or replaced under the deal. So far Origin and AGL are talking about such deals. We might have 2m solar homes (PV, hws) but it’s hard to see that many batteries being installed at current prices.

    So far the main force on emissions is the cool reception for Abbott at international meetings which may ultimately have no effect. I suspect he will be re-elected and then allow some belated but half hearted measure on emissions. If carbon pricing came back in some form and batteries got cheaper there could be increased uptake.

  14. Regards #54,

    I said there that I have a log fire in my factory. With this morning being so cold, this afternoon I decided to light the fire when the temperature started to drop. So here it is 2 am, the outside temperature is 6 degrees and falling according to the dash temp meter, inside the factory it is a steady 15 degrees C. the log fire is keeping a steady 9 degrees over the outside temp in a 2000 square foot factory with a high roof. I’m burning cut up pallets and several medium size logs that I have had here for ages. First fire of the year at work here and it is making it far more pleasant than any other cold day so far. I am going to have to get some more logs here if the cold days are going to persist for another week.

  15. BilB I remember a wood stove being in a factory that I worked in many years ago. It was a family business and the bosses wife – the boss really – sometimes cooked a one pot stew or soup on it. For everyone.

    There were only a few weeks of the year that it was cold so the main need in that factory was for cooling in summer.

    I was wondering if anyone was looking at the potential health benefits that could be had if people did more cooking themselves rather than buying processed food. Is it energy efficient for families to buy unprocessed or processed food?

    There is this.

    “Cutting emissions,(now) the commission says, will limit health damages, as well as bring important health improvements associated with improved air quality, increased mobility from better public transport, and better physical and mental health from greener spaces and more energy efficient homes.”

    For example if people chose not to drink soft drinks because it was going to worsen climate change, it would be better for them and prevent a lot of health problems that are caused or exacerbated by sugar consumption.

    And if we went back to cooking one pot meals, people would only need one knob on the stove or perhaps two, one for the potatoes.

    I can vouch for the energy efficient houses being a good thing though. I built a house a decade ago using all the passive energy principles I knew about and could afford at the time and I’ve only ever needed an electric oil heater and a small fan heater during all the darling downs winters I’ve experienced.

    This year has been so warm that I’ve only turned it on a few times and my neighbour has only had to chop one load of wood.

    Greece is looking good.

  16. I note the comments about the electricity requirements for cooking, and I am somewhat bemused.

    Whilst it is a good and necessary thing to switch from fossil to renewable fuel for cooking, it is also good and necessary to minimise the total amount of energy used to achieve it. The issues with battery storage capacities are very much reduced if one employs heat-retention cooking. I and a lot of my green-minded friends take it for granted (usually incorporating it into a slow food ethic), but every now and then (now is a now…) I’m reminded that this is not a widespread idea.

    I was going to make the comment myself that if we insulate our buildings, why do we not insulate our cooking utensils, only to find when I was digging up my first link that someone else had said the same thing.

    It’s not difficult. All it takes is some forethought in preparation, which is no harder than remembering to take reusable bags to the supermarket, and which is not much different to preparing tomorrow night’s meal today, or tomorrow morning, or both. There’s an issue about making sure that the food is kept about 60 °C, or at least reheated before eating, but it’s not onerous.

    I often hear “but…” comments in response to this. In my experience the vehemence of such is generally proportional to the overall commitment of the commenter to saving energy.

    If one is in a position to combine it with solar cooking, the overall saving of energy and emissions is enormous. It’s just a matter of walking the talk.

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