Since I wrote my post on good climate news for 2017, a couple of news items have caught my eye
* Britain now generates twice as much electricity from wind as from coal, and around 30 per cent from renewables in total
* More than half the vehicles sold in Norway are now electric or plug in hybrid
My thoughts on these examples over the fold:
TL;DR version: These examples show that, at least for developed countries, massive reductions in CO2 emissions are feasible right now, with no discernible effect on living standards.
Let’s take Norway first. The rapid shift to electric vehicles is part of a program aimed at ending sales of internal combustion cars by 2025. It’s been driven by subsidies of various kinds, as well as easier access to parking. These subsidies are substantial when considered in relation to the purchase price of cars. What matters, however, is that they are quite modest in relation to government budgets and the economy as a whole. They don’t even rate a mention in the summary page of this OECD economic survey. Of course, Norway is rich, even by developed country standards, but only about 25 per cent richer than Australia.
As we’ve seen repeatedly, subsidies for ambitious climate programs are initially set too high, with goals being overachieved as policymakers are surprised by consumer demand and technological progress. Norway is already scaling back its subsidies, but that won’t derail progress towards decarbonization. Countries that move a bit later will be able to start with lower subsidies and draw on Norway’s lessons regarding the best way to encourage a rollout of charging stations, the key infrastructure requirement.
Finally, it’s worth observing that Australia offers some pretty big subsidies to (mostly) large car buyers through our indefensible concessions on FBT, and through inadequate road pricing. The only benefit of these subsidies is to maintain employment in the salary packaging industry and to keep the toll road juggernaut rolling.
Turning to Britain, it’s striking to recall that, only a few years ago, we were having heated arguments about whether an energy sector with 30 per cent renewables could possibly work. Looking in more detail at the numbers, the UK has one advantage in eliminating coal, namely that it generates around 25 per cent of its electricity from nuclear (a high cost source, but the cost of existing stations is sunk), which has constant supply characteristics similar to those of coal. Even so, coal and nuclear combined only account for around 30 per cent of the total, far less than Australian fans of “baseload” assume to be necessary. Against that, Britain has some big disadvantage. It’s a notoriously lousy location for anything solar, and the lack of available land (amplified by NIMBY resistance) means that most of its windpower development is offshore. The British example shows that, with sensible policy, Australia could reduce the coal-fired share of electricity to 30 per cent in a decade or so and at negligible economic cost.