The case for fuel efficiency standards

Thanks to Joe Hockey’s masterful salesmanship, the idea of restoring indexation of fuel exercise, let alone imposing a carbon price, is dead for the foreseeable future. This is one case where, despite my economistic prejudice in favor of price-based measures, I think regulation is the way to go. Australia is one of the few developed countries that does not impose fuel efficiency standards on motor vehicles. Now that the Obama Administration has greatly tightened US standards, we are set to have the most petrol-guzzling car fleet in the entire world.

The Climate Change Authority, of which I’m a board member, recently looked into the issue and concluded that, over the lifetime of a vehicle, fuel efficiency standards matching those of the US would save motorists thousands of dollars. Unfortunately, it’s difficult to factor this saving into the initial sale price, given that it may not be reflected in resale values. Still, this would be one of the easiest and cheapest ways of reducing CO2 emissions.

In the long run, given the demonstrated feasibility of electric vehicles, it should be possible to decarbonize most motor transport at a very modest cost. Once the infrastructure was set up properly, this would also solve a large part of the timing problem created by the fact that peak solar supply is in the middle of the day, when household demand is low, but when millions of cars are parked, and could be recharged.

CCS AWOL?

As recently as the Stern Review in 2006, carbon capture and storage from coal-fired power stations was seen as the most promising clean energy technology on offer. This was before the huge decline in the cost of solar PV and the more modest, but still substantial progress on wind energy. Since then, the technology has dropped off the radar, to the point that many reports don’t even mention it. But I just got an invite to a conference on the subject, so I thought I would take another look.

The blurb refers to a number of projects “Callide and Surat Basin in Queensland, CarbonNet in Victoria, and South West Hub in Western Australia”. A quick survey suggests that these are mostly at “proof of concept” stage, rather offering a technology that could actually be implemented on a large scale. Globally, the site says

The Global Status of CCS Report: February 2014 states that there are 12 large-scale CCS projects in operation globally and nine under construction. Overall, these 21 projects have a total capture capacity of almost 40 million tonnes of CO2 a year.

If my arithmetic is right, the entire global effort is about equivalent to the impact of Australia’s Renewable Energy Target:the large scale component calls for 41 000 GWH a year by 2020: my rule of thumb is 1MWh = 1 tonne CO2.

There’s also a report on CCS in the New York Times, which is optimistic, but very vague on cost.

That’s disappointing: from Australia’s point of view, a cheap, safe method of CCS would have resolved the climate change problem, at least as regards electricity, with no adverse impact on our coal industry. I’d be interested in comments from more informed readers.

Condemned by history

So, after some farcical manoeuvres, the Senate has passed Abbott’s legislation removing the carbon price. I hope and believe that this outcome will be reversed in due course, but those who brought it about will stand condemned by history.

It’s not merely that this is a bad policy, which will impose large and increasing costs (depending on how long it takes us to get back on track) on Australia and the world into the future. Even more damning is the fact that this action is entirely based on conscious lies, embraced or condoned by everyone who has actively supported it.

First, and most obvious, no one (least of all Tony Abbott) believes that the government’s “Direct Action” policy is a superior alternative to the carbon price, one that will deliver emissions reductions more rapidly and at lower costs. It is, as everyone knows, a cynical ploy put forward simply to allow the government to say that it has a policy.

In reality, Abbott and the rest want to do nothing, and the motives for this desire are entirely base. For a minority of the do-nothing group, it is simply a matter of financial self-interest associated with the fossil fuel industry. For the majority, however, it is the pursuit of a tribal and ideological vendetta. Their position is driven by Culture War animosity towards greens, scientists, do-gooders and so on, or by ideological commitment to a conservative/libertarian position that would be undermined by the recognition of a global problem that can only be fixed by changes to existing structures of property rights.

Most of these people would describe themselves as climate “sceptics”. There is no such thing. That is, there is no one anywhere who has honestly examined the evidence, without wishful thinking based on ideological or cultural preconceptions, and concluded that mainstream science is wrong. Most “sceptics”, including the majority of supporters of the conservative parties, are simply credulous believers in what their opinion leaders are telling them. Those opinion leaders are engaged, not in an attempt to determine the truth, but in a cultural vendetta against their enemies or in an ideologically-driven attempt to justify a predetermined do-nothing position.

This is a sad day, but one that will come back to haunt those who have brought it about.

Zombie DDT myth reanimated

A large part of my blogging career has consisted of attempts at zombie-slaying: finding ideas that have been refuted by the facts, but that remain undead. Zombies are hard to kill, but one I thought had been permanently dealt with – the myth that Rachel Carson brought about a worldwide ban on DDT, leading to millions of deaths from malaria[1]. Although quite a few people helped to show that this wasn’t true, the lion’s share of the credit, at least in the blogosphere, goes to Tim Lambert (who stopped blogging a while back, though his site still runs a montly open thread). Tim and I laid out the facts in a 2008 piece in the English magazine Prospect which made the following points

* DDT has never been banned in anti-malarial use
* The failure of DDT to eradicate malaria was due to resistance, promoted by overuse in agriculture and elsewhere, exactly as Carson warned. Bans on agricultural use of DDT helped slow the growth of resistance
* The attacks on Carson were undertaken by tobacco industry lobbyists, seeking (among other things) to pressure the World Health Organization not to undertaking anti-smoking campaigns in poor countries

Our primary targets were Steven Milloy and Roger Bate‘s Africa Fighting Malaria organization.

Whether due to our efforts or not, the DDT ban myth seems mostly to have died. Milloy, whose links to tobacco have thoroughly discredited him, seems to be out of the pundit business altogether. He still has an adjunct perch at the Competitive Enterprise Institute but his web page there shows only two opinion pieces since 2008. AFM is also quiescent – its website doesn’t show any research activity since 2011 and its staff all appear to have paying jobs in free-market thinktanks, suggesting a zombie organization.

But the zombie plague always recurs and just now I’ve seen (via Ed Darrell) another instance, oddly enough in an environmentalist magazine Greener Ideal. The author, one Mischa Popoff is described as ” former organic farmer and USDA-contract organic inspector” and repeats the standard DDT myth before a segue into a defence of GMOs. But, as Ed Darrell points out, Popoff is being a bit cute here. DuckDuckGo reveals that he is in fact a Policy Advisor for The Heartland Institute and a Research Associate for The Frontier Centre for Public Policy (the latter being apparently a Canadian version of Heartland, as is the IPA in Australia. The site is down now, so I can’t check).

As long as Heartland lives, zombie ideas will never truly die.

fn1. As usual, the Australian right commentariat bought this one hook line and sinker. Miranda Devine excelled herself, but Blair, Bolt, Quadrant, the CIS and the IPA were all along for the ride.

Hoist by their own petard

Tristan Edis has a nice piece in Climate Spectator contrasting the many statements made by Tony Abbott and Greg Hunt (echoed by Bolt, Blair, Devine, McCrann etc) before the election about the impact of the carbon tax on the price of everything from airfares to supermarket goods with the reality that this impact was minuscule. The implication is that removing the tax won’t have anything like the broad effects on the cost of living that Abbott has promised.

It was this gap between rhetoric and reality that produced last weeks fiasco and the Senate, and may yet derail the government’s entire policy. Taking the government at its rhetorical word, Clive Palmer wanted the ACCC to ensure that all major firms, including airlines and supermarkets, rolled back the cost increases imposed as a result of the carbon tax. Greg Hunt assured everyone that the legislation would do so but it turned out there was no specific reference to anything but electricity. This was for the obvious reason that, in other industries, there was no cost increase to roll back.

All of this gives Clive Palmer, if he wants it, the opportunity to make whatever mischief he chooses. There’s no real way the government can deliver on its rhetoric about reducing the cost of living, so he can demand whatever he wants in the way of add-ons to their legislation.

Can any evidence convince the right?

Along with nearly 60 other Australian economists, notably including John Hewson, Justin Wolfers and Harry Clarke, I’ve signed my name to a public statement urging agreement on a fair, economically efficient and environmentally effective policy to price and limit carbon emissions.

I’m not naive enough to expect that this will have much of an effect, any more than previous statements of this kind I’ve signed. The problem is not, as you might think, that there is serious disagreement among economists on the issue. Opponents of market-based policies to limit carbon emission have tried in the past to organize counter-statements, and have failed miserably. Outside the set of IPA hacks, most recently seen defending the ludicrous claims of the tobacco lobby, there is essentially no disagreement on this (although there is plenty of dispute about the best design, the optimal price and so on).

The problem is, rather, that there is no evidence, and no clever way of framing the issue that is going to convince the tribal right to go against their shibboleths on this issue. If there were, the actual experience of a carbon price of $24/tonne would have done so. In the leadup to the introduction of the carbon tax/price, Tony Abbott described it as a ‘wrecking ball’ that would destroy the Australian economy. Two years later, the economy is still here and not even the government pretends that removing the carbon tax is going to yield any significant benefit.

And the same is true more generally, notably in the US. This NY Times article by Brendan Nyhan makes the point

Once people’s cultural and political views get tied up in their factual beliefs, it’s very difficult to undo regardless of the messaging that is used.

While this is always true to some extent, it’s far more true, at present, of the right (in English speaking countries) than of the left, and far more true of the right today than in the past.

In the end, there’s no way to persuade those on the political right to accept factual truths about (for example) climate change, without also persuading them to abandon the political right.

Never saw it coming!

I’m in the US at the moment, working on papers and experiments involving unforeseen contingencies. I just woke up to the news that Clive Palmer has had a meeting with Al Gore that has led him to support the renewable energy target and an emissions trading scheme (the latter contingent on other countries taking the same route). And, relevant to me personally, he is to oppose the abolition of the Climate Change Authority.

I’ll wait for more news on this. In the meantime, at least I now have an ideal example of an unforeseen contingency.

This is a job for the Freedom Commissioner

The Minerals Council of Australia has just published a report it commissioned from Sinclair Davidson of the Institute of Public Affairs, responding to campaigns to encourage divestment from coal. What’s most interesting is the suggestion that Corporations Act and the anti-boycott provisions of the Trade Practices Act could be employed to silence critics of the coal industry. The relevant section, from the conclusion

Finally, the campaign may contravene the letter or the spirit of the Corporations Act. While activists argue that wealth portfolios without fossil fuel stocks perform just as well as those with fossil fuel stocks, the reality is that failing to hold a well-diversified portfolio has substantial economic costs in the form of higher risk and lower returns. So if investors make valuation errors based on the divestment campaign and relinquish high-performing stocks, a breach of the Corporations Act may have occurred.

There is a potential role for the Australian Securities and Investment Commission to examine whether the stigmatisation of the fossil fuel sector via the divestment campaign is a breach of the [Corporations Act].

The divestment campaign would amount to an unlawful secondary boycott if environmental activists were covered by those [anti-boycott] laws. They are seeking to restrict coal mining in Australia by targeting a critical supplier to the sector.

There are quite a few points of interest here. The most obvious is the threat to freedom of speech, something that ought to be of interest to Freedom Commissioner Tim Wilson, formerly of the IPA. In this context, it’s worth noting that campaigners against wind farms (notably including the IPA) would be potentially subject to the same kinds of penalties.

More generally, there’s the question of the anti-boycott provisions and the Trade Practices ACT in general. These provisions involve fairly substantial infringements on freedom, primarily for the benefit of business. The law originally focused mainly on protecting small businesses against a variety of anti-competitive practices of big firms. That sounds good, but there’s an equally good case to be made that the market should be left to sort itself out in such matters, or replaced by public provision when it can’t. The extension of Trade Practices Law to cover unions (under the Fraser government’s Section 45D) and public services (under National Competition Policy) makes the Trade Practices Act one of the central legal instruments for the imposition of market liberalism.

Note: Again, no personal attacks, please. There’s more than enough to criticise in the substance of this piece.

Another one (or more) bites the dust …

Coming back yet again to nuclear power, I’ve been arguing for a while that nuclear power can only work (if at all) on the basis of a single standardised design, and that the only plausible candidate for this is the Westinghouse AP1000. One response from nuclear enthusiasts has been to point to possible future advances beyond the Gen III+ approach embodied by the AP1000 (and less promising competitors like EPR). The two most popular have been Small Modular Reactors and Generation IV (fast) reactors. Recent news suggests that both of these options are now dead.

The news on the Small Modular Reactor is that Babcock and Wilcox, the first firm to be selected by the US Department of Energy to develop a prototype, has effectively mothballed the project, sacking the CEO of its SMR subsidiary and drastically scaling back staff. Westinghouse already abandoned its efforts. There is still one firm left pursuing the idea, and trying (so far unsuccessfully) to attract investors, but there’s no reason to expect success any time soon.

As regards Generation IV, the technology road map issued by the Gen IV International Forum in 2002 has just been updated. All the timelines have been pushed out, mostly by 10 years or more. That is, Gen IV is no closer now than it was when the GenIV initiative started. In particular, there’s no chance of work starting on even a prototype before about 2020, which puts commercial availability well past 2035. Allowing for construction time, there’s no prospect of electricity generation on a significant scale before 2050, by which time we will need to have completely decarbonized the economy.

Derp, a 20 year history

Noah Smith’s classic definition of “derp” as “the constant repetition of strong priors” was developed with particular reference to solar energy, to refer to people who’ve taken the view, at some point in the past, that solar energy can’t work, and who are neither willing to change their minds, whatever the evidence, nor to state their views once and for all and remain silent thereafter.

The classic illustration of this would have to be Ted Trainer of the University of New South Wales. For the past 20 years, he’s been writing and rewriting the same paper, showing that renewables can’t possibly sustain a consumer society. Here’s a version from 1995, and from 2003, and here’s the latest.

What’s striking is that, while the numbers change dramatically, the conclusions don’t. The 1995 report says, in essence, that solar PV is totally unaffordable for all practical purposes. [1] So, our only hope is to embrace a massively simpler lifestyle,

The most recent version, written at a time when cheap solar power is a reality, has much less scary numbers. He estimates that the capital investment required for decarbonization of the economy would amount to 11 per cent of GDP. That’s still an over-estimate but it’s in the right ballpark. Trainer rightly observes that this number far exceeds current investment levels and is unlikely to be attained. But, unlikely as it may be, it would certainly be chosen if people accepted Turner’s conclusion that the only alternative was to live in huts with peat roofs.

And, over time, the insistence on negativity about renewables has led Trainer to promote views that are the opposite of his original concerns about simplicity For quite a few years, his work was published primarily at pro-nuclear site, Brave New Climate[2].

If Ted Trainer actually wants to help save the planet it’s time for him to abandon the campaign against renewables and urge society to accept the relative modest reduction in the rate of growth of income needed to decarbonize energy supply. Once the prospect of massive extinction has been staved off, we will have plenty of tiem to think about a simpler lifestyle.

fn1. As an illustration, the cost of a system to charge an electric car is estimated at $350 000, an estimate that is supposed to take account of optimistic projections of efficiency gains. These systems haven’t quite arrived yet (as usual, there are a bunch of technical difficulties to be overcome) but it appears they will soon be on the market for less than $10000. These systems have an obvious potential to resolve the problem of mismatch between peak PV availability at midday and peak demand in the evening, and may therefore reduce the conflict associated with the idea of a “utility death spiral”/

fn2. BNC ran into the same problem. In his eagerness to push the idea that nuclear power is the only way to save the planet from global warming, Barry Brook ran slabs of anti-renewable nonsense from climate delusionists such as Peter Lang.