Category: Environment

Low-carbon electricity future: the big picture

John Quiggin90 Comments

The latest renewables v nuclear sandpit thread has racked up 300 comments and counting. Rather than attempting to arbitrate, I’m going to assume that both sides are right in their most pessimistic estimates of the other technology. That is, I’m going to look at the implications of assuming that a low-carbon electricity generation (mainly carbon-free with some gas) will imply average costs of $200/MWh.

What does that mean at the household level. Average generation costs are currently around $50/MWh, so there’s an increase of $150/MWh or 15c/kWh.

UpdateI didn’t think I needed to spell it out, but obviously I do. Debate on the merits of specific technologies, such as nuclear v renewables belongs in the sandpit. End update
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Water is heavy

John Quiggin90 Comments

I just did an interview with ABC Radio Lismore about the latest proposal to divert water from the Clarence River to the Murray Darling Basin. Apart from the environmental effects (disastrous according to the studies I’ve seen) proponents of ideas like this seem to be unaware of a crucial fact. Water is heavy. A megalitre of water (worth maybe $200 as bulk supply to irrigators) weighs 1000 tonnes. Pumping that much mass over even a low mountain range is prohibitively expensive. You can overcome that with tunnels if the gradients are steep enough, but the Great Dividing Range is pretty broad in Northern NSW.

And, don’t get me started on the really crazy projects like Colin’s Canal.

Water, water everywhere …

John Quiggin19 Comments

… but we still can’t water the lawn. As I predicted more than a year ago, the gates have been opened at Wivenhoe Dam, and water saved at substantial cost last year is now flooding down the Brisbane River. Yet, anyone who wanted, for whatever crazy reason, to water their lawn today would be breaching Brisbane’s permanent water restrictions, which forbid watering on Mondays (why Monday? – I have no idea). And watering the lawn between 10 am and 4 pm is never allowed.

It makes sense to require water-efficient sprinklers, taps and so on – investment in such measures now will pay off in a drought. But, when water is plentiful, there should be no restrictions on when and how it is used. That way, restrictions will have more bite when they are actually needed.

The Guide to the Draft of the Plan to do Something about the Murray

John Quiggin16 Comments

The problems of the Murray Darling Basin have been developing for more than a century. I’ve been working on this issue for 30 years, during which, despite a series of policy initiatives too long to list, the situation in the Basin has got worse in most (not all) respects. So, it’s not surprising that the attempt to provide a comprehensive plan for the future involves a drawn-out process. The big question (which the Risk and Sustainable Management Group at UQ will be addressing in a workshop later this month) is: Have we finally got it right?

My general view is optimistic. If the politics can be negotiated, and if the government is willing to spend around $5 billion on buying back overallocated water rights, we can probably reach a solution that is economically, environmentally and socially sustainable.

The Draft Plan proposes a reduction in water use for irrigation of between 3000 and 4000 Gigalitres (GL). That range reflects two fairly tight constraints. Anything less than 3000 GL won’t achieve environmental sustainability. Anything more would imply unacceptably large impacts on irrigated agriculture.

Here’s the rough arithmetic on the irrigation side, which is broadly consistent with the modelling done by my Group, some of which was used along with research by ABARE in preparing the draft plan. A 30 per cent cut in water use will result in a 15 per cent reduction in the gross value of agricultural output, and a smaller reduction in net returns to farmers.

The big change required to achieve this kind of reduction in water use is a shift from irrigated rice production to dryland agriculture. Since yields on irrigated lands are much higher that will imply a reduction in our total grains output. Still the impact is much smaller than, for example, the effect of the current overvaluation (relative to long-run value) of the Australian dollar.

Importantly, although the changes in the Draft Plan have been referred to as “cuts in allocations” this is incorrect. Although the National Water Initiative proposed cuts where water resources had been over-allocated in the past, the Draft Plan calls for the entire reduction in water use to be treated as a change in government policy, meaning that the Commonwealth will bear the cost. It’s already been made clear that this reduction will be achieved entirely by voluntary buybacks and conservation measures.

While there are some opportunities for conservation, the most cost-effective mechanism in most case is buying back entitlements. Now that the drought has broken, I’d guess the likely price for entitlements will be around $1500/ML suggesting a cost of buyback (or similarly cost-effective conservation) of between $4.5 billion and $6 billion. It’s not clear whether buybacks that have already taken place will be counted towards this. There’s enough money allocated to the National Water Plan/Water for the Future to cover this cost, though most of it is currently earmarked for on-farm works.

Nuclear, again

John Quiggin116 Comments

I’m sure quite a few regular commenters are keen for me to lift my ban on discussions of nuclear power (imposed to prevent the threadjacking effects of this topic). So, I thought I would open it up to all comers with a couple of observations of my own:

(1) Nuclear power isn’t going away any time soon. Nuclear plants generate a lot of power and most of them seem likely to outlive their originally planned operational lifetime. So, there doesn’t seem to be much point in being “anti-nuclear” in the sense of hoping for a world without nuclear energy – that horse bolted decades ago.

(2) Except in China (and maybe India) nuclear power isn’t getting bigger any time soon. Following the failure of Obama’s energy bill and the GFC, the US “nuclear renaissance” is dead in the water, and the same is true in Europe. While residual anti-nuclear sentiment plays a role here, the big problem is economics.

(3) The only plausible path to an Australian nuclear power industry involves the use of modern plant designs and regulatory systems with a proven track record in the US and/or Europe and Japan. Given point (2), that path won’t open up any time soon. So, for the foreseeable future, nuclear isn’t an option for Australia, and there is little or nothing we can, or should, do about it. When there, are, say 50 new plants in the developed world with 5-10 years of operating history behind them, it would make sense for us to take another look. On the most optimistic possible projections, that might happen sometime after 2030.

That’s it from me. I won’t moderate the thread except to delete personal attacks and similar violations of the comment policy.

Population: Numbers and faces

John Quiggin79 Comments

The question of Australia’s population is finally a matter of serious debate, after years of being settled by default and deceit[1]. As this surprisingly reasonable piece from Chris Berg of the IPA points out, even the Greens, who have generally been willing to “present clear policy where Labor and the Coalition just waffle”, have found this difficult to handle. Berg observes that the Greens are torn between general sympathy for those wanting to migrate and environmental concerns about the implications of population growth.

For Berg, a Big Australia advocate, the issue is simple. Environmental issues can always be fixed by economic growth and “high immigration … has been the fuel of the Australian economy for two centuries.” Implicitly, Berg asserts that more immigration will make current Australian residents better off. The problem, as Ross Gittins points out is that this generally isn’t true. Increased immigration doesn’t raise average income for those already here, and the need for lots of new infrastructure creates all kinds of economic and social stresses. Of course, the costs are even greater in the case of natural increase – Peter Costello’s fatuous suggestion that couples should have an extra child for the sake of the country was a prime illustration of his lack of any economic understanding, despite a dozen years as Treasurer.

So, there is no getting around the dilemma described by Berg. Considered in terms of aggregate numbers, we would be better off, economically, socially and environmentally, with a slower rate of population growth. But potential immigrants aren’t just numbers. They are people with a variety of good reasons for wanting to come here (to reunite with family members, or to take up a job to escape from persecution or just to get a better life). Refusing them admission hurts them as well as those in Australia (relatives, potential colleagues and employers, those who feel a moral obligation to help refugees) who want to welcome them here. There is no easy answer to this question, and the wishful thinking displayed by advocates of a Big Australia does not help to resolve it.

fn1. The most prominent example being the Howard government’s policy of ramping up immigration while playing on racist fears in relation to boat people. Under Abbott, the conservatives are at least consistently anti-immigrant. That makes them less dishonest, if no less ugly.

Votes for clunkers

John Quiggin19 Comments

Julia Gillard has announced an Australian version of the cash for clunkers program of the Obama Administration. Reader Ben Elliston writes

read an article some months ago by Jeffrey Sachs evaluating a
similar policy from the Obama administration:
http://www.scientificamerican.com/article.cfm?id=a-clunker-of-a-climate-policy

It turns out that the Gillard proposal is even worse than Obama’s.
Sachs calculated the greenhouse gas abatement value of Obama’s scheme
at US$140 per metric tonne. Gillard’s policy will reduce emissions by
1 million tonnes at a cost of $394 million dollars ($394/tonne).

My only observation is that Ben’s estimate is taken directly from the government’s press release, which is almost certainly overoptimistic. For comparison, at about $25/tonne, brown-coal electricity generation becomes uneconomic compared to gas and black coal. At $100/tonne, just about all the alternatives (including wind, nuclear, CCS, and solar) look pretty good. Cash for clunkers is, as Sachs concludes, a clunker of a policy.

And just in case anyone has forgotten, Abbott’s anti-policies are even more focused on this kind of nonsense/

Non-policy or anti-policy

John Quiggin36 Comments

My column in yesterday’s Fin (over the fold) advocating agreement between Labor and the Greens on a short-term carbon price was rendered obsolete almost immediately by Julia Gillard’s speech (as it happened, I was in the building next door when she gave it).

Gillard’s non-policy represents a failure of leadership. The best that can be said for it is that the delay generated by this process is only supposed to last for 12 months, and that 150 randomly selected Australians could scarcely do a worse job on this vital issues than our political leaders have done.

But, as is so often the case, Abbott is even worse, offering an anti-policy that would represent an obstacle to any real action. I’m feeling happy about my decision to vote for the Greens. With rather less enthusiasm than before, I’ll still give Labor my second preference.

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Support John Abraham

John Quiggin68 Comments
Potty peer Christopher Monckton has stepped up his campaign to shut down John Abraham’s debunking of one of his talks last year, by asking supporters to flood Abraham’s university with emails demanding it start a disciplinary inquiry.

I can only endorse this comment on Monckton and the lunacy of a world in which someone like this is taken seriously.

Posted via email from John’s posterous

Update I thought Posterous would include the link automagically but apparently not. Here’s Garth Renowden’s site where you can support Abraham and/or bag Monckton.