Monday, December 14, 2015

Monday Forum - what do you think of the Paris climate deal?

At the end of November we had quite a long discussion (Saturday Morning Musings - coal, climate change and conceptual confusions) on the policy and other issues connected with responses to climate change. Since then, the agreement reached in Paris has been released  The Australian site the Conversation has a couple of useful summary pieces:
In After Paris — what now?, Don Aitkin takes a more jaundiced view, Catallaxy Files a still more jaundiced view: Of more substance is this second Catallaxy post: Cross-post: Kesten Green – Is climate forecasting immune from Occam’s razor?

I have to agree with Don that the language is opaque. However, this seems to be a feature of all these types of international agreements..

Given that we now that we have the agreement, I thought it might be worth re-visiting the earlier discussion. What do you think of the outcome?

From my perspective, I thought that it was actually a useful next step. It won't satisfy purists on either side, one wanting greater action, the other no action at all. However, it does create a structure that could evolve.depending on the way the problem unfolds. It also, as Katherine Lake points out, contains provisions that could facilitate the emergence of a carbon market.


University of New England academics provide their own policy take, while kvd pointed .to this interesting piece in the UK Telegraph. 


2 tanners said...

Couldn't get to the article crossposted to Catallaxy (paywalled for $36 to what I understand is a denialist journal - i.e. to be printed requires a particular outlook). If the prediction of 2 degrees is out by plus or minus 27% that could mean chaos, or less chaos for the earth. It does not say what its own prediction is, and does not explain why mitigation measures would not work regardless of the cause.

But no, Paris won't be perfect. Hopefully it will be politically feasible and appears to have slapped down China and India's former 'special pleading'. And that's the best we can hope for.

Jim Belshaw said...

Hi 2t. I'm not sure that the International Journal of Forecasting is a denialist journal. Kesten Green maybe. I do have some sympathy with the complexity point and also the importance of simpler tests in some cases. You only have to look at economic models.

2 tanners said...

If the test is "Can the decision maker understand the underlying science?" as a test of scientific rigour, that's trash. It was not long ago that meteorology pushed the limits of supercomputers and it still does.

Seems to come out ahead of the "Red sky at night" model both for accuracy and precision, though, despite its immense complexity.

You may be right about the International Journal of Forecasting (I can't find my reference for this), but its co-founder and co-writer of the paper (Armstrong) has no climate science qualifications and is on the record as a climate sceptic. The data he uses seems to be way out of skew with observed temperature changes UNLESS he is performing a particular sleight of hand by readjusting the base year every so often to keep the story going. See the first graph on this page.

Like climate scientists, I'm not saying AGW is proven, but the weight of evidence seems strong and preventative or mitigatory action is often good policy.

Anonymous said...

AEP seems to have moved on from 'the science' to the economics of it. Probably a good thing for us laymen at the pub :)


2 tanners said...

And I think that nuclear may well have its day limited, not because it's nasty and risky but because its costs are steadily rising and those of solar and wind are falling. I'm not sure you can buy a solar panel these days that is NOT (essentially) made in China. Of course the same can be said for nuclear power plants...

Jim Belshaw said...

That's an extremely interesting article, kvd. I will bring it up as a postscript in the main post. One of the things that I have tried to say is just that. After a point, arguments about the science don't matter. It's the economic, political responses that dictate events and must be understood.

Jim Belshaw said...

On nuclear power plants, I think that you may well be right. On the manufacturing point, one of my concerns about the domestic magic pudding approach lies in the dual assumptions that there will be an offsetting green revolution yielding growth and that Australia will be able to get its share of this, offsetting costs. Its the second in particular that I have problems with.

2 tanners said...

Jim, look at it this way. Our costs will be higher as a coal producer/exporter - i.e. a party in a less economic and one day unprofitable enterprise. Fortunately our industry is largely overseas owned, gets big tax breaks and employs relatively few people, but even so, there will be a price to be paid.

On the other side of the coin, cheaper power is a magic pudding - you get more for the same expenditure and this holds true for coal, nuclear or wind, solar and other things. That power is then (a) put to use in productive enterprises, lowering prices or (b) used domestically, increasing net disposable income and the ability of consumers to spend.

When (and only when) the income loss is outweighed by the cost reduction effects, then we are better off. It's be the brave economist to point to that crossover and name a date, but it's not now because of our current investment. We should be certainly stopping quasi-investment through government in old tech, though.

That comment is not limited to the energy market - it's the same everywhere, Canute ordering the economic tide to go back.

Jim Belshaw said...

Mmmm, 2t. Just to pick a few points up.

As at February 2014, just under 55,000 people were directly employed in coal mining, another 145,000 in related employment. Further, those people are concentrated in particular areas. That's not insignificant. I couldn't find the latest figure for coal exports, but from memory its around $23 billion for metallurgical coal, $15 billion for thermal coal. It's thermal coal that's attracting the main angst. Again large numbers.

I have challenged you before on the subsidy issue but now need to check that properly. The ownership thing is not, I think, especially relevant.

Cheaper power does have benefits. However, the shift to renewables does not of itself mean cheaper power prices as compared to the price that might hold if we were not worried about green house gases although it may ultimately be the cheapest option after factoring in carbon costs. Most of the modelling that has been done, I stand to be corrected here, recognises that there will be a cost but argues that that cost can be accommodated by economic growth. We can still have a bigger cake! Or can we?

2 tanners said...

Totally take your point about the concentration of people employed by coal (it's the nature of mines), but where the miners actually live is a different question. I have to take your figure of 145000 indirect employees on faith, but indirect usually means that this is not the sole part of their employment. The car industry used to include the entire staff of the advertising industry in its claims, for instance, as well as after market modifiers who didn't care where a motor was manufactured.

The tax breaks I referred to were the ones introduced by the Gillard/Swann government and largely designed by the industry. As an RRT for an irreplaceable resource, they're laughable.

My argument is not that coal is insignificant. It is that it is a dying industry and the sooner we face that fact, the better. 25 years ago, we lectured the Germans that instead of subsiding their workers and their uneconomic mines, if the state instead bought Australian coal to meet all its needs AND bought as much coal as Germany produced in addition to its needs AND employed the miners to fill up the mines, not empty them, it would do so at a cash profit. Germany ignored us and financial reality.

Our industry is not at that point and I have said so above. What I am both expecting at an unspecified point in the future and dreading is the taxpayer supporting, through subsidy and legislation, an industry which cannot even cover fixed costs because alternative fuels have undercut coal. You know as well as I that legislation which limits one option of favours another has a dead weight social loss which the consumer ends up funding.

Jim Belshaw said...

I accept that indirect jobs can be an elastic concept, 2t. We can think of this at a couple of levels. At the first level, there are support jobs necessary to keep the mines running and to shift the coal. Then there are the jobs that depend on the expenditure of both direct and the first group of indirect jobs.

I can't see Australia subsidizing coal production just to keep the mines going, although there may be scope for reducing royalties. There is no point in setting royalties at a level that creates a triple whammy of lost production, lost royalties and lost jobs. Unless, of course, your objective is actually to close the mines.

Metallurgical coal gets a bit lost in all this discussion even though Australian production is greater than thermal coal. It is, I think, the metallurgical area that has been hardest hit in price terms because of the China slowdown.

I am still trying to think through all the market variables. One odd side-effect of the growing pressure on coal may well be an increase in coal production. If coal companies conclude that coal or at least thermal coal is to be phased out in a defined time horizon, then it would make commercial sense to try to maximise output now. That, in turn, would drive prices down and thus make coal fired power stations more viable.

Anonymous said...

Again, without getting into the sciency stuff, I found this comparison of useful alternatives to oil to be quite interesting:

While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source

Also, while Tesla is building a battery manufacturing plant capable of producing (I think) 2M units per year, it is worthwhile noting that present vehicle manufacture runs to about 70M units annually. And then add on the "one for every home" brigade of optimists.

It is these sorts of mind-boggling comparisons that make me unhopeful about the practicality of the bright new carbon-free economy. What say you 'tanners?


ps in casting about for info on solar I found this quite fascinating website providing live feeds from Alice Springs:

- click on the various units for information

Jim Belshaw said...

Good morning, kvd. In 2t's absence.

That Wikipedia article is interesting. The numbers are a little dated. I tried to find a later reserves estimate - However, if we take it a rough scoping it does draw out some interesting issues. It would be helpful in all this discussion if there was an agreed basis of facts on things such as sources of emissions. However, this US EPA publication provides some information.

According to the publication, in 2010 electricity and heat production excluding on-site industrial energy generation (this is included under industrial, building heat generation (included under buildings)and emissions from fuel extraction, refining, processing, and transportation (this is included under other energy) created 25% of global emissions. This was followed by industry 21%, agriculture, forestry and other
land use 24%, transportation 14%, other energy 10%, buildings 6%.

According to the World Coal Association, coal generates around 41% of world electricity. In another statistic from the US Center for Climate and Energy Solutions (, worldwide coal supplies 29.7 percent of energy use and is responsible for 44 percent of global CO2 emissions. The various figures aren't fully consistent, but they are useful as rough orders of magnitude.

Now if we look at these number, coal is clearly important but its not the end of the story. If coal usage stopped tomorrow and using the Center figures (they seem to be the highest), coal greenhouse gas emissions would go from 44% to zero, but this would have to be offset against greenhouse emissions from alternatives and would in any case at zero leave 56% of emissions behind to be reduced or compensated for in the achievement of a carbon neutral world. The limits on oil and natural gas as a resource is another factor.

I don't have time to tease this out, but in my earlier writings on this I argued that a solution would have to come via a combination of multiple changes combining reduced emissions with greater absorption. I placed especial weight on the second. This brings in a new factor, time. My personal view is that (and assuming the science is correct) things will evolve faster than expected. However, we are still talking decades. Meantime, and I now include Ross Gittins in this -, the current obsessive focus on coal strikes me as unrealistic and short sighted.

2 tanners said...

Been flying, hence my uncharacteristic silence. The Tesla battery is a good example of my position. Currently, in cost of electricity generation and storage terms, it is hopelessly outclassed by a coal powered grid. I'd never buy one and wouldn't support government assistance for a local industry producing them.

As for Australian not subsidising coal, why did we subsidise cars? Or wool? My aim is not to close or open mines, it's to see that my money gets spent on things that I value. Subsidising the NBN, for instance, at least bears the possibility of improving productivity and quality of life - we paid for the old copper network out of public funds.

I also think the focus on carbon is a mistake. It's not the only greenhouse gas and I'm not sure why it is demonised at the expense of others.

But I think that the economics are going to settle this long before the politics can. It will be ugly for both the oil rich and coal rich nations, but more so for the former.