Understanding Climate Risk

Science, policy and decision-making

Revkin on Australia’s coal exports: the elephant in the national climate policy room

with 7 comments

Andrew Revkin of Dot Earth has contacted a few researchers on both sides of the big pond to comment on what Australia’s national carbon management legislation might mean for the US. The overall view was that Australia’s current situation is affected by our political context, limiting its ability to translate to the US situation, but that the effectiveness of the legislation was definitely improved by the committee process that resulted from the last federal election. He returned last week to ask the question: I find it hard to believe that anyone who cares about GLOBAL greenhouse gas emissions /concentrations could cheer the (Australian) law, and – if so – I’d have to ask why? The motivation for this question was Australia’s coal exports, which are largely untouched by the legislation (a fact, widely touted as a good thing for the economy).

This is a really interesting and difficult question and garnered a range of comments that reveal substantial disagreements between experts. Read all the responses on Dot Earth. I’m torn by this question because I:

  1. Do cheer the legislation for what it can potentially achieve, and
  2. Don’t think it does much for rising international emissions due to the economic boom. The boom has accelerated growth in coal-generated carbon emissions since 2000, mainly growth in China, and affects emission projections out to 2020 and beyond as India and other countries join in.

One way to escape this bind is to set the boundary limits of Australia’s legislation and outline what it does and does not do. And to ask “what about coal?” If national legislation in itself is not sufficient and global agreements are just as difficult to agree on, what next?

Frank Jotzo (Climate Change Institute, ANU) and David Stern (Crawford School of Economics and Government, ANU) responded largely positively but with reservations. David Victor (U California, San Diego) supported the plan but said it wasn’t enough. Australia wasn’t unique in being a large energy exporter, so there are wider lessons to be learnt. Roger Pielke Jr (U Colorado) criticised the Australian legislation as not as effective as financing direct investment in technology transformation, however some of the amendments put in since his earlier published critiques account for those criticisms, though probably not enough. John Perkins of the National Institute of Economic and Industry Research, criticised the lack of emphasis on exports and the reliance on dodgy offsets. Guy Pearse (U Queensland) added to that, summarising his forward estimates of likely coal production and its acceleration as multiple elephants in the corner. John Perkins agreed. I recommend reading the comments in full rather than relying on these one-line summaries.

This post and extra comments are prompted by Revkin’s accompanying commentary. His argument is similar to the research direction we are taking at Victoria University. He says:

It is findings like these that cause me to take a different stance on climate progress than Joe Romm, who demands that anyone seriously engaged in assessing climate policy pick a number — either for a safe target for stabilization of carbon dioxide concentrations or temperature rise.

To me, choosing a number — 350, 450 or 550 parts per million, 2 or 3 degrees (F. or C.!) — is essentially meaningless for our generation, especially given the trajectories for emissions in China and India.

The task on emissions is twofold — to bend the curve of gas releases using regulations, incentives, education and standards, but (more importantly, to me) also to build the intellectual infrastructure and innovative, globally-collaborative culture that will be required for the next generation to take that curve down toward zero even as humanity’s energy needs continue to rise. My emphasis on the second component derives from all the biases toward the quick fix that are built into the human brain, political institutions and culture.

I don’t agree that picking a target is meaningless, it’s just that the target itself does not serve as a measure of what entails good progress on policy viewed from where we are now. The issue as to whether anyone cares about global emissions / concentrations contains the notion of a destination that can be framed as containing aspirational / desirable / achievable targets. A range of targets can be argued as viable from different points of view.

Andrew Revkin’s last para points to a learning by doing policy strategy that requires an intellectual, and I would argue institutional,  culture capable of measuring progress according to various metrics. Not a good fit with the winner-take-all adversarial system we have where even the press often takes sides, stifling and misdirecting public debate.

Policy progress can be grouped under two main headings. One is the degree of learning that feeds back into the policy process. The other is the size of the response with respect to the scale of the problem.

An example of the first covers dodgy offsets and hot air. Australia’s legislation is focussed on lowering the cost of abatement so allows international trading in carbon development and forestry offsets. International trading means the low-hanging fruit for abatement will be taken up reasonably quickly. It also means that all sorts of schemes may be floated to exploit this. So-called “gold standards” therefore require tight legislation, accurate accounting and a known life-cycle in offsets that is contained within a legislative and regulatory framework. This will create governance issues in countries where this is difficult to implement (data, legislative frameworks, institutions). If many or all countries trade permits, the low-hanging fruit will be rapidly consumed. The focus will then have to shift to more applied solutions involving new technology, tech transfer and behavioural change. Price will matter but the international price at this stage is hard (impossible?) to predict.

Australia’s advantages are our accounting standards, the technical ability to count carbon stocks and emissions, and governance, which means that the domestic aspects of this can, in theory, be appropriately managed. Tracking progress through such mechanisms is very important and the legislation is designed to do this. Standards thus set will have to be international for markets to be affective. Jiang Kejun of China’s Energy Research Institute visiting Australia in September (presentation pdf) said that the Chinese were observing this process very closely to learn what they could as they contemplate their own limited trading schemes.

The scale of the response with respect to the problem is a different, but related issue. Australia’s emission reductions are a small amount of the total global potential. For a recent article in the Sunday Age I calculated  that reductions of 5% to 2020 from business as usual equals about 0.0038°C (~760 million tonnes CO2). If Australia reduces to -80% of 2010 emissions by 2050, the benefit is about 0.02°C. Guy Pearse estimates  that the ~730 million tonnes of CO2 embedded in coal exports each year is 20% higher  than current annual emissions (583 million tonnes) and that this rate may be double to triple by 2020 as coal exports expand. The resulting emissions will add up to substantially more than the 0.02°C embedded in the national policy target to 2050. I’m hoping that in the near future we can come up with a reliable estimate for what these exports will mean in terms of potential warming and accompanying impacts.

That suggests there are two areas at least in which to develop metrics for “good” policy. One is the learning-by-doing process that feeds back into the policy process (and becomes general market intelligence used in both the public and private sector) and the other is in measuring how the evolving response manages the scale of the problem. I drew a diagram to illustrate this a couple of months ago, comparing it with the win-all, lose-all policy construct.

This schematic looks at several stages of business as usual and policy out to 2030, after which a minimum emissions path is followed to 2100. Results are expressed as the median warming from pre-industrial temperature. The top line is business as usual and policy in late 2006 at the peak of the boom. It resembles the SRES A1 emission scenario on steroids. The next line down is what we knew in 2008, following a similar path. The next adds the impact of the GFC (not much impact on warming) and the next line down adds Cop15 (Copenhagen pledges). The last and lowest line reduces emissions across the board from 2020 instead of 2030. According the 2°C target, these are all policy failures.

However, Peter Sheehan and I argue that there is considerable learning in these projections and that they contain significant policy progress. Much is due to national-scale policy development rather than through international agreement. They also contain some hot air, and that’s where a learning by doing element becomes important, to ensure that these policies are efficient in terms of outcome.

Revkin’s comments on an appropriate intellectual culture and international collaboration are spot on. He refers to the long term. When taking part a long distance race, you don’t give up after 100 metres because the race isn’t won. It depends on pre-event preparation, the amount of energy released over time, tactical responses on the road, strategic responses to what the pack is doing.

This marathon might be different to a competitive marathon with an individual winner but it’s still long distance and the finish line is out of sight. Here we want the pack to win, to pick up stragglers but also to keep an eye on those who want to sneak around the corner and catch the bus to the finish line. Framing what we think might be good tactics and good policy in that respect is very important.

Australia’s federation of states allows different policies to be tried at state level, allowing policy comparisons to be made. The US is also a federation. The recent decision by six states to withdraw from the Western Climate Initiative cap and trade plan to follow a non-market strategy continues policy competition in the US (The reason is that it insulates energy-intensive industry exposed to a pervasive market price). Given the recent warnings by the International Energy Agency on the timeliness of action, the potential learning from such policy competition may not compensate for the delay in implementing wide-ranging policy initiatives.

There has been progress but the elephants are still at large.


Written by Roger Jones

November 19, 2011 at 4:21 pm

7 Responses

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  1. […] (for now):I’m with Guy on this.Nov. 19, 10:59 a.m. |UpdateRoger Jones has followed up with a must-read blog post examining this exchange and my views and offering a way forward, including an innovative graphic. […]

  2. […] Jones has followed up with a must-read blog post examining my views and approach, including an innovative graphic. […]

  3. I am from Australia. The world’s top 10 polluters in terms of GHG total emissions are China, US, European Union, Indonesia, Russia, India, Brazil, Japan, Mexico and Canada. Canada is second behind the US in terms of tons of GHG emissions per capita, followed by Russia, Indonesia, EU and Japan. Where is Australia – no where to be seen. Australians see the ALP / Greens carbon tax just that, another tax. . Carbon in itself is not a pollutant. The Australian legislation is based on antiquated ignorant and plainly stupid ideology that has no part in todays world. All these polluting countries are laughing at Australia but it is boom time for Green Capitalist for derivative trading where the world’s greatest polluters are the winners.

    John Ralph

    November 20, 2011 at 1:55 pm

    • Oh how I loled John. Did you read that in your “skeptics play book”. It certainly isn’t based on any facts so I’m going to assume that it is most assuredly twaddle. Cheers for the ever present pointless and incorrect comment.

      We need more ignorance of the issue and its solutions and less fact based argument and reasoning. So thank you very much for fighting that battle and helping to keep Australia stupid, its an important fight, we need to win it. For idiots, everywhere.

      Lachlan Ward

      November 20, 2011 at 4:47 pm

  4. My back of the envelope calculation of the effects of the Carbon Tax/ETS using Australian Treasury modeling.
    For the period 2010 to 2050 (these are cumulative amounts)
    Domestic Abatement – 7,000 Mt CO2
    Abatement using International Carbon permits ie we pay Nigeria, etc – 9,000 Mt CO2
    Total Australian exports of CO2 as coal etc – 45,000 Mt CO2 !!!!!
    We are exporting 6 times more co2 than we will directly abate!
    No wonder people are skeptical when Governments proffer these “non solutions” as Prof Richard Muller calls them!


    November 21, 2011 at 8:01 am

  5. […] fellow at the Center for Strategic Economic Studies of Victoria University followed up with a must-read blog post examining the dilemmas. He helpfully reminds readers that decarbonization of a vast and growing […]

  6. […] fellow at the Center for Strategic Economic Studies of Victoria University followed up with a must-read blog post examining the dilemmas. He helpfully reminds readers that decarbonization of a vast and growing […]

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