Climate change

The Plan

Now we know what guided Morrison’s pathetic performance at the COP-26 meeting in Glasgow. It’s the Commonwealth’s Modelling and Analysis of Australia’s Long-Term Emissions Reduction Plan.

It contrasts two scenarios – “No Australian Action” and “The Plan”. If we take no action to adopt a 2050 target we will be punished by the financial markets who would place a risk premium on our cost of capital.  (No mention of our contribution to global warming – that’s presumably an incidental matter.)  If we adopt The Plan (capitalized), which involves the government acting “as an enabler to support consumer choice and voluntary adoption of other technologies driven by global trends”, then somehow all turns out well.  The Plan’s path to this felicitous outcome is shown below.

In terms of government action, apart from a commitment to invest “more than $21 billion” by 2030 (about $280 per year per household) there isn’t much for government to do. It is to GHG reductions what the Covid-19 vaccine national roll-out strategy was to vaccination – a  Morrison announcement, devoid of practical action.

Writing in Renew Economy Michael Mazengarb presents a scathing criticsm of The Plan: Morrison chooses fossil fuels over farmers in “laughable” net zero modelling.  That final 15 percent of “further technology breakthroughs” is pure fiction – a filler to bring other figures, flaky in themselves, up to the required 100 percent. The Plan envisages that by 2050 the coal industry will still be operating at about 50 percent of its current capacity, and that the gas industry will actually be expanding over most of this period.

Although The Plan is a product of a deal with the National Party, Mazengarb points out that it has been chosen over an alternative that would have seen significant benefits to farmers in terms of payments for soil sequestration, but which would have had a more detrimental impact on the oil and gas sectors.

What The Plan does achieve, according to Mazengarb, is a set of “fanciful alternative scenarios”, that will be used to provide material for political attacks against Labor.

Expect to hear about the $200 roast, $5 per litre for gasoline, the loss of every job north of the Tropic of Capricorn …

interviewed on PM last Friday, Steven Hamilton of George Washington University tried his best to make sense of The Plan, but it was a struggle. He sees it delivering no more than a 75 percent reduction in emissions. Like Mazengarb he rules out the 15 percent filler (the final element in blue in the chart). He is also very doubtful about the contribution of offsets (the purple block), because the plan assumes domestic offsets will be available at $24 a tonne and international offsets at $40 a tonne right up to 2050, even though they are already trading at $90 a tonne and that price will almost inevitably trend upwards. Offsets will become prohibitively expensive, he believes.

Writing in The Saturday Paper Mike Seccombe provides background into the politics of climate change modelling. He explains how the modelling process seems to have been designed to give Morrison the authority to attack anything Labor may propose – a repeat of the attack he mounted on Labor’s modest 2019 proposals that were going to put “a “wrecking ball through the economy”. The model also provides support for The Plan’s assertion that it will provide thousands of jobs and have net economic benefits.

As anyone who has ever been involved in modelling knows, the assumptions upon which models are built are crucial. Any modeler, guided by ethical principles, would provide a range of predictions based on possible values of sensitive assumptions, or in view of present technological possibilities, would provide an on-line interactive tool allowing the public to test a range of assumptions. But the Morrison Government, in its patronising way, simply presents a take-it-or-leave it model, built on assumptions that most closely support its preferred political spin. Seccombe suggests it has been able to rely on a politicized and compliant public service. The Australian Bureau of Agricultural and Resource Economics (ABARE) “has led the world in the politicisation of modelling”.

This application of modelling contrasts with the use of Covid modelling. Covid modelling was not driven by strong lobbying from interest groups. The government couldn’t demand that the modellers would specify a set of assumptions that would lead to a politically desired outcome. 

A completely different modelling exercise has been conducted by the Centre of Policy Studies at Victoria University: Zero greenhouse gas emissions by 2050: what it means for the Australian economy, industries and regions. The researchers assume we will not be relying on abatement credits (they will become too expensive), but we will use other market mechanisms – a carbon tax or an emissions trading scheme – as well as some non-market interventions, such as subsidies and regulations. They go through the effects on particular industries and regions. There would be some minor costs relative to a do-nothing base case, but their assumptions upon which their model is built are very conservative (they make no assumptions about technological breakthroughs) and their assumptions around the base case are very generous. For most states and regions there are net benefits, or little change from the base case, but there would be costs for Queensland, particularly some present coal-mining regions. The biggest benefit they don’t mention is the transformation of our economy away from commodity dependence.

Other comments on Australian climate change policy

There is no shortage of comments on the Morrison government’s pathetic performance on climate change. One worth mentioning is The Australia Institute’s report on the influence of The fossil-fuelled 5 – the UK, US, Canada, Norway and Australia – all prosperous countries, all contributing heavily to GHG emissions (particularly through their exports), all with plenty of capacity to adjust their economies to do without fossil fuels, and all in a position to set an example to the rest of the world.

The Australia Institute also has a short paper Overpromise and underdeliver – A brief history of Australian climate plans by Matt Sanders and Richard Denniss. Contrary to Energy Minister Taylor’s assertions, we have generally undelivered on our promises. In fact our performance would be even worse than recorded if we were to exclude the supposed benefits from changes in land use and land clearing.

One neat comment by Alan Kohler is specifically on electric vehicles in a 3 -minute clip: What’s driving demand for electric vehicles. It’s really about what’s suppressing Australian demand for electric vehicles. Carmakers are begging our government to set strong regulations on emissions, but our government is gripped by a nonsensical rejection of regulation, even regulations that help make markets function efficiently.

 The Glasgow final agreement

Again there is plenty of media comment on the final Glasgow pact, particularly the change in relation to coal – a significant change from the term “phase out” to “phase down” – initiated by India but probably supported by Australia.

Michael Jacobs of the University of Sheffield, UK, has a report on what went on at COP26 – Glasgow kiss – published in Inside Story. Yes, Alok Sharma, the British chair of the summit, was holding back tears when he apologized for the weakened final proclamation.  Nevertheless Jacobs is positive:

Cynicism is understandable. But the right question to ask is not whether emissions have fallen since the UN Framework Convention on Climate Change was first signed in 1992. It is what would have happened if there had been no international treaties, and no talks.

Jacobs comments that there is now a process to deal with this serious global problem and that the men and women in governments around the world have had to account for themselves on the world stage. There is also a recognition of the injustice inflicted on poorer countries by the behaviour of the rich ones. (Don’t know what a Glasgow Kiss is?  – neither did I – try the Urban Dictionary.)

On the ABC’s Breakfast program Fran Kelly interviewed Robert Orr, Special Adviser on Climate Change to the UN Secretary-General: Negotiators strike a climate deal but the world is still far from limiting warming. Understandably he emphasized positive aspects of the process, including the deforestation agreement, better accounting for emissions, and the agreement by 100 countries to cut methane emissions (Australia wasn’t one of the 100). Unlike Australian Resources Minister Keith Pitt, he did not see the weakened agreement on coal as a “win” for Australia. “The coal industry is not long for this world”, Orr said. (9 minutes)

Michael Mazengarb, writing in Renew Economy, believes that even this watered-down outcome maintains pressure on climate laggards like Australia. We will still be under immense pressure to announce new 2030 targets before the next conference, and whatever wording is applied to coal, “it still represents an unprecedented global statement on the looming end of coal power, the first time both coal and fossil fuel subsidies have been explicitly mentioned in a global agreement”.