Energy and climate change policy
Australia goes to Sharm el-Sheikh heavily in debit
In 2009 the world’s wealthiest nations pledged $US100 billion a year by 2020 to help poorer countries shift to cleaner energy sources and to mitigate the effects of climate change. In fact, as the OECD points out, that target has not been met: in 2020 only $US83.3 billion was mobilized, and it went mainly towards mitigation rather than assistance in reducing countries’ contribution to greenhouse gas emissions.
Josh Gabbatiss and Simon Evans, writing in Renew Economy, point out that Australia is named among a handful of mainly English-speaking countries that have not contributed their fair share of payments to this $100 billion goal. Drawing on data provided by Carbon Brief, they calculated countries’ fair share by considering what proportion of accumulated greenhouse gases they have pumped into the atmosphere. By that measure we fall short by $US1.7 billion a year.
At COP 27 the proposal has come forward for a fund to help those poorer countries most negatively affected by climate change mitigate its effects. Unfortunately it is framed as a “loss and damage” fund, conveying the impression that it would be an untied source of compensatory funding to assuage the guilt of prosperous countries. That impression has given political opportunists, including Peter Dutton, a chance to criticize the government for supporting it.
In relation to the proposal, Climate and Energy Minister Chris Bowen has clarified the situation in a short interview on ABC Breakfast. Such a fund would seem to be particularly appropriate for Pacific island nations which have a tiny carbon footprint but are highly vulnerable to rising sea levels and a climate that’s becoming angrier.
As is widely reported, Australia will bid to co-host the 2026 conference along with Pacific nations, but as The Guardian’s Adam Morton points out, many other nations, including the US and EU, are doing more than we are to reduce emissions between now and 2030. In view of Australia’s appalling presence at the Glasgow summit in 2021, perhaps the best mark we can expect is “most improved”.
The hard-headed economics and politics of tackling climate change
Anyone who still believes that renewable energy is a “woke” or political identity issue, would do well to spend 12 minutes watching one of Australia’s leading businesspeople on the ABC’s 730 program, warning of the dire risk to the planet if we fail to invest in non-fossil fuel sources.
In the interview Andrew Forrest, the founder and chair of Fortescue Metals, outlined his business philosophy before heading off to COP 27, where he is one of the private sector’s most influential representatives.
Of course he has a vested interest in Fortescue’s hydrogen business, but as Adam Smith argued, it is possible for self-interest and the community interest to align in certain situations. Forrest’s passion in this interview is the use of hydrogen to reduce iron ore in steel manufacture, a conversion that could significantly reduce China’s greenhouse gas footprint (while sustaining demand for iron ore).
He criticizes some in the corporate sector for greenwashing, and he sees hydrogen replacing natural gas in our network of gas pipelines. (But isn’t H2 a smaller molecule than CH4, and more prone to leakage in old pipelines?)
He concludes with a statement about the geopolitics of renewable energy.
There is a fuel which the more you use it the more expensive it becomes. There is a fuel that is polluting the world and is destroying the future of our children. There is only one fuel where despots and dictators cannot use it as weapons. They cannot cause billions of people misery through jacking up their cost of living through outrageous prices. That fuel is renewable energy. We now must wake up to this, take the coal shower, realize we’re just digging ourselves deeper and deeper into a fossil fuel hole. … There’s one fuel which the more you use it gets cheaper and cheaper and cannot be used by despots and it’s all around us. Let’s go after it.
Bringing electricity back into public hands
As we covered in last week’s roundup, if it wins the coming election the Andrews Government in Victoria proposes once again to become heavily involved in electricity generation and distribution, through some form of joint public-private cooperation, and with the government exercising control over prices and important physical investments.
Andrews observes that privatization has failed: prices have risen, there has been too little re-investment in capacity, and the private sector is not up to the complex task of steering the industry through its transition to renewable supply.
On the ABC’s Life Matters program, Hilary Harper interviews Alison Reeve of the Grattan Institute and Bruce Mountain of Victoria University on the justification or otherwise for the Victorian government’s proposals, before opening the discussion to callers: Talkback: privatising electricity networks. (43 minutes)
Mountain is enthusiastic about Andrews’ idea. Reeve does not disagree with him, but she outlines the usual case for privatization. Both agree that the most important issue is not who owns what, but who has control. The task for government will be to devise a governance structure to serve the public interest, while ensuring that the arrangements are free of the day-to-day influence by the relevant minister. (That’s pretty much the textbook model for a publicly-owned utility.)
Almost all callers, many of whom seem to have experience in the energy industry, public and/or private, support the idea of bringing electricity back into public ownership and control. They generally dismiss as a furphy the idea that government enterprises are invariably less efficient than private enterprises. (This aligns with studies in organization theory: ownership, in itself, is a poor predictor of an organization’s performance.)
Treasury endorses Soviet-style central planning
To suggest that our Treasury has abandoned all that is good about markets and has endorsed central planning may be a tad exaggerated, but that is probably how some energy companies will see Treasury’s statements to Senate committees, essentially giving the government approval to intervene in the gas and coal markets to reduce prices. In his opening statement to the Legislation Committee Treasury Secretary Steven Kennedy says:
… interventions that directly address the higher domestic thermal coal and gas prices are more likely to be optimal. Australia is uniquely placed to pursue this type of intervention given it is a net exporter of energy.
That’s hardly radical for anyone who understands how gas companies are behaving, but revolutionary in relation to Treasury’s usual anti-regulationist line.
The ABC’s Henry Belot has a piece – Federal Treasury secretary Steven Kennedy recommends government intervene in energy market to drop power prices – covering Kennedy’s remarks at Senate hearings, and quoting some ministers’ responses.
My other car is a battery
1921 Hupmobile, 12 liters/100 km
The Climate Council has ranked car companies by the date at which they will provide only electric vehicles on the Australian market. Tesla and Polestar (a division of Volvo) are already there. As we scroll down the list we find more >modest brands including Mazda, Hyundai and Honda that intend to meet that target by 2040 or earlier.
The Climate Council’s short paper describes various drive trains – hybrid, plug-in hybrid, battery electric (which will probably dominate the market in time) and fuel cell. It urges the government to implement strong fuel efficiency standards so as to hasten the Australian market’s transition away from gasoline and dieseline-powered vehicles.