Govt must set tough targets

Climate chaos0
I assert:

1. The United Nations Climate Change Conference moves to Poznan, Poland on 1st December. Before that date, the Australian Government will announce its targets for greenhouse gas emissions by the year 2020. To be considered a realistic attempt at controlling global warming risks, the WORLD target has to be at least 25% below 1990 levels. Since the way these things are calculated favours Australia, for us that really means 25% below current levels, which do happen to be the highest in the world per. capita.

2. To be in a strong negotiating position with China, USA, Europe, Indonesia, Japan, and India the Australian figure must exceed 25% and perhaps be as high as 40%. These six regions of the world are of singular importance to Australia strategically and economically: they are also the six biggest producers of greenhouse gas emissions, and getting them all to agree with a reduction of 25% or more is essential if mitigation is to have any chance of working. Currently, all of them except Indonesia are easily open to such influence, and Indonesia is a very poor country which produces greenhouse gases by deforestation and needs appropriate financial aid.

3. But Australia also has much to gain internally by setting a target at or above 25%. Only with such a hard target will all the debate go away and the search for realistic solutions begin: so long as we have targets that nobody believes will limit global warming to manageable risks, there will be no commitment to finding such solutions, and the vested interests will continue to spend money on lobbying and spin instead of innovation or infrastructure. Furthermore, unless mitigation is obviously the Governments preferred option, people believe that adaptation is the economically favored position, and the Government is going to bail them out over such adaptation at some future time. Adaptation will be necessary regardless and the time for bailout may come regardless of this decision, but if a figure below 25% is chosen the risks are such that their present value far exceeds anything we have seen in the re-pricing of risk in the present financial crisis.


Detailed discussion:

1. Why should we be concerned if the WORLD doesn’t choose a realistic target?

It is less than one year since Kevin Rudd swept John Howard out of office. The world is currently preoccupied with the financial crisis. Precipitated by the failure of self regulation of financial processes, a credit crisis has led to a recession which appears certain to be wide spread, long lasting, and painful.

In this climate, and in the next two weeks, the Government needs to decide, and prepare to defend, the target it will set for Greenhouse Gas Emissions Reductions by 2020. Under current conditions, the decision that looms has become the ultimate test of the Government, and Kevin Rudd’s leadership.

It was always going to be difficult to sell the reduction that all logic says is the minimum possible for a meaningful attempt to harness the risks associated with global warming. The list of vested interest is long and powerful including the State Governments, our largest exporters such as coal companies, some economists who know nothing of science or the management of risk, and the party power brokers who look to maintaining power at the next election and know how the opposition may be able to use such a decision in the short term.

It is now doubly difficult, for the short term crisis always has the power to displace long term interest. It is difficult enough that “marketing” has the resources of roughly 10% of all developed country economies. That is about $100 billion dollars annually in Australia alone (not all opposed to a hard target of course). Now, every media outlet will magnify the fear for the economic consequences, and ask the questions once again of why we have to go first, or why we can not delay action once again until the present crisis is over.

So here, once again, are the reasons for Kevin to take courage, and pick a realistic number, a number for reduction of greenhouse gases greater than 25% by 2020 and as close to 40% as he dares to believe we can achieve. These reasons are the reasons of a business person, and an applied scientist, for that is what I am. But they also contain the logic that could apply to every decision concerning the future, and had they been applied to Governments role in overseeing the finances industries handling of the marvelous new financial tool of derivatives, we would have avoided most, if not all of the current economic pain.

These reasons are two fold: the first is the science that leads us to believe that a change in world average temperature of 2 degrees C will put us into uncharted territory, and the second is the likely negative consequences. Of course, in some places the consequences may not be negative, but we have identified likely negative consequences that nearly all put Australia at risk.

The science is as close to certain as it is possible to be, that any worldwide cut less than 25% by 2020 (relative to 1990), and perhaps 40%, will lead inevitably to an eventual change in world wide average temperature of over 2 degrees C. I have put details of the science at the end of this discussion, but the argument comes down to this: since 1900 the average world temperature has risen 0.7 degrees C, which is way more than the fluctuations in temperature caused by all the uncontrolled events like volcanic eruptions, and is exactly what you would expect from the release of greenhouse gases since the industrial revolution. And, since all the underdeveloped countries want to industrialize, and the developed countries are obsessed with further economic growth, these greenhouse gas emissions have accelerated and so has the global warming. Even though the random fluctuations are 0.3 degrees C, which means that we have a few “cooling” years in every
decade, the average for each decade is higher than the last. Although 1998 is the hottest on record, if anyone wants to bet against a year exceeding 1998 in the next three years, I am willing to bet.

So what of the consequences of a rise above 2 degrees C? We tend to think of the consequences in terms of what will happen to Australia, just as we do with the financial crisis. This pushes us in the direction of adaptation, and compensation from Government for those “innocents” most affected by the change, as we already have in providing money to the car industry and for carbon sequestration using underground disused oil well storage. However, if we look at the likely consequences world wide, our current choices may not be a very good use of our money, if we have a limited resource, and money is always a limited resource. On the other hand, ad hoc action on the Murray-Darling basin is infinitely better than no action, and perhaps the cost of adaptation is so high that subsidizing multinationals will look like a piss in the bucket in the long term.

In any case, if reductions of at least 25 to 40 % are not achieved by 2020, it is very likely that later in the century:

· There will be rising sea levels, and changing rainfall patterns, such as increased tropical cyclones, leading to drastically altered ecosystems, for example rainforest becoming savannah, and drastically altered conditions for man made systems such as agricultural irrigation.

· With changed ecosystems, and changed man made systems systems, there will be premature deaths of between one billion and three billion people who currently live in poverty or absolute poverty, because they often live in the places most vulnerable to rising sea levels (river deltas for example), and changing rainfall patterns, such as rivers that rely on snow melt part of the year

· With population stresses leading to death and devastation, there will be greatly increased warfare, both civil and between nation states

· With increased warfare, there will be greatly increased risk of nuclear weapons proliferation, and possibly nuclear weapons use by major powers

· With growing hopelessness, there will be greatly increased terrorism

· Changed weather systems will lead to greatly accelerating destruction of ecological habitats and with rapidly changing ecosystems there will be accelerating loss of biodiversity

· The stresses placed on food production systems, and resources in general, will manifest as economic destruction on an unprecedented scale, especially in recently developed countries, including the possible breakdown of trade

· These changes will lead to the most powerful states seeking to achieve energy independence, security and sustainability at the expense of the sovereign position of weaker states with energy resources

It is less likely, but entirely possible, that even more catastrophic consequences also exist, such as runaway release of greenhouse gases NOT from industrialization, but from the global warming itself. The result could be major melting of Greenland or Antarctica ice, and sea level rises of say 10 meters instead of the currently projected one meter.

These are the reasons for the world choosing a target of at least 25% reduction by 2020, in order to eventually limit Global warming to 2 degrees or less.

2. What may Australia achieve by setting a realistic target?

Kevin Rudd is a very well informed man, and will certainly know the above given reason for the world to set a realistic target. The reasons for Australia not setting such a target will be endlessly thrust upon us by the vested interests, the opposition, the media, and all purveyors of the conventional wisdom. Indeed, Australia is almost irrelevant in the direct sense, to the success or otherwise of the attempt to mitigate, being a mere 2% or so producer of greenhouse gases. We have much to lose, since the lifestyle that we uniquely enjoy rests so strongly upon energy.

However, no leader worthy of the name would hesitate. When Roosevelt was approached by Einstein, and told that there was a remote possibility that a new form of weapon, Nuclear, may be possible if he took the cream of his precious scientific and engineering manpower, and the resources of great companies, and dedicated them to this cause, he didn’t hesitate. Those who hesitate at such moments are remembered, if at all, with disdain.

Kevin knows that to be in a strong negotiating position with China, USA, Europe, Indonesia, Japan, and India the Australian figure must exceed 25% and perhaps be as high as 40%. These six regions of the world are of singular importance to Australia strategically and economically: they are also the six biggest producers of greenhouse gas emissions, and getting them all to agree with a reduction of 25% or more is essential if mitigation is to have any chance of working. Currently, all of them except Indonesia are easily open to such influence, and Indonesia is a very poor country which produces greenhouse gases by deforestation and needs appropriate financial aid.

In short, what Australia will achieve by choosing a realistic target is credibility, and to an extraordinary degree. For a country that is not in the G8, anything that moves the world to operate through the G20 has to be desirable.

3. What has Australia to gain apart from increased influence?

While I think that the influence with the rest of the world that we would gain by setting a realistic target is reason enough to do it, there is one more set of reasons that we should set such a target.

If a difficult target is set, the arguments will be over: and then long before 2020, if we look for them, there are many innovative changes that can be made or adopted. We are likely to find ways of treating carbon dioxide at the chimney of the power station, instead of mixed into the atmosphere, perhaps by using sunlight and algae to make bio-fuel, which we would never even consider if no difficult target is met. With a realistic target, we will turn our attention to roads on which ultra light weight powered vehicles can travel safely and exclusively, and their occupants can travel comfortably and quickly, perhaps a road with a roof to keep off the rain which runs in the air above our existing roads, which we wouldn’t even consider without difficult targets. The list could go on and on, but the purpose is not to speculate on the solutions, it is to illustrate that a difficult target does not only get us into the Copenhagen venue, it forces
innovation from participants in the energy market who ultimately should be rewarded for taking risks that on average will pay for themselves many times over.

I can not emphasize too strongly, that we should never try to invent the wheel that has already been perfected in an economic world of which we are a 2% part. But equally, if we do find a new economic technology, we can leverage it to 50 times the Australian economy, and so even one success can wipe out the cost of many failures.

In no area is this as true, as it is for building products, and commercial, industrial, and residential buildings. Since our use of coal and other fossil fuels is largely driven by the built environment, either as embedded energy (like bricks, cement, steel) or for use of electricity and gas, it is very relevant to single out the built environment. It plays such a large part in our economic growth, and in our culture, we can not ignore this national icon. The potential for greenhouse gas reduction is so enormous in both new housing and retrofitting that a 25% reduction could come from them alone. Would a bank rather fund the retrofit of automated sun control shutters, or the purchase of a sea side home that may be inundated as the water rises? And since Government is now guaranteeing the bank, Government could give zero interest loans for the former, and regulate the risk for the other.

Or they can proclaim that doing nothing is not an option, and then sit back and wait to see what happens.

4. An After thought:

There are strong parallels with the current financial and economic crisis. The industrial revolution was the blessing that bought to the world economic prosperity on an unprecedented scale, but also bought greenhouse gases, while the invention of the pricing of risk associated with options, futures and other derivatives brought to the world low cost finance and simple diversification of risk, and led to unprecedented economic growth with low inflation. This made it appear that those who participated were best able to control these new instruments and consequently deregulation of the markets.

But deregulation of the market allowed financial institutions to provide profits and bonuses on short term results by extremely excessive leverage, without any guarantee or oversight of long term security or way to recover the money. We now know how the later played out: the variability in the system increased to such an extent that confidence was lost, and everyone wanted to withdraw their capital simultaneously. This led to correlated behavior in all markets regardless of their underlying values or risks, and the destruction of credit, and now we the people have to pay as our Governments struggle to reestablish credit and get the economy working again.

Without a realistic 2020 target, exactly the same thing will happen with respect to global warming. Each country and region will seek economic growth through the lowest short term cost of energy, fossil fuels without a carbon cost. Economic growth automatically results in military strength and a large economy with military strength results in power and influence, and a tendency towards unilateral action. However, the natural environment is not impressed. Its scale is infinitely greater than any country, and when the influences are magnified by feedback, the catastrophes will become correlated and the potential to bring down even the biggest players will exist. This will be a very dangerous world for Australia to exist in, and there is no guarantee that anybody will, or could, protect us. For all these reasons, I hope that we choose a 25%+ target before Dec 1

5. Science and climate change:

And now for the moment you have all been waiting for. Travel light and never forget your micro-fiber towel, for we all live on planet Earth, a very nearly perfect sphere, with a circumference of nearly exactly 40,000 km (since that is how a kilometer was first defined). This Earth circles the sun at a distance of roughly 150 million km, and has done so for some 4 billion years. Many other planets also circle this sun, and by measuring their surface temperatures we know that the surface temperature is determined primarily by that distance from the sun, and secondarily by the ridiculously small amount of surface gas which we call the atmosphere. If it were not for this tiny 10 km thick layer, our planet would be some thirty degrees cooler, which means that almost all of earth would be covered in ice. Even with six billion people, we all have about a million tons of this atmosphere, unfortunately not nearly enough.

This atmosphere was developed over 3 ½ of the 4 billion years, by an interaction of life with the gases Carbon Dioxide and Oxygen (and to a much lesser extent Nitrogen), and forms one component of the very thin layer we call the Biosphere, the other components being the very thin layer of rocks that sit on top of the continents Granite base, and the water that sits on top of the non continents, the worlds oceans floor of Basalt. We call it the biosphere because there is an exquisite balance that has been developed and maintained, between these gases, liquids and solids and the life that occupies them.

This exquisite equilibrium however has never been static, even in the five hundred million years since the major components of the current atmosphere were in place, and life moved to the land and became plants and animals. The equilibrium is only approximate, because the Planet Earths path around the sun is not a perfect circle, and so sometimes the Earths surface starts to cool as the sun becomes a tiny bit weaker, and the equilibrium changes and tips, and ever so slowly the polar ice spreads towards the equator, at the same time the oceans absorb more carbon dioxide.

We know the full history of these variations in exquisite detail for the last few million years, for it is written in ice. It may well have been the same for hundreds of millions of years but as the continents were not where they are today; no continuous record of that age exists.

The major period of this variation is 100,000 years. In the 100,000 years, the ice on the continents grows to be kilometers thick, and the Earth cools erratically but persistently. Then the sun becomes a little stronger and the surface warms just a tiny bit, but suddenly, in the space of a mere one thousand years, the equilibrium shifts dramatically, earth warms and much of the ice melts and the land becomes covered with life once again. Very often this is new life, different life than has ever occupied this ground before.

This “saw tooth” pattern last switched back to warm earth a little over ten thousand years ago. Since then, there have been smaller variations in temperature due to a myriad of other smaller effects, until roughly one hundred years ago. Then the Earth started to warm still further, and highly significantly although the number at first seems small. In the last one hundred years, the temperature has risen 0.7 degrees C, and it is currently rising even faster.

To grasp the true significance of this number, the most obvious thing to think about is the Artic ice sheet, which for so long has been like dry land. It is now melting at an enormous rate, for melting only requires the tiniest change from below 0 degrees C to above 0 degrees C, but once melted it mixes with the waters of the artic ocean and nearly all of it does not refreeze with the coming of winter. Fortunately, so far there has been little melting of Antarctica, as the land is mostly very high mountains, but most glaciers everywhere in the world are disappearing fast.

Although scientists have been certain the world was warming since around 1990 (and had suspected it for fifty years before that), there were uncertainties about the causes of temperature variation, such as El Nino and La Nina, and the explosions of volcanoes. Some of those uncertainties remain, but the rise in temperature has been so rapid in the last twenty years that it has taken the temperature outside of the common variation due to these causes which is about 0.3 degrees C. In the language of statisticians, the probability that the temperature rise is due to greenhouse gases released by humans is almost one, being several times bigger in size than the usual erratic changes due to volcanoes, etc, and almost exactly the value we would predict from the change in atmospheric properties induced by greenhouse gases.

To conclude, precipitated by the failure to regulate the processes for asset and derivatives ratings and other fundamental financial processes, a recession which appears certain to be wide spread and long lasting has developed.

Critically, the deregulation eventually led to excessive leverage, which led, when the bubble burst, possibly triggered by something seemingly unrelated such as oil prices, to re-pricing of risk in an ad hoc and chaotic way, the credit crunch, and the financial crisis in turn has led to the economic crisis of recession.

Let us not make the same mistake over greenhouse gases.


Leave a Comment

You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.