New technologies need carbon pricing

“Just wait for new technologies” remains one of the most frequent catch cries of those opposed to carbon pricing. It was among the justifications for why Australian didn’t embark on carbon pricing in the early part of last decade, after being recommended by CoAG’s Independent Energy Review Panel back in 2002.

However, the idea that we can just wait for new technologies relies on two fallacies.

The first is that it assumes that alternative forms of energy are, or can be, cheaper. The fact remains, at least in the Australian context, that all other forms of energy generation tend to be more expensive than fossil fuels. That’s why we use fossil fuels; they’re the cheapest form of energy we know. Energy from coal-fired power is around 4-5c/kWh, while all nuclear, wind, coal+CCS (carbon capture and storage) and geothermal around 8-10c/kWh. If there was no constraint on the earth’s ability to absorb our greenhouse emissions, then you’d keep on doing what we’ve been doing for the last century. With the current pricing of alternative energy technologies, none would be deployed while there are cheaper alternatives.

The second problem is that the costs of technology do not come down automatically as a function of time. It is broad deployment that pulls down the cost of new technologies. If you look at gas-fired power plant, solar photovoltaics or wind, the costs of these have come down dramatically in the last few decades (gas a little earlier) and what has caused this is widespread diffusion of the technologies and achieving economies of scale. For example, early wind turbines installed in California in the 1980’s had capacities around 20kW each, whereas the latest on-shore turbines are 3,000kW, and offshore turbines at 5,000kW. Meanwhile, solar photovoltaics show a logarithmic relationship between cost reductions and deployed capacity.

While we demand least cost energy, these new technologies will simply not be deployed at broad scale unless there is a policy intervention. The most efficient policy intervention is to internalise the externality, that is, price the byproduct of fossil fuel generation and reflect the constraint in the atmosphere’s ability to absorb the emissions. By pricing in emissions, fossil fuel generation becomes more expensive and this makes alternative energy more viable.

New technologies are of vital importance. If we implemented carbon pricing without new technologies, our choices would be limited to existing technologies, so the carbon price and the corresponding strength of the structural shift in the economy would be significantly greater. In the microeconomic sense, new technologies pull down (and shift to the right) the supply curve of abatement, making it easier to meet any given reduction target.

New technologies and carbon pricing are not policy alternates. We need both.

Comments

  1. For what I understand, if there is a shift due to this carb tax (which could be doubtful beside closing down of coal plant) it will be to Gas plant.

    Not new tech, still very carb intensive, does very little to move to a low carb economy or to reduce materially CO2 emission, do not increase our productivity, research, tech workforce, reduce dutch disease.

    just pointless move to save us few hours / days of warming but will create more fat cats in our bloated/parasitic financial industry.

    We need windfarms on Roaring 40s, grid, solar.

  2. You do understand that the CO2 concentration is at drought levels in the atmosphere that it results in inhibition of photosynthesis, vital for all life on earth!

    You do understand that we are currently in a ice age climate, and that life flourished when the world was 14deg warmer than present!

    You do understand that Energy is a raw material of the economy, and making it more expensive will have a detrimental effect on the economy

    You do understand that lakes of toxic waste have been generated by the extraction of rare earth metals required for wind and photovoltaics!

    All fuels come from CO2 that used to be in the atmosphere!
    We should be aiming to increase the level to at least 800ppm, not trying to reduce it!

    • seen it coming

      Two things – without a friendly environment there is no economy and pollution for free obviously ends up with more pollution.
      Bad luck about that living in past problem but the future requires thinking not reminiscing.

      • Coal has been hugely beneficial to the environment as it replace wood as the main human fuel source. At the same time it did produce nasty heavy metal and sulfur pollution that was solved with technology (and is why we desperately need to replace some of our older plants in Aus)
        It is also a finite resource and has a horrific human toll due to mining accidents. The problem is that replacing fossil fuels with more expensive alternatives hurts people! When you consider the opportunity cost in a world where millions are blind due to a simple vitamin A deficiency, what should we be spending our money on?

    • Why pointless? There is a hell of a lot of money riding on some pretty ordinary science; why not question it? Reeks of superstition, to me.

      • I have been following the science involved for 25 years, since way before it became politicised.

        The science is sound as much as any science is sound. And way more certain than is required for drug trials and medical treatments which we all trust.

        The problem is that most people don’t understand the science ( as most people don’t understand economics “RE prices always go up !” ) so the debate is now political and if you read the comments on the linked article above you will see that it is pretty much all nonsense. Unfortunatly the political debate in Australia is pretty much the same at a parlimentary level too.

        Either way – as Carbon Bologny mentions further down, eventually we will need to move away from Hydrocarbon fuels anyway.

      • Drederick Tatum

        I’ve read the science too and broadly agree with it. My problem is the hysterical disaster movie claims that get made – Flannery being exhibit A. These type are no different to the bullhawks that people rail against every day — common theme is people blinded by ideology.

        They are at it again today. It seems like it will be a real disappointment to many if we are not submerged in the next decade or so.

      • I totally agree.

        Normal discussion is quickly lost ( and is not often reported at all) and it is only the extreme, ridiculous or scandalous that gets reported.

        however that is so true of so much public discussion these days …. all you have to do is look at the discussions of something as mundane as house prices ….

  3. Why don’t just state it openly – carbon tax has no influence whatsoever on environmental outcomes, only the ‘clean energy industry needs subsidies’.

    Quote: ‘While we demand least cost energy, these new technologies will simply not be deployed at broad scale unless there is a policy intervention.’

    There you have it, none of these so called ‘clean energies’ are economically viable – unless the government introduces ‘a carbon market mechanism’.

    However hard the politicians and their proxies try to convince the population at large that ‘taxing carbon’ will lead to less pollution and clean air – people are becoming more and more skeptical about the science of climate change modelling and ‘scientific’ motives.

    If the Oz economy isn’t yet on its knees, if consumers haven’t closed their wallets, if companies haven’t downgraded their profits yet – the time will come when advocates of more taxes and levies to support pet policies and industries – will lose peoples’ confidence. There is a huge credibility problem with the advocates of climate change based on human activity.

    Carbon Coyote – nothing that you have wrote has changed my mind that you expect the financial industry to underwrite the ’emerging clean’ technologies – it ain’t going to happen. Financial markets support profit – not failure.

    • I think you have it around the wrong way.

      As CO2 from burning fossil fuels is currently treated as an externality, society is subsidising producers of fossil fuels.

      When you remove this subsidy, other energy sources will become viable. The sooner this subsidy is removed, the cheaper it will be to switch to sustainable energy sources.

      As a bonus, Australia is one of the only countries that can transition to renewable energy before it reachs peak coal production.

  4. “The first is that it assumes that alternative forms of energy are, or can be, cheaper.”

    Right, so in an economy that is based entirely on cheap and efficient energy sources, the only way to save the world from emissions of a trace gas is to give this up and make all our power more expensive? And this will have no effect whatsoever on the economy? Ok then…

    Also, if making power more expensive somehow spurns innovation, why is it that Europe has not developed a super cheap alternative yet? In fact, all that has happened over there is power has got much more expensive, with more effects being felt the more the nation pushes the ‘green dream’ (aka Spain).

    “The second problem is that the costs of technology do not come down automatically as a function of time. It is broad deployment that pulls down the cost of new technologies.”

    So the government should intervene in the vain belief that they can somehow make solar and wind cheaper? This is Ministry of Truth stuff right here. “Taxes create innovation”. What planet does that economic theory come from?

    When horse manure was stinking up New York the government didn’t tax horses more in the hope that someone would invent the car. Someone invented the car/mass production because there was a clear chance to profit. There was a very real problem and the solution made someone bucket loads money.

    The same cannot be said of catastrophic man-made global warming because the theory hasn’t been proven yet. All the so called ‘evidence’ is based entirely on computer models that have been found wanting at every instance.

    Maybe it would be a good idea to actually prove there is a problem before pushing wasteful and useless solutions to it?

      • Sorry but this is just semantics, you know exactly what I mean.

        If you would like me to spell it out:

        “There is no evidence to a statistically significant level, that human emissions of carbon dioxide (a trace gas required for life on Earth) will warm the world to a ‘tipping point’ where a positive feedback effect will cause runaway global warming”.

        There is solid evidence that the sun makes the days warmer than the nights.

        There is solid evidence that if I jump off the top of a house I will fall towards the ground.

        There is no solid evidence of catastrophic man-made global warming.

        Happy?

      • Happy ? No ?

        1. Because you just re-formulated the question by requiring a prositive feedback loop …

        and 2 because there is mountains of evidence to support it.

        Unfortunatly we can’t do a double blind clinical trial where we take 100 earths and randomly assign them to different groups an apply policy to them and then statistically analyse the results using analysis of variance.

        This seems to be the only type of “proof” that people would be willing to respect.

        However there are other tried and tested methods to study these kind of issues which have been in use for years and are for example the basis of particle physics, sociology and even economics.

      • 1. Umm, so if there isn’t a positive feedback effect why are we even talking about this? The whole theory is that human induced CO2 emissions will cause runaway global warming because of a positive feedback effect.

        I said ‘catastrophic global warming’. I never re-formulated anything, it’s been the same question from the beginning.

        2. No, there most certainly is not. There are models, based on false inputs and data. There are predictions that have been proven wrong. There are political bodies CLAIMING ‘mountains of evidence’. What there isn’t is ‘mountains of evidence’.

        You say this, then you basically admit ‘well, we can’t actually prove it, so we have to rely on 2 social sciences and one hard science that doesn’t actually prove our theory.’

        Sorry mate, you are going to have to do much much better than that if you are going to convince people this is anything more than a post-modern religious faith.

        (By the way, the world actually warming at a faster than normal rate would be a start lol)

      • Absence of evidence is not evidence of absence Matt…

        Why do all of these comments always gravitate towards the “science” alone when Carbon Coyote is discussing the economics of climate change policy?

        As a businessman, investor and taxpayer – I am interested in how policy affects those 3 areas – I thought a lot of you would be too?

      • “Absence of evidence is not evidence of absence Matt…”

        In science absence of evidence is absense of evidence, nothing more nothing less. Without evidence a theory is nothing. Should we not get evidence before doing anything?

        Since people like CeC are claiming they are acting on the science should the science not actually be confirmed first? Unless this is done then all his assumptions are completely worthless and any discussion about the effects of policies are irrelevant because they are based entirely on a fallacy.

        In other words, if he can’t get the science right, how can he get the economics?

        I am more concerned about the fact that the government are pushing through a policy that will fundamentally change our economy on theories that are unproven and, essentially, based on fantasy. The issue is far broader than just economics, it goes right to the heart of our so called ‘representative’ democracy.

      • So just out of interest – what kind of evidence would you accept?

        What kind of study would persuade you ?

      • 1. Proof that the rate of warming is outside historical norms.
        2. That CO2 increasing/decreasing is a driver of climate change and not a result of it
        3. That increasing CO2 would be bad for the planet and not actually be better for it (it’s plant food after all)

        etc etc… bearing in mind that I have read it all before and I used to actually believe in the fantasy until I finally saw the counter evidence.

        Now let me flip this on to you. How many years would the world temperature have to stay steady/drop and how many predictions would have to be found wanting until you accept that there are serious flaws with the so called ‘evidence’?

      • Oh also, if the world warms 5 degrees in a year and the polar ice caps actually melt dramatically I might reconsider my position.

      • Sorry – i didn’t mean what hypotheses did you want to see tested, because they have been tested to the satisfaction of bodies such as NASA, CIA and the US chamber of Commerce …

        but what type of study, because obviously the ones done so far are not convincing you …

      • No they aren’t convincing and appealing to authority does not make your argument any more valid. They aren’t convincing because for every study that is found to support the thesis (always by government funded organisations) there is one that completely dismantles it.

        Like I asked before. For science to be accepted it must be able to predict future outcomes with a high level of accuracy. The AGW movement has been characterised by consistently getting predictions wrong. As such, how many incorrect predictions will it take until you sit down and actually consider the evidence?

      • Exactly – hence my original suggestion that we leave the bunfight to those over there …

      • How is it pointless? It goes right to the heart of the issue.

        If the science is not settled then all economic assumptions on the carbon tax are essentially pointless.

      • Carbon E Coyote

        MattR, you have seen the counter-evidence, but you haven’t seen the counter to the counter-evidence. A useful site for that is here:

        http://www.skepticalscience.com/argument.php

        It lists what the skepitcs are saying (CO2 is good for us, it’s the sun, the world’s not warming, we’re heading into an ice age etc etc) and outlines what the science is actually saying.

        I agree with you that there’s no point talking about a carbon price if there’s no basis in the science. Problem is that there is a basis in the science, hence the starting point for economic/financial analysis provided by this blog.

      • Actually, CeC I have seen that one as well. Then, there is the counter-counter-counter evidence.

        http://www.galileomovement.com.au/

        No, the science is not settled. No there is no basis for this carbon tax.

        Part of science is developing theories that predict future events. One of the striking things about the AGW theory is it’s complete inability to get anything right in terms of climate predictions.

        Sorry mate, but just saying something, doesn’t make it so.

      • Drederick Tatum

        Carbon E., I went to your link and skimmed the list and zeroed in on the modelling, since this is an area I understand and my main concern with the science, i.e. having a handle on a cause for warming doesn’t equate to having a computer model that can provide robust forecasts.

        The description given on that website seems to confuse back testing with forecasting. Those readers this who have done any financial or economic modelling will know what I am talking about there. By definition your most robust model is probably going to fair well in back testing (testing with historical data). It doesn’t follow that the same degree of precision will occur in forecasts or that the forecasting will be any good at all.

        Hence while I am comfortable enough with the conclusions of the science (i.e. the explanation of how we got here) I tend to discard the forecasts/extrapolations and don’t envisage a collapse in the beach front property market anytime soon (other than for property bubble reasons).

      • Ahh – the first thing i was taught in statistics.

        “the only perfect predictor of whether something will happen is if it happens …”

        it seems so many people will only accept that level of perfection .

      • Carbon E Coyote

        Agree with you DT. The science of observation and how we got here has a lot more certainty than the science of predicting where we’re going from here.

        MattR, I wonder whether a site that starts with “any carbon tax is destructive” and “stop the carbon dioxide tax” is actually going to take a dispassionate look at what the science is actually saying, or whether it would more likely cherry pick the data (peer-review or otherwise, subsequently dismissed or otherwise) that supports its case? All the claims on it are answered by the site I previously pointed out.

        The “skepitcs” call the “warmists” “alarmist”, but I would say that those saying that the carbon tax will ruin or destroy us are being at least as alarmist.

      • CeC, you linked to a site that is run by a known warmist and is entirely impartial.

        You now simply dismiss the site I linked to without even reading it, by claiming that ‘it says something I disagree with right from the start, therefore it is wrong’. And you wonder why people don’t respect the arguments of warmists. Warmists call skeptics far worse names than ‘alarmist’.

        I actually linked to two sites and have more where that came from by the way.

        http://wattsupwiththat.com/

        Let me guess, just a shill in the pay of ‘big oil’? Like I said, heard it all before.

      • Drederick Tatum

        zentao, no it has nothing to do with only accepting “that level of perfection”

        It is about failing to understand the level of *imperfection* and therefore having misplaced confidence in the forecast. (we also see this in neoclassical economic — the parallels are interesting — blind faith in models).

        basically it is about uncertainty of nonlinear dynamics. While you obviously want your model to work when doing back testing you need to be aware of the uncertainties on nonlinear models for forecasting (this is a general statement, not just for climate models). I have read claims that imply certainty (as night follows day) that coastal towns will be under water. Fitting a model to historical data is not a test or *precision* and *uncertainty* in forecasting — this is something that people who buy horse racing systems fall for and seems like those that buy the certainty of climate computer models fall for the same trap.

        So being able to explain the climate does not equate to being able to forecast it 100 years from now.

      • Drederick Tatum, As someone who understands modelling you will be interested to know that accurate climate backcasts are only achievable because the modellers incorporate an artificial adjustment to make them line up (a plug).
        The actual warming seen in the last century is only half of what is modelled, to overcome this flaw they make up a value for sulfur particulates that balances the error. This value has no basis in science and is fundamentally opposite what one would estimate from known data.
        For more on this read http://www.climate-skeptic.com/2009/02/the-plug.html

        This site is run by someone with a background in computer modelling and economics. If you want more in depth knowledge then read the section on climate modeling
        http://www.climate-skeptic.com/2009/02/the-plug.html

  5. CEC, in relation to new technologies – we’ll know more about the purported fusion technology I’ve discussed in earlier posts within the next 5 months.

    We can argue whether or not it would be more prudent to wait until then and assess if this technology proves to be a Holy Grail of energy, but from my perspective, the prospect of commercial viability is only 5 months away.

    Personally, I would also prefer the government to stop spending copious amounts of time and our money into a carbon scheme that many people don’t fully understand and others don’t agree with, but rather throw resources into implementing this type of technology if proven to be true.

    I’m sure the planet can survive for the next few years as this technology is being evaluated and progressively implemented – if we are to believe CO2 (this nefarious lifeblood of our planet) is on the increase and will ultimately cause the destruction of our civilisation.

    Another promising free energy device is called Muller’s Magnetic Motor. It is open-sourced and is currently being worked on in various parts of the world by engineering enthusiasts. Being an electronics engineer myself, I’ve looked at the schematics and they seem to make some sense, as the methodology used is very unique. I have also seen some of the small 12-volt prototypes on Youtube, but the system needs refining for larger scale operation. I’d lean towards it being a doable device and I don’t think it is that far away.

    I reckon it’s going to be hard keeping the genie in the bottle for too long.

    • Carbon E Coyote

      If only I had a dollar for every time I’ve heard someone tell me that commercial viability is xxx months away! I’ll believe it when I see it.

      My point remains, whether it’s fusion (which people have been working on for decades) or new magnetics/electronics, it may or may not be technically feasible at lab or even pilot scale, but getting it into the market will take financial resources and a market pull, especially if they are more expensive (at scale) than our current system. And I would bet that they are.

      • So we should tax other, already viable, forms of base load power in the mean time, in the vain hope that a new technology will, maybe, take over in the future?

        Sorry, I just don’t buy it.

      • Carbon E Coyote

        No, we price in carbon so that existing technologies (gas, wind, solar, nuclear etc) are deployed, so we immediately reduce emissions (if we don’t we increase emissions by 24% to 2020), and in the longer term there’s an economic incentive for newer technologies (solar thermal, ocean power, CCS etc) to come to the market to try to beat the existing mix.

      • Assuming the man made version of AGW is true wouldn’t it be far cheaper to just adapt to it as it happens? I used to believe in AGW once upon a time until I realised that all you have to do is follow the money to see which side of the fence you are sitting on. Most of, if not all the pro-AGW warmists are living off this gravey train either thru gov. grants, hand-outs or political connections. The race to legitimise C02 thru some gov mandated economic system will open up the door to all kinds of un-intended consequences and could be like the home insulation scheme disaster on steroids. I wonder how they coped with that warm spell in the middle ages and wasn’t ‘Greenland’ named ‘Greenland’ for a reason? The earth didn’t spin off it’s axis back then and a warmer world means increased crop yields.

      • Austraialien

        You can follow the money on global warming researchers, but you can’t follow the money for oil producers or coal miners?

        I think your sand pit is running low, best go fill it up.

      • DaveBD,

        A dishonest, strawman argument.

        In no way is his statement an explicit denial of funding for the legitimate scientists seeking to debunking the AGW myth.

        He is stating one truism, virtually all associated with pushing AGW are making money off it, and this money would cease once the lie of AGW comes to mainstream consensus.

        As opposed to _this_ side of the argument is that once any scientist is found to obtain funding from an oil concern, they are dismissed out of hand, as if ‘guilt by association’ is enough.

        The science, as of May 2011, is well and truely in favour of AGW being a myth, with every AGW model to date proven false, thus showing pro-AGW scientists DO NOT know how the climate operates.

        Every single AGW theory has major flaws, and the alternative theories have much stronger empirical and theoretical claims.

      • “If only I had a dollar for every time I’ve heard someone tell me that commercial viability is xxx months away! I’ll believe it when I see it”

        CEC, I’m not sure where you’ve been hearing the above, but I’ve been following this area for a number of years and Andrea Rossi’s Cold Fusion device is the first device I’ve read that has made the claims of being a commercially viable product and given a release date – October 2011.

        “I’ll believe it when I see it” – I’ll agree with you here but the evidence is quite compelling and the fact that he is self-funded must speak volumes.

        “…getting it into the market will take financial resources and a market pull, especially if they are more expensive (at scale) than our current system. And I would bet that they are.”

        These units will remove the need for a home/office to be connected to the grid. The estimated price is $2000 (Euro) per kw and a 2kw unit will be more than sufficient to run the average home. The estimated running cost is less that 1c per kw hour – so I can’t see how it’s going to be more expensive?

        This is clean and safe technology.

        What I do see is energy companies trying to prevent this from manifesting – that’s the nigger in the woodpile!

      • I should also add that the pseudo alternatives such as solar, wind and tidal are restricted by environmental conditions and geographic areas. On a local level they are based on a 25% duty cycle – operating effectively 8 hrs per day. You will still need to be grid connected unless you have banks of expensive batteries that have a realistic lifecycle of 5-8 years.

        The beauty of the over unity device concept is it churns out power 24/7 and is a REAL ALTERNATIVE and a REAL threat to the energy establishment.

        Imagine the level of freedom…

    • Hi Nod

      While it is nice to remain hopeful about cold fusion, I would regard this ‘discovery’ as a chemical reaction until proven otherwise.

      Also remember that if the government implemented a carbon dioxide price at around $100/tonne (not the <$40/tonne it is suggesting) a multitude of sustainable energy sources would become viable.

      Letting a bureaucracy pick winners is not the best way to encourage innovators and entrepreneurs to solving our energy/climate crisis.

    • Muller’s Magnetic Motor is for dreamers. Best to stay real, at least in an economics oriented discussion.

  6. Well, since you have made it plainly obvious that the so called ’emerging clean technologies’ are not viable – as a trader – you have given me no alternative but to short them.

    That is what the market does – discount failure. Bring it on…sucker, I’ll take your money.

  7. I have no problem with the science behind global warming, and to my mid there is plenty of evidence re historic levels of C02 55 million years ago and green trees in Spitzbergen etc, the fact that a carbon tax is just another subsidy to develop new technolgy, and the current energy providors will pass the cost on to us ,most likly by reducing output still keep the same level of profit and no new power supply or providors come on to the market to provide competition to put downward pressures on the price.The money goes overseas as the power supply companies are Chinese owned and we have a declining economy. This doesn’t seem to have been entirely thought out too well.

  8. Technology exists; it is just cost that keeps it on sidelines. There are two ways of making alternatives (solar + pump hydro) dominant: increase coal/gas prices or decrease solar cost. Our politicians and businesses decided to use increase option because it will bring them more profit. It is feasible to lower solar price by 50% at this moment but that wouldn’t bring profit to any of the big player.

    • The old column of water trick…or where
      you talking a point to pipes..from our biggest water reserves too our Dams..

      MSG, Got alot ignored for being the biggest stable powers we know
      Makes you wonder doesn’t it…maybe it’s just electrical engineers,the logical alike..
      I wonder…not past giving up…cheers JR

  9. Yawn. More denialism.

    Its often occurred to me that its extraordinarily hard to introduce new taxes (GST, carbon tax etc) but its really, really easy to create bubbles.

    So instead of punishing ourselves with a new tax, lets change the tax laws so that its irresistibly attractive to reduce your carbon emissions, and invest in clean technologies.

    Disclaimer: I fully understand that bubbles are ultimately far more damaging than a price on carbon, but given the rampant denialism in the community, what choice do we have?

    • We have the choice not to listen to fringe pseudo-science that pushes a dogmatic view about Carbon in the atmosphere.

      The real science is now well and truely in the favour of AGW being a myth.

    • Talking of Bubbles – The next bubble – carbon credits.

      “Instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion-dollar market that barely even exists yet, but will if the Democratic Party that [Goldman Sachs] gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an ‘environmental plan,’ called cap-and-trade.”
      — Matt Taibbi, Rolling Stone, July 2009

      • 3d1k

        If carbon dioxide is traded as a commodity, than it will be susceptible to bubbles like every other commodity.

        Perhaps you should direct your criticism to the operation of the free market

      • There are also some pretty good articles out there with the view that the end of the carbon trading bubble could eventually be a “Lehmans” type scenario.

        Free market operation? When carbon trading is mandated, imposed and initially controlled by government.

        It is then handed, fait accompli, to the markets. But don’t you worry, financial interests have ensured its safe delivery under the guise of environment policy.

        My criticism is entirely directed towards the financialisation of carbon.

    • Lorax

      I am not opposed to reducing emissions, unlikely to be a negative to do so. But the introduction of the financial aspect, a freely tradeable, permit purchasing, offset generating and profit-making ETS – results in carbon becoming just another commodity traded in global exchanges. ETS value lies in the need for industry to trade emission credits in order to carry on business – business as usual. Global emission reductions are likely to be negligible but profits for the financial architects and traders, significant. So, just maybe, you’re onto something.

      Would be interested to know what were the alternatives to Enron’s emissions trading idea. Were there any not financialised.

      Can’t help but think that governments and environmental groups have been taken on one helluva ride by Big Finance.

    • Carbon Bologny

      I wouldn’t be so quick to label critical thinkers ‘denialists’ as vested interests in politics and the msm do. It shows a complete lack of respect for the very compelling counter debate and the value critical thought. Dismissing critical thinkers with pjeroative terms that suggest they’re in la la land does little to advance the debate.

      • So critical thinker

        Why are methane levels rising?
        Why are atmospheric carbon dioxide levels rising?
        Why are carbon dioxide concentrations in sea water also rising?

        What is causing the increase in surface and sea level temperatures?
        What happens to water vapour in the atmosphere as surface and sea level temperatures rise?

        What is the relationship between Milankovitch cycles, carbon dioxide and the ice ages?

        How do you explain the relationship between temperatures and CO2 levels in ice core data?

      • Dave the methane levels have stabilised.
        We don’t actually know how much humans have increased the CO2 in the atmosphere because the oceans release dissolved gasses as they warm, as described by henry’s law.
        The temp of the ocean governs the partial pressure of CO2 in the atmosphere and the turnover rate is about 10% of the atmospheric volume/year according to the IPCC. at the current low ocean temps (typically 4degC except at the surface) 98% of all CO2 is dissolved in the ocean.
        The cooling and warming of the deep ocean controls the release and absorption of CO2 during ice ages, that is why the Change in CO2 lags 800 years behind the change in temp. 800 years just happens to be the period the global thermohaline circulation takes to circulate through the deep ocean so it is quite possible that most of todays CO2 increases are caused the warming seen during the medieval warm period with an 800 year lag.
        Estimates of past CO2 levels from ice caps are extremely dubious as they take 200 years to form and so remain uncalibrated!

        20 million years ago the atmospheric CO2 concentrations halved, but the earth didn’t start cooling until 2 million years ago. If CO2 controls temp then please explain the 18million year lag?

  10. Carbon trading: It’s all about the money, honey!

    From a recent Barclay’s report:

    “Carbon will be the world’s biggest commodity market, and it could become the world’s biggest market overall”

    “Some industry projections forecast the carbon markets will reach $3 trillion by 2020.”

    http://www.scribd.com/doc/51532174/Barclays-has-forecast-42-growth-in-the-value-of-carbon-credits-by-2012

    and from a 2010 World Bank Report:

    “Put simply, carbon trading is not primarily practiced to cut emissions, as its advocates claim. Instead, trading takes place to make speculative profits, or to “hedge” the risks that large energy companies face in relation to changing fossil fuel prices and currency fluctuations.”

    http://www.carbontradewatch.org/articles/carbon-market-growth-is-mainly-fraudulent-world-bank-report.html

    The introduction of a carbon tax and the eventual ETS will directly benefit those involved in carbon markets – where all the talk seems to be “a great investment opportunity” and very little about achieving meaningful reduction in global emissions – but that was never the priority in the design of carbon schemes.

    • That might well be true, but don’t forget that ‘carbon’ trading is almost synonymous with ‘energy’ trading.

      And as industrial society is based on energy, why wouldn’t carbon trading reach $3 trillion by 2020?

      Look at oil as a comparison. Conventional oil production is about 73mb/d. At $100/barrel, thats $7.3billion/day, or $2.66 trillion/year.

      And oil makes up just one third of global primary energy.

  11. Carbon Bologny

    Matt R you’re a legend, I don’t need to weigh into this debate because you’ve smashed it out of the park IMHO.

    Simply breathtaking to see how gullible people have become with this anthropogenic GW BS.

    • Well i think we managed to do the normal merry-go-round pointless cycle that all these discussions take. Which just points out that there is no real framework for a real evidence based discussion.

      Just disagreeing does not critical analysis make ….

  12. There’s a serious debate to be had about the climate sensitivity and its uncertainty, but anyone denying AGW outright now is frankly delusional, not just in denial.

    We have good data on human carbon dioxide, methane, etc. emissions and good models for the carbon cycle.

    The basics of the greenhouse forcing, water vapour feedback, etc. come from relatively elementary radiative physics, and don’t rely on climate models. If you’ve got a bit of physics, a nice overview is http://geosci.uchicago.edu/~rtp1/papers/PhysTodayRT2011.pdf

    Given this basic evidence for AGW, claiming it doesn’t exist requires coming up with a climate model that shows how cloud feedbacks, etc. counter the basic radiative forcing. But none of our climate models show that, and none of the denialists seem at all interested in providing models that might (but instead deny that climate models are any use at all).

    The real questions are the uncertainties in the magnitude of AGW and the most cost-effective way to reduce greenhouse emissions. Which brings us back to the original article, which seems spot on. I’m picturing Roosevelt saying “we don’t need to fund this Manhattan Project, we’ll just wait and the technology will eventually appear of its own accord”.

    • Danny, had a look at the article and it nicely explains the laws of thermodynamics and the characteristics of C02 and H20 with respect to infra red absorption rates. The article states that CO2 has a higher absorption rate of infrared that H2O which is true. But Infrared only makes up 1/3 of the solar spectrum and H2O has a broader absorption rate that CO2 across this broader spectrum.

      When you consider greenhouse gases (excluding oxygen & nitrogen) are made up of approximately: 95% water vapour, 3.6% Carbon Dioxide, 0.4% Methane (CH4), 0.9% Nitrous oxide (N2O) and 0.1% CFC’s (and other misc. gases) the driver of climate is not CO2.

      Moreover, add to the mix the estimated human activity which contributes 0.117% to the carbon dioxide level through farming, manufacturing, power generation, and transportation.

      These emissions are so dwarfed in comparison to emissions from natural sources such as the sun and the oceans of the world which we can do nothing about, that even the most costly efforts to limit human emissions would have a very small – perhaps undetectable – effect on global climate.

    • Your kidding me right, How do you have accurate models and physics when the observations of water vapour and atmospheric carbon turnover are the opposite sign in one case and out by a factor of 100 in another?
      Not to mention that the most recent study of CO2 absorption came out with a figure 50% lower than the accepted 1.2degC/doubling before feedback.

      If you want to find a crook, look for the person who is trying to inhibit free speech!

  13. This corner of Macrobusines has a lot of acronyms that I am not familiar with. Is it practical to link or site the definitions as is done in the more mainstream feeds?

    I have an interest in carbon pricing and financial modelling. Is there anyone who can give an analysis of the current federal proposal in financial terms?

    How much money is being redistributed? What proportion of that is intended to end up as research, green subsidy, trading profit, emitter subsidy and government costs? What do the basic $/Kwhr options look like?

    Does there need to be a sepparate feed where the “climate change believer” Vrs “climate change skeptic” coin can keep getting tossed ? It doens’t add much value here.

    Australias contribution to greenhouse gas emissions is around 1%. So our “save the planet” options are limited to successfuly introducing a scheme that demonstates a green house reduction at reasonable cost and then hoping that larger emitters take note and follow suit.

    The arguements here seem to follow the federal line, “It’s about faith, not finances.” And that has been a political cancer that no-one in China, India or America will have an interest in repeating.

    • Yet many American states (e.g California) have mandates for 20%+ renewable electricity by 2020.

      California has installed the first standalone compact linear fresnel refractor designed by Ausra (an Australian company now bought out by Areva).

      Arizona and California have agreed to purchase power from 2 solar thermal power towers to be built by Enviromission, another Australian company.

      The Chinese wind and nuclear industry is booming, they are building high speed rail and they have in the order of 100 million electric bicycles.

      Globally, the amount of renewable energy capcity installed in 2010 was at similar levels to fossil fuel installations.

      And you’re saying the rest of the world is doing nothing?!

  14. Nod, you are listing greenhouse gases by their volume, not by their greenhouse effect.

    In terms of greenhouse effect
    Water vapor 36 – 72 %
    Carbon dioxide 9 – 26 %
    Methane 4 – 9 %
    Ozone 3 – 7 %

    Of these the atmospheric lifetime of ozone and water vapor is in the order of days.

    Methane has an atmospheric lifetime of about 12 years (it is decomposed in the atmosphere to CO2 and water).

    But the atmospheric lifetime of CO2 can range in the thousands of years.
    The amount of water vapour in the air is a function of the surface/sea temperatues. So an increase in CO2 increases surface and sea temperatures, creating a corresponding increase in water vapour.

    As a side note, Nitrogen(N2) and Oxygen(O2) make up 99% of the atmosphere by volume. So by default all greenhouse gases (water vapour, CO2, methane, ozone, nitrous oxide) are trace gases. However they absorb and emit radiation within the thermal infrared range, unlike Nitrogen and Oxygen.

    • Dave,

      We can counter argue on quality vs quantity or whether CO2 is the cause or the effect of rising temperatures IF temperatures are indeed rising, but I’d like to share something with you from a more hands-on approach.

      I own a farm out in the countryside (no need for location) and I regularly spend time with the local farmers when I get a chance to get away from the city. One particular family member I met early on, which has been extremely successful over the years, conveyed to me that the land and the phases of the moon tells them what the weather is going to be like. One example is if ants start building mounds on their nests and depending on the height and direction of that opening determines the direction of the coming rains and its volume days in advanced. Another example is the phasing of the moon indicates future weather and ideal growing conditions etc.

      The most astonishing thing I discovered when talking to this family member was that the family kept diaries that meticulously noted temperatures and other conditions on a daily basis going as far back as 1902. His basic conclusion from his observational standpoint is that temperature is cyclic and there has not been a notable change over this period in terms of temperature average in his area. That helped to seal it for me.

      • What I should’ve added is:

        Could I have been deceived?

        Having met this family member a few times, the feedback from the rest of the community and the fact that he really has nothing to prove – I doubt it.

      • Nod, there is every chance that this farmers records are correct. And I won’t discount that.

        But you can’t look at one region and infer global temperatures from it. You need to be measuring/collating measurements from thousands of locations throughout the world in order to determine changes in global temperature.

        He also has to be looking for an average change of just 0.7C over the last 100 years. Because temperatures are cyclic over years/weather pattern cyclics, he would need to plot all temperatures against time for any hope of seeing a trend (if it does indeed exist in his case).

        Probably the easiest trend to observe is the rise in sea level temperatures over the last 50 years, I will have to find it for you. Its very easy to see the warming trend on these graphs, overlaid on the changing of temperatures with the seasons.

    • The bulk of CO2 does not stay in the air for 1000s of years.
      Dozens of peer reviewed articles show that the turnover of atmospheric CO2 is about 20% per year. This is even mentioned in the IPCC report. The CO2 concentration has an annual cycle that could not exist without high turnover.
      The 1000’s of years came from someone feeding numbers into computer models (surprise, surprise) and has no basis in reality!

      Again water vapour is not increasing in the upper atmosphere like the models predict, because increased convection (the dominant negative feedback on earth) dries out the atmosphere.

  15. Nod

    I should add the sun does not emit CO2. And the change in sun activity alone cannot explain the increase in global surface and sea temperatures.

    The ocean at the moment is acting as a net CO2 sink, as concentrations of CO2 are increasing. This is already having an effect on reefs throughout the world, which are severely threatened regardless of our next course of action.

    • “I should add the sun does not emit CO2. And the change in sun activity alone cannot explain the increase in global surface and sea temperatures.”

      Explain to me that ‘fact’.

      • The 4% decrease in cloud cover was responsible for 75% of the observed warming during the satellite period. Something that climate scientist try to dispute through the classic three monkeys routine!

      • I’m aware of that graph. I particuarly wanted you to bring that up to demonstrate the extent of the junk science the AGW side pushes forward.

        I remember this being revealed in Martin Durkin’s “Great Global Warming swindle” and even though it’s 400 year survey hand a much greater correlation coefficient was much, much greater than any carbon concentration levels, it appeared that focusing on the last 30 years, and no other rigourous analysis completely dismisssed this claim.

        No, this is not science, AGW proponents have not dismissed this because of the last 30 years shown in the graph.

        The continued research from this theory is the lag factor associated with the thermal convection properties between gases to liquids. In this case the atmosphere to the oceans.

        Putting a saucepan of water upon a hot source of heat does not heat the water instantaneously. Likewise removing from the source of heat does not see it return to room temperature instantly, diffusion takes time.

        The oceans are incredibly dense, at some points have a thermal mass 3,300 times that of the atmosphere. Even with the planet cooling since 1998, the store of carbon in the oceans can still be released.

        So now, take that garbage away, AGW proponents have not dismissed it. It is a viable alternative, still in progress, and it already has a stronger case that anything involved with AGW.

      • If only you could see the irony in the name ‘The Great Global Warming Swindle’.

        The energy absorbed by the oceans has INCREASED over the last 50 years, just as the temperature of the oceans has INCREASED.

        Similarly as atmospheric CO2 levels continue to increase, the concentration of CO2 in the oceans has also increased.

        If we were following a typical Milankovitch cycle, than yes, heating of the oceans would release CO2. However the CO2 levels in the ocean are INCREASING not decreasing, at a period of LOWER sun activity.

        And your cooling trend since 1998 is interesting, given that 2005 and 2010 are the hottest years on record, and also given that average global sea temperatures have increased every year since 1998.

      • The oceans haven’t warmed for the last 50 years if you use sources better than the thoroughly discredited Levitus data.

        Any extrapoliation about ocean temperature is now being used by the Argos buoy system, and it’s empircal data comlpetely discredits, once again, all the model depicted prior to 2006.

        The Argos data shows very slight increases, and that supports the solar activity theory due to radiation taking years, even decades to permeate throughout the oceans. That said, the cold fringes, such as the artic ice caps have been growing since 2007.

        Antartic, ocean borne ice has been growing for much longer. What it’s effect is on the displacement of carbon in the oceans, we don’t know. But only one side is actually interested in science.

        As far as the ‘2010 hottest year claim’, get off it.

        This has been debunked. The GISS data that backed up this claim has shown to be totally false. Only 25 per cent of their readings are first source, 75 per cent are second hand readings, all of shich were shown to have an upward bias.

        Now add that after all this contaminated data, it still managed to only be above 1998 by about 2/100th’s of a degree, this can easily be discounted.

        It was also an upward outlier of a downward trend since 1998.

        Something noticable was the U.S meteorological data that showed temperatures for north america in 2010 was 94th in terms of hottest years. Quite some divergence for a global phenomenom.

      • So you agree, 2010 was warmer than 1998.

        And you still haven’t explained why surface AND sea temperatures have continued to rise over the last 30 years, despite LOWER solar activity.

        Are you claiming to prove a cooling trend by using a change in ice caps since 2007?

        So the GISS data is false. If we cannot trust NASA, which organisation is collecting reliable data?

        Should we wait for ‘The Great Global Warming Swindle’ before we can update our information?

      • No, I do not know how you came to that conclusion.

        What I said was a result was obtained that said 2010 was warmer than 1998.

        That result is under doubt, to the point of being dismissed because;

        i) the data collected was not a primary source
        ii) the data was then contaminated with an upward bias
        iii) the marginal increase of this result above the 1998 result is within the realms of a tracking error.

        Considering the scientific frailties disclosed in i) and ii) then a conclusion that 2010 was warmer than 1998 can not be claim with any confidence.

        As far as surface temperature raising in the past 30 years. I don’t agree with that. The mainstream data indicates surface temperatures have cooled since 1998.

        Oceans rising in temperature, as I have explained, because of thermal convection, an increase in ocean temperatures will lag.

        Now to the GISS point,

        http://www.telegraph.co.uk/comment/columnists/christopherbooker/8211948/Its-the-hottest-year-on-record-as-long-as-you-dont-take-its-temperature.html

        Well yes, it does appear we can not trust NASA’s Goddard institute.

        And to finish off with “Should we wait for ‘The Great Global Warming Swindle’ before we can update our information?”

        Well, a display of petulance and throwing your toys out of the cot, so typical of AGW proponents.

        But alas, your doomed, fringe science is getting destroyed by what is now mainstream science. That is AGW is a myth.

      • bhahahahahahahah!!

        I quote from the New Scientist.

        You use The Telegraph! Maybe you should check with The Sun Herald or The Australian while you’re at it!

    • Carbon E Coyote

      Yes, nailed, one farmer’s data vs the world’s climate scientist. No contest.

      • All scientist are sceptical of CAGW because all scientist are sceptical of all theories as the scientific method demands.
        The Scientific method also demands that equal consideration must be given to thesis and antithesis, yet anyone who speaks out against this 100billion dollar fraud is vilified as a denier!
        Then there is the absurd claim that scientist all agree despite the fact that 1000s of scientist have put the reputation and funding on the line by speaking out.
        The only difference between greenies and communists is that greenies haven’t figured out how to use a gun yet!

      • CEC, isn’t climate change meant to be global?

        Ideally what is needed is to find more farmers who have kept records and then do a comparative analysis.

        Personally, after spending time in the rural part of the country – I’d trust a farmer’s interest in making sure of their forecasts over that of a scientist.

        Observing, recording and analysing = farmer = scientist. One is hands-on whilst the other is theroretical and has a piece of paper with his or her name on it that’s meant to demand respect.

        Furthermore, what type of science do we have if we need to cherrypick data?

      • Carbon E Coyote

        Scientist and farmer are doing the same thing, collecting and observing data. Yes the farmer is undergoing a scientic process, but so are the world’s scientists who are collecting data from all over the globe. I’m sure you’d agree that it’s possible to draw stronger conclusions from a range of data series than just a single data series.

        What’s being observed is unequivocal; here’s a link to it on NASA’s website.

        http://data.giss.nasa.gov/gistemp/graphs/

      • Rob there is nothing wrong with being sceptical about anything.

        The frustrating thing is when the facts are twisted in ‘A Current Affair’ style, rather than asking real questions.

        For example in posts some has said that greenhouse gases are only a tiny % of our atmosphere, and so therefore are insignficant. Instantly that demonstrates complete ignorance of climate science.

        In regards to cloud cover, yes there is one (disproved) theory out there that changes in cloud cover is solely responsible for observed temperature changes.

        To start from the start, the earth is constantly being bombarded by high energy cosmic rays from outside the solar system. Increased sun spot activity correlates to an increase in the suns magnetic field, which deflects the cosmic rays.

        The theory championed by those like Svensmark was that at periods of high sun spot activity (such as from 1980 to now), more of the cosmic rays would be blocked, and hence less cloud cover causing global warming.

        However satellite data collected over the last 30 years does not support this theory.

        http://www.newscientist.com/article/dn11651-climate-myths-its-all-down-to-cosmic-rays.html