Garnaut warns: Address climate change or “things fall apart”

Ross Garnaut is a professorial research fellow in economics at the University of Melbourne:

Four years ago in December 2015, every member of the United Nations met in Paris and agreed to hold global temperature increases to two degrees Celsius, and as close as possible to 1.5C.

The bad news is that four years on the best that we can hope for is holding global increases to around 1.75C. We can only do that if the world moves decisively towards zero net emissions by the middle of the century.

A failure to act here, accompanied by similar paralysis in other countries, would see our grandchildren living with temperature increases of around 4C this century, and more beyond.

I have spent my life on the positive end of discussion of Australian domestic and international policy questions.

But if effective global action on climate change fails, I fear the challenge would be beyond contemporary Australia. I fear that things would fall apart.

There is reason to hope

It’s not all bad news.

What we know today about the effect of increased concentrations of greenhouse gases broadly confirms the conclusions I drew from available research in previous climate change reviews in 2008 and 2011.

I conducted these for, respectively, state and Commonwealth governments, and a federal cross-parliamentary committee.

But these reviews greatly overestimated the cost of meeting ambitious reduction targets.

There has been an extraordinary fall in the cost of equipment for solar and wind energy, and of technologies to store renewable energy to even out supply.

Per person, Australia has natural resources for renewable energy superior to any other developed country and far superior to our customers in north-east Asia.

Australia is by far the world’s largest exporter of iron ore and aluminium ores.

In the main they are processed overseas, but in the post-carbon world we will be best positioned to turn them into zero-emission iron and aluminium.

In such a world, there will be no economic sense in any aluminium or iron smelting in Japan or Korea, not much in Indonesia, and enough to cover only a modest part of domestic demand in China and India.

The European commitment to early achievement of net-zero emissions opens a large opportunity there as well.

Converting one quarter of Australian iron oxide and half of aluminium oxide exports to metal would add more value and jobs than current coal and gas combined.

A natural supplier to the world’s industry

With abundant low-cost electricity, Australia could grow into a major global producer of minerals needed in the post-carbon world, such as lithium, titanium, vanadium, nickel, cobalt and copper.

It could also become the natural supplier of pure silicon, produced from sand or quartz, for which there is fast-increasing global demand.

Other new zero-emissions industrial products will require little more than globally competitive electricity to create.

These include ammonia, exportable hydrogen and electricity transmitted by high-voltage cables to and through Indonesia and Singapore to the Asian mainland.

Australia’s exceptional endowment of forests and woodlands gives it an advantage in biological raw materials for industrial processes.

And there’s an immense opportunity for capturing and sequestering, at relatively low cost, atmospheric carbon in soils, pastures, woodlands, forests and plantations.

Modelling conducted for my first report suggested that Australia would import emissions reduction credits, however today I expect Australia to cut domestic emissions to the point that it sells excess credits to other nations.

The transition is an economic winner

Technologies to produce and store zero-emissions energy and sequester carbon in the landscape are highly capital-intensive.

They have therefore benefited exceptionally from the historic fall in global interest rates over the past decade. This has reduced the cost of transition to zero emissions, accentuating Australia’s advantage.

In 2008 the comprehensive modelling undertaken for the Garnaut Review suggested the transition would entail a noticeable (but manageable) sacrifice of Australian income in the first half of this century, followed by gains that would grow late into the second half of this century and beyond.

Today, calculations using similar techniques would give different results.

Australia playing its full part in effective global efforts to hold warming to 2C or lower would show economic gains instead of losses in early decades, followed by much bigger gains later on.

If Australia is to realise its immense opportunity in a zero-carbon world, it will need a different policy framework.

But we can make a strong start even with the incomplete and weak policies and commitments we have.

Policies to help complete the transition can be built in a political environment that has been changed by early success.

Three crucial steps

Three early policy developments are needed. None contradicts established federal government policy.

First, the regulatory system has to focus strongly on the security and reliability of electricity supplies, as it comes to be drawn almost exclusively from intermittent renewable sources.

Second, the government must support transformation of the power transmission system to allow a huge expansion of supply from regions with high-quality renewable energy resources not near existing transmission cables.

This is likely to require new mechanisms to support private initiatives.

Third, the Commonwealth could secure a globally competitive cost of capital by underwriting new investment in reliable (or “firmed”) renewable electricity.

This was a recommendation by the Australian Competition and Consumer Commission’s retail electricity price inquiry, and has been adopted by the Morrison Government.

We must get with the Paris program

For other countries to import large volumes of low-emission products from us, we will have to accept and be seen as delivering on emissions reduction targets consistent with the Paris objectives.

Paris requires net-zero emissions by mid-century. Developed countries have to reach zero emissions before then, so their interim targets have to represent credible steps towards that conclusion.

Japan, Korea, the European Union and the United Kingdom are the natural early markets for zero-emissions steel, aluminium and other products.

China will be critically important. Indonesia and India and their neighbours in south-east and south Asia will sustain Australian exports of low-emissions products deep into the future.

For the European Union, reliance on Australian exports of zero-emissions products would only follow assessments that we were making acceptable contributions to the global mitigation effort.

We will not get to that place in one step, or soon. But likely European restrictions on imports of high-carbon products, which will exempt those made with low emissions, will allow us a good shot.

Movement will come gradually, initially with public support for innovation; then suddenly, as business and government leaders realise the magnitude of the Australian opportunity, and as humanity enters the last rush to avoid being overwhelmed by the rising costs of climate change.

The pace will be governed by progress in decarbonisation globally. That will suit us, as our new strengths in the zero-carbon world grow with the retreat of the old.

We have an unparalleled opportunity. We are more than capable of grabbing it.

Ross Garnaut is a professorial research fellow in economics at the University of Melbourne, chairs the international advisory board of the Australian German Energy Transition Hub and is a Distinguished Fellow of the Melbourne Energy Institute. He is chairman of, and a shareholder in, Sunshot Energy and a shareholder in SIMEC ZEN Energy, both of which are engaged in the development and trade of energy. He conducted the 2008 and 2011 climate reviews for the Rudd and Gillard governments. His book Superpower — Australia’s Low-Carbon Opportunity, is published today by BlackInc with La Trobe University Press. This article originally appeared on The Conversation.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Comments

  1. “With abundant low-cost electricity, Australia could grow into a major global producer of minerals”
    Well that’s not about to happen because..
    “First, the regulatory system has to focus strongly on the security and reliability of electricity supplies, as it comes to be drawn almost exclusively from intermittent renewable sources.

    Second, the government must support transformation of the power transmission system to allow a huge expansion of supply from regions with high-quality renewable energy resources not near existing transmission cables.

    This is likely to require new mechanisms to support private initiatives.

    Third, the Commonwealth could secure a globally competitive cost of capital by underwriting new investment in reliable (or “firmed”) renewable electricity.”
    Because all of these thing are directly opposed to the energy “free market” that privatisation has caused.
    For these things to be viable requires a publicly owned, single operator network, not a hodge podge of operators all competing with each other to maximize profits.
    The answers lie back in time, to quote a fellow commentor.

    • ” security and reliability of electricity supplies,”
      is the antithesis of a free market auction that financially rewards shortages of supply, and pays people nothing for unused excess capacity.

      ” transformation of the power transmission system to allow a huge expansion of supply from regions with high-quality renewable energy resources not near existing transmission cables.”
      Requires long term coordination of grid development with power station development. When these are owned by differing private organisation in direct competition how do you expect to achieve this level of coordination?

      “the Commonwealth could secure a globally competitive cost of capital by underwriting new investment”
      yay, the government gets to pay for it but not actually get any of the profits that could be invested towards the required infrastructure above.

  2. “With abundant low-cost electricity, Australia could grow into a major global producer of minerals”

    We already are.

    • Metals, not just minerals…

      The status quo (minerals) and dunderheads could (and do) do it.

      We need to stop assuming there is so much awesomeness and wisdom in the status quo – and do better, heaps better.

      Appealing to the status quo is a lazy, uncreative person’s way of pretending to have thought of more than jsut short-term profit and their short-term comfort – not saying that’s you, but I work in industry, and see it frequently.

      We can do better. Other people groups could do a lot better with the natural endowments we have; we need to stop conflating our luck with being awesome, and just do better in so many ways.

      My 2c

      • The task is enormous. Building plant, rebuilding, retooling, getting intermittant renewables to industrial locations, energy storage concern re 24/7 material production, attracting capital, preparedness to invest (not taxpayer subsidised), assumption Australia position unique (no competition), that finished product competes in global markets. So much more.

        The scale of energy transition to decarbonise by 2050 is so hugeit is guaranteed not to happen. Nor this grand Australia as Industrial Powerhouse to the World design.

        And Extinction Rebellion who apparently have zero time for mining, go figure 😉

  3. As Indonesia strikes a deal to import tech/knowledge/plant to grow jobs & industry, to benefit their country, & to make the most of it’s Nickel position….. We think more about sellout Quarry Australia, Without the Value Add…. No wonder anyone with vision & brains just leaves.

  4. The Horrible Scott Morrison MP

    At least he isn’t making all this up for personal gain. Jesus, how thick do you have to be?

  5. no post on a liberal member admitting the voting signage was coloured like the AEC on purpose?

    • Not sure where I read it, maybe here, but apparently political advertising is exempt from truth in advertising laws. Therefore they can make any sh#t up they like. One only need look at how Morrison got parachuted into his seat to work out how the LNP operate.

  6. ‘I fear the challenge would be beyond contemporary Australia. I fear that things would fall apart.’

    lol – cause Ross Garnaut and his ilk have been so successful at mitigating any of the other challenges facing Australia.

    I’m going to make a bold prediction re climate change. Sweet FA will happen in the next decade. And it won’t make the slightest difference.

    the planet will be fine, and leftist totalitarians will still use their doomsday predictions to steal from public purses wherever possible.

    I guess climate alarmism is simply part and parcel of the great moral panic of the 2010’s, along with #MeToo, white privilege, rampant misandry and whatever other degeneracy leftists dream up.

    simply a means for the leftist scum to steal from normal taxpayers.

  7. I stopped reading at: “With abundant low-cost electricity, Australia could grow into a major global producer of minerals” – Ha! as if!

    • It is cute. If electricity prices did fall, the Libs would have one less enemy of the “quiet Australian” to turn to when one of their idiot members did something inevitably stupid.

  8. I think our hand will be forced. If EU goes ahead with the Paris agreement then EU will impose carbon tax or carbon tarffs on anyone that will not play along but wants to export to EU.

  9. No afternoon links?

    Liberal Party figure admits Chinese-language federal election signs were meant to look like AEC material

    “You intended to convey that it was an AEC corflute didn’t you,” Ms De Ferrari said.
    “It was similar to the AEC colours, yes,” Mr Frost replied.
    “That is a yes then?” she asked.
    “Yes,” he replied.

    https://www.abc.net.au/news/2019-11-06/josh-frydenberg-gladys-liu-high-court-challenges-election-result/11675738

    She won by a lousy 1090 votes.

  10. proofreadersMEMBER

    Move on – nothing to see here. ScoMo, Angus, Abbottolypse, AJ, The Australian and Sky after Dark are all that Strayans need to listen to on this topic. How good is Straya.

  11. The human brain starts to degrade when CO2 levels exceed 800ppm. Buy a CO2 monitor because levels inside a poorly ventilated house or room regularly exceed that. As we pump more CO2 into the atmosphere, about 2ppm extra per year, it gets harder and harder to ventilate, and we become dumber and dumber – literally.

  12. bolstroodMEMBER

    ‘Australia’s exceptional endowment of forests and woodlands gives it an advantage in biological raw materials for industrial processes.’
    Garnault has got to be joking.
    Land clearing and contempory government Forestry practices like clear felling, Climate enhanced wild fires , and droughts speak to the desertifcation of the Australian landscape.

  13. In a world where coal, iron ore. steel & aluminium will be banned (Garnaut – how about other energy intensive products – cement / concrete / glass as well?)….

    Then Australia “with abundant (sun and wind) low-cost electricity.. (yep) ‘could’ (might / may) grow into a major global producer of minerals needed in the post-carbon world, such as lithium, titanium, vanadium, nickel, cobalt and copper”….

    Aren’t we doing that already?

    The deserts of Australia converted to a sea of solar panels and windmills & free electricity.
    All that nasty climate changing gas is turned off as well.
    Our key exports highly toxic refined metals & minerals.

    The facile duplicity of the ‘expert’.
    Labor’s global-warming expert Ross Garnaut as who chairman of Lihir Gold presided over a major environmental disaster on Lihir Island.

    The mine tailings & waste dumped into the river & surrounding ocean, with a estimated 300 year toxic impact in the ecology of the island & surrounding coastal waters.

    Ross Garnaut also upset his elderly North Carlton neighbours, building a five-metre wall that casts the garden of the retired migrant couple next door into permanent shade.

    So Ross Garnaut.
    🔻Lihr Island ecosystem toxic for 300 years.
    🔻No sunlight or home grown vegetables for the neighbours.

    • Sadly true. Trusting Ross Garnaut with your low carbon futures is like trusting Donald Trump in a room full of debutantes. I still have a copy of the self-inflating “Platinum Age” presentation he gave to an adoring ANU audience in 2007, just before the world economy crashed into the GFC. No sense of shame, these market economist chaps.

    • Great stuff Mike MB-about time someone expressed the facts about Ross Garnaut. This bloke makes it up as he goes. Australia cannot now supply low cost gas or electricity and somehow now it can be transformed to a processing powerhouse with cheap solar electricity. Garnaut has never acknowledged the lack of economies of scale in Australia and distance to markets and his advocated policies of smashing small scale manufacturers with tariffs to zero was a disaster.
      His partner Gupta is a ponzi creator (read the FT on Gupta). In a second career Garnaut should start writing science fiction.