Gambling with Civilisation.

In a recent issue of the erudite New York Review of Books under the above title Paul Krugman reviews a  book by William Nordhaus entitled 'The Climate Casino: Risks,Uncertainty and Economics for a Warming Word'

Both of these writers have to be taken seriously. Krugman is a columnist for the NY Times, Professor of Economics and International Affairs at Princeton University and awarded the Nobel Prize in Economics in 2008, and Nordhaus was one of his mentors.

None of the books or the authors mentioned has more than the normal academic quibbling over fine details and predictions. There is absolutely firm agreement that the world is getting warmer, and it's largely caused by burning coal to generate electrical power. They also agree that the long term consequences are dire unless action is taken to curb emissions and limit the impending increase in world temperatures as much as is humanly possible.  So much for the relentless denial of The Australian's Andrew Bolt and Tony Abbott's equivocation.

Both of these senior economists think that either a tax on carbon or an emissions trading scheme is the answer.  Both are economist answers, and although I've supported the Labor Party's bumbling efforts in this regard as better than nothing, I have niggling concerns about all schemes that aim to encourage physical change indirectly through financial incentives and taxes.  Too often they don't work in a world of smart people who learn how to game the system legally to their advantage.  And once they're enacted politicians find such schemes hard to remove; negative gearing of housing is a good example. And even if their impact may be positive eventually, it's too slow.

The technical ways of reducing the CO2 emissions from coal power generation are well known.  There is the much touted CCS, carbon capture and storage, where the emissions are siphoned off and stored, probably in old mines.  Misleadingly called 'clean coal' this idea has, despite all sorts of trials, never been put to the test in a functioning power station. It has the principal disadvantage that it's less efficient (less power for the same amount of coal) and the power would therefore cost more.

A more plausible option is to phase out coal and fire power stations with natural gas.  This would lower emissions considerably but would also increase the cost of power.  The carbon tax aimed to encourage coal fired producers to change to one of these options but it hasn't happened yet.

The alternative that is actually happening is electrical energy generated through renewable solar power or wind power.  Increasingly competitive and economic, and on one or two days recently wind power generated enough power for the whole of South Australia. 

Krugman writes that 'There's real power behind the opposition to any kind of climate action--power that warps the debate both by denying climate science and by exaggerating the costs of pollution abatement.  And this isn't the kind of power that can be moved by calm, rational argument.  Why are some powerful individuals and organisations so opposed to action on such a clear and present danger?  Part of the answer is naked self-interest.  Facing up to global warming would involve virtually eliminating the use of coal …..it would involve reducing our use of other fossil fuels and would substantially increase electricity prices.  That would mean billions of dollars in losses for some businesses and for the owners of these businesses subsidising climate denial has so far been a highly profitable investment.'

Krugman is no left wing environmental ideologue and is writing about the USA but the situation is similar here.  While in opposition the Prime Minister buttoned his lip about climate change so as not to offend the punters but is showing his true colours with his intemperate comment that there is no connection at all between climate change and increasingly fierce bushfires.  Unfortunately people with Mr Abbott's mindset are not going to be persuaded by scientific evidence and reason.  And we also have very strong coal interests who have a lot to lose; it's a powerful combination to overcome.

Apart from the warming effect of our domestic CO2 emissions, the Australian situation is exacerbated by the fact the we have such plentiful and cheap coal resources that we sell over two hundred million tons annually to other countries who then pollute the atmosphere, all with a washing our hands attitude that the consequences of this is nothing to do with us!

At the very least we certainly shouldn't build any more coal-fired power stations, although this is still currently on the Victorian government's agenda.

The Federal Government's intention to eliminate the Carbon Tax will clearly take many months before it's finally decided, and from all accounts it is extremely doubtful whether their proposed answer will achieve effective reductions in emissions.  Gambling with civilisation indeed!

So is there anything meaningful that could be done to put meaningful action on climate change firmly back on the political agenda? 

Even assuming that renewable energy sources will keep on increasing, the only real effective alternative to some sort of slow moving 'economist answer' is to phase out coal. But it's difficult to suggest an effective strategy to do this in the face of the current political situation and such powerful financial interests.

A good start would be to eliminate all rail, port and other massive hidden taxpayer subsidies for coal export, and ally these measures with a resource tax on every tonne of coal exported.  However the current Federal and State governments are unlikely to adopt these measures.   A deadline should also be set for the conversion of all existing coal fired power stations to the use of natural gas, along with an acceptance of the higher power costs.  New coal fired plants should simplynot be permitted.

Another action advocated by climate activist Bill McKibben is divestment, the calculated attempt to persuade educational and religious institutions, investment and superannuation funds to divest themselves of shares in all coal and associated companies and thereby increase political pressure on them and the political parties.  As McKibben laments 'donations from the fossil industry managed to turn one of our two political parties into climate deniers and the other party into cowards.'

Hopefully in the long run it may be taken out of our hands.  China in particular is apparently increasingly worried about the health costs caused by the smog from burning coal, and plans to cap thermal coal use by 2015, a big shift from the last ten years when thermal coal consumption doubled.  Keep your fingers crossed.

There was a student demonstration in the Melbourne CBD recently over student fees and it reminded me of the Vietnam rallies of my youth where hundreds of thousands of people of all ages demonstrated across Australia. 

I'm starting to think that numbers might be the only thing that will move the pollies.  GetUp and others are organising a National Day of Climate Action at 11am on Sunday 17 November in Treasury Place, Melbourne.  Come along, big oaks from little acorns grow, it might be the beginning of something big, you will be able to tell your grandchildren you were there, better still bring them.

Don Gazzard LFAIA
Mid November 2013

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