An analysis of the strategy paper
Statements in bold italics are allegations (numbered by us) from the strategy paper; our responses are in ordinary typeface:
CARBON PRICE - TOP LINES
Key Facts
1a. We believe climate change is real ……..
Climate change is real and continuous. 20,000 years ago present day New York was under a kilometre of ice and lower sea levels meant that early Australians were able to walk to Tasmania; and just 300 years ago, during the “Little Ice Age”, the world was again significantly colder than today.
Australians who witnessed the 2009 Victorian bushfires or this year’s Queensland floods and cyclones need no reminder that hazardous climate events and change are real. That is not the issue.
The issue is that use of the term “climate change” here is code for “dangerous global warming caused by human carbon dioxide emissions”. The relevant facts are:
(i) that mild warming of a few tenths of a degree of warming occurred in the late 20th century, but that so far this century global temperature has not risen; and
(ii) that no direct evidence, as opposed to speculative computer projections, exists to demonstrate that the late 20th century warming was dominantly, or even measurably, caused by human-sourced carbon dioxide emissions.
1b. …… and taking action is the right thing to do.
The primary action that is needed should not be controversial.
It is to combat and adapt to hazardous climatic events and trends (whether natural or human-caused) as and when they happen. Of course, the required activities should be undertaken within a framework of careful cost:benefit analysis.
Spending billions of dollars on a penal carbon dioxide tax fails the cost:benefit test. Such a measure acts only to reduce Australia’s wealth, and therefore our capacity to address the real-world problems of natural climate change and hazard.
2. We want the top 1,000 biggest polluting companies to pay for each tonne of carbon (sic) pollution they produce.
Carbon dioxide is not a pollutant, but rather a natural and vital trace gas in Earth’s atmosphere, an environmental benefit without which our planetary ecosystems could not survive. Increasing carbon dioxide makes many plants grow faster and better, and helps to green the planet. If carbon dioxide were to drop to a third of current levels, most plant life on the planet, followed by animal life, would die.
As Ross Garnaut recognises, all businesses, including even the corner shop, are going to be paying for carbon dioxide emissions. In the long run, businesses must pass on the tax to their customers and ultimately the cost will fall on individual consumers.
A price on carbon dioxide will impose a deliberate financial penalty on all energy users. This will initially impact on the costs of all businesses, and energy-intensive industries in particular will lose international competitiveness.
The so-called “big polluters” are part of the bedrock of the Australian economy. Ultimately, any cost impost on them will either be passed on to consumers or will result in the disappearance of the activities, with accompanying direct and indirect employment.
3. A carbon price will provide incentives for the big polluters to reduce their carbon pollution.
All companies must pass on their costs to consumers, or go bankrupt. A price on carbon dioxide will encourage firms to reduce emissions, but their ability to do so is limited.
The owners of fossil fuelled electricity power stations that are unable to pass on the full cost of a carbon dioxide tax will see lower profits, and the stations with the highest emission levels will be forced to close prematurely. If investors expect the tax to be permanent, power stations with higher emissions will be replaced by power stations with lower emissions whose lower carbon dioxide taxes enable them to undercut the tax-enhanced cost of the established firms. The higher cost replacement generators will set a higher price for all electricity.
Alternatively, if investors lack confidence that the tax will be permanent, the new more expensive, lower emissions power stations may be perceived as too risky to attract investment. This will cause a progressive deterioration in the system’s ability to meet demand.
4. Australia is the worst per head carbon emitter in the developed world.
This statement is untrue.
According the latest UN Human Development Report, Australia emits 18 tonnes per capita of carbon dioxide. Other countries with high emissions include Luxemburg (24.5 tonnes), the US (19 tonnes), the UAE (32.8 tonnes), Qatar (56.2 tonnes), and Kuwait (31.2 tonnes). Australia’s emissions are higher than those of many other countries largely because we have cheap coal, little hydro-electric potential, and have banned nuclear power.
Low energy costs allow Australia, unlike other developed countries, to export products like aluminium whose production incorporates high carbon dioxide emissions. Most other developed countries import these products, effectively our-sourcing their emissions but not reducing them.
Importantly, countries are not better or worse emitters. Countries’ levels of emissions depend on their geographical and industrial structure and their living standards rather than any policy decisions their governments may have taken on carbon dioxide emissions.
5. Other countries are taking action, even China and India. Australia must make a start or our economy will be left behind.
Although several European countries have created conditions that force or encourage electricity producers to invest heavily in wind/solar, these high cost sources of electricity comprise a greater share of total output in Australia than in most other countries. Compared to the share in Australia of 1.5 per cent, the US obtains 0.8 per cent from these sources, Japan 0.4 per cent, China 0.5 per cent and India 1.7 per cent (sources: ESAA, EIA, IEA).
Australia has a Mandatory Renewable Energy Tariff (MRET) which requires that 20% of electricity is to be generated by renewables by 2020. Because renewable sources such as wind and solar are uncompetitive, by 2020 MRET will impose a tax equivalent to $14 per tonne of carbon dioxide emitted. Though these subsidy measures have often been trumpeted as promoting new Australian technologies, none have materialised. Nor are they likely to do so in the future, but in any event Australia cannot be left behind technologically, because if any practical research breakthroughs occur these will become available in all countries
More broadly, any expectation of a global agreement on emissions reduction has collapsed with the failure of the Copenhagen and Cancun climate meetings, and the world’s largest emitters (USA and China) have made it crystal clear that they will not introduce carbon dioxide taxation or emissions trading. The Chicago Climate Exchange has collapsed, and though a dozen US states had previously committed to anti-carbon dioxide schemes some of those (e.g. New Hampshire and New Mexico) are now withdrawing from the schemes.
Contrary to assertions, neither China nor India is taking substantive action specifically to mitigate their carbon dioxide emission level. China has already surpassed the level of per capita emissions said to be necessary to stabilise atmospheric levels of carbon dioxide. In both countries, nuclear power and efficient coal-fired electricity generators are being embraced, but these choices are directed at energy supply efficiency not carbon dioxide emissions. Minister Combet has claimed that India has a form of carbon tax, but that “tax” is actually an environmental levy on coal mining at about $1 per tonne, which is similar to long standing levies faced by coal mining in Australia.
China and India together deliberately undermined the Copenhagen negotiations in 2009. Both countries refuse to commit to any quantified emissions reduction targets, other than that the carbon dioxide per dollar of GDP will progressively decline as their electricity generators are increasingly modernised and their economies develop. As in Australia, there are many voices in both countries rejecting theories of man-made global warming
[1].
6. We will protect existing jobs while creating new clean energy jobs.
The whole point of a carbon dioxide tax is to force coal-fired power stations out of existence. No amount of subsidy will “protect” the jobs of the workers involved.
It has been shown that in Spain, 2.2 conventional jobs are destroyed for every new job created in the alternative energy industry, at a unit cost of about US$774,000/job. In a comparable UK study the figures were even worse, with the destruction of 3.7 conventional jobs for every 1 new job.
7. Every cent raised by the carbon (sic) price will go to households, protecting jobs in businesses in transition and investment in climate change programs. There will be generous assistance to households, families and pensioners (tax cuts are a live option).
As with any tax, the proceeds are returned to the community. One part of this, perhaps 20 per cent or so, is required to administer the program and is a deadweight loss. The rest is a redirection of funding to areas that the government considers to be more productive, or more politically supportive. The effect of this invariably leads to a loss of efficiency within the economy and to a slower growth rate.
It is also the case that introduction of a new tax generally results in unanticipated costs, which, because they are unknown, taxpayers cannot be compensated for.
CLIMATE IMPACT ON AUSTRALIA
8. We have to act now to avoid the devastating consequences of climate change.
Of itself carbon dioxide, even at concentrations tenfold those of the present, is not harmful to humans. Projections usually assume a doubling of emissions and associate this with an increase in global temperatures.
There is no “climate emergency”, and nor did devastating consequences result from the mild warming of the late 20th century. Global average temperature, which peaked in the strong El Nino year of 1998, still falls well within the bounds of natural climate variation. Current global temperatures are in no way unusually warm, or cold, in terms of Earth’s recent geological history.
9. If we don’t act then we will see more extreme weather events like bushfires and droughts, we will have more days of extreme heat, and we will see our coastline flooded as sea levels rise.
These alarmist statements are based exclusively on a naïve faith that computer models can make predictions about future climate states. That faith cannot be justified, as even the modelling practitioners themselves concede.
The computer models that have yielded the speculative projections quoted in the strategy paper are derived from organisations like CSIRO, which includes the following disclaimer at the front of all its computer modelling consultancy reports:
This report relates to climate change scenarios based on computer modelling. Models involve simplifications of the real processes that are not fully understood.
Accordingly, no responsibility will be accepted by CSIRO or the QLD government for the accuracy of forecasts or predictions inferred from this report or for any person's interpretations, deductions, conclusions or actions in reliance on this report.
10. This [human-caused climate impact] will hurt Australia’s industries, jobs, our infrastructure and our way of life.
[This statement is fleshed out with a further page of unvalidated computer projections of a future that will be characterised by more extreme hot days, a higher bushfire risk, enhanced sea level rise, an increased frequency of drought and an increased, negative climate-event impact on tourist icons such as the Great Barrier Reef and the Victorian ski fields.]
All these claims are speculative, and the accuracy of the computer models involved can be judged from the following graph and its explanation.
US government climate scientists started the global warming scare in 1988 when they provided this forecast to a committee hearing in the US Congress. The actual observed temperature that eventuated later has been superimposed on the model projections in red.
The three black prediction lines are for three scenarios:
A. Carbon dioxide levels grow exponentially (top line, solid).
B. Carbon dioxide levels grow linearly (middle line, dashed).
C. Carbon dioxide emissions cut back so atmospheric CO2 stopped going up by 2000 (bottom line, dotted).
The carbon dioxide levels that occurred in reality were almost exactly those in scenario A, so it is the topmost line that is the relevant forecast.
Obviously the planet's temperature (red line) hasn't increased nearly as much as was forecast by the computer models. After the temperature peak in 1998 (a strong El Nino year), the temperature has levelled off and is now gently declining. The red overprinted temperature is only plotted up to the beginning of 2010, but after a temporary peak in 2010 (below the 1998 peak) temperature has again declined, and is now lower than at the beginning of 2010
The claims in the strategy paper that we have to stabilize carbon dioxide emissions immediately or dangerous warming will occur, with manifold dramatic environmental consequences, are based on faulty computer models that are unchanged in basic character from those that have proved to be inaccurate since 1988.
THE ALL IMPORTANT DATA
In the real world, over the last ten years, and despite a 5% increase in atmospheric carbon dioxide:
Global temperature has declined slightly (Liljegren, 2011)
Ocean heat content has declined slightly (Knox & Douglass, 2011); and
Global sea-level rise has remained stable, with no net acceleration (Houston & Dean, 2011)
In addition:
Tropical storm energy shows no upward trend, and is near its lowest since records began in 1977 (Maue, 2011);
The number of cyclones in northern Australia has declined since the 1970s (BOM, 2011); seven times as many extreme tropical storms traversed north Queensland and the GBR between 1600 and 1800 as occurred between 1800 and 2000 (Nott et al., 2007).
No evidence exists that current Australian climatic phenomena - including droughts, floods, storms, heat waves and snow storms – differ now in intensity or frequency from their historic natural patterns of strong annual and multi-decadal variability; and
Tourists continue to flock to a Great Barrier Reef that (outside of very local resort areas) remains in the same excellent natural health that Captain James Cook observed in 1770.
The headline-seeking, adverse environmental outcomes that are highlighted in the strategy paper are therefore as inaccurate and exaggerated as were Hansen’s 1988 temperature projections.
There is no global warming crisis, and model-based alarmist projections of the type that permeate the strategy paper are individually and severally unsuitable for use in public policy making.
