Some criteria for judging next week’s carbon price scheme

Bernard Keane over at Crikey.com.au has written a quick guide to surviving the carbon price apocalypse. As he points out, businesses will quite naturally whinge and beg for money and deniers will get into a frothing rage.

The rest of us have to decide if it’s actually a good scheme or not, and get ready to make a fuss if it isn’t. Keane gives us 2 critical points to look out for: will it help create an international agreement on emissions? and will it actually help reduce emissions by our (very small) target of 5%?

He also gives another four additional points to do with compensation and adaptation. It’s an interesting little article, well worth a look.

Different ways of thinking about climate change: what’s yours?

I’ve been thinking a lot this weekend about how people react to the idea of climate change. Once they’ve heard about it, some people can’t deal with it, so they try to forget about it and carry on; others leap into action to prevent it.

I don’t think there’s a right or a wrong way – it’s just human nature to react differently to bad news, and a lot of it depends on what kind of experiences you’ve already had in your life. But it does affect the kinds of action you’d be willing to take.

A while back, Sara Phillips wrote an interesting article for ABC Environment: Floating your boat on climate change. In it she describes 6 ways people view climate change, if they believe it’s even happening:

1. A market failure – businesses create pollution for free, but it costs money to clean it up. Solution: a price on carbon pollution.
2. A technological failure – our modern technologies have the unfortunate side effect of carbon pollution. Solution: improved, cleaner technology.
3. A global injustice – developed nations were lucky and got to pollute the planet on their way to prosperity, while under-developed nations haven’t even had a chance to sort things out yet. Solution: equal sharing of future pollution ‘rights’ between all countries, rich or poor, while the rich countries pay to clean up the pollution they’ve already caused.
4. Overconsumption – too many people wasting too many non-renewable resources. Solution: a new ‘steady-state’ economic model (compared to our current ‘growth is essential’ model), and improved contraception.
5. Mostly natural – it was always going to happen no matter what we did. Solution: focus on adapting to our new circumstances.
6. A planetary tipping point – something that will change life on Earth so that it’s unrecognisable. Solution: whatever works, probably requiring massive geoengineering projects.

Most of the people I know would belong to at least one of these groups. I’m in the group that thinks of climate change as both a global injustice, and due to overconsumption.

But I’d happily get behind any of these solutions, although I’d prefer global geoengineering to be used only as a last resort after we’ve tried everything else. We’ve already done some accidental geoengineering when we started pumping carbon dioxide into the air, and that didn’t turn out so great!

A carbon price? Great, especially if it gets reluctant business-people involved. Clean energy innovation? Yes please! Equal pollution rights per person? Bring it on. Improved contraception? The sooner the better, it’s a human rights issue as well as an environmental one.

I even support adaptation, even though I believe the changing climate is our own fault. We can hardly avoid adapting, so it’s best if we do it with some planning ahead of time.

How about you? What solutions are your favourites, and does it match any of the groups in the article?

How will climate change affect Australia?

I can think of better reactions to climate change!

Recently I had someone ask me why they should worry about climate change. Warm weather is great, they said, and if it gets a bit hotter we’ll just have to start having siestas in the middle of the day and stay up later at night!

I’m totally in favour of naps after lunch, that’s for sure, and if my boss would go for it I wouldn’t wait for climate changes to start a regular siesta session. But the impacts of climate change will be so much more than being a bit warmer: in Australia we’ll be looking at less rainfall and therefore less drinking water, damage to rainforests and coral reefs, crop failure due to changing weather patterns, and possibly the collapse of fisheries (if over-fishing doesn’t get there first).

It’s been a while since anyone looked at the precise effects climate change will have in Australia, so I was really glad to see these two items last week. They’re based on the most recent global and local climate data, which makes them the most up to date info I can find.

Firstly, David Spratt and Phillip Sutton of the Climate Code Red blog and book have written an article about the global temperatures we can expect. They pay particular attention to the news about Australia, with the shocking news that most of Australia can expect temperatures of more than 50 degrees by the end of the century.

Here in Perth we normally get about 28 days a year over 35C each year, and it really wears me out. I can’t imagine what it’d be like to have that kind of weather for longer.

Secondly, the Department of Climate Change and Energy Efficiency has released info and PDFs of the impacts of climate change for each state and territory in Australia. It’s based on research by the CSIRO Adaptation Flagship and the Natonal Climate Change Adaptation Research Facility. I like them because where they can, they provide specific numbers for residential, transport and infrastructure replacement costs, and the effect on water supply and agriculture.

Take a look at the information for your state – is there anything unexpected in there? or does it seem like what you were expecting to happen if we don’t get climate action soon?

Cap and trade: one way to put a price on carbon

Looks like the government read my post last week about why we need a price on carbon – the afternoon of the day I posted it they formed a committee to talk about it! They’re still figuring out exactly who’s on it, but there’s strong representation from the Greens and the independents, which I think is a good sign.

There’s a few different ways to price carbon, each with it’s own pros and cons. Today I wanted to share what I’ve learned so far about emissions trading schemes, or cap and trade, which is what’s already set up in Europe and New Zealand.

What’s cap and trade?

Cap and trade systems put a limit (the cap) on how much carbon dioxide is allowed to be emitted and let companies buy and sell their share of the total, trading their rights at a price they feel reflects the value of that pollution. They can pay a lot to get a bigger share of the emissions pie, or they can save money by reducing their emissions to fit their allocated amount, or they can make money by reducing below their allocated amount and selling off the excess to other companies.

A cap and trade setup acheives greenhouse gas reductions by lowering the cap each year. So the emissions allowed are set and reduced, and we let businesses argue among themselves about how much they want to pay for a share of those emissions.

It acts as an incentive for reducing pollution, rather than a punishment for actual pollution made. It’s also apparently easier to co-ordinate national trading systems into a global trading system than it is to co-ordinate pollution taxes across the different exchange rates of nations.

So what’s the catch?

The major problem is that cap and trade systems guarantee a set reduction, and no more: individuals who voluntarily reduce their emissions leave more permits free for corporations. For example, if you switch from driving to cycling to work, that means you buy less petrol, which allows the oil company another few permits to sell.

Other important issues are that it takes a long time to set up a proper trading system, and that it’s quite difficult for the general public to understand how the system applies to their everyday life.

Potential problems include governments give away the permits to companies instead of selling them (as Rudd’s CPRS was going to do), the cap not being set low enough, or the cap not being reduced regularly. Revenue from the scheme goes to either corporations or the government, rather than being returned to the public. And it’s possible for there to be corruption in the trading, as there is with any sort of financial market.

But it’s possible to pair a cap and trade scheme with tax cuts for individuals, or investment in fossil fuel alternatives, and a well-planned system would avoid many of these problems.  To me, these are design issues that are up to each country to solve, rather than real problems with cap and trade as a theory. So far, existing ETSs haven’t been ‘gamed’, and good regulations can prevent it in the future.

Who’s in favour of cap and trade?

Governments generally prefer cap and trade to other systems, as they’ve seen them work for acid rain, and emissions are falling by 2% per year in Europe already. Businesses who expect they’d be able to make reductions in their pollution and therefore make a profit by selling their permits are generally keen. Cap and trade is also popular with economists who prefer market-based solutions to regulation when it comes to dealing with ‘externalities’ like pollution.

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I’m still reading up on carbon taxes and other ideas for how to price carbon, so although I think a cap and trade system could work well for Australia, I’m not sure yet if it’s my preferred option. I’ll keep posting as I find out more, and would love it if you left links in the comments to anything interesting you’ve read on the topic. If you’ve got any questions, I’m not an expert, but I’d be happy to try to figure them out along with you

Why we need a price on carbon ASAP

Back in 2007, we were promised a price on carbon emissions. Three years on? We’re still waiting. I still don’t understand the ins and outs of the politics that prevented it, and I’m not sure anyone except Kevin Rudd does. But that hasn’t lessened the need for this essential part of the solution to climate change.

I know that the economics side of greening our future is a bit on the dull side, but bear with me for a bit. I think it’s really important that we put pressure on the new goverment to get a carbon price happening as soon as possible. Here’s why:

1. We won’t be taken seriously in international climate negotiations until we put a price on carbon. Australia and USA are the only developed nations who have yet to make a proper commitment to fighting climate change. When we go to negotiations (and they haven’t stopped since Copenhagen), having made no progress since 2007 will undermine any promises we make. The EU has had a carbon price for 5 years, New Zealand started one a few months ago, and Japan and Taiwan are in the process of sorting their own out now. Why should they make concessions to us when we haven’t lifted a finger yet? And why on earth would still-developing nations believe we’d help them, when we haven’t even stopped making the situation worse? This is a global problem: we need a global agreement to fix it.

2. We can’t get large emissions cuts without getting businesses on board with the plan, and carbon pricing has broad support in the Australian business community. It allows business and investors to find their own way of reducing emissions in order to avoid the cost. And the expense is a more predictable one than that of adapting to rising sea levels or resources costs. Businesses can (and probably will) pass on costs to consumers – but then we can reduce our use of any product that’s too expensive because it’s too polluting, or find a competing business which has lower prices because they’ve cleaned up their act.

3. Direct action and regulations can help us cut emissions, but they’re more expensive than a carbon price. Voluntary action is cheaper, but unless you convert 95% of Australia to green living overnight, it can’t get deep reductions in emissions anywhere near fast enough. Other methods are doable, but expensive.

4. It can be used to make polluters pay for the other environmental work that needs to be done, like the direct action and regulations mentioned above. Ending deforestation and ocean pollution won’t be cheap, and neither will researching new energy sources and improvements to energy efficiency. The companies who made a profit by degrading and wasting our shared resources can pay to clean them up again.

Of course, it’s possible to have a carbon pricing system that doesn’t acheive any cuts in emissions, or can be gamed by corporations. I’ll take a look next week at what a well-designed system would look like.

But the possibility of politicians messing it up doesn’t change the fact that it needs to be done. And since it must be done, it’s better that we start paying attention while politicians and businesses sort it out, so we can hold them to account.