Making it last

Facing our limits

4 Comments 08 July 2010

“The greatest shortcoming of the human race is our inability to understand the exponential function”

- Professor Albert A. Bartlett, University of Colorado

A Full World

by Ian Dunlop

As population rises from 6.8 billion today towards 9 billion by 2050, the inevitable logic of exponential growth in both population and consumption is now hitting the limits of global ecosystems and resource availability. The immediate pressure points are energy security, climate change, biodiversity loss, water and food availability, issues which are converging rapidly in a manner never previously experienced. These are only the tip of the broader global sustainability iceberg.1 Further constraints and limits are fast becoming evident as major developing countries, particularly China and India move up the growth escalator.

This situation is not unexpected; it has been anticipated for decades going back before the 1972 publication of “The Limits to Growth”.2 In the meantime the developed world has created a political and capitalist system which has proved incapable, so far, of recognising that the most important factor for its own survival is the preservation of a biosphere fit for human habitation.

The aftermath of WWII bred statesmen and women in both government and business intent upon creating a better world, re-building society, avoiding further conflict and genuinely prepared to take a long-term view. The results were far from perfect, but that vision did provide the foundations for the increasing prosperity the West has enjoyed ever since.

With prosperity came complacency; the assumption that growth within a finite system can continue indefinitely. This is hardly surprising, given that power and influence accrue to those who prosper under capitalism, and that technology until recently has enabled us to push back or ignore any physical constraints. Enormous political and personal capital is now vested in preserving the status quo. As a result, our institutions have become predominantly short-term focused; politically due to electoral cycles and corruption of the democratic process; corporately due to perverse subsidies and incentives, particularly the bonus culture which became the norm through the 1990s. Managerialism3 replaced leadership, statesmen all but disappeared, ethical standards deteriorated, so that we now find ourselves uniquely ill-equipped to handle the long-term challenges which lie ahead. The upshot is a series of escalating crises, most recently the Global Financial Crisis (GFC).

The developing world was intent on slavishly following our example. However in the last decade that began to change as the reality of pollution, resource scarcity and increasing inequity hit home, and it became obvious that the developed world model has serious flaws.4

What was workable in a relatively empty world of two-three billion people post-WWII is not workable in today’s full world of 6.8 billion, let alone the nine billion to come. Our ideological preoccupation with a market economy, based on political expediency and short-term profit maximisation, is rapidly leading toward an uninhabitable planet, as sustainability issues of theoretical concern for decades manifest themselves physically, particularly in regard to climate and energy:

Climate change

There is now unprecedented evidence that human carbon emissions from fossil-fuel consumption and land degradation are, on the balance of probabilities, warming the planet at an accelerating rate.5 6 7 Despite two decades of negotiation, virtually nothing has been done to address the problem, with human emissions accelerating in excess of the worst predictions8. The impact is clearly seen in record global surface and ocean temperatures9, rapid Arctic and Antarctic ice volume loss 10 11 12 13,  increasing permafrost methane emissions14 15, ocean acidification16 17 and escalating extreme weather events.18 19 20 These major changes are happening at the 0.8oC temperature increase we have already experienced relative to pre-industrial conditions, let alone the additional 0.6oC to 3.5oC21 to which we may already be committed as the full effect of historic emissions is felt.

The inertia of the climate system, particularly the slow warming of the oceans, means that the results of our emissions today only become evident decades hence. Thus unless we take rapid action now, we may well be locking in irreversible climate change of catastrophic proportions for future generations; indeed we may have already done so. A difficulty in gaining acceptance of this thesis is that conventional economics heavily discounts such possibilities.

The appropriate method of handling high impact, low probability events, the so-called “fat tail” conundrum, has been well explored by Harvard’s Martin Weitzman22, arguing that conventional cost benefit analysis is entirely inappropriate in such circumstances. The validity of this argument is beginning to be accepted by mainstream economists such as Paul Krugman.23

Unfortunately the latest science suggests that the supposed low probability of these events has increased significantly. Given the serious implications for future generations, we should base solutions far more on ethical and moral values than on economics.

The inexorable conclusion is that the global response to climate change has to be moved to a genuine emergency basis, rather than being seen as incremental change to “business-as-usual” which is still the focus of most current debate.

There will always be scientific uncertainties on an issue this complex, with year-to-year climatic variations continuing to be used selectively by deniers to discredit the mainstream science; but the overall trends are clear and they are all moving in the wrong direction. It is tempting to believe the deniers are right, but faced with the mounting empirical evidence, prudent risk management dictates we should not take the risk that they are wrong.

The Copenhagen COP15 meeting was not the failure generally portrayed in the media, albeit the outcome was not what many had hoped for. For the first time the real issues came on to the negotiating table:

  • the impossibility of getting agreement among 193 countries via the UN process,
  • the necessity for the top 6-12 emitting countries to take the lead in framing solutions; but based on current, not outdated, science.
  • The prospect that the real objective must be to limit temperature increase to 1.5oC or less, relative to pre-industrial levels, rather than the “official” 2o C,
  • the beginnings of a technology transfer and financing package for the developing world

Certainly, legal binding undertakings were missing, but this was a forgone conclusion given that the developed world has yet to put forward any serious proposals to encourage developing country action, and that their own targets and policies are hopelessly inadequate and compromised.

There is a long way to go, but it is dawning on global leaders that the size of the challenge is far greater and more urgent than is being officially acknowledged. Unfortunately it may take some further natural disasters to drive the point home; although that may occur more rapidly than expected if the latest evidence can be believed.

Gradually, the world is starting to understand that, if catastrophic outcomes and climatic tipping points24 are to be avoided, the real target for a safe climate is to reduce atmospheric carbon concentrations back to the pre-industrial levels of around 300ppm CO2 from the current 392 ppm CO2.  This will require emission reductions in the order of 40-50 per cent by 2020, almost complete de-carbonisation by 2050 and continuing efforts to draw down legacy carbon from the atmosphere.25 26 27 28

Looked at from a total carbon budget perspective, to have a less than 25 per cent chance of exceeding the 2oC temperature increase relative to pre-industrial levels, which is still the official political objective, the world can only emit a further 800 Gigatonnes CO2 in toto from today, a budget which would be used up in less than 20 years. Accepting a 50/50 chance allows the budget to increase to 1,200 GtCO2, used up in less than 30 years. (The Australian budget runs out in around five – eight years).29 If the temperature target has to be less than 2oC, the budgets are considerably lower.

The global constraint would only allow around 27 – 47 per cent respectively of existing fossil-fuel reserves (reserves recoverable with existing technology and prices) to be consumed.30 Why then do we continue to pour investment into expanding reserves of oil, gas and coal with increasingly risky and environmentally damaging ventures such as deepwater oil exploration and tar sands if we can only afford to burn a less than half of existing reserves?

Energy security

Cheap energy has been the cornerstone of successful societies for centuries. Take it away and societies historically, if they were sufficiently resilient, have broken down, re-organised at a lower energy level and moved on. If they were not resilient, they collapsed and disappeared. Today, just as economic growth for the bulk of the world’s population is accelerating, the days of cheap fossil–fuel energy are ending, triggered by the peaking of global oil supply and the need to reduce carbon emissions to combat climate change. After years of denial, these realities are finally being acknowledged by official bodies such as the International Energy Agency (IEA)31 and some industry leaders.32 33 34 35 36 Unfortunately the full implications of the message have yet to penetrated the “official future” of many national governments, particularly Australia.

The alternatives to our traditional energy mainstays of oil and coal range from natural gas, unconventional gas from coal seams and shale and new generation nuclear power to numerous renewable energy options, each of which have advantages and disadvantages. On the demand side, enormous opportunities exist for improvements in energy conservation and efficiency.

There is no “silver bullet” to solve escalating energy security concerns, but much “silver buckshot” whose development must be accelerated, ideally by a combination of regulatory and market mechanisms, to meet future needs. The critical policy requirement is that each option is assessed in the light of its true cost, benefits and risks, as discussed in Ian McAuley’s chapter.  Externalities such as carbon pollution must be fully internalised, inter alia removing the enormous subsidy the fossil-fuel industries have enjoyed since the Industrial Revolution. The competitive ranking of the new alternatives will only emerge gradually, hence the need to accelerate the overall innovation process but avoid picking winners. Each option will take a decade or more to make much impact, so time is of the essence. Whether other forms of cheap energy will emerge, or energy will remain expensive, is unclear, but there is little doubt that energy prices in the medium term will be volatile as the new order unfolds.

Peak oil

Peak oil is not just an economic issue, but a reflection of the physical barriers to energy supply we now face. We are not running out of either oil, gas or coal resources. The issue is how to convert those resources in the ground into flows to the market in an environmentally and economically acceptable manner.

Peak oil is the point at which it is no longer possible to increase oil production to meet demand, notwithstanding increasing prices, as evidenced by the stagnation of global oil supply since 2005.37 It results from the discovery rate of new oilfields falling far behind our escalating use of oil, and the fact that production from long established oilfields is depleting at faster rates than anticipated. As a result, we are forced to explore in more difficult conditions, with ever increasing risk and cost, as witnessed by the BP oil blowout in the Gulf of Mexico and controversy over tar sands production in Canada.38

A critical metric is the “Energy Return on Energy Invested” – how many energy units are produced for the energy invested in producing it. Historically, from an energy production perspective, this ratio has been 100:1 or more for large onshore oilfields; it is now declining below 5:1 in many new offshore oil provinces and tar sands operations, and may fall below 1:1 when the true environmental impact is internalised, at which stage there is little point in continuing operations.39 40

Peak oil, due to the immediacy of its impact, is likely to be the trigger that forces serious action on climate and energy security. The oil price spike to US$147 per barrel in July 2008 warned us of the tightrope we are walking, probably triggering the GFC as it broke the financial back of debt-laden, gasoline-dependent consumers in the US  Prices subsequently dropped as the GFC destroyed oil demand, but have currently recovered to around US$80 per barrel. A further rebound can be expected if economic activity strengthens.

Opinions vary widely on the evolution of global oil supply, and much will depend on the speed of recovery.41 It may well be that global supply by 2030 is 20-30 per cent below current levels42 a traumatic change for a world wedded to oil, particularly in sectors where substitution options are limited, for example for private transport and aviation.43

Coal

Coal is the most critical factor in solving the energy security and climate change dilemma. It is the largest, cheapest and most widely-available fossil-fuel resource, but has the worst environmental impact, with emissions double that of gas per unit of energy. Unless means can be found to capture and store those emissions securely, the coal industry worldwide must shut down rapidly if catastrophic climate change is to be avoided. Clean Coal Technology (CCT) and geological Carbon Capture and Storage (CCS) are seen as the means of securing coal’s long-term future, to the point where they have become unquestioned articles of faith on the part of industry and government. Substantial investments are being made in research and development of both CCT and CCS, with high emission facilities, such as power stations, being built “carbon-ready” so that CCS technology can, in theory, be added as soon as it is available.

Unfortunately that faith looks increasingly misplaced. CCS is established technology in the oil and gas industry where it has been practiced safely for decades by storing carbon dioxide in the reservoirs from which it was originally extracted with the oil and gas. However, sequestering carbon emissions on the scale now required by the climate science means the establishment of an industry the size of the world oil industry, storage in geological formations that have never demonstrated the security and stability of oil and gas reservoirs, solving substantial reservoir engineering problems and, unlike oil and gas practice, transporting the material large distances from source to storage. This has to be done at scale in less than two decades to have any real impact on the climate problem. At present there are only five commercial scale projects worldwide, none in the critical power generation area, and technical progress is painfully slow. The IEA have highlighted the need for 100 projects by 2020, 800 projects by 2030, and 3,400 projects by 205044; an extremely demanding target representing an investment to 2050 of around US$5.8 trillion.

CCT refers to a range of technologies, such as Integrated Combined Cycle Gasification and Supercritical Pulverised Coal Plants, aimed at reducing the environmental impact of coal. However, it is an oxymoron in that coal does not become clean, rather emissions are reduced typically by 20-40 per cent and efficiency is increased;  which is valuable, but does not solve the fundamental problem of coal’s high emissions.

Hence the need for objectivity in developing these proposed solutions. Whilst research on CCS and CCT should continue, it is doubtful they will provide the hoped-for panacea. Given the climate change risks now emerging, it is an extremely dangerous strategy to place most of our eggs in these baskets as Australia is doing, and to lock-in the construction of new high-emission facilities, CCS-ready or not, before the viability of the technology is assured. As The Economist put it:

“Politicians should indeed encourage investment in clean technologies, but direct subsidies are not the way to do it. A carbon price or tax, which raises the cost of emitting carbon dioxide while leaving it up to the private sector to pick technologies, is the better approach. CCS is not just a potential waste of money. It might also create a false sense of security about climate change, while depriving potentially cheaper methods of cutting emissions of cash and attention—all for the sake of placating the coal lobby.”45

Gas

Much store is placed on the future role of Liquified Natural Gas (LNG), Coal Seam Gas (CSG) or unconventional gas from shale beds, as a transition fuel to the low-carbon economy in replacing coal, due to gas having roughly half the carbon emissions of coal. However gas is not without its problems in the context of a climate change emergency response – even halving emissions is inadequate, but gas also has some unexpected consequences.

Coal burning emits not just carbon, but also aerosols, tiny particles which are suspended in the atmosphere and have a cooling effect. Cleaner-burning gas does not emit aerosols, so if coal use drops, to be replaced by gas, the level of aerosols drops correspondingly and hence the cooling effect reduces. One unintended consequence therefore of the use of gas may be a relative increase in global temperature due to the removal of cooling aerosols. This is not a reason to delay the reduction in coal burning, but it is a factor which has to be considered in developing a transition plan to a low-carbon future.

CSG and unconventional shale-gas also have complications. They rely on fracturing geological formations with fluids to release gas trapped in the coal seam or rock pores. Depending on the geological strata, this may result in a rapid production build-up, but an equally rapid production decline, necessitating many wells being drilled over an extensive area using large amounts of water, with potential risks to acquifers and land use. All of which requires high standards of regulation and compliance, with associated costs, if these new industries are to operate responsibly. A very different operation from conventional oil and gas production, which is relatively localised.

A further factor is the leakage of gas prior to combustion. Whilst gas when burnt has roughly half the emissions of coal, if gas is leaked to atmosphere pre-combustion, it has a warming potential around 25 times that of CO2. Hence a leakage rate of around 3 per cent negates the advantage gas has over coal from an equivalent warming perspective. Typical leakage rates appear to be in the 1.5 – 2.5 per cent range, so gas may not have the advantage over coal which is generally assumed. It also emphasises the need for high standards of performance to prevent leakage as the use of gas increases.

Nuclear

The renaissance of the nuclear industry engenders strong emotion, both for and against, in the light of historical accidents such as Chernobyl and Three Mile Island, the risk of nuclear terrorism and weapons proliferation and the legacy implications of nuclear waste. Nonetheless major investments in new nuclear plants are being made particularly in the developing world.

New nuclear technologies promise much safer standards than existing plants, including possibly the ability to use up existing nuclear waste. However these technologies are still in the embryonic stage and far from commercial application.

Given the scale of the climate challenge ahead, it would be unwise, a priori, to exclude nuclear options from the possible solutions. They should be considered, provided the full life-cycle environmental costs and risks are taken into account.

Global discontinuity

Other key factors, such as biodiversity, water and food are also reaching global limits, particularly biodiversity loss which is proceeding 100 to 1000 thousand times faster than the natural level46, and at great economic cost.47 48

The overall impact through the 20th Century is that humanity now requires the biocapacity of almost 1.5 planets to survive.49 Unless action is taken to change our ways, by 2030 we will require two planets. So we are rapidly eating up our natural capital and creating the conditions for escalating global conflict as we squabble over increasing scarcity.

There is much discussion on the technical dimensions of this challenge such as climate, energy, food and water, but these are only symptoms. The underlying drivers are population and economic growth which are creating the great discontinuity between the 20th and 21st Century as we are forced to address what is, in essence, a global sustainability emergency.

The key question for individual nations now is their preparedness to face up to this challenge realistically. Whether they will lead, prepare themselves and seize the enormous opportunities ahead as energy systems, societal and economic values are re-booted, and the world moves on to a low-carbon, sustainable footing, or allow vested interests to dominate, deny and delay, facing straightened circumstances as the impact of climate change and scarcity takes an increasing toll on their environment, economy and society.

Further, will they acknowledge that the capitalist model as we know it, and the economic growth that goes with it, is no longer sustainable. Capitalism is arguably the most effective mechanism the world has so far known for providing goods and services and creating financial wealth, but as the GFC demonstrated only too well, it is now under attack from itself and its lack of underlying principle. Capitalism should have a major role to play in achieving global sustainability – but what form should it take?

Some nations, and businesses, clearly have got the message – China, South Korea, the US and some European countries for example, are positioning themselves to be world leaders in making the transition.50 51 Others, generally the resource-rich countries, continue to drag the chain in the hope that their conventional business models can continue indefinitely, ironically on the back of Chinese growth!

The debate is invariably pitched in the context of the problems and costs of moving away from our comfort zone of business-as-usual. What it ignores is first that business-as-usual is no longer an option, and second the enormous opportunities ahead, as the world is re-jigged for a genuinely sustainable future.

“The 21st Century will, in fact, be the Age of Nature.  We’ll learn, probably the hard way, that nature matters: we’re not separate from it, we’re dependent on it, and when there’s trouble in nature, there’s trouble in society.”52

Whither Australia?

So how is Australia placed to negotiate this discontinuity?

We have had a dream run since the end of World War II, built on our natural wealth. Despite the occasional hiccup, our economy has expanded year after year, with increasing prosperity.  Much of our success has been built around supplying agricultural products and raw materials to the expanding economies of the world, particularly in Asia – initially Japan, then Korea and South East Asia, now China and India.  Understandably we are proud of being world leaders in agriculture, mining and processing, but we have also created a strong and vibrant society in many other areas, all built around a capitalist, market economy model.

Our resource base is formidable and expanding.  Not only do we have substantial energy resources of gas and coal, but we have the world’s largest uranium and thorium resources and enormous untapped renewable energy – solar, wind, ocean, geothermal and bioenergy.53 Beyond that, iron ore, other metalliferous minerals and agricultural assets abound

However as McAuley points out, as the discontinuity unfolds, that bounty may well become our Achilles heel unless carefully managed. Much of our exports are carbon-intensive – thermal and coking coal, alumina, natural gas, with coal being the largest export earner of around $36 billion in 2009-10.54 Our domestic energy system is highly carbon-intensive, largely a result of readily available and inexpensive coal.55 Our carbon emissions are correspondingly high, around 19 tonnes CO2 per capita in 200756 amongst the highest in the world.

A weak point is oil, where Australia has a particular vulnerability. We are around 50 per cent self-sufficient in oil, declining rapidly unless new discoveries save the day which seems unlikely. We rely on long supply lines from Asian refineries for around 85 per cent of our daily product use, offset by high exports. We do not comply with the requirements of IEA membership to maintain a 90 day net import strategic petroleum reserve, relying instead on operational stocks and just-in-time delivery. With a small, geographically dispersed population in a large land mass, we are heavily dependent on transport fuels. The cost of our oil and gas imports is now close to twice our oil and gas exports, with high coal exports saving the day. This will represent an increasing burden on our current account deficit as our level of self-sufficiency declines.

Despite this vulnerability, peak oil is not on the Federal Government agenda. While some state governments have taken it seriously57, studies at the Federal level have been dismissive58, even though it may have far more impact in the short term than climate change.

If the world now moves rapidly to a low-carbon footing due to climate change, whilst facing increasing oil scarcity due to peak oil, many of our traditional advantages turn into major strategic risks – that is risks beyond our control which have the potential to fundamentally change our way of life, and undermine our economic strength.

Whilst our raw material exports will not cease overnight given likely strong demand from the developing world, a shift toward low-carbon alternatives will seriously disadvantage Australia if carbon sequestration technologies fail. Similarly, we may not find it that easy to secure the oil imports we require. Domestic alternatives, based on our coal and gas resources, such as Coal-to-Liquids (CTL) and, to a lesser extent, Gas-to-Liquids (GTL) technologies are likely to be expensive and environmentally damaging.

In agriculture, Australia is already experiencing the impact of changing temperature and rainfall patterns, which may well be the result of human-induced climate change, with serious drought in many areas and overabundance of rainfall in others fundamentally altering farming patterns and water supply. As the Garnaut Review pointed out:

“Australia has a larger interest in a strong mitigation outcome than other developed countries. We are already a hot dry country; small variations in climate are more damaging to us than to other developed countries”59

On the positive side, we have enormous undeveloped renewable energy resources, and there is great potential for the biological as opposed to geological sequestration of carbon, which has substantial benefits for agriculture60, and possibly for our coal industry.

A Janus nation

The scenario, of rapid climate change combined with the onset of peak oil, while becoming part of mainstream thinking overseas, is still regarded as extremism in Australia, and not as part of the “official future”.

Ironically, we have some of the best scientific and analytical advice in the world on the implications of climate change and energy supply, in studies such as the Garnaut Climate Change Review and extensive work by the CSIRO and other bodies.61 62 They indicate the need for rapid change – advice which is blithely ignored.

On the other hand, the vested interests defending the status quo, particularly those linked to some sections of the resource industries, are amongst the strongest in the world, not surprisingly given the importance of those industries historically to the development of Australia and the resulting power they have accrued.

The resistance to accepting the implications of climate change is well documented63 64, as McAuley points out. At virtually every turn in the tortuous path of climate reform over the last two decades, the vested interests have dominated, determined to slow reform, maximising compensation and escape clauses, without regard to the longer-term implications. Gradually, as the evidence has mounted, outright denial has given way publicly to grudging lip service to the need for action, whilst privately delaying tactics continue.

Successive governments have either not believed the science, or have been brow-beaten into adopting minimalist reform agendas, which are largely meaningless in the context of the real problem. Statesmanship and leadership are notably absent.

Environmental NGOs have, in the main, opted to work “in the government tent” in finessing a minimalist reform agenda, rather than insist on meaningful reform, on the basis that it is better to get something started and then modify it, than nothing at all. That the history of major reform in Australia is that, once implemented, it takes at least a decade to make significant change – a decade we no longer have. The abject failure of that strategy has been demonstrated by the backsliding of the Federal government post-Copenhagen in shelving their emissions trading scheme, whilst other countries move forward.65 66

Other sectors of business are taking a far more positive approach to the changes and opportunities ahead67 and are acknowledging the risks of inaction.68 From all sides though, comes the demand for certainty to facilitate investment decisions. But “certainty” if based on the wrong definition of the problem, is bound to unravel rapidly.

Meanwhile the resource sector, buoyed up by bullish forecasts of coal and gas demand from organisations like the IEA69, are forging ahead with fossil fuel developments. These include the doubling coal exports over the next 20 years, the expansion of LNG exports and the establishment of a coal seam gas industry with major investment in mines, railways, ports and processing facilities. There are however no proven means of sequestering the associated carbon emissions.

The investment in alternative clean energy is miniscule in comparison. The strong research capability which Australia developed in many renewable energy areas has departed to more fertile investment climates overseas.

Our great strategic error

So Australia ends up in the worst of all possible worlds. The science is clearly indicating the need for radical emission reductions. The vested interests ignore these calls, continue to undermine any sensible reform and, by special pleading render ineffective even the minimalist reform proposed in the interests of short-term advantage. In the process, as McAuley discusses, sound policy instruments such as emissions trading are discredited due to the political horse-trading as governments bow to vested interest pressure. Lack of certainty on a carbon price stunts the growth of fledgling alternative energy industries, stifles consumer behavioural change and, combined with conflicting regulatory measures, leads to non-optimal short-term investment decisions.

Business demands leadership from government whilst, with a few notable exceptions, showing none itself, and both main political parties lack the stomach to take on the vested interests. So we fall back into the comfort zone of our dig-it-up and ship-it-out high carbon mindset. In so doing, we are making arguably the greatest strategic error in Australia’s history.

For while Australia is moving backwards on climate change reform, the rest of the world is accelerating. The Chinese, other Asian countries, Europe and the US are all now vying for leadership in the low carbon economy. A decade hence, with the climate science better understood, it is likely that the incremental demand for our high carbon products will evaporate and the bullish IEA demand forecasts, yet again, will never eventuate. Australia at that point will be left with a large inventory of stranded assets, minimal investment in low carbon alternative energy and little resilience to weather the impact of both climate change and peak oil.

The irony is that Australia has some of the best low carbon resources and opportunities in the world70 71, which we seem determined to ignore.

The time has come for a radical re-think of our strategy for the 21st Century. However it is not good enough just to tinker at the edges of current discredited environmental and energy policies – root and branch surgery is needed. Furthermore, this must be done on an integrated, sustainable basis – what is the realistic carrying capacity of Australia given the societal, environmental and economic pressures likely to confront us?

The pre-requisite is vision and an honest acceptance of the challenge we face.

Re-thinking Australia’s 21st Century strategy: Key policy settings for a new Government

1. Recognise that population and economic growth have created a sustainability emergency unique in world history. As a result, we are in the midst of a global discontinuity in which societal values, growth, economic and business concepts have to be restructured urgently. In this context, while the day-to-day business of government will continue, serious effort must be allocated to a fundamental review of short and long-term national strategy as “business-as-usual” is no longer an option. Ideally this should be done with bi-partisan support, separate from adversarial politics.

2. Initiate debate on a comprehensive sustainability strategy for Australia, encompassing inter alia climate, population, energy, biodiversity, resource scarcities, economic, tax and business concepts.  McAuley argues for the focus to be on integrated policy, rather than treating issues in separate silos as at present. The objective is for Australia to prosper within realistic national and global carrying capacities, with an emergency plan to achieve the transition to a sustainable future effectively and equitably.

3. Climate change must be treated as a priority as it directly affects Australia’s future even in the short term. The lag effect means that we may well be locking in irreversible changes today which will have catastrophic implications for future generations. The formulation of the climate “problematique”, on which current global and national policy is based, is almost a decade old. In the interim, scientific understanding and the empirical evidence for anthropogenic climate change have progressed markedly, to the point where it is clear that the climate challenge is far greater and more urgent than we assumed. The gulf between current science and policy is widening dramatically. In short, we are trying to solve the wrong problem with the wrong policies.  Until we honestly define the problem, with the appropriate caveats on risk and uncertainty, realistic policy and solutions will not be forthcoming.

Current science suggests that, if catastrophic outcomes and climatic tipping points are to be avoided, the real target for a safe climate is to reduce atmospheric carbon concentrations back to the pre-industrial levels of around 300ppm CO2 from the current 392 ppm CO2. This requires the emission reductions and timeframe discussed earlier in this article.  The “climate problematique” should be re-defined in these terms.

4. To maintain the currency of this definition, initiate a regular, objective, statement on the latest climate science and implications, free from political spin, published by authoritative bodies (Chief Scientist, CSIRO, international linkages) which is ongoing, not just in response to events such as Copenhagen or denialist campaigns.

5. Be prepared to challenge conventional thinking and to adopt radical solutions as appropriate. The entire tenor of the climate debate, and energy security, revolves around incremental change to “business-as-usual”, whereas the evidence indicates climate change must be treated as a genuine emergency. Many will argue that this is unnecessary extremism and that change of the extent indicated above is impossible, but that is only so when viewed with current mindsets. We have the solutions, given the will to honestly face the size of the challenge, but they are currently being ignored. Our preparedness and ability to take emergency action was demonstrated with the GFC; there is even more reason to apply the same rationale to climate change.

6. Given the warning of catastrophic irreversible tipping point scenarios, based our response more on moral and ethical values than on quantitative economics. Economic analysis is valuable in charting the most efficient pathway to reach the targets, but it should not be the prime consideration in determining those targets. Far more attention should be given to the “fat tail” conundrum of handling high impact, low probability events where conventional cost benefit analysis is inappropriate.

7. Re-frame climate policy accordingly. The CPRS is a disaster which cuts across all sensible design concepts for effective emissions trading. If implemented, it would impose a major cost on the economy for minimal reduction in emissions; it should be dropped forthwith. We need a “root-and-branch” redesign of climate policy built around the “problematique” set out above, with a balance of market and regulatory mechanisms. The rapid introduction of a carbon price is essential, to provide investment certainty and initiate behavioural change; ideally via a simplified and efficient emissions trading mechanism with minimum compensation and escape clauses. This should incorporate both a realistic short-term starting price and a long-term objective. If this proves impossible due to the historic baggage of recent negotiations, it should be abandoned in favour of a simple “fee and dividend” mechanism to minimise rent-seeking and retain public credibility.

8. Develop a balanced portfolio of solutions, with fair transition arrangements but focusing on the opportunities and benefits of creating new industries rather than the problems and costs of moving away from the old. At present the vast bulk of climate policy is aimed at protecting our traditional carbon-intensive industries, with token gestures toward the low-carbon alternatives which represent our future. This must be re-balanced to direct more seed funding to serious alternative technologies, including consideration of new generation nuclear options.

9. No carbon-intensive projects should be approved forthwith, either for domestic or export use, unless they incorporate proven, secure carbon sequestration technologies. In the absence of demonstrable research progress, funding for CCS and CCT should be cut back.

10. Take genuine global leadership. In addition to rapid, deep domestic emission reductions, actively promote concrete proposals to involve the developing world. Moving toward equal per capita emissions globally, as suggested by the Garnaut Review and others before.  Dispense with the conditional, “we’ll drop ours if you drop yours” approach to emissions reduction.

11. Review Australia’s vulnerability to peak oil based on the latest information. Design integrated climate/peak oil strategies accordingly. Global climate constraints only allow around 27 – 47 per cent respectively of existing fossil-fuel reserves to be consumed. Continuing investment into high risk, low efficiency and low EROEI options, such as deepwater exploration, shale and tar sands, and Coal-to-Liquids should be discouraged in favour of low-carbon alternatives.

12. Explain honestly to the community the sustainability emergency and potentially catastrophic climate risks we now face, but equally the enormous opportunities the solutions open up, with education to develop the platform for commitment to the major changes ahead.

13. Take rapid, decisive action to implement a low-carbon economy.

‘It is no use saying, “We are doing our best”. You have got to succeed in doing what is necessary.’72



Endnotes

  1. “Meeting the needs of the present without compromising the ability of future generations to meet their own needs” United Nations World Commission on Environment and Development (1987), Our Common Future. “The idea is inspired by the belief that the current pattern of human activity cannot be sustained indefinitely.  It postulates that there can be a future design of society in which environmental degradation and extremes of social inequity are avoided on an ongoing basis”, Tibbs, H. (1999)
  2. Meadows, D. et al (1972) “The Limits to Growth”, A Report to the Club of Rome
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  11. Polar Science Centre (2010)
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  24. Lenton, T. M. et al (2008) “Tipping Elements in the Earth’s Climate System”, Proceedings of the National Academy of Sciences of the United States of America. http://www.pnas.org/content/105/6/1786.full.pdf+html
  25. NASA (2008) “Target Atmospheric CO2 – Where Should Humanity Aim?, Goddard Institute for Space Studies. http://www.giss.nasa.gov/research/briefs/hansen_13/
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  27. Climate Code Red (2008) http://www.climatecodered.net/
  28. Safe Climate Australia (2009) “Transition Plan Strategic Framework”. http://www.safeclimateaustralia.org/wp-content/uploads/2009/05/Transition.Framework.01B.pdf
  29. Spratt, D. (2009) “Forget about 2050, we’re blowing the carbon budget right now”. http://climatecodered.blogspot.com/2009/09/forget-about-2050-lets-talk-about-now.html
  30. Meinhausen et al (2009) “Greenhouse gas emission targets for limiting global warming to 2oC” Nature. http://www.nature.com/nature/journal/v458/n7242/abs/nature08017.html
  31. International Energy Agency (2008 & 2009) “World Energy Outlook” OECD, Paris
  32. Association for the Study of Peak Oil (ASPO). http://www.peakoil.net/
  33. “Status of Conventional World Oil Reserves – Hype or cause for concern?”, Owen/Inderwildi/King, Smith School, University of Oxford. March 2010. http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7500669/Oil-reserves-exaggerated-by-one-third.html
  34. UK Industry Task Force on Peak Oil & Energy Security (2010) “The Oil Crunch” http://peakoiltaskforce.net/download-the-report/2010-peak-oil-report/
  35. Macquarie Bank (2009) “The Big Oil Picture”. http://www.aspo-australia.org.au/References/Bruce/Macq7-Oil-Sept-09-Iain-Reid-NY.pdf
  36. van de Veer, J. (2008) “The End of Easy Oil” Council for Foreign Relations. http://www.cfr.org/publication/15923/royal_dutch_shell_ceo_on_the_end_of_easy_oil.html
  37. ibid “The Oil Crunch”, P16
  38. Podesta, J. (2010) “The Dirty Truth About Tar Sands”, Centre for American Progress. http://www.americanprogress.org/issues/2010/06/tar_sands.html
  39. “Ten Fundamental Principles of  Net Energy”, The Encyclopedia of Earth, 2008. http://www.eoearth.org/article/Ten_fundamental_principles_of_net_energy
  40. Kunnes, H. (2009) “Economic Scenarios for an Age of Declining EROEI’s”, ASPO-USA. http://aspo-usa.com/2009presentations/Hannes_Kunz_Oct_11_2009.pdf
  41. ibid “The Oil Crunch”, P31
  42. ASPO Base Case (2009), Australian Association for the Study of Peak Oil. http://www.aspo-australia.org.au/
  43. Korowicz, D. Feasta & the Risk/ Resilience Network (2010) “Tipping Point. Near-Term Systemic Implications of a Peak in Global Oil Production”. http://www.feasta.org/documents/risk_resilience/Tipping_Point_summary.php
  44. International Energy Agency (2009) “Technology Roadmap – Carbon Capture & Storage”. http://www.iea.org/papers/2009/CCS_Roadmap.pdf
  45. The Economist (2009) “The Illusion of Clean Coal”, 5th March 2009.
  46. Rockstrom et al (2009) “A Safe Operating Space for Humanity”, for Stockholm Resilience Centre. http://www.stockholmresilience.org/planetary-boundaries
  47. UNEP et al “The Economics of Ecosystems and Biodiversity” et al. http://www.teebweb.org/
  48. http://www.guardian.co.uk/environment/2010/may/21/biodiversity-un-report
  49. Global Footprint Network (2010) “The Ecological Wealth of Nations”. http://www.footprintnetwork.org/images/uploads/Ecological_Wealth_of_Nations.pdf
  50. HSBC (2009) “A Climate for Recovery”. http://www.globaldashboard.org/wp-content/uploads/2009/HSBC_Green_New_Deal.pdf
  51. World Business Council for Sustainable Development (2010) “Vision 2050 – The New Agenda for Business”. http://www.wbcsd.org/Plugins/DocSearch/details.asp?DocTypeId=25&ObjectId=MzczOTc
  52. Homer-Dixon, T. “The Upside of Down”, P13
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  54. ABARE (2010) “Australian Commodities”. Available online: http://www.abare.gov.au/publications_html/ac/ac_10/ac10_June_a.pdf
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  58. ACIL Tasman for DRET (2008) “An Assessment of Australia’s Liquid Fuel Vulnerability”: http://www.ret.gov.au/energy/Documents/Energy%20Security/Liquid%20Fuel%20Vulnerability%20Assessment.pdf
  59. “Garnaut Climate Change Review”, P xix. http://www.garnautreview.org.au/domino/Web_Notes/Garnaut/garnautweb.html
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  72. Winston S. Churchill, Lord Mayor’s Banquet, 1954

Author(s)

Ian Dunlop

Your Comments

4 Comments so far

  1. A Punter's Appraisal says:

    Thank you for an enlightening article. It is of some concern that while discerning citizens express outrage over the federal government’s inaction on climate change, state governments are running amok and the culture of bludging off the environment is ingrained in the status quo.

    Environmental Protection Act (WA):

    “An Act to provide for an Environmental Protection Authority for the prevention, control and abatement of pollution and environmental harm, for the conservation, preservation, protection, enhancement and management of the environment…….”

    The state of Australia’s environment makes a mockery of the EP Acts – not least in the state of WA:

    EPA WA SOE – 2007 – Key Findings:

    • WA’s net greenhouse gas emissions increased 17% between 1990 and 2005. If land use concessions are excluded, then emissions have increased 45% over the same period.
    • On a per capita basis, WA’s greenhouse gas emissions are higher than Australia’s and other developed countries, including the United States and the United Kingdom.

    The current Premier of WA is prone to overriding EPA environmental impact assessments and it is glaringly obvious that voluntary actions to mitigate air pollutants by the mining industry remains a comedy act – befitting for the clones of a Mr Bean.

    While we express concern about CO2 emissions from the fossil fuel industry, the Eastern Goldfields of WA has no ambient regulatory enforcement for particulate matter (PM).

    The Kalgoorlie-Boulder gold super pit is the largest in Australia, set to expand to 4 kilometres long, 1.6 kilometres wide and just over half a kilometre deep in one of the dustiest communities in the nation.

    Particulate Matter contributes significantly to the formation of anthropogenic brown clouds which are impacting on climate change and are now hovering over Asia, North America and Europe

    In addition, Australia has no emission standards even for mercury so when one company dumped some 14 tonnes of mercury over a community in two years, no regulatory enforcement was administered.

    Gold is mined predominantly for jewellery. Then there’s diamonds, precious stones and opals to appease human vanity and whilst these industries release precious soil carbon, heavy metals and GHGs to the atmosphere, they also slaughter wildlife with impunity:

    http://www.conservationmaven.com/frontpage/millions-of-australian-reptiles-falling-victim-to-mine-shaft.html

    Catastrophic climate change or catastrophic ecological wipeout? Whatever comes first. See you at the Doomsday Ball.

  2. Geoff Holland says:

    [A]
    But surely coal has a greater net positive solar forcing than gas? (despite lack of aersol emissions which cause negative solar forcing).

    [B]
    Are we trying to argue that the GFC is a result of dwindling resources such as peak oil? Do we also include climate change as a factor?

    The orthodox view is that the GFC was caused by overgearing – allowing too much lending with too little security. This was primarily in the US, and other countries badly effected were those also highly geared.

    The question is:

    1. is this just a matter of tightening up lending regulations? or

    2. was this loosening up of lending criteria (overgearing) necessary in order to keep the US economy moving?

    If the answer is 1. then all we need to do is tighten lending criteria again.

    If 2. then maybe the OECD countries are naturally entering a steady-state economy which is what some have been advocating for decades. Japan may be the best example. This coincides with a steady state population (in many European countries and Japan, but not so much in the US yet).

    It is likely that the economies of OECD countries have slowed to less than 2% per annum because economic growth opportunity has moved to the emerging economies of China, India, Brazil and a number of smaller developing nations where labour and real estate are cheaper (and environmental regulations are less stringent).

    The increase in the price of oil from USD20 to USD80 (400%) in only a few years (>50%/annum?) is also presumably having a breaking effect on OECD economies.

    Economic loss from climate change is likely having some impact – possibly net crop loss in producer nations (increased production in some cases?). And the cost of storm damage – but this may well be still relatively minor – the main one being Hurricane Andrew (also Philippines, Burma, Haiti though mostly earthquake damage, Pakistan – but these don’t impact the global economy so much except as a pressure on Aid and emergency relief funds. ODA doesn’t increase, but rather it is redirected).

    Since we do not value our biodiversity, species loss is probably not a factor in the Global Financial Crisis, and may only be a factor when species loss causes ecosystems breakdown which then negatively impacts on production systems.

    [C]
    Highlighting our vulnerability and dependency on 50% of our oil from Asian refineries, which is gradually increasing, may be a good way to encourage the general public to give greater support to energy efficiency, solar and other renewables, higher taxes on petrol, more use of public transport etc.

  3. gerard says:

    big mistake, huge!

    The human population growth rate peaked in 1960, and has been declining since. Given natural development, the peak in numbers will be about 2050. Population in nations such as Japan, Russia, the UK, Greece, Italy, Germany are now in decline.

    A look at FAOstats shows that the real population pressure comes from the animals – not wildlife but livestock numbers. We’re depleting wildlife quite well, with lifestock outweighing wildlife by 7 to 1!

    At any given time, there are now over 60 billion livestock on the planet, 10 for each human. In Australia the number is 25 for each human. Humans consume just 12% of appropriated net primary production (NPP), and livestock consume 58% – and now that most livestock is factory farmed (including cattle), dealing with the effluent alone is a massive environmental problem (none of it is treated like human effluent). With India and Chine now wanting to eat like the west, this is only going to become more of a problem.

    Livestock production is driving most deforestation, a large share of the open fires (creating massive black carbon emissions) and depletion of soil carbon on degraded pastures (pastures make up 70% of all agricultural land).

    It’s time to take our heads out of the sand and deal with the issue of what we eat – it’s killing the planet.

    Australia is way behind – the UN and several European countries are now talking about this issue directly – it’s time we did.


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    [...] the need for an emergency response to climate change, whilst facing increasing oil scarcity due to peak oil, many of our traditional advantages turn into major strategic risks; that is risks beyond our [...]

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