Ethics of emissions trading

"Emissions trading sounds like a compelling idea in principle but the practicalities are much less attractive. [...] it's depoliticized over-consumption (i.e. we are told it no longer matters who causes what harms, provided we all pay the right amount) [...] emissions trading carries a series of practical problems. A weak cap means increased emissions but a tight cap, based on a effective climatic targets would likely lead to regressive social consequences, for instance, privileging a Londoners' stag party over a Polish OAPs' warmth."

- Dr John Broderick in "Should we stop worrying about the environmental impact of flying?", Guardian 31st Jan 2013.

This neatly summarises one of my concerns with emissions trading schemes. The question of the relative social good associated with a particular set of emissions is assumed to be answered through a direct equation with the economic cost of that good. If a stag party for a rich Londoner costs as much as heating the home of an elderly Polish couple, then these social goods are deemed equivalent, despite the fact that one is a luxury while the other may well be a necessity under certain circumstances. In some ways, it is a similar issue to the globalisation of the food market. If there are wealthy people willing to pay for a luxury cash crop on another continent, this is taken as justifying the eradication of local food autonomy in a developing country.

But not all goods are commensurate on a common scale. It is not possible to put a price on everything. The logic of the market is not universally applicable.

"There will be no carbon tax under the government I lead"

It is refreshing to find a journalist who has done a little bit of homework prior to an interview and is ready to question spin, half-truths, strategic inexactitudes and "misstatements" from political leaders.

Rather than contribute another dissection of this particular interview, instead I thought I'd gather a few thoughts on the Australian carbon price and its place in contemporary Australian politics.

As Leader of the Opposition Tony Abbott is so fond of reminding us (especially when facing an interviewer turning the screws on his own truthfulness), Australian PM Julia Gillard did indeed say during the 2010 election campaign, "there will be no carbon tax under the government I lead". Yet one of the signature pieces of legislation from this minority government has been the introduction a price on carbon coupled with income tax reform.

A straightforward broken promise? Yes and no.

It is axiomatic that a minority government will need to compromise its electoral platform in order to get the support of other parties or independents required to govern. If a party could gain the support of enough MPs without altering its policies, then the extra MPs would just join the party. It is abundantly clear in this case that the price on carbon was the top item on the Greens agenda (and also on the radar of the independents) and so compromise was necessary. Once the election results were known, that such legislation would be the price of Greens support (needed by either party to govern) was entirely predictable.

As far as I can see, there were really only four other alternatives: (a) for the Greens to have dropped this demand, which was considerably more core for them than a promise made once on the campaign trail (did Gillard make this claim more than once? If so, I am not aware of it), (b) for the Greens to have negotiated an agreement with the Coalition, which would have faced the same sticking point (along with likely even more disagreements on other policies), (c) for the two parties who were against a carbon price (Labor and the Coalition) to have made this the sine qua non of their respective positions and so come to a power-sharing agreement between them in order to prevent the Greens from introducing such an idea, or (d) for no agreements to be reached and a new election called.

As I've said before, too much is usually made of campaign promises. Governments exist to execute wise political authority, not merely to implement the majority will.

While it is a minor point, it's worth noting that the carbon price is not a tax. The current system is based on carbon credits that are sold to the five hundred or so largest polluting companies in a market mechanism that spends the first few years with a fixed price and unlimited credits in order to give business certainty and then shifts to a fixed number of credits (declining each year) and a moving price (with a floor and ceiling imposed). It may well have been better as a direct tax at the point of extraction with proceeds distributed equally to all Australian citizens (tax and dividend), but that is not the system that was chosen. Now it is quite arguable that most Australians do not understand the difference, but that is because there has been such an effective effort by the Opposition to muddy the waters and no effort on the part of the government to explain it. Public ignorance is assumed and reinforced by both sides.

More importantly, the current legislation is way too unambitious, with tiny targets that put Australia towards the back of industrial counties in its level of ambition and which, if adopted by all advanced economies, would most likely see us sail past two, three and four degrees. Furthermore, current legislation does not including our massive coal exports, which are already the largest in the world and are planned to double in the next decade (blowing any domestic reductions out of the water), nor the embodied carbon in imported goods, nor international aviation or shipping. It provides extremely generous free credits to many industries to soften the initial burden. And it includes international offsets, so that we can continue to emit locally while paying someone else to make changes elsewhere that Treasury does not actually expect domestic emissions to decline very much, if at all.

Yet perhaps the greatest failure by the government regarding this legislation has been the failure to make use of its introduction to keep raising climate literacy, explaining the basics of climate science (which are still widely misunderstood), why serious action of carbon emissions are morally justified (getting beyond short-term cost-benefit analyses) and necessary at every level (personal, local, national, international), why Australia must do its bit (which is considerably more than most other nations, not less) and why this battle is worth fighting, even if it looks like we're currently losing.

So be assured that I am no particular fan of the present legislation or government, but repeating Gillard's broken promise - while it may be a satisfying way of expressing anger at a government that has had its fair share of controversies while being surprisingly effective at getting more than an average amount of legislative work done - is doubly misguided.

The price of carbon

"The good news is that the modest carbon price announced yesterday will neither impoverish Australians nor bankrupt our economy. The bad news is that the modest carbon price announced yesterday won’t save the planet either."

- The Australia Institute, Has the PM "knocked the brick wall down"?

The minority Labor government in Australia has announced the details of a long-awaited scheme to put a price on carbon. The basic outline is quite helpfully explained in the animation above, and summarised in greater detail here.
I speak of a carbon price, because it is not a tax, but an emissions trading scheme with a fixed price for three years. This is not simply a matter of playing with words, as explained here.

The scheme is modest in ambition, with only a 5% reduction in emissions by 2020,* despite Australians having the highest per capita emissions of all advanced economies and the 10th largest aggregate emissions overall (it would be interesting to see figures on aggregate per capita emissions, but I haven't been able to find them anywhere). However, unlike Kevin Rudd's defeated ETS, this target is not locked in, but can be raised by an independent Climate Commission anytime from 2015 when the carbon price shifts from being directly set by the government to being dependent upon the auction of a set number of emissions permits. Furthermore, the target for 2050 has been raised from 60% to 80%.
*From a 2000 baseline, which Australia continues to use, despite a global agreement to use 1990 as the benchmark. Therefore, Australian targets cannot be directly compared to those of most other countries. The later baseline makes them less ambitious than a similar figure from a 1990 baseline.

The price for tradable permits will start at a set price of $23 per tonne, rising slightly until 2015, when the number of permits will be capped and the price determined by the market. Only the largest five hundred or so companies will be involved, who together emit the vast majority of Australian emissions. Agriculture and petrol are excluded from the scheme. The former because monitoring of agricultural emissions are too complex; the latter because petrol prices are too politically sensitive (despite this weakening the social, economic and ecological benefits of the scheme). Most households will receive compensation in the form of tax rebates and a raising of the minimum tax threshold will simplify matters for the tax office and for about a million Australians who will no longer need to lodge a return. Only the wealthiest households will be worse off (or rather, only the most carbon-intensive wealthy households).

Many experts see the scheme as representing a decent first step of what was politically possible with a few regrettable compromises. This piece gets into more of the details than I have time or inclination to do at the moment.

A few brief thoughts: with the vast majority of Australian households projected to be better off and the administrative burden falling on about five hundred major companies, the threat of bureaucratic and economic armageddon waved around by Tony Abbott will hopefully be quickly rejected.

Yet with all the focus (by both sides of politics) on what it will mean for the average household budget, most people don't seem to understand that the point of the system is encourage behavioural change. If you don't want to pay more for your energy bills, then switch to renewable power and implement some basic energy efficiency and conservation measures. If you don't want to pay more for your food, then switch to eating local and organic produce. If you don't want your small business to pay more for its inputs, then consider lower-carbon alternatives for your business model. Whether the price will remain too low to encourage these changes directly through the hip pocket remains to be seen. It may be that the primary benefit of the system in the short term will be to provide some needed stability to the renewables market.

From a political perspective, the claim that the Greens are not interested in environmental issues ought to be put decisively to rest, given the political costs Gillard has borne over the last few months during negotiations. What these demonstrate is that without the Greens pushing her, she would not be here of her own free will. This was the price the Greens and independents demanded of Gillard after the hung parliament, and it is clear that this is therefore at the heart of what the Greens hoped to achieve with their new-found political influence. Whether they were right to block Rudd's proposed scheme back in 2009 (which was superior in a couple of ways to the current proposal, though clearly inferior in many others) is a more difficult question. Hindsight offers a perspective of the enormous fallout of that earlier decision (change of leadership in both parties, an early election, a protracted chance for the opposition to pursue large swings in popular support for a carbon price), little of which was obvious at the time.

The Greens' shift from principled opposition to pragmatic support of a least worst viable option represents a difficult yet crucial debate. The proposed scheme may represent the best that was actually available, that is, politically palatable, under current conditions (and so requiring plenty of sweeteners for some of the worst polluters), yet it is important to admit and repeat that it falls far short of what is necessary to avoid some very bad outcomes. Under such circumstances, is a small step better than nothing? Does this represent the strategic establishment of a system that can be scaled up as the political will builds over time? Or can much ado about very little ultimately prove a distraction from or substitute for more radical change, locking in assumptions about the viability of the status quo without addressing the root causes of the problem in our consumerist idolatry and myopic pursuit of further economic growth?

UPDATE: Ethos have kindly published a version of this post on their site, and there has been further discussion over there.

Gittins on Australia's hung parliament

Ross Gittins once again talks sense in his latest SMH article on why the Greens did so well. Here's a taste:

"So unattractive was the choice the main parties offered that I'm sure people voted Greens for various reasons. But no doubt concern about lack of ''real action'' on climate change was the most prominent. Consider the way people concerned about global warming - still a majority of voters - were dudded by the two main parties. Both went to the last election promising to introduce (similar) emissions trading schemes; both went to this election promising not to introduce such schemes. [...]

"The Libs describe their approach as 'direct action' - which translates as support for the regulation and government intervention once primarily associated with Labor. Labor's major contribution to the climate change policy debate during the campaign was its proposal for a 'citizens' assembly', which sounds reminiscent of the Greens' historical preference for 'consensus-based' decision-making. The Greens, on the other hand, have been pushing for the economic rationalist approach of relying on a carbon tax and price signals."

Gittins mentions a new paper put out by the Australia Institute that includes six principles for policy design on climate change.

I've also just caught up with two slightly older pieces by Gittins: Gillard's failure of leadership and why the pursuit of green jobs is a distraction from climate action.

Hung parliament: not so bad?

Random thoughts on the Australian federal election result

"This is clearly the closest election result we've seen in Australian history."

- Antony Green, ABC's election analyst during an interview on Lateline.

I am not entirely disappointed with a hung parliament in Australia after Saturday's election. At the very least, it means that neither side can claim victory. They both lost. There was indeed a swing against the ALP (-5.4%) and towards the Coalition (+1.9%), but elections are not won on swings. And indeed, if they were, then the Greens received a much larger positive swing (+3.7%). One significant factor in this was likely to be disgruntled ALP supporters registering their disapproval of the Rudd/Gillard failure of nerve on climate. It may have also been punishment for Gillard's move to the the right on asylum seekers, but Rudd's popularity started its precipitous decline when he announced the shelving of his carbon trading scheme.

In the Senate, before below the line and postal votes are counted (and below the line postal votes, like mine!), it looks like both major parties faced negative swings (Coalition -1.3%; ALP -4.6%) while the Greens are highly likely to have secured balance of power (+3.9%) and the most Senate seats of a minor party in Australian history. The DLP may have followed Family First's success in 2007 by gaining a Victorian seat with only 2.23% of the primary vote.

Earlier this year in the UK election, when it became clear that the parliament was going to be hung, there was a lot of misinformation peddled by politicians, pundits and certain sections of the media about what it was going to mean. Due to a busy weekend, I haven't been following enough Australian media to know if a similar pattern has been emerging there. So to clarify some issues that were muddied here and may be there, by constitutional convention, Gillard remains caretaker PM until the result becomes clear, the incumbent PM has first right to form a coalition or minority government, and there is no necessity for either side to have a formal coalition to govern. Having more seats (yet not a majority), having more primary votes, having more two party preferred votes: none of these are really relevant in determining who forms government (except insofar as they can be spun to provide some kind of moral weight).

That a hung parliament doesn't necessarily mean instability can be seen from a wide range of nations who regularly manage to get along with one. That they have been rare in the UK and Australia has led to a little hysteria (from what I've seen, not quite as much in Oz as there was here a few months back) about the dangers of no party having a majority. However, it ought to be remembered that neither the ALP nor the Coalition (!) are really a single party (the internal divisions within the ALP are famous, and were on display in paradoxical ways with the recent leadership spill) and so Australia has never really had a majority government. We've pretty much always had to get along with a cobbled together kind of political power, and that's not all bad. Yes, this might be a little more pronounced than usual, but I think that it could turn out to be healthy if it means some negotiations and compromises, with each issue needing to be argued on its merits and weighed against other priorities. That's how the system works. As long as one side can guarantee a majority who will pledge to avoid frivolous votes of no confidence and won't block supply, then a minority government is quite feasible.

To get there, both sides are now wooing the support of the three independents (Tony Windsor, Rob Oakeshott and Bob Katter) who have pledged to work as a bloc. Although they are all former National Party members, it has quickly become obvious that they can not simply be assumed to belong naturally to the Coalition. They have affirmed their desire to (a) stay independent, avoiding a formal coalition and (b) provide enough stability for a full three year term, enabling one or other side to form a minority government with some stability. I found this quote from Oakeshott interesting. Along with a single Greens member, there is likely to be a fourth independent, Andrew Wilke, a former Greens member, who was also a whistle-blowing intelligence analyst under the Howard government.

In addition to these five, it is also important to note (and few media outlets seem to have mentioned it) that the sprawling WA electorate of O'Connor (which covers a greater area that NSW), saw not simply a surprise defeat by the outspoken and controversial Liberal veteran Wilson Tuckey, but a victory by a member of the National Party of WA, who are affiliated with the national National Party, but maintain a distinct party structure from them. In particular, they do not recognise a formal Coalition with the Liberal Party and so just as the Greens member is likely to side with Labor yet not enter a formal coalition, so Tony Crook of O'Connor is likely to side with the Coalition, but not be a formal member for the Coalition. There is no love lost in WA between the Nationals and the Coalition and Crook has indicated he is willing to negotiate with the ALP.

Speaking of the National Party (and for a moment lumping the WA Nationals in with the rest), that they can gain seven seats with 3.87% of the national vote, while the Greens gained just one lower house seat with 11.39% does make one wonder about the relative merits of arguments for proportional representation. Of course, Australia already has PR in the Senate and so the Greens' balance of power there is an indication of their current popularity. Whether it is a short term punishment of the ALP or indicative of longer term trends towards a greater consciousness of ecological issues remains to be seen.

Whatever happens, despite (or perhaps because of) a deeply disappointing and cynical campaign in which both major parties ran very negative campaigns almost entirely devoid of any global or long term vision, Australian politics just got more interesting.

USA fail

Why the failure of the US Senate to pass a climate bill is worse than the failure at Copenhagen
The Copenhagen Conference on Climate Change was largely a failure, but this was not particularly surprising given the huge range of factors working against an fair, ambitious and binding deal.

However, the recent death of any chance of the US Senate passing (or even voting on) a much watered down climate bill anytime soon was a genuine and more significant failure. This is not only because the passage of a US bill would be the single greatest factor increasing the likelihood of a global deal, but mainly because the opportunity was so much more achievable. Think about the constellation of factors making it possible: a president who had included it as a major part of his campaign, Democrat majorities in both houses, an ever more convincing scientific body of evidence, a catastrophe in the Gulf of Mexico highlighting the dangers of addiction to ever more difficult to obtain fossil fuels, a bill that had largely been crafted by a bipartisan team, a core strategy invented by conservatives (i.e. using trading schemes for managing environmental issues), in the middle of what has been so far the hottest year on record at the end of the hottest decade on record, after having repeatedly set the highest twelve month running average on record, with the greatest sea ice volume anomaly on record (plus a range of other climate related records) and a US population who want a price on carbon. Somehow, with all that going for them, they still managed to drop the ball.

If we want to stay below 450 ppm of CO2 (giving only a little better than a 50/50 chance of staying below 2ºC, and so only heavy damage), then each year of delay increases the price of achieving such a risky target by a staggering US$500,000,000,000. Yes, five hundred billion US dollars for each year of delay, because each year we wait, more infrastructure is built that will last for about forty or fifty years. Once another coal-fired power plant is built, it becomes a sunk cost, meaning that those costs are unrecoverable and will most likely continue to be used to the end of its life unless the price of carbon becomes astronomical.

So why did the bill fail? Brian Merchant argues there were seven things that killed the climate bill (in ascending order of importance):

7. Woeful media coverage.
6. Shortsighted action by the US Chamber of Commerce.
5. Archaic fillibuster rules in the Senate (a supermajority is not a constitutional requirement).
4. Barack Obama didn't get it and didn't get into it.
3. Fossil Fuel interests spreading misinformation.
2. Centrist and Coal State Democrats.
1. The Party of No: Republicans deciding that they would rather be opposed to anything from the other side than be willing to seek good solutions together.

The bill in question was far from perfect, and I've voiced my concerns with aspects of cap and trade before, but in this case, something probably would have been better than nothing, especially since it would have introduced a mechanism that could have been ramped up as more people get it. As it is, it looks like China might have to take the lead.

Obama was never going to be the messiah, but when the history of his presidency is written in decades to come, I wonder whether his other achievements will be overshadowed by this episode.

So what should the church be doing? Same thing as always, but more so.

On governments and regulation

Jeremy Kidwell is a fellow PhD student here at New College working on a theology of manual labour. He has just started a new blog series on governments and regulation in which he will mount an argument against carbon trading schemes, "but not for the reasons you might be expecting". I am sure it will be worth a read.

CPRS: Breaking the deadlock?

Disclaimer: I am no economist nor an economist's son. All opinions expressed to be taken with a pinch or three of salt.

The current debate in Australia over the Government's proposed Carbon Pollution Reduction Scheme (CPRS) seems bogged down, and has even reached a point where it has given Kevin Rudd the necessary trigger to request a double dissolution (though he seems unlikely to use it just yet). The danger is that the CPRS may continue to be blocked or watered down by the Opposition, delaying any significant carbon policy from Australia and contributing to the broader global impasse reached at Copenhagen. The even larger danger is that it might be passed in something like its current form and pitiful targets will be locked in for decades.

Back in 2007, "Professor Ross Garnaut was commissioned by all of the governments of Australia’s federation to examine the impacts of climate change on Australia and to recommend policy frameworks to improve the prospects of sustainable prosperity."[1] The Garnaut Climate Change Review was published in late 2008. Chapter Fourteen of the Review recommended that for an initial period there ought to be a fixed price on carbon at AUS$20/tonne (in 2005 dollars) without offsets or international trading. This was to reduce uncertainty during the period in which an international agreement was being negotiated and would give businesses something firm from which to begin their necessary modifications. Such a fixed period was to start in 2010 and cover until at least the end of the Kyoto Protocol in 2012.

I think that as an interim measure, this suggestion has merit. Undoubtedly, it is not perfect, but it may be a way of breaking the current deadlock and of avoiding a situation in which Australia ties itself to weak targets. I'm pleased to hear that the Government has entered into serious negotiations with The Greens about this suggestion, since it might represent the best that it is currently possible to do, while not closing down future improvements.

UPDATE: The dangers of carbon uncertainty from a US perspective.

Flashmobs for climate action

Next Monday at 1pm, I'm joining a climate change wake-up call flashmob event in Edinburgh. It’s organised by Avaaz and is one of almost two thousand events taking place on September 21st all across the world to demand a strong global climate treaty.

Here is the Avaaz description of the idea:

Flashmobs are fun, peaceful demonstrations in which participants assemble suddenly in a public place, blending in with the crowd, perform an unusual action simultaneously for a few minutes, and then quickly disperse.

On the morning of September 21, everyone participating will set our alarms and gather together a few minutes before the assigned time, at locations chosen by the hosts in our local area. When our alarms go off, we'll hold up our mobile phones and find each other, and then, as a group, call our leaders to urge them to go to Copenhagen and sign a fair, ambitious, and binding climate treaty this year. We'll make as much noise as we can, while recording videos and photos for the UN presentation -- then head back to work, school, or home to upload the results!

Want to join me? Here's the link. And here are the details:

When: 21st September, 2009 at 1:00pm
Where: St Andrews Square, Gardens -- Edinburgh, Edinburgh, SCT

Not in Edniburgh? Find one near you.

By themselves, protests like this might not change much. And personally, I'm fairly downbeat about the likelihood of Copenhagen resulting in an agreement over ambitious global targets. I'm also not persuaded that carbon trading is some kind of magic bullet or even the best way forward. Nonetheless, the size and success of symbolic actions like this help to keep ecological issues on the political agenda, which is one small good thing.

Railroading the discussion

Did you know that rail transport is five times as energy-efficient as road? Or that air transport takes about 420 times the energy of rail to move the same amount of weight? And so why would we give road travel an artificial boost with a promise of cent-for-cent excise reduction to cover any rise in petrol under an emissions trading scheme? Quite apart from being a disappointing cave-in that sends precisely the wrong message (the Government will protect you and your car), it also means that rail freight will be disadvantaged over road. In their wisdom, our leaders obviously consider it to be a necessary political sweetener to wash down the bitter pill of the end of our energy-intensive lives.

When there is soon national hand-wringing and finger-pointing over QANTAS needing to be bailed out or being bought out in the coming consolidation of air carriers, spare a thought for poor underfunded RailCorp and CityRail.
H/T Doug for the statistics.

Peak Oil continues to go mainstream

On the front cover of today's SMH: a CSIRO-led study predicting petrol could be at $8 per litre within the next ten years.

This issue will soon become far bigger economically (and so politically, socially, personally and spiritually) than an emissions trading scheme or even the global credit crisis and yet it has received far less attention than either. If you're still new to the term "Peak Oil", then check out this introduction.

Before you start calculating how much it will cost to fill up your car for $8 a litre, or working out how to upgrade to a hybrid, spend a little time thinking what such oil prices could do to the cost of food and hence to the political stability of most developing nations. Think also about the superpowers' efforts to secure supplies from the Middle East.

We need a far bigger solution than cutting taxes by 5c/litre.