The Bullroarer - Thursday 6 December 2007

Courier Mail - Rate and fuel rises hit urban fringe

PEOPLE living on Brisbane's fringe are the worst affected by increasing petrol prices and interest rates. Griffith University's index of Vulnerability, Assessment for Mortgage, Petrol, Inflation, Risks and Expenditure (VAMPIRE) showed that between 2001 and 2006 the vulnerability rose for people in outlying areas. "Areas that were not populated in 2001 that have since been developed all ended up with the highest vulnerability rating," researcher Jago Dodson said.

The Age - The global warming battle: united we stand, divided we fall

They call it the prisoner's dilemma. A group of you are captured, separated and individually interrogated. When your turn comes, you don't know what those interrogated before you have said. Do you confess, at the risk of giving away the evidence that could convict you? Or deny it, at the risk of increasing your penalty if others have confessed?

You might wonder what this has to do with climate change, and the meeting under way in Bali to launch negotiations for a post-Kyoto agreement. Plenty, says Ross Garnaut, the man commissioned by Kevin Rudd and state governments to report on what should be Australia's policy on climate change.

Twenty years ago, Garnaut was Rudd's boss. At 41, having invented the resources rent tax and been economic adviser to Bob Hawke, he was ambassador to China, while Rudd was his bright young Mandarin-speaking workaholic. They have kept in touch, and Garnaut, a man of sharp mind who was shunned by John Howard for his Labor ties, relishes being back in the policy arena.

Last week he gave his first speech setting out his views on the issues (on the net at In short, his views are that:

* Climate change is "a worse and more urgent problem than we thought", requiring firm, quick action.
* There are "diabolical" policy challenges in getting effective international agreement, partly because "the incentives are all wrong".
* The world has the technological and economic ability to stop global warming.
* There might never be one big international agreement, but a series of commitments.
* The costs of action are relatively small.
* The biggest challenge is to design an emissions trading system that cannot be captured by vested interests.

To sum it up, Garnaut is confident we could solve the problems, at little cost : it "might mean that Australia's GDP would treble by 2051 rather than 2050" : but he is not confident that we will.

Crikey - Penny Wong's really tricky Bali brief

Prime Minister Rudd has put his new Climate Change Minister Penny Wong under the pump. Her mission, should she choose to accept it, is to unite developed and developing nations when it comes to future emissions controls. ...

This is no mean feat. In fact, it's a herculean task. Factor in the competing interests of developed nations like the US who have thus far resisted binding targets, and developing nations like China and India who point out the unfairness of hampering the economic growth that promises to lift millions of people out of poverty. Trying to end the Mexican stand-off between the two has thus far alluded any UN talks and no one's holding their breath at Bali. ...

Here's a quick guide to Developed v Developing countries for an indication of just how big Rudd's ambition, and Wong's task, is ...

IHT - NZ government introduces legislation to ban power plants that burn fossil fuel

The Australian - Rudd's warm Kyoto reception

SMH - I can unite world on climate, says Rudd

The Australian - Rudd caught in Kyoto split

The Australian - We won't block new climate pact: US

SMH - Now it's time to look beyond Kyoto

SMH - Rudd backs deep cuts by 2020

AFP - Climate campaigner's road from 'raving idiot' to Australian of the year (via Energy Bulletin)

Energy Bulletin - An Open letter to Kevin Rudd, Australia's new Prime Minister

The Australian - $100bn in carbon futures trading coming soon

Mr Collins said he expected that carbon emission permits to be allocated and auctioned over the first 10 years of any Australian scheme could be worth about $105 billion. He estimated that it would take three to five years for such a futures market to fully develop.

Mr Collins said the Government's move to sign the Kyoto Protocol this week would speed the development of a carbon emissions trading scheme in Australia. "It means that things will move faster from here on. (Signing Kyoto) also means that there are likely to be linkages for the scheme. There would be fewer linkages for a stand-alone scheme."

Mr Collins said any futures market in carbon emission permits could not begin until the design of the scheme was "locked down in legislation". He said that once that happened, a futures market could be operational within weeks.

Mr Collins said one of the lessons of the European Union's carbon trading scheme, which began in January 2005, was the importance of linking the official government-backed emission trading register with a settlement service such as Austraclear. "The government registries (for trading permits) will need to interface with the financial market for settlement to take place," he said.

SMH - Renewable energy doesn't have to hurt: report

The Australian - Tap into climate change

On the ASX, investors have had a relatively small degree of choice in the renewable energy sector, particularly if financial viability is applied as a criterion. Standouts of the local sector are Babcock & Brown Wind Partners (ASX code BBW, market cap $1.4 billion), which has investments in wind power in Australia, Germany, France, Spain and the US; Viridis Clean Energy (VIR, market cap $173 million), which has investments in wind power in Germany and Britain, power from landfill gas in Britain and the US, and natural gas and process gas (gas captured from industrial processes) in Italy; and Energy Developments (ENE, market cap $530 million), which operates power generating capacity of more than 480MW in Australia, Britain, the US, France, Greece and Taiwan, sourced mostly from landfill gas (gas created when micro-organisms cause organic waste to decompose in landfills).

There is also GRD (GRD, market cap $400 million), which has also established waste-to-power technology at its operating plant at Eastern Creek, Sydney, and is building two plants, with a processing capacity of 600,000 tonnes a year, in Lancashire in England. GRD is not a pure exposure, as its largest operating division is its resources engineering business.

After that, the market has a group of emerging technology situations, like the "hot rock" geothermal energy companies, and a cluster of biofuel companies struggling in the wake of drought-induced rises in the price of their feedstocks.

Crikey - Water restrictions don't work, here's another idea

The Age - Where to water

SMH - Parking four times cheaper for low-emission cars

SMH - Squaring up for an urban overhaul

SMH - Great balls of ire as art tackles warming

NZ Herald - Oil and gas zones ready to be explored

SMH - Battle over coal port access hots up

Peak Energy - The history of Iraqi oil

Peak Energy - Show me your anthrome

Leeches lining up.

There's almost too much here to take in but just to take one, the $100bn carbon credit market. This proves Garnaut's point about being swayed by vested interests. I'd also recall Richard Feynman's quote sometimes on the main TOD banner; it said in effect humans can fool themselves but they can't fool mother nature.

I believe that the majority of claimed carbon offsets are exaggerated, mistimed, irrelevant or fraudulent. Only 'debits' ie permits should be traded. Please Mr Rudd, don't let the leeches suck the vitality out of the system before it even starts.

I've been saying for years that carbon taxes are much better than cap'n'trade, but to no avail (imagine my shock).

The problem is that cap'n'trade attracts financial players, who add their weight to the push to do something about global warming (which is good).

The bad thing is once that market is active (and huge) we'll face institutional incentives to keep carbon quotas fixed, not keep reducing them. Then we'll have the fossil fuel industry and the financial industry to content with. Sigh.

I live in hope the tech industry's desire to eat the energy industry will eventually win the day...

Do you know how cap 'n' trade would apply to the transport sector?

Firstly a political decision would have to be made to include liquid fuels (petrol, diesel, avgas, auto-LPG etc) in the scheme. The carbon intensity not only varies by fuel type but even with petroleum grades(eg Tapis) but it could be say 1.5 tonnes of CO2 per 1 tonne or 7 barrels of crude. The carbon spot price cannot be known in advance but say it was $40 per tonne of CO2 that might work out at say 4c per litre. Other government price influences include fuel excise, GST and local subsidies.

On the other hand the carbon charge in light rail powered by coal fired electricity should work out a lot cheaper per passenger-kilometre. An interesting point is that if the cap is strict (ie no whacky offsets) then using it up early in the year could make the cost of all fossil fuel skyrocket including transport. That hasn't happened because existing schemes are lax.

It seems then that all fuel users would be competing on the same terms, with no regard for the purpose. e.g. emergency services, tradesmen, couriers would be competing with road racers, Sunday drivers, joy flight operators and petrol heads for ever diminishing quantities of more expensive fuel.

Whoever has the deepest pockets wins.

Doesn't some form of allocation or rationing system seem preferable?

I agree. We could end up with carbon debit cards that allow say;

  • 1 interstate flight per year
    20L per week of petrol
    5 khw per day of peak period electricity
  • Any extra carbon allowance will have to be bought or penalised.

    I think we have to discriminate between intended uses. A farmer needing diesel to run his business should be treated differently to big truck racers.

    Discretionary usage by private persons would be at the bottom of the pecking order. Sob, no more interstate football trips for me.

    It's a case where the unrestricted operation of the free market would give sub-optimal results.

    If a debit card comes about think of the animosity caused if the govt continues to encourage population growth and all existing people's allowances are reduced in addition to the expected depletion rate.

    I don't see why a farmer should get it cheaper than a regular person. That's what we do with water - the more you use, the cheaper it is. And that's got us our current water shortages, which I don't think is a good result.

    A relatively small carbon tax could actually raise quite a lot of money without common people even noticing, while large carbon users could with small efficiencies make up for it. For example, the average emissions per Australian are about 25 tonnes of CO2e annually. $0.01/kg would raise

    25,000 x 0.01 x 21,000,000 = $5.25 billion

    We could raise about half that simply by taxing the major emissions causers, for example it'd be about $0.01/kWh for coal-fired stations, $0.022/lt for petrol, $0.25/kg for meat, and so on. This would be charged at the retail end of things, like the GST. We could raise from this about $3 billion annually.

    With that money, we could invest in renewable energy, mass tranist and so on. And that amount - a couple of hundred bucks per Aussie - is not going to bankrupt any common people, while it will force large companies to seek efficiencies in fossil fuel and electricity use.

    We'd just raise the tax by a couple of cents a year. Pretty soon everybody would be clamouring for renewable energy, more mass transit, and so on. The market demand combined with the carbon tax-generated subsidies would deal with things very effectively.

    I agree - a steadily increasing carbon tax is the engine that can solve both global warming and peak oil (given enough time).

    I like the idea of a carbon tax to reduce demand, but if there is not enough petrol to go around how can you justify price being the method of allocation rather than need?

    Should the Porsche hill climb club have preference over Meals On Wheels?

    Food rationing in war-time seems quite morally defensible.

    Do you think the military, police, emergency services etc will bid in the open market for ever diminishing supplies at ever higher prices? I think not. They will have first bite of the cherry and the scraps will be thrown to the public chooks.

    I stick to my point that some uses are more important than others and we must discriminate on that basis rather than merely fighting it out in the market place. The good guys don't always have the most money.

    The thing is that if you have a relatively small tax, it hits small users lightly, and heavy users heavily. Petrol already jumps up and down five cents just on a weekly basis through the strangeness of the servo market, so if you've a carbon tax of five cents, the people who use 45 litres a week won't even notice, but the people who use 450 litres or 450,000 litres certainly will. So Meal on Wheels and Bob driving to his minimum wage dishwashing job will be fine, but taxi drivers and trucking companies are going to start looking at alternatives and efficiencies.

    Rationing's quite morally defensible, but I don't see that it's needed right now. And the flipside to rationing (or high taxes) is the creation of a black market - and black markets favour those who are already wealthy, so again this time you really do get the problem that the Porsche driver gets fuel but the Meals on Wheels people don't.

    I do think it's likely that government services will be given preference over private citizens in a limited supply situation. But again, that's a problem with rationing, not with carbon taxes.

    And we're talking about what we think should happen, not what we think will happen. Neither a carbon tax nor rationing is politically likely.

    Rather, I think that as the oil supply dwindles and its price rises, governments will actually stop taxing it and start subsidising it to try to keep the price low and the public's howls of outrage quietened. The prices will rise nonetheless and we'll have a recession, with many cities in the West looking a lot like a good chunk of Detroit, with abandoned homes and factories. Some cities will do better, and manage to get a good supply of fuel to keep everything going, and shanty towns will build up on the outskirts of these cities.

    But we're talking about coulda woulda shoulda, not about willya.

    5 khw per day of peak period electricity

    Leaving aside my fundamental disagreement with this whole line of thought, you should allow for green power here.

    I happily pay extra for 100% green power, and as a result I would firmly resist any sort of rationing of electricity - I'm not emitting any carbon and as far as I'm concerned I can use as much power as I like, when I like.

    (Before you hurl any abuse my way I'll note that all my appliances are as energy efficient as I can get, and I very rarely run the air-con - but this is as much an idiosyncracy as it is something I think I need to do).

    With what line of thought do you fundamentally disagree?

    The idea that rationing anything actually works - especially when there are substitutes available.

    Rather than focus people's attention on trying to grab a share of a fixed or dwindling cake, I prefer to make them aware of other alternatives.

    In this case, while I believe oil supplies are limited and annual production will start to decline in the not too distant future, I also believe there is a lot of energy available from alternatives, and I'd rather see the attention of people, government and corporations directed towards harnessing these.

    I think the psychology of this works out a lot better in the long run...

    Anyone who thinks they have some ideas to contribute towards the 2008 Budget should visit: