The Oil Drum - ANZ

Climate Under No Threat, Sceptics

2012-02-16T03:25:00.001+11:00

IMPORTANT UPDATE at end

Well at least that's how the cognoscenti funded by the Heart Land Institute in the US would have as believe. Notable among them is Australias own Bob Carter. The Fairfax press reports...

Scientist accepts 'cash for climate'
Ben Cubby
February 16, 2012

A PROMINENT Australian scientist has rejected as offensive any suggestion he is doing the bidding of a US climate sceptic think tank that is paying him a monthly fee.

Confidential documents leaked from inside The Heartland Institute, a wealthy think tank based in Chicago and Washington, detail strategy and funding for an array of activities designed to spread doubt about climate change science, paid for by companies that have a financial interest in continuing to release greenhouse gases without government interference.

Among the recipients of funding is Professor Bob Carter of James Cook University, a geologist and marine researcher...

The documents show Professor Carter receives a ''monthly payment'' of $US1667 ($A1550), as part of a program to pay ''high-profile individuals who regularly and publicly counter the alarmist message''.

Professor Carter did not deny being paid by The Heartland Institute, but would not confirm the amount, or why it was paying him.

''Institutions or organisations simply pay for services rendered. In the same way that an architect is paid for their work, so are scientists. What they may make any payment to me for, I'm not discussing with anybody outside of my family.''

More than $US20 million had been spent funding and co-ordinating activities of climate sceptics and bloggers since 2007, the documents suggest.

Other cash recipients include Anthony Watts, a US climate sceptic blogger, who is to receive $US90,000 this year. Programs for funding include school curriculum modules that teach science from a climate sceptic perspective.

The documents discuss strategy to ''keep opposing voices out'' of the media and co-ordinate efforts with other ''groups capable of rapidly mobilising responses to new scientific findings, news stories, or unfavourable blog posts''.

Also at the Sydney Morning Herald and Crikey.

The documents were originally published on DeSmogBlog which has followed up with a post detailing a report by John Mashey titled Fake science, fake experts, funny finances, free of tax. Specifically,

...this new report is painstakingly detailed and carefully referenced throughout. It both corroborates and is corroborated by the leaked Heartland documents, which reinforce Mashey's conclusion that Heartland is a for-profit public relations and lobbying firm that is operating with non-profit status by misrepresenting the nature of its activities in its own tax filings.

In totally unrelated news The Canberra Times reports that SA Senator Corey Bernadi wants the CSIRO to redact some of the information it is handing out to kiddies in its climate change kit.

Climate change kit for kids 'apocalyptic'
Rosslyn Beeby, 15 Feb, 2012

The CSIRO will review its new climate change education program for schools following claims made in Senate estimates today that the material is biased and frightens children by offering ‘‘an apocalyptic scenario.’’

South Australian Liberal Senator Cory Bernardi said the CSIRO’s Carbon Kids education kit was ‘‘designed to scare kids’’ about future impacts of climate change.

It painted a frightening picture for children of a world where rising temperatures had created jobs losses and food scarcity, he said. The kit had ‘‘cherry-picked facts’’, offered no discussions of alternative views, and ignored positive steps such as future development of green jobs.

The Good Senator attended the Heart Land Institute sponsored “4th International Conference on Climate Change”. This from Crikey is an interesting read.
News.com also has this story. I liked the question in the poll accompanying the story.

Hot under the collar
Should schools teach the controversy?

What controversy?

Ian Plimer has had his totally unquestionable ethical scientific stance rewarded.

Rinehart appoints daughter, climate sceptic to key board
The Australian
February 16, 2012 12:00AM

AUSTRALIA'S richest person, Gina Rinehart, has continued to reshape the management of her business empire, appointing climate-change sceptic Ian Plimer and favoured daughter Ginia as directors of a company linked to a mine that generates annual revenues of $2 billion.

And even if the climate under no threat sceptics are wrong then there is always clean coal and CCS.

Clean coal 'unviable for two decades'
Michael Atkin, ABC News Online February 15

There will be no business case for developing clean-coal power plants in Australia or overseas in the next 20 years, according to a key Federal Government adviser.

National Low Emissions Coal Council chairman Dick Wells says even the introduction of a carbon price in July will not entice the coal industry to invest the billions required for clean-coal plants because it makes no financial sense and punishes shareholders.

He says carbon capture and storage (CCS) will not play a major role in combating dangerous climate change unless the Gillard Government dramatically increases industry assistance.

"If you want to wait for the carbon price to rise to levels where these will be commercially viable we're probably into the 2030s," Mr Wells said.

The Gillard Government has a $1.68 billion CCS Flagships program to get major projects off the ground and the coal industry's Coal 21 fund has committed $289 million to projects so far.

But the potential of CCS remains largely unfulfilled.

"We're a long way off it (the 2050 targets)," Mr Wells said.

The National Low Emissions Coal Council estimates $10 billion to $17 billion is required to have one industrial-scale, clean-coal power station and a portfolio of smaller projects operating commercially by 2020.

The CCS Flagships program originally had deeper pockets, with $2 billion pledged. However, its funding was reduced to $1.68 billion last year.

Just $57.26 million has been spent so far but Mr Wells defends the need to move slowly.

"I don't think there is any embarrassment about not spending the money too fast," he said.

No. Probably just as well, because the super tax that so enraged the mining industry last year may not return much to the real owners of the resource anyway.

Mining's small change
Peter Carey and Neil Fargher
February 16

Flaws in the mineral tax mean Australia may profit little from its resource wealth.

COULD Australia end up with little to show for its mining boom - as an echo of what happened to Nauru once its considerable phosphate wealth was exhausted?

Close examination of the proposed minerals resource rent tax reveals serious flaws that could leave the federal government well short of the forecast revenue. It is conceivable that some large and highly profitable mining companies could reorganise their affairs to pay little or none of the tax.

The first and most obvious shortcoming of the MRRT, in terms of its revenue potential, is that it applies only to coal and iron ore. All other minerals are exempt.

The main problem is that the tax is based not on an objective measure such as tonnes of material mined, but on ''super profit'' (mining profit less allowances). Profit at the best of times is a highly flexible concept that can allow accountants to apply creative techniques to minimise a company's tax obligations. With the MRRT, the incentives and opportunities for creative avoidance appear even greater than those applying to company tax.

The minerals tax is not based on audited company profits from statutory accounts, but on a narrow portion of profits from particular mining activities. It requires the taxpayers (that is, the mining companies) to determine the amount of proceeds and costs that relate to these activities.

This reliance on the miners themselves to determine the appropriate proceeds and costs creates a significant incentive to estimate profit from taxable activities in the most tax-efficient manner.

UPDATE to main story.

Scientist Peter Gleick has publicly stated that he obtained the documents from The Heartland Institute by impersonating a board member (presumably over the phone). He regrets taking this unethical step but states he was driven by frustration over the constant barrage of disinformation from such outfits as The Heartland Institute. Since the documents released were instantly denied (it's a reflex action) it probably became necessary to take this action if only to prove that the documents did in fact originate from The Heartland Institutes own email server. While this damages Peter Gleicks credibility, his simple deception is a different class of unethical breach from the hacking theft perpetrated at CRU. Climate denialists baying over ethical breaches need chew on that before publicly exposing themselves as hypocrites. Not that it will stop them as a brief survey of blogs and newspapers (also just blogs) will reveal.

The Origin of the Heartland Documents
Peter H. Gleick 20/2/12

...in a serious lapse of my own and professional judgment and ethics, I solicited and received additional materials directly from the Heartland Institute under someone else's name.

I can explicitly confirm, as can the Heartland Institute, that the documents they emailed to me are identical to the documents that have been made public.

Whistleblower Authenticates Heartland Documents
DeSmogBlog

Climate scientist Peter Gleick has acknowledged that he was the person who convinced the Heartland Institute to hand over the contents of its January Board package, authenticating the documents beyond a doubt and further exposing the disinformation campaign Heartland has pursued in the last week, trying to discredit the information.

Without condoning or promoting an act of dishonesty, it's fair to say that Gleick took a significant personal risk - and by standing and taking responsibility for his actions, he has shown himself willing to pay the price.

Climate scientist Peter Gleick admits he leaked Heartland Institute documents
The Guardian, 21/2/12 (<- yesterdays word was palindrome)

Peter Gleick, a water and climate analyst, says he was blinded by his frustrations with ongoing attacks on climate science.

A leading defender of climate change admitted tricking the libertarian Heartland Institute into turning over confidential documents detailing its plans to discredit the teaching of science to school children in last week's sensational expose.

The admission – nearly a week after Heartland's financial plans and donors' list was put online – looked set to further inflame the climate wars, in which a network of fossil fuel interests, rightwing think tanks and politicians have been working to block action on climate change.

Power in the rising sun

2012-01-27T00:00:00.000+11:00

The theme behind these stories is the energy situation in Japan since the Fukushima disaster last year. In the aftermath of the destruction a report was quickly compiled for the Japanese Govt. outlining the possible worst case scenarios and actions that might need to be taken.

Report on Japan nuclear crisis said millions might need to leave homes; gov’t kept it secret
Associated Press, January 25

The Japanese government’s worst-case scenario at the height of the nuclear crisis last year warned that tens of millions of people, including Tokyo residents, might need to leave their homes, according to a report obtained by The Associated Press. But fearing widespread panic, officials kept the report secret.

It also casts doubt about whether the government was sufficiently prepared to cope with what could have been an evacuation of unprecedented scale.

Article continues...

And it was called 'Yellow'

2012-01-26T00:00:00.000+11:00

Nearly every month there are fresh articles reporting news of further possible advances in solar technology. Most research aims at either improving the efficiency of the cells by capturing more of the electromagnetic spectrum. Either some modification of the crystal structure modifying the electron band gap or splitting the different wavelengths so that they are captured by semiconductors selective for these specific wavelenghts or by using organic dyes to help capture photons.

Other approaches aim to reduce the cost of solar by using less efficient systems that can be cheaply applied on large easily manufactured surfaces that can be incorporated into existing buildings and construction systems.

However, I'm not so sure that re-marketing Cadmium Yellow as "a paste of semiconducting nanoparticles called solar paint" is the smartest approach.
Article continues...

Australian Government tries to hide its own peak oil report

2012-01-23T07:36:00.002+11:00

re-posted from oilshockhorrorprobe

The Daily Telegraph has revealed how the Australian government has attempted to suppress its own report on peak oil. The response from the New Zealand government had been equally secretive and obfuscating.
Article continues...

Hope spins eternal

2012-01-21T19:26:00.001+11:00

It's well past time to start the New Years posts...
The Australian had to mine through several issues of Nature Climate Change to find a "feel good" climate change story.

Coral breakthrough offers climate hope
CORAL reefs may be much better able to adapt to rising sea temperatures due to climate change than previously thought, according to a breakthrough Australian discovery revealed yesterday.
According to PhD student Emily Howells, the findings demonstrate the potential for corals to adapt is more widespread than previously thought.

Further research is under way to establish the speed at which coral can adapt to rising water temperatures, and whether it will be fast enough to survive the impact of climate change.

However, a few paragraphs into the story...

"The algae we are working on occurs up and down the Great Barrier Reef and we are finding that even though it is the same type of algae, those in warm locations have adapted to warm water temperatures and those that are in cooler places, over many years, have adapted to cooler temperatures," Ms Howells said.

"We really don't know about their rate of adaptation to temperature change."

The title of the paper in the December issue of Nature Climate Change is far less dramatic.

Coral thermal tolerance shaped by local adaptation of photosymbionts
(Published online 18 December 2011)
...
Here we demonstrate divergent thermal tolerance in a generalist Symbiodinium type from two different thermal environments.
...
Juvenile corals associated with Symbiodinium from the warmer reef grew rapidly when exposed to 32 °C, yet underwent bleaching and tissue death when associated with Symbiodinium from the cooler reef. These results demonstrate that Symbiodinium types can adapt to local differences in thermal climate and that this adaptation shapes the fitness of coral hosts. If Symbiodinium populations are able to further adapt to increases in temperature at the pace at which ocean climates warm, they may assist corals to increase their thermal tolerance and persist into the future.

Emphasis mine.

It's great that this fundamental biophysical research demonstrates that a generalist Symbiodinium has developed tolerance to raised water temperatures, and that it might therefore be possible for coldwater corals to adapt to these conditions. But the abstract has the usual cautious caveats: might, if, could, may.

Will they also be able to do so under the combined stress of acidification?

Of course even a cursory look at the tables of contents from the surrounding issues shows that this "breakthrough" is just one very small glimmer of "hope" in the, most probably, damaging changes projected for the future.

Xmas Message

2011-12-25T00:52:00.002+11:00

Posting during the holiday period will be light (or non existant) until the New Year.
After two years out of Oz I'm fully enjoying a short stay at home with family.
On behalf of all contributors I wish you all a safe and happy XMas.

Base Motives

2011-12-21T03:05:00.000+11:00

The Age has an interesting piece of pop psychology about why 'sceptics', in the face of all argument to the contrary, continue to follow the road paved with gold, arguing that...

Climate sceptics might just be captive to basic emotions

Paul Biegler
December 20, 2011

Instant gratification is a powerful, but flawed, human motivator.

If you are down a blind alley searching for that perfect Christmas gift for your climate sceptic friend, you could do worse than slinging them a book on Emotional Intelligence. Why? Research is mounting that your friend is the victim of one of the brain's many computing glitches. More particularly, [they have] been derailed by an emotional response that is at best unhelpful and at worst catastrophic. [They have] capitulated to the pleasure of the here and now.

In his recent book Brain Bugs, psychology professor Dean Buonomano summarises a wealth of evidence that when it comes to putting off rewards, many of us suck. In the most famous study, back in the 1960s, Walter Mischel sat unsuspecting toddlers at tables laid with a single marshmallow. They could eat it now or receive an extra one if they waited a short time. Some rug rats unceremoniously demolished the treat without delay, while others exercised supreme self-control and resisted temptation until the appointed moment. Follow-up of the youngsters two decades later found those who showed restraint had better college admission scores. Other studies have linked weakness of will with obesity and addiction.

This is an example of temporal discounting, where greater rewards in the future are tagged with lesser value in virtue of their temporal distance.

Adults remain prone to temporal discounting. Given the choice of $100 now or $120 in a month, most take the money and run, sacrificing what amounts to an annual return on their one-month investment of 240 per cent. How could we be so dumb?

Climate scepticism is a strong candidate example of temporal discounting. A truckload of science supports global warming and its attendant perils. Yet, addressing this temporally far-flung threat, while generating distant benefit for our planet's inheritors, will cost us real pleasure now.

The task is difficult, not least because many of our emotional decisions are backed by post hoc - but aberrant - rationalisation.

In the climate realm, fabrication is also rife. Enthralled by their emotional biases, sceptics mouth desperate appeals to the corruptibility of scientists, or to the fallibility of climate prediction models.

It's one thing to claim that the work of an individual scientist or even a team is wrong. But so called sceptics essentially make the amazing claim that ALL climate scientists are wrong.

Comment section after comment section of newspapers and blogs are filled with poorly researched (I'm being generous) claims asserting that this or that aspect of climate change has been overlooked.

Are all scientists so dumb? Not in my personal experience.

To cover this obvious rebuttal, 'sceptics' make a further assertion - climate scientists have become trapped in so called 'group think'. No evidence for this is provided other than the fact that climate science (and science in general) disagrees with the sceptic position.

Imagine the accused standing up in court and stating "Obviously, Your Honour, the verdict of the Jury can not be trusted as they have become trapped by group think".

Pop psychology is perhaps just slightly more informative than pop stupidity - as de-constructed here.

The Durban UNFCCC international climate negotiations

2011-12-07T21:16:00.002+11:00

In which Robin Johnson's Economics Web Page discusses the Durban UNFCCC international climate negotiations through a historic lense of the Second World War and the Rio 1992 Earth Summit.

In a very considered comment on the Hot Topic blog , David Lewis questions whether the Durban UNFCCC international climate negotiations can come up with a binding treaty that effectively reduces greenhouse gas concentrations, given the existing public will.

"I don’t see how negotiations on an international climate treaty can proceed to an agreement that would actually stabilize the composition of the atmosphere at a level that would not cause [dangerous anthropogenic interference] without more demand for such an agreement coming from the global population."

David Lewis compares the global demand for action in the international climate change negotiations with the changing British attitudes to 'Total War' with Hitler's Germany in 1940. Lewis implies that in the climate change negotiations, each government is "trapped in a circumstance where it can’t generate the national will that’s necessary."

In terms of the purposes served by international climate change negotiations, I would go a step further than that thoughtful comment from David Lewis. I say that the negotiations have never had the goal of producing a binding treaty to stabilise greenhouse gas concentrations. Governments instead use the negotiations as one of their reasons for not reducing emissions of greenhouse gases and for continuing with 'business-as-usual'.

Let me summarise my contention using another reference to the Second World War.

Q. Whats the difference between Neville Chamberlain's negotiations in 1938 with Hitler in Munich that lead to the annexation of Czechoslovakia and the UNFCCC international climate change negotiations?

A. Neville Chamberlain only went once to Munich.

In making my argument I am influenced by a paper my late father Robin Johnson (as in Robin Johnson's Economics Web Page) wrote in 1992 about the political-economy of the Rio Earth Summit. Robin uses the term "political-economy" to indicate he is considering the various groups with interests in the Earth Summit and asking what interests were served by the outcomes.

Robin noted that the expected outcomes of the Rio Earth Summit were binding signed international conventions on climate change and biological diversity. However, the actual outcome was a "framework convention...full of resounding phraseology and generalities..."

Robin says the reason for this outcome was the fundamental split between the 'North' (developed countries) and South (developing country) blocs. Neither bloc was was willing to put global interest ahead of national interests. Instead, the outcome of the Earth Summit consisted of "...non-binding language ... adopted to get all major nations to sign..."

No agreement except on non-binding rhetorical statements! Sounds familiar, doesn't it? Isn't that what's happened with all the subsequent climate change talks?

Robin's paper uncannily predicts much of the next 19 years of inconclusive negotiations. He wrote "Prior to meeting in Rio, some governments expressed concern that the Earth Summit would become a "pledging conference" where world leaders would be expected to step to the podium and announce their country's contribution." Copenhagen 2009, anyone?

Robin concluded "The challenge for those seeking action will be to channel the outcomes of Rio into concrete action by member states." Substitute "Bali 2007" or "Copenhagen 2009" or "Cancun 2010" for "Rio", and we can re-use that conclusion for all subsequent international climate change negotiations.

So, from a political economy point of view, the climate change negotiations have had the effect of ensuring that international opinion stays "behind the demand curve” for decisive action. After all, that is the function they have served in the 18 years since the Rio Earth Summit in 1992.

So I think we need to let go of the idea that the negotiations as they are currently constituted and conducted will make any useful contribution to the kind of decisive international action that is required. We need to accept that the negotiations are just another forum for business and politics as usual.

Chart of Australian Oil Consumption and Production

2011-12-05T17:22:00.004+11:00

This graph of Australian oil consumption and production is based on the BP Statistical Review of World Energy June 2011. I prepared it for a local government workshop later this week and thought I'd post it here for others to use.

Australia is one of very few OECD countries where oil consumption is still rising in this high oil price environment, albeit slowly. You can thank the resource economy for that (and the related strength of the Australian dollar).

...we just run logistical support.

2011-12-03T20:19:00.001+11:00

The Age (Dec 3) carries a story about The Basin Communities Association, wherein it is disclosed that the "association" shares its head quarters with the NSW Irrigators' Council, and that until recently the Irrigators Council chief executive (Andrew Gregson) was its President and Secretary. But don't worry...

Mr Gregson denied the association was a front group and said the irrigators "don't own it, don't run it, we are not on the board of it, we just run logistical support".

The board includes Malcolm Jackman, head of rural giant Elders; Scott James, head of Westpac's agribusiness sector; Ray Najar, a civil engineer who works in irrigation and water resource management and is chairman of the Australia Arab Chamber of Commerce and Industry; Ross McPherson, the Shepparton-based regional newspaper magnate and one of the architects of Victoria's controversial $2 billion foodbowl plan; a local Griffith irrigator and a regional financial planner.

For a moment there I was concerned that this was not a true community based organisation as implied by the name.

I guess strictly speaking it isn't a front group. The correct term is probably puppet.

Thankyou for reading for one year...

2011-12-01T00:45:00.001+11:00

Although this is just a part time amateurish effort, readership (amazingly) has doubled since TOD-ANZ launched about this time last year. Thank you. We hope the information here continues to be of some benefit/amusement to you all.

A special thanks to all contributors.

NZ Election 2011 - Praying to the Growth Fairy

2011-11-30T14:24:00.001+11:00

reposted from oilshockhorrorprobe

I had thought that my next post would be on the surreal lack of policy from any of the political parties in the Election addressing resource depletion and their collective failure to face the reality that "economic growth" is not returning.Before I could get around to it I read this excellent post from James Henderson at "The Standard", and so I am re-posting it here.
Article continues...

Why solar parity scares big utilities

2011-11-21T19:09:00.000+11:00

The Climate Spectator has another article on how renewable energy can bring power prices down - Why solar parity scares big utilities.

Thursday January 29, 2009, was a big money day for Victoria’s brown coal generators.

After a night of uncomfortably warm temperatures, and a dawn reading of 32°C, Victoria’s residents turned to their air-con and pedestal fans in near record numbers. By 9am, demand had spiked so high that electricity prices had soared to $10,000 a megawatt hour as utilities switched on every last generator they could find to meet demand. These wholesale prices are normally between $35-$50/MWh.

During that day, which reached a peak of 44.3°C in Melbourne in mid afternoon, the wholesale electricity price never fell below $1,000/MWh. For nearly four hours, it hovered around the $10,000/MWh price. The way the National Electricity Market works means that every generator switched on at that time receives that price, even though it still only cost the brown coal generators around $4/MWh to shovel the coal into their power plants. Over an eight-hour period, the state’s generators would have pocketed an estimated $550 million in revenue, near one fifth of their total revenue for the year.

It was, needless to say, an absolute jackpot for the generators. But while this was an extreme case, it was not an atypical event in the NEM. It is estimated that, on average, around one quarter of the revenue from electricity sales each year is generated from the prices gleaned from around 24-36 hours of peak production. The business models of the energy utilities depend on it. But now those models are under threat.

What, for instance, would have happened that day to electricity prices had there been large amounts of solar deployed along the eastern seaboard available to meet demand? According to modeling conducted by the Melbourne Energy Institute at the University of Melbourne, 5 gigawatts of solar PV would have been very effective in curbing peak demand. Prices would still have spiked, but not over $300/MWh, and for shorter periods. The total revenue for the day would have been just over $340 million – half of what it would otherwise have been.

This is what is known as the merit order effect: the effect technologies with a short-run marginal cost – i.e. with fuel that costs next to nothing, such as solar, wind – have on the market when they deliver electrons en masse to the grid. The overwhelming evidence from Australia and overseas is that they bring the wholesale cost of energy down, sometimes so much that the reduction in prices is greater than the cost of the subsidies that got them built in the first place. And established utilities with higher-cost fuel, such as coal and gas, don’t like it one bit, and are suddenly realising the extent of the threat to their business.

Normally, the overnight load in Victoria stands at around 5.5GW, not enough to even meet the output of all of the state’s coal-fired generators. Wholesale prices barely meet the cost of production. At 8.5GW of demand, an average high-load weekday, peaking gas generators are required and the wholesale price jumps to around $70/MWh. The coal-fired generators make money. But would this still be the case if 1.5GW of solar was available? The Melbourne Energy Institute says not; it would mean that gas-fired utilities normally brought into the grid would not be required and the wholesale price would remain at modest levels.

This might explain why state governments, in Victoria and NSW in particular, are happy to delay the rollout of renewable energy at a large scale. As noted here before, Victoria’s decision to defer an increase in its state-based renewable energy target was motivated by the potential impact of the merit order effect on the state’s coal-fired generators. Right now, the deployment in both wind and rooftop solar is at a virtual standstill because of policy uncertainty. That suits the established generators just fine.

Mike Sandiford, the director of the Energy Research Institute at the University of Melbourne, says that in the case of solar, this is simply delaying the inevitable. Grid parity – and the deployment of solar at a scale that the modeling contemplates – is coming whether the governments and the utilities like it or not, and it’s time policy makers faced up to the issues that it presents.

“We can either hide from grid parity or we can embrace the challenges,” Professor Sandiford said. “All we ever hear is that it is expensive, can’t deliver, or is not worth investing. We rarely hear of the opportunities.” The modeling of the 5GW solar scenario was extended to cover the entire 2009 and 2010 years. It found merit order savings of $1 billion in the first year and $600 million in the second, and avoided transmission and distributed investment.

As those figures show, it’s not just the generators that are impacted by this, it is the network operators as well. NEM data shows that while peak demand is growing, mean demand has plateaued and is now falling, possibly as a result of rising electricity prices, more solar PV, the merit order effect, or even the benefit of the pink batt program.

This divergence has meant that more infrastructure is being built to meet peak demand and is being used less during the day. And despite spending billions on network upgrades, and contributing well over half of the increased retail prices, the industry is losing productivity at a rate of 1 per cent a year. In most industries, this would be untenable. A dramatic increase in distributed energy such as solar would force the network operators to revisit the means to make money.

Professor Sandiford says most of the pubic discussion around feed-in tariffs and other green incentives is to pitch them as a form of regressive tax. That, he says, is way too simplistic. “There are other values here. It can shave peak demand, and it mitigates against extreme prices,” he says. “We are using less electricity at medium prices and more at the peak. It is important to know the answers to these problems before we go off spending. Whether we like it or not, it is going to hit us. We should try and understand what these issues are.”

Climate change in the NZ election - Elephants swallowed by a snake and flogging a dead horse

2011-11-17T11:01:00.007+11:00

A snake swallows the elephant in the room and then flogs a dead horse - The politics of climate change in the 2011 New Zealand Election campaign

Robin Johnson's Economics Web Page posts some thoughts on the politics of climate change in the campaign for the New Zealand general election.
So whats happening with climate change in the campaign for the New Zealand general election on 26 November 2011?

I was originally thinking about writing a wonkish post comparing climate change policies between NZ's political parties. e.g. see Interest.co.nz. You know the sort of thing

Which parties have policies that reflect the seriousness of the impacts the science predicts? Who has got the science wrong? Which politicians are all talk and no action? What are the minute details of the each party's NZ ETS policies. Such as delays to sector entry dates, partial price obligations and varying free unit allocation regimes... MEGO, anyone? (My Eyes Glaze Over....)

Then I thought, No! I am looking through the wrong end of the telescope.

You know what really strikes me about climate change in the election?

It's the absence.

It is as if climate change is nearly completely absent from the campaign. When climate change does pop up, it's portrayed in simplistic soundbites.

NZ Climate Change Minister Nick Smith says anthropogenic climate change is real and complex and 'wicked'. But promises more moderating, balancing and delaying of the NZ ETS. The NZ Labour party says anthropogenic climate change is real and we will fiddle with some NZ ETS details for agriculture slightly earlier than National as farmers don't vote for us anyway. The NZ Greens say anthropogenic climate change is real and we have a detailed wonk-friendly exposition on our website, but for this election we are running with "jobs, kids, rivers". oh no..... MEGO....

What's happened is that climate change, the 'elephant in the room', has been swallowed up whole by the 'snake in the room' -- politics. Along with all other serious political issues.

This snake is the real theme of the election. Commentator Russell Brown calls it the politics of absence. Brown says "cultivated political absence...shapes the almost unprecedented popularity of John Key". Prime Minister John Key's political success is because of this successful strategy of "de-politicising" himself. Key's politics-free radio chat show was the perfect example.

The NZ media have largely just played along with the politics of absence. The election is discussed as a poll-driven horse race. Or a rugby game "of two halves" with "kicking for touch". Who looked confident? Who had the best sound bites? Who mispronounced his/her New Zild the least or most. Restructure or "reeshrukcha"?

The NZ media have trivialised and objectified political debate. I give this example. The most discussed electoral contest in 2011 appears to be Auckland Central which the Herald calls "the battle of the babes" as the candidates, Jacinda Ardern and Nikki Kaye, are both relatively young women, whose shared Herald columns are called "Broadsides". Do I need to say more?

After the snake has swallowed the elephant in the room, the snake becomes the dead horse that needs some more flogging.

Climate change has been politically institutionalised. Its now "flogging a dead horse". Everyone has a policy (a horse). Everyone talks their policy. No one does anything.

These policies all have a narrative that explains the problem (the horse is under-performing) and a 'narrative' solution (keep flogging the horse).

It is here that the metaphor of "flogging the dead horse" fits so well. Firstly, the probability of the two main political parties really acting to reduce our emissions of greenhouse gases is the same as the probability of the flogged horse springing back to life.

The second reason is that the best dead horses can be repeatedly flogged.

Take NZ's main planning law, the Resource Management Act (RMA). It's the ultimate flogged dead horse of NZ politics. In its 20 years of life, it has been in an almost eternal state of being vilified from all sides: for environmental failures and for economic inefficiency.

Both National and Labour have both been subjecting it to interminable reviews and amendments. The basics remain the same. Plans are written with lofty goals. Plans don't reflect consent practice. But then consent decisions rarely reflect plan goals. Consents are needed for some activities not others. Some consents need more evidence and take longer than others.

The NZ ETS is the new dead horse in the flogging stable. Its perfect. Like RMA issues, the NZ ETS is fiendishly complex. To most people, the NZ ETS is a MEGO topic. My Eyes Glaze Over. A recital of any of the detail of the NZ ETS is usually enough to induce that response. Thus deflecting most criticisms.

Being complex, if not incomprehensible by design, the NZ ETS can be fitted, usually negatively, into any political viewpoint. Farmers can still oppose it with vitriol despite their generous treatment. It is just as good a political punching bag as the RMA.

The National Party's 2009 amendments institutionalise that most Kiwi of practices -- a five yearly review by committee. To me this is the statutory recognition of the near-permanent state of "fixing" the RMA is subject to. Labour have said they will continue the 5-yearly reviews if they become Government. Thus they have bought into Nick Smith's approach of eternal moderating of the NZ ETS. Labour get a payoff of needing less specific policies.

So debates on the NZ ETS, like this one, between Nick Smith's soundbites and Greens Co-leader Russel Norman's observations on perverse price incentives, on TV One's Q and A programme, don't really matter politically. The debate itself is just more MEGO. The snake swallows the elephant.

Interestingly, TV One had former Greens col-leader Jeanette Fitzsimons as their 'pundit' for the Smith/Norman debate. She cut right through the snake punditry by analysing the NZ ETS on the meta level. Fitzsimons said the NZ ETS was now so weak and distorted that it no longer mattered what tinkering Smith did to it. "It's like driving a car fast towards a cliff and arguing whether to go in fourth gear or fifth".

Which is of course another way of saying the horse is dead and no amount of flogging will make it trot again.

Asian alternatives

2011-11-14T22:28:00.000+11:00

A longish compilation of recent news from around Asia with a focus on SE Asia. Topics covered are climate change and renewable energy.

Climate change to bring more floods: World Bank
AFP (via Google) 11/11

HANOI — Climate change will bring more floods and extreme weather to Southeast Asia, a World Bank official said Thursday on a visit to the region, where hundreds have died in severe inundation.

"What we are seeing is there are more floods, more extreme weather events, higher temperature, more variable rainfalls and we believe that is caused by climate change. And we should expect this to increase, sadly," Andrew Steer, the World Bank's special envoy for climate change, told reporters in the Vietnamese capital Hanoi.

Thailand's worst floods in half a century have killed 533 people and damaged the homes and livelihoods of millions around the country.

In neighbouring Cambodia, the deadliest floods since 2000 have killed at least 247 people while more than 100 have died in Vietnam, mostly in the southern Mekong Delta.

Steer, who cancelled plans to visit Thailand on his regional tour because of the disaster, said the floods there were "consistent with what we know to be true about climate change."

UN chief hails poor nations over climate change
AFP via Google 14/11

"Some of the countries most affected by climate change should be an "inspiration" to rich nations on reducing their emissions, UN Secretary General Ban Ki-moon said on Monday.

"In this time of global economic uncertainty, let (these countries') commitment to green growth be an inspiration to more developed countries -- the major emitters," he said.

He said it was unfair to "ask the poorest and most vulnerable to bear the brunt of the impact of climate change alone" and called for the release of agreed funds to help poor countries to adapt to global warming.

The meeting in Dhaka of 18 countries most affected by climate change hopes to agree on a united front ahead of UN talks in Durban, South Africa, in December, where a "Green Climate Fund" will be negotiated.

The forum reflected the fact that the pace of international climate negotiations was "very slow and inadequate" said Bangladeshi Prime Minister Sheikh Hasina, speaking at the opening on Monday.

"We are bearing the brunt of the damage though we made negligible or no contribution to the menace. This constitutes a serious injustice... and demands immediate rectification and remedy," she said.

China

China registers sharp drop in carbon intensity
China Daily 11/11

BEIJING - China has become the top emitter of carbon in the world after its emissions of greenhouse gases increased by 33.6 percent from 2006 to 2010, according to a report released by Tsinghua University on Wednesday.

At the same time, China's carbon intensity - a measure of a country's emissions compared with each unit of its economic growth - dropped by 20.8 percent, partly because of the country's work to become more energy efficient and rely more on renewable sources of energy.

Article continues...

The Declines Incline

2011-11-13T22:58:00.001+11:00

Sceptical Science has a very nice graphic showing how a global temperature decline, or series thereof, is confected from the obvious long term trend.

Going Down the Up Escalator, Part 1

Right now we're in the midst of a period where most short-term effects are acting in the cooling direction, dampening global warming. Many climate "skeptics" are trying to capitalize on this dampening, trying to argue that this time global warming has stopped, even though it didn't stop after the global warming "pauses" in 1973 to 1980, 1980 to 1988, 1988 to 1995, 1995 to 2001, or 1998 to 2005 (Figure 1).

As Figure 1 shows, over the last 37 years one can identify overlapping short windows of time when climate "skeptics" could have argued (and often did, i.e. here and here and here) that global warming had stopped. And yet over the entire period question containing these six cooling trends, the underlying trend is one of rapid global warming (0.27°C per decade, according to the new Berkeley Earth Surface Temperature [BEST] dataset). And while the global warming trend spans many decades, the longest cooling trend over this period is 10 years, which proves that each was caused by short-term noise dampening the long-term trend.
…

Other Physical Evidence of Continued Warming

It's also important to point out that global temperature measurements aren't our only evidence of the long-term global warming trend. We've observed many physical indicators of global warming (Figure 2).

Figure 2: Physical Indicators of a Warming World

See the original post for a detailed account.

100% renewables, no hot air

2011-11-12T09:37:00.000+11:00

Zero Carbon Australia's Matthew Wright has a response to a recent competing proposal for 100% renewable energy from UNSW's Mark Diessendorf - 100% renewables, no hot air.

The Zero Carbon Australia Stationary Energy project has paved the way for Australian researchers to contribute their best scenarios for transitioning to a 21st century renewable powered economy in a decade.

When we first set out on the momentous task to write the plan, recruiting dozens of engineers, physicists and scientists, we really hoped that we would create a competition around the goal on who could write the best scenarios for transition. We wanted to see reports like ours being written by state and federal governments, public and private research institutions and universities. We congratulate UNSW for being the first institution to take up the challenge.

As the community partner in the ZCA project, Beyond Zero Emissions welcomes the UNSW’s contribution with its soon to be released scenario for taking the economy to 100 per cent renewable energy.

Before we can discuss the merits of their proposal, we need to consider the two schools of thought on how to achieve a completely decarbonised economy: those who think we should have a fossil fuel powered "transition;" and those who think that transition using fossil fuel “lite” technologies – namely fossil gas – is a diversion, not a shortcut. Beyond Zero Emissions fit into the latter category while the UNSW fit somewhere in between.

Based on what is known about the UNSW plan, the research recommends building gas peaker plants to generate 14 per cent of Australia’s electricity needs. These plants would run on fossil gas – which would include petroleum gas and coal seam gas – and switch to gasified biomass at an unspecified point in the future.

We believe that it is simplistic and naïve to believe that fossil gas feedstock will be replaced with biomass feedstock, and think that future scenarios from universities and environmental organisations will send a green light to oil and gas companies Origin Energy, AGL, Santos, etc, to proceed with their massive expansion of coal seam gas in the food producing areas and forests of NSW and QLD; not to mention their intentions for Tasmania, Victoria, West Australia and their shale gas dreams in SA.

Even if the switch to biomass was contemplated on the studies' proposed scale, BZE’s research team had already looked seriously into biomass burning for the specific task of addressing reduced solar and wind resources in the winter. After diligent analysis, it was decided that a combination of overcapacity and biomass co-firing would be the best, least environmentally damaging and cheapest way to meet the more challenging winter demand.

The UNSW team, by their own admission, hasn’t done the economics on their transition plan, and so Beyond Zero Emissions can’t actually comment on the costs directly. What we do know is that our researchers ruled out the gasification of biomass due to the lack of demonstrated commercial-scale projects, the lack of project pipeline and known cost curves, and the fact that storage wasn’t demonstrated on any scale.

The UNSW use of biogas or biomass gasification was investigated, however research found that no technology existed on the scale needed and the costs quoted were as much as 10 times the cost of transporting biomass pellets. Palletisation as chosen by the Zero Carbon Australia team is a very well known process, with a significant scale industry operating in Europe and the US.

The challenge for the UNSW team is to either size their gas production for the maximum peak demand of their turbines, which I would expect would be in the order of 20-50GW of capacity, or to add storage for their gasified biomass, which is a costly option. The UNSW proposals might combust hydrogen and carbon monoxide directly, or alternatively reform the gasified biomass into methane, but both these options would prove to be very expensive. We are confident that our plan will be cheaper than the UNSW plan if they decide to stick to their choice of gasified biomass.

Gas generation is the most notable difference between the Zero Carbon Australia plan and the UNSW scenario but it’s not the only one.

The ZCA included a significant energy efficiency program, the most ambitious one proposed to date, which shows how we can deliver half the end use energy we currently deliver. How we do that is being comprehensively detailed in the work of the Zero Carbon Australia Buildings plan, which will be published in February next year.

Then there’s our plan to link the main electricity grids in Australia: the Mount Isa mine grid in the north and the eastern seaboard grid with the West Australian grids. This proposed updating of infrastructure is on par with what’s happening in China, in South America, and serious plans to connect North Africa and the Middle East to Europe. Our plan to link eastern and Western Australia with HVDC, creating a national grid, is consistent with the recommendation of Siemens Australia. The cost of this technology has come down since we researched and produced our report.

In his article last month, UNSW's Mark Diesendorf questioned whether Australia has the available labour force to build the renewable energy system, even though it is adequately addressed in the ZCA plan. When the coal industry is set to triple in size, we hear a bit about capacity constraints, but nobody concludes it’s a showstopper. When the gas industry decides its going to build $100, $200 or even $400 billion worth of LNG trains, no one says that it can’t be done because of capacity constraints. Not only does the same logic apply to a rapid rollout of renewables, but workers are crying out for jobs in the renewable powered cleantech economy.

“If we don’t change direction soon, we’ll end up where we’re heading”

2011-11-11T04:20:00.001+11:00

That is the prominent quote headlining the English language executive summary of the World Energy Outlook Report of the International Energy Agency released Wednesday.

The following are selected passages from the projections made by the IEA. Bolding is as in the original, underlining and [text ] added.

There are few signs that the urgently needed change in direction in global energy trends is underway. Although the recovery in the world economy since 2009 has been uneven, and future economic prospects remain uncertain, global primary energy demand rebounded by a remarkable 5% in 2010, pushing CO2 emissions to a new high. Subsidies that encourage wasteful consumption of fossil fuels jumped to over $400 billion.
…
Despite the priority in many countries to increase energy efficiency, global energy intensity worsened for the second straight year. Against this unpromising background, events such as those at the Fukushima Daiichi nuclear power plant and the turmoil in parts of the Middle East and North Africa (MENA) have cast doubts on the reliability of energy supply, while concerns about sovereign financial integrity have shifted the focus of government attention away from energy policy and limited their means of policy intervention, boding ill for agreed global climate change objectives.

The assumptions of a global population that increases by 1.7 billion people and 3.5% annual average growth in the global economy generate ever-higher demand for energy
services and mobility. A lower rate of global GDP growth in the short-term than assumed in this Outlook would make only a marginal difference to longer-term trends.

The age of fossil fuels is far from over, but their dominance declines. Demand for all fuels rises, but the share of fossil fuels in global primary energy consumption falls slightly from 81% in 2010 to 75% in 2035; natural gas is the only fossil fuel to increase its share in the global mix over the period to 2035. In the power sector, renewable energy technoogies, led by hydro-power and wind, account for half of the new capacity installed to meet growing demand.

We cannot afford to delay further action to tackle climate change if the long-term target of limiting the global average temperature increase to 2°C, as analysed in the 450 Scenario, is to be achieved at reasonable cost. In the New Policies Scenario, the world is on a trajectory that results in a level of emissions consistent with a long-term average temperature increase of more than 3.5°C. Without these new policies, we are on an even more dangerous track, for a temperature increase of 6°C or more.

Four-fifths of the total energy-related CO2 emissions permissible by 2035 in the 450 Scenario are already “locked-in” by our existing capital stock (power plants, buildings, factories, etc.). If stringent new action is not forthcoming by 2017, the energy-related infrastructure then in place will generate all the CO2 emissions allowed in the 450 Scenario up to 2035, leaving no room for additional power plants, factories and other infrastructure unless they are zero-carbon… Delaying action is a false economy: for every $1 of investment avoided in the power sector before 2020 an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.

In the 450 Scenario, we need to achieve an even higher pace of change, with efficiency improvements accounting for half of the additional reduction in emissions. The most important contribution to reaching energy security and climate goals comes from the energy that we do not consume.

Rising transport demand and upstream costs reconfirm the end of cheap oil. All of the net increase in oil demand comes from the transport sector in emerging economies, as economic growth pushes up demand for personal mobility and freight.

Four-fifths of oil consumed in non-OECD Asia comes from imports in 2035, compared with just over half in 2010. Globally, reliance grows on a relatively small number of producers, mainly in the MENA region, with oil shipped along vulnerable supply

Coal has met almost half of the increase in global energy demand over the last decade. Whether this trend alters and how quickly is among the most important questions for the future of the global energy economy. Maintaining current policies would see coal use rise by a further 65% by 2035, overtaking oil as the largest fuel in the global energy mix.

China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015, which aims to reduce the energy and carbon intensity of the economy, will be a determining factor for world coal markets. China’s emergence as a net coal importer in 2009 led to rising prices and new investment in exporting countries, including Australia, Indonesia, Russia and Mongolia.

India’s coal use doubles in the New Policies Scenario, so that India displaces the United States as the world’s second-largest coal consumer and becomes the largest coal importer in the 2020s.

If the average efficiency of all coal-fired power plants were to be five percentage points higher than in the New Policies Scenario in 2035 … CO2 emissions from the power sector [would be lower] by 8%

…CCS plays a role only towards the end of the projection period…

…If CCS is not [or can not be] widely deployed in the 2020s, an extraordinary burden would rest on other low-carbon technologies…

For further detail go to the website. There is a 6 page factsheet

Coincidentally the following job ad appeared in my inbox:

A Singapore-based leading Energy Broking firm with world-wide market coverage is looking for an Energy Broker with qualifications as follows:
Requirements:
Excellent command of English (both speaking and writing), Bahasa Indonesia and ability to speak and understand Mandarin (Chinese language ability is not crucial but will be an advantage)
Preferably experienced in Coal industry.

Agricultural emissions out of NZETS and Nick Smith fails ETS basics

2011-11-10T10:10:00.002+11:00

Robin Johnson's Economics Web Page cross-posts on the New Zealand decision to indefinitely defer the entry of agricultural emissions into the NZ emissions trading scheme

New Zealand Climate Change Minister Nick Smith has confirmed that agriculture will be unlikely to enter the New Zealand Emissions Trading Scheme. The news has as they say gone around the world with coverage in the NZ Herald, Reuters, Bloomberg and the Sydney Morning Herald.

Gareth of Hot Topic puts it this way.

"Hon Dr Nick Smith... explained the recent decision to indefinitely delay bringing agriculture into the scheme, stating the technology to do so practically does not yet exist"

Nick Smith yet again gets away with a soundbite of spin that is contradicted by the orthodox economic rationale for having an all-sectors all-units and all-gases international emissions trading scheme for greenhouse gases.

Just for the sake of argument, let's ignore the Sustainability Council's work on agricultural emissions reduction and assume that Dr Smith is correct that there are no practical technologies that will enable the agricultural sector to reduce emissions.

Let's go back to basics. Why do we even have emissions trading including all greenhouse gases across all sectors and across national borders?

The whole point is so that 'cheaper emissions reductions' can, in the short to medium term, largely carry the can for 'expensive emissions reductions', in meeting emissions limits or caps.

In economics speak, a sector of an economy with 'expensive emissions reductions' options is more or less just the same as a sector without practical technologies to enable reductions of emissions. Agriculture, for example, according to Nick Smith!

To paraphrase from another Nick, Lord Stern, in a well-functioning "deep and liquid" market for emissions permits, emitters with expensive mitigation options become buyers of permits and purchase permits from emitters with cheaper mitigation.

The role of the all-gases ETS, is to provide a wider variety of cheaper markets for emissions reductions, than would be the case in a single-gas ETS (such as a ruminant methane ETS, if there was one).

So the role of the emitting industries with fewer mitigation options (or more costly options) is to provide a flow of funds to reward those industries that have the cheaper emissions reduction options!

Logically, the lack of immediate practical mitigation technology in any one sector, is not a valid reason for leaving a sector out of an all-gases ETS.

24 Hours to Massive Change: Global Design Workshop

2011-11-09T23:59:00.000+11:00

Massive Change is holding a workshop on Design thinking in Brisbane at the end of November - 24 Hours to Massive Change: Global Design Workshop.

How much can you really accomplish in 24 hours?

Find out in Bruce Mau’s 24HRS2Massive Change Workshop.

A great deal – in fact, a massive amount – if you bring together a group of entrepreneurial design thinkers. That’s the premise of a new workshop, aptly titled “24 Hours to Massive Change” – taking place from November 23 through 26, 2011, in Brisbane, propelled by Bruce Mau’s Massive Change Network. Participants will learn how to transform their businesses, organizations and institutions by thinking like designers, and tackle problems, develop solutions, and create new ways of innovating to move forward.

Oz Carbon Tax Passes Senate

2011-11-08T19:21:00.000+11:00

The Australian "Carbon Tax" has been passed in the Senate and will become law. It remains to be seen if Tony Abbott, should he get elected, follows through with his hubristic and dogmatic threats of repealing the law.

The Greens are understandably pleased.

Mining interests and The Australian have predicted this will trigger the imminent demise of the entire Australian economy, even though the more likely threat is due to financial problems in Europe. Piers Akerman (hat tip Deltoid) dredges up the old Dark Ages analogy to describe the horror that is about to befall us all at the hands of the "Green Cultists" who, for some unexplained reason want to rain doom on us all.

I guess we all have our own favourite falling sky to fret over...

Finally, carbon tax becomes law

The Age, Nov 8.
The Labor government has finally got its carbon price plan through the Senate — on a vote of 36 to 32.

The carbon price begins with a tax, starting next July and will move later to a trading scheme. The issue has dogged Labor, contributing to Kevin Rudd’s fall from the leadership, after he backed off on his emission trading scheme, delaying it when he could not get it through the Senate.

‘‘The Gillard government has today secured a clean energy future for all Australians,’’ Ms Gillard said.

The carbon victory comes as Labor was heartened by an improvement in today’s Newspoll, with the ALP primary vote rising from 29 per cent to 32 per cent.

Supporters of the carbon scheme celebrated out of the Parliament, undeterred by torrential rain.
Carbon facts: how the package will roll out
The Age, Nov 8.
How the clean-energy package will roll out:

Carbon emissions tax for the 500 biggest polluters starts on July 1, 2012.
Tax moves to an emissions trading scheme in 2015.

Tax begins at a fixed price of $23 a tonne and rise by 2.5 per cent a year until 2015.
Tax will not apply to agricultural emissions or light on-road vehicles.
Electricity generation, stationary energy, some business transport, waste, industrial processes and fugitive emissions will be covered by the initial tax.

Average households will see a $9.90 weekly cost rise.
Average households will receive assistance of $10.10 weekly.
Free carbon permits will be the given to the most emissions-intensive and trade-exposed industries.

The government wants to cut pollution by 80 per cent by 2050.

There are many tired phrases used by grumpy old men, and Piers hackneyed use of "The Dark Ages" should prompt the question, exactly how dark where they? Well, not much really.

Top 10 Reasons The Dark Ages Were Not Dark

Wikipedia suggests that this period of Western Culture was just a bit obscure to the scholars of the Renaissance - many of whom glorified Rome. So if you love empires, wars and conquests then I guess the relative peace in Western Europe during this time (at least until the Crusades) means yes it was "dark". The Byzantine and Islamic cultures on the other hand had a mostly rip roaring "dark ages" of a time.

UPDATE

Markets Live: Stocks lose $37b on Italy fears

Those clever evil Greens... at must be their doing.

Election 2011 Two-facedness - Saving money good - saving fuel bad

2011-11-08T08:10:00.000+11:00

All of the political parties agree New Zealand needs a long-term savings and investment plan . These elections there have been major policy announcements on Kiwisaver, reducing debt and the age of eligibility for National Superannuation. Saving money good.

But when confronted with arguably a more serious and immediate threat to New Zealand's economy, national well-being and security -- namely our dangerous exposure to oil price shocks, and oil supply disruptions and shortages, - all the main parties fail to articulate a coherent long-term plan to lower our dependence on ever more expensive imported oil. Saving fuel bad.
Article continues...

Wind like Spain? It's a no-brainer

2011-11-07T22:15:00.000+11:00

The Climate Spectator has an article from Matthew Wright urging Australia to follow Spain's example in the adoption of wind power - Wind like Spain? It's a no-brainer.

Wind power has the support of the majority of Australians, so it's painful to hear a small minority, most of them backed by fossil fuel interests, undermining one of the great universally available energy sources to power the world out to 2100. It is telling that the technology has very few detractors in those countries that aren't big net fossil fuel exporters.
As of this year, Spain has 20,000 wind turbines. If these were transplanted to Australia they would easily power our biggest state. That’s because wind turbines in Australia produce twice as much electricity as those installed in Spain, due to our superior resource.

With over 21,000MW capacity installed, Spain is 18 per cent wind powered and, with annual electricity demand the same as Australia's, is doubling their wind capacity by 2020. It's still full steam ahead on Spain's renewables program, despite a housing boom/bust that has sent their economy into a tailspin and caused over a million construction workers to lose their jobs.
Spain enjoys lower wholesale energy prices thanks to wind power, due to the merit order effect. Wind power significantly drives down electricity prices – and Australians, in 2011, are still missing out on the benefits of the price-lowering effect that large-scale wind deployments can deliver.

Using a fleet of modern Enercon E-125 or Siemens 6MW wind turbines, for the same installed capacity we would generate twice the amount of annual electricity generated, and we'd get twice the annual contribution of wind to our electricity mix. In other words we'd be on 35 per cent renewable electricity today.

It's a no brainer; to achieve the same amount of electricity as Spain from wind would come at a 75 per cent discount to what the Spanish have invested. That's because of the combination of "buy one get one free" – our wind resource generates twice as much as theirs and we're starting in 2011, 15-20 years after the Danes, Spanish and Germans who have done the heavy lifting and got the technology down the cost curve. Add to that the bonus that comes from the much cheaper turbines coming out of China exerting downward pressure on European turbine prices and you have a very cheap, well tested renewable resource. Time to get on with the job.

I’d hate to call it bludging, but we are also benefiting from the heavy lifting of countries like Denmark, Germany and Spain through their deployment programs to date. These European leaders have really got wind turbines (along with other renewable technologies) down the cost curve through the optimum combination of deployment – learning through doing and public and private research and development.

Many of Spain's turbines are older models. The new ones are more efficient, taking up as much as a third less space on the ground than much of the fleet in Spain, leaving more area for existing uses such as cropping. Australia, with 15 times the land area, and a huge choice on wind resource, could achieve 50 per cent wind with as few as 7,000 modern turbines. Or, with the same installed capacity as Spain, we would be getting 40 per cent of our electricity from wind and at a 75 per cent discount.

The potential for Australian wind doesn't stop there. Spain is on target to double their wind capacity to 35 per cent by 2020. With a practical near-term target like that we know that Australia could easily be getting 50 per cent of our energy from wind in a similar timeframe, with our combination of favourable conditions, less turbines, better sites, twice the output, half the cost, much bigger land area, better opportunities geographical distribution leading to better meteorological diversity, as well as much lower density of population and easier to access sites.

But Spain will actually have enough wind turbines to produce 70 per cent of our electricity by 2020. So what would happen if we installed that much capacity of wind here? Studies have already been done that give us an idea: they show that in the UK and Denmark, with 40 per cent penetration, 4 per cent of wind is actively curtailed and at 50 per cent, 7 per cent is to be curtailed.
That is, if we install wind turbines across the grid with an annual capacity factor so they are able, theoretically, to deliver 54 per cent of our electricity, due to a number of hours of oversupply and some transmission constraints, 7 per cent active curtailment would mean that 50 per cent of our energy would actually come from wind.

New Zealand Minister Nick Smith fails the smelter spin test

2011-11-02T10:51:00.006+11:00

Robin Johnson's Economics Web Page cross posts about New Zealand Climate Minister Nick Smith's spin over emissions trading subsidies to an aluminium smelter.

What does New Zealand's Minister for Climate Change Issues, Nick Smith, say when the New Zealand Green Party accuses him of subsidising greenhouse gas polluters?

Well it seems he denies it and he produces instructive soundbites of spin. I am informed that at Wellington's Oxfam election and climate change debate he said that New Zealand's sole aluminium smelter at Tiwai Point is the only aluminium smelter in the world exposed to a carbon price.

He has said this soundbite a few times. For example, in response to NZ Green MP Kennedy Graham on 29 September 2011:

"..the aluminium smelter in Bluff is the only aluminium smelter in the world to face any price at all for its greenhouse gas emissions".

On TV One's 'Q and A' programme:

"the New Zealand Aluminium Smelter in Bluff, it is the only one in the world that pays any face at all for carbon pricing." (1)

In Parliament in September 2009,

"...the Bluff smelter, on 1 July next year, will be the very first to face a carbon price for its pollution. The European scheme excludes aluminium smelters until 2013..."

Does Dr Nick's soundbite stand up to scrutiny? Not really. The European Union Emissions Trading Scheme, which started in 2005, excludes the European aluminium smelters until 2013. But it included electricity generation from 2005. And aluminium smelting is very electricity intensive. As the International Energy Agency says: "Although the primary aluminium sector is not directly covered by the (EU) ETS, the impacts of the CO2 price are felt through increases in electricity prices" (p 8). (2)

So, Europe's smelters are exposed to a carbon price through their power bills.

Another example of a Smith soundbite is saying that the overly-generous free allocation of emissions units to industry in the NZ ETS is not a cost to the taxpayer. For example: Parliament on 29 September 2011:

"This member and other members make the gross error of trying to claim that not exposing industries or consumers to the full price of carbon over all their emissions is somehow a subsidy. A subsidy implies that there is a cost to taxpayers. That is not true.."

Unfortunately for Dr Nick, that's not what the New Zealand Auditor General, Lynn Provost, says in her accounting and auditing advice for emissions units in the public sector

"NZUs have a market value and the issue of NZUs without charge to participants is an expense to the Government and creates a liability".

Sorry Dr Smith, the Tiwai Point smelter is not the only aluminium smelter exposed to a carbon price in an ETS. And the European smelters probably pay a higher carbon price through their electricity costs as the Tiwai Point smelter owner is compensated for electricity costs as well as emissions through excessive free allocation of emissions units.

Sorry Dr Smith, you can't just create and give away a permit to emit greenhouse gases that has a clear market value and say there is no cost to taxpayers as Treasury did not write out a cheque. The Auditor General confirms what we taxpayers already know that there is a real cost to taxpayers of giving emissions units away to big emitters.

Footnotes
(1) NB By 'pay any face' I think he means 'face any price'.)
(2) IEA, 2008,'Climate Policy and Carbon Leakage - Impacts of the European Emissions Trading Scheme on Aluminium'

A cheaper path to 100% renewables

2011-10-25T23:15:00.000+11:00

The Climate Spectator has an article from UNSW’s Mark Diesendorf looking at an alternative to the Zero Carbon Australia plan to switch Australia to 100% renewable energy - A cheaper path to 100% renewables.

Australia has enormous renewable energy resources in the form of sunshine, wind, biomass (organic) residues, hot rocks and waves. But is a transition to 100 per cent renewable energy technologically and economically feasible here?

Last year, a ground-breaking study, "Zero Carbon Australia Stationary Energy Plan," claimed that 100 per cent renewable energy is technically possible and would cost about $370 billion.

The core of the ZCA study was an hour-by-hour computer simulation, by Jack Actuarial Consulting, of Australian electricity demand in 2008 and 2009, supplied mostly by concentrated solar thermal power (CST) with thermal storage, and by wind power.

As is inevitable in a first-of-a-kind study of a revolutionary new energy system, some simplifying assumptions were made:

– Western Australia was connected ... to the eastern states with new transmission lines;
– Second-generation CST power stations … were chosen as the principal energy source. These solar stations were given thermal storage equivalent to 17 hours of full power output and so can, in theory, run through the night;
– A daily average was taken for solar energy inputs, although hourly data are much more accurate;
– To compensate for the reduction in sunshine in winter, a vast excess of CST generating capacity was introduced;
– Also for winter, biomass residues were shipped out to the solar power stations to be burned under the thermal storages when necessary.

At the University of New South Wales, PhD candidate Ben Elliston, Associate Professor Iain MacGill and I initiated an independent research project based around some different assumptions, to remove the above assumptions of the ZCA study.

We performed a series of hour-by-hour computer simulations of the 2010 electricity demand in the five Australian states covered by the National Electricity Market. We chose a broader energy mix than ZCA: first-generation CST with thermal storage, wind, solar PV, gas turbines and existing hydro – all commercially available technologies. Gas turbines, which are like jet engines, are highly flexible generating plants ideally suited to supporting fluctuating renewable generation. Some are already being deployed in Australia. They could initially be fuelled on natural gas, however this could be replaced with liquid biofuels produced sustainably from the residues of existing crops.

We found that it is, indeed, technically feasible to supply current electricity demand by 100 per cent renewable energy with the same reliability as the existing fossil fuelled system.
The key challenge is meeting demand on winter evenings. At sunset on overcast days, the thermal energy storages are not full and sometimes wind speeds are low. In our initial simulations, to be presented in a peer-reviewed paper at the forthcoming Australian Solar Energy Society’s annual conference, we used biofuelled gas turbines to fill the gap. This is likely to be lower cost than ZCA’s solution of choosing a vast excess of CST power stations, which would not be used in summer.

However, the UNSW study proposes an even cheaper solution than lots of gas turbines or CST: namely a revitalised energy efficiency program to reduce electricity demand on winter evenings. Furthermore, in a ‘smart’ electricity system it will be easier to reduce demand quickly during periods of low supply.

Both the ZCA and UNSW studies refute the claims by renewable energy sceptics that renewable energy cannot replace baseload (24-hour) coal-fired power. ZCA interprets its results by concluding that CST with thermal storage is baseload.

We interpret the simulation results differently, concluding that although CST can perform in a similar manner to baseload in summer, it does not in winter. However, we maintain that it doesn’t matter. The important result is that our renewable energy mix gives the same reliability of the whole generating system in meeting demand as the existing polluting system.

Although the UNSW study has not yet performed an economic analysis, our scenarios have the potential economic advantage over ZCA’s that they don’t require transmission links between WA and the eastern states and they have a smaller percentage contribution from CST, currently the most expensive component of the energy mix.

It should be emphasised that neither the modelling of ZCA nor UNSW establishes a timescale for the transition to 100 per cent renewable electricity. However, the ZCA study claims that the transition could be made in a decade. That claim is an assumption based on the observations that Australia could supply the raw materials for manufacturing the systems and that solar and wind technologies are suitable for rapid manufacture.

NZ ETS 120% Pure Subsidy Part 2

2011-10-21T11:35:00.010+11:00

Robin Johnson's Economics Web Page cross posts about the very generous free allocation of emissions units under the NZ emissions trading scheme to Rio Tinto Alcan NZ's Tiwai Point aluminium smelter.

Over on Gareth's Hot-Topic blog I had a go at estimating how free emissions units had been allocated for free to New Zealand's only aluminum smelter under the New Zealand Emissions Trading Scheme.

A brief recap, Tiwai Point Aluminum Smelter is located near the town of Bluff, out on the edge of Foveaux Strait near the southern-most city of Invercargill The smelter is operated by NZ Aluminium Smelters Limited, which in turn is owned by Rio Tinto Alcan NZ Limited, a subsidiary of Canadian multinational Rio Tinto Alcan. Tiwai Point Smelter processes bauxite from Queensland into high-quality aluminium.

In response to my post, Simon Terry of the NZ Sustainability Council points out that we shouldn't be surprised at the high level of free allocation of units to big emitters. He documented this in June 2008, in the report Corporate Welfare Under the ETS, which looked at free allocation of units to eight energy intensive companies under the proposed NZ ETS.

In particular, he reminds us that in the NZ ETS the free allocation of units includes a factor to compensate for NZ ETS-related electricity price increases. As the NZ ETS will make some power generation more expensive to the extent that it uses fossil fuels (Huntly Power Station for example). This explains why the 'allocative baseline' factor for aluminium smelting is 2.645 units per tonne aluminium when the emissions factor for NZ's Ministry for the Environment's Greenhouse Gas Inventory is 1.67 tonnes CO₂-e per tonne aluminium.

This feature of using free allocation of units to compensate emitters for electricity price increases is explicit in the 1999 - 2008 NZ Labour Government's original NZ ETS proposal Framework for a New Zealand Emissions Trading Scheme, released in September 2007. As indicated by this quote under the heading "Allocation of emission units"

"indirect emissions associated with the consumption of electricity, as well as direct emissions from ... industrial processes will be included in the concept of emissions from industrial producers...The basis for allocation for electricity consumption will be one that compensates firms for the cost impact".

Another regular commenter, Password1, says my analysis is totally incorrect because I have left out the indirect emissions from using electricity, that I am not comparing the same sets of data, and that I need to redo my calculations based on what is in the legislation. Further, my assertion that there has been an "overallocation" of units "is wrong, wrong, wrong".

Password1 concludes that

"The smelter is not getting a ‘refund’ – they are facing a proportion of the full cost of emissions both at the point of aluminium production and from being passed down from the electricity generator."

Okay maybe I will redo my calculations. So off I will go down the rabbit-hole and look into this electricity factor. So what is the proportion of the 'allocative baseline' factor for aluminium smelting, 2.645 units per tonne of aluminium, is to compensate for NZ ETS-related electricity price increases?

This idea of fossil-fuel-thermal power costs (increased by the NZ ETS) affecting a smelter that only exists because of hydroelectric dams on Lakes Manapouri and Te Anau seems a bit bizarre. Especially since the smelter's supply contract is with Meridian Energy, the 100% renewable power company.

However, the NZ wholesale electricity market works by preferentially using the lowest priced generation offer in any one half-hour trading period. This means that wholesale price is set by the most expensive block of electricity offered into the market which is needed to ensure demand is satisfied and that block may be from a coal or gas thermal generation.

When demand is high and hydro lakes are low, thermal power sets the wholesale price. As was the case through much of 2008. When demand is low and hydro lakes are full, then the coal-powered Huntly Power Plant may be on the substitutes bench and the NZ ETS costs won't flow through to NZ's wholesale electricity price.

So it does seem that there is some level of carbon price from the NZ ETS reflected through the wholesale price that ends up in the electricity price paid by the smelter. However, it is quite hard to quantify this price.

This issue was discussed in June 2010 in this Cabinet paper. Paragraph 37 tells us that the electricity allocation factor is 0.52 tCO₂-e/MWh. Paragraph 40 tells us that an analysis of the smelter's electricity contract with Meridian Energy indicates that the use of this factor would result in over-allocation of units as the actual extra electricity costs are less than 0.52 tCO₂-e/MWh.

Unfortunately the actual extra electricity costs, the degree of over-allocation and the fiscal cost of allocation to the smelter, have all been blanked out from the cabinet paper, apparently as 'the information is commercially sensitive'. I appear to be at the end of that rabbit-hole.

The next rabbit-hole is to check the emissions factor that gives emissions of CO₂-e from tonnes of aluminium produced.

In terms of emissions reported and units surrendered, Regulation 35 of Climate Change (Stationary Energy and Industrial Processes) Regulations gives a 10-variable formula for the calculating the smelter's emissions from production. I am missing about 4 of these variables. So that's also a dead end for duplicating the emissions and the units to be surrendered.

But why don't I just use actual numbers? This Ministry of Economic Development report shows that the NZ aluminium manufacturing sector has only one NZ ETS 'participant' and that the sector, and therefore the one participant, the aluminium smelter, reported emissions of 615,814 tonnes CO₂-e for the 2010 year and 312,294 tonnes CO₂-e for the six months from 1 July to 31 December 2010.

So 312,294 tonnes were emitted in the six month period of obligation to surrender matching units. So we divide by 2 for the two-for-one unit deal, and that results in 156,147 units to surrender.

210,421 units were allocated to the smelter for the six months according to the NZ Ministry for the Environment.

That's 54,274 more units allocated than surrendered or alternatively the units allocated to the smelter exceeded the units surrendered by the smelter by 135%.

This result is pretty much a mid-point between my estimates which were from 147% to 122%, as summarised in this table.

Table 1 Low actual and high estimate of units to surrender
	Low	Actual	High
Units to surrender	143,342	156,147	172,526
Units allocated	210,421	210,421	210,421
Excess allocation (units)	67,079	54,247	37,896
Excess allocation (per cent)	147%	135%	122%

Summing up

The Tiwai Point smelter was allocated 210,421 emission units in the six-month NZ ETS compliance period in 2010. Without any reasonable doubt, this represents 54,274 more emission units than it surrendered to match emissions.

At today's NZ unit price of $NZ14, the value of the units allocated is $NZ2,945,894. The value of the excess of units allocated above units surrendered is $NZ759,836. That is the value of the taxpayer's gift to the smelter.

An unknown (or undisclosed) proportion of the free units are intended to compensate the smelter for NZ ETS-related electricity price increases in a year characterised by highest level ever of renewable generation.

I can't prove that the amount of free units allocated is more than the sum of the units to be surrendered for emissions plus some units as compensation for electricity price increases. But I think it is highly likely.

In any case, it hardly matters whether the volume of free allocation is either just under 100% of costs or whether its 135%. Both options pretty much effectively negate the carbon price on the smelter and mean no real incentive to reduce emissions.

The bottomline for me is that if the smelter were not in the NZ ETS, they would at least be paying the some carbon price as a 'downstream' electricity user where some costs of fossil-thermal power generation are factored into the wholesale electricity price when fossil-thermal power is not priced out by cheaper hydro-generation.

Because of the allocation of units for power price increases, the smelter faces a lower carbon price than if it was exempt from the NZ emissions trading scheme and just paid its power bills.

There was an argument that the NZ ETS might be weak but at least it was better than nothing. In the case of the smelter, we can know discard that argument.

Trans-Tasman Emissions Trading Scheme Challenge Part Two

2011-10-13T13:13:00.004+11:00

Robin Johnson's Economics Web Page cross posts on a trans-tasman emissions trading test.

Yesterday the Australian Parliament adopted legislation for its greenhouse gas emissions trading scheme.

So I thought I would write another post on the theme of the "Trans-Tasman Emissions Trading Scheme test series", this time looking at the key differences between the New Zealand Emissions Trading Scheme and the Australian Emissions Trading Scheme. The number one key difference between the two emissions trading schemes is in how clearly each scheme sets the carbon price.

Unequivocal carbon price vs volatile carbon price.

Unlike the NZ ETS, the Australian ETS will set an absolutely clear and unequivocal price on greenhouse gas emissions.

The price will be $AU23 per tonne from 1 July 2012, then $AU24.15 in 2013-14 and $AU25.40 2014-15 (Securing a Clean Energy Future, The Australian Government's Climate Change Plan, p 26). From 1 July 2015, the carbon price will float within and upper and lower ceiling with the Government setting an overall 'Cap' or limit on GHGs (Securing a Clean Energy Future p 27).

The price for "New Zealand Units" under the NZ ETS is being set at a discount to the price of international Kyoto units in the volatile international carbon. So the NZ price is ...well...it's yeah whatever. As in this chart for 2010. Note that the Australian minimum carbon price of 23.00 Australian Dollars converts to 29.50 New Zealand Dollars? The price of 29.50 NZ dollars is off the vertical scale of this chart!

And as in this updated chart for September, showing the fall in the international price driven by the Euro-Zone debt crisis is further pushing the NZ unit price down.

This direct importing of the international price into the NZ unit price is because of two intrinsic design features of the NZ ETS.

The NZ ETS has no cap on domestic GHG emissions and no cap on free allocation of units to emitters. The NZ ETS is highly linked to international markets. It allows almost all international Kyoto units to be imported and surrendered by emitters.

So an emitter would say to a seller of NZ units "Why should I buy your NZ units instead of international units, which I could sell in a much wider market, unless the NZ units are at a discount?"

Of course, the Australians, influenced by Ross Garnaut and Bob Brown of the Green Party, are not having a bar of this price volatility. In terms of the economics literature, this is absolutely the right way to go.

A clear and consistent carbon price out for several years will clearly signal to emitters which emission reduction technologies to adopt - ones that will break even at the set carbon price! The same goes for developers of windfarms and producers of biofuels. A clear carbon price into the future will give investors confidence that they will not lose their shirts putting capital into windfarms and biofuel plants. Carbon price volatility, like in New Zealand, just makes investment in either mitigation or substitution of fossil fuels a bad bet.

So why on earth would a big industrial emitter want to have an emission trading scheme like New Zealand's where they have an unpredictable and volatile liability to pay a carbon price instead of an unequivocal and consistent-over-time carbon price as set out in Australia's scheme?

The only answer I can give is that if like Rio Tinto NZ Alcan Limited, you are given more emissions units than you need for your actual emissions then it just doesn't matter what the price is.

From brown coal to solar thermal

2011-10-06T21:33:00.001+11:00

The Climate Spectator has a report on some positive thinking in South Australia, where Alinta is considering converting an old coal fired power station to a solar thermal power generator - From brown coal to solar thermal.

The owners of Australia’s most polluting coal-fired power station, the Playford plant in South Australia, are considering converting it to a solar thermal facility if it is closed as part of the government’s proposed buyout of brown-coal generators.

Jeff Dimery, the head of the now privately owned Alinta, said solar thermal technology was one of two options being considered after the closure of the 240MW Playford, and may be an easier option than trying to source gas for a gas-fired peaking generator, as there is no gas pipeline to Port Augusta.

“We’re exploring the idea of building a renewable facility and integrate that with baseload (from the remaining northern station) and solar thermal would be ideal, as there a good sun resource in the region,” Dimery told Climate Spectator in an interview. “The technology requires funding, and it’s a case of needing to convince government that it is one of better projects. We intend to explore it.”

Playford is one of four brown coal generators eligible to make a tender for the government’s proposed buyout, which intends to remove 2000MW of brown coal generation from the grid by 2020 in order to reduce emissions, and create room for gas-fired generation or renewables to be built in their place.

The solar thermal idea will not form part of Playford’s submission – apparently it matters not what the owners of the retiring generation plant intend to do with the funds (and some may be expected to expatriate those funds overseas), but Dimery is confident that Playford would be an attractive option in any case. For a start, it’s the most polluting, at 1.7t of Co2e/MWh, the early closure of 240MW would have little impact on the National Energy Market, and the workforce could be absorbed at the neighbouring 520MW Northern Power Station without any forced redundancies. That could save on government funds.

The other attraction of solar thermal is that it could be integrated into the Northern Power Station, pre-heating boilers in the same way that a solar booster plant will be designed to do at the Kogan Creek power station in Queensland, and/or putting electricity directly into the grid.

When should agriculture enter the New Zealand Emissions Trading Scheme

2011-10-03T09:20:00.002+11:00

An agricultural commenter has hit back at the NZ Emissions Trading Scheme Review 2011 and the New Zealand Herald editorial Farmers must share burden on emissions' for saying that there should be no further delay of the 2015 date when agricultural emissions will enter the New Zealand Emissions Trading Scheme (NZ ETS).

The Herald editorial had the temerity to comment on the government's "extraordinary generosity to farmers" in changing the "modest impositions" of the NZ ETS on agriculture so that it "will become truly timorous".

David Anderson, who is described as a former editor of Rural News and a communications consultant in "teh" (sic) agribusiness sector, has just had an opinion piece in the NZ Herald (27 September) arguing for a further delay in agriculture's entry into the NZ ETS.

Just as a brief re-cap, in the Clark-Cullen Labour Government's original version of the
NZ ETS, agriculture was 'last in', with unit surrender obligations starting on 1 January 2013; i.e. after the end of the 2008-2012 Kyoto Protocol first commitment period. In November 2009, Nick Smith and National changed the start or entry date to 1 January 2015 and confirmed that it would be processors and not individual farmers who would have the obligation to report emissions and surrender units. That was done in the Climate Change Response (Moderated Emissions Trading) Amendment Act 2009

As we know, Federated Farmers can be a bit emotive about the NZ ETS, with past President (and now ACT Candidate) Don Nicholson) describing the NZ ETS in 2009 as the road to hell paved with good intentions.

So lets have a look at David Anderson's arguments. The first argument is;

Why would we want to unfairly penalise New Zealand's agriculture sector - and one of the few sectors with the ability to help the country out of the current economic hole - by imposing taxes when our international competitors are not doing the same?

Because agricultural GHG emissions are the New Zealand's largest source of emissions! It's not that hard to understand.

In 2009, agricultural GHG emissions were 32.8 million tonnes (mt) of CO2-e out of a total of 70.6 million tonnes or 46.5 per cent of New Zealand’s total greenhouse gas emissions. The energy sector emitted 31.4 mt (44.4%). Industrial processes emitted 4.3 mt (6.2%). Waste emitted 2.0 mt (2.9%). Solvents and other products emitted 0.03 mt (0.04%) according to the Ministry for the Environment Greenhouse Gas Inventory 2011.

Other developed countries who have signed up for the Kyoto Protocol obligations just don't have agriculture dominating their GHG emissions like New Zealand. For example, here's a chart comparing New Zealand and Australian agricultural GHG emissions.

Lawyer Toni Moyes points out in a 2008 paper in the Ecology Law Quarterly, 35:4, pp. 911–966; Greenhouse Gas Emissions Trading in New Zealand: Trailblazing Comprehensive Cap and Trade that New Zealand is "fundamentally different" from European countries where carbon dioxide from the energy sector emits 80% of GHG emissions. Moyes concludes "Thus, if non-CO₂ gases were excluded, the NZ ETS would ignore over half of the problem. Likewise, sectors typically excluded from ETS must be included in the NZ ETS in order to address the majority of emissions. The NZ ETS would be far less effective if agriculture, the single biggest emitter, was ignored." I could not put that better. It is not "unfair" to include agriculture in the NZ ETS, it is essential.

Also, I have to point out that Anderson completely omits to mention the fact that agriculture, once it does enter the NZ ETS, will have (arguably) the most generous free allocation of emissions units of any sector of the economy. Under an ETS, emissions units must somehow get into a trading market. They may be either auctioned to emitters (obviously most wealth-enhancing for the tax payer) or "grandfathered", allocated for free to existing emitters. New Zealand has chosen to 'gift', or allocate for free, all domestic NZ units.

According the Ministry for the Environment, free allocation of units to agriculture will be 90 per cent of the emissions baseline and will phase out at 1.3 per cent per annum from 2016. The baseline will be the industry average emissions per unit of output. The allocation will be uncapped, meaning that there is no set limit on the number of units that may be allocated. Further, there are NO eligibility tests or thresholds for agricultural allocation, meaning that all agriculture participants will be eligible for an allocation.

So the entry of agriculture to the NZ ETS in 2015 will be cushioned by 90%. Or the GHG price signal will be reduced by 90% (compared to other sectors) down to 10% via free allocation. The free allocation percent will be based on "average output", which will be gazetted in regulations. Any processor who does 'better than average' will be in for a windfall gain. Again this is hardly the imposition of an unfair tax.

Number two argument is:

I don't see how handicapping our main economic driver will reduce international greenhouse gases. Surely all that will do is shift the production of these agricultural greenhouse gases from New Zealand to another country?

This is the carbon leakage argument. That businesses and their emissions will relocate to other jurisdictions to escape a carbon price.

Dr Jan Wright, the Parliamentary Commissioner for the Environment, pretty much shot to pieces the agricultural carbon leakage argument in her submission on the 2009 amendments to the NZ ETS.

Dr Wright noted that National was proposing to base allocation of units to agriculture on the industrial allocation model in the Australian Carbon Pollution Reduction Scheme (which was in 2009 only a proposal and which was withdrawn in 2010).

"There is no justification for treating allocation to the agricultural sector the same as industrial processes, either here or in Australia. The impact of the ETS on agriculture is very different to that of industrial process sectors. Productive agricultural land can not be shipped offshore...Carbon credits should not be allocated to prevent an unlikely event."

The nail in the coffin is from Suzi Kerr, an economist who has specialised in permit trading. She had this to say in her submission to the NZ Emissions Trading Scheme Review 2011:
."A small, but crucial, point on agricultural emissions is that all available empirical evidence suggests that leakage of land and production out of the agricultural sector in response to greenhouse gas costs would be small. This evidence is summarised in Kerr and Zhang (2009).

Number three argument is;

It has always argued that it's crazy for New Zealand farmers to be hit with the costs of an ETS when they had no way of mitigating these

This is the 'Agriculture can't mitigate' argument. As blogger Idiot/Savant said in his blog No Right Turn, this is simply untrue. The Sustainability Council wrote a report A Convenient Untruth in 2007 that argues that there are significant mitigation options for agriculture.

Anyway, Anderson almost immediately contradicts this statement in the next paragraph when he states

"There is already evidence - which is also noted by Caygill's Review Panel - that the agriculture sector is reducing its greenhouse gases (my emphasis). Emissions per unit of product from agriculture have fallen by about 1.3 per cent a year over the past 20 years - due to improved management, animal genetics, pasture and crop genetics and technological changes. Opportunities for further reductions included the use of forestry on marginal or erosion-prone land, nitrification inhibitors, and "good practice" management techniques that increase productivity."

Its great that agriculture is reducing emissions! Those responsible deserve all credit for it. However, the advocates of agriculture such as Anderson need to be reminded that reducing emissions is the same as mitigating them!

Anderson's fourth argument is that

"critics and environmental doomsayers" are "making claims about farmers being subsidised".

And that it is unfair and selective to say farmers are getting a free ride.

Look, as far as I'm concerned, we all have an obligation to do something about climate change. New Zealand's climate change policy reflects that. NZ has emissions reduction targets and climate change policies and commitments under the Kyoto Protocol and the UNFCCC. All of us share the responsibility of making NZ's emissions reductions policies work. If we leave out agriculture, the sector of the economy that is the biggest emitter of GHGs, then that is unfair to everyone else.

Clean energy: A faded shade of green

2011-09-27T08:53:00.000+10:00

The NZ herald has an article looking at the forces both pushing the adoption of renewable energy forward and those retarding it - Clean energy: A faded shade of green.

For clean technology fans, the dawn of the 21st century appeared to be the best of times. As the world confronted the growing scientific consensus that rising greenhouse gases were driving climate change, a move from fossil fuels to renewables seemed irresistible. Clean technology looked a hot prospect.

Now that vision seems more muddied. Renewables are on the rise, but fossil fuels are fighting back. Coal mining has soared to feed China's energy appetite.

Oil exploration is expanding in the Arctic - where ice covers an estimated 160 billion barrels of oil, five years' supply at today's consumption rates, plus unknown amounts of natural gas - in New Zealand, and elsewhere.

Despite BP's catastrophic Deepwater Horizon oil spill in the Gulf of Mexico, drilling is poised to resume at depths of up to 3300m. Regulation remains lax. Three years after President Obama talked up clean tech, it is business as usual at the White House.

Outside its front gate, hundreds of protesters have been arrested demonstrating against plans to build a 2597km pipeline to ship crude oil strip-mined from Canadian tar sands - estimated to contain 175 billion barrels, the world's third-largest reserve after Saudi Arabia and Venezuela - from Alberta to refineries in Texas. Another Canadian pipeline is envisaged to carry oil to the Pacific.

Critics fear spills and say carbon emissions from refining the tar sands will "turbocharge global warming". Nine Nobel Laureates, including Archbishop Desmond Tutu and the Dalai Lama, have weighed in, saying the pipeline will fuel climate change and "endanger the entire planet".

Elsewhere, Obama is accused of reaching into George W. Bush's pro-polluter playbook as he gives Shell tentative approval to drill off the coast of the Arctic National Wildlife Refuge - a goal denied Bush - and of siding with the American Petroleum Institute, calculating that renewed exploitation of fossil fuels will increase jobs and relax the foreign stranglehold on America's energy supply (in this calculation at least, Canada doesn't count as foreign).

In the green camp, there is a despairing sense of clean tech opportunities missed.

"When Obama won the White House the oil business saw a threat and they rearmed," says Kert Davies, research director with Greenpeace USA. "And they sent hordes of lobbyists to Washington, and doubled down on ... campaigns to keep things the way they are. The President said some harsh things about the industry after the Deepwater oil spill.

"But in the end all US policy has bent to the oil industry. And we don't see any change."

Economic woes have also stalled investment in renewable energy alternatives.

But while frontier oil exploration and record coal sales remain the in-your-face energy reality, three inexorable, linked factors are driving deeper change.

The first is the huge energy demand caused by runaway population growth - by 2050, humankind is expected to number 9 billion, compared with 1.6 billion in 1900 - and the rise of industrial titans such as India, China and Brazil.

The second is "peak oil" - the moment when oil production reaches its highest point, then starts to decline. Whether this has occurred is contentious. It is hard to know the world's fossil fuel reserves, but they are finite.

Last year's annual report from the International Energy Agency (IEA) forecast global oil production would reach 96 million barrels per day (mb/d) in 2035 (in June it was 88.7 mb/d), driven by natural gas and "unconventional oil" such as tar sands, as conventional crude levels out.

Extracting oil would become more expensive and leave a bigger legacy of polluting carbon. And energy demand would soar 36 per cent by 2035, with most of that extra demand coming from non-OECD nations, led by China.

Oil drives transport, but electricity generation is the key to record coal consumption. Nuclear power, meanwhile, faces an uncertain future after the meltdown at Fukushima: Germany will close its reactors by 2022 and this month's explosion at a French nuclear waste site fuelled fears about safety, radioactive waste and CO2 emissions from uranium processing.

Meanwhile, infinitely sustainable renewables - solar, wind, hydro, geothermal, biofuel and ocean power - produced 16 per cent of world energy last year. The IEA forecasts that renewable use will triple between 2008 and 2035.

The third factor is climate change. When the OECD announced five "global shocks" likely to destabilise the world economy, climate change wasn't mentioned.

But money men at the sharp end, such as those in the reinsurance business, routinely factor in findings agreed by the United Nations Intergovernmental Panel on Climate Change.

However, if the past is any clue, switching energy sources will be a protracted, stop-start affair during which competing realities co-exist.

Sail didn't give way to steam overnight, just as steam didn't surrender to oil in an instant. Big Oil and renewables may co-exist for decades, given the complex challenge of rejigging vital infrastructure - transport, power generation and the like - in developed societies addicted to the old fossil fuel order.

But while making the transition is expensive, delaying may be more so. Studies suggest that choosing renewables increases jobs and wealth by more than expanding sunset industries. At the same time, clean energy costs are coming down, as oil costs climb.

The NZ ETS Review 2011: Clear signals for business as usual

2011-09-21T12:36:00.003+10:00

Robin Johnson's Economics Web Page cross-posts on the recent Review of the New Zealand Emissions Trading Scheme.

New Zealand Minister for Climate Change Issues Nick Smith has finally released the delayed report of the NZ Emissions Trading Scheme Review 2011. The 98-page report is titled Doing New Zealand’s Fair Share, The Emissions Trading Scheme Review 2011.

The review panel chaired by former Rogernome David Caygill gave their report to Smith on 30 June 2011. Two and half months later and one week into the Rugby World Cup, Smith has let the report out into the world.

From the title of his press release, Slowing of ETS recommended by Review Panel, I think Smith is pretty happy with the report. It also uses some of Smith's favourite phrases; such as "Doing our fair share" and balancing the environment and the economy.

"The Panel acknowledges there needs to be an appropriate balance between managing these short-term costs and providing a clear long-term direction. Given the current international uncertainty and the challenging state of the economy, this means there should be measures in place which ensure the increase in the costs of the ETS occurs at an appropriate pace."

If you don't want to scroll through another 98 pages of blue-green flannel just like that, the best short sweet on-line summary to read is this Reuters factbox.

For me, these recommendations are the guts of the ETS Review report (as numbered in that report).

Agriculture's planned 2015 entry to the NZ ETS should not be delayed (4.1). At least they didn't cave in to Federated Farmers. But there is a big but to this.

The important issue of the lack of a real cap on emissions is just kicked for touch and left for future reviews (3.15)

The issue of high volumes of subsidised allocation of free emissions units to industry is just kicked for touch (3.9).

Remember that the NZ ETS includes a $25 fixed price option for buying emissions units until 2012? This is limited to energy, transport and industry. This option would have acted as a maximum limit on unit prices, except for the fact that NZU prices were never more than $25 in 2010.

The report recommends keeping the fixed price option/price limit out to 2017 and increasing it by $5 each year (2013; $30, 2014; $35, 2015; $40, 2016; $45, 2017; $50).

I am very skeptical that actual NZ units prices will reach these levels. The Euro-zone debt crisis has just contributed to the recent collapse of the international carbon price. The international carbon price is the dominant driver of NZ unit prices. It is pure speculation that actual NZ prices will be any where near the proposed price ceiling.

Remember Nick Smith's two for one deal for 2010 to 2012? Where emitters can can emit two tonnes of greenhouse gases and surrender one emission unit? In other words it halved the emitters obligations to surrender units. The report recommends extending this to out to 2015. So 2013 would be the "three for two" deal, 2014 would be the "five for four" deal, before finally going to one tonne to one unit deal in 2015. So in carbon pricing we look to simplistic sales slogans. Only in New Zealand.

And I said there was a 'but' for agriculture. On entry in 2015, the report recommends that agriculture should be eligible for the two for one deal until 2016. Then three for two deal, the five for four deal, before finally going to one tonne to one unit in 2019. Oh I forgot to mention that from 2019 there would still be 90% allocation of free units declining at a linear rate of 1.3% each year.

Summary

I must admit I am completely underwhelmed by the report, its analysis and it's recommendations. I didn't think it was possible to further dilute the carbon price signal in the NZ ETS with more exemptions. I didn't think it was possible to make the NZ ETS sound even more like a bad used car parts advertisement. But I am wrong on both counts.

Australia to host geoengineering conference

2011-09-15T23:25:00.001+10:00

The Brisbane Times reports that a geoengineering conference will be held in Canberra later this month - Australia to broach radical global warming solutions.

Clouds could be made more reflective and oceans fertilised to increase carbon dioxide absorption under ideas to be discussed at Australia's first high-level climate engineering conference later this month. International interest in climate engineering – also known as geoengineering – is increasing as efforts to curb the world’s emissions of greenhouse gases continue to falter.

Scientists said the event was an important step for Australia into the controversial geoengineering debate but expressed grave concerns some proposed technologies could have dangerous and far-reaching side effects.

The two-day science symposium, starting in Canberra on September 26, is being hosted by the Australian Academy of Science and the Australian Academy of Technological Sciences and Engineering. Among the more controversial ideas being discussed is the injection of sulphur particles into the stratosphere to reflect sunlight and slow global warming.

Other technologies include fertilising oceans to increase uptake of carbon dioxide and spraying aerosols into the atmosphere to increase the reflectiveness of clouds. But the meeting will also cover relatively benign ways to pull greenhouse gases from the atmosphere, including planting more trees and using climate-friendly agricultural techniques.

Cross-posted from Peak Energy.

Sydney's New 1 Bligh St Skyscraper is Australia's Greenest Office Tower

2011-09-13T17:35:00.000+10:00

Inhabitat has a post on a new green building in Sydney - Sydney's New 1 Bligh St Skyscraper is Australia's Greenest Office Tower. I haven't had a close look at it but the lobby certainly looks impressive...

Ingenhoven Architects + Architectus recently unveiled a brand new glass high-rise in downtown Sydney that has earned the highest score in Australia’s Green Star standard. Inaugurated by Australian Prime Minister Julia Gillard and commissioned by the Dexus Property Group, the 1 Bligh office tower glows from within with 28 story-high atrium that stretches from the building's lobby to a massive skylight up top.

The floor-to-ceiling atrium also acts as a natural cooling system, siphoning hot air and funneling it out the top of the building. Office balconies line the interior of the atrium, benefitting from the breeze and natural light.

The shape and design of the building is based on solar orientation – the layout creates advantageous shady and sunny areas. Employees can enjoy harbor views from any height through the clear glass façade. An outdoor patio on floor 15 offers a place to have lunch with a view. The entire roof is a green planted terrace accessible from the 28th floor that offers superior harbor and city views, fresh air, and greenery. The roof deck is also partially covered so employees can still enjoy it in rain. The soil and greenery on the roof cuts down on the building’s solar gain.

The double skinned façade glitters in Sydney’s skyline, while cooling the inside. The building is partially powered by a vacuum tube solar collector. Sydney frequently experiences water issues, so the building has an on-site wastewater recycling system that is so prolific it recycles some public sewage system water as well. On-site bicycle parking encourages employees to take green transportation to work.

The thin ice of modern life

2011-09-08T03:27:00.000+10:00

(pinched from Peak Energy)

Scientific American has a post on the decline of arctic sea ice - Total Arctic sea ice at record low in 2010: study.

The minimum summertime volume of Arctic sea ice fell to a record low last year, researchers said in a study to be published shortly, suggesting that thinning of the ice had outweighed a recovery in area The study estimated that last year broke the previous, 2007 record for the minimum volume of ice, which is calculated from a combination of sea ice area and thickness.

The research adds to a picture of rapid climate change at the top of the world that could see the Arctic Ocean ice-free within decades, spurring new oil exploration opportunities but possibly also disrupted weather patterns far afield and a faster rise in sea levels.

The authors developed a model predicting thickness across the Arctic Ocean based on actual observations of winds, air and ocean temperatures. "The real worrisome fact is downward trend over the last 32 years," said Axel Schweiger, lead author of the paper, referring to a satellite record of changes in the Arctic.

"The real worrisome fact is downward trend over the last 32 years," said Axel Schweiger, lead author of the paper, referring to a satellite record of changes in the Arctic.

The researchers at the University of Washington in Seattle checked the model results against real readings of ice thickness using limited submarine and satellite data.

The approach has some detractors because it is focused is on modeling rather than direct observations of thickness, and therefore contains some uncertainty.

Sea ice area is easier to measure by satellite than ice thickness, and so has not needed a modeling approach.

The figure above is from the Arctic Sea Ice Blog and shows [modelled] sea ice volume. The figure below (from The Cryosphere Today) shows the sea ice extent in millions of square kilometers.

The anomaly for this time of year is a loss of about 1.8 million square kilometers. What does that mean?

The maximum total sea ice area in winter is about 13 - 14 million square kilometers (also falling) or about 2 Australias. So the deficit in area at the end of the summer melt compared to the long term average is equivalent to 1 Queensland, 2 NSWs, 7 New Zealands or 20 Tasmanias.

Tassie often goes missing in stylised maps of Australia, but I think people might notice if Queensland did.

Will NSW renewables be blown off course by Victoria’s winds of change ?

2011-09-06T18:35:00.001+10:00

The Conversation has an article on the ever shifting sands of state renewable energy policy and the boom-bust cycles the shifts create in industry - Will NSW renewables be blown off course by Victoria’s winds of change?.

Not so long ago, Victoria was the poster child for renewable energy policy in Australia.

It had a Climate Change Act put in place to reduce greenhouse gas emissions by 20% between 2000 and 2020. It had a government-supported plan to get 5% of its power from the sun by 2020.
Victorian households were being paid 60 cents per kilowatt hour for solar power they pumped back into the grid. And wind farm proponents were queueing up to take advantage of the state’s excellent wind resources.

Then there was an election, and the wind changed in Victoria.

Could the wind power industry now turn to NSW for further development? Or will a Coalition-controlled NSW also prove to be hostile territory for wind power?

First, let’s consider the effects a change of government had in Victoria.

Ted Baillieu’s Coalition has backed away from its previous support for the Climate Change Act, describing its legislated targets – such as a 20% reduction in CO₂ – as “aspirational".
Then, in a horror week for renewable energy, the Victorian Government slashed its support for rooftop solar power and introduced restrictive new planning requirements for wind farms.

The planning changes mean wind farms can’t be built within two kilometres of a home without the written consent of the home owner. The ban also applies within five kilometres of 21 regional cities. Scenic locations, such as the Great Ocean Road and Dandenong Ranges, are also off-limits.

Unless you have an entire community on-side, the new planning regulations don’t leave many places to build.

Last year, the National Health and Medical Research Council found no published scientific evidence to link wind turbines with adverse health effects. Yet the Victorian decision allows a single opponent to veto a wind farm development even if the rest of the community wants it.
Is this how planning decisions should work? What happened to weighing up community opinion and making a decision in the public interest? Residents have no such right of veto over coal-fired power stations, new roads or mansions that block their view.

The Clean Energy Council claims the decision could cost Victoria $3 billion in wind farm investment. Some wind farm developers have already announced plans to look elsewhere.
So, will the wind power industry shift its focus to NSW for future developments? Not if NSW Premier Barry O'Farrell has his way.

O’Farrell recently expressed his personal preference for no more wind farms in NSW. While he later stressed his commitment to the NSW target of 20% renewable energy by 2020, investors would be worried.

Under the previous Labor government in NSW, most wind farm decisions were made by Minister for Planning, Tony Kelly, instead of local councils. This meant local concerns about wind farms could easily be overlooked.

The O'Farrell-led Coalition government is considering new planning guidelines for wind farms which are likely to give local communities more say in decisions regarding nearby wind farms. But there are indications the guidelines will be more flexible than those in Victoria.

Despite these indications, it is impossible to predict whether NSW will go down a similar path to Victoria, making renewable energy generation increasingly arduous. In fact, predicting future renewable energy policy anywhere in Australia is a challenge.

That is precisely the problem – renewable energy in Australia has been on a rollercoaster of boom and bust, driven by frequent policy changes.

Consider two examples.

In 2001, the Howard Government’s Mandatory Renewable Energy Target (MRET) led to a boom in wind power. The policy mandated that, by 2010, 2% of Australia’s electricity generation would be sourced by renewables.

When the target percentage was not increased in the years following the policy announcement, the wind power boom faded away. Wind companies that had set up manufacturing facilities in Australia pulled out, and have not returned since.

More recently, the NSW Government offered a generous premium tariff for households to install solar panels, only to slash the scheme when it became too popular.

Given these developments – and the policy decisions mentioned above – it’s a wonder that Australia has any renewable energy installed at all.

For investors and small businesses, the constant chopping and changing makes renewable energy a risky venture. The Gillard Government’s carbon price will deliver greater consistency for investors but it, too, is vulnerable to a change in government.

Australia has enough renewable energy resources to become a renewable energy superpower. To realise this potential, renewable energy needs consistent long-term policy to support its steady development as a response to climate change.

Unfortunately, climate change has become an ideological battle ground where consistency is hard to find.

Fortunately, we do have a consistent national mechanism to support renewable energy – Australia’s Renewable Energy Target, which requires 20% of our electricity to come from renewable energy by 2020.

Now we just need a consistent national planning approach to back it up.

CSIRO Solar field construction timelapse video

2011-09-06T07:31:00.000+10:00

The CSIRO has some video of the construction of a solar thermal power R&D facility - Solar field construction timelapse.

For your viewing pleasure: the construction of CSIRO Solar Field 2, in just over a minute.

How wind is cutting energy costs

2011-09-05T21:57:00.001+10:00

Giles Parkinson at The Climate Spectator has some more real world validation of Jerome a Paris’ frequently made argument that wind power lowers power prices - Why wind is cutting energy costs.

The most common critique of wind energy, and renewables in general, in the mainstream media and anywhere the issue is discussed is that it is expensive.
The problem is, this is only half true. Or at least, it only tells half the story. While the levelised cost of energy from wind farms is higher than that of baseload coal and gas, the deployment of wind energy here and overseas is having a surprising impact on energy market prices: it is causing them to fall.

And it’s not the only myth that a new analysis of the South Australian market has busted: wind is succeeding in displacing coal, it is also having a dramatic impact on the state’s energy emissions, and it doesn’t need anywhere near as much back-up generation as some like to claim.

The International Energy Agency wrote on the price impact earlier this year – and we reported on it – when it cited the case of Ireland, where wind energy is causing wholesale prices to fall by around €74 million; the same as the cost of feed-in tariffs to support the financing of wind power and the associated balancing costs.

Now Windlab Systems, the CSIRO spin-off that has developed the world’s leading wind mapping technology and is now in the business of developing wind farms – including some in places in inland Australia where you wouldn’t expect them – has produced a similar assessment of how its proposed 700MW Kennedy wind farm in north Queensland would impact pool prices in the state. But it says the cost benefits could be even greater.

According to modeling presented at a seminar in Sydney last week, a 700MW wind farm – which would be the largest in the country – would cost consumers $120 million a year from 2013/14 from the amount of renewable energy certificates that are used to subsidise green energy under the renewable energy target. (That figure is based on a REC price of $55/MWh, compared to around $40 now).

But the modeling also suggests that the amount of electricity generated by the wind farm would cause pool prices to fall by up to 9 per cent, reducing the average price in 2013/14 from around $67/MWh (a carbon price would be included by then) to around $61/MWh. The savings in costs to consumers would be $330 million, nearly three times the cost of the subsidy. There is a further cost benefit from a reduction in transmission losses, because the wind farm would be situated far closer to customers than current generators. Windlab estimates these savings to be around 5 per cent from the cost of energy.

So how does “expensive" wind deliver cheaper energy prices? By a mechanism known as the merit order effect, which has successfully delivered cheap electricity prices to Australia (and other countries) by allowing those generators with the lowest variable marginal cost (mostly, the cost of fuel) to get priority. The final price is set by the last generator needed to meet demand – the higher the demand, the higher the price paid by all.

What the MRET and other subsidies do is allow the wind farms to jump to the top of the queue, meaning less of the expensive generators are needed, and so the marginal cost that sets the pool price is cheaper. “It is actually a very efficient mechanism to capture those benefits," says Richard Mackie, Windlab’s general manager in Australia.

(It should be noted that some funny things do happen at night, when demand is low and coal generators, which don’t like to be switched off, bid negative prices. The introduction of large amount of wind in SA has made this a more regular event, and this has added to the lower pool prices. Some wind farms have chosen instead to switch off capacity).

Unsurprisingly, the fossil fuel industry hates this. For decades, they have enjoyed a system where rising demand pushed prices up until a strong enough signal was given for more capacity to be built. Once it was, prices eased back again and so the process renewed itself.

The arrival of wind in the last decade, and the MRET, threw a spanner in these works. Apart from cutting their margins, it also means that significant baseload gas generation is less likely to occur unless coal capacity is removed, which is why some call for the MRET to be scrapped or reduced.

But doesn’t this mean that wind is simply displacing gas, rather than coal, and not achieving so much in the reduction of emissions – two other accusations (other than price) that are often thrown at the wind industry?

Not according to another analysis conduct by Windlab, using data from the Australian Energy Market Operator of the South Australian market, which has the biggest penetration of wind anywhere in the world apart from Denmark.

There are more than 1150MW of wind turbines in SA, accounting for 21 per cent of nameplate capacity. Normally, that might be translated into around 5-10 per cent of overall electricity produced, depending on the wind conditions, because wind doesn’t blow all the time.

But in SA, wind also accounts for 21 per cent of energy production – mostly because it has been displacing brown coal energy that is imported from Victoria. The brown coal generators know this, which is why they fought so hard to water down Victoria’s renewable energy target and to argue against an upgrade for the interconnector linking the two markets – too much wind power is bad for fossil fuel profits.

The increased penetration of wind also helped the state record a dramatic reduction in carbon emissions. In 2005/06, when wind contributed just 5 per cent of the electricity produced, SA’s emissions from electricity were 9.8 million tonnes of co2e. In 2010/11, when wind contributed 21 per cent, the emissions had dropped to 8mt/C02e, even though overall electricity production had increased around 6 per cent over the period. Windlab says most of this reduction, which translates into a 23 per cent cut in emissions intensity from from 0.72 to 0.55 tonnes of CO2e, can be attributed to wind.

But don’t wind farms need massive amounts of back-up power from expensive and comparatively heavy-emitting open cycle gas turbine (OCGT) plants, also known as peakers?

Not in the case of SA. Windlab says 200MW of OCGT has been added to the state’s grid over the last five years, compared to 763MW of wind, but much of that new peaking capacity is designed to cope with rising peak demand – driven by the increased use of air conditioners – which has risen by 370MW, or 23 per cent, over that period.

And here’s another surprising statistic: the amount of electricity produced from peaking plants has actually fallen in the past five years, from 501GWh to 325GWh, despite the increased capacity and the rising peak demand. Not only has wind reduced imports of brown-coal generation from Victoria, it has also, counter-intuitively, reduced the need for peaking plants for much of the year – although not, it should be noted, at times of the highest peaks caused by extreme heat waves, when wind has mostly absented itself.

Wind has not needed anything near like-for-like backup, as some of the more absurd analyses from the anti-wind brigade pretend. Indeed, some of the peaking plants last year were used less than 1 per cent of the time – little changed from before wind’s arrival.

There is no doubt, that a high penetration of wind energy like that which has occurred in SA is challenging to manage. But it can be done. In SA this is helped because there is a large amount of gas, baseload and otherwise, which offers more flexibility; and because there has been accurate wind forecasting (thanks to Windlab), which helps manage wind’s variability. And the wind industry says there are demonstrable benefits: wind energy does reduce emissions, it cuts the pool price (sometimes by more than the cost of the original subsidy), it reduces transmission loss factors, and, of course, it brings in investment and jobs.

EcoImagination: Water Recycling

2011-09-05T09:17:00.000+10:00

GE's "Imagination Network" has a new video on water recycling from an Australian viewpoint (following on from their recent Smart grids video) - The Water Recycle".

The video can't be reduced in size and this blogger template isn't really compatible with large width embeds, so you might want to go to the link to watch it...
Article continues...

Energy and the Economy Part 2.

2011-09-03T08:57:00.004+10:00

I am going to engage in some speculation. Let us accept the following assumptions as a premise for this argument,

1. The economy is a chaotic system.
2. Both our markets and our economy are displaying classic chaotic bifurcating behaviour (they are bouncing up and down).

Question: Why the bifurcating behaviour? What is driving the instability?

I am going to argue that the answer is blindingly simple and very obvious when you think about it, but a full understanding requires some background knowledge.

1. Mathematically, what does the economy look like?

To understand the driver of the instability, we need to tackle another issue: Mathematically, what does the economy look like – what drives the economy?

As a first order approximation, the answer is simple and obvious. The economy grows exponentially. The expansion is a requirement of the Fractional Reserve System. To quote Wikipedia : “Fractional reserve banking involves the creation of money by the commercial bank system, increasing the money supply.” The amount of money in circulation (the money supply) each year MUST increase, in order to make the Fractional Reserve system work. This has a tendency to create inflation if it is not balanced by an equal increase in GDP.

In simple, non-maths terms the economy MUST grow by a few percent every year.

The reason for this is simple. If the amount of money in circulation increases, but goods produced do not increase, then you have more money chasing the same quantity of goods, so each “unit” of goods will be “worth” a higher amount of money. Actually it is much more complex than that (look up “Velocity of money” as a starting point) but that is a good first-order explanation.

So. The mathematical description of the economy is very simple – money supply must expand exponentially (driven by the nature of the Fractional Reserve system), and the underlying productivity that the money “maps” to must expand with it.

Failure of expansion in either the money supply or GDP will result in problems.

If money becomes unavailable (as occurred during the depression) then the Fractional Reserve System fails – there is no money available to pay debt so debts are defaulted on. Since money (in our system) is based on debt, the default causes the money to “disappear” (the debt is “written off” by the bank), and this reduces the amount of money in circulation, exacerbating the problem (as occurred in the Great Depression).

John Maynard Keynes had the insight that this problem can be fixed by central banks – they step in and inject money into the system to “re-inflate the economy”. Once the amount of money in circulation is once again in line with the required growth rate, the normal investments that businesses need to do (in order to grow) can be carried out, and growth returns. (Again, this is a grotesque simplification – but good enough for a first order understanding. For more detail read the Wiki article).

Since the 1980s our economy has been dogged by a series of recessions, which the Central banks have responded to by injecting cash (another simplification, but it will do).

The cash injections worked, but a pattern emerged: as a rough approximation, it is fair to say that each recession required more central banking intervention than the last – culminating in the 2007/2008 GFC, which required unprecedented intervention. The GFC was odd, in that the interventions don’t seem to have worked.

2. On Bubbles.
The injection of money into the economic system is meant to encourage investment in productive businesses and thus re-start growth. However recent decades have seen a different pattern. Injection of money has led to investment in a series of “bubbles” and in intangible “Financial Instruments” rather than investment in productive businesses (i.e. businesses that produce tangible things).

The most recent bubble was the housing bubble. A house has a limited “lifespan”, so the value of a house should depreciate as it ages. However, in recent years the value of a house has gone up, not down.

In common with other bubbles has been a faith in the “Greater Fool” theory: The theory that you can buy an object at an inflated price now and sell to a “Greater Fool” for an even more inflated price later – even though the value of the object should have depreciated.

Why would people invest in a depreciating asset - and thus implicitly trust to the “Greater Fool” theory? The answer is obvious. They do this if there is money to invest and no better investment available.

If you can’t invest in a sound business (a business that produces something new of tangible value) then you invest in a bubble (depend on a Greater Fool).

So a bubble requires two elements:

i) A supply of cash, looking for investments.
ii) Limited sound business investments.

3. Putting it together.
So suddenly Keynes isn’t working. Why not? The answer is obvious. The Economy has two parts which must “map” to each other:

i) Money supply
ii) GDP (a proxy for "stuff made" or productivity).

We have just said that it appears that productive investments don’t seem to be available – so any expansion of GDP is due to phantom bubble blowing, not real productivity.

Injecting money only works if it can engender “real” growth. If the production of tangible goods is not an option, the money leads to a bubble, which collapses. A fair description of the last 15 years.

The Dow Jones has collapsed to a level below where it was in 2000 (in real terms). US GDP should probably do the same and if the US dollar continues to decline the value of the US economy (in real terms) probably will drop to pre-2000 levels (it may have already, I haven’t done the maths).

So now we can answer the question: Why is the economy undergoing a chaotic bifurcation?

The Keynes strategy was designed to deal with a contraction in money supply. But money supply maps to underlying productivity. What if the problem is a contraction in the ability to grow? This won't be cured by adding money - the money needs to be invested in growth.

A few simple data points:

i) Growth of economies is correlated with growth of consumption of energy supplies. Recent studies that found a possible weakening in this correlation for developed nations failed to consider the fact that the energy consumption had simply been outsourced to the manufacturing nations. (See the Bundeswehr study referenced in Part 1 for more discussion and references).
ii) Oil production peaked and plateaued in around 2005. (See the Bundeswehr study referenced in Part 1 for more discussion and references).
iii) Energy and mineral resources required to extract energy and minerals is increasing exponentially as the quality of resources decreases (see here and here for discussion.).

Given these trends it is obvious that the quantity of resources available to do useful work for society is going to struggle to keep up with growth. This is reflected in an increase in prices for these resources – making investment in any resource-requiring production (i.e. any production of tangible goods) difficult. This clearly encourages investment in “phantom” productivity – bubbles and intangible “services” or products.

If the growth in money supply over recent years was invested in phantom bubbles, then of course it will collapse until it represents the value of the “real” economy.

This is seemingly well under way.

But there is an underlying issue: The Fractional Reserve System REQUIRES growth. If growth is not possible, then this system is fundamentally unsound.

So here is the issue in a nutshell: The Keynes policy approach addresses an issue with money supply. It would allow money to be invested in growth. But what we have is an issue with growth. The system is much more complex than I have indicated, but this fundamentasl mismatch is (I believe) at the core of the problem.

It is simple, and (when you think about it) obvious.

The bifurcation(s) must drive a decrease in complexity until a stable system evolves. If growth is less possible, a new system must evolve.

Energy and the Economy Part 1.

2011-09-03T08:36:00.004+10:00

A complete version of the Bundeswehr (German Army) study is now available. Amazingly, they seem to be interpreting things in quite interesting ways. In many ways it looks spookily familiar – first in their reference to a bifurcating chaotic system, and second in their comment that “All other subsystems have developed hand in hand with the economic system. A disintegration can therefore not be analysed based on today’s system. A completely new system state would materialise.”Excerpts from the Bundeswehr study:

The phenomenon of tipping points in complex systems has been known for a long time and is referred to as “bifurcation” in mathematics. Tipping points are characterised by the fact that when they are reached, a system no longer responds to changes proportionally, but chaotically. Currently, reference is made to potential “tipping processes” most notably in the field of climate research. At such a point, a minor change to one parameter – in the case of the climate, a change in temperature – would have a drastic effect on an ecosystem.At first glance, it seems obvious that a phase of slowly declining oil production quantities would lead to an equally slowly declining economic output.Peak oil would bring about a decline in global prosperity for a certain length of time, during which efforts could be made to develop technological solutions to replace oil. Economies, however, move within a narrow band of relative stability. Within this band, economic fluctuations and other shocks are possible, but the functional principles remain unchanged and provide for new equilibriums within the system. Outside this band, however, this system responds chaotically as well.From the perspective of economics, at least one border of the band can be identified: an economic tipping point exists where, for example as a result of peak oil, the global economy shrinks for an undeterminable period. In this case a chain reaction that would destabilise the global economic system and cause a clear shift in the analytical framework for all other security consequences would be imaginable. The course of this potential scenario could be as follows:[Short Term]1. Peak oil would occur and it would not be possible, at least in the foreseeable future (153), to entirely compensate for the decline in the production of conventional oil with unconventional oil or other energy and raw material sources. The expression “foreseeable” is very important in this context. Ultimately, it leads to a loss of confidence in markets.In the short term, the global economy would respond proportionally to the decline in oil supply (154).
Increasing oil prices would reduce consumption and economic output. This would lead to recessions.
The increase in transportation costs would cause the prices of all traded goods to rise (155). Trade volumes would decrease. For some actors, this would only mean losing sources of income, whereas others would no longer be able to afford essential food products.
National budgets would be under extreme pressure. Expenditure for securing food supplies (increasing food import costs) or social spending (increasing unemployment rate) would compete with the necessary investments in oil substitutes and green tech.
Revenues would decrease considerably as a result of recession and necessary tax reductions.[Medium Term]In the medium term, the global economic system and all market-oriented economies would collapse.
Economic entities would realise the prolonged contraction and would have to act on the assumption that the global economy would continue to shrink for a long time (156).
Tipping point: In an economy shrinking over an indefinite period, savings would not be invested because companies would not be making any profit (157). For an indefinite period, companies would no longer be in a position to pay borrowing costs or to distribute profits to investors. The banking system, stock exchanges and financial markets could collapse altogether (158)
Financial markets are the backbone of global economy and an integral component of modern societies. All other subsystems have developed hand in hand with the economic system. A disintegration can therefore not be analysed based on today’s system. A completely new system state would materialise.
Nevertheless, for illustration purposes here is an outline of some theoretically plausible consequences:
Banks left with no commercial basis. Banks would not be able to pay interest on deposits as they would not be able to find creditworthy companies, institutions or individuals. As a result, they would lose the basis for their business.
Loss of confidence in currencies. Belief in the value-preserving function of money would dwindle. This would initially result in hyperinflation and black markets, followed by a barter economy at the local level.
Collapse of value chains. The division of labour and its processes are based on the possibility of trade in intermediate products. It would be extremely difficult to conclude the necessary transactions lacking a monetary system.
Collapse of unpegged currency systems. If currencies lose their value in their country of origin, they can no longer be exchanged for foreign currencies. International value-added chains would collapse as well.
Mass unemployment. Modern societies are organised on a division-of labour basis and have become increasingly differentiated in the course of their histories. Many professions are solely concerned with managing this high level of complexity and no longer have anything to do with the immediate production of consumer goods. The reduction in the complexity of economies that is implied here would result in a dramatic increase in unemployment in all modern societies.
National bankruptcies. In the situation described, state revenues would evaporate. (New) debt options would be very limited, and the next step would be national bankruptcies.
Collapse of critical infrastructures. Neither material nor financial resources would suffice to maintain existing infrastructures. Infrastructure interdependences, both internal and external with regard to other subsystems, would worsen the situation.
Famines. Ultimately, production and distribution of food in sufficient quantities would become challenging.

The report runs to 112 pages, a link to it is available from the Energy Bulletin review here.

aeldric.

PacPyro - A Landfill Listing ?

2011-09-02T22:18:00.001+10:00

The Climate Spectator has a report on a company looking to exploit biochar production for carbon credits - Landfill listing.

Landfill energy and biochar specialist Pacific Pyrolysis has decided to push the go button on its backdoor listing on the ASX less than a week after the federal government got its Carbon Farming Initiative through parliament. ...

The company has developed technology that uses a process of slow pyrolysis to convert low value, non-food biomass, such as municipal green waste and industrial sludges into renewable energy and biochar, and says it has an extensive pipeline of projects with major corporations and councils. It has a demonstration plant north of Sydney and expects its business to be able to generate renewable energy certificates and also be included in the CFI, which will allow farmers and others to generate credits for carbon abatement initiatives.

PacPyro hopes to tap into the $10 billion landfill market, exploit rising landfill costs and energy prices to deliver its technology as a cheaper and more profitable option. It expects to deploy its first commercial scale plants from 2012, depending on its ability to strike commercial partnerships, and to potentially tap government funding, as well as its ability to generate renewable energy and carbon credits.

Cross posted from Peak Energy.

New Zealand Officials Muzzled on Peak Oil?

2011-09-02T09:53:00.000+10:00

from Denis Tegg at oilshockhorrorprobe

The government has finally released its Energy Strategy. There are cosmetic changes from the Draft version but it's no surprise that the final Strategy continues to completely ignore the threat of peak oil. There were many submissions, including my own, which detailed the raft of recent reports from oil and energy experts, think tanks and government institutions which are all pointing to an imminent supply and oil price crunch. And in 2009 government officials themselves gave strong warnings to Ministers. So since 2009, have the officials been muzzled?
Article continues...

Plane biofuel to be made from eucalypts

2011-09-01T21:58:00.000+10:00

The SMH reports that Virgin Blue, looking to escape the squeeze from scarcer fossil fuels, is partnering with a consortium including GE to produce biofuel for aviation from eucalypts - Plane biofuel to be made from eucalypt.

A consortium of companies is taking action by using eucalypt trees to develop a commercial biofuel for the Australian aviation industry.

"Innovation and creativity will play enormous roles as part of the transition to a low carbon future," said Ben Waters, director of ecomagination, GE Australia and New Zealand.

GE on Thursday announced it was joining Virgin Australia and other partners to research and develop the commercial biofuel.

The focus will be on using a thermochemical decomposition of organic material - at elevated temperatures in the absence of oxygen - to covert mallee eucalypt trees to the biofuel.

Mr Waters said a pilot biofuel production unit would be opened in Australia next year. ...

A recent CSIRO report estimated the aviation industry could cut greenhouse gas emissions by 17 per cent, generate more than 12,000 jobs and reduce Australia's reliance on aviation fuel imports by $2 billion per annum over the next 20 years through the adoption of biofuels.

Other members of the consortium include Renewable Oil Corporation, the Future Farm Industries CRC, and Canadian biofuels company, Dynamotive Energy Systems Corporation.

The report mentioned above may be Sustainable Aviation Fuels Road Map: Data assumptions and modelling

Cross posted from Peak Energy.

Conservative Behaviour

2011-09-01T01:28:00.001+10:00

Two articles from The Conversation. The first looks at recent trends in Australian power consumption, admittedly from a small sample of years, suggesting that consumers are using less electricity and exploring some of the likely causes.

The second, is a damming dissection of climate change denial in The Australians ongoing campaign against reality.

Powering down – has Australian electricity consumption hit its peak?
A number of recent reports have documented an unprecedented decline in electricity consumption. The Australian Bureau of Agricultural and Research Economics, in its 2011 Energy Update, shows a decline of 5.4% in 2008-09, followed by a 1.2% decline in 2009-10.

Event horizon: the black hole in The Australian’s climate change coverage
The problem is that on one side of the debate you have 97% of the world’s published climate scientists and the world’s major scientific organisations, and on the other side you have fools.

Excuse my bluntness, but it is past time to acknowledge that the science underpinning anthropogenic climate change is rock solid. The sceptics have had the time and opportunity to come with up a convincing case, but their best efforts read like arguments that NASA faked the moon landing.

The Australian’s anti-science campaign takes many forms. One is the inflation of the credentials of their fake experts. For example, OpEd writer and member of the Outdoor Recreation Party Jon Jenkins was referred to as an “Adjunct Professor”. Bond University wrote to The Australian informing them that this was not true.

Howard Brady was called a “climate change researcher from Macquarie University”; in fact, Brady is a 70 year-old retiree who has published just seven scientific papers (on Antarctic sediments, not climate), the most recent one in 1983, following which he worked for 17 years in the oil industry. Macquarie University contacted The Australian to set the record straight.

In neither of these cases did The Australian publish a retraction or clarification.

One feature I really like at The Conversation site is the ability to vote down comments as unconstructive. For some trivial childish reason I take great pleasure in voting obvious stooges down - and take heart that all is not lost when others appear to share this sentiment.

Queensland to be left in the dark ?

2011-08-31T22:55:00.000+10:00

The Brisbane Times has an article on possible electricity shortages emerging in Queensland - Queensland to be left in the dark.

Warnings that Queensland could experience power shortages in two years proved the need for a carbon tax, according to the Climate Institute. But the state government and energy provider Origin have denied the state is at risk of power shortages as argued by the Australian Energy Market Operator.

Its Electricity Statement of Opportunities report found Queensland would be the first jurisdiction in Australia to experience shortages if it failed to attract more investment in power stations.

Climate Institute CEO John Connor said the report warned uncertainty over the carbon tax could deter or distort energy investments costing electricity consumers up to $5 billion in higher bills.

"It's clear that the best possible outcome for electricity consumers is decisive action from our politicians to cut our carbon emissions by putting a price on carbon," Mr Connor said. "Without a pollution price and the clarity of the renewable energy target, investors will try and second guess government policy, make inefficient decisions or delay investment and this will increase electricity costs. A pollution price will be a green light for the electricity sector to get on with the job of building the infrastructure needed to provide clean energy power for Australians." ...

Energy Minister Stephen Robertson also said Queensland was "well placed" to have the electricity generating capacity to meet the energy demands of a fast-growing state. ...

“These include ERM Power Ltd’s 500 megawatt Braemar 3 gas power station, Origin Energy’s 500 megawatt Darling Downs Stage 2 gas-fired project and the 44 megawatt solar thermal project at the Kogan Creek power station.’’

Charting unexplained territory in the NZ Emissions Trading Scheme Report

2011-08-24T17:23:00.009+10:00

This is another cross-post from Robin Johnson's Economics Web Page.

Recently, I have written a couple of posts on the New Zealand Emissions Trading Scheme (NZ ETS).

I compared the comprehensiveness of the NZ ETS vs the Australian Clean Energy Future ETS, the Kyoto chart junk in the Report on the New Zealand Emissions Trading Scheme, and the over-supply of the New Zealand Units in 2010.

This post mixes two of these ideas; searching out bad charts and looking again at the supply side of the New Zealand carbon market, how many New Zealand Units were allocated for free to emitters and businesses under the NZ ETS.

The Report on the New Zealand Emissions Trading Scheme provides in Figure 5 a pie chart of the number of New Zealand Units (NZUs) surrendered by emitters.

Although the pie chart is Kaiser Fung's least favourite type of chart, this pie chart isn't too bad. There are a manageable number of categories; only five; and no 3-D effects. The key point is clear from the pie chart, that about two-thirds of NZUs surrendered were purchased from foresters.

Also the chart follows the NZ Ministry for the Environment's usual practice of providing the original data underneath so you can do you own chart.

I did a bar chart of the data, re-labelling the "Other" NZUs as "Free NZUs".

The free allocations of NZUs are shown in another pie chart, Figure 8.

The allocations to industry activities (the pie slices) are charted not as as numbers of NZUs as in Figure 5, but as proportions. The proportions are noted as percentages on each pie slice. There is no table of data accompanying the chart. This is clearly inconsistent with Figure 5. Why doesn't the pie chart show either the actual total number of NZUs allocated, or the number allocated by activity? The total number of NZUs allocated for free in 2010 is not disclosed anywhere else in the Report on the New Zealand Emissions Trading Scheme. There is another chart, Figure 11, that appears to show free NZU allocations to each industry sector.

Maybe these add up to the total "pie" in Figure 8. I added them up; 1.76 million NZUs given to industry, plus 6.9 million NZUs given to pre-1990 forest owners plus 0.69 million NZUs given to fishing quota holders: equals a total of 9.35 million NZUs.

However, the total number of NZUs allocated by free gifting between 1 July 2010 to 31 December 2011 is 12,776,026, according to the Ministry of Economic Development Chief Executives report. So there appears to be a gap of 3.4 million gifted NZUs, not disclosed in The Report on the NZ ETS.

Is this a big deal? I think it is. Dr Jan Wright, NZ's Parliamentary Commissioner for the Environment, describes free allocation for what it is; a subsidy to industry

In her submission on the 2009 amendments to the NZ ETS, Jan Wright said

Allocation is costly. Each credit that is given away rather than kept or sold is a real dollar loss to the taxpayer. And there is another cost: it lessens the incentive to invest in low-carbon technology and emissions reductions. Generous and unlimited allocation that is promised to last a long time, whether or not it actually does, removes the push to transform to a low carbon-intensive economy.

To me this is an unsatisfactory level of disclosure of information. I am struggling to find an explanation for this other than to obscure the amount of subsidies funded via NZUs to emitters such as Rio Tinto-owned New Zealand Aluminum Smelters Ltd. I leave the last word to Jan Wright.

The principle of Parliamentary scrutiny in the Public Finance Act should also apply to allocation. Given the large taxpayer expense, the reason for allocating to a particular sector should be transparent.

Christchurch quake cost added to NZ's yearly oil import bill?

2011-08-24T08:51:00.000+10:00

re-posted from Denis Tegg's blog - oilshockhorrorprobe

By 2015 New Zealand could face an extra $10 billion cost each year to import oil, compared to 2011 prices. That's more than the cost to government of the Christchurch earthquake each and every year! By 2020 the oil import cost each year could soar to $19 billion more than the present cost. That's the bill for two Christchurch earthquakes every year.
Article continues...

New Holland Disease?

2011-08-23T04:11:00.011+10:00

Dutch Disease is the term used by economists to describe the situation now being faced by Australia (aka New Holland). The Sydney Morning Herald (link below) describes some of the effects the mining boom is having on the rest of the economy - where most people work. The demise of BlueScope is covered in a related article from The Conversation, 'Once upon a time, when Australia had a steel industry …’, which has the great line, "governments ... wedded to day trading for policies".

Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The claimed mechanism is that an increase in revenues from natural resources (or inflows of foreign aid) will make a given nation's currency stronger compared to that of other nations (manifest in an exchange rate), resulting in the nation's other exports becoming more expensive for other countries to buy, making the manufacturing sector less competitive.

The current situation in Australia appears to be a textbook example.Article continues...

Solar will force coal and nuclear out of the energy business

2011-08-21T10:40:00.003+10:00

The Conversation has a post on the economics of solar power vs that of traditional energy sources from Andrew Blakers, the Director of the Centre for Sustainable Energy Systems (CSES) at Australian National University - Solar will force coal and nuclear out of the energy business.

A solar energy revolution is brewing that will put the coal and nuclear industries out of business. Solar is already reaching price parity with coal in many parts of Australia. In contrast to coal and nuclear, solar is fully sustainable and safe. Solar is now an established industry that is growing very rapidly.

The CO₂ emissions from a modest four-star house with modern efficient appliances are about 6 tonnes per year. Emissions from a typical car driving 10,000 km per year are 1.5 tonnes per year. Installing a 5 kilowatt photovoltaic panel will fully offset these amounts of CO₂ by reducing the need to operate a coal fired power station. We’re well on the way to grid parity

Photovoltaic power has reached retail grid parity for three out of four Australians – everywhere except Victoria, Tasmania and Canberra. Retail grid parity means that it’s cheaper to get electricity from photovoltaic panels on your house roof than to buy it from the grid.

In Adelaide, photovoltaic power is only two-thirds the price of retail grid electricity. By 2015, grid parity will be achieved in all of Australia, as well as in nearly every temperate country in the world – about 6 billion people.

Eliminating CO2 emissions from electricity production will be easier, cheaper and faster than most pundits predict. The faster that the solar energy industry develops, the less damage from greenhouse gas warming will occur.

The smart future of public transport

2011-08-19T08:15:00.000+10:00

The Conversation has an article on the use of "infostructure" to improve public transport - The smart future of public transport.

Can you imagine a public transport environment free from the complications of buying a ticket and validating it? What if fare evaders were automatically singled out for their faux pas? Or how about the information you require to complete your journey following you around on a wall surface, allowing you to use a mobile phone application which integrates your real time location with a game so you can play and not miss your stop?

These are some of the scenarios outlined in Infostructure: A Transport Research Project, which explores how digital media technologies can improve the customer experience on public transport.

In many cities rising traffic congestion and the sustainability agenda has brought renewed focus to public transport utilisation. Infostructure argues network and station expansion efforts are not the only solutions to public transport issues.
Information is key to the journey

As the information around us becomes ever more dense, access to high quality facts has gained increasing importance.

Within public transport environments, effective provision and access to information shifts greater control to the customer. That in turn enables them to make informed decisions about their commute, helps them manage their time and experience. ...

Got a ticket?

The project entitled Forward Motion proposes a station environment where digital technologies are seamlessly integrated with the building fabric to enable an innovative mode of ticket validation for public transport users.

Described as the “shame security system,” and comprising Radio Frequency Identification Detectors (RFID), a multi-touch sensor system and LED lighting integrated within the flooring, the system detects a customers presence, and automatically communicates with their RFID embedded ticket. Or it automatically red-flags those trying to evade paying their fare. ...

Updating in real time

The mobile phone application designs demonstrate the convenience of access to location-based real time information. Not only does this information travel with you, but it can also be responsive to other context specific information as your environment changes.

The digital technologies featured here are in many cases already operational in small and large scale applications. RFID technology is used for public transport ticketing in London with the Oyster card, Hong Kong’s Octopus system, and in San Francisco’s Clipper cards. It’s also used for facial recognition with biometric data integrated into passports and augmented reality information applications on many smart phones. ...

As demonstrated by projects such as Dare to Be Aware, Lead the Way and Intelligent Tunnel the integration of urban digital media technologies with broader design solutions for public transport environments provides opportunities to simultaneously address both operational and customer experience issues.

The design of a station – its architecture and the way it defines space, has the potential to operate “informationally.” That means surfaces such as the wall, floor or ceiling have the possibility to both transmit and receive information. They can become responsive to the user, and therefore focussed on the customer.

And these ideas may not be too far away from becoming a reality. The University of Technology Sydney, and the University of Sydney have been awarded an ARC grant to work with Transport NSW and Railcorp to develop them further. Work on improving the spatial and visual user information technologies for public transport will start at the end of this year. Stand by for your daily commute to get a lot smarter.

Australian Parliamentary Library - The development of Australia’s coal seam gas resources

2011-08-18T22:08:00.001+10:00

Coal seam gas is the big energy and environment story of the year in Australia, with the potential to become a big wedge issue in federal politics for the Liberal and National parties (along with minor right wing MPs).

More on that later, but in the meantime its interesting to see that Michael Roarty from the the Australian Parliamentary Library has produced a note on the industry - The development of Australia’s coal seam gas resources.

The aim of this Background Note is to outline recent developments in this increasingly important part of Australia’s energy sector. The Note is primarily about the extent of this resource and its development (including some environmental matters related to this) but it does not cover the details or controversies relating to how and where it is developed.

Coal seam gas (CSG) occurs naturally, in varying quantities, in coal seams. It consists mainly of methane (CH4) – hence its other name of coal bed methane (CBM). Methane burns well in air, and thus can be used as fuel.

Gases in coal seams are formed during the long geological process of coal formation (coalification) when organic matter is converted into coal. The gas accumulates underground, held within the cleats (natural fractures) and pores of the coal itself. Not all coal seams contain useful quantities of methane. In some cases, the coal gas may consist mainly of carbon dioxide (CO2), or it may contain poisonous carbon monoxide (CO), or nitrogen. There may also be quantities of hydrocarbon gases other than methane (for example, ethane, propane, butane).

When methane is released as a side-effect of coal-mining operations it is called coal mine methane (CMM) and is usually vented to the air (although in particular cases it can be captured and used as an energy source[1]). It used to be considered a nuisance that hindered coal mining as it was responsible for serious coal mine fires and explosions in earlier years. CMM nowadays is much more effectively managed using methods such as methane drainage, in association with mining activities.

Coal seam methane is identical to “natural gas” (also methane) associated with traditional oil and gas fields, but its exploitation and use is a relatively new phenomenon. Until recently, the natural gas or methane used in Australia and elsewhere was nearly all supplied from reservoir gas—that is, ‘conventional gas’ that occurs in underground porous sedimentary rock reservoirs (gas fields) rather than in coal seams. But coal seam gas, just like conventional gas, can be used to power water and space heating for industrial, commercial and domestic users, as well as in gas turbines to generate electricity. Thus, the coal seams are merely a new source for an old and valued fuel.

The Eastern Australian natural gas market has for some time been supplied from the Cooper/Eromanga oil and gas fields in central Australia and the Gippsland Basin located offshore from south-east Victoria. While some new, but small, oil and gas fields have been developed in offshore Victoria, and some additions to the central Australian gas fields have been found, the consensus is that these fields are slowly depleting and will be unable to supply the growing Eastern Australian gas market well into the future.

The development of the coal seam gas deposits in Queensland and New South Wales associated with the coal fields will not only enable the supply of natural gas for the growing Eastern Australian market but also enable the establishment of major export liquefied natural gas (LNG) industries, providing an impetus to employment, infrastructure investment and Australia’s exports.

It should be noted that as well as pumping out the methane from a coal seam, another method for extracting the gas involves in situ combustion of the coal seam and any included methane to form ‘syngas’, which can be used to generate electricity at the surface. This technology, known as “underground coal gasification”, is at a less advanced stage in Australia, with a 5MW facility undergoing development and demonstration near Dalby in Queensland[2]. It offers the potential to extract energy from coal seams that are too deep to mine economically. As this technology represents a different set of technical and environmental challenges to those of coal seam gas, and the timeline for commercial large-scale development is probably a decade or more away, underground coal gasification is not included in the scope of this paper.

Cross posted from Peak Energy.

New Contributor

2011-08-18T21:36:00.002+10:00

I'd like to welcome a new contributor from New Zealand, Denis Tegg, who blogs at NZ Oil Shock.

We are always on the lookout for contributors, so if you would like to post an article here, please contact one of the editors.

New Zealand at greater risk from oil shocks - official advice ignored

2011-08-17T09:03:00.003+10:00

This is a guest post from Denis Tegg.

In November 2009 senior officials warned the government --

the risks of oil price shocks and a physical shortfall in the world supply are issues of "strategic importance"

New Zealand is more vulnerable and may suffer more than other OECD economies

new technologies and fuels will only "marginally" reduce New Zealand's vulnerability to these oil supply/price risks

without "sufficient incentives" New Zealand's resilience will decrease even further

a substantial increases in domestic oil production will not insulate New Zealand from higher oil prices because oil is traded internationally and we would still pay the international price.

This advice from senior officials was given to Transport Minister Steven Joyce and Energy Minister Gerry Brownlee in a report entitled "Oil Prices and Transport Sector Resilience" and obtained under the Official Information Act.

Astoundingly the warnings of a clear and present danger to New Zealand's economy have been almost totally ignored by government. Instead of tackling the strategic risks identified in the report, and bringing in policies to lower New Zealand's oil dependency, the government has -

perversely initiated policies which increase New Zealand's exposure to oil price and supply shocks. It has abandoned plans for mandatory fuel efficiency standards for light vehicles, and has vastly increase spending on motorways which perpetuate urban sprawl and New Zealand's car and oil dependence, while public transport funding has languished.

other practical policy ideas in a 2008 New Zealand Transport Authority report to lower New Zealand's oil dependence have been kicked to touch.

having received advice in 2009 that it clearly does not wish to hear, it has steadfastly avoided asking for any further advice from officials about New Zealand's oil vulnerability. Instead it has instructed its officials to downplay and marginalise the risks posed by peak oil, as is evidenced by a peak oil presentation given recently by an MED official. That presentation is completely at odds with the clear and compelling warnings given in the 2009 Report.

How do officials assess the risk?

The report begins by documenting New Zealand's extreme reliance on imported oil. Oil accounts for 51% of New Zealand's total consumer energy, transport accounts for 80% of New Zealand's oil consumption and 14% of household expenditure is made on transport costs.

The report then tackles the issue of peak oil (without using that phrase of course). It notes that in 2008 the International Energy Agency became more pessimistic and warned that current investment in oil production is insufficient and that faster than expected decline rates in larger oil fields from politically volatile countries --

"increase the risks of a sudden oil price shocks, caused either by political tensions in major supplier countries or by a physical shortfall in supply"

The report then proceeds to pull the rug from under the government's flagship energy policy -- the Petroleum Petroleum Plan to find more oil offshore from New Zealand. The report states that increases in domestic oil production -

"would not necessarily insulate the New Zealand economy from oil price volatility or long-term price rises. This is because like all internationally traded commodities domestic oil and fuel prices are largely driven by the international price"

Effect on New Zealand economy generally

Echoing many of the points made in previous posts here and here on this blog, the report confirms that "reflecting the importance of energy to economic activity, high or volatile prices can have a pervasive effect on economic performance", citing as examples the cost of asphalt and bitumen to roads and fuel costs which dominate the operating costs of the fishing and aviation sectors.

"Our exposure to oil price changes is more acute than many of our trading partners due to a distant from international markets" and

"tourist visitor numbers are at risk from significant increases in aviation fuel costs" and

"international and domestic transportation costs largely determined by oil prices therefore play a significant role in the competitiveness of businesses right across the economy. The transport sector's exposure to increasing and volatile oil prices is therefore an issue of strategic importance"

New Zealand's vulnerability relative to other countries

New Zealand is a comparatively large user of oil for transport fuels. We have a low and dispersed population leading to high levels of freight between centres

New Zealand has a very low energy productivity at 3.6 litres of fuel per unit of GDP compared to say Sweden which is of comparable size and population density requires only 2 litres per unit of GDP - see graph below -

New Zealand has one of the highest per capita car ownership rates in the world

the fuel economy of private cars is low compared to most other OECD countries. Even if New Zealand could achieve a 20% improvement in fuel efficiency by 2030, New Zealand would still be 45% less fuel efficient than Europe in 2030

New Zealand has one of the highest levels of vehicle kilometres travelled per capita in the OECD while having one of the lowest levels of personal consumption expenditure per capita

Road transport accounts for 84% of travel in urban areas. Countries like Australia and the US with poor public transport options are however better able to cope with higher oil prices because they have higher GDP per capita

we are far away from key markets for goods and tourism and therefore more affected by oil prices than in most OECD countries

Report's Conclusion

"if real long-term oil prices continue to increase as forecast New Zealand's economy may suffer more than other economies". Overall "the transport sectors resilience to increasing all prices is relatively low"

In complete contradiction of the 2011 MED presentation that "new technologies will save us" the 2009 report bluntly states that "New Zealand's vulnerability will be reduced marginally by the combined availability and affordability of new technologies such as electric vehicles and second-generation biofuels"

Again completely contradicting the government's position that there is no need for government intervention and that the market will provide all the solutions, the report states "the cost, supply, convenience and reliability of new technologies are key barriers and that without incentives the transport sector's resilience will decrease further"

Our Economic Titanic
Unlike the global financial crisis which took most experts and our government by surprise, the severe impacts of rising oil prices on our economy are well understood and thoroughly predictable. The government has received warnings that we are far more exposed than other developed nations to these risks.

Yet like some delusional captain of the Titanic this government accelerates the ship of state on a collision course with the oil crunch iceberg. Unlike the global financial crisis, the government cannot use the excuse that they were not warned. Its failure to heed these warnings and act decisively will surely go down in history as New Zealand's economic Titanic event.

Time to refine energy security

2011-08-16T23:50:00.001+10:00

The Canberra Times has a guest editorial from Jenny Stewart on energy security and peak oil - Time to refine energy security.

For the past six months our national attention has, understandably, been focused on the carbon tax issue.

The policy agenda now needs to move in a related, but different direction. The reason is a three-letter word – oil.

While oil producers will be affected by the carbon tax, politics ensures that there will be no tax on petrol.

Yet oil is, arguably, one of Australia’s key energy problems. As a nation, we passed ‘‘peak oil’’ some time ago. Domestic production plateaued more than 20 years ago, and since 2005, has been in decline. The oil that is left is a long way offshore, and a long way down. Extracting it will be costly and risky.

Australian refining capacity is more constrained now than it was a decade ago. South Australia lost its one oil refinery in 2003. A number of the refineries in Queensland, Victoria and NSW are small in scale, and subject to stiff competition from imported, refined products. Further rationalisation of refining capacity seems likely as imports continue to increase, particularly from large-scale refineries in Asia.

The government (in the form of the National Energy Security Assessment released in 2009) acknowledges challenges ahead, but tells us that, fundamentally, all is well. Energy security (that is, adequacy, reliability and affordability of supplies) is assessed as ‘‘high’’ until 2018, with only moderate concerns for 2023. Essentially, the assessment assumes that, because markets will continue to operate, there is no need to worry.

Although oil prices will continue to rise, the resilience of the Australian economy will ensure that we can cope. While domestic refining capacity is expected to decline, this is not considered to be a concern, so long as more facilities are built for handling imports. The assessment does not examine the impact of possible disruptions in oil supplies from the Middle East. Indeed, the reader would be hardpressed to realise that oil is a resource whose future is problematic.

Now, price signals are important inputs into public policy. But in the case of oil in particular, there are good reasons to be sceptical about the merits of relying on this mechanism as a basis for policy. World oil prices subside when growth declines, and pick up again when growth gathers pace. And as we saw when the oil producing nations began to exercise their market power in the 1970s, they can spike rapidly. But over the longer run, oil prices do a poor job of reflecting the scarcity of the resource.

Internationally, as in Australia, rates of oil use exceed the extent to which new reserves are being found. Planetary ‘‘peak oil’’ will soon be upon us. Given this situation, the price of oil should have been rising steadily over the past 20 years, because producers would be holding back present-day production, in order to receive higher prices later. Yet while there are short-term fluctuations, the inflation-adjusted price of oil has proved remarkably steady over the past two decades, increasing only in recent years as demand has accelerated.

Governments are thinking longer term, but not in the way an environmentalist would want. Nations are looking far less at the greenhouse gas equation, and far more at economic growth and energy security. Hence the efforts in Canada to extract oil from tar sands.

Almost as much energy goes into the process as comes out of it, yet Canada’s federal and provincial governments remain committed to the industry. Despite the recent disaster in the Gulf of Mexico and in the face of the protests of conservationists, the US is again moving towards oil-drilling in the Arctic.

For countries with some oil reserves of their own, there are difficult questions to answer about the extent to which local production should substitute for imports. Certainly, since the Hawke government deregulated the industry in 1988, Australia has been content to leave the decision about whose oil to use, to market forces. As a result, our petrol and diesel prices are low by international standards and our transport (and food production) systems are more dependent upon oil than ever. But these very factors make us vulnerable to geopolitical change. Not only that, we are at the end of some very extended supply chains.

New Zealand’s Tui Oil Field - Peak Oil With Bells On

2011-08-16T18:15:00.002+10:00

This is a guest post from Denis Tegg.

One of the least understood elements of peak oil is the rapid decline rate of production from the peak for any given oil field. For an example of just how severe and steep the decline rate can be, look no further than the recent announcement that the Tui oil field in the Taranaki Basin has had its remaining oil reserves slashed by 1/5, and that production will fall off a cliff. For a New Zealand oilfield, this is peak oil in action with bells on.

We are all used to seeing breathless media announcements of "huge" new discoveries of oil. What we hardly ever hear about is when oilfields inevitably start to rapidly decline. No surprises therefore when the Tui reserve downgrade from 50.5 million to 40 million barrels was buried deep in the business section of our press and never made the front pages.

The remarkable story about the Tui oil field completely missed, or ignored by the business media, is just how quickly the field reach peak production, and how rapidly it’s decline will be.

It was only four years ago on 30 July, 2007 that Tui began production. 31 million barrels of oil have been produced in those four years. But the remaining 9 million barrels of expected reserves are projected to dribble out over the next 9 years before the field is fully depleted in 2020.

The steepness of the decline can be seen from this graph from a July 2011 New Zealand Oil and Gas report -- (representing its 12.5% stake in the Tui field). If you focus on the dark blue part of the graph at the bottom of each column you can see that NZOG’s share of production will fall from 270 kboe in 2012 to 200 kboe in 2013 -- representing a decline of 26% in oil flows for Tui in just one year.

The overall decline rate for the Tui oilfield in the four years between 2012 and 2016 is a staggering 59%!

Contrast this with the super optimistic projections for Tui when it was first discovered. As Greg Peel of International Business Times points out --

"Tui's reserves have been constantly upgraded over its life, suggesting a well life beyond 2030".

The steep decline rate at Tui should not be a surprise. As I pointed out in April, the IEA noted in its 2010 New Zealand Review

"recently commissioned producing fields, like Tui for example, are relatively small and have a high rate of depletion"

Note : The same graph also shows a steep decline of 38% in 4 years for the Kupe oil field (light blue) which is also very high by international standards.

Why is this important?

It confirms that in the next four -- five years domestic oil production in New Zealand will fall off a cliff, at the very time a global oil supply crisis is unfolding. We are already hugely dependent on oil imports and vulnerable to any disruptions to supply. We will become even more dangerously dependent on a dwindling supply of oil from volatile world markets.

Meanwhile the government's "response" to peak oil is misguided and pathetic. We have no plan to lower our dependence on imported oil, other than “drill and hope”. No -- it's time to do a Thelma and Louise -- let’s all accelerate down the white elephant billion-dollar "roads of significance to National" and race over the oil crisis cliff!

Power consumption makes historic drop

2011-08-15T18:32:00.000+10:00

The ABC has a report on falling power demand on the local grid - its a shame summer peaks aren't dropping as well - as we are in a weird situation of investing heavily in transmission infrastructure to satisfy falling aggregate demand - Power consumption makes historic drop.

One of Australia's largest electricity distributors says it is experiencing a "historic" cut in households' demand for power.

Ausgrid, which provides power to much of New South Wales, has announced demand for its electricity by regular households has fallen 2 per cent each year for the past four years. It is the first time the company has seen a fall in demand since the 1950s.

"If you go right back to the 1950s, residential consumption has continued to rise year on year, and in around 2006, we saw that plateau," Ausgrid energy efficiency specialist Paul Myors said.

Ausgrid says the drop is caused by consumers switching to energy efficient hot water systems and light bulbs after seeing their power bills go through the roof.

"One example where we have seen most strongly is with residential hot water because we often separately meter this in households," Mr Myors said. "We've seen reductions even greater than 2 per cent, even up to 8 per cent per year," he said.

It is expected the Australian Energy Market Operator will also announce a fall in power demand of 5 to 6 per cent in the next decade.

Public Receptive to Peak Oil Debate and Policy Ideas - Survey

2011-08-12T17:50:00.001+10:00

This is a guest post from Denis Tegg.

It's a common misconception that only "greenies" and "doomsters" are concerned about peak oil. This view perhaps explains why politicians and the mainstream media have marginalised or ignored the issue. However a recent US survey of public opinion reveals that, in fact, those Americans who identify themselves as "very conservative" politically or who are "strongly dismissive" of climate change are among those most concerned that rising fuel prices are harmful to the economy and public health.

Overall nearly 2/3rds -- or 65% -- of all respondents to the US survey said that if oil prices triple it would be "very harmful" to the economy, and 44% said it would be "very harmful" to public health.

These are the key findings of a study published online this week at the American Journal of Public Health.

Here is the breakdown by idealogy - note: those who identified themselves as "very conservative" were 20% more concerned than those who said they are "very liberal"

and here is the breakdown by views on climate change - ( strong concern about peak oil from those who are dismissive of climate change is not an endorsement many would wish for, but it indicates that when peak oil is couched in immediate economic terms, then climate sceptics are almost as worried about oil prices as those who are alarmed about climate change )

New Zealand Poll
The US survey findings aligns closely with a poll carried out by WWF in New Zealand in August 2010. In that poll 72% of New Zealanders believe it is the government's task to plan ahead, and invest now in public transport and alternative fuels before the price of oil rises. The NZ survey did not break down opinion among “liberals” and “conservatives” but it seems likely that ideological results would be similar here. Further polling and focus group surveys would be useful.

Latent Unease
For some time I have sensed a general feeling of unease in the public about oil prices, particularly since the latest spike began in late 2010, so soon after the 2007 -- 08 oil shock. There is a sense that this is not "normal", but for most people they cannot quite put their finger on the reasons for fuel prices rising and being so volatile. This latent sense of unease is confirmed in the US study's conclusions where they say -

"although Americans are unlikely to be aware of the concept of peak petroleum, the level of expert agreement on the issue, or the potentially significant impacts on society, the public does possess a latent sense of an impending energy problem"

What are the takeout messages from the US and New Zealand opinion surveys?

To me they are --
1   there is a broad consensus across the political divide that peak oil/oil price shocks are dangerous and damaging to people's well-being and the economy

2    to a far greater extent than previously thought "middle New Zealand" as well as those identifying themselves “far left" and the "far right" are open to engagement and debate on peak oil and its implications, from both the media and politicians.

3   there is sufficient concern to indicate that the public are already receptive to the major political parties proposing bold policies to lower our dependency on imported oil and as to how we might transition to alternative sources.

Will politicians and media have the courage?

probably not. As Dave Allen colourfully puts it -

"In a country run by responsible adults, these prudent warnings based on the best available science -- would be blaring from every political and cultural orifice. In a country run by amoral, narcissistic, opportunists, they are whispered at the fringes – in the hushed politeness of power-point presentations, on fringe websites, in meagerly-read books, and among small groups of alarmed citizens."

A review of the Report on the NZ ETS

2011-08-11T22:28:00.004+10:00

This is a guest post from Robin Johnsons Economics Page.

On 1 August 2011, New Zealand Minister for Climate Change Issues Nick Smith released the first progress report on the implementation of the New Zealand Emissions Trading Scheme (NZ ETS).

I have now read the Report on the New Zealand Emissions Trading Scheme and have a few comments - having been distracted by the chartjunk in the Minister's foreword.

Perhaps the first point to make is that the NZ ETS has now been though a complete compliance period, the six months from 1 July 2010 (when energy and industry entered) to 31 December 2010. In that period emitters and foresters were in the emissions trading market. The emitters, in energy and industry (about 45% of New Zealand's greenhouse gases) are "participants" in ETS jargon.

These participants had an obligation under the NZ ETS to measure their greenhouse gas emissions and to obtain and surrender a matching number of emissions units to the NZ Government. The Report on the New Zealand Emissions Trading Scheme documents these transaction so it should help us make an assessment of how the NZ ETS is working.

The same underlying infromation, emissions units issued and surrendered in the 2010 compliance period, has already been available from New Zealand's "central bank" for emissions units - the NZ Emissions Unit Register, run by the NZ Ministry of Economic Development. The NZ Climate Change Response Act 2002 requires certain information on emissions trading to be disclosed annually. The Ministry for the Environment's Report on the New Zealand Emissions Trading Scheme is really this same trading information with some, ugh, "100% Pure" photo shoot pictures, quite a few junk charts and several text-boxes.

The Ministry for the Environment report and Dr Smith's press release received some media coverage. The best reporting, with no junk charts, is Brian Fallow in the NZ Herald.

Dr Smith's narrative is that the NZ ETS is going well and Fairfax/Stuff repeated this angle, as did the National Business Review and even Reuters said the NZ ETS was working as intended. The Sydney Morning Herald even reported that the NZ ETS had "performed to expectations."

In terms of raw numbers, there 96 mandatory "participants" (emitters) in the NZ ETS at 31 December 2010 - compared to 500 planned for Australia's proposed emissions trading scheme. Of the 96 participants, 76 are in the energy sector.

There were 1,216 voluntary participants, of which 1,206 were in the forestry sector; forestry having entered the NZ ETS from 1 January 2008 mainly in terms of sequestering carbon in forest carbon sinks and receiving units in return. The NZ ETS creates its own specific emission unit, the New Zealand Unit (or "NZU") as well as allowing the use of most Kyoto Protocol units.

In the six months from 1 July to 31 December 2010, 12.8 million NZUs were gifted to participants by "free allocation"; 9.4 million NZUs were transferred to mostly to foresters for forest carbon sequestration and 8.3 million units were surrendered to the Government (Surrender means to obtain units equivalent to a participant's GHG emissions and to transfer them to the Government's account at the NZ Emission Units Register).

We may then ask "So what?" in response to these raw facts. Well, lets think how the NZ ETS performed according to the expectations of someone who has written a book on the NZ ETS - the economist Geoff Bertram. In the book The Carbon Challenge, Bertram and co-author Simon Terry analysed the NZ ETS as a market for emission units/carbon credits and in terms of supply, demand and price.

The supply of NZUs into the market for the six months from 1 July to 31 December 2010 was 22.2 million NZUs, made up of 12.8 million NZUs gifted to companies by "free allocation"; and 9.4 million NZUs transferred for forest carbon removals.

The demand from the market participants (the emitters) is the 8.3 million units surrendered in 2010. The NZ Emissions Unit Register report tells us that the 2010 year GHG emissions were 33.4 million tonnes and the NZ ETS-liable emissions from 1 July 2010 to 31 December 2010 were roughly half that at 16.3 million tonnes. Remember Nick Smith's 2-for-1 deal to surrender 1 unit for 2 tonnes of GHGs? That explains why only 8.3 million units were surrendered, when 16 million tonnes of GHGs were reported.

For me the critical issue here is that supply (22.2 million units) exceeded demand 8.3 million) by 13.9 million units (or by 267%). There were 13.9 million units left over after emitters satisfied their 2010 NZ ETS surrender obligations.

As we know from basic economics, when supply exceeds demand, the price drops. The MfE report and Dr Smith's press release make no mention of the NZ ETS carbon price. However, the reliable Westpac carbon update provided this chart which shows the declining price of NZUs in 2010-2011.

The excess 2010 units have no expiry date and will carry forward to 2011. In 2011 and 2012, as well as starting with excess units, the 2010 template will be repeated for 12 months not six. More units will be allocated for free to industrial emitters and more units will be given to pre-1990 foresters as compensation, and to post-1989 foresters for carbon sequestration. The 1-for-2 deal carries on as well to 2013. These features are embedded into the structure of the NZ ETS and will ensure that for the rest of the Kyoto Protocol commitment period to 2012 that the NZ ETS market will be over-allocated with NZUs which will trade at a discount to other internationally marketable Kyoto emissions units.

Geoff Bertram and Simon Terry made a number of predictions in The Carbon Challenge. Here's one.
"In the New Zealand scheme, arbitrage between the NZU and the Kyoto currencies sets a ceiling on the carbon price, with no quantity limit. Local emissions volumes will change only insofar as the price of the Kyoto currencies constitutes an incentive to change behaviour; and NZUs will be used to cover liable emissions only insofar as they are a cheaper alternative to Kyoto currency units"
(p 58).

My conclusion is that, contrary to Dr Smith's narrative, the MfE report on the NZ ETS is completely consistent with Geoff Bertram's prediction that the NZUs would be over-allocated, would be priced at a discount to international units and as a consequence the NZ ETS will not provide a sufficient price incentive to reduce GHG emissions.

Nuclear: too hot to handle

2011-08-11T08:14:00.000+10:00

Bloomberg reported last week that the Fukushima meltdown continues to set new radiation records - Tepco Says Highest Radiation Yet Is Detected at Fukushima Dai-Ichi.

Tokyo Electric Power Co., operator of Japan’s crippled Fukushima Dai-Ichi nuclear plant, said it detected the highest radiation to date at the site.

Geiger counters, used to detect radioactivity, registered more than 10 sieverts an hour, the highest reading the devices are able to record, Junichi Matsumoto, a general manager at the utility, said today. The measurements were taken at the base of the main ventilation stack for reactors No. 1 and No. 2.

The Fukushima plant, about 220 kilometers (137 miles) north of Tokyo, had three reactor meltdowns after the March 11 magnitude-9 earthquake and tsunami knocked out power and backup generators. Radiation leaks displaced 160,000 people and contaminated marine life and agricultural products.

The Times Union reports that the Japanese are growing suspicious of offical claims and are starting to measure radiation levels themselves - Japanese monitor radiation on their own.

Kiyoko Okoshi had a simple goal when she spent about $625 for a dosimeter: She missed her daughter and grandsons and wanted them to come home.

Local officials kept telling her that their remote village was safe, even though it was less than 20 miles from the crippled Fukushima Daiichi nuclear power plant. But her daughter remained dubious.

So starting in April, Okoshi began using her dosimeter to check nearby forest roads and rice paddies. What she found was startling. Near one sewage ditch, the meter beeped wildly, and the screen read 67 microsieverts per hour, a potentially harmful level. Okoshi and a cousin who lives nearby worked up the courage to confront elected officials, who did not respond, confirming their worry that the government was not doing its job.

With her simple yet bold act, Okoshi joined the small but growing number of Japanese who have decided to step in as the government fumbles its reaction to the widespread contamination, which leaders acknowledge is much worse than originally announced. Some mothers as far away as Tokyo have begun testing for radioactive materials.

Crikey has some choice words to say about the disaster - Fukushima disaster: worse than Hiroshima.

More gravely serious truths about the severity of the Fukushima nuclear power plant disaster following the earthquake and tsunami of March 11 have emerged.

Two things are now clear and they justify the following charges: the nuclear experts that the Australian media relied upon should never be trusted again; and social media real-time raw and unfiltered audio and video reports are providing a more truthful and relevant coverage of the aftermath of the continuing nuclear crisis than the selective and filtered copy being carried by print and wire agencies.

While the Bloomberg news report overnight of two extremely high radiation readings being recorded at the Fukushima complex of nuclear plants on August 1 and August 2 are alarming, other significant disclosures are also made in this story.

* The reading of 10 sieverts of radiation per hour outside the damaged reactor buildings was the highest level the equipment used could have detected, meaning the lethality of the contamination was off the scale; and

* For the first time a tenured nuclear expert Tetsuo Ito, the head of the Atomic Energy Research Institute at Kinki University concedes that the melted cores of one or more reactors may have melted through the supposedly failure proof containment vessel floor, sinking deeper into the subsoil and given the nature of the radioactive material concerned, into a position where it can spread a very long distance directly through the subsoil water table.

It took TEPCO and nuclear apologists until last month to even concede that “partial meltdowns” had occurred in up to three of the reactors, even though the only plausible explanation for the caesium contamination detected outside the reactors within 48 hours was the rupturing of the caesium sheaths surrounding the uranium rods upon their exposure to air following the draining of coolant fluid, setting up the requirements for a melt down to occur.

In what would be consistent with a deliberate policy of gradually revealing the truth some months after the event, the Japanese nuclear authorities and government are also now routinely referring to the fact that contamination levels outside the exclusion zone around the Fukushima Daiichi complex include hot spots that are as highly affected as they were around the Chernobyl reactor that exploded in the former Soviet Union 25 years ago.

Which is where social media in Japan is making itself felt.

In a series of widely viewed and replicated YouTube videos a Japan nuclear expert, Professor Tatsuhiko Kodama, has told Japan’s lower house Diet that the nation has failed miserably to make a timely evacuation of the at risk population worst affected by Fukushima radioactive fallout compared to the massive relocation that occurred in the Ukraine in the two weeks after the Chernobyl disaster.

In the English language transcripts of these videos, notably on the Penn-Olsen Asia tech blog, Kodama says he is shaking with anger at the incompetence and dishonesty of the government and nuclear authorities and the TEPCO power company in the aftermath of the accident. He attacks the use of simplistic readings that ignore for example the accumulation of deadly isotopes at the foot of slippery slides in children’s playgrounds in favour of readings at the top from which rain has washed away the contamination.

The readings, like the children, are being cooked, either by ignorance or intent.

Kodama says the uranium equivalent of the contamination released by the three affected reactor cores and four cooling ponds at Fukushima was that of 20 Hiroshima-sized atom bombs:
“What is more frightening is that whereas the radiation from a nuclear bomb will decrease to one-thousandth in one year, the radiation from a nuclear power plant will only decrease to one-tenth.

“In other words, we should recognise from the start that just like Chernobyl, Fukushima I Nuclear Plant has released radioactive materials equivalent in the amount to tens of nuclear bombs, and the resulting contamination is far worse than the contamination by a nuclear bomb.”

Kodama’s testimony, poorly reported in the established Japan media, is circulating in social media in tandem with raw videos of government officials telling a meeting of Fukushima residents demanding urgent help in evacuating to other parts of the country that they should stay put and trust them to reduce radiation. The meeting becomes increasingly angry after one official tells the residents they could evacuate at “their own risk”, while they shout at them for telling them to stay put and die.

The bigger context to these reports from Japan is that the guidance given by nuclear scientists and apologists alike to the media in Australia was disgracefully inaccurate and patronising. The reality of the caesium contamination was ignored, and the quoting of initial radiation readings in the wrong metric was ignored (and later found to be fictitious as well as mischievous, when TEPCO confirmed that it didn’t actually have any capability of measuring contamination within key parts of the complex).

The constant refrain that Fukushima would never be a level-seven disaster such as Chernobyl contained longer in the Australian media than anywhere else, even after the nuclear authorities in France and US broke with the usual protocol of not commenting on other national agencies, and said that it could reach level six or level seven and expressed a lack of confidence in their Japan counterparts.

One thing that is becoming apparent after this disaster is that the truth, like the fallout, is going to force itself on the authorities no matter how much the business, political and scientific establishments try to play it down.

The Climate Spectator has a look at the elevated level of skepticism about nuclear power - Nuclear: too hot to handle.

Recent reports about the potential of BHP Billiton to delay uranium production from its massive Olympic Dam project, and Resource Minister Martin Ferguson’s urging of the NSW coalition government to overturn the state’s ban on uranium mining, suggests differing views about the outlook for the nuclear industry.

That the much anticipated “nuclear renaissance” has been stalled – at least in western democracies – appears to be beyond doubt, at least in the short term. But the medium- to long-term outlook is subject to much conjecture, and seems to depend on how you answer two questions: Who is going to want it? And who is going to pay for it?

In the immediate aftermath of the Fukushima nuclear crisis, we noted that the nuclear industry was unique among energy sources in that it relied on the indulgence of public opinion – unless, of course, you live in a country like China – to be built. This has been borne out by events in Germany and Italy, and the continuing angst in Japan.

But it’s not the only problem – even in those countries where nuclear is supported by the government, the question remains, who is going to pay for them? And it seems clear that the private sector is not.

Advocates for nuclear power in this country like to present the industry as the lowest-cost clean energy alternative to fossil fuels. But this ignores the fact that nuclear plants are massively expensive and involve huge up-front costs, invested well in advance of a commercial return because of the long lead times.

And it is completely dependent on government support. As Citigroup analysts pointed out in a 2009 analysis on the economics of the nuclear industry, there hasn’t been a plant in the world built without the relevant government assuming much of the construction, operating and financing risk. There is not a single insurer, banker or construction company in the world that is willing to assume that risk.

France is often cited as the glowing example of low cost nuclear energy, but the French government effectively wrote off the capital investment of its nuclear fleet, meaning that the operating companies such as EdF and GDF Suez have been able to book what the International Energy Agency described as billions of dollars in “nuclear rent."

Now, the assumption that nuclear will be cheaper than competing “clean” technologies such as coal with carbon capture and storage is being questioned again, particularly in light of the extra costs that will become an inevitable consequence of post-Fukushima safety reviews.

Nomura Securities analyst Kyoichiro Yokoyama last week released a detailed assessment of competing clean baseload technologies, in which he concluded that the cost of nuclear was considerably higher than that of even coal with carbon carbon and storage.

Yokoyama noted that low costs had been a key selling point for nuclear power, underpinned by an analysis from the IEA and the OECD’s Nuclear Energy Agency last year that suggested that the levelised cost of energy (LCOE) for coal-fired plants with CCS comes out 25-40 per cent higher than that for nuclear plants, with or without a carbon price. But Yokoyama said that, since the Fukushima Daiichi incident, an increasing number of people have been questioning the real cost of nuclear power generation.

“Some observers have noted that the cost of the various subsidies paid when nuclear plants are constructed is not factored in and it has also been pointed out that the estimation of costs associated with spent fuel has tended to be overly optimistic,” he wrote. “In many cases, the details of these amounts are unclear or unspecified, which makes calculating the actual cost of nuclear power generation somewhat problematic.”

He drew on research from MIT that noted how the cost of disposing of spent fuel and numerous regulatory and political risks associated with operating licences, including gaining the approval of residents, meant the capital costs were considerably higher (around 2-3 percentage points) than for thermal generation. MIT suggested that this translated into a LCOE for nuclear power generation of $US60-$US65/MWh for the US and Germany and $90/MWh for the Czech Republic. These costs are roughly the same as for coal-fired generation with CCS.

The question of costs and the ability of the private sector to come to the party has been raised on several occasions in recent weeks in the UK, which is keen on pressing ahead with its nuclear rollout. A joint venture between France’s EDF and the listed UK utility Centrica plans to roll out of three or four nuclear plants by the end of the decade.

Last week, Lakis Athanasiou, the utilities analyst with London-based investment bank Evolution Securities, warned that Centrica should "not touch (the new nuclear venture) with a barge pole," particularly if the UK government is unwilling to take construction risk.

The Evolution Securities view reinforces renewed concerns expressed by other investment specialists such as Citigroup, which a week earlier said new nuclear was not an investable option for public equity markets and listed companies such as Centrica or Germany’s RWE.

“The cost of capital based on those risks would be way too high to give you an electricity price which is affordable,” Citigroup’s utilities analysts told reporters at a briefing in London. "You would be looking at a project cost of capital of at least 15 per cent. That would require a power price of about 150-200 pounds per megawatt hour (based on 2017 money) to make that project work," he said, noting it is three to four times as much as current UK spot power prices.

"We think (nuclear energy) is uninvestable for public equity markets. EDF may be willing to take on the construction risks but none of the other (big utilities) are willing to do that." EDF, he noted, is an exception because it is majority-owned by the French government.
In that 2009 report, Atherton noted that three of the risks faced by developers – construction, power price, and operational – are “so large and variable that individually they could each bring even the largest utility company to its knees financially. This makes new nuclear a unique investment proposition for utility companies.” He noted that UK government policy remains that the private sector takes full exposure to the three main risks. “Nowhere in the world have nuclear power stations been built on this basis,” he said.

Further delays and cost overruns at new generation nuclear plants being developed in Europe by French companies have also raised questions about the cost factor, particularly with the extra safety measures that would appear to be an inevitable consequence of the Fukushima incident. EDF said the new generation European pressurised reactor (EPR) at Flamanville, in north-western France, has been further delayed and is now expected to open in 2016 (rather than 2014), and its budget has now jumped out to €6 billion ($8 billion). It was originally to be built by 2012 at a cost of €3.3 billion.

Another French company, Areva, is experiencing similar problems at its EPR plant in Finland.

And in weirder nuclear news, the ABC has a report on some Swedish dude who had a "meltdown" occur on his stovetop - Man tries to build nuke reactor in kitchen.

A Swedish man who tried to build a nuclear reactor in his kitchen says he started the experiment "just for fun".

Richard Handl, 31, from Aengelholm municipality in south-western Sweden, was detained by police two weeks ago and says he started the project as a hobby. "I have always been interested in nuclear physics and particle physics," he said.

In May, he launched an English-language blog, Richard's Reactor, in which he charted his progress in the project, complete with pictures.

His plan was "to build a working nuclear reactor. Not to gain electricity, just for fun and to see if it's possible to split atoms at home." ...

Mr Handl's blog can be found at http://richardsreactor.blogspot.com.

Cross posted from Peak Energy.

WA govt retains local gas supply policy

2011-08-10T19:59:00.000+10:00

Channel 9 reports that the WA governments policy of reserving a percentage of local production for domestic consumption is being retained - WA govt retains local gas supply policy.

The Western Australian government will keep in place a 15 per cent domestic gas reservation requirement for all major gas projects in the state.

The policy, established under the previous Labor government, requires producers to set aside 15 per cent of their gas reserves for domestic consumption, rather than for export to Asia at higher returns.

Premier Colin Barnett has tabled his government's response to recommendations of a parliamentary committee's inquiry into domestic gas prices, that were found to be double those in eastern states.

New Zealand Government’s Response to Peak Oil – In time we hope something will turn up

2011-08-09T21:57:00.002+10:00

This is a guest post from Denis Tegg.

On July 8 I attended a forum on peak oil organised by the Sustainability Society. Dr Richard Hawke from the Ministry of Economic Development gave a presentation on behalf of the New Zealand government entitled "Peak Oil - New Zealand's Response". I came away with emotions ranging from frustration to anger and embarrassment.

So I thought it would be cathartic to dissect the presentation --

Dr Hawke began with a typically confusing introductory slide on electricity generation, when anyone with a basic knowledge of peak oil knows that it's a liquid fuel problem, not an electricity issue. We cannot power our cars, trucks ships and planes on electricity.

Next was a cringingly awful attempt to paint peak oil as part of an historical continuum of false prophecies on oil production. Awful because all of the examples used were from the 19th century or early 20th century before the concept of peak oil was understood. Who cares what someone said in 1865? The glaring omission from the examples given was of course the prediction from US Shell geologist Dr King Hubbert. He predicted in the 1950s that US oil production would peak in 1970 -- which it did, and has declined steadily ever since in spite of the best technology, most intensive drilling on the planet and record high prices. Similarly omitted were the projections of Colin Campbell and other peak oilists in the late 1990’s who predicted that global crude oil production would peak around 2005 -- 2006 -- which it also did.

Dr Hawke then attempted to paint peak oil proponents as pessimists who underestimated oil reserves, exaggerated future demand, while not giving enough emphasis to substitution and technological advances -- the archetypal cornucopian view. Firstly, the argument about reserves is a straw man because peak oil is essentially concerned with the flows -- production of oil -- (which have been flat since 2005 despite record high prices and advances in technology) rather than how much oil might or might not be in the ground.

As to exaggerating future demand, surely the government is not seriously suggesting that soaring demand from China, India, Middle East and other developing nations is magically going to decline? Again this is a typically Western-centric view which wrongly transposes the declining oil demand trends in OECD nations like New Zealand to the world as a whole.

The presentation then suggested that technology and alternatives will be the silver bullets that saves us. But the presentation conveniently fails to mention the higher cost, much lower energy return on energy invested and the planet-frying effects of using alternatives such as the tar sands in Canada. The slide actually shows the the extreme and dangerous depths to which drilling must go!

But what really got me wound up was the selective use of the International Energy Agency's information, which the government believes provides “credible information on the global oil market”. On the one hand the government takes as gospel the projections of the IEA that as yet undiscovered fields and unconventional oil will meet demand out to 2035. This selective faith in the IEA is maintained despite -

• the IEA forecasts on oil production having to be revised downward in huge chunks every year for the last six -- eight years
• peak oil scientists having been far more accurate with their production forecasts in the same timeframe
• peak oil experts such as those at Uppsala University providing analysis that shows the IEA’s forecasts for finding undiscovered oil fields are around three times greater than historical norms

But on the other hand the government is quite prepared to ignore other recent IEA announcements - calling for large-scale government intervention - because it does not suit its “the markets will solve everything” ideology . The IEA said in its 2010 Report on NZ that the government should “give priority to enhancing energy efficiency in the transport, commercial buildings and industry sectors by defining clear objectives for the sector supported by adequate cost-effective measures and long-term investments"

The next slide shows the government’s blind faith reliance it has in the IEA's flawed oil price modelling. The slide shows an oil price in 2035 – (24 years from now) at $US135 a barrel under the (worst-case) “existing policy” scenario. Does anyone seriously think the world oil price will be only $US15 higher in 24 years than it is now? Yet the government continues to place faith in IEA price modelling.

The next slides selectively depict various scenarios for future oil production. But only the most optimistic scenarios are shown - a “new policies" scenario and a “green revolution” -- 450 ppm Co2 or 2° of warming" scenario. Post Kyoto there is scant evidence of world governments actually implementing either of these scenarios. So why is the far more pessimistic "current policy" scenario omitted from the presentation?

Domestic policies

This is where the government's so called "response" to peak oil is set out. Four actions to "reduce our dependence on oil" are outlined –

• New Zealand Emissions Trading Scheme
• Encouraging entry of biofuels and electric vehicles to the NZ market
• Investment in public transport infrastructure; and
• The Petroleum Action Plan

I want to concentrate on the government's response on biofuels and electric vehicles and its Petroleum Action Plan, as the ETS and funding for public transport infrastructure have been well canvassed elsewhere.

Biofuels Grant Scheme
Slide 27 brazenly suggests that the government is actively encouraging biofuels and electric car uptake as serious policy initiatives as a response to peak oil. Frankly I found this an insult to the intelligence of the forum audience and the public at large. Why? -- Because these are minuscule and pathetic policy responses.

Here is the analysis of these 2 policies done by WWF....

“In the first eleven months of operation (July 2009 – May 2010), an average of 44,620 litres of biodiesel were covered by the scheme, which is roughly equivalent to 38 tonnes of fuel. Extrapolating this average over a whole year equates to 456 tonnes per year. Total oil consumption in NZ in 2008 was: 5,737,000 tonnes. At this rate, biodiesel covered by the scheme would comprise 0.008% of total NZ oil consumption.”

Road User Charges Exemption for Light Electric Vehicles

WWF “The government predicts 127 electric vehicles will obtain the exemption by 2012 when the scheme expires, with combined annual revenue foregone in road user charges over its four year duration is projected to be less than $105,000.”

$105,000 is less than 0.002% of the government’s planned spending on roads

Petroleum Action Plan

The second much touted “response” is the Petroleum Action Plan (PAP) the aim of which is to develop New Zealand's petroleum potential.

In previous posts I have described this policy as "drill and hope" or “hope to drill” Guess what? The government has confirmed that is exactly what it is! There quite unashamedly in slide 29 is the statement --

"in time it is hoped this will improve our net position and reduce our dependence on imported oil".

Let's just repeat that - a major policy plank of the government's response to peak oil is -

"in time" (7 -- 10 years at best before any flows of new oil can be expected, but with the oil crisis unfolding right now)
"it is hoped" (would it help if we all got down on our knees and prayed?) that something will turn up. Yet this is put up as a credible response to peak oil which is already causing higher inflation and substantial and negative impacts on GDP?

Already huge cracks are appearing in the petroleum plan ….

• In late 2010 Exxon pulled out of exploration in the Great South Basin
• despite a record number of wells being drilled offshore of Taranaki, very little new oil has been found in the last two years
• Petrobras is angry with the government that it was confronted with major protest action offshore from East Cape which disrupted its exploration work. The company left early, and who knows whether they will return.
• Grey Wolf has withdrawn its application for offshore drilling in Golden Bay
• Not one company has taken up available exploration permits off the coast of Northland. The government surreptitiously placed this news on the MED website in the past few days with no ministerial press release. When confronted the government said the global financial crisis and the Gulf of Mexico oil spill was to blame. Well hello! Was that not blindingly obvious when the PAP was formulated.? I pointed out these issues in an earlier post .

Yet in spite of these major setbacks in five different much touted offshore oil basins, the government's presentation has the gall to put up this graphic suggesting we will be "saved" by new oil discoveries.

As I pointed out in a post in November last year about this very same graphic -- if you strip away these yet to be discovered oilfields -- you are left with the real world situation of New Zealand oil production having already peaked and declining steeply to zero by 2023.

Conclusion
This was a non-response to peak oil. It was a "let's pretend is not happening" and if it turns out it is happening "let's hope and pray that something will turn up"

Am I my feeling any better having got this off my chest? Well not really -- because there are effective policy responses that the government can make. But due to its ideological blinkers, they will continue to ignore them.

Labour has yet to announce its energy policy for this year’s election. Whether it too is unprepared to take bold and effective action on peak oil remains to be seen. I expect to be equally disappointed.

Note: Prof Bob Lloyd of Otago University also gave an excellent presentation on peak oil at the forum which you can view here

The Minister's Chartjunk in the NZ ETS Review 2011

2011-08-03T21:08:00.004+10:00

This is a guest post from Robin Johnson's Economics Webpage.

This evening I was intending to carefully read the Report on the New Zealand Emissions Trading Scheme that Minister for Climate Change Issues Nick Smith released today and write a considered review.

However, I only got as far as Nick Smith's forward on the the third page when I got stopped in my tracks by Figure 3, a misleading piece of chartjunk if I ever saw one, about New Zealand being on target to meet its obligations under the Kyoto Protocol. Here it is.

Fig 3 New Zealand's net Kyoto greenhouse emissions 2000 2012

The chart legend says it shows "Kyoto net emissions (actual emissions)". This parameter trends upward to 2007 and then in 2008 and 2009 it suddenly drops below the blue line of NZ 1990 emissions. Thus showing we are meeting our emissions reduction committment that we signed up in the Kyoto Protocol. Its enough to make you proud to be a Blue-Green.

This chart is junk because it misrepresents the underlying data on greenhouse gas emissions. Back to the legend: "Kyoto net emissions (actual emissions)". Why does it say "actual emissions" in brackets? Because Smith would like you to think that. Lets look at real chart of real New Zealand greenhouse gas emissions.

NZ Total GHG emissions 1990 to 2012

This shows total real emissions up to 2007 and predicted emissions 2008 to 2012 - the green line. It looks nothing like Fig 3. The actual and predicted trend does not show a return to 1990 volumes of emissions. However, that legend also said net emissions, that is total or gross emissions in any year less carbon absorbed by forests. Maybe Fig 3 is based on net emissions.

NZ Gross and Net GHG emissions 1990 to 2012

The trend in net emissions (total less forest sink removals) or the blue line shows an even steeper rate of increase than the total emissions. So how can Fig 3 show that New Zealand reduced emissions to 1990 volumes? Two more clues are in Figure 3. The title is "Kyoto net" and there is a note under the data source says "Kyoto net 2000-2007 values are backcasted". So the Fig 3 data is not just "net", it is also "Kyoto net" and "backcasted". What does ''backcasted" mean? Another chart shows how Smith gets to Fig 3 from the real total and net emissions data.

NZ Kyoto calculation 1990 to 2012

Greenhouse gas emissions, as defined for compliance with the Kyoto Protocol, are gross from 1990 to 2007, and once the Kyoto committment period starts in 2008, an Annex B country like New Zealand can meet its target by deducting removal units issued for carbon sinks - so Kyoto-defined emissions go net from 2008. Hence the red line. The removal units issued for afforestation (the increase in carbon stock in a forest planted since 1990) appear as if from nowhere in 2008 and disguise the growth in both the gross and net emissions.

This isn't new information. In 1997, Simon Upton, the Minister for Climate change in Jim Bolger's 1990's National Government spoke of New Zealand's position at the UNFCCC talks; "if sequestration is treated in the way New Zealand has long been advocating, then the major contribution we expect to make to removing carbon from the atmosphere..will earn us 'credits' ".

Interestingly, Upton had this cautionary note: "It might be suggested that New Zealand's interest in sinks stems purely from a desire to secure for itself a large buffer that would allow for significant growth in greenhouse gas emissions". Upton believed that would not be a credible policy.

However, since Upton's day, the chartjunk that is Figure 3 indicates that New Zealand's climate change policies have consistently been all about providing exactly that buffer to allow for significant growth in greenhouse gas emissions while claiming to have mitigation policies such as the NZ ETS that match our much-abused clean green overseas image.

And now it is time for a break.

2011-07-23T00:31:00.000+10:00

After nearly 8 months of hammering it into a not too shabby format, SP is going to have a break from blogging.
Real life commitments are beginning to interfere with this hobby and must be dealt with first.
Volunteers are welcome to post guest articles or become authors, just contact Big Gav.

Trans Tasman ETS Challenge

2011-07-15T13:07:00.005+10:00

Or the ACT as seen from NZ, a guest post from Robin Johnsons EWP making some comparisons between the New Zealand scheme and the proposed Australian Carbon Tax (ACT).

Securing a Clean Energy Future - how comprehensive?

I have to admit I recently rushed to conclude that the Australian carbon pricing scheme would be a "leapfrog" ahead of the NZ Emissions Trading Scheme (NZ ETS). Okay, I admit I generally think the NZ ETS is worse than nothing as a policy to reduce GHG emissions. So the Australian scheme must be more effective. So I have leapt to a conclusion without doing the number crunching.

Now I have actually read Julia Gillard's carbon pricing proposal and can offer a slightly more considered opinion.

The carbon price scheme has a name and obligatory website; Securing a Clean Energy Future. The full document is Securing a Clean Energy Future, The Australian Government's Climate Change Plan, Commonwealth of Australia 2011, ISBN 978-0-642-74723-5.

First of all, the 'Clean Energy Future' is not a carbon tax. It is a cap and trade emissions trading scheme with a safety valve. Page 25 says "Large polluters will report on their emissions and buy and surrender to the Government a carbon permit for every tonne of carbon pollution they produce." That's very much an emissions trading approach, but with a fixed carbon price for three years. The price is A$23 per tonne from 1 July 2012, then A$24.15 in 2013-14 and $AU25.40 2014-15 (p 26). From 1 July 2015, the carbon price will float within and upper and lower ceiling with the Government setting an overall 'Cap' or limit on GHGs (p 27).

The GHGs covered are; carbon dioxide, methane, nitrous oxide and perfluorocarbon emissions from the aluminium sector (p 28).

There will be 500 sources of emissions, which will be companies or sites with direct greenhouse gas emissions of 25,000 tonnes of CO2-e a year or more, Sectors covered will be; stationary energy, waste, rail, domestic aviation and shipping, industrial processes and fugitive emissions (p 27).

But not farming or land transport fuels.

So how comprehensive is 'Clean Energy Future'? To me, the comprehensiveness of a carbon tax or an emissions trading scheme is a good metric of likely efectiveness. And its a metric to use to make comparisons between policies.

Lets say the comprehensiveness is the proportion of total GHGs emitted that is either taxed or included in an emissions trading scheme. 'Clean Energy Future' claims half to two-thirds. The report states that more than half of Australia's GHG emissions will be directly covered by the scheme, and almost two-thirds of GHGs will be included when other measures are included.

'Clean Energy Future' includes an appendix of forecast revenues. In the year to 30 June 2013, the 'Clean Energy Future' scheme will earn A$ 7.74 billion (Appendix C, p 131). At the fixed price of A$ 23 per tonne, that gives 337 million tonnes of GHG (by CO2-e) that is taxed or priced. Thats 60% of Australia's 2009 GHG emissions (565 million tonnes) priced in 2013. That seems not a bad start, given that Geoff Bertram and Simon Terry have calculated that the NZ ETS, after free allocation, delayed start dates, only prices 3%, (12 million tonnes out of 378 million tonnes) of New Zealands GHG emissions between 2008 and 2012 (Bertram and Terry 2010, The Carbon Challenge, p 111).

But is there any free allocation of carbon permits to emitters in the 'Clean Energy Future' scheme? Yes, if you look carefully there is.

The revenue forecast in Appendix C lists costs of A$ 2.85 billion for "Jobs and competitiveness program" and A$ 1 billion for "Energy security".
Table 15 on page 114 notes that "Jobs and competitiveness" invloves the free "allocation of permits ...to new and existing entities undertaking an eligible emissions-intensive trade-exposed (EITE) activity". Table 16 Energy Security p 116 indicates that "Energy security" involves "allocation of permits and cash estimated at $5.5 billion over six years to assist highly emissions-intensive coal-fired generators" and "payments for the closure of around 2,000 megawatts of very highly
emissions-intensive coal-fired generation capacity by 2020".

So of the A$ 7.7 billion collected from the 500 emitters in 2012-2013, possibly some A$ 3.85 billion will be rebated to the dirtiest and most carbon-intense emitters, as long as they are trade-exposed. The definition of emissions-intensive-trade-exposed isn't exactly tied down and has a number of parts. One is being imports or exports as greater than 10% of production. Also, rather like the NZ ETS, any assistance to emitters will phase out at a very gradual 1.3% a year (Table 15, p 114).

Lets assume that 100% of these two categories is spent on free allocation of permits or is just given as a subsidy to some of the 500 emitters. If we have 337 million tonnes of GHG emissions (by CO2-e) that is priced, and subtract 167 million tonnes for the gifting and assistance ( A$ 3.85 billion divided by $23AU = 167 mt) we get 169 million net tonnes of GHG emissions priced in 2013 under the 'Clean Energy Future' scheme. Thats 30% of 2009 GHG emissions of 565 million tonnes.

Okay, I am comparing 2013 for the 'Clean Energy Future' scheme with 2008-2012 for the NZ ETS, but a minimum of 30% coverage of GHG emissions beats 3% of GHG emissions hands down. The 'Clean Energy Future' scheme is more comprehensive than the NZ ETS by a factor of 10. 30% of GHG emissions priced vs 3% priced. That certainly is a big "leap frog" ahead by our trans-tasman cousins, I would say.

Its the future with no polluter

2011-07-11T00:13:00.013+10:00

Given the recent news that former Governor of the Reserve Bank of Australia Bernie Fraser will be the inaugural chairman of the soon to be established Climate Change Authority (CCA), I proffer the above tag line for the official motto¹.

Bernie Fraser to head climate change authority
SUN 10 JULY 2011
Prime Minister, Deputy Prime Minister and Treasurer, Minister for Climate Change and Energy Efficiency

The Gillard Government is pleased to announce that it intends to appoint the former Reserve Bank Governor and former Treasury Secretary Bernie Fraser as Chairman of the new Climate Change Authority (CCA).

The CCA is to be established by legislation as an independent body to provide expert advice on key aspects of the carbon pricing mechanism.

When the carbon pricing mechanism moves to a flexible price emissions trading scheme, the Government will put annual caps on the amount of carbon pollution that can be released into the atmosphere by entities covered by the carbon price.

The CCA will play an important role in the governance of the carbon pricing mechanism.

One of the CCA’s responsibilities will be to make recommendations to the Government on future pollution caps under the carbon pricing mechanism.

These recommendations will have regard to, among other matters:

• the Government’s announced medium and long-term carbon pollution targets;

• progress towards emissions reductions;

• the impact of its recommendations on the Australian economy, including on specific industries.

The Government will make final decisions on these pollution caps, based on the recommendations of the CCA.

The CCA will also provide advice on the performance of the carbon price and other climate change initiatives and will track progress towards Australia’s pollution reduction targets.

It will conduct regular public reviews and its reports will be made public.

The headline at The Age is,

$15 billion in tax cuts for low and middle income earners under carbon deal
Phillip Coorey
July 10, 2011 - 6:39PM

Low and middle-income families and singles pensioners and other welfare recipients are the biggest winners from the carbon price while those on generous incomes will bear almost the full brunt with next-to-no assistance.

Unveiled at midday today by the Prime Minister, Julia Gillard, a package of $15 billion in tax cuts and increased benefits mean 4 million households will receive more in compensation that the carbon tax will add to their cost of living.

A further 2 million households will be no worse off by being fully compensated, while another 2 million will receive something.

Of the nation's 8.8 million households, only 700,000 receive nothing.

The scheme will operate as a fixed carbon price of $23 from July 1 next year, and move to a full emissions trading scheme on July 1, 2015, when the market will set the carbon price.

It excludes petrol and is not revenue neutral as first forecast. It will cost the budget $4.2 billion over four years and will erode the forecast $3.5 billion return to surplus in 2012-13 by $530 million.

It's fairly obvious how the Opposition/News Co. is probably going to play this. It will be some variation of economic doomsday-ism rolled up with "the politics of envy" style rhetoric coupled with a frenetic whisking up of the "green socialist agenda" - when The Greens aren't being compared to Fascists, that is.

As Crikey writes, like all such deals, its a compromise. Maybe not the best compromise but it hopefully breaks the inertia and resistance created by the climate denial spin machine.

Carbon tax: the policy and the politics
by Bernard Keane

This is a better package than the CPRS it is so closely modelled on, but not by a lot.

The key problem with the CPRS was that compensation for emissions intensive industries was so great and went for so long that it neutered the price signal...

The same levels of assistance will apply to big polluters again, but this time the Productivity Commission will be on the case to review whether the assistance is justified and there’s an in-built bias toward reduction in assistance to the levels proposed by Ross Garnaut in his updated report if the PC agrees. But big polluters have a guarantee that their assistance won’t be cut until at least 2018, although the PC can start its 2014-15 review early if it believes there are industries making windfall gains from compensation. Which, of course, they will be.

There will also be an independent body to examine the case for accelerating Australia’s laughably unambitious target of 5% by 2020. The Climate Change Authority could become a potent independent source of advice that will pressure future governments inclined to recalcitrance in the key issue of how quickly we proceed with decarbonising the economy.

So two independent sources of pressure on future governments to improve this scheme in its two critical features: how much the price signal is neutered by compensation, and how fast we should be reducing emissions.

The other key advantage over the CPRS is the use of tax cuts aimed at addressing EMTRs for low-income earners. This isn’t merely sensible policy, it’s actually consistent with the government’s own reform efforts so far under Julia Gillard, aimed at increasing workforce participation.

This tax break for 'working families' my also function as a 'pre-emptive' stimulus - given the direction of oil prices and signs that the US and Europe may be in for another bout of GFC.

The bad news is some of the worst polluters will get even more than they got under the CPRS. The coal industry will get a staggering $1.2 billion in handouts, in an outrageous cave-in to the industry that is responsible, more than any other, for Australia’s contribution to global warming. Compensating the coal industry for a carbon price is like compensating the local drug dealer for a crime crackdown.

So how does it stack up against the criteria Crikey suggested last week? Will it be seen as a serious contribution to the cause of an international agreement on climate change? Yes.

This is about as voter-friendly a package as you can get while still doing something about climate change. With tax cuts for low income earners, generous overcompensation for pensions recipients and handouts to rentseekers to mute claims of job losses, the package minimises the potential for scare campaigns and special pleading.

As we all know, this government is so inept it’s likely to botch the selling of the package and leave people convinced they’ll be ruined by it.

Still, by targeting assistance at the steel industry, the coal industry and the coal-reliant electricity sector, Labor is keeping one eye on its heartland, even if it will have trouble with the road transport industry (which is still getting a good deal under road pricing arrangements). The government wants to extend a carbon price to heavy vehicles in 2014 but this has not been agreed by the Multi-Party Committee on Climate Change (read, the independents).

And the package relies far more heavily than the CPRS did on tax cuts to deliver compensation, giving the government a potent selling point — two, actually, because the lift in the tax-free threshold will be over two years.

There are some very generous concessions.

Big polluters get $9.2b assistance
Business Age, 10th July

The federal government will provide $9.2 billion in assistance to support jobs and industries affected by the introduction of a carbon price.

The government released its long-awaited carbon price package on today, announcing an initial $23 carbon price that will be paid by around 500 big top polluters.

Over the first three years $9.2 billion of the revenue raised will be used for assistance by way of free carbon permits to manufacturers that generate over 80 per cent of emissions.

For manufacturing industries like aluminium smelting, steel making, flat glass making, zinc smelting, and most pulp and paper manufacturers, they will receive 94.5 per cent of industry average carbon costs.

Lower polluters, such as plastics and chemical manufacturing, tissue paper manufacturing and ethanol production will be eligible for permits to cover 66 per cent of carbon costs.

Liquefied natural gas projects will receive 50 per cent assistance. The steel industry will receive $300 million in assistance to encourage investment and innovation to assist in the transformation to a low-carbon economy.

The coal sector will receive a $1.3 billion package to support jobs during the move to clean energy.

The government said most small businesses will not be materially affected by the carbon price, but will benefit from an extension in the small business instant asset write-off threshold to $6500.

And landholders will also see some financial benefits.

Farmers to reap $1bn windfall
The Australian, July 10.

FARMERS who plant trees and store carbon in their soil will share in $1 billion in carbon tax receipts under the package to be unveiled tomorrow.

Canberra will recruit country Australia to its cause by buying credits from landholders who make carbon savings or allowing them to sell those credits to polluters to cover their carbon bills.

It will also reinvest carbon tax revenue in land research and management programs, including funding for outreach officers and training for farmers who want to take part in the scheme.

Greens deputy leader Christine Milne yesterday said the deal struck by her party would end the "political interference" at cabinet and ministerial level in renewable energy funding programs.

"We're going to see now real support, consistent secure support for research and development, and demonstration and commercialisation projects," she said.

Mr Oakeshott said the latest bargain with the government offered landholders "significantly more" than was on the table under Labor's earlier carbon pollution reduction scheme.

Which should help prevent some farmers from joining or voting for silly front groups like The Climate Skeptics², who also seem to want to revive the "Tilt Australia" campaign.

[UPDATE]
It only took a few hours.

Tony Abbott slams 'veiled socialism'
TONY Abbott has accused Julia Gillard of using her carbon tax plan as a cover for a redistribution of wealth, savaging the new policy as "socialism masquerading as environmentalism".

The Opposition Leader also insisted the package would cost jobs, demanding the Prime Minister visit factory floors and mines to face workers whose jobs he said she had put at risk.

"We're against this," Mr Abbott said. "This is a bad tax. It can't be fixed. It has to be fought."

SURELY Tony Abbott didn't mean to let his Climate Change Denial Disorder (CCDD)come to the fore, again ... he needs to be prescribed some Realityne^TM.

Mr Abbott said. "This is a bad tax based on a lie."

Meanwhile, elsewhere in The Australian, others are looking to the business upside.

Biggest single investment ever made in renewable energy
The Australian, July 11, 2011

The Clean Energy Finance Corporation will start operating in 2013-14 with more than double the seed capital of its overseas counterpart, Britain's $4.5bn Green Investment Bank.

And green power projects -- excluding nuclear, biofuels from native forest woodwaste, and carbon capture and storage -- will take up at least half the fund's capital, after lobbying by the Greens.

Greens deputy leader Christine Milne said the dedicated funding represented the biggest single investment in renewable energy Australia has ever made.

"With a legislatively guaranteed stream of funding outside the budget, no future government will be able to undermine it without changing the legislation," she said.

The fund, which will be independent of government and run by a board of banking, investment management, clean energy and technology experts, aims to partner with business to maximise investment in the sector.

The government believes $20bn will be spent on renewable energy projects in Australia in the next decade and $100bn by 2050. "Treasury modelling shows that with a carbon price, energy from the renewables sector is projected to account for around 40 per cent of our electricity generation by 2050, a significant increase from its current level of around 10 per cent," it said yesterday.

Professor McKibbin was concerned by the scale of the package's subsidies for renewables.

"We know from the Productivity Comission report that that is a very high cost way of reducing carbon per unit . . . it has to be done in a way that is very carefully managed," he said.

"I would prefer that the carbon price system itself generates enough incentives."

1. Bernie Fraser achieved some celebrity in Australia for his role in promoting superannuation funds with the tag line "It's the super of the future", uttered in a distinctive monotone.
2. I've already linked to The Australian, I refuse to have links to two sites from the dark side in one post ;-).

Climate for Corruption

2011-07-03T02:48:00.002+10:00

No this is not a post about those fiendishly clever climate change conspirators pulling a fast one on Claude or Ligna Coal Magnate.

The small Maldivan Newspaper Haveeru caught my eye, or rather my Google news feed, with the following interesting article about the potential for corruption in carbon markets and climate mitigation schemes.

Transparency Maldives launches Global Corruption Report on climate change

Haveeru Online, June 26.
MALE, June 28 (HNS) – Transparency Maldives Sunday launched the Global Corruption Report: Climate Change compiled by Transparency International.
Transparency International officially inaugurated the report, first of its kind to comprehensively explore major climate-related corruption risks, in April of this year at Dhaka, Bangladesh.
International watchdogs identify that improper or poor governance paves the way to corruption especially in the area of climate change governance, as huge amounts of money flow through new and untested financial markets and mechanisms.
The Global Corruption Report: Climate Change focuses on this issue along with making climate governance work, strategies for reducing carbon emissions, building effective adaptation to climate change, actions for sustainable climate governance and recommended actions for governments, businesses and civil societies.
The report stresses the importance of protecting from corruption the estimated US$700 billion budget allocated for mitigation efforts by 2020. It also highlights the inequality of the current processes for individuals and groups most directly affected by climate change.

Well not nearly as much as the US spends on oil wars but more than the ADF wastes (ie a lot).

“The quality of climate governance – the degree to which policy development and decisions are participatory, accountable, transparent, inclusive and responsive, and respect the rule of law – will determine how well it addresses inherent corruption risks,”
However, it is noted that organisations and personnel in developing countries most affected by climate change lack the skills and expertise needed to observe and track the projects undertaken.
By 2009, the registered number of observer organisations to the United Nations Framework Convention on Climate Change (UNFCCC) from the United Kingdom, Canada, and the United States reached more than 400 while from the developing countries, India, China and Brazil were only able to recruit just more than 10 organisations.
“According to a recent study in the North Africa region, however, almost 70 percent of the potential investors interviewed considered regulatory risk, including corruption, to be likely – and a serious impediment to investment,” it says.
“As a critical mechanism for mitigation, carbon markets need safeguards to reduce the risk of corruption, as well as to ensure their sustainability and capacity to reduce greenhouse gas emissions.”
Transparency International notes that adaptation to climate change requires large-scale infrastructure development like flood control systems in Bangladesh, which received a 2.4 score on the Corruption Perception Index (CPI) of 2010.
“None of the 20 countries most affected by climate change scored higher than 3.6 on the Corruption Perception Index,” the report stresses.

From the introductory page at Transparency International

Carbon markets: Managing public assets transparently
In international carbon trading schemes, individual governments can sell carbon credits when a country’s emissions are below their pollution targets. In an opaque market, the government mismanagement of credits can go unnoticed. Media investigations in Slovakia revealed that the government sold carbon credits at half their value to a company with links to officials in the ministry that made the sale. They made neither the contract nor the price public. The sale represented an estimated €75 million in lost revenue for the people of Slovakia.

What needs to be done
If climate governance is not prepared for corruption, corruption will undermine climate governance. The GCR does not just raise the alarm, it provides a risk map of ways to make climate change measures more effective.
Recommendations include:
All conferences and meetings where climate change targets are set should be open to the people they impact and transparent at the international and local levels
Experts monitoring and verifying projects must be independent and not paid from the budget of the project they are overseeing
All climate measures should have strong, well-resourced oversight bodies
Civil society must monitor government commitments to reduce emissions and be involved in development and oversight of national plans for mitigation and adaptation.
Downloads
Global Corruption Report: Climate Change (full download)
Parts 2 & 3
Part 4
Part 5
Part 6

This report appears to have been released earlier and may be having regional releases.

Green schemes are 'wide open to major corruption'
The Independent, Sunday, 1 May 2011
Corruption is threatening global steps to combat climate change, a new report from Transparency International (TI) warned yesterday. Billions of pounds will be plundered and wasted, it says, unless stronger measures are introduced against embezzlement and misappropriation.
The organisation warns that 20 nations most vulnerable to climate change – where millions in grants and aid will be targeted – are judged to be among the most corrupt in the world – and stronger oversight is needed to ensure the funds are properly spent.
"Corruption holds nothing sacred, not even our planet's future," said Huguette Labelle

Although you don’t have to be corrupt to perceive the world through a cash register – greed will suffice.

"Failure to properly govern climate change measures now will not only lead to misallocated resources and fraudulent projects today, but also hurts future generations," …
"Where huge amounts of money flow through new and untested financial markets and mechanisms, there is a risk of corruption," [the report] says.
Carbon markets, the main financial tool for combating climate change, have already been hit by fraud, the report points out. In January, the European Union's carbon market was shut down after it was attacked by cyber-hackers. More than three million carbon credits were stolen from government and private company accounts.
The system has also been hit by repeated tax frauds. One scheme to meet all of Europe's power needs from concentrated solar power plants covering 1 per cent of the Sahara desert was undermined after experts said bureaucratic complexity and corruption in north Africa raised the risks and costs of investment there. After an investigation by Spanish officials, it was discovered that more than one in 10 of its solar parks was falsely registered as operational, despite making no contribution to the energy grid.
Illegal logging, an industry estimated to be worth more than $10bn a year, is fuelled by corrupted customs and other officials, the report says. Some countries have already claimed carbon credits for fictitious forest plantation projects. In Kenya, deforestation is exacerbated by corruption among under-resourced forest guards. TI estimates that in 1963 Kenya had about 10 per cent forest cover; by 2006, it was less than 2 per cent.

But its not just developing nations.

All countries are vulnerable: Britain is criticised for its failure to deal with so-called "greenwashing" marketing techniques used by companies to misrepresent how environmentally friendly their products are.
Also highlighted is America's failure to curb the influence of the "brown lobby" – the 2,000 registered oil, gas, coal and electricity lobbyists who spent an estimated $400m in 2009 compared with the green lobby's $22m.

And from Reuters – Africa,

Corruption must be cut to protect climate –report
Reuters, April 30 2011
MARKETS
Carbon markets, the main financial tool for combating climate change, continue to be shaken by fraudulent activity.
Over the past couple of years, the European Union's $134 billion emissions trading scheme has been blighted by the re-sale of used carbon offsets, hacking, theft and continuing value-added tax fraud. [ID:nLDE70J1KT]
The integrity of the U.N.'s Clean Development Mechanism (CDM), which encourages emissions cutting schemes in poor nations, was dented after some project developers were accused of exploiting the system. [ID:nLDE6AI1A3]
"Creative accounting can lead to the double counting of emissions by companies of their own reported mitigation efforts, (...), thus nullifying the environmental integrity of the emissions reductions," the report said.
Corruption risks also exist in political decision-making and climate financing and through the mismanagement of public funds, the report said.

We need only remember this fiasco…

… in a supposedly well regulated economy to see what flies are attracted to a shit load of money.

[UPDATE]

In a good move to avoid political interference in clean energy decisions in Australia,

New body to control clean energy grants
The Age, July 5, 2011
RESPONSIBILITY for handing out about $1 billion in clean energy grants will be taken out of government hands under a compromise with the Greens as part of a carbon price deal to be announced on Sunday.
The Age has learned that clean energy programs such as the $1.5 billion solar flagships program - designed to help build Australia's first large solar plants - will be removed from Energy Minister Martin Ferguson's control and run by an independent statutory body.
The new statutory body running clean energy grants is expected to take over responsibility for some of the $5 billion clean energy initiative announced in 2009, including the remaining $730 million in solar flagship funding.

And the West Australian also reports,

Rules to rein in carbon cowboys
July 2, 2011
Trade in international pollution permits will be strictly limited under the Gillard Government's climate change package to prevent so-called "carbon cowboys" from scamming the multibillion-dollar scheme.
In a significant departure from Labor's abandoned carbon pollution reduction scheme, international permit purchases are likely to be restricted to high quality sellers such as the European Union and the US State of California. The concern under the CPRS was that low-quality carbon abatement could be bought by Australian polluters from places such as equatorial Africa and South-East Asia through hard-to-verify and dubious projects such as tree plantations.
It is understood the Government agreed to "qualitative and quantitative controls" under its emissions trading scheme at the insistence of the Greens who opposed unlimited access to international permits under the CPRS.

Although Tony Abbott sounds increasingly like he is running for the Republican nomination in the US rather than as opposition leader of Australia, viz;

Opposition Leader Tony Abbott, who yesterday blasted the Government's planned carbon tax as "socialism masquerading as environmentalism"…

Dear Vice-Chancellor

2011-06-29T02:29:00.002+10:00

Academic enrollments are falling, placing some universities and departments under some stress. If you want to focus your displeasure at continued deliberate obfuscation (there can be no other term) then a letter to the VC of Charles Cook or Adelaide Uni might have a small influence. Target the bottom line – enrolments. Draft letters and contact details are provided below.

There are two prominent academic “skeptics” in Australia, Dr Ian Plimer and Dr Bob Carter. Interestingly both from the fields of geology, both highly praised and both at the ends of their respective careers. Dr Plimer is not a disinterested party personally when it comes to climate change as he is in fact on the boards of several mining companies.

Both are also members or affiliates of that well known defender of the public good the IPA (Plimer, Carter).

Dr Carter recently had another opinion piece in The Age. It’s a sadly amusing read.

While both are free to express “their” opinion as they wish, so to are you. Should you need an avenue to do so I suggest the Vice Chancellors of the venerable institutes at whose publicly funded teat they are still attached – kind of hypocritical given the views of IPA.

Neither of these gentlemen need necessarily be “muzzled” from voicing their opinion, but on every such occasion that they do speak a disclaimer should be attached. They should be required to state publicly that their opinions are not supported by the universities that they represent nor the overwhelming majority of research on the issue. My thinking follows from Milgrams classic experiment on the acceptance of “authorities”.

Carters views were rebuffed later in the same paper.

Article continues...

Mythonium

2011-06-26T06:24:00.003+10:00

Easier to create than Unobtainium, and with a longer half life than any of the transactinides, it is a powerful and necessary element in any public relations effort.

Myth creation is common during a crisis. Some of them are deconstructed below.

The first major myth concerns Japanese technological prowess. As a nation the Japanese have a strong technological history, but they are not alone in having a long cultural history of avoiding (or outright denying) uncomfortable “truths”.

The first article below is an extensive cut and paste from the New York Times (follow the link for the complete story). I have edited out more from the start of the original piece and highlighted some of the more boring technical or “factual” statements that normally get relegated to the bottom of the journalists pyramid.

‘Safety Myth’ Left Japan Ripe for Nuclear Crisis
Norimitsu Onishi, NYTime, 24 June
SHIKA, Japan — Near a nuclear power plant facing the Sea of Japan, a series of exhibitions in a large public relations building here extols the virtues of the energy source with some help from “Alice in Wonderland.”
“It’s terrible, just terrible,” the White Rabbit says in the first exhibit. “We’re running out of energy, Alice.”
A Dodo robot figure, swiveling to address Alice and the visitors to the building, declares that there is an “ace” form of energy called nuclear power. It is clean, safe and renewable if you reprocess uranium and plutonium, the Dodo says.
“Wow, you can even do that!” Alice says of nuclear power.

See more images at Building Japan’s Nuclear ‘Safety Myth’ also from the NY Times

Over several decades, Japan’s nuclear establishment has devoted vast resources to persuade the Japanese public of the safety and necessity of nuclear power. Plant operators built lavish, fantasy-filled public relations buildings that became tourist attractions. Bureaucrats spun elaborate advertising campaigns through a multitude of organizations established solely to advertise the safety of nuclear plants. Politicians pushed through the adoption of government-mandated school textbooks with friendly views of nuclear power.
The result was the widespread adoption of the belief — called the “safety myth” — that Japan’s nuclear power plants were absolutely safe. Japan single-mindedly pursued nuclear power even as Western nations distanced themselves from it.
As the Japanese continue to search for answers to the disaster at the Fukushima Daiichi plant, some are digging deep into the national psyche and examining a national propensity to embrace a belief now widely seen as irrational.
Because of this widespread belief in Japanese plants’ absolute safety, plant operators and nuclear regulators failed to adopt proper safety measures and advances in technology, like emergency robots, experts and government officials acknowledge.]
Banri Kaieda, who runs the Ministry of Economy, Trade and Industry, which oversees the nuclear industry, said at a news conference at an International Atomic Energy Agency meeting in Vienna on Monday. “It’s a fact that there was an unreasonable overconfidence in the technology of Japan’s nuclear power generation.”
With radiation levels too high for workers to approach the reactors, the Japanese authorities floundered. They sent police trucks mounted with water cannons — equipment designed to disperse rioters — to spray water into the reactor buildings. Military helicopters flew over the buildings, dropping water that was scattered off course by strong winds, in a “performance, a kind of circus” that was aimed more at reassuring an increasingly alarmed Japanese population and American government, said Kenichi Matsumoto, an aide to Prime Minister Naoto Kan.
Japan lacked some of the basic hardware to respond to a nuclear crisis and, after initial resistance, had to look abroad for help. For a country proud of its technology, the low point occurred on March 31 when it had to use a 203-foot-long water pump — shipped from China…
But perhaps more than anything else, the absence of one particular technology was deeply puzzling: emergency robots.
Japan, after all, is the world’s leader in robotics. It has the world’s largest force of mechanized workers. Its humanoid robots can walk and run on two feet, sing and dance, and even play the violin. But where were the emergency robots at Fukushima?
The answer is that the operators and nuclear regulators, believing that accidents would never occur, steadfastly opposed the introduction of what they regarded as unnecessary technology.
“The plant operators said that robots, which would premise an accident, were not needed,” said Hiroyuki Yoshikawa, 77, an engineer and a former president of the University of Tokyo, Japan’s most prestigious academic institution. “Instead, introducing them would inspire fear, they said. That’s why they said that robots couldn’t be introduced.”
The rejection of robots, Mr. Yoshikawa said, was part of the industry’s overall reluctance to improve maintenance and invest in new technologies.
“That’s why the safety myth wasn’t just an empty slogan,” said Mr. Yoshikawa, now the director general of the Center for Research and Development Strategy at the Japan Science and Technology Agency. “It was a kind of mind-set that rejected progress through the introduction of new technology.”
After Chernobyl, the nuclear establishment made sure that Japanese kept believing in safety.
The plant operators built or renovated the public relations buildings — called “P.R. buildings” — attached to their plants. Before Chernobyl, the buildings were simple facilities intended to appeal to “adult men interested in technical matters,” said Noriya Sumihara, an anthropologist at Tenri University who has researched the facilities. Male guides wearing industrial uniforms took visitors around exhibits consisting mostly of wall panels.
But after Chernobyl, the facilities were transformed into elaborate theme parks geared toward young mothers, the group that research showed was most worried about nuclear plants and radiation, Mr. Sumihara said. Women of childbearing age, whose presence alone was meant to reassure the visitors, were hired as guides.
In Higashidori, a town in northern Japan, one of the country’s newest P.R. buildings is built on the theme of Tonttu, a forest with resident dwarfs. The buildings also holds events with anime characters to attract children and young parents…
Here in Shika, more than 100,000 guests last year visited the P.R. building where Alice discovers the wonders of nuclear power. The Caterpillar reassures Alice about radiation and the Cheshire Cat helps her learn about the energy source.
The nuclear establishment also made sure that government-mandated school textbooks underemphasized information that could cast doubt on the safety of nuclear power. In Parliament, the campaign was led by Tokio Kano, a Tepco vice president who became a lawmaker in 1998.
In 2004, under the influence of Mr. Kano and other proponents of nuclear power, education officials ordered revisions to textbooks before endorsing them. In one junior high school social studies textbook, a reference to the growing antinuclear movement in Europe was deleted. In another, a reference to Chernobyl was relegated to a footnote.
The nuclear establishment itself came to believe its own safety myth and “became entangled in its own net,” said Hitoshi Yoshioka, an author of a book on the history of Japan’s nuclear power and a member of a panel established by the prime minister to investigate the causes of the Fukushima disaster.

Will these events mark a transition to more questioning approach by the public to the otherwise supine acceptance of authoritarian opinion?

Survey shows disappointment, anger among Fukushima evacuees
Asahi Shimbun (Asahi.com), 25 June.
Disappointment toward Tokyo Electric Power Co. for its failure to guard the safety of the Fukushima No. 1 nuclear power plant and anger at the central government's inept handling of the accident.
Those are the two major themes that emerge from the results of an interview survey of 407 evacuees from the Fukushima nuclear accident.
About 90,000 Fukushima residents have evacuated because of the nuclear accident, with about a third of that number moving outside of the prefecture entirely.
While TEPCO may have provided many Fukushima residents with jobs, the nuclear accident has turned many evacuees against nuclear energy.When asked their opinion on the use of nuclear energy, 70 percent of respondents said they were opposed while 26 percent said they were in favor of nuclear energy.While the survey methods and sample sizes are different, those results are much more anti-nuclear than a nationwide poll conducted by The Asahi Shimbun in June in which 37 percent favored the use of nuclear energy and 42 percent opposed it.
Having young children was an obvious reason for not wanting to return to Fukushima.
A 37-year-old woman left her home in Minami-Soma with her husband and one-year-old son even before the region was designated as a potential emergency evacuation zone.
Whenever her son has health problems because of the unaccustomed evacuation life, the woman blames herself for giving birth at such a difficult time.
"No matter how much they say it is safe, there is no way we can believe them ever again," the woman said.The deep disappointment felt by many of the respondents is due to the fact that many believed TEPCO and other experts who repeatedly said Japan's nuclear power plants were safe and that no accident would ever occur.
Anger at the central government was due in major part to the confusion over evacuation instructions in the immediate aftermath of the accident.
A number of evacuees said they were given conflicting or incomplete instructions that made it difficult to understand where they should flee to.
A 72-year-old woman said, "Information that radioactive materials had spewed from the plant was only transmitted later. If I had known about it earlier, I would have evacuated much farther away."
A woman in her 60s from Namie said, "Not being informed about radiation, I was told to go to a location that had dangerously high levels of radiation."
As a result of such experiences, a total of 80 percent of respondents said the government's response was either totally inappropriate or somewhat inappropriate.
With life in evacuation centers now exceeding three months, close to half of the respondents said their health had worsened as a result.

When workers are put at risk they must be hailed as heros, whether they had a choice or not or new the risks.

Japan's 'throwaway' nuclear workers
Reuters, 24 June.
A decade and a half before it blew apart in a hydrogen blast that punctuated the worst nuclear accident since Chernobyl, the No. 3 reactor at the Fukushima nuclear power plant was the scene of an earlier safety crisis.
Then, as now, a small army of transient workers was put to work to try to stem the damage at the oldest nuclear reactor run by Japan's largest utility.
At the time, workers were racing to finish an unprecedented repair to address a dangerous defect: cracks in the drum-like steel assembly known as the "shroud" surrounding the radioactive core of the reactor.
But in 1997, the effort to save the 21-year-old reactor from being scrapped at a large loss to its operator, Tokyo Electric, also included a quiet effort to skirt Japan's safety rules: foreign workers were brought in for the most dangerous jobs, a manager of the project said.
"It's not well known, but I know what happened," Kazunori Fujii, who managed part of the shroud replacement in 1997, told Reuters. "What we did would not have been allowed under Japanese safety standards."
The previously undisclosed hiring of welders from the United States and Southeast Asia underscores the way Tokyo Electric, a powerful monopoly with deep political connections in Japan, outsourced its riskiest work and developed a lax safety culture in the years leading to the Fukushima disaster, experts say.
The repeated failures that have dogged Tokyo Electric in the three months the Fukushima plant has been in crisis have undercut confidence in the response to the disaster and dismayed outside experts, given corporate Japan's reputation for relentless organization.
Hastily hired workers were sent into the plant without radiation meters. Two splashed into radioactive water wearing street shoes because rubber boots were not available. Even now, few have been given training on radiation risks that meets international standards, according to their accounts and the evaluation of experts.
The workers who stayed on to try to stabilize the plant in the darkest hours after March 11 were lauded as the "Fukushima 50" for their selflessness. But behind the heroism is a legacy of Japanese nuclear workers facing hazards with little oversight, according to interviews with more than two dozen current and former nuclear workers, doctors and others.

And finally,

Report From Tokyo: No News Is Good News?
Huffington Post, 23 June
Controlling information flow in a crisis is crucial to its outcome. So it should come as no surprise that much information received about how the crisis at Fukushima unfolded has been kept away from traditional and social media as long as possible. In the end, however, the truth does come out.
One of my favorite truths this week was the acknowledgment by the Tokyo Electric Power Company (TEPCO) that 69 workers who worked at reactor #1 at the Daiichi Fukushima nuclear power plant in March "cannot be found." This means that these individuals, who may have been exposed to high doses of radiation, cannot be located for testing. Was this a case of "sloppy paperwork" or something else? Either way, one wonders how long and why this was kept from the public eye.
While many are no longer surprised to see this sort of thing occurring in Japan, it becomes even less palatable when it happens on the global stage. Take the case of International Atomic Energy Agency's (IAEA) recent decision to hold talks about the Fukushima disaster behind closed doors.
But the picture emerging after three months of radiation release is nothing to laugh about. The June 17th edition of Science magazine reports that radioactive cesium (both 134 and 137) has spread over 100 miles from the plant and now affects an area southwest of the reactors with a large pocket of contamination further south to the outskirts of Tokyo.Not telling the truth gives traditional and social media pundits much to write about and makes the pain last longer when it is revealed. Let us hope that more of those with inside knowledge prioritize the people more than they do their entrenched interests.

For an amusing expat view from Japan of the events try Spike Japan. Read the article about Pluto kun (Plutonium Child) and the bizarre world of TEPCO PR aimed specifically at children After the earthquake: So farewell then, Plutonium kun.

“I’m hardly absorbed by your stomach or intestines and I’m expelled by your body, so in fact I can’t kill people at all”.

A stroll in the mist – Side B

2011-06-22T17:17:00.003+10:00

The photo essay Singapore - sustainability in the mist is still attracting some admirers. Below are some further photos and light commentary about my impression of Singapore with an eye to the environment and sustainability.

The first photo shows a different angle of the misty walk illustrating the large expanse of heat retaining concrete in this area. As mentioned in the previous photo essay, the cooling ability of the misting pipe is limited – especially given its height – and the amount of wind. Unfortunately, to work as hoped this sculpture needs to take the risk of actually inconveniencing the public with the possibility of actual dampness. On the opposite side of the bay is a purpose built stadium for the events planned for this area.

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