12 February 2010

Australia Decarbonization Paper

If you got here via the Sydney Morning Herald or The Age, welcome. The paper of mine referenced in the articles can be found here. Comments welcomed.

It is true that my analysis failed to account for accounting tricks:
Australia's Climate Change Ministrer, Penny Wong, yesterday said the paper ignored ''the important role international permits will play in Australia's low cost transition to a low pollution future''. ''The government's policy includes using international permits as part of the market-based Carbon Pollution Reduction Scheme…"
So Australia doesn't really intend to decarbonize its economy? Wow.

12 comments:

  1. From the Sydney Morning Herald:

    Australia's Climate Change Ministrer, Penny Wong, yesterday said the paper ignored ''the important role international permits will play in Australia's low cost transition to a low pollution future''. ''The government's policy includes using international permits as part of the market-based Carbon Pollution Reduction Scheme…''

    I imagine Ms. Wong is referring to the purchase of carbon credits, which means Australia is shooting to meet its targets on paper, not in actual emissions reductions.

    Are there any papers or studies that looks into how much individual governments are planning to use carbon credits to meet their target reductions, which would then show how much actual emissions will be reduce vs. emissions reduced only on paper?

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  2. After reflecting on the picture, I suspect those involved in rejecting your paper will "roo" the day.

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  3. The thing that really puzzles me is the persistances of politicians on cap and trade. Most politicians will do almost anything to kick a difficult decision down the road, particularly one that might increase the cost of living for all their constituents, as this generates significant rath in the electorate. Climategate and the revelations about sloppy science in the IPCC give these policians more than ample reason to take a second look at the science but its full speed ahead for many. What is really driving this? I've always maintained that Cap and Trade is windfall to the traders and in Austrailia, the former head of the liberal party, Malcom Turnbull, is married to someone with a job in the financial industry. I wonder how many other connections, weather they be through legislators or advocacy organization, are there between the financial sector and the more public face of climate advocacy. It just seems so odd that some sort of trading scheme is always at the heart of the CO2 control mechanism, no matter the environmental consequences (think biofuel) or the likelyhood of corruption.

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  4. Australia is the world third largest producer of coal.

    A fictional country..lets call it Londonistan is running out of coal.(BP Statistical Energy review says 9 years)

    It would be cheaper for Londonistan to build a nuclear power plant rather then pay the shipping on Australian Coal.

    Londonistan is part of the Carbon Trading Scheme. Since they no longer have any coal, they a coal burning permit that is of no value to them.

    Australia purchases the permit.

    Everyone is happy.

    Londonistan gets Australia to subsidize their nuclear power plant.

    Australians get to pollute away guilt free.

    Or in an alternative universe(sometimes referred to as reality.

    Australians decide the money would be better spent on building their own nuclear plants or wind mills and let Londonistan pay for their own nuclear plant.

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  5. But, the world's largest CO2 separation and storage project is currently under construction in Australia.
    http://www.chevronaustralia.com/ourbusinesses/gorgon/environmentalresponsibility/carbondioxideinjection.aspx

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  6. So Australia doesn't really intend to decarbonize its economy?

    I think you got it :)

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  7. I comment on this here:

    http://stochastictrend.blogspot.com/2010/02/decarbonization-in-australia.html

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  8. Ms Wong's office is just around the corner from where I live.. literally. Not sure if she's there much. I tend to curse when I walk past...

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  9. @Harry
    Are you sure about this?

    "It would be cheaper for Londonistan to build a nuclear power plant rather then pay the shipping on Australian Coal."

    I don't think so :). It's not even cheaper to make the ships nuclear powered. As these are quite simple and seriously well tested PWR systems, that would have been on of the low hanging fruits if true.

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  10. jgdes,

    There is a $47 difference in the mine mouth price of Central Appalachian Coal and Wyoming Powder River Basin Coal. $57 vs $10. The Powder River Basin coal has 25% less energy content. So let's adjust for that. For the same energy content Appalachian Coal is $43/ton and Powder River Basin is $10 per ton. (They have the same SO2 content).

    So why would anyone pay $43 for something that can be bought for $10? The difference is the cost of shipping the coal.

    Now if we examine electric utility rates.

    Wyoming has one of the Cheapest Electricity rates in the US, just over 5 cents per KW.

    If we look at South Carolina with 40% coal and 50% nuclear, their electric rate is 7 cents/KW.


    Back to our fictional country Londistan

    Various scholarly papers have been done that concluded 'Carbon' needs to be priced somewhere between 13 and 30 Euro's a ton for nuclear to be profitable.

    A nice article from 1952

    http://www.time.com/time/magazine/article/0,9171,806187,00.html

    "Of every dollar France gets in U.S. aid, she now spends 75¢ to import coal from the U.S. at ruinously expensive prices. Coal that costs $10 a ton in Pennsylvania sells for $22 a ton in Europe, after shipping costs are added."

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  11. Last year I believe Berkshire Hathaway bought Burlington Northern Sante Fe. About the same time a study project was announced regarding shipping Montana coal to China through Vancouver using the BN to the port city. Coal is not dead.

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  12. Small point, I know, but the paper repeatedly uses units of "mT" rather than "MT". One "mT" means a "milli-ton" (ie. one kg), if it means anything at all.

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