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Inefficient though fairly effective carbon pricing

IT is now widely understood (i) that current carbon pricing has fairly marginal impacts on electricity prices and that (ii) current electricity prices are high because of excessive investment in network costs which stems from the way electricity prices are regulated: Ross Gittins provides a simple explanation of this second issue. Australian electricity prices are [...]

Emissions Reduction Fund analytics

There is a widespread misperception that the Emissions Reduction Fund (ERF) cannot, in principle, work to effectively reduce carbon emissions. An example is in today’s article in The Saturday. Basic environmental economics on the equivalence between taxes and pollution subsidy policies shows that this is wrong. It is also wrong to dismiss the ERF scheme [...]

Cut GGE stocks not rates of GGE emission

Climate policies should target the control of stocks of greenhouse gas emissions (GGEs) in the atmosphere not the flow rates at which people are adding to these stocks. It is a simple point – heating effects depend on the stocks not on the rate at which these stocks are being added to. The point can [...]

Emissions Reduction Fund is now definitely revealed to be a bad joke

I saw this morning that total planned funding for the government’s ERF of $2-55b will not be increased after 4 years. This is to be TOTAL funding through to 2023/2024.

This pathetically weak scheme is now revealed to be more than weak – it is a bad joke. There is no way targets of 5% [...]

Water provides a source of comparative advantage

The problem of water shortages around the world is not due to the fact that the total volume of water available is inadequate. The problem is that the world’s water supplies are distributed very unevenly. Moreover it is difficult to directly trade water internationally because it is bulky and heavy. Products which are relatively water [...]

A carbon capture & storage (CCS) success story

This New Scientist article is worth thinking about. A CCS plant in Canada (Boundary Dam) is about to become a working coal-fired power station with 90% of its CO2 emissions captured. It will be the first commercial scale CCS power station. A second plant in Mississippi that utilises coal gasification will test another energy source. [...]

Daft Coalition Policy #10: Unwarranted drought assistance

The move by the Abbott Government to provide $320m to farmers experiencing drought is terrible, not merely inconsistent, economic policy. The move undoes 5 years of reforms to drought assistance arrangements initiated by previous governments although the Gillard Government did some equally daft things. Australia experiences regular “droughts” as a part of its normal climate. [...]

Worsening droughts with climate change

Tony Abbott might be correct that climate change is not responsible for the current drought but he would be irresponsible to assert that future drought patterns will be independent of climate change.

There is, in fact, evidence published by our own Bureau of Meteorology that El Nino effects – and hence droughts – will have [...]

Warming & telling lies

2013 was the hottest year since records across Australia were begun. 9 of the warmest years on record have occurred in the past 12 years. That is what the Australian Bureau of Meteorology (BOM) states.

Of course it could be that Australia’s BOM are cooking the books to exaggerate the extent of warming. They could [...]

Maurice Newman & foolish commentary

In The Australian today Maurice Newman is quoted as saying that Australia’s climate policies have decimated Australian manufacturing. It is a foolish claim given that manufacturing in Australia faced problems even before we began to set a low price on carbon and before we began pursuing renewable energy targets. The Dutch Disease consequences of the [...]

Summary for policy-makers from IPCC

This important scientific report (as with previous IPCC reports) contains a summary for policy-makers. I am reading it now. I am interested in the observation that climate change will intensify El Nino events although specific rainfall effects remain less specific than one might hope for. This is an important document for my own research so [...]

Big deal: Rudd repeals carbon tax one year early

Given that Kevin Rudd faces a tight electoral battle I suppose introducing an ETS a year early seemed like a good idea to him. The opinion polls are ambiguous – most Australians favour the tax – hardly surprising given its minuscule influence on living costs and industry profitability despite the frantic bleating of The Australian’s [...]

Obama’s direct action plans deserve applause

Ignorant conservative political parties in the US and Australia are forcing reliance on relatively expensive direct action plans to tackle climate change. Tony Abbott is using an unprincipled attack on a “big new tax” to foist an ineffective direct action plan on Australia. President Obama wanted an effective carbon tax plan for the US but [...]

High speed rail on Australia’s east coast

About half of Australia’s population live in the east coast cities of Brisbane, Sydney, Canberra and Melbourne – it is well more than half if people living at points adjacent to this corridor are included. The most recent proposal for a high speed rail (HSR) link has been predictably debunked by government officials and the [...]

Rising temperatures

This study confirms the Mann “hockey-stick” story but takes the global temperature rise back 11,500 years. Temperatures during the past 100 years have increased faster than in any period since the start of the Holocene 11,500 years ago. I can’t locate a preprint of the Science article that details these claims. (2300)

Restricting carbon supply & climate change

The attractive feature of supply-based restrictions on the extraction of carbon-based fuels is that they raise the price of such fuels globally. Demand restrictions that are created, for example, by carbon taxes can, in a setting where they are imposed unilaterally, lead to carbon leakages because, in part, of an induced reduction in the global [...]

An ambiguous ‘climate change adaptation’ case for air-conditioning

One of the weird arguments for guns by the US gun lobby is to distribute more guns so the innocent can protect themselves. This argument for air conditioning has similar elements. Air conditioning saves lives when populations are exposed to extreme heat events although the proliferation of such technology, will increase the number of extreme [...]

Climate change stopped 16 years ago

No, it didn’t.

OK I am a bit obsessed with this issue (and have addressed the issue recently here and in 2008 here) but the lie that it did stop still gets repeatedly cited as an “inconvenient truth” by populist commentators such as Alan Jones and in blogs such as Andrew Bolt and Catallaxy. I [...]

Moylan’s ethics

Anti-coal campaigner Jonathan Moylan’s actions in disrupting the market for Whitehaven stock a few days ago was intended to be a moral action. It is not immoral to have principles and to take a strong stance against the use of coal given the imminent problem of climate change that the world now faces. On the [...]

Real option and insurance approaches to infrastructure investment with climate risk

I attended the Risk Management and Climate Change think Tank meeting at the Australian Centre for Financial Studies in Melbourne yesterday. As background I prepared the following notes that are intended to provide a non-technical guide to some technical economics.

Abstract: The real options and insurance literatures alter the way planners think about evaluating [...]