Pragmatus J

RENEWABLE, LOW IMPACT FUELS – GAME CHANGER

2013-03-30T20:14:00.001+10:00

This post is based on an article of mine, “Methanol electro fuel: A transport game changer” published in RenewEconomy on 12/3/13. It has been expanded to include more discussion on other renewable, low impact fuels and the extraction of CO2 from air and water. Briefly:

The renewable, low impact fuels described in this post can be produced in sufficient quantities to replace all fossil fuel requirements using commercially proven processes. All these renewable products are low impact because, unlike many bio-fuels, their production doesn’t require the diversion of land from food production, or damage to the environment. With the exception of hydrogen they could all be handled using existing gasoline, diesel or LPG infrastructure. Ammonia and methanol can replace LPG or gasoline after minor engine adjustments.

These renewable fuels are game changers. They provide an essential part of any credible plan for 100% renewable transport. As a result we don’t have to choose between 100% renewable transport vs destroying the economy, starving the poor or forgoing overseas travel.

Renewable hydrogen, methanol and ammonia can also be used to convert the production of a wide range of metals and chemicals to 100% renewable.

DETAILS:

Iceland

has begun exporting clean, renewable,electro methanol to the

Netherlands

for blending with gasoline. While the quantities are small, this is a game changer for transport, petrochemicals and much more. It is a game changer because this methanol is renewable, low impact and able to be produced in sufficient quantities to completely avoid the need for fossil transport fuels. The methanol is:

1. Renewable because it is produced from nothing more than renewable geothermal electricity, water and geothermal CO2.

2. Low impact because, unlike many bio-fuels, its production doesn’t require the diversion of food producing land or damage to the environment. Diversion of land to the production of bio-fuels is already causing starvation of people in some countries as well as damage to the environment. All renewable methanol requires is enough land to produce the renewable electricity and the space required for a compact production plant.

3. Able to be produced in very large quantities. Any form of renewable electricity could be used and, if necessary, the CO2 could be extracted from seawater or air if more concentrated sources of CO2 are not available.*

4. Electro because it provides a way of converting electricity into a transportable fuel.

In addition, methanol can be used to produce other fuels such as gasoline and diesel. (Gasoline was produced from methanol at Motunui (NZ) for a number of years using the Mobil process. The plant could have been operated to produce diesel if required.)

Renewable methanol, gasoline and diesel are transport game changers:

1. They allow credible, easily understood plans to be developed for 100% renewable transport: Plans that:

a. Could be as simple as replacing fossil fuels with renewable fuels. (NOTE: Better plans will involve a mix of strategies – For example, where practical, it will usually be more cost effective to use electricity directly instead of converting it into electrofuels.)

b. Don’t depend on the replacement of the existing transport fleet.

c. Don’t depend on starving the poor or damaging the environment.

d. Don’t depend on forcing little old ladies to ride bicycles.

2. They free long term transport plans from the need to consider greenhouse emissions.

3. In addition to cleaning up transport, renewable fuels could also be used reduce emissions from a wide range of industries. For example, most of the 50 million tonnes of methanol produced from fossil fuels each year are used as feedstock for the production of a range of petrochemicals. These petrochemicals would become renewable if they are produced from renewable methanol. The range of products that could be produced competitively from methanol would increase dramatically once the use of fossil fuels becomes unacceptable.

Methanol is not the only useful electro product than can be produced from nothing more than electricity, air and water:

1. The Fischer-Tropsch Process provides another proven way to produce a range of renewable hydrocarbons (including lubricants and gasoline) from nothing more than CO2 plus renewable power and hydrogen.

2. Dirty hydrogen made using fossil fuels has a key role in the production of a wide range of chemicals. It can also replace fossil carbon in the production of metals such as steel. The production of renewable hydrogen using electrolysis is the first stage of the Icelandic process for producing renewable methanol.

3. Dirty ammonia is produced by reacting dirty hydrogen with nitrogen from the air. Renewable ammonia can be produced by simply replacing dirty hydrogen with renewable hydrogen. Liquid ammonia can be transported and used as a fuel in a similar way to LPG 83% of the predicted world 2012 production of 198 million tonnes will be used in fertilizers. The remainder is used for things like the production of explosives, nitrogen containing chemicals, disinfectants and refrigerants.

Other possibilities:

The processes outlined above are not the only possibilities for producing renewable, low impact fossil carbon replacements in substantial quantities. Some of these, like this proposal for a salt water based algae plant at Whyalla may take their energy directly from the sun. Others may involve different routes for converting renewable power to fossil fuel replacement. It is certainly an area of active research.

*Recovering CO2 from Seawater or Air:

Numerous investigations of the recovery of CO2 from seawater or air have been conducted. For example, the

navy investigated the use of electrolysis for the recovery of CO2 and H2 from seawater. This was part of an investigation into the production of jet fuel using nothing more than nuclear power, and seawater. Other links talk about recovering CO2 from air, comparison of recovery of CO2 from air and water and the use of waste heat to reduce the cost of recovering CO2 from scrubber chemicals. All that can be concluded at this stage is that the production of renewable fuels from CO2 will be more expensive once the supplies of high CO2 concentration sources have all been taken. Renewables that do not require CO2 may become more competitive once this has happened.

CONCLUSIONS:

The

Iceland

and NZ commercial production stories put together mean that we don’t have to choose between 100% renewable transport vs destroying the economy, starving the poor or forgoing overseas travel.

BACKGROUND INFORMATION:

A: Hydrogen:

Hydrogen has a role in the production of a wide range of chemicals. It also has a role in some of the greener ways of making metals such as steel.

Most of current world production is dirty hydrogen produced from the reforming of fossil fuels. This reforming process releases carbon dioxide to atmosphere. Less than 4% of current world production is renewable hydrogen produced by the electrolysis of water using renewable electricity.

While hydrogen is widely touted as the transport fuel of the future it comes with a number of serious limitations:

1. The established hydrogen storage technologies are limited to storage at very cold temperatures (-253 deg C) or high pressures (3500 to 7000 kPa). Neither is very practical for most transport purposes.

2. Hydrogen has lower energy densities compared with conventional fossil fuels. Even at 6900 kPa a litre of hydrogen has only 14% of the energy in a litre of Jet A fuel. (26% for liquid hydrogen) Specific energy per kg is much better @ 330%. (However, this figure does not take account of the weight of high pressure storage tanks.)

3. It is far more energy efficient to use renewable electricity directly for transport compared with renewable hydrogen. Even if the hydrogen is used in fuel cells, overall efficiency is likely to be less than 50%.

B: Methanol:

Methanol is used on a large scale (about 37 million tonnes per year)^[5] as a raw material for the production of numerous chemical products and materials. Methanol has the potential to be part of a wider range of chemicals if the use of fossil carbon ceases to be an option. At present, the bulk of methanol production starts with the conversion of methane to a mixture of hydrogen and carbon monoxide. This mixture is then converted to dirty methanol.

Methanol can be used as a transport fuel. Due to its high octane rating methanol can be used in internal combustion engines and gas turbines. Pure methanol is used as a racing fuel because it allows compression ratios as high as 15:1 to be used.

Methanol is a liquid under normal conditions, allowing it to be stored, transported and dispensed easily, much like gasoline. Its energy density is 47% by volume compared with Jet A fuel (46% by weight)

C: Ammonia:

Ammonia is produced by reacting nitrogen from the air with hydrogen. Most of the world production is based on dirty hydrogen. A limited amount of renewable ammonia has been (is?) produced in Iceland.

Because of its many uses, ammonia is a major inorganic chemical. There are numerous large-scale ammonia production plants worldwide, producing a total of 131million metric tons of ammonia in 2010. About 80% of the ammonia produced is used for fertilizing agricultural crops. Ammonia is also used for the production of plastics, fibers, explosives, and intermediates for dyes and pharmaceuticals.

Ammonia can be used as a transport fuel in internal combustion engines and gas turbines with only minor engine modifications. (It needs about 5% biodiesel in the mix for diesel engines.) Ammonia used as a fuel can be stored and handled in a similar way to LPG.

Ammonia has lower energy densities compared with conventional fossil fuels. Its energy density is only 35% by volume compared with Jet A fuel. (43% by weight.)

D: Cost Comparisons:

No clear cost comparisons were found. The Iceland experience with renewable methanol and ammonia as well as the NZ experience with the conversion of methanol to gasoline suggests that at least some renewable fuels will be competitive (or close to competitive) with fossil fuels if a supply of low cost renewable power is availa

ROOFTOP SOLAR IS DRIVING DOWN EVERYONE'S POWER BILL

2012-12-24T09:48:00.000+10:00

This is a summary of an article of mine Why Utilities will Pay a Premium for Rooftop Solar published in REnewEconomy on 14 Dec 2012. It was written to counter claims that people without rooftop solar (RTS) were paying more for their power so that RTS owners could be paid a 44 cent/kWh feed in tariff much higher than the current tariff of about 23 cents/kWh .

Claims are being made that ordinary householders are subsidising rich rooftop solar owners. For example, Mark McArdle, (Queensland Minister for Energy and Water Supply) issued a media statement saying “the QCA analysis showed the solar bonus scheme currently added $26 per year to everyone’s annual electricity bill, which will increase to $90 next year if an application by Energex to the Australian Energy Regulator was successful.”

He added, “Rooftop solar costs are projected to add more than $240 per year to average electricity bills within five years.” (These claims were based on the previous government’s feed in tariff of 44¢/kWh)

So what is rooftop solar actually doing to household power bills in Queensland? And how high could the feed-in tariff go before it really would be increasing household power bills?

In the detailed section below, a comparison of demand and revenue vs time of day for 2008 and 2012 is used to answer the above questions. The quick answers are:

1. Rooftop solar is actually saving the “typical Queensland household” (without PV) $65/yr.

2. The feed-in tariff would have to rise above 96¢/kWh before rooftop solar actually stopped saving households (and power companies) money. Power companies can actually become more competitive by locking in extra contracts for the supply of rooftop solar, even if it means paying the small premium that was offered to me.

3. It is difficult to say what effect rooftop solar would have on household bills in five years’ time. My guess is that investment in rooftop solar will be justified at feed-in tariffs below what householders will be paying for power and that it will still be saving households money.

DETAILS:

If the feed-in tariff for rooftop solar is higher than what householders are paying for power it looks, at first glance, as though it would push up household bills. However, the reality is more complex. What really counts is the price of the power rooftop solar is replacing. Solar PV produces power during the high demand part of the day. Part of the power mix at this time comes from very expensive sources such as peaking generators that may only run for a limited amount of time during the year. It is these expensive sources of power that rooftop solar should replace. Moreover, added capacity from rooftop solar will increase downward market pressure on prices in general.

Despite the size of the feed-in tariff, it is quite possible that rooftop solar is actually driving down the average household power bill.

Figs 1 and 2 come from RenewEconomy. These graphs compare Queensland demand and revenue vs time of day for 2008 and 2012. This period is important for this discussion. RTS grew dramatically between 2008 and 2012.

The graphs exclude data for RTS

Fig 1 shows that average demand only differed during the time of day when rooftop solar would have been producing power. For this reason, it is not unreasonable to assume that the differences between 2008 and 2012 figures were due to its growth. We can also assume that the amount of rooftop solar for 2008 was small enough to be ignored in calculations.

Data taken from the smoothed curves was used to estimate changes in daily demand, revenue and price for non-rooftop solar. Between 2008 and 2012 there was:

1. A 1.87% drop in demand. (2.67 gWh/day).

2. A massive 31.3% drop in the daily revenue received by non-rooftop solar generators ($2.059 million/day)

3. A 30% reduction in the average price paid to non-rooftop solar generators. (1.41¢kWh)

Little wonder that the power generation industry is not completely enthusiastic about rooftop solar.

For more go to original article

FLOATING MEMBERS AND TWO MEMBER ELECTORATES - BASIS OF A BETTER ELECTION SYSTEM?

2012-10-27T16:29:00.001+10:00

Revised: 21 March 2013

In the 2010 Australian federal election* there was no clear result at the end of vote counting despite the ALP winning the two party preferred (2PP) vote. In the end, an ALP minority government was formed after post election negotiations with the Greens and independents. The LNP could have quite easily ended up as the government despite losing the 2PP vote.

By contrast, in the 2012 Queensland state election, the LNP gained a very clear majority of seats after clearly winning the 2PP vote. The problem here was that the ALP won only 8 % of the seats (7 members) despite having 27% of the primary vote. As a result, the ALP is struggling to hold the government to account let alone provide a credible alternative at the next election. Not a good outcome for the state. (The LNP won 88% of the parliamentary seats despite winning less than 50% of the primary vote.)

The common link between both these problems is that single member electorates were used to decide who will become members of parliament. The above are not the only problems associated with single member electorates.

In this article it is argued that a specific system based on two member electorates would overcome the problems that are a feature of systems based on single member electorates.

(*Definitions of the terms used here are included at the end of the article.)

INTRODUCTION:

Two electoral systems are used in

Australia

for state and federal parliaments. For all lower houses of parliament except Tasmania systems based on single member electorates using some form of simple preference counting are used. For the Australian Senate and some state upper houses, systems based on multiple member electorates using some form of proportional preference counting are used. (The lower houses determine who the government will be while the upper houses act as houses of review with the power to reject most legislation.)

Single Member Electorate Systems:

The Queensland state 2012 election results highlight some of the problems associated with single member electorates. Table 1 provides the key results:

TABLE 1: RESULTS OF QLD 2012 ELECTION

PARTY	RESULTS QLD 2012 ELECTION
PARTY	% OF PRIMARY VOTE (@ 2 April 2012)	SEATS WITH PARTY LEADING PRIMARY VOTE	MEMBERS ELECTED (Actual Result)	% OF MEMBERS
LNP	49.7	78	78	87.7
ALP	26.7	7	7	7.9
KAP	11.5	2	2	2.2
GREENS	7.4	0	0	0
FAMILY FIRST	1.4	0	0	0
ONE NATION	0.1	0	0	0
INDEPENDENTS	3.2	2	2	2.2
TOTAL	100.0		89	100.0

(Details of the Qld electoral system and the 2012 election results can be found at the Wikapedia and Qld electoral commision websites.)

A good result in the sense that the party that won the 2PP vote was able to form government with a workable majority. A bad result in the sense that the main opposition party (ALP) will struggle to provide an effective opposition or to be seen as a credible alternative at the next election because it only won 8% of the seats. Bad too in that the minor parties only won 2% of the seats despite winning 20% of the primary vote between them.

The disturbing thing is that the outcome could have been quite different even if every voter had voted exactly the same. Consider an extreme example: If the ALP had been able to locate all of its supporters in electorates where the ALP vote was slightly above 50%, the ALP would have won 48 seats and formed government without needing any preferences. At the other extreme, if the distribution of votes had been identical for all electorates, the LNP would have won all the seats after distribution of preferences. Other changes in the geographical distribution of supporters could have seen minor parties and/or independents holding the balance of power. Table 1 and these examples demonstrate why systems based on single member electorates:

1. Provide no guarantee that the party that wins the 2PP vote will form government.

2. Can have results distorted by the location of electoral boundaries or geographical distribution of supporters.

3. Tend to give the parties with high primary votes a disproportionate share of the members.

There are a number of other problems with single member electorates including:

1. Voters in marginal electorates have far more influence than those in safe electorates.

2. Not all voters will be represented by a member of the government. This can make it harder for these voters to influence government decisions.

3. Incumbent members have an advantage over challengers.

The only real attraction of single member electorates is that each voter shares “their” member with fewer other voters.

Large Multi-member Electorate Systems:

Compared with single member electorates, multi-member electorates combined with the use of proportional preference voting result in the percentage of members elected for each party being closer to the percentage of votes received. However:

1. There is an increased risk of minor parties and/or independents holding the balance of power. In this case, who forms government will be decided by negotiations held after the election, not the voters.

2. It may be harder for independents running on local issues to be elected.

3. Each member will have to look after far more voters.

4. It will still be possible for a party that didn’t win the 2PP vote to form government.

5. The location of electorate boundaries and geographic distribution of party supporters can still distort results unless the whole country/state becomes a single electorate.

The combination of large multi-party electorates with proportional preference voting is good for houses of review (where it is desirable to avoid the house being dominated by one party) but not appropriate for lower houses that have to decide which party is to form government.

Two Member Electorates:

Systems based on two member electorates have the potential to resolve many of the problems listed above. What is described below is one system that could realize this potential:

Key features of the proposed system:

1. The government will be formed by the party* that wins the overall 2PP vote*. (The voters decide directly who will be the government.)

2. Each electorate will have one member belonging to the government party.

3. The second member for each electorate will be elected from non-government candidates.

4. In addition, there will be a number of “floating members” who do not represent any electorate. The division of these floating seats between the parties will aim at bringing the number of members for each party closer to what they would have won if the whole state was a single a multi-member electorate using proportional preference voting.

5. The use of this floating member system means that governments will rarely have a majority. To avoid instability and ensure governments have enough money to do their job, a two thirds majority will be required to:

a. Pass a vote of no confidence.

b. Block supply.

c. Block the setting up of a government loan

d. Remove a tax. or government charge.

e. Prevent the government changing an existing government charge the rate for an existing tax.

6. Apart from the above exceptions, a simple majority of MP's will have the power to reject proposed legislation as well as initiate and pass legislation. (A limit on the time between passing legislation and signing it into law would be required to ensure governments cannot use procrastination as a defacto veto.)
7. Vacancies will normally be filled by the nominee of the party the departed member was a candidate for at the time of the last election (or the nominated successor of an independent.) By-elections will only be held if it is not clear who the replacement should be.

The above will allow a single house parliamentary system to provide both government stability and the checks and balances that we get from the federal Senate.

*NOTES:

In this section, the term “party” includes coalitions registered before the election.
A party that were not in the final 2PP count may challenge the result. The challenging party would form government if it can beat all interested parties in a one on one 2PP count.

The following vote counting procedure could be used to achieve the key features:

1. Step 1: Reduce the number of candidates for each party to one: If a party has more than one candidate for an electorate, the normal preference vote counting procedure will be used to determine which candidate will represent the party. (Only ballot papers that gave their first preference vote to the relevant party will be part of this count.) The preferences of losing candidates will then be distributed and these losing candidates excluded from the rest of the count.

2. Step 2: Do the overall 2PP count to determine which party will govern.

a. Preferences of independents will be distributed first.

b. The party (not individual) with the least number of total votes for the state will then be eliminated and their preferences distributed.

c. Count will proceed until only two parties are left. The party with the most votes at this stage will win the 2PP vote and form government.

3. Step 3: Determine who the non-government member for each electorate will be:

a. Exclude from this count all ballot papers that gave their first preference to the government party.

b. Use the normal single electorate preference counting method to determine who the second members will be.

4. Step 4: Determine who the floating members will be:

a. Do a proportional preference count for the whole state to determine how many members each party would have got under this system.

b. For each party calculate the difference between the proportional number and the numbers calculated in steps 2 and 3.

c. Allocate to the government the number of seats required to bring total government seats up to what the government would have got under the proportional preference count.

d. Allocate another floating seat to the government to compensate for having to supply the speaker. (Only if the government does supply speaker.)

e. Allocate one floating member to the non government parties.

i. Eliminate parties that already have all the members they would get under proportional preference voting.

ii. Allocate one floating member to the party requiring the largest number of extra members.

iii. Allocate one floating member to the party requiring the next largest number of extra members. Continue this process until all the parties requiring extra members have received one extra member or all the floating member vacancies have been filled.

iv. Repeat steps i to iii until al the floating vacancies have been filled.

DISCUSSION AND CONCLUSIONS:

The two member electorate system proposed here reduces most of the problems associated with

Australia

’s single member electorate systems. In particular, the new system guarantees that:

1. The party that wins the 2PP will form a stable government on its own with the power to raise the funds it needs to do the job.

2. The system will provide Senate style checks and balances unless the government has a majority in its own right. This would only happen if there had been a very strong vote in the government's favour (such as occurred in the 2012 Qld election.)

3. There will be a viable opposition.

4. The result will be fairer to minor parties.

5. Independents with strong local support can still become members.

6. Each electorate will have one government and one non-government member.

7. The votes in every seat are equally important

Most important of all, the location of electoral boundaries and the geographical distribution of party supporters have no effect on who wins government and a limited effect on the number of seats won by each of the non-government parties.

Table 2 compares the actual result of the 2012 Qld election with estimated results if the proposed system had been used with 29 floating seats.

TABLE 2: COMPARISON EXISTING AND PROPOSED SYSTEM

PARTY	RESULTS QLD 2012 ELECTION		ESTIMATED MEMBERS USING PROPORTIONAL PREFERENCE (WHOLE STATE A SINGLE ELECTORATE)	ESTIMATE PROPOSED SYSTEM
PARTY	% OF PRIMARY VOTE (@ 2 April 2012)	MEMBERS (Actual Result)		FLOATING MEMBERS	TOTAL MEMBERS
LNP	49.7	78	46	17	47
ALP	26.7	7	24	0	25
KAP	11.5	2	10	6	8
GREENS	7.4	0	6	3	6
FAMILY FIRST	1.4	0	1	1	1
ONE NATION	0.1	0	0	0	0
IND	3.2	2	2	0	2
TOTAL	100.0	89	89	29	89

*NOTES:

1. The Qld parliament had 89 members after the 2012 election..

2. Estimates are based on primary votes only, not on a detailed analysis of the 2012 result.

3. It is unusual for a government to get as high as 49.7 % of the primary vote. The LNP would have lost its parliamentary majority if their primary vote dropped to 47.4%.
4. Qld has 30 federal electorates, the same as the number of shared electorates assumed for the table 2.

There are numerous variations on what is proposed here. Consideration might be given to:

1. Allowing parties that were not in the final 2PP count to challenge the result. The challenging party would form government if it can beat all other interested parties in a one on one 2PP count. (The challenging party wins because a majority of voters prefer it to any other individual party – Could quite easily happen if the smaller party is a center party that receives most of the preferences of other parties.) Parties with primary votes below some cut-off might be excluded from this challenge process.

2. Guarantee that total members for the main opposition party will be at least the same as the number of electorates. This would help this party compete against the government in the next election by being able to allocate a member to each electorate. Other non-government parties may lose members to allow this to be done unless the extra main opposition party members were additional, non-voting members of parliament.

The crucial features of any good system will be:

1. Government is formed by the party (or registered coalition) that wins the overall 2PP vote.

2. Each electorate ends up with a government and non-government member.

DEFINITIONS:

Ballot paper: Voters record their vote on their ballot paper and place it in a ballot box for counting.

Coalition: An alliance between two or more political parties.

Federal government: The national government.

Incumbent: A candidate who was the member for the seat before the election.

Independent: A candidate who is not the official candidate of a political party.

Lower house: The house of parliament that decides which party/coalition forms government. Both upper and lower houses have the right to initiate legislation.

Upper House: This is a house of review that should act as a check and balance. With the possible exception of some money bills legislation needs to be passed by both houses of parliament. Queensland has no upper house.

Preference voting: The system used for all government elections in

Australia

. It allows voters to show their support for minor parties without losing their right to vote for their preferred major party. Voters put number one next to the name of their preferred candidate (first preference), two next to their second preference etc. (Some states allow symbols other than numbers to be used.)

Primary vote: This is the total number of first preferences received by a candidate or party.

Counting preference votes for single member electorates: The number of first preference votes received by each candidate are counted. If no candidate has more than 50% of the vote, the candidate with the least number of votes is eliminated and the second preferences of this candidate are added to the votes of the surviving candidates. This process continues until one candidate gets more than 50% of the votes. For more details see Counting for the Federal House of Representatives.

Proportional preference systems: These systems are used for counting preference votes in multimember electorates such as those used for the Australian Senate. For details see How the Senate Votes are Counted

Two party preferred vote (2PP): This count can be done for both individual electorates or the overall vote. For the overall vote: At the start of this count all candidates who are not party candidates will be eliminated and their preferences distributed. The candidates for the party with the least number of votes in the overall count will then be eliminated and their preferences distributed. This procedure will continue until there are only two parties left. The 2PP vote is the votes (including received preferences that the surviving two parties have at this stage.)

Major parties: These are the parties that have a real chance of forming government. For many years, control at national and state level has alternated between the ALP and a stable coalition of the Liberal and National parties. In Queensland, the Liberal and National parties merged to form the LNP before the 2012 election.

Minority government: A term used to describe a government that depends on independents or minor parties to retain power.

Safe seats: Seats that one party wins every election.

Working majority: A majority large for the government to get its legislation passed. A government needs at least one more members than the combined non-government members to have a working majority. One government member usually becomes the parliamentary speaker. The speaker only has a casting vote

PHASE CHANGE MATERIALS – BACKGROUND INFORMATION

2012-08-08T23:46:00.000+10:00

This post was initially written to provide background information for this article on the potential benefits of moving air conditioners to off peak power. (published by RenewEconomy on 21 Sept 2012) The article argues that that gradually moving air conditioners to off peak would allow most of the proposed power system upgrades to be deferred for a long time. The use of phase change materials (PCMs) to store cold or heat would allow this conversion to be done without reducing people's comfort levels.

PCMs are finding a markets as a compact way of storing heat or cold. This post provides background information on the characteristics and uses of PCMs.

DEFINITIONS:

Phase: Many materials can exist in more than one phase. For example, water can exist in the solid, liquid or gas phase. Some materials can also exist as different crystal phases.

Phase change: The change from one phase to another. For example, the melting of ice to liquid water. Phase changes can be driven by changes in temperature and/or pressure.

Phase change material (PCM): A mixture or pure substance that can change phase. The term is often restricted to materials that change phase over a narrow temperature range.

Latent heat: The heat that has to be added (or taken out) in order for the phase change to take place. It is the high value of many latent heats that make PCMs so useful for storing heat and cold. For example, one kWh of heat will melt 10.8 kg of ice or raise the temperature of the same weight of liquid water by about 80 deg C.

Heat flow: The movement of heat from one place to another.

Thermal inertia: If something needs a lot of heat (or cold) to change its temperature, it has high thermal inertia. For example, a 10,000 litre tank of water has more thermal inertia than a 100 litre tank. Traditional buildings in hot dry areas are often built with thick, heavy walls to give high thermal inertia so that the temperature inside the house doesn’t vary as much as it does outside. Using PCMs to provide thermal inertia reduces building weight as well as concentrating the thermal inertia within the comfortable temperature range. (Note that, for keeping a building cool, the PCM must get cold enough to freeze at some time during the day.)

Heat pump: Heat pumps are used in most refrigerators, air conditioners and some hot water systems to “pump” heat from one place to another. This Wikipedia diagram shows how a heat pump works:

Refrigerant gas is compressed in the compressor (4). The hot compressed gas then flows to the condenser (1) where it loses heat and condenses to liquid. The liquid then flows through an expansion valve (2) to the evaporator (3) where it absorbs heat and returns as cool, low-pressure gas to the compressor. In effect, heat is pumped from the evaporator to the condenser. The condenser can be used for heating and the evaporator for cooling. Reverse cycle air conditioners can be used for heating or cooling. The flow of refrigerant is reversed so that the condenser becomes the evaporator.

Heat pump COP (Coefficient of performance): The ratio between the heat pumped and the energy consumed by the pump. COP drops as the difference between condenser and evaporator temperature increases. Doubling the temperature difference will approximately halve the COP. The “COP” for a simple bar radiator is always 1.0 no matter what the temperatures are.

DESIRABLE PROPERTIES OF PCMS:

Desirable properties include:

1. The phase change occurs slightly below the desired temperature for cooling, above for heating.

2. Phase change occurs within a narrow temperature range.

3. Low cost.

4. Stability. Can be used indefinitely over a wide range of temperatures without deteriorating.

5. Tasteless and odorless.

6. Neither flammable nor toxic.

7. Can be safely stored in a wide range of materials without causing corrosion problems.

WHAT PCMS ARE COMMERCIALLY AVAILABLE?

A wide range of PCMs are commercially available. For example, UK company PCM Products produces a range of PCMs based on the solid/liquid phase change. Melting points range from -100 to 885 deg C. Their products include PCMs based on organic mixtures, salt mixtures, and salt solutions. PCM products also produces a range of PCMs based on the solid to solid phase change.

Development of commercial PCMs is difficult. Most commercial PCMs don’t have all the desirable properties listed above. Choices may involve compromises.

The liquid/gas phase change is rarely used to store energy because of the volumes required to store the gas. The exceptions are cases where it is environmentally and economically acceptable to discharge the gas to atmosphere. For example, liquid nitrogen is commonly used to store cold when temperatures as low as -196 deg C are required.

Dry ice (solid CO₂) uses a solid/gas phase change to store cold at -78.5 deg C.

HOW MUCH DO PCMS COST?

The cost of PCMs varies considerably because of the different raw materials used in their manufacture. Indicative data supplied by Australian manufacturer PCP Australia (Jan 2012) suggests it would cost $70 to buy enough of their PC25 product to store one kWh of heat. By contrast, the equivalent cost for their PC17 product would be about $150. PC17 costs more because the mix contains bromides instead of chlorides. (PC25 melts at 25 deg C. About 15 litres of either product is required to store one kWh of heat or cold.)

APPLICATIONS:

Both the PCM Products and PCP Australia websites provide information on ways in which PCMs are used and how PCMs can be incorporated into various materials. Smart Planet provides a wider view of the possibilities.

Example: Using PCMs to allow air conditioning to move to off peak power:

In countries such as Australia, peak power demand is driven by the very high power demand from air conditioners during very hot days. This problem could be avoided if the heat pumps on enough air conditioners were switched from “on-demand” power to some form of “controlled power” (Off-peak power.) Switching to controlled power allows power suppliers to control demand by turning air conditioner heat pumps on and off.

Switching air conditioners to controlled power would only be acceptable to the community if people’s comfort is not affected. Using PCMs to store heat or cold while the heat pump is running would be one logical approach to protecting comfort. PCM storage is attractive because relatively little space is required. Approaches that might be considered include:

1. Leaving existing air conditioners unchanged and installing PCM based products within the building rooms. Products such Dupont Energain Thermal Mass Panels might be used to do this. One disadvantage of this approach is that the panels will continue to heat/cool the building when this is not needed. (Think of a house that is empty while the occupants are at work.) Another disadvantage is that the building may need to be kept hotter or colder than desirable while heat/cold is being stored. OR

2. Locating the heat/cold storage outside of the in an insulated storage tank. The air conditioner system would be modified so that the heat pump pumps heat/cold to the storage tank. Cold (or hot) water from the tank is then pumped to the rooms for temperature control. This PCB Australia circuit shows one way that this could be done. The tank contains water and the PCM. The water in the tank would be physically separated from the PCM to avoid contamination.

Apart from solving the peak power problem, the use of PCM storage in air conditioning systems saves money for the consumer by allowing:

1. Low-cost off-peak power to be used to run the heat pump.

2. Average power consumption to be reduced. (The compressor would be scheduled to run at times of the day when outside temperatures are closer to the storage temperature. (See “Heat pump COP” above re the benefits of doing this.) This link gives average monthly maximum and minimum temperatures for various Australian locations and times of the year. The differences between maximum and minimum temperatures are sufficient to make the power savings significant.

Solar hot water heating may provide a better source of heat than heat pumps in some locations.

DISCLAIMER:

John Davidson is not associated with any organization that profits from sale PCMs.

A BETTER COMMERCIAL MODEL FOR ROOFTOP SOLAR PV?

2011-11-30T22:14:00.000+10:00

Revised 11 April 2013

The dominant commercial model for rooftop solar PV has the individual house holder owning the panels and getting the resulting income/free power. In this post it is argued that it may make sense to give home owners the option of leasing rooftop space to power companies who own the panels and the power produced by the panels. Advantages of this approach include the reduction of power costs by making it easier to use competitive tendering to set the feed in tariff, allowing a mix of location and panel orientation better suited to the needs of the total power supply system as well as providing an income stream for home owners who cannot afford to buy panels.
Breaking News:
Since I first started talking about the advantages of competitive tendering for the supply of clean electricity , the ACT introduced their "Reverse Auction" for driving investment in large scale solar. I don't know all the details of their system except that it is a competitive tendering system.
I have now found this article in the Australian (Giles Parkinson 7 Sept 2012) that announced that the ACT auction process had reached the point where the first contract has been awarded to Spanish group FRV for a lower than expected fixed price of 18.6 cents/kWh for 20 yrs. This price may seem a bit high but, based on Qld experience it should actually reduce ACT power bills by replacing more expensive sources of day-time power. End of breaking news.

Rooftop solar started off with idealistic and/or technophillic people buying and installing their own roof top solar PV panels on their own house. When governments started using subsidies and feed in tariffs high enough to encourage investment in roof top solar PV the whole thing morphed into middle class pork barrel. Poorer people simply couldn’t afford the investment even though it had become attractive. There are other disadvantages:

The investment rate is slow because there is a limited pool of investors. Most of these investors will install far fewer panels than their roof could hold.
The small size of each installation reduces the potential savings of larger installations and the possibility of having one converter to process the DC power from a number of roof tops. A larger, more sophisticated converter may help solar PV be more grid friendly.
Feed in tariffs are set by governments or power companies at a level they are sure will spur investment. Competitive tendering is not used to reduce price to the grid.
Poorer householders cannot afford to install solar PV even when the investment gives good returns.
Homeowners orient their panels to maximize total power generated per day even though this means that less power will be produced during high demand periods at the beginning and end of the day.
Solar PV is being concentrated in suburbs where homeowners can afford them. This may not be the best outcome in terms of both distribution system stability or producing more power during high demand periods during the day.

If we are serious about rooftop solar there is a case for changing the dominant commercial model to one where power companies install and own the panels and lease roof space from homeowners. The attraction of this approach include:

The power companies (not necessarily major ones) should be better able to mobilize finance. Investment rates should improve.
There will be cost savings arising from installing more panels per roof and linking the DC power from a number of houses that are near to each other. The linking of more than one house to a larger, more sophisticated converter may also make solar PV more grid friendly.
The use of competitive tendering to drive down the price paid for solar PV becomes more practical
Homeowners in poor areas can make some extra money without having to invest or maintain.
It will be easier to control the mix of location and orientation to give a better result for the system as a whole.

This does not mean that householders should be blocked from installing panels on their roof and selling power into the grid.

FREE SPEECH AND THE RACIAL DISCRIMINATION ACT

2011-09-29T13:49:00.001+10:00

Andrew Dodd at the Drum had this to say about the Federal court ruling against Andrew Bolt and the Herald Sun on a racial discrimination case brought by a group of prominent fair skinned Aborigines that Bolt accused of claiming Aboriginality to advance their careers:

“No doubt the Federal Court would like us to see its judgment against columnist Andrew Bolt today as a call for decent standards in journalism, rather than as a landmark ruling against freedom of speech.

But in reality it will not be seen that way because it is a slap in the face for free expression. It limits the kinds of things we can discuss in public and it suggests there are lots of taboo areas where only the meekest forms of reporting would be legally acceptable”.

Dodd then went on to say that:

“Justice Mordy Bromberg ruled in favour of nine fair skinned Aborigines who claimed that two articles written by Andrew Bolt two years ago were inflammatory, offensive and contravened the Racial Discrimination Act.

There is clear logic in the judge’s ruling, but my contention is that it fails to establish why Bolt’s writings did not qualify under the freedom of expression exemptions within the Act and it falls short of establishing that Bolt’s motives were as debased as the ruling suggests.

Bromberg makes it clear that Bolt and the Herald Sun lost their case because Bolt got his facts wrong and because he went out of his way to distort and inflame and provoke……..
Controversially, the judge also ruled that it’s the group of people who have been offended that should determine whether or not a comment is offensive. In other words, the views of an average Herald Sun reader are not important here. It’s the views of Aboriginal people that matter.

In essence this case was lost on this point – the belief by the judge that “people should be free to fully identify with their race without fear of public disdain or loss of esteem for so identifying………

I think the ruling is dangerous because it asserts as indisputable fact that Bolt’s articles were not reasonable and were not written in good faith and do not classify as “fair comment”. The Judge clearly believes they were not written with a genuine public interest in mind.

But in the end this is just one person’s view. Although those of us that don’t like Bolt’s writing might think we understand his motives, we really don’t have a clue whether Bolt honestly held these views. Perhaps he was being courageous, rather than reckless, in seeking to talk openly what many would say quietly. I don’t share his views but I can see some merit in the argument that true racial tolerance is only achieved when we can ventilate unpopular views openly and have a robust discussion about them.”

Perhaps the case should have been run as defamation. However, to be realistic, the libel laws in

Australia

are too often used to allow the rich and powerful to shut people up or stifle debate on issues that should be debated. To be realistic too the ruling is fuzzy enough to create uncertainty in some people who want to comment critically about racial issues and the behavior of individuals and organizations. This uncertainty can result in things being left unsaid that should be said.

Think about the robust comments made in many parts of the media about Abbott, Gillard and Andrew Bolt. There is certainly the odd one that could be described as “encouraging public disdain”. There are certainly some where at least one of the commentators has got their facts wrong. (They can’t all be right.)

Personally I would like the robustness of public debate to be protected even if it doesn’t mean that we can shut up Andrew Bolt.

COAL AND LNG - LIFE CYCLE EMISSIONS

2011-09-26T10:41:00.002+10:00

The following link compares life cycle emissions for the use of natural gas and coal in the US:

http://www.ce.cmu.edu/~gdrg/readings/2005/10/12/Jaramillo_LifeCycleCarbonEmissionsFromLNG.pdf

In particular look at fig 4 and 8. Fig 4 suggests that, for the LNG cycle, at least 0.3 tonnes of emissions will come from non emission sources per tonne combustion emissions with about half this coming from LNG production, tanker transport and regasification.

While these figures are all about US alternatives, they clearly emphasize the importance of challenging the gas industry to publish site specific data. Also suggests that there is lots to be said for locating generators close to the gas source.

Would be interesting to compare life cycle emissions from Australian LNG and coal used in Chinese power stations.

SHOULD WE CHANGE THE WAY WE WORK

2011-08-16T22:01:00.000+10:00

This post was published originally at Larvatus Prodeo. It discusses options for changing the way we work that could reduce emissions and share the work more fairly. See: (http://larvatusprodeo.net/2009/08/24/guest-post-should-we-change-the-way-we-work/)

A recent Climate Progress post reported that “closing Utah state offices on Fridays has resulted in a 13 percent reduction in energy use as well as collectively saving employees between $5 million and $6 million annually in commuting costs.” (A 5×8 hr week was replaced by a 4×10 hr week) In addition, “employee surveys have shown that most state workers like the new schedule — absenteeism and overtime are down and customer complaints have steadily dropped. Even wait times at the Department of Motor Vehicles have decreased…”

The post goes on to mention Californian studies that have indicated potential health and traffic congestion benefits from making similar changes. More details for the Utah case and additional benefits can be found here. Note that the aim in Utah was to save heating etc. costs by actually shutting down the offices for an extra day/week.

So perhaps it is worth asking how changes in technology and the way we work might help the environment, quality of life and job security? By and large we are still using work patterns that were developed when observing the Sabbath was considered important and the telegraph was leading edge technology. Does it really still make sense for most people to work day shift, Monday to Friday and to do their work in workplaces that are more than a few kilometres from home?

Technology changes in the last 10 years have changed what is practical. Not so long ago I needed to work at my personal workplace with filing cabinets, reference books etc to work efficiently. Now all that information that used to be on paper will fit on a memory stick or be accessible via the internet. There is no longer a need to have a dedicated workplace to work efficiently. Modern technology is also allowing many other jobs that had to be done at a particular place to now be done anywhere with reasonable internet connections. For example, my understanding is that Hamersley now controls its crushing plants from Perth instead from control rooms at the crushers. Technology also means that many people should be able to reduce commute emissions by spending more time working at home or closer to home.

We have also reached a point where most people have no particular reason not to take time off during the week instead of weekends. For me the only time when being off at weekends was important was the 40% of my working life when our children were at school.

One possibility worth considering is a wider adoption of 7 day work rosters similar to those used by the mining industry. For example, many of the Thiess sites I worked with used a 4 day on 4 day off roster that averaged 42 hrs/week for 12 hr days. The roster was popular and turnover low. Seven day rosters can involve more than 2 crews, different roster arrangements etc. if required.

From an emissions point of view the big attraction of the above roster is that assets are used more efficiently. For example, it would allow office space requirements to be halved if individuals work more hours per day to maintain the same weekly hours. Halving office space requirements halves the emissions generated when an office is not being used. It would also allow most of the emissions associated with office buildings to be avoided for many years. Construction resources could be diverted to building more important things such as hospitals, clean power generation and the conversion of unused office space to accommodation etc. Widespread use of 7 day rosters would also reduce traffic congestion during peak hours as well as reducing weekend crowding at some recreation facilities.

It is worth discussing what changes to work arrangements may make sense in terms of society, the environment and the economy and the key reasons for this choice. It is also worth discussing what working arrangements we would choose as individuals if we had the choice.

USING OFFSET CREDIT TRADING TO DRIVE DOWN NEW CAR EMISSIONS

2011-08-12T23:24:00.000+10:00

In a previous post it was argued that the most effective way of driving down the emissions per km of new cars would be to use an offset credit emissions trading system. The aim of this post is to detail one version of this type of system.

WHAT ARE OFFSET CREDIT TRADING SCHEMES?

Versions of offset credit trading emission trading schemes are at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain. Offset credit trading is particularly suited for situations where the aim is to control an average and where there is no shortage of better than target product.

There is no transfer of funds to the government so offset credit trading schemes are not defacto tax schemes. If all else is equal price increases will be lower because prices do not have to cover the cost of the defacto tax.

Under an offset credit trading system credits are awarded for better than target performance. Any entity that wants to perform worse that target has to purchase these credits from entities awarded credits for performing better than target.

HOW MIGHT AN OFFSET CREDIT TRADING SYSTEM BE USED TO DRIVE DOWN THE AVERAGE EMISSION PER KM FOR NEW CARS?

A basic offset credit emission trading scheme for controlling average emissions per km might work as follows:

1. Government sets target and specifies test procedures.

2. If a new car with emissions per km below target is registered, free credits would be awarded by the government. The number of credits awarded would depend on how far below target the emissions were.

3. Before a new car with above target emissions could be registered enough of these credits generated by the registration of below target cars must be purchased and surrendered to the government. The number of credits needed will depend on how far above target.

In effect, all above target emissions have to be offset against below target emissions so that the average stays at or below target.

The advantages of offset credit trading schemes include:

1. Do not depend on any change in the price of fuel to work.

2. Will reduce the price paid for cars with below target fuel consumption.

3. The target can be as challenging as the government is willing to make it.

4. Unlike simple cap schemes, it does not completely block the sale of new cars with above target emissions. (Reduces the impact of complaints from those who really do need cars with above target emissions.)

5. At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

In practice there may be a number of modifications to the above system. For example;

1. Limiting actual trading to that required by manufacturers/importers whose averages haven’t quite matched the target.

2. Providing some relief for genuine working vehicles and special cases such as large families.

3. Extending the system to take account of significant conversions of existing cars.

4. Controlling fuel consumption rather than emissions so that it is easier for people to understand targets.

5. Excluding light commercial vehicles from the offset trading pool while giving/requiring similar payments to those in the offset credit trading scheme for below or above target emissions. (Removes the incentive to argue about whether a vehicle is or isn’t commercial.) There might be an upper limit on payments to avoid pushing the payments for large trucks up for no real reason.

6. Have a separate system for commercial vehicles.

7. Having different targets for vehicles that normally travel long distances or do not have access to clean electricity. (Vehicles for which plug in hybrid will make little difference.)

At the start of the program there will be plenty of large, second hand vehicles available for those who really need this type of vehicle. It would make sense to wait and see before introducing special arrangements.

CARBON TAX NOT THE BEST WAY TO DRIVE DOWN CAR EMISSIONS

2011-08-12T15:22:00.001+10:00

SUMMARY:

This note argues that:

1. A carbon tax is not an effective way of driving down car related emissions. It was estimated that a $23/tonne carbon tax would reduce total car emissions by only 1.1% initially rising to 2.6% after a number of years.

2. Driving down the average emissions per km of new cars should be a key part of any long term plan for reducing fleet emissions.

3. An offset credit emissions trading scheme would be the most effective way of reducing the average emissions per km of new cars. The attractions of this approach include:

I. Does not depend on any change in the price of fuel to work.

II. Will reduce the price paid for cars with below target fuel consumption.

III. The target can be as challenging as the government is willing to make it.

IV. Unlike simple cap schemes, it allows some scope for people to purchase new cars with above target fuel consumption.

V. At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill $614 per tonne CO2 abatement.

(*NOTE: Offset credit trading is at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain.)

RECOMMENDATIONS:

1. That an offset credit trading scheme be introduced before the next election.

2. The initial tailpipe emission** target be set at 122 g CO2/km. (5 litres/100 km for a petrol driven car.)

3. The target be ramped down to 25 g/km by 2020.

(**NOTE: The target may be expressed in a form that takes account of total emissions from well to tailpipe, not just tailpipe emissions.)

DETAILS:

Reducing the fuel consumption of cars is important from the point of view of both emission reduction and reducing our exposure to oil supply problems. ABS data indicates that passenger vehicles (excluding buses) consumed 18 billion litres of fuel at an average rate of 11.5 litres/100km during 2007. This fuel consumption would generate about 45 million tonnes of CO2.

Unfortunately, a carbon tax has been found to be ineffective at reducing total car fleet emissions. The results of two large overseas studies in the UK and US both suggest that a $30/tonne CO2 tax on tailpipe emissions would reduce total car fleet fuel consumption by only 1.4% initially rising to 3.4% after a number of years. (For a base fuel price $1.50/litre - These reductions correspond to price increases per tonne CO2 abatement of about $2100 and $900 respectively.)

Other strategies for achieving total fuel reduction include:

1. Reducing total km traveled by using more public transport, car pools, reducing the distance/frequency of travel to work etc.

2. Reducing emissions per km for the existing car fleet by retrofitting cars with plug in hybrid drives, improving driving practices, lowering speed limits, using lower roll resistance tires, fitting lower air resistance hub caps, etc.

3. Reducing average fleet emissions per km over time by improving the average emissions per km of the new cars. This strategy is important because it has the potential to yield the large reductions required to survive future oil shortages and because a typical car will have a life of 10 to 20 years.

The focus of this note is driving down the average fuel consumption of new cars.

Driving down the average fuel consumption of new cars:

There are many commercially available cars that are that have standard fuel consumptions well below the 11.5 litres/100km 2007 average. For example, there are small, low cost cars with claimed highway fuel consumption below 5.0 litres/100 km as well as more expensive conventional drive cars that are claimed to consume as little as 3 litres/100 km. ABS 2007 figures had passenger vehicles averaging 39 km traveled per day, light commercial 50 km/day. This suggests that the plug in hybrids that are beginning to appear on world markets should deliver fuel consumptions below one litre/100 km without requiring large batteries.

Car related emissions are one area where quite dramatic reductions can be achieved over time even if we restrict ourselves to technologies that are currently commercially available.

ABS reports that “Over recent years there has been a continuous reduction in average new vehicle emissions. From an estimated 252 grams of CO2 per kilometre in 2002, National Average Carbon Emissions (NACE) for all new light vehicles sold in

Australia

for 2008 was 222.4 grams of CO2 per kilometre. This decline in carbon emissions of new vehicles places the industry well on track to achieve the target of an average of 222 grams of CO2 per kilometre by 2010.” The target referred to was the Federal Chamber of Automotive Industries (FCAI) voluntary target. (222 gms per km corresponds to the tailpipe emissions from a car consuming 9 litres petrol/100km.)

Three alternatives for driving down the average fuel consumption of new cars down further have been considered here:

1. The carbon tax.

2. The use of caps to put an upper limit on emissions per km.

3. The use of an offset credit based emission trading scheme to control the average fuel consumption of new cars.

The carbon tax:

As mentioned above the carbon tax is not an effective way of driving down car related emissions because average fuel consumption has been found to be only weakly linked to fuel price.

A $30/tonne tax would add about 33¢/day to the cost of running the average 2007 car. So it is hardly surprising that fuel consumption that such a tax would not be a great incentive to act. Even worse, most of the changes that we are suggesting people take to reduce their fuel cost will reduce comfort, convenience and status.

The carbon tax is not an effective way of driving down the average fuel consumption of new cars.

The use of regulated emission caps:

Regulations that cap emissions per km for new cars could be used to block the sale of new cars that exceed the limit. Advantages include:

1. It does not depend on any change in the price of fuel to work.

2. It could be very simple if no exceptions are allowed.

3. The target can be as challenging as the government is willing to make it.

4. At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

The disadvantage is that a simple cap may produce loud protests from individuals who have a particular desire for a vehicle that exceeds the cap as well as manufacturers whose product just exceeds the cap. There is a real risk is that the protests will result in higher caps.

A cap based system also provides no incentive for manufacturers to produce cars with emissions well below the cap.

The use of caps can be used to drive serious reductions in emissions. However, there are some disadvantages.

Offset credit based emission trading schemes:

Offset credit trading emission trading schemes are at the core of both the Australian MRET emissions trading scheme used to drive investment in renewables as well as the US system for reducing acid rain. Offset credit trading is particularly suited for situations where the aim is to control an average and where there is no shortage of better than target product.

An offset credit emission trading scheme for controlling average emissions per km might work by:

1. Government sets target and specifies test procedures.

2. If a new car with emissions below target is registered, free credits would be awarded by the government. The number of credits awarded will depend on how far below target.

3. Before a car with above target emissions could be registered a number of these credits generated by the registration of a below target car must be purchased and surrendered to the government. The number of credits purchased will depend on how far above target.

In effect, above target emissions have to be offset against below target emissions so that the average stays at or below target.

The advantages of this approach compared with the others include:

1. It does not depend on any change in the price of fuel to work.

2. It will reduce the price paid for cars with below target fuel consumption.

3. The target can be as challenging as the government is willing to make it.

4. Unlike simple cap schemes, it does not completely block the sale of new cars with above target emissions.

5. At a petrol price of $1.50/litre it would actually REDUCE the national fuel bill by $614/tonne CO2 abatement.

In practice, it may be convenient to use the existing MRET administration system to manage the system for reducing car related emissions.

Offset trading could be used to drive serious reductions in car related emissions while avoiding some of the disadvantages associated the use of regulated emission caps. It is the best of the alternatives considered.

REFERENCES:

1. ABS

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/321136439E3661E8CA25773700169CE4

2. PHIL GOODWIN, JOYCE DARGAY and MARK HANLY ESRC Transport Studies Unit, University College London, London, UK: “Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review (UK)” Transport Reviews, Vol. 24, No. 3, 275–292, May 2004

3. Espey, Molly (Energy Journal. Vol. 17, no. 3, pp. 49-60. 1996)

Explaining the variation in elasticity estimates of gasoline demand in the United States: A meta-analysis

NOTES:

It may make sense to keep light commercial vehicles out of the offset trading pool while giving/requiring similar payments to those in the offset credit trading scheme for below or above target emissions. Removes the incentive to argue about whether a vehicle is or isn’t commercial. (There might be an upper limit on payments to avoid pushing the payments for large trucks up for no real reason – or exclusion of vehicles above say 10 tonnes.)

SOLUTIONS TO THE AUG 11 WORLD ECONOMIC CRISIS

2011-08-07T22:05:00.000+10:00

At the moment the Asian (and by extension, the Australian) economic strategy depends on the US growing its debt at an unsustainable rate so that it can continue to buy Asian goodies. Goodies that the US could make for itself by using idle human and manufacturing resources. So far a key part of this arrangement has been that countries like China have simply accumulated surplus’s of $US or fed them into the questionable loans that fed the GFC.
The problem has been made worse by the crazies at the WTO who don’t seem to have come to grips with the idea that countries suffering from large trade deficits destabilize the world’s economic system as well as damaging themselves. Under the current rules all that a country with a serious trade deficit seems to be allowed to do is to slow its economy to the point in an attempt to drive down the demand for imports. Attempting to control imports by more direct means is considered unacceptable.
If China is seriously concerned about the loss of value of its $US holdings, the most logical thing for them to do would be to use their $US surplus to directly or indirectly buy US goods. This approach should be a win/win that helps both the US and world economy, creates jobs in the US while improving the standard of living of the average Chinese. The long term problem with this approach is that other countries may take up the destabilizing role that China currently fills.
In the longer term we need to have a hard look at the way free trade globalization operates. If nothing else, the WTO rules should be changed to recognize that countries with large trade deficits should be able/required to take direct action to restrict imports to a level the country can afford.
The key question is: “how does the world get the benefits of free trade globalization while minimizing some of the potential problems?”
I guess the good news at the momnet is that a contracting world economy will reduce greenhouse emissions.

ETS AND THE REDUCTION OF ACID RAIN

2011-04-27T08:52:00.000+10:00

The cap and trade sytem used to reduce acid rain is often quoted as the justification of other ETS systems such as the Australian CPRS. However, it is important to understand that there are important differences between the cap and trade used to drive down acid rain and some of the other cap and trade systems.
Firstly, the acid rain system was an offset credit cap and trade system. Wikapedia (http://en.wikipedia.org/wiki/Acid_Rain_Program) says: “As an incentive for reducing emissions, for each ton of sulfur dioxide reduced below the applicable emissions limit, owners of a generating unit received an emissions allowance they could use at another unit, keep for future use, or sell. This legitimized a market for sulfur dioxide emissions allowances, administered by the Chicago Board of Trade.[5] Units that installed flue gas desulfurization equipment (e.g., scrubbers) or other “qualifying Phase I technology” which reduced sulfur dioxide emissions by 90%, qualified for a two-year extension of the 1995 deadline, provided they owned allowances to cover their total actual emissions for each year of the extension period.” This system generates no revenue for governments. It is worth noting too that this cap and trade was only part of a complex system that included substantial regulation. (See link above for more detail.)
This is very different than some other programs, such as the CPRS, where governments SELL permits. These systems are defacto taxes. The price increases associated with this type of system have to be much higher because the price increases have to take account of the cost of the tax in addition to the actual cost of clean-up.
Secondly, there was always plenty of low sulfur coal available so the target could always be met. The cap and trade simply allowed various generators to use different strategies. It also encouraged generators installing scrubbers to scrub more then the minimum required to meet target for the sake of trade-able allowances. The price of low sulphur coal would have had a stabilizing effect on the price of trade-able allowances
It is a bit more tricky where investment is required to meet targets. The value of trade-able allowances will vary enormously depending whether investors have over or under estimated future demand. Not desirable when investment in things like clean energy take years years to be paid back

The Damage Caused by Unemployment

2011-04-20T15:42:00.000+10:00

This post was first published in Australian Options:

There are many things that contribute to the damage caused by unemployment. One problem is that politicians are unwilling to admit that they haven't got a quick fix for this shortage of work. As a consequence, the only fixes they are willing to consider seriously involve creating more work and using welfare to alleviate some of the economic pain. That is, when the more scurrilous politicians are not trying to blame the unemployed for unemployment and doing all they can to increase the damage to the unemployed.
The second problem is that employers that create unemployment by working individuals long hours are not the ones paying the unemployment welfare bill. Peter Brokensha's recent figures (Australian Options, Autumn 2004) suggest that over 700,000 extra 35 hr/week jobs would be created if nobody averaged more than 45 hrs/week. Perhaps we should go "user pays" and let employers who claim that they save money by working people long hours pay the cost of the unemployment welfare bill? Perhaps too, the union movement might ask itself whether the working class as a whole might not be better of if penalty rates for overtime were traded off for increases in base pay rates. Worker dependence on those hours at double time is part of the reason work-sharing is resisted.
The third problem is we assume unemployment is automatically damaging and ignore the possibility that there are ways of reducing the damage without reducing unemployment. There are certainly individuals who desperately need work for economic and other reasons. However, there are also those who are not damaged by unemployment and use it as an opportunity to further their education, start a new business or simply seek the perfect wave. I am sure that there are many employed people who would see 12 months on the dole as a welcome opportunity, particularly if they knew they could get work at the end of it. Most of us have worthwhile things we really want to do but never get around to because we never have the time. The shortage of work should have been treated as an opportunity to increase the skills of the workforce, create new business and allow individuals to spend time on more satisfactory things than working long hours.
Perhaps we should start saying that the real problem is that there are people unemployed who are damaged by unemployment, not unemployment as such. Yes, we need to think about creating jobs and providing welfare. Yes, we need to think about sharing the work that is available. But we also need to think about other ways of reducing the damage and actually using the opportunities unemployment offers individuals.

John Davidson
Queensland

EVALUATING EMISSION ABATEMENT PROGRAMS

2011-03-01T09:24:00.000+10:00

This post first appeared as a guest post at Larvatus Prodeo . It looks at what should be considered when eveluating climate action programs and applie sthese criteria to the eveluation of programs that depend on putting a price on carbon. The conclusion was that the carbon price should be put to one side and alternative approaches used to get on doing things that we know have to be done.

Evaluating emission abatement programs

The great big lie that makes AGW deniers so influential is not their climate science distortions. It is their exaggeration of the impact of the action required to reduce emissions on individuals and the economy.
Fighting this exaggeration is not been helped by some of the climate action programs that have been foisted on us by both the Coalition and Labor in recent years. Programs where the cost per tonne CO2 abatement have been over $300/tonne. (Compared with less than $40/tonne to achieve the same emission reduction by lifting the MRET target.)
Fighting this exaggeration has not been helped either by proposals for large, complicated programs which are difficult to understand and easy to distort. The complicated nature of the CPRS was the gift that kept on giving for a skilled distorter like Abbott.
Given past mistakes and the government’s determination to commit to a large, complicated carbon price program with compensation before the end of the year, it might make sense to have a conversation about what questions should be asked before committing to climate action programs.
It might also make sense to see how well the proposed carbon price program stacks up against these questions. Unfortunately, the carbon price program just doesn’t stack up when the right questions are asked.
This post was prompted by a recent article from Mark Davis and Lenore Taylor under the provocative title Climate cash goes up in smoke. They said:

More than $5.5 billion has been spent by federal governments during the past decade on climate change programs that are delivering only small reductions in greenhouse gas emissions.
An analysis of government schemes designed to cut emissions by direct spending or regulatory intervention reveals they have cost an average $168 for each tonne of carbon dioxide abated.

The article then goes on to compare various programs based on a table that can be found here.
Unfortunately, their analysis is seriously flawed. The “total cost” quoted in the table does not take account of “costs or savings to households, businesses and other non-government players in the economy.” As a result, the regulation-driven “Greenhouse intensive water heater phase out” program looks like a real bargain because the cost of installing the greener option is a non-government cost. Equally, the “Household insulation” program looks worse than it should because it doesn’t include the benefits of savings in power costs or the economic stimulus that was critical at the time.
Despite these limitations, the article was a strong reminder of the need for proper evaluation of climate action programs.
An interesting article, A carbon price can’t save the planet by itself by Ross Gittens, is more useful. The article focuses on the need for complementary measures to deal with important issues for which a carbon price is particularly ineffective. Much of the discussion is relevant to evaluating the desirability of adopting a carbon price scheme.
Of particular interest is a set of six principles for evaluating climate action programs that come from Richard Denniss and Andrew Macintosh. These can be summarized by the following check list:

Cost effective? ($ per tonne CO2 abatement?)

Response to clear case of market failure?

Complement, not oppose other programs?

Federal policies fit in with state policies?

Equitable?

Accountable?(NOTE: Explanations and examples for all these principles can be found near the end of the Gittens article.)
It was concluded that “objectives… need to be spelt out clearly…. and the schemes need to be monitored regularly against those objectives.”
Some other items might be added to this check list:

Price effective? (Important because it is price increases rather than costs that voters actually see and price increases that spur claims for compensation.)

Easy to explain/hard to distort?

Generates appropriate market forces to drive improvements?

Certainty re rate of take-up?

International impact?At this stage it is useful to see how two existing programs would rate:
Firstly – Malcolm Turnbull’s “Incandescent light bulb phase out”: This is a successful program that ticks all the applicable boxes. In particular:

It gave certainty of take-up – a particular advantage of simple regulation based schemes.

It addressed a market failure. This arose because the potential savings to an individual user were too low to create much interest.

It created the market forces that have helped to improve light quality and drive down globe prices since the regulations came into force.

It is cost effective. A high efficiency globe running one hour a day will save me about $5/year – close to the current price of a high efficiency globe. Secondly – Various solar PV programs: These were less successful programs that still got results and would get a tick in terms for most of the applicable checks. However, there were some checks where the answer was ambiguous or clearly negative:

Cost/price increase per tonne CO2 abatement: There is some ambiguity re this figure because solar PV generates most of its electricity at times when the price paid is well above average.

Uncertainty re rate of take-up: Governments have responded to above expectation take-up by cutting back on schemes. The resulting fluctuations in demand have made it difficult to develop a stable solar PV installation industry.

No market forces to drive down the cost of subsidies or the size of feed in tariffs: The above expectation take-up suggests that the price premium for solar PV power would have been lower if the programs had been set up to create competition between solar PV generators.

Not equitable: Only the better off could afford to take advantage of the overly generous feed in tariffs. On the other hand, the poor had to pay the higher prices required to support this generosity.In addition, the subsidy scheme was run on pork barrel principles. The subsidy per kWh was higher for small installations and the subsidy model assumed that the panels would be owned by the householders. It might have been smarter to provide the same subsidy per kWh no matter how large the installations were and not to have differentiated between householder owned installations and installations owned by companies who leased roof space from householders. Larger scale and the roof top leasing option should result in lower costs and the possibility of extra income for low income householders.
So what about the proposed carbon price program?
Once again the proposed program would get a tick for most of the applicable checks. However, there are some real problem areas:
Certainty of take-up is going to be a real issue, particularly during the initial stages where the carbon price is low. In theory, the starting prices being bandied around at the moment would be sufficient to start a massive boom in CCGT (combined cycle gas turbine) investment that could see almost complete replacement of coal fired power by the end of 2016. In reality, there may be almost no investment in CCGT because of carbon price uncertainty. There will be uncertainty caused by fears that the opposition will win the next election and drop the whole program. In the specific case of CCGT there will be the additional risk that future increases in the price of carbon may be sufficient to drive the replacement of CCGT before an adequate return on investment has been achieved. Greater certainty and smaller price increases could be achieved by using competitive tendering to set up long term contracts for the supply of cleaner electricity.
Market failure: Gitten’s argument for complementary systems was based on the market failure of the carbon price system for some sources of emissions. For example, the carbon price program would not be an effective way of driving down car-related emissions because the price signal is so weak. In 2007, a $30/tone carbon price would have added only 49¢/day to the fuel costs of the average car. (See here for more details.) Hardly enough on its own to make most people change their driving habits, particularly if they are being asked to sacrifice convenience, comfort and status. People may change their driving habits because of a commitment to saving the planet. They will change if required by regulation but they are unlikely to change for 49¢/day.
Opposing other programs: Richard Denniss says:

The Rudd government’s emissions trading scheme was designed in such a way that any reduction in emissions caused by its subsidies for households installing solar panels would simply reduce the effort required by other polluters, not add to the overall reduction.

This is a potential problem with any program that has an overall emission reduction target.
Easy to explain/hard to distort: Would be a problem if the government goes ahead with a comprehensive program, particularly if it includes compensation for polluters.
Cost/price increase per tonne CO2 abatement: Intuitively, it might be expected that, if the carbon price is $40/tonne, then the price increase per tonne CO2 abatement will also be $40/tonne. However, this is only true if there is 100% replacement of dirty with a clean alternative (and the price premium for clean is the same as the carbon price.) For lesser replacements the price increase is higher because the average price has to take account of both the price premium for clean and the carbon price on dirty. For example, by the time the percentage of clean electricity has reached the 2020 MRET target of 20% renewables, the price increase per tonne CO2 abatement would be $200/tonne, not $40/tonne. At the halfway mark (10%) it would be $400/tonne. In addition, the actual price of electricity will have to be the same as the price of dirty after the carbon price is applied no matter how far the cleanup has progressed. (About 4¢/kWh above the current price.)
By contrast, alternatives, such as the MRET, that do not depend on a carbon price to drive change give lower price increases per tonne CO2 abatement because the average price does not have to take account of the carbon price on dirty. For the above case the price per tonne CO2 abatement will stay at $40/tonne no matter how far emission reduction has progressed. In addition, the actual price only ramps up as the proportion of clean electricity increases. For example, the average price will only need to ramp up by 0.08¢/kWh per year to reach 0.8¢/kWh above the current price by 2020.
In theory some of the higher prices associated with the carbon price approach can be returned to tax payers after taking out admin costs and the CPRS style compensation payments that the government is now talking about including in their carbon price scheme. Even if all the difference were returned, the politics of arguing for a 4¢/kWh price increase now instead of a 0.08¢/kWh increase per year is ridiculous. It would also be much harder for a polluter to argue for compensation when the price of electricity is only rising at 0.08¢/kWh per year.
CONCLUSION: It might be a lot smarter to forget about carbon price for the time being and get on with the things we know have to be done to meet 2020 targets using approaches that don’t depend on putting a price on carbon.

FLOODS AND DROUGHT - WHIVENHOE DAM MANAGEMENT

2011-01-30T09:53:00.000+10:00

Brisbane water supply got down to 17% full at one stage during the recent drought. If the drought had continued much longer we would have had a crisis that would have resulted in the widespread shutting down of business as well as really severe restrictions on domestic use. The economic damage would have been much worse that what happened to Brisbane during these floods. The real danger of the 2011 flood inquiry is that the focus will be on flood mitigation at the expense of water supply. It is crucial that the inquiry is an integrated one that looks at both floods and water shortages as well as making the city less vulnerable to the effects of both:

This link has some very quoteable quotes from Prof Neal Ashkanasy, a water resources engineer and psychologist who now works at the University of Queensland and a former national president of the Hydrology and Water Resources Institution of Engineers.:

“Wivenhoe accounts for only 40 per cent of Brisbane’s run-off water, with a major effect on flooding in the city being Lockyer Creek and the Bremer River, which empty into the Brisbane River below the dam”
“In my estimation, the Wivenhoe Dam kept 1.5m off the top of the 2011 flood, so its contribution to mitigation was significant”
“Bear in mind that the really big floods in 1893 and 1941 were over 8m on the gauge, and this one was only 4.5m. When John Oxley discovered Brisbane 180 years ago, the local Aboriginal people were very agitated about flooding, and they showed him high-water marks that would have been 12m.”
“The rules about the release of water are… mandated and cannot be played with, so it is my view the operators last week had little alternative other than to do what they did.”
“1974 the then premier, Joh Bjelke-Petersen, argued strongly for politicians to have the say on when water should be released, but the then water commissioner, Peter Bevan “put his job on the line” by refusing to allow it.”
“I have read where it is suggested Wivenhoe should have been kept at 75 per cent capacity. Imagine if that had been the case in the recent drought, when it went from 100 per cent to 17 per cent. What if the starting point then had been 75 per cent and not 100 per cent?”

One thing is for sure. Brisbane will have to face worse droughts and worse floods than we have experienced recently at some time in the future. We need to be ready to deal with both.

APPEDIX:
Some background items from this Larvatus Prodeo post by Brian:

"Anyone seriously interested should read and learn by heart this SEQ Water Strategy document (large pdf) which you can (download from here). One of the more interesting figures is this one:

Partitioning SEQ water storage

The idea is that we have a 1% probability of being reduced to the T1 trigger (40% capacity) in the next 10 years. Knocking off 25% of storage from the top would compromise this safety margin and make water much more expensive.
At T2 (30% capacity), you should be building climate-independent extra capacity and have another 30 months to complete it.
Under this planning regime, which takes into account population projections, we should have medium level restrictions no more than once in 25 years, those restrictions should not last more than six months and should amount to no more than a reduction of 15% of normal entitlement.
Sounds rational to me.
While we are at it here are the SEQ dam capacities. There are no more sites available, other than building the Wolfdene at huge cost of resumptions.
This map shows the rivers and dams in the area:

SEQ dams

WE NEED TO PUT THE CARBON PRICE TO ONE SIDE AND GET ON WITH WHAT WE NEED KNOW WE NEED TO DO

2011-01-30T09:23:00.001+10:00

This is a copy of aletter sent to a number of MPs during Jan 2011. The key message is that the government will have very little tangible action to show for 5 years of Labor government unless it puts the search for the carbon price magic bullet to one side and gets on with some of the things that clearly ned to be done.

The letter also argues that the carbon price approach is far less effective than alternatives that leave the price of dirty unchanged and only charge for the higher price of clean (if applicable). In the case of driving investment in clean electricity the price increase per tonne emission reduction will be four times the value for the alternative suggested at the point where emission have been reduced by 25%.

It concerns me that, despite all the climate action promise of 2007, very little ended up being achieved during the last parliamentary term. It concerns me even more that it looks like much the same will happen during the current term. Once again, the government will stuff around chasing the carbon price “answer to everything” until the contracts and regulations required to get emissions reduction back on target has to be deferred till after the next election. If nothing much is achieved before the next election both the Labor and Greens parties will be rightly blamed because of their insistence that “putting a price on carbon” has to be done before anything substantive can be done.
The irony is that we don’t need a carbon price to get emission reduction back on target. More to the point, a carbon price based approach is not the best way to do important things like driving investment in cleaner electricity, reducing the fuel consumption of cars or, for that matter, anything else I have looked at.
When comparing climate action alternatives what really counts is the cost/tonne emission reduction. So how does the carbon price approach compare by this measure?

The fundamental problem with the carbon price approach is that depends on “putting a price on dirty” to drive climate action. Unless the result is 100% emission reduction, the price increase for some emissions will be “unproductive” in the sense that it will result in little or no action. These unproductive price increases add to the price per tonne emission reduction. For example, if a $10/tonne carbon tax on all emissions reduces emissions by 10%, the carbon tax/tonne emission reduction will be $90/tonne, well above the carbon tax of $10/tonne. This is because 90% of the original tax will still be being paid and be part of the price per tonne emission reduction.
By contrast, alternatives that do not depend on changing the price of dirty avoid this unnecessary addition to the price/tonne emission reduction.
In theory, some of the money that goes into the higher prices associated with the carbon price approach can be recovered and returned to taxpayers. In practice, admin costs, compensation payments, etc. will reduce this return.
The other fundamental problem with “putting a price on dirty” is that the whole strategy depends on this price increase. For this reason the full price increase has to be imposed at the beginning of the clean-up process.
By contrast, alternatives that do not depend on changing the price of dirty avoid this need for any increase in prices at the start of the process. Even in cases where the clean alternative needs to sell at a higher price than dirty, the average price will only ramp up slowly as the proportion of clean increases.
A comparison of the carbon price approach with alternatives for driving investment in cleaner electricity and reducing the fuel consumption of cars is appended. To summarize:
Driving investment in cleaner electricity:
The alternative involved the setting up of contracts to supply cleaner electricity combined with regulations to ensure that the purchase of the cleaner electricity produced under these contracts would take precedence over the purchase of dirty electricity. It was calculated that, for a targeted carbon price of $30/tonne CO2:
The carbon price approach would result in an increase in the national power bill of $150/tonne emissions reduction by the time power related emissions had been reduced by 20%. In addition, the average price of power would have to rise suddenly to 3¢/kWh no matter how much emissions had been reduced.
By comparison, the alternative would have increased the national power bill by only $30/tonne emissions reduction no matter how much emissions were reduced. The average price of electricity would ramp up as the proportion of cleaner electricity increases. The average price increase would have reached only 0.6¢/kWh by the time emissions had been reduced by 20%.
Driving down car related emissions:
The alternative uses regulation to ensure the average fuel consumption per km of new cars stays below a target that ramps down with time. It was calculated that:
The carbon price approach would increase the national fuel bill by $870/tonne emission reduction when a carbon price of $30/tonne CO2 is introduced. This would drop to $170/tonne after several years. In addition, the price of fuel rises by 12¢/litre as soon as the carbon price is introduced.
By contrast, the alternative REDUCES the national fuel bill by $300/tonne emissions reduction. It does not require any change to fuel prices to work.
RECOMMENDATIONS:
It is recommended that:
1. The government puts a high priority on setting up the contracts required for the supply of cleaner electricity. (If we start now the government should be able to have enough contracts in place before the next election to at least bring emissions back on target by 2016.)
2. Serious consideration be given to setting up enough contracts to replace almost all coal fired power with gas fired CCGT and some renewables. (The figures I have seen suggest that this could be achieved without increasing the cost of power by more than 2¢/kWh - Would cost only 55¢ per person/day including cost to business.)
3. A system be set up to control the average fuel consumption of new cars. It is suggested that the initial target by set at 5.5litres/100 km. (Half the average consumption of the current fleet. There are many low cost cars available right now that consume less than this target. )
NOTE: Right now the coal and mining industries are in a very healthy state. So it is the right time to get on with the job of replacing coal fired power with something cleaner. At the moment, many of the coal mines that would lose power station contracts will be able to sell the coal elsewhere. However, there are some mines feeding power stations for which this is not an option. While it is never a good time for these miners to lose their jobs, it is better to do so while the demand for experienced mine workers is strong.
Regards
John Davidson
9 Pontefract St
Chapel Hill
Qld 4069
Australia
07 3878 9167
0408 727 486
davidson.john.robert@gmail.com

APPENDIX: DETAILS:
NOTE: In order to get a feel for the financial impact of various alternatives a carbon price of $30/tonne CO2 has been used where required. (This would add about 3¢/kWh to the price of dirty electricity and about 12¢/litre to the price of petrol.) $30/tonne was used because Michael Fraser, the managing director of AGL, has publicly stated that “his company will not start making investments in lower-carbon energy if the carbon price is below $30 per tonne CO2.” (1)
What should be done before the next election to regain climate action credibility?
I am engineer whose experience includes involvement in tender and bid preparation for large contracts in the mining industry. On the basis of this experience my guess would be that, if the government decided right now to set up the contracts required for the supply of clean electricity, the contracts would be finally signed some time in 2013 and the cleaner power would come on line sometime during 2016. This means that it is desirable to have enough contracts in place before the next election to ensure that the electricity clean-up program will be back on target by the end of 2016.
Setting up regulations to help reduce emissions may take less time. However, in the case of regulations to change the efficiency of new equipment, keep in mind that it takes time for old equipment to reach the end of its life. For example, if something last 20 years, halving the emissions of new units now will only result in a 25% reduction in average unit emissions by 2020.
So what is wrong with putting a price on carbon?
Let us start answering this question by looking at two specific cases.
Case 1: Driving investment in cleaner electricity:
Potential investors will decide to invest on the basis of the price they expect to receive and their confidence that consumers will buy their product. They will not be concerned about the price of dirty electricity as such unless this is going to affect their price or sales.
Option 1: Carbon price orthodoxy: The carbon price is used to drive up the costs of dirty electricity by 3¢/kWh. If we assume that all this cost increase will be added to the price, the average price of electricity has to rise by at least 3¢/kWh no matter whether we are replacing 1% or 100% of the dirty electricity. What this means is that by the time we have replaced 20% of dirty electricity the increase in the country’s power bill will have dropped to $150/tonne emission reduction.
NOTE: In reality, dirty electricity suppliers will absorb some of the cost if the alternative is to lose sales. The carbon price may have to be set higher in anticipation of this response.
Option 2: Use competitive tendering to set up long term contracts for the supply of cleaner electricity: In this case the price of dirty electricity can remain unchanged and a series of long term contracts for the supply of cleaner electricity set up. Regulations would be needed to ensure that the purchase of the cleaner electricity produced under these contracts would take precedence over the purchase of dirty electricity.
Because the price of dirty electricity remains unchanged, the increase in the country’s power bill will stay at $30/tonne emission reduction no matter how much dirty electricity has been replaced. The average price of electricity would ramp up slowly as the proportion of more expensive, cleaner electricity increases. Thus the average price of electricity would only have risen to only 0.6¢/kWh by the time emissions had been reduced by 20% - A far better result than what would have been achieved under option 1.
NOTE: In practice, these figures understate the advantages of option 2. Competitive tendering should give a lower cleaner electricity price than what would result from the government trying to set a high enough carbon price to be sure that investment would follow. In addition, competition amongst dirty electricity producers competing for a declining market should drive down the dirty electricity price as well.
A contract approach has the added advantage of allowing much better control over the rate of investment as well as issues such as location, technical details etc.
Case 2: Reducing the fuel consumption of cars:
Option 1: Carbon price orthodoxy
The $30/tonne carbon price is used to drive up the price of fuel by 12¢/litre (10% for a base fuel price of $1.20/litre.) This increase in price will only have a limited impact on emissions. Reviews of numerous studies in both the UK(2) and the US (3) found that a 10% increase in the price of fuel reduced car related emissions by about 2.5% in the first year and 6.0% in the longer term. This is in line with our own experience of negligible cuts in fuel consumption during fuel price surges.
On the above figures, a $30/carbon price would increase in the country’s fuel bill by $870/tonne emission reduction for the 2.5% reduction in fuel consumption dropping to $170 when the 6% reduction has been achieved.
NOTE: The smallness of the emission reduction should not be surprising. ABS data for 2007(4) indicated that the average car consumed about 1500 litres of fuel a year at an average consumption of 11.4 litres/100km. An increase in the price of fuel of 12¢/litre would add only 49¢ a day to the cost of running this average car. Hardly enough drive most people to make inconvenient changes.
Option 2: Use regulations to control the average fuel consumption of new cars
The proposed alternative consists of the following elements:
Firstly, a target that ramps down over time is set for the average fuel consumption of new cars. An initial target of 5.5litres/100km is suggested. (50% of 2007 figure.)
Secondly, an offset trading system may be set up to allow for the buying and selling of offset credits. (Ex: A new car consuming 3 litres/100km below target might obtain 3 credits. A car consuming 2 litres/100km above target would require the purchase of 2 credits.)
Thirdly, regulations would be introduced to ensure that importers and manufacturers keep the average fuel consumption of what they sell below target unless they buy sufficient offset credits from others to compensate.
This alternative does not require any changes to the price of fuel. It will actually REDUCE the national fuel bill by $300/tonne emission reduction for the base fuel price of $1.20/litre because of the reduction in average fuel consumption per car.
It is harder to say what effect this alternative will have on the new car bill. If enough people react by buying smaller, cheaper cars the new car bill may actually fall.
NOTE: Reducing the average price of new cars is only one of the things that have to be done to reduce car related emissions. However, the average car lasts for something between 10 to 20 years so there is some urgency in bringing down the average fuel consumption of the new cars entering the system.
In terms of national fuel bill reduction it is worth noting that transport group Linfox has managed to achieve a 28% reduction in emissions per km since 2007 without a carbon price. Climate Spectator (5) reported that: “Linfox argues that a carbon price would be ineffective in the transport industry, but is pushing for regulation instead”. Quite so.

REFERENCES :

1. Climate Spectator 24 Dec 2010:

3. Espey, Molly (Energy Journal. Vol. 17, no. 3, pp. 49-60. 1996)

Explaining the variation in elasticity estimates of gasoline demand in the United States: A meta-analysis

4. ABS http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0~2010~Chapter~Sector%20%286.5.2.3%29

5. Climate Spectator 14 Oct 2010

BLACK SATURDAY - SHOULD STAY OR GO POLICY BE OVERTURNED?

2011-01-29T22:09:00.001+10:00

This post was first published as a guest post at Larvatus Prodeo The post looks at some of the issues raised in the commission and challenges the wisdom of both the way the commission was conducted and some of the conclusions. It is particularly critical of the change in emphasis to evacuation as the magic bullet. Only 1.5% of people in the area left their homes as the "result of a red alert" issued a while after black Saturday:

May 28th, 2010 by Guest Poster | Published in Disasters | 142 Comments

John Davidson is a process engineer who lived in various locations around Australia while working in the construction and mining industries. For two years his responsibilities included emergency services for the Groote Eylandt mine and township. He was on Groote Eylandt when it was hit by two cyclones and has gone through innumerable cyclone alerts.
(Image from ABC)
Following the Black Saturday fires it was generally assumed that the “prepare, stay and defend or leave early” (Stay or Go) policy would be replaced by some form of “Evacuate Early” policy. However, this recent article from ABC Drum suggests that some version of the Stay and Go policy is likely to be retained on the basis of recent information.
While there is no doubt that the best way of surviving a big fire is to be somewhere else, the behavior of people both during and after the fires suggest that the solution may have to be more complex than a simple “evacuate early” policy. The most telling statistic here was the response to “code red” alerts after Black Saturday. From the linked article:

Two-thirds did not leave their homes. While one-third weren’t at home, only 1.5 per cent had left because of the code red declaration.

During the fires themselves,

58 per cent of those killed had made no preparations before 1:30 pm on the day of the fires.

So firstly there is a people problem. For some reason people were ignoring policy and acting in what appeared to be a risky manner. This despite years of promotion of the Stay and Go policy or the recent horror of what happened on Black Saturday.
If we are going to have an effective policy we need a better understanding of why people did what they did during the Black Saturday fires and the recent red alerts. This includes understanding both why people left and why people stayed.
Secondly there was a technical problem:

As many as 20 per cent of those who died had been “well prepared” to stay and defend according to the criteria laid out in the Country Fire Authority’s “Living in the Bush” booklet, meaning there was evidence of fuel management around their property, appropriate firefighting gear and an independent water supply.

Also

Professor Handmer said that “29 per cent of people killed were either actively defending at the time of their death or had done “some” or “questionable” defence. If you include children and others dependent on those who were defending, he said the figure could be at least 60 per cent.

The conclusion was that people died defending despite following all the defence recommendations in the CFA’s booklet.
Flaws in preparation and fire fighting technique appear to have contributed to some of the stay and defend deaths. Others may have occurred because people were trying to defend the undefendable. Professor Handmer again:

“Fire plans might be worse than a nebulous concept, actually something that gave people a misguided sense of security. It was something Joan Davey had identified in the Commission’s earliest hearings – that her son Rob and his wife Natasha had accumulated pumps and firefighting equipment and developed an unrealistic expectation that they could defend a cedar house on a ridgeline, surrounded by national park.”

The Stay and Go policy also advises defenders “to shelter inside the house – albeit not passively – while the fire front passes.” So there is was no requirement for a plan B to save lives if the fight to save the house is lost before it is safe to go outside. There was also no refuge in which to place dependants while the fire was being fought. It would be useful to know whether any defenders died in houses that did have an effective refuge that could be accessed from the house during the height of the fire.
It is also worth noting that only 173 people died out of the 14,000 residents in the fire affected area. Some residents left early, some of these successfully defended their houses and most of the rest managed to survive by some means of other. It would have been interesting to see the statistics from research into the success stories.
In terms of future policy, American professor Dutch Leonard put the criteria for a good policy very succinctly:

“A policy is no good if it only works in theory. In that case it could actually be an “invitation to potential disaster”. …A policy may not be a good policy if we can’t actually get people to comply at the level required in order for them to remain safe. So, I think it is in effect a moral question. I don’t think we can judge the policy as good if it has bad effects by simply saying, ‘Well, the household should have complied and they didn’t.’”

All the above suggests that we will continue to have a mix of people who choose to leave early, defend and procrastinate. Good policy should encourage people to make better decisions. However, it is equally important that it helps those who make less than wise decisions.
The article goes on to discuss a number issues raised in the commission and the response of various individuals to these issues. I won’t try to duplicate this discussion but do have the following suggestions based on the above analysis.
Do a house by house audit: This may save the lives of those who have convinced themselves that they can defend the cedar house on the ridge, help both evacuation and defense plans and possibly reduce the risks incurred when people who don’t need to evacuate do evacuate. It may also help reinforce the determination of those who really do need to evacuate – It is just too easy for Fred at the pub to convince others that evacuation is unnecessary, because, rightly or wrongly, he is convinced that it is OK for him to stay in his house.
Look for ways of improving the survival of undefended houses: There is no doubt that defended houses have a better chance of surviving than undefended houses. There is no doubt either that the loss of a house is traumatic even if it is fully insured. So it is not surprising that Professor Handmer emphasised that “half of people surveyed indicated the desire to stay and defend.” Improving the survival of undefended houses takes away some of the pressure to defend the home. Much of the action required should also help active defenders defend their homes.
Use a system of yellow, orange or red alerts: The cyclone alert system that I am familiar with went from yellow to orange to red alert as the cyclone centre got closer. The graduated system allowed us to make preparations and defer shutting down the mine before the red alert had us all going to shelter. A similar system of fire alerts might use yellow as a warning to start keeping track of what is going on, orange to complete preparations to evacuate or defend and red to evacuate or stand by to defend.
Plans B and C: These are needed for both evacuation and defence plans. Evacuation plans need to take account of the possibility of roads being blocked or the logical evacuation route taking evacuees towards the fires. Houses should only be defended if there is some way for the defenders to escape from the house during the peak of the fire.
Public refuges: These are important both as a means of saving late deciders, reducing traffic travel times and reducing the amount of traffic on evacuation routes.
It was said in safety circles that the US Air Force found that the only way to find out what really caused crashes was to take no disciplinary action on the basis of what was found. So it is a bit depressing when the article’s punchline said:

The fiercest outrage at all the failings uncovered over a year of hearings has been directed at Christine Nixon’s pub dinner.

It only takes one scalp hungry lawyer to compromise an investigation.

SHOULD GAS FIRED BE PART OF THE TRANSITION TO CLEAN POWER

2011-01-29T21:30:00.001+10:00

This post was first published as a guest post by John Davidson. It argues that it makes good sense to use the gas fired transition as part of the process of replacing fossil fuel power with clean power. The gas fired transition provides a low cost way of making rapid reductions in emissions. It has the added advantage of providing back-up for renewables that do not have steady output such as wind and solar:

I first met John Davidson, a process engineer who has worked in the construction and mining industries around Australia, at the Brisbane hearings of the Senate Select Committee on Climate Policy last year. Soon afterwards I suggested he might do a post on the possible conversion of coal-fired power stations to gas. Here is the result. As context, about half Australia’s emissions come from stationary energy. Further, the transport sector accounts for another 15%, where the potential for electrification is considerable. (Pie chart courtesy of the Royal Automobile Association of South Australia.) So the potential for savings in CO2 emissions is considerable.
We will need to convert our electricity generation to all green power at some point in the next 40 years if we are to meet our 2050 emissions targets. (In the calculations for this post, “green power” means emissions of 57 g CO2/kWh (5% of the current black coal power figure.)) One approach would be to use a “pure green option”. This means installing green power only until there is no further need for coal fired power.
However, it may be smarter to use a “transition option”. This would involve starting the process by replacing some or all of the coal fired power with “cleaner” power that doesn’t meet the long term emission target. This cleaner power would then eventually be replaced by green power in time to meet 2050 targets. The general arguments in favor of the transition option are, firstly, that it allows time for various green power options to be developed to the point where more informed decisions can be made before committing to green power and, secondly, that it may be more cost/price effective, particularly in the politically important short term.
The most commonly suggested transition process is CCGT (combined cycle gas turbine) power generation. CCGT emissions per kWh would be about 40% of those for black coal power, i.e., not low enough to allow us to meet the green power criteria (unless geosequestration ends up proving to be viable.) CCGT combines gas and steam turbines with the steam turbine being used to extract from the gas turbine exhaust. The salt water cooled Tallawara CCGT power station obtains 38% of its power from the steam turbine.
Conventional CCGTs with fixed compressor turbine blades lose some efficiency on turndown. However it is possible to avoid this drop in efficiency by using adjustable compressor blades. For example, the first three rows of compressor blades in the Aghada CCGT in Ireland results in a design that is suitable for “base, peak and shoulder power as well as daily startup applications as required.” This flexibility means that this CCGT could fit easily into power supply systems as well as helping other power sources with less flexibility and/or consistency. This will help defer the extra costs of energy storage or extra capacity if green power sources such as wind and solar that have variable outputs are to be used.
In addition, CCGT has a smaller footprint than coal fired. This means that CCGT can be easily fitted on to existing coal fired power generation sites. This reduces the need for environmental studies and allows CCGT to take advantage of equipment from the coal fired installation such as cooling systems, switchyards and possibly existing steam turbines. It also means that CCGT can be set up to produce more power from an existing site than the current installation.
In terms of CCGT costs, Richard McIndoe (MD of TRUenergy, owner of Yallourn power station) said on the ABC’s Inside Business that he would only require a 20% increase in the Yallourn price to justify an investment of up to $2.5 billion to convert Yallourn from brown coal to CCGT. These figures correspond to a price premium of about 1.54 cents /kWh compared with the current wholesale price. This figure would rise if artificial limits are placed on power station life.
By contrast, the MRET scheme has had trouble maintaining investment when the price of credits drops below $40/tonne CO2. (Equivalent to a price increase of 4.32 ¢/kWh) This price would need to be higher once a point is reached where extra capacity and/or energy storage would be needed to compensate for variable output.
From a greenhouse emissions point of view, the most important figure for comparing options is the amount of CO2 emitted over the next 40 years compared with what would happen if emission remained unchanged. As an indication, electricity related emissions over the next 40 years would drop by 43% if emissions were ramped down to pure green starting yr 5 and ending yr 40. The reduction would rise to 66.5% if the cleanup was finished at the end of yr 20, 72.4% for a yr 15 finish and 84.3% for a yr 5 finish.
Politically, price increase and cleanup achieved by year 10 are more important. Of less importance is the extra cost per tonne of emission reduction over the forty years.
The simple model outlined at the end of this post was used to compare the options. On the basis of these calculations it was concluded that, for a given set of targets, the CCGT transition option would result in lower power costs. (Provided that an appropriate investment schedule is used and the 40 year emission reduction target was not much above 72.4%.) From a strictly emissions point of view there was no difference. Either option could meet quite challenging emission reduction targets.
It was also found that the investment schedule and targets had a much stronger effect on prices for the transition option. The reason for this sensitivity is that the life of CCGTs would have to be artificially restricted in order for emission reduction targets to be met. According to the model used, cost per tonne emission reduction for the transition option could be driven down by:

1. Installing CCGT only (no green power) until all the planned CCGT capacity has been installed. 2. Bringing all the CCGT plants on line as quickly as possible. 3. Increasing the percentage of coal power replaced by CCGT 4. Accepting higher emissions over the next 40 years 5. Choosing the optimum investment schedule for the stageswhere green power was replacing coal or CCGT power.
A few figures for a 66.5% 40 yr emissions reduction:

i. 10 yr price increase = 1.5 cents/kWh vs 2.73 for pure green. ii. Average price increase per tonne/CO2 reduction = $32 CCGT vs $40 for pure green

i. 10 yr price increase = 1.9 cents/kWh vs 2.73 for pure green. ii. Average price increase per mt/CO2 reduction =$36 CCGT vs $40 for pure green

i. 10 yr price increase = 0.9 cents/kWh vs 1.6 for pure green.. ii. Average price increase per mt/CO2 reduction =$35 CCGT vs $40 for pure green

iii. 10 yr price increase = 1.3 cents/kWh vs 1.6 for pure green.. iv. Average price increase per mt/CO2 reduction =$39 CCGT vs $40 for pure green

The prices quoted above should be treated with caution. The interview transcript suggests that Richard McIndoe was extrapolating from costs for TRUenergy’s new salt water cooled Tallawara CCGT power station (rather than a detailed study of the Yallourn case) and did not state what returns on capital the 20% price increase was based on. In addition, the model used makes a number of simplifications and assumptions. The model did not take account energy storage and surplus power requirements for green power or the benefits of the flexibility of CCGT so the case for CCGT will probably be stronger than the calculations suggest.
The figures above do highlight the importance of the investment schedule for the transition option prices and the benefits of completing CCGT installation ASAP. Tender documents for the supply of clean electricity that include the possibility of the transition option need to deal with these issues.
A government that desperately needs to reestablish its environmental credentials could do worse than seeking to set up contracts for the full replacement of coal fired with CCGT as soon as it can be done. The 60% reduction in electricity emissions is equivalent to a 30% reduction in total emissions before 2010.
MODEL DETAILS:
Except where stated the following applies to both options:

the setting up of contracts for the supply of clean electricity.

For the transition option it was assumed that:

1. CCGT generators would begin coming on line at the end of yr 4, green power would begin coming on line no sooner than the end of yr 10 and the full conversion to green power would be completed before the end of year 40. 2. The price of CCGT power would be calculated by assuming that a premium of 1.54 cents/kWh would be required for a CCGT life of 20 years. 3. The premium required for other CCGT lives was calculated on the basis of a capital cost of 21.5 cents per annual kWh and an expected return on capital of 15% before tax. 4. CCGT life was calculated as years of full output + 0.5*(years CCGT was coming on line + years being replaced by green power.)[Note: The asterisk in 4 above is used to signify "times". The calculation can be stated as:

4. CCGT life was calculated as: (years CCGT coming on line)/2 + (years at full output) + (years being replaced by green power.)/2For example consider a case where:

- It takes 4 years for gas power to come on line. (Time from first power into grid till running at full capacity) - CCGT then runs at full capacity for 15 years. - Then output ramped down for 10 years until gas completely replaced by greenFor this case CCGT life= (4/2 + 15 + 10/2) =22 years.]

ETS IS THE PROBLEM - NOT THE ANSWER

2011-01-29T16:32:00.001+10:00

This post was first published as a guest post in Larvatus Prodeo (June 23 2010). It discusses the problems of systems for driving climate action that depend on a carbon price as well as the additional problems that arise as a result of the carbon price being set by a market that can change the value of emission credits very rapidly. This more recent post based on a letter to MPs (15 Jan 2011) looks at how staying with the carbon price approach will make it difficult for Labor to have anything tangible to show when it goes into the next election. It also points out that the carbon price approach results in a much higher price increase per tonne emission reduction than some alternatives that do not depend on using a carbon price to artificially increase the price of dirty :

I first met John Davidson, a process engineer who has worked in the construction and mining industries around Australia, at the Brisbane hearings of the Senate Select Committee on Climate Policy last year. Soon afterwards I suggested he might do a post on the possible conversion of coal-fired power stations to gas. Here is the result. As context, about half Australia’s emissions come from stationary energy. Further, the transport sector accounts for another 15%, where the potential for electrification is considerable. (Pie chart courtesy of the Royal Automobile Association of South Australia.) So the potential for savings in CO2 emissions is considerable. Brian

We will need to convert our electricity generation to all green power at some point in the next 40 years if we are to meet our 2050 emissions targets. (In the calculations for this post, “green power” means emissions of 57 g CO2/kWh (5% of the current black coal power figure.)) One approach would be to use a “pure green option”. This means installing green power only until there is no further need for coal fired power.
However, it may be smarter to use a “transition option”. This would involve starting the process by replacing some or all of the coal fired power with “cleaner” power that doesn’t meet the long term emission target. This cleaner power would then eventually be replaced by green power in time to meet 2050 targets. The general arguments in favor of the transition option are, firstly, that it allows time for various green power options to be developed to the point where more informed decisions can be made before committing to green power and, secondly, that it may be more cost/price effective, particularly in the politically important short term.

The most commonly suggested transition process is CCGT (combined cycle gas turbine) power generation. CCGT emissions per kWh would be about 40% of those for black coal power, i.e., not low enough to allow us to meet the green power criteria (unless geosequestration ends up proving to be viable.) CCGT combines gas and steam turbines with the steam turbine being used to extract from the gas turbine exhaust. The salt water cooled Tallawara CCGT power station obtains 38% of its power from the steam turbine.
Conventional CCGTs with fixed compressor turbine blades lose some efficiency on turndown. However it is possible to avoid this drop in efficiency by using adjustable compressor blades. For example, the first three rows of compressor blades in the Aghada CCGT in Ireland results in a design that is suitable for “base, peak and shoulder power as well as daily startup applications as required.” This flexibility means that this CCGT could fit easily into power supply systems as well as helping other power sources with less flexibility and/or consistency. This will help defer the extra costs of energy storage or extra capacity if green power sources such as wind and solar that have variable outputs are to be used.
In addition, CCGT has a smaller footprint than coal fired. This means that CCGT can be easily fitted on to existing coal fired power generation sites. This reduces the need for environmental studies and allows CCGT to take advantage of equipment from the coal fired installation such as cooling systems, switchyards and possibly existing steam turbines. It also means that CCGT can be set up to produce more power from an existing site than the current installation.
In terms of CCGT costs, Richard McIndoe (MD of TRUenergy, owner of Yallourn power station) said on the ABC’s Inside Business that he would only require a 20% increase in the Yallourn price to justify an investment of up to $2.5 billion to convert Yallourn from brown coal to CCGT. These figures correspond to a price premium of about 1.54 cents /kWh compared with the current wholesale price. This figure would rise if artificial limits are placed on power station life.
By contrast, the MRET scheme has had trouble maintaining investment when the price of credits drops below $40/tonne CO2. (Equivalent to a price increase of 4.32 ¢/kWh) This price would need to be higher once a point is reached where extra capacity and/or energy storage would be needed to compensate for variable output.
From a greenhouse emissions point of view, the most important figure for comparing options is the amount of CO2 emitted over the next 40 years compared with what would happen if emission remained unchanged. As an indication, electricity related emissions over the next 40 years would drop by 43% if emissions were ramped down to pure green starting yr 5 and ending yr 40. The reduction would rise to 66.5% if the cleanup was finished at the end of yr 20, 72.4% for a yr 15 finish and 84.3% for a yr 5 finish.
Politically, price increase and cleanup achieved by year 10 are more important. Of less importance is the extra cost per tonne of emission reduction over the forty years.
The simple model outlined at the end of this post was used to compare the options. On the basis of these calculations it was concluded that, for a given set of targets, the CCGT transition option would result in lower power costs. (Provided that an appropriate investment schedule is used and the 40 year emission reduction target was not much above 72.4%.) From a strictly emissions point of view there was no difference. Either option could meet quite challenging emission reduction targets.
It was also found that the investment schedule and targets had a much stronger effect on prices for the transition option. The reason for this sensitivity is that the life of CCGTs would have to be artificially restricted in order for emission reduction targets to be met. According to the model used, cost per tonne emission reduction for the transition option could be driven down by:

i. 10 yr price increase = 1.5 cents/kWh vs 2.73 for pure green. ii. Average price increase per tonne/CO2 reduction = $32 CCGT vs $40 for pure green

i. 10 yr price increase = 1.9 cents/kWh vs 2.73 for pure green. ii. Average price increase per mt/CO2 reduction =$36 CCGT vs $40 for pure green

i. 10 yr price increase = 0.9 cents/kWh vs 1.6 for pure green.. ii. Average price increase per mt/CO2 reduction =$35 CCGT vs $40 for pure green

iii. 10 yr price increase = 1.3 cents/kWh vs 1.6 for pure green.. iv. Average price increase per mt/CO2 reduction =$39 CCGT vs $40 for pure green

the setting up of contracts for the supply of clean electricity.

For the transition option it was assumed that:

4. CCGT life was calculated as: (years CCGT coming on line)/2 + (years at full output) + (years being replaced by green power.)/2For example consider a case where:

WHAT CLIMATE POLICY SHOULD LABOR AND THE GREENS HAVE NOW?

2011-01-29T16:24:00.000+10:00

This post was first published as a guest post by John Davidson before the 2010 federal election. Much of what was said then is still very relevant:

Since their last change of leaders both Labor and the Coalition have placed “putting a price on carbon” as the key driver of climate action on indefinite hold. They also look like moving to some form of direct action for at least the next few years. In addition, while the polls are continuing to show support for climate action this support has softened since Copenhagen. There is a reluctance to support changes that will have much effect on people’s lives or the economy, particularly if certain large countries with much lower per capita emissions than Australia don’t start reducing their emissions first. (In 2007, even the US per capita figure for emissions from the consumption and flaring of fossil fuels was 9% lower than Australia.)
So in this changing political environment does it still make sense to continue urging the Labor party to include putting a price on carbon as part of their election promises or to concentrate on arguing for an effective direct action program?

I have long argued in favour of a simple climate action plan that uses various forms of direct action to drive climate action instead of an ETS (or anything else that depends on putting a price on carbon.) Direct because direct action has the potential to achieve targets with lower price increases and more certainty that the planned outcomes will actually be achieved. Simple because it is easier to sell something politically when people have some chance of understanding what is proposed and how it will affect them personally. Simple, because we need to get some serious real action started early in the next parliamentary term instead of wasting another three years doing little more than work on the next grand climate action plan.
However, a simple direct action plan is no guarantee of a good outcome. If too much of it depends on unproven technology (such as geosequestration) it can become an excuse for more procrastination. If it gets taken over by emotional arguments against various technologies (such as gas fired power) it will reduce what can be achieved within politically realistic price restraints. If decisions are being made on the basis of marginal seat politics, special interests and fear of the political muscle of big polluters it could become just as bad (if not worse) than what CPRS became.
So the aim of this post is firstly to reiterate arguments against proposals for an “introductory” carbon tax and then set out what I believe should be the core of Labor’s climate action proposal for the next three years. I will be arguing that Labor’s policy should be based the following principles:
1. Existing programs should be continued until something better is in place and working.

2. The initial focus for the next term should be on getting serious action started on cleaning up electricity (including the possibility of the replacement of coal-fired with gas) and reducing the fuel consumption of new cars.

3. The nominated emission reduction target should be covered by the action to clean up electricity. All other gains and personal efforts should be treated as a bonus for the next 10 years.
The problem with “introductory” carbon taxes:
Recent experience with MRET suggests that the price of carbon must be at least $40/tonne CO2 (=¢4.3/kWh for black coal power) for investment in renewables to be justified. This means that investors in renewable electricity need to be assured that the price of power will rise by at least ¢4.3/kWh above the current price before their investment is justified. However, if the carbon tax is only $30/tonne CO2, consumers will feel the pain of a ¢3.2/kWh price rise without any new investment in renewables. This reduced tax should be enough to justify the conversion of coal fired power plants to gas fired using CCGT (Combined Cycle Gas Turbine). However, if the price drops further, a point will be reached where conversion to gas cannot be justified either. Consumers will suffer the pain of increased power costs without any reduction in power generation related emissions.
By contrast, if we drive the investment by setting up of contracts for the supply of cleaner electricty, the average price of electricity only needs to ramp up slowly as the proportion of cleaner power increases. For example, this means that the increase in price of power after 50% of coal fired has been replaced by renewables would only have to be ¢2.15/kWh vs ¢4.3/kWh if carbon taxes are used to drive the investment. In addition, setting up of contracts will give a more certainty concerning the rate at which the cleaning takes place since the competitive tendering process sets the price. There is no need to second guess what carbon price is needed for investment to take place.
Targets and action:
Penny Wong has stated that the government’s current target is the equivalent of a 25% reduction in total emissions by 2020 from the current level. At the moment, the MRET power target is 20% renewables by 2020. (=10% reduction in total emissions.) The government also excluded transport from the CPRS so it is worth asking what else they expect to happen to give the 15% reduction in emissions not covered by cleaning up electricity?
We know that electricity will have to be cleaned up before 2050 so the simplest way of meeting the 2020 target would be to do it all by reducing power related emissions. (A 50% reduction in power related emissions would be required to give the 25% reduction in total emissions.) So what should happen during the next term of government as part of the plan to achieve this?
It will take 3 to 4 years between the signing of a contract and the cleaner power coming on line. Because of this all the contracts required to meet the 10 yr target would need to be signed before the end of 2016. On this basis it does not seem unreasonable for at least half the contracts required to meet the 2020 target to be signed before the end of the next term of government. (NOTE: The lag before new cleaner power comes on line means that it will take until at least 2014 before the power cleanup related price rises start. It is important to point this out.)
It should also be noted that the economics of using CCGT as part of the transition to clean power are better if all the investment in CCGT takes place as early as possible in the cleanup process. The calculations in this link also suggest that the use of CCGT may result in power prices that are lower enough compared with renewables to be politically significant. (As well as giving a lower average cost of power for the next 40 years even though all the CCGT will eventually be replaced by lower emission alternatives .)
All the above suggests that Labor policy should, for power related emissions:

1. Allow for a CCGT transition if this minimizes the cost of reducing emissions. 2. Commit to the signing of the contracts required to reduce emissions by at least 25% before the end of the next parliamentary term. 3. Allow the contracts required to cover the full 50% target to be signed as early as practical if enough CCGT tenders are competitive. Reducing car related emissions:
Even if we agreed with Abbot that “AGW is a load of crap” there is still a strong case for reducing our dependence on imported oil. It makes sense for Labor to go to the election with at least some proposals for driving down oil consumption.
Doing something about the fuel consumption of cars would be a good starting point. ABS reported that the average fuel consumption of Australian passenger vehicles was 11.5 litres/100km in 2007 compared with 11.4 litres/100 km in 1963. See ABS fuel consumption data. There are some cars on the market that consume close to 3 litres/100 km and a number of low cost cars that consume less than 5 litres/100 km. Small plug in hybrids will reduce fuel consumption below one litre/100 km for typical urban trip mixes.
Our experience with recent fuel price jumps suggest that increasing the price of fuel has little effect on total fuel consumed. It would make a lot more sense to leave fuel prices unchanged and concentrate initially on driving down the average fuel consumption of new cars using an MRET style system. (Set a target and insist that producers and importers either keep the average fuel consumption of the cars they sell below this target or buy credits from companies that average below the targets.)
There are potential arguments about exceptions for large families and people who live or work in places where 4 wheel drives really do make a difference. Labor should consider going into the election with the broad outline of an MRET type system and a promise to consult before the system is finalized. They should emphasize that this approach does not require fuel or registration price increases.
What about the Greens?
There are a number of things I would like to see the Greens do. The most obvious is to continue to apply pressure to adopt more challenging targets and to argue for policies and actions that will help the willing to do more to reduce their carbon footprint.
I would also like the Greens to drop calls for putting a price on carbon, get behind direct action and push both sides of politics to do more. I would also like to see more emphasis placed on arguing for actions that get the maximum gain for minimum pain. (Minimum pain can include physical discomfort as well as cost.)
I would be particularly encouraged if opposition to the use of a gas transition was dropped. What really counts is the amount we emit over the next 40 years and our rate of emissions by 2050. By all means insist that investors in CCGT understand that their generators will only be allowed to run for a limited amount of time. But also recognize that we can do a lot more cleanup using CCGT before we run into price driven political barriers.

SILENCING THE BACK BENCH

2011-01-29T15:58:00.000+10:00

This was published originally as a guest post by John Davidson on Larvatus Prodeo (4 Nov 2010):

Barry Cohen had a depressing article on the decline of question time in yesterday’s Australian. His line is that question time should return to being “the forum for a backbencher to make a reputation” instead of allowing QT to be the private domain of of both government and opposition executives. He provides some interesting statistics to support his argument:

In 1970, during my first term, the leader of the opposition, Gough Whitlam, would generally ask two questions a day, his deputy Lance Barnard one. With an average of 17 questions, that left roughly 14 to be shared among the other 100 MPs.
Shadow ministers received no special privileges and no one received a second question until all had had their first. As a result each member asked about seven questions a year.
Here is the breakdown for 1970: Whitlam 119 (18.8 per cent), Barnard 65 (10.4 per cent), shadow ministers 94 (14.8 per cent), backbenchers 354 (56 per cent).

By contrast in 2007-10:

With three Coalition leadership changes (Brendan Nelson, Malcolm Turnbull, Tony Abbott) and subsequent shadow ministerial reshuffles it is difficult to be precise about the numbers but the following is close: Abbott 531 (33.8 per cent), deputy leader Julie Bishop 136 (8.6 per cent), Nationals leader Warren Truss 66 (4.2 per cent), shadow treasurer Joe Hockey 153 (9.8 per cent), other shadow ministers 431 (27.5 per cent), Coalition backbenchers 184 (11.7 per cent), independents 63 (4.4 per cent).
The Coalition leadership and shadow ministry asked 83.9 per cent of all questions while 38 backbenchers and four independents had 16.1 per cent.

Barry also said that modern Labor was not much different when it was in opposition during the Howard era. He also comments that:

if backbenchers are told not to think or act for themselves that is what they will do.
Most have lost interest in digging around for questions to ask if they get on to an important issue and they see it taken over by a shadow minister.

The saddest bit was this final quote:

I was alerted to this emasculation of QT years ago when discussing a particular issue with a Labor backbencher.
“Ask a question,” I suggested.
“They won’t let me,” was his response.
“Excuse me?”
“The tactics committee meet every morning on sitting days to decide what questions will be asked and who will ask them.”
“You are joking!”
He looked at me as if I were the one who was mad.

Perhaps the sickness in both the major parties would be helped if they followed something like the Whitlam practice. It is certainly not helped by the new Clayton’s question time of 45-second questions and four-minute answers.

REDUCING THE INFORMAL VOTE

2011-01-29T15:42:00.000+10:00

This post first appeared as a guest post by John Davidson in Larvatus Prodeo 1 Sept 2010:

REDUCING THE INFORMAL VOTE

The informal vote for the house of reps was 5.64% in this election with state figures ranging from 4.19 in Tasmania to 6.89 in NSW. Some of these informal votes would be due to the “pox on both your houses syndrome”. However, the rest would be due to votes being “accidentally informal” for some reason or other. Accidentally informal not only robs individuals of their vote but it may also skew the election results given that people with low education or poor English skills might be more likely to make mistakes on their ballot paper.
With these problems in mind it was interesting to read a recent analysis by POSSUM on the causes of informal voting for the house reps. He used statistics (linear regression) to estimate the effect of the number of candidates on a ballot paper, the percentage of people in the electorate who speak English poorly (or not at all) as well as whether the state in which the electorate was located had optional preference voting (OPV) for state elections. (Qld and NSW have OPV)

The figures for 2007 and 2010 were analyzed separately. The following table summarizes the key results:

The “C” value is the value the equation predicts for the hypothetical case of no OPV, all voters have good English and no candidates. If we assume that this figure is the upper limit on “deliberately informal” the implication is that the “accidentally informal” vote would have been AT LEAST 2.69% for 2007 vs 2.56% for 2010. It should be no surprise if the deliberately informal vote rose significantly for 2010
with not much change in the accidentally informal.
For those that are interested the Possum post provides more details of how these figures were developed and possible reasons for other differences between 2007 and 2010.
One thing Possum didn’t mention was that under the Howard government details of the voting system were included in English classes for migrants as part of the AMEP program using the “Lets participate – A course in Australian Citizenship” book. Unfortunately, this book has been withdrawn since the 2007 election pending the issuing of a new book. This may partly explain why the impact of poor English was higher this election. (Of course, many ESL teachers continue to put considerable effort into explaining the electoral system, but it would have been smarter to wait until the new book was ready before withdrawing the old.)
The impact of English skills was considerable. The following graph of Possum’s does show how important English skills were for some electorates.

This graph emphasises the desirability of doing more to reduce the effect of English skills. More effort into helping new Australians understand the way the Australian preferential voting system works as well making the ballot paper easier for people to use.
The big surprise was the size of the estimated impact of voting in states that have OPV. Adding 1.65% to the informal votes of Qld and NSW voters just because their state system is fairer than the federal system is a serious penalty and one that was large enough to have changed the election outcome.
The problem with the federal system is that it makes votes informal even when it is quite clear what the voter intended. The aim of a fair voting system is to take account of a voter’s intentions, not test how well a voter understood the intricacies of the voting system.
The fix for the OPV problem is to take account of a voter’s intentions to the extent that it is possible. This would automatically count the vote of someone who chose not to use the preference option. It would also allow ballots that went 1,2,2,5 to be used for all stages of the account except when deciding which party that got a 2 was the next party to be eliminated. This is the priority reform for the House of reps. It should help reduce the OPV, ballot length and English skills effects.
The senate informal vote at 4.74% was not as bad as the house of reps but still high enough to affect outcomes in close elections. There was no Possum analysis for this vote but it does not seem unreasonable to expect similar patterns, after taking account of the above the line option.
One of the key problems for the senate system is fixing the scandalous system of above the line voting that allows party backroom operators to allocate the preferences of those who vote above the line.
This party-controlled preference allocation is an invitation to corruption, questionable deals and the creation of artificial parties that direct preferences in unexpected directions. It is worth looking at this site that gives preference details for all the parties in each state. There are some surprises. For example, in Qld, both the Democrats and Carers split the preferences so that someone who voted above the line for them had an equal chance of putting the LNP or Labor ahead.
The other key problem is that, like the house of reps, votes are made informal even when voter’s intentions are clear.
There are a number of fixes required for the Senate system:

The system that allows party backroom operators to allocate preferences should be scrapped.
There should be the option of allocating preferences above the line. (With the added option of allowing excursions below the line if someone wants to change the order of voting within a group.)
Counting should take account of voter’s intentions to the extent that this is possible.

There are a number of quite simple changes that could be made to make both the house of reps and senate voting systems simpler, fairer and less open to corruption.

TURNING OFF THE VOTERS

2011-01-29T14:45:00.000+10:00

The following first appeared as a guest post guest post on Lavatus Prodeo on 22 Sept 2010:

TURNING OFF THE VOTERS - John Davidson

Tim Colebatch in The Age presented some interesting data on voter turnout and informal voting. He says that:

"More than 14 million Australians were on the rolls for the 2010 election. But almost a million of them decided not to vote. And of those who did, almost 730,000 voted informal.
Combine the two, and the conclusion jumps out at you. This election campaign turned off more voters than any other election for decades."

More precisely, it turned off more Labor voters than any other election for decades. Some voted for the Greens. Some voted informal. Some didn’t bother to vote at all. But few crossed over to vote for the Coalition.
The official figures show a swing of 2.6 per cent from Labor to the Coalition. But that’s just among those who lodged formal votes. And it misses two of the main reasons why Labor’s vote fell. Hundreds of thousands of former Labor supporters either stayed away from the booths, or voted informal. (Emphasis added)

It is worth comparing the 2007 and 2010 results. For example:

The number not voting rose from 5.2 per cent to 6.8 per cent, The highest for 85 yearsThe boycott rate rose in every state and almost every electorate. But overwhelmingly, it rose most in safe Labor seats. Of the 30 seats with the biggest growth in the numbers not voting, 23 were Labor seats, six Coalition and one independent (Kennedy). Informal rose from just under 4 per cent to 5.6 per cent in 2010. The only year with a higher informal was 1984. (The 1984 figure was high because of confusion associated with the introduction of above the line voting in the Senate.) In Blaxland, Paul Keating’s old seat informals rose from 8.9 to 14.1 per cent. The 14 seats with the highest informal votes were all Labor seats in western Sydney. The Coalition did disastrously in the three south-eastern states.

despite its assertion that it somehow won the election, the reality is that it lost narrowly on the two-party preferred vote, because it polled disastrously in Melbourne, Adelaide, Victoria’s regional cities and Tasmania.

In these states it was the worst result for the Coalition since Parliamentary records began in the 1940s, just 44.7 per cent of the two-party preferred vote in Victoria and 39.4 per cent in Tasmania – the lowest vote the Coalition has ever recorded in any state.
The bottom line is that despite population growth

we cast fewer formal votes in the 2010 election than we had in 2007. And the only party to score a significant increase in its vote – as a share of the enrolled voters – was the Greens, itself primarily a protest party.

In 2007 39.5 per cent of enrolled voters voted for Kevin Rudd, but in 2010 only 33.4 per cent voted for Julia Gillard.
This should have resulted in a massive win by the Coalition, but their vote rose just barely as a proportion of voters enrolled – 38.4 per cent voted for for Tony Abbott as against 38.3 per cent for John Howard.
Mark Latham’s call for us all to vote informal may have had some effect. But it had resonance because neither major party was offering anything new of substance this election – just going forward presenting real leaders who struggled to get beyond slogans. Ironically it may have been Kevin’s broadband commitment that finally got Labor over the line rather than Gillard’s rush to drop anything that might upset the conservatives.

PICKING WINNERS IS NOT ALL BAD

2010-12-06T09:10:00.000+10:00

A lot of commentators see "picking winners" as an automatic term of abuse. And they can be right when what is happening is pollies deciding that X is the answer and it has to happen in a marginal electorate. It is less dangerous when what it means is identifying the boundaries within an acceptable decision can be made and the selection criteria.
What the Chinese seem to be doing is "picking losers" (Ex: Coal fired power and dependence on oil) and then pursuing a number of alternatives.
What worries me about the Greens and Labor is that they are obsessed with renewables while not really understanding the limitations.

SIMPLE CLIMATE ACTION PLAN ANYONE?

2009-12-08T13:53:00.001+10:00

I have just had a guest post published in Larvatusa Prodeo which suggests that it would be better to use an "Include by exception" approach to developing the climate action plan required to meet 2020 emission reduction targets. This plan might start with a base plan that uses the clean up electricity on its own to achieve the target and then modifies the base plan by adding other actions to the plan with the aim of reducing overall cost and/or giving a better result. The modification may include reducing the extent to which electricity would be cleaned up so that the 2020 target remains unchanged.
The big attraction of this approach is that it is much easier to understand than systems like CPRS that have started out as EXCLUDE by exception. The problem with CPRS is that by the time all the exclusions are included the system has become extremely complex and difficult to understand.