Pragmatus J

A BETTER COMMERCIAL MODEL FOR ROOFTOP SOLAR PV?

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

The dominant commercial model for rooftop solar PV involves the individual house holder owning the panels and getting the resulting income/free power. In this post it is argued that it may make more sense for the dominant commercial model to have power companies owning and operating the panels installed on rooftop space leased from the house owners. Advantages of this approach include the potential for reduced power costs, 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.

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:

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.

DRIVING INVESTMENT IN CLEAN ELECTRICTY

2009-12-06T16:04:00.007+10:00

This post is essentially an extract from Submission 572 to the Senate Climate Committee (John Davidson - April 2009).

It considers the issues involved in driving major investment in clean-electricity and compares one "case specific" approach with emission trading and carbon tax comprehensive schemes.  A case specific approach is an approach developed for a particular opportunity to reduce NCP (net carbon pollution). In this example, the case the approach selected was the use of regulation and contracts for the supply of cleaner electricity The attraction of this particular strategy is that it is able to deal with the issues associated with the clean up of electricity, gives a very predicable growth in clean electricity capacity, satisfies most of the needs of the various stakeholders and only requires the average price of electricity to ramp up slowly in line with average costs. Problems with both the emission trading and carbon tax approach include much faster price increases, a much less satifactory resolution of stakeholder concerns and a far less predicable rate of investment in clean electricity.

Note: A completely different approach may be appropriate for driving minor investment such as the installation of rooftop solar cells.

Submission 572 argues in favour of the case specific approach rather than the "one answer fits all" approach used by both emission trading and carbon tax schemes. The key feature of the specific case approach is that it allows quite different strategies to be used to handle different opportunities to reduce NCP. To get a better idea of how this might work in practice see Simple action plan anyone?

2.1: Background:

Electricity generation accounts for approx. 50% of Australian greenhouse emissions. In addition, some proposals for cleaning up other sources of emissions will be more effective when cleaner electricity is available; e.g., the use of plug-in hybrid cars. Some of the reduction in electricity related NCP (Net Carbon Pollution) will come from reductions in per capita consumption of electricity. However, serious investment in clean-electricity will be required in order to meet 2050 NCP targets. This investment may include investment to reduce NCP for existing dirty-electricity generation as well as the construction of new, clean generating capacity.

Special features of the electricity industry that may influence the design of schemes for driving major investment in clean-electricity include:
1. The total investment will be so large that it will need to be spread over decades.
2. Years will elapse between a decision to build extra capacity and this extra capacity coming on line.
3. It will take many years to pay back investment in power generation.
4. The cost of cleaning up electricity is expected to continue dropping as a result of new technology and improvements to existing technology.
5. Generating plant life can be over 20 years.
6. Almost all existing dirty-electricity production will have to shut down or be cleaned up by 2050 if NCP targets are to be met.

7. The order in which dirty-electricity capacity is shut down will not simply depend on emissions/kWh or costs. The choice may need to take account of:
a.   Impact on transmission losses and grid investment requirements.
b.   Vulnerability to localized failures.
c. Ability to complement the future mix of clean power sources. There is often a trade-off between efficiency and ability to respond to variation in demand.
8. Location of new plant may have to take into account factors other than investors’ return on investment including:
a.   Overall cost effectiveness, not just cost effectiveness of the new plant itself.
b.   Impact on transmission losses and grid investment requirements.
c.   Vulnerability to localized failures.
d.   Benefits of geographic spread on variation in total wind, solar and/or tidal power output.
9. Technology selection may have to take into account factors other than investors’ return on investment including:
a.   Potential impact on what happens in other parts of the world; e.g., many countries would welcome a low cost way of reducing NCP from coal fired power stations.
b.   Overall cost effectiveness.
c. Minimizing transmission losses and grid investment requirements.
d.   Vulnerability to localized failures.
e.   Matching time and seasonal variation of total clean-electricity output to consumption patterns.
f.   Benefits of trialling new technologies such as combinations of heat storage with solar thermal.
a. Potential impact on emissions from other sources; e.g., CO2 sequestration offers the best chance of serious reductions of emissions from cement and steel production.
g. Impact on the Australian coal industry.

2.2: Criteria for a Good Scheme:

Features of a good scheme for driving major investment in clean-electricity include:
1. Investors will be seeking certainty re future sales and prices.
2. Customers will be looking for:
a.   No large, sudden jumps in the price of electricity.
b.   Low average prices.
c.   Price certainty.
d.   Reliable supply:
i.      Additional capacity sufficient to meet growing demand.
ii.     Enough surplus dirty-electricity capacity retained to provide a capacity safety margin.
2. Dirty-electricity producers will be looking for:
a. Certainty re:
i.     Order in which dirty-electricity generators will be shut down.
ii.     Approx timing of these shutdowns.
iii.    The extent to which a plant would have to reduce NCP/kWh to delay or avoid the need for shutdown.
b. Reasonable profits during the running down of dirty-electricity production.
3. The government should be seeking a system that would:
a.   Not have the potential to destabilize the economy.
b. Have a positive effect on employment and economic growth.
c.   Have a positive effect on NCP reduction efforts outside of Australia.
d.   Give government control of the rate of clean up.
e.   Give government the option of putting limits on technology, location, ownership, operation etc if required.
f.   Provide a reasonable compromise between the needs of customers, investors and dirty-electricity producers.
g. Include provisions for ongoing planning, research and development.

2.3: One direct action (Case specific) Alternative*:

The following suggestion would satisfy most, if not all of the above requirements. This particular alternative assumes that private enterprise would build, own and operate clean-electricity production*. Details:
1. The government would control the rate of cleanup by periodically issuing competitive tenders for the supply of clean-electricity.
2. If required, tender documents would put limits on technology, location, capacity etc as well as the extent to which this might be achieved by clean up of dirty-electricity.
3. The pricing formulae and sales guarantees would be agreed to during tender negotiations. Note that:
a.   The agreed pricing formulae may be different for different contracts.
b. Sales guarantees and pricing formulae may hold for only a limited amount of time or cumulative power output.
4. New regulations would require that preference normally be given to clean-electricity, provided that it was offered at the agreed price.
5. A similar approach may be used if the proposal involved a partial cleanup of an existing dirty-electricity plant.
6. A plan would be developed for the running down of dirty-electricity production.
7. Pricing formulae and sales guarantees may be negotiated for part of the production from dirty-electricity producers. Prices may also be negotiated for standby time and maintaining the option of restarting a plant.
8. It may be necessary to modify the existing marketing and pricing system to fit in with the above changes.
9. Ongoing planning, research and development might be financed by a small electricity levy or simply be part of a larger system.

The above suggestion provides a satisfactory way of dealing with the issues raised in section 2.2 above. In particular:
1. It avoids the need for destabilizing price shocks.
2. Preference is given to clean-electricity.
3. Prices will only ramp up slowly in line with the average cost of production.
4. Prices will be kept low because:
a.   Competitive tenders are used.
b.   Future price agreements can take advantage of improving technology without affecting earlier price agreements.
5. It provides certainty to potential investors.
6. Power shortages will be avoided.
7. It has the potential to provide a reasonable deal for dirty-electricity producers.
8. It gives government control of the rate of cleanup and the option of placing limits on location, technology etc.
9. It will stimulate the economy by providing steady investment opportunities and green jobs.

*NOTE: No claim is made that that the above is the best case specific alternative for driving investment in clean electricity.

2.4: Emission Trading Scheme:
A comparison of ETS with the case specific scheme described in section 2.3 led to the startling conclusion that ETS would be inferior to the case specific scheme for all of the criteria listed in section 2.2 above. In some cases, the extent of this inferiority was very significant. In particular:
1. ETS depends on “putting a price on carbon” to drive change. As a consequence:
a.   There must be a potentially destabilizing jump in the price of electricity before investment in clean-electricity can be justified
b.   Decisions re location, technology etc. will be made by investors on the basis of return on capital.
c.   Decisions re the shutting down of dirty-electricity capacity will be determined on the basis of intense competition between these producers. The result may not be optimal in terms of the total electricity supply system.
2. The price of carbon is determined by the price of carbon permits traded in a carbon permit market. As a consequence:
a.   Potential investors in clean-electricity would be exposed to future price related risks due to:
i.     Short term variations in carbon permit prices resulting from:
•       Problems matching supply and demand for clean-electricity.
•      Speculator activity and the normal vagaries of the permit market. The price of EU carbon permit prices had dropped from a 2008 high of €30 down to only €8 per metric tonne CO2 by 25 Feb 2009 (1). This is equivalent to a drop from 6.4¢ to 1.7¢/kWh* ex generation plant. See attachment A1 for details.
ii.     Drops in longer term average permit prices due to the development of more cost effective ways of producing clean-electricity.
b.   Investment in clean-electricity will tend to follow economic cycles due to the price of permits dropping during periods of lower than average growth. (It would be better if investment was counter-cyclic.)
3. The government limits the number of new permits issued each period to match a NCP cap that ramps down to the 2050 target. As a consequence, there is a risk of artificial power shortages or restraints on growth if the investment in cleaning up electricity has not been large enough.
*NOTE: The World Business Council for Sustainable Development (2) commented recently that “European carbon prices are now far below levels which can, on their own, make expensive, low-carbon energy technologies competitive with fossil fuels such as coal, gas and oil.”
The effect of some of these problems might be reduced or avoided by special arrangements; e.g., passing laws that allow governments to specify the location of new wind farms. However, the potentially destabilizing price jumps, uncertainty re the price of carbon and high level of investor uncertainty are fundamental features of ETS.

2.5 Carbon Tax Scheme:
A carbon tax based scheme (CTS) will avoid the problems that arise with ETS as consequence of depending on markets to set the price of carbon and the use of a NCP cap. However:
1. The problems associated with “putting a price on carbon” will be the same as for ETS.
2. The price of carbon (tax rate) is set by the government. If set too low, there will be no investment in clean-electricity. Too high and the price of electricity will be higher than necessary.
3. CTS provides no mechanism for controlling the rate of clean-up.
4. Carbon taxes might be reduced in response to the development of lower cost methods of clean power production. However, the threat of future tax reductions would be seen as an additional risk by investors. (Unless compensation for the effects of tax reductions was agreed to before the investment was made.)

2.6 Conclusions – Driving Investment in Clean-electricity:
The case specific scheme described in section 2.3 was clearly superior to both ETS and CTS for driving major investment in clean-electricity.

5.0 REFERENCES:
1. Reuters: “Leave falling carbon prices alone, say experts” 25 Feb 2009
2. World Business Council for Sustainable Development:
“U.S. gives cap-and trade
boost for climate treaty” 27 Feb 2009
3. Australian Bureau of Statistics: 4605.4 “Australian Transport and the Environment”
4. Australian National Greenhouse Inventory
5. Public Transport Users Association: “Myth: Cars are Becoming More Fuel Efficient”
6. Gizmag
7. Australian Uranium Association Publication: “Uranium, Electricity and the Greenhouse Effect”

REDUCING THE FUEL CONSUMPTION OF CARS

2009-12-06T15:18:00.006+10:00

DRIVING DOWN THE AVERAGE FUEL CONSUMPTION OF
NEW CARS

This post considers alternatives for driving down the average fuel consumption/km of
new cars. It is largely based on Submission 572 to the Senate Climate Committee (John Davidson - April 2009)

It considers the issues involved in driving down the average duel consumption of new cars and compares one "case specific" approach with emission trading and carbon tax comprehensive schemes. A case specific approach is an approach is an approach developed for a particular opportunity to reduce NCP (net carbon pollution). In this example, the case the approach selected was the use of regulation and offset credit trading to control the average fuel consumption of new cars. The attraction of this particular strategy is that it doesn't require changes in fuel price to work and gives a very predictable outcome. By contrast, both the emission trading and carbon tax approach require an increase in the price of fuel to drive the change and the outcome will be difficult to predict.

Submission 572 argues in favour of the case specific approach rather than the "one answer fits all" approach used by both emission trading and carbon tax schemes. The key feature of the specific case approach is that it allows quite different strategies to be used to handle different opportunities to reduce NCP. To get a better idea of how this might work in practice see Simple action plan anyone?

3.1: Background:

Passenger vehicles accounted for 62% of transport fuel consumption in 1995 (3) with total transport responsible for 14% of total CO2 emissions in 1999 (4). Based on these figures, passenger vehicles would account for 9% of total greenhouse emissions. The average fuel consumption of passenger vehicles was 11.5
litres/100km in 2007 compared with 11.4 litres/100 km in 1963 (5). Part of the problem is that most Australians would consider the loss of their cars as a major attack on their quality of life. To some extent this concern is due to practical considerations such as trip times, delays waiting for public transport, comfort and
security. These issues are of particular importance to those who live away from the most congested parts of large cities. In addition, for many people, cars are linked to psychological factors such as status and image. The action required to reduce NCP from people transport will need something more complex than the availability of low NCP (net carbon pollution) alternatives.
Any credible plan for reducing the fuel consumption of cars to the levels required to meet 2050 targets must include strategies for reducing average fuel consumption/km. Reducing the average fuel consumption of new cars would have to be part, if not all of this effort. Small cars are already available in Australia with fuel consumptions below 4 litres/100 km. There are no technical reasons why further reductions cannot be
made without radical changes to the car as we know it.
For example, existing plug-in hybrid technology would allow most car owners to significantly reduce petrol consumption without having to wait for technical breakthroughs or new infrastructure; e.g., an owner with the writer’s typical-working week trip pattern would achieve an average petrol consumption of less than 0.8 litres/100 km by retrofitting a 4 litres/100 km car with a plug-in hybrid able to go 35 km on battery
power alone. (Basis 6x30 + 1x100km trips per week.)
Special features related to the use of cars that may influence the design of schemes for driving down the average fuel consumption of new cars include:

1. The relative fuel consumption of different types of car may vary considerable depending what they are used for. (For example, conventional cars may actually have better fuel consumption than plug-in hybrids if they are being used for long trips in flat countryside.)
2. Some people would be satisfied with a car designed for the efficient transport of one or two people. See for example, this extensive review of vehicles that are narrow enough to travel two abreast on a single lane.
3. The fuel consumption record for an internal combustion driven car is better than 0.03 litres/100 km (5). One line of investigation involve producing the car of the future by converting an ultra-lite to a safe car by using controls and sensors to avoid accidents instead of merely surviving accidents.
4. Other people, such as large families, workmen, etc. may have regular need for vehicles that can carry more people and/or bigger loads. However, there is a danger that special arrangements for these people will be used to allow others without these practical needs to indulge in their desire for gas guzzling luxury.
5. Using a simple cap on the fuel consumption of new cars to drive down average fuel consumption will increase the pressure to make special exceptions and aim for less ambitious targets.

3.2 Criteria for a Good Scheme:
1. Car manufacturers will be seeking certainty re:
   a. Future changes in average fuel consumption requirements.
   b. Method(s) to be used for measuring fuel consumption.
2. Car buyers might be looking for:
   a.   No increase in the price of fuel.
   b.   Low prices for fuel efficient cars.
   c.   No limit on the number of fuel efficient cars.
   d.   Fuel consumption measurement that reflects their usage pattern.
   e.   A mechanism that provides at least some option of continuing to buy cars with fuel consumptions above target.
   f. Special provisions for those who really need vehicles that can carry more people and bigger loads.
3. The Government should be seeking a system that would:
   a.   Not require any potentially destabilizing jumps in the price of fuel.
   b.   Have a positive effect on employment and economic growth.
   c.   Have a positive effect on NCP reduction efforts outside of Australia.
   d.   Give government the option of controlling:
      i.       Future values for the average fuel consumption of new cars.
      ii.      The method(s) use for measuring fuel consumption.
     iii.     Special exceptions and acceptable ways of meeting these needs.
e. Measures fuel consumption in a way that:
     i.      Recognizes the benefits of plug-in hybrids
     ii.      Encourages reduction of both oil imports and contribution to total NCP by making an allowance for
             the future effect of plugin hybrid electricity consumption on total NCP.
   f. Include provisions for ongoing planning, research and development.

3.3: One Case Specific Alternative:
The following suggestion is one example of a case specific alternative that would satisfy most, if not all of the above requirements:
1. All imports would be considered to be “new cars” for the purposes of this scheme.
2. Regulations would be introduced to:
   a.   Specifying future average fuel/NCP requirements for new cars.
   b.   Specify the method(s) to be used to calculate fuel consumption/NCP including NCP allowance for    electricity consumption.
c. If appropriate, detail separate schemes for different classes of vehicle, location or use.
3. Supplies some mechanism for giving tradeable credits to sellers whose average fuel consumption per car is below target.
4. Ongoing planning, research and development might be financed by fuel taxes or simply be part of a larger system.

The above suggestion provides a satisfactory way of dealing with most of the issues raised in section 3.2 above. In particular:
1. It will work no matter what happens to the price of fuel.
2. Allows the government to control the future average fuel consumption of new cars.
3. It will provide certainty for car manufacturers.
4. Gives the government the power to deal with special needs and different usage patterns.
5. The cost of fuel efficient cars will be reduced by the effect of the credit trading system.

It is difficult to predict the net effect on employment. However:
1. Any system that reduces the need for oil imports will cost jobs in the oil related industries.
2. Avoiding the need to increase fuel prices will help other parts of the economy.

3.4: Emission Trading and Carbon Tax Schemes (CTS):

The key problem with both these schemes are:
1. The price they put on carbon will increase the price of fuel for both cars and the general transport industry.
2. In the short to medium term the price of carbon will reflect the price required to drive investment in clean-electricity, not the value needed to reduce the fuel consumption of cars.
3. Provides manufacturers with no certainty re future average fuel consumption requirements for new cars.
It can be argued that increasing the price of fuel may have the added benefit of driving down total car kilometres. However:
1. We are comparing schemes for driving down the average fuel consumption/km of new cars. Reducing kilometres travelled is a separate issue.
2. Large movements in fuel price over the last few years had little effect on total fuel consumption.

3.5 Conclusions – Driving Down Average Fuel Consumption of New Cars:

The case specific scheme described in section 3.3 was clearly superior to both ETS and CTS for driving down average fuel consumption of new cars.

5.0 REFERENCES:
1. Reuters: “Leave falling carbon prices alone, say experts” 25 Feb 2009
2. World Business Council for Sustainable Development: “U.S. gives cap-and trade boost for climate treaty” 27 Feb 2009
3. Australian Bureau of Statistics: 4605.4 “Australian Transport and the Environment”
4. Australian National Greenhouse Inventory
5. Public Transport Users Association: “Myth: Cars are Becoming More Fuel Efficient”
6. Gizmag
7. Australian Uranium Association Publication: “Uranium, Electricity and the Greenhouse Effect”