The Oil Drum - ANZ

Power in the rising sun

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

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

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

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

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

Article continues...

And it was called 'Yellow'

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

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

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

However, I'm not so sure that re-marketing Cadmium Yellow as "a paste of semiconducting nanoparticles called solar paint" is the smartest approach.
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Australian Government tries to hide its own peak oil report

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

re-posted from oilshockhorrorprobe

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

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

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

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

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

However, a few paragraphs into the story...

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

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

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

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

Emphasis mine.

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

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

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

Xmas Message

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

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

Base Motives

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

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

Climate sceptics might just be captive to basic emotions

Paul Biegler
December 20, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Durban UNFCCC international climate negotiations

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

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

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

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

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

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

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

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

A. Neville Chamberlain only went once to Munich.

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

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

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

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

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

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

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

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

Chart of Australian Oil Consumption and Production

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

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

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

...we just run logistical support.

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

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

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

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

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

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

Thankyou for reading for one year...

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

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

A special thanks to all contributors.

NZ Election 2011 - Praying to the Growth Fairy

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

reposted from oilshockhorrorprobe

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

Why solar parity scares big utilities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It's the absence.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Asian alternatives

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

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

Article continues...

The Declines Incline

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

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

Going Down the Up Escalator, Part 1

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

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

Other Physical Evidence of Continued Warming

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

Figure 2: Physical Indicators of a Warming World

See the original post for a detailed account.

100% renewables, no hot air

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Coincidentally the following job ad appeared in my inbox:

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

Agricultural emissions out of NZETS and Nick Smith fails ETS basics

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

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

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

Gareth of Hot Topic puts it this way.

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

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

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

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

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

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

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

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

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

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

24 Hours to Massive Change: Global Design Workshop

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

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

How much can you really accomplish in 24 hours?

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

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

Oz Carbon Tax Passes Senate

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

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

The Greens are understandably pleased.

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

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

Finally, carbon tax becomes law

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

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

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

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

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

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

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

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

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

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

Top 10 Reasons The Dark Ages Were Not Dark

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

UPDATE

Markets Live: Stocks lose $37b on Italy fears

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

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

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

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

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

Wind like Spain? It's a no-brainer

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

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

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

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

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

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

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

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

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

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

New Zealand Minister Nick Smith fails the smelter spin test

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

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

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

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

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

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

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

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

In Parliament in September 2009,

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

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

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

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

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

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

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

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

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

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

A cheaper path to 100% renewables

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NZ ETS 120% Pure Subsidy Part 2

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

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

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

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

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

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

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

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

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

Password1 concludes that

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summing up

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

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

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

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

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

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

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

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