Author: Bryan Walker

Down in the sewer

This column was published in the Waikato Times on 2 June

algaeWhile our government flounders around still somewhat directionless when it comes to a sustainable economy, others are getting on with the job ahead. Blenheim company Aquaflow is one such. It’s actually Marlborough sewage water that is flowing, but the company extracts renewable energy from it in the form of “green crude” oil. The secret lies in the tiny algae that colonise the settling ponds. They may be individually miscroscopic, but in mass they add up to tonnes per day harvested. And they contain oil, stored as they convert the sun’s energy into chemical energy, something they are very efficient at, given access to CO2 and dissolved nutrients in the water in which they are suspended.

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Blueprint for a global deal

The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity

It is two and a half years since the landmark Stern Report to the UK government was released. It called climate change “the greatest and widest-ranging market failure ever seen” and concluded that the benefits of strong and early action to reduce emissions far outweigh the economic costs of not acting. At 700 pages it was a daunting document.  Now Nicholas Stern has written a book which updates his thinking and explains it in terms which non-economists will readily be able to follow — The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity (US edition – confusingly published in the UK under a different title Blueprint for a Safer Planet.) Stern has a long-standing involvement with efforts to overcome poverty in developing nations.  He makes it clear from the start that combating climate change is inextricably linked with poverty reduction as the two greatest challenges of the century and that we shall succeed or fail on them together – to tackle only one is to undermine the other. This theme is frequently sounded in the book, and is an indication of the humanity which he brings to his task, as well as the realism.

Stern recognises we are on track to end-of-century temperatures of 4-5 degrees centigrade or higher relative to 1850, enough to rewrite the physical and human geography, with the prospect of massive and extended human conflict.  He firmly dismisses those who deny the dangers and the urgency of action.

The target level he focuses on for risk reduction is a maximum 500 parts per million CO2 equivalent. (CO2e includes the greenhouse gases other than CO2 and 500 ppm is roughly equivalent to the more commonly used 450 ppm CO2. The current level of CO2e is estimated at around 430 parts per million.) The target of 550 ppm CO2e adopted by the Stern Report he now considers too risky.  He notes that even at 500 ppm CO2e the risks are high – a probability of over 95% of a temperature rise greater than 2 degrees, but only a 3% chance of it being above  5 degrees. So although he uses the 500 ppm CO2e target for the purposes of the book he readily acknowledges the likely need for downward revision – probably to 400 ppm CO2e to have a fifty-fifty chance of limiting the temperature rise to 2 degrees.

A very positive section outlines the technologies already available for the task and  summarises what we must do under four headings: make more efficient use of energy;  halt deforestation; put existing or close-to-existing technologies to work quickly, including carbon capture and storage; invest strongly in new technologies which are on the medium-term horizon. The resulting low-carbon world, ushered in by a new burst of innovation, creativity and investment, will be a very attractive one in which to live. “It is a world where we can realise our ambitions for growth, development and poverty reduction across all nations, but particularly in developing countries.” This is not a fancy. Previous examples of rapid change show it can be done.  Stern’s contacts in the many places he visits and speaks leave him with a strong impression of the vast entrepeneurship and creativity which can be released given the right policy frameworks. This is one of the cheering themes of the book.

The cost is reasonable.  Drawing on McKinsey analyses to discuss cost, he concludes that  2% of GDP per annum will do it, a level smaller than some which our economies already cope with in terms of exchange-rate movements or changes in trade terms. It can be thought of in terms of an extra six months for the world economy to reach the level of world income it would otherwise reach by 2050.

There is no ‘versus’ between mitigation and adaptation. Stern descibes several ways in which different countries are taking adaptation measures and makes it very clear that adaptation is particularly important for developing countries, hit earliest and hardest by consequences for which they bear no responsibility.  He quotes Archbishop Tutu with approval: “I call on the leaders of the rich world to bring adaptation to climate change to the heart of the international poverty agenda — and to do it now, before it is too late.”

So far as Stern is concerned the ethical demand to act on climate change needs no further justification than that provided by the risks of inaction and the costs of action which he covers in the early chapters of the book.  But because many economists use a more formal and model-based discussion of how to balance the costs of inaction against the cost of action he devotes 20 pages of the book to examining how and why a number of high-profile economic analyses have got things badly wrong. The costs of inaction are much larger than are understood by many of the economists who have argued for it.  Even his own Stern Report is now shown to have been too cautious on the growth of emissions, on the deteriorating absorptive capacity of the planet, and on the pace and severity of the impacts of climate change.  The “slow ramp” approach advocated by some of his critics would lead to concentration levels so high as to be unthinkable.

Policies need to be effective, efficient and equitable. Different countries can have different combinations of policies relating to carbon taxes, carbon trading on the basis of quotas, and regulation. But the overall level of ambition needs to be strong and equitable, and there must be a strong role for trading schemes which allow international trade in greenhouse gas reduction – this trade both improves efficiency and provides incentives for developing countries to join in international action. He has an excellent section on the conditions which will enable trading schemes to work to the desired end.  The explanations of the necessity of international trading schemes as part of the mix for emission reduction were one of the highlights of the book for me, and made very clear the contribution that economists can bring to the enterprise.

We must have a global deal. The world needs an overall 50% cut in emissions by 2050 relative to 1990. Towards achieving this the developed countries need to agree to a 20% to 40% reduction in their emissions by 2020 and to 80% by 2050.  Within this time frame they need to demonstrate that low carbon growth is possible and affordable.   The developing countries need to commit, subject to the developed countries’ performance, to take on targets by 2020 at the latest. Their emissions should peak by 2030, or 2020 for the better-off among them. They should be integrated into trading mechanisms both before and after their adoption of targets.

In discussing funding he focuses on three areas. First, deforestation, responsible for 20% of global emissions.  There is a need for strong initiatives, with public funding, to move towards halting deforestation now. We should prepare to to include avoided deforestation in carbon trading.  Second, technologies must be developed and shared.  Carbon capture and storage figures strongly here and elsewhere in the book. It is highly important if only because of the significance of coal for China and India and he calls for financial commitment to help fund thirty-plus new commercial-size plants in the next seven to eight years.  His final plea is that rich countries deliver on their commitments to overseas development assistance, with extra costs of development arising from climate change.

He relates climate change policy to the current economic turbulence by pointing to two key lessons. First, that the financial crisis has been developing over 20 years and surely tells us that ignoring risk or postponing action is to store up trouble for the future. Second, to grow out of the recession we need a driver of growth which is genuinely productive and valuable.  Low-carbon growth can easily be that driver.

The book is a mine of information and helpful explanation of how proposed policy measures can work. Stern has worked closely with politicians and policy makers and obviously has familiarity with how they work and think. That doesn’t mean he has been taken over by political calculations as to what is possible or not.  Quite the contrary.  He is firm on the primary responsibility of the rich nations to steer the world through to a co-operation on climate change which will both lower emissions and at the same time bring the benefits of development to the poorer nations.  He is not afraid to sound a visionary note when he considers the good that can flow to all countries if we rise adequately to the challenge of a planet in peril. I was heartened as well as informed by his book.

The twain must meet

richard-holmesSpeaking recently at the Hay Festival in the UK, biographer Richard Holmes attacked the “dangerous” division between the arts and the sciences, warning that the split could be fatal in the face of global warming. Fifty years ago the British novelist and scientist C P Snow gave a famous lecture, The Two Cultures, which pointed to a breakdown of communication between the sciences and the humanities. I was a young man at the time and can remember thinking it characterised my position adequately enough.  I was reasonably well informed in literature, history and theology but had very sparse knowledge when it came to the sciences. I’ve tried over the years since to get better acquainted with the major themes of science, but it’s pretty well in the nature of things that there’s no easy path from the humanities to the sciences. Traffic the other way flows much more readily and many scientists are very much at home in both worlds.

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The Minister Speaks

nick-smith_editedThe Minister Responsible for Climate Change Issues Nick Smith’s address to the recent NZ Climate Change Centre’s conference Managing the Unavoidable appeared to be the first comprehensive public statement he has made since assuming ministerial responsibility.  I read it with interest and here offer comments on some of it. 

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Giddens on the politics of climate change

Politics of Climate Change

A couple of weeks ago I read Will Hutton’s column in the Guardian announcing that sociologist Anthony Giddens’ new book The Politics of Climate Change was an attack on the “mystic, utopian views of the green movement” and its impossible demands that we give up our current standard of living. I had Gidden’s book on order and felt dismayed at the prospect of reading the accusations Hutton expatiated on in his column. I needn’t have worried. Hutton was using the book to launch his own, not Giddens’, diatribe. Giddens does say some rather facile things about the green movement, but not to the extreme that Hutton suggested.

Giddens takes climate change seriously though he insists, in passing, on a degree of respect for the ‘sceptics’ which suggests that he isn’t fully conversant with the science. He speaks of a crisis of epic proportions, and one of his opening sentences describes his book as “a prolonged enquiry into a single question: why does anyone, anyone at all, for even a single day longer, continue to drive an SUV?”  The SUV is a metaphor – “we are all SUV drivers, because so few of us are geared up to the profundity of the threats we face.”

The scale of global warming and the fact that it is mainly about the future make it a unique problem, and paradoxically a difficult one for us to engage with, he says. We are dealing with dangers that seem abstract and elusive, however potentially devastating. What should be a front-of-mind issue becomes a back-of-mind one.

Giddens develops a number of concepts in the course of the book. Two of prominence are political and economic convergence. Political convergence occurs when policies relevant to mitigating climate change overlap positively with other areas of public policy and each can be used to gain traction over the other. Areas such as energy security and energy planning, technological innovation, lifestyle politics, the downside of affluence and the need for a sense of human welfare greater than mere GDP. This oblique approach avoids what he sees as the inadequacy of focusing on global warming alone, in view of the perceived inability of people to act on dangers which aren’t immediate or visible.

Economic convergence refers to situations where low-carbon technologies and lifestyles may overlap with economic competitiveness. In other words environmentally progressive policies may well coincide with what is good for the economy, and attention should be focused on this.  He somewhat qualifies this with the recognition that growth should not be treated as an unalloyed benefit, especially in the developed countries.

Political transcendence, another of his concepts, means the question of climate change has to move beyond party divides and have an overall framework of agreement that will endure across changes of government.  Giddens notes that he has never agreed that the political centre is the antithesis of radicalism. Sometimes overall political agreement is the condition of radical policy-making, definitely so in the case of climate change.

In considering the track record of countries to date he does some thumbnail sketches of a few who have been the most successful in controlling carbon emissions – Sweden foremost, Germany, Iceland, Norway, Cost Rica, Denmark.  He includes New Zealand largely on the grounds of our ambitions which he thinks look unlikely to be realised.  It’s not clear whether he’s caught up on the fact that NZ’s present government has disavowed any wish to show leadership in the matter. The case of the UK is examined in detail, some of which I’ll traverse here as an example of the kind of detailed useful information the book incorporates. The ambition of the 2008 Climate Change Act is recognised. It set a statutory target of an 80% reduction of greenhouse gas emissions by 2050 over a 1990 baseline. A progress report will be published every five years and reviewed by Parliament, along with the ongoing results of an adaptation programme. A carbon budget will be established to cover each five-year period.  A Committee on Climate Change will advise the government on the level of carbon budgets and the optimal path towards emission reduction targets.  The Energy Act of the same year recognised how closely climate change and energy change policy are intertwined. Giddens acknowledges the determination shown by these two pieces of legislation and notes the high degree of cross-party support in their passage through parliament. Although some sceptics used the opportunity to air their views the main clauses were strengthened rather than weakened.  He goes on to discuss weaknesses and problems which remain, the following among them: the policies are more about ‘what to do’ than ‘how to do’; both Acts are organized mainly in terms of negatives and lack a positive vision; the Climate Change Committee is only advisory; the objectives of the Climate Change Act are not necessarily reconciled with other government policy – eg. Heathrow.  The chapter concludes with the recognition that progress is relatively limited even among the best performing nations. There is a long way yet to go.

Giddens goes on to consider the role of the state in ensuring that a serious impact is made on global warming. While he agrees that international agreements will be essential and that many other agencies, including NGOs and businesses, will play a fundamental role, it is the state which retains many of the powers that will need to be invoked. A few examples follow.

The state must help us to think ahead. Political leaders must introduce policies for the long term. This means a return to planning, in some guise or another. Targets may make government ministers feel good, but it is means which must be concentrated on in planning. Governments should also encourage other sectors of society and individuals to shift towards long-term thinking.

The state must intervene in markets to institutionalise ‘the polluter pays’ principle, thereby ensuring that markets work in favour of climate change policy rather than against it. So-called externalities must be brought into the marketplace.  Environmental costs must not be permitted to remain outside the economic system.

The state must counter business interests which seek to block climate change initiatives. A tall order given the dominance of big business, Giddens agrees, but large-scale change must be achieved.  He believes governments acting together with enlightened corporate leaders could find a confluence of interests – an example of economic convergence.

The state must keep climate change at the top of the political agenda. Competing political parties must agree that climate change and energy policy will be sustained in spite of other differences and conflicts. Climate change should feature in the curriculum of all schools.

The state must provide subsidies to enable new technologies to thrive, since, in the beginning, they will be unable to compete with fossil fuels.  Giddens discusses in some detail the function carbon taxes can play in stimulating innovation. He inclines towards carbon taxes over carbon emissions markets, though sees no reason why the two can’t co-exist.

Later in the book Giddens examines the function of international agreements. He expresses reservations about the effectiveness of the Kyoto-style approach in terms of the danger that an elaborate architecture may be created but no buildings actually get constructed. The national and local level are the places where binding targets are most likely to work.  He does not suggest we turn our backs on international cooperation, but thinks there is a role for agreements or partnerships between individual nations, groups of countries and regions which could act to strengthen more universal measures. The US and China surely need to get together, since where climate change and energy security are concerned they hold the future of the world in their hands.  If the EU is treated as a single entity then just six countries have produced 70 percent of cumulative world emissions, twenty have been responsible for 88 percent. These groups should be meeting to contribute to collective efforts.

If Giddens stands with the optimists, it is not in the sense that the risks we face have been exaggerated. Doomsday is a possibility imminent in our society and economy. He is optimistic in the sense that he sees risk and opportunity belonging together and considers it possible that we can mobilise to meet the opportunities through appropriate new technologies.

The book occasionally irritated me in its attitude to the green groups which have for some time sounded the alarm on climate change and spoken of the need for changes in society’s direction. I could sometimes detect a tone of “move over naïve ones, the sophisticates will take up the reins now”. I also wonder at the assertion of these sophisticates that the public can’t usefully be confronted head on with the realities of climate change. I was, when I started to read in the area, and it has galvanised me far more than any oblique approach would have done. I am inclined to think that the problem with public opinion and the politicians who fail to guide it is not simply that they are unwilling to face the facts, but also that they have not yet received a clear picture of climate change and the measures needed to abate it. The organised denialist movement bears a heavy responsibility here.

However I am no sociologist, and Giddens does not in any case exclude the more direct approach. Nor does he evade the need for policy measures to be fully adequate to the challenge. I thought his book a useful, often engaging discussion of the political options and an informative account of what is under way in many parts of the world.