Energy & Environment Tim Worstall Energy & Environment Tim Worstall

No, we really shouldn't build the Swansea tidal lagoon

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It's possible that we really should think about tidal power. There's a lot of it about and around our islands, so why not ponder whether we could capture some of it? The real point to ponder of course being whether it makes us all collectively richer. And there we find that there's a slight problem:

Plans to build the world’s first ‘tidal lagoon’ in Swansea Bay have suffered a setback after influential consumer charity Citizens Advice said the project was “appalling value for money” and should not receive subsidies.

Ministers are preparing to begin formal bilateral negotiations with developers over the proposed green energy scheme – a £1bn, six-mile sea wall with turbines to harness the power of the tide, which has already been included in the National Infrastructure Plan.

Tidal Lagoon Swansea Bay is thought to be seeking a guaranteed subsidised price of about £168 for every megawatt-hour (MWh) of electricity it generates over a 35-year period – almost four times the current market price of power.

And there is the problem. All of us having to pay, through our electricity bills, four times the current price for electricity does not make us collectively richer. It makes us, significantly, collectively poorer. Further, sorry about this, no you cannot add in all sorts of greenery arguments and no CO2 emissions and future high gas prices and all that malarkey. This has been comprehensively studied in great detail:

What they've done in the report is look at all of the different variations of the proposal. A great big dam across the whole estuary, the various partial ones, lagoons with turbines and so on. And they've looked at all of the various different costs and benefits of them. Environmental costs, emissions, the cost of gas fired plants which would be the alternative, everything up to and including the kitchen sinks in which the workmen will wash their hands. And what we find is that the more we spend on it, the bigger we make the project, the more it makes us poorer.

For what we're looking for is a positive net present value. That is, all the costs, properly discounted into the future, are a lower number than all of the benefits properly discounted into the future. When we get more benefits than there are costs, we become richer. For the Cardiff Weston Barrage, similar to what Hain is currently proposing, we have a net present value of -£27.1 billion. Yes, that is minus £27.1 billion. The costs of this plan are £27.1 billion, which even in government circles is something that can be described as real money, higher than the benefits that we all get from this scheme. Building it will make us all, collectively, £27.1 billion poorer.

That these plans (and all variations studied have exactly the same result) have a negative net present value is simply the flip side of their needing a high fixed price for the electricity they produce. One is simply the capitalisation of the other, the point that they are just not economically sane projects.

If this project does get off the ground, if some fool does issue a contract for differences at such prices, then we can take that as a marker that the inmates really have taken over the asylum. This is simply a terrible deal that should be immediately rejected.

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

This is really quite gobsmacking from Friends of the Earth

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Friends of the Earth is running a series of little debates over what we should all be doing to make the world a better place. Obviously this is not a bad idea: how to make the world a better place is an entirely suitable subject for discussion even if we'd not expect all that many useful suggestions from that quarter. Imagine our surprise then, the quite gobsmacking surprise, that they're actually recommending voluntary cooperation and free markets absent government regulation:

Isn’t Wikipedia a paradise for practical jokers?

If we run our global commons like that, we’ll be saving forests that don’t exist and hailing the creation of a super-sucking CO2 machine called Bee Jay.

Not true. It isn’t perfect – don’t use it to diagnose any health problems – but it’s perhaps more accurate than you think. A study favourably compared the reliability of Wikipedia to that of the Encyclopædia Britannica.

In any case, Wikipedia is a permeable mega-site. Anyone can edit it. So it’s pretty darn impressive that millions of people confidently use it every month.

And don’t forget, compared to the waves of anonymous Wikipedians, the group of people negotiating our global commons are visible and relatively minute. Indeed, their UN talks should be a doddle to manage in comparison.

Well, yes, your humble author was one of those who had a published conversation with the former Editor in Chief of Britannica at the time that research came out. And I was able to point out exactly why Wikipedia did work. In a different manner to a centrally edited encyclopedia, yes, but the end result was as good or better. Less checking and verification at the outset but that voluntary interaction led to a result, over time, as good or better.

Wi-Fi, air traffic control radars, mobile phone networks… They all have their own frequency highways. But these highways need to be managed to stop multiple-wave pile-ups.

Did I mention that they run across national borders? Tricky. Yet a network of technical bods across Europe have been managing these frequencies without political interference – even throughout the Cold War.

Like Wikipedia, they huddled around shared interests – not wanting to live in a world resembling a detuned radio. Their interactions fostered a sense of community and a common cause. As did flexibility eg countries could use frequencies formally allocated to other countries, as long as they didn’t interfere with existing radio services. Cooperation gave birth to standards and regulatory powers.

Quite, the use of those common resources were managed, as the mentioned Elinor Ostrom pointed out, by people voluntarily cooperating for their own enlightened self interest.

We know that markets work, that world around us shows that markets work but as with Dr. Johnson, the surprise is not to hear such things said so well but to see them from this source.

So, we can expect FoE to be signing up to the neoliberal globalisation plan then can we? You know, the only one of the various plans on offer that is based upon this acknowledgment of the inclination to voluntary cooperation among human beings, the only one that allows that inclination to flourish?

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Energy & Environment Vicente Lopez Ibor Mayor Energy & Environment Vicente Lopez Ibor Mayor

Markets vs. Mandate: the American energy dilemma

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New York State’s fracking ban has evoked strong polarising sentiment. Local anti-fracking supporters welcomed the ban as a necessary intervention against corporations pursuing profits at the expense of local safety. The fracking industry on the other hand, saw it as a political move; an example of political interference in the markets at the expense of jobs, energy security and the principles of enterprise and free markets that America stands for. This dynamic is symptomatic of a bigger tension between markets and mandate within the US energy industry; one that that lies at the heart of hotly contested issues like the Keystone pipeline and the proposed TTIP EU-US free trade agreement.

And against the backdrop of a President carving out climate action as a top priority, historic US commitments to reducing emissions, a Republican House majority that views Obama’s Environmental Protection Agency as big-government interventionism, and America’s emergence as a global energy producer, how this tension is resolved affects not just the future of American energy, but has wider global ramifications.

Six years ago I wrote in the Financial Times about the need for less interference in European energy markets to enhance competitiveness; a perspective I still find myself inclined towards today, and for good reason.

Take energy security for example. Shifting responsibility for energy security from suppliers to government would reduce, not increase, security. A liberalised market provides strong incentives for producers to diversify supply and respond to consumer demand. OPEC’s current oil price war might even eventually strengthen a fracking industry forced to become more technically innovative and cost efficient to survive, despite the shorter-term challenges.

Then there is the danger of vested interests influencing a wide government mandate and effectively using government as a proxy for their own interests as illustrated by recent alleged links between energy company Devon Energy and Oklahoma Attorney General Scott Pruitt.

And of course there is the notion that climate change justifies state intervention to make cleaner renewables more competitive against oil and gas. But while this is a logical argument, its worth noting that government intervention is at least partly to blame for renewables having less market share in the first place. Federal research for US oil and gas as well as tax credits and subsidies totalling $10 billion between 1980 and 2002 dwarfed state support for renewables, ensuring there was never a level playing field to begin with. And modern-day fracking could not have developed without federal research and demonstration efforts in the 1960s and ’70s.

But as valid as all this is, it fails to tell the whole story.

What makes the energy industry unfortunately unique is the speed with which it could environmentally impact our planet; a factor so exceptional it justifies exceptional action in addressing it, including, if need be, some level of market intervention.

The real problem with the US energy debate is its deep ideological polarisation. Energy discourse is too often pulled towards dogmatic extremes; between those who believe strong government intervention is necessary to further centralise and regulate energy markets, sometimes to the point of protectionism, or conversely those who, as economist Paul Krugman put it when describing the GOP, “believe climate change is a hoax concocted by liberal scientists to justify Big Government, who refuse to acknowledge that government intervention to correct market failures can ever be justified”.

A healthy balance is probably somewhere in-between with sound market based interventions that do not plan energy markets or pick winners through polices like the ethanol blending mandate, but instead couple responsibility for environmental damage and carbon emissions with individual companies and consumers. A carbon tax could help achieve this by using market incentives to strengthen cleaner energies and encourage efficient consumption. After all, why should the burden of carbon emissions, which have a cost, not be factored into a transaction?

And just as timely market adjustments within the financial sector could have averted the worst of the 2008 financial crash and subsequent government bailouts, a carbon tax today would prevent a more drastic future government response to disasters that rising CO2 emissions would undoubtedly cause if left unchecked.

Yet with the looming 2016 Presidential elections, the potential for politicised narratives and populist slogans to take priority over any meaningful measured balance in the US energy discourse is all too real and present.

Somewhere between climate deniers, including prominent GOP members, refusing to acknowledge the need for any climate action, and those attempting to address the problem in a vacuum without considering how sweeping interventionist solutions undermine economic competitiveness (an approach that creates an inevitable political, business and electoral backlash), lie more sustainable, effective solutions. It is vital moderates across the political aisle work together to reach them.

Vicente Lopez Ibor Mayor is currently Chairman of one of Europe’s largest solar energy companies – Lightsource Ltd. He is former General Secretary of Spain’s National Energy Commission between 1995-1999 and was previously a member of the Organizing Committee of the World Solar Summit and Special Advisor of the Energy Program of UNESCO (1989-1994).

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Energy & Environment James Knight Energy & Environment James Knight

Why emissions tests are so exhausting

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One problem I have with carbon tax is that due to lots of asymmetry of information the setting of a carbon tax rate is almost entirely arbitrary. Still, despite this, carbon tax does some good for the following reason. People change their bad consumption behaviour to accord with differing incentives like price changes. So for example, a tax on carbon dioxide emissions of £50 or £60 a tonne would affect our consumption habits in relation to products and services associated with carbon dioxide emissions, whether it be driving, flying or whatever. If this tax enabled the government to reduce taxes in other areas, then the carbon tax would help us change our habits and at the same time bring about selection pressure in the market for us to be more mindful of the environment.This is part of a general law of economics - when prices go up or down, people change their buying habits. If the price of red grapes goes up by 40% and green grapes stay the same, people will buy more green grapes and fewer red grapes. Similarly, if the price of emitting carbon goes up, people will lower their CO2 emissions, which will place selection pressure on consumers and on eco-unfriendly businesses. This means that as carbon/pollution taxes endure, people will look for more ways to be greener, making us as humans more mindful of our environment.

Alas, the government isn't happy with mere carbon taxes - it places superfluous and hence unnecessary additional burdens on us. It does this because politicians usually do not know the correct rate in a cost-benefit analysis between the externalities we emit and the freedoms we enjoy. Let me give you a personal example of this - the MOT emissions test. I drive a high-emission Subaru, and in order to enjoy this I am penalised with a higher rate of car tax. I also have a higher fuel bill than most. But both of these measures are fine by me in a free market where free-choice rules: I enjoy my Subaru and its fast-driving capacity so I soak up the additional cost. In a free society you may prefer something similar, or something very different, like, say, a more efficient Nissan Micra. You'll pay less than me in tax and fuel (per mile) but I'll beat you off the lights every time and probably get to my destination quicker than you. As long as we're both happy with that arrangement (and our choices indicate we are) then all is fine.

The trouble is, emissions testing at the MOT centre means that it doesn't stop there. Drivers cannot get an MOT certificate if their vehicle’s exhaust emissions are too high. This has come at a considerable extra cost to me (and other drivers like me). I had to pay £650 to replace a perfectly good sports-cat because it couldn't lower the emission levels to below the legal limit, and I will have to do this every few years for the same reason. Add to that the fuel costs and wear and tear each year getting the sports-cat hot enough to pass the test, and the fact that many other parts (oil, filter, lambda sensor, valves, etc) need changing more regularly to keep my emissions low enough, and this amounts to an unnecessary set of costs that I have to incur on top of the carbon tax I already pay to run a Subaru.

These costs are unnecessary for two reasons: firstly because they are going to have no significant bearing on future environmental changes at all. And secondly, a carbon tax (on my car tax and my fuel buying) already does the trick without imposing all the additional MOT emissions costs on me. If I find I want to lower my tax and insurance and reduce my fuel bill I can choose to sell the Subaru to a buyer who wants a fast car. Through that transaction we both win. If I can't sell it due to no one wanting such expensive car bills then it's a signal that my next car should be a more environmentally friendly car. In each case, autonomous decision-making rules. With the MOT emissions problem I have to fork out hundreds of pounds just to keep my car on the road. The government is already getting its pound of flesh through my increased road tax and fuel bills, it's unnecessary and hugely damaging to my bank balance to add MOT emissions expenditure to the mix.

There's also the unpredictability factor which gives us inopportune bills for which it is hard to save - and this affects not just high-emission drivers - all drivers have the same issue here. When your car tax and fuel bill is consistent with the kind of car you drive you can plan your year around it, knowing roughly what your expenditure is likely to be. If you end up with a part fault you can replace it knowing that the part needed replacing. But with these emission laws, bills can come in not through non-functionality of parts but through cars not being able to get through the MOT emissions test without having them replaced. As I and no doubt many drivers have found, this frequently brings about unexpected bills of hundreds of pounds that we need to pay, not to make the car roadworthy but to make it MOT emissions-worthy (a very different thing).

If we think it's reasonable to pay a bit more to run gas guzzlers, then it's true we need some mechanism to know whether people are running high-polluting vehicles or not. But we already have this mechanism in the form of higher fuel bills for gas guzzlers and higher car tax to account for those emissions, which, to me, renders the additional (and superfluous for reasons I indicated) MOT emissions test unnecessary. I'm not saying we don't need an MOT test at all - we just don't need the emissions part.

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

They're spouting rubbish about rubbish again

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We're really got to get ourselves a new group of people running our public services you know. The current lot seem to have missed the point of the whole exercise. For, at root, the entire exercise of politics and state power is really a method of deciding who empties the bins. There are certain things that simply need to be done. There's also a group of things that can be done individually, one of those that can be done by simple voluntary cooperation and another group of things that can only be done by some fairly strong compulsion. And those that are properly the province of that state, this government idea, as those that must both be done and can only be done with that compulsion. And taking out the rubbish is one of those things that is both. Yes, a free market would indeed deal with most of it but the public health benefits of not having those remaining piles of stinking ordure mean that there's always going to be some state compulsion necessary.

At which point we get:

A town has been left overflowing with rubbish bags after binmen have refused to pick them up - because the sacks are the wrong colour.

Mountains of household waste is lining streets in Weymouth, Dorset, after residents were given blue bin bags as part of a new waste collection scheme rolled out in the town.

But some claim they did not receive the new blue sacks, and have continued to use the standard black ones - only for them to be left by the side of the road by binmen under strict orders not to take away the 'unauthorised bags'.

Piles of rubbish bags have been mounting up in streets around the town for the past two weeks, to the anger of residents.

What?

The council-run Dorset Waste Partnership said it is 'applying its policy' to limit residents to one household rubbish bag a week in the hope they will recycle more.

The loons have taken over the asylum. We need to fire these people and get a new set.

Please note this is not about party politics and it's also not about the "shortage of landfill". We don't have such a shortage. The country produces about the same amount of waste each year as the number of holes we dig each year for other reasons. The only shortage is in the licences to be allowed to put the rubbish into the holes we already have available.

What this is about is that we've simply got the wrong group of people ruling us and that needs to change. On the basis that government really is about deciding who take out the rubbish and if they can't even manage that then....well, why don't we try finding some people who can manage that minimal task?

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

But Minister, we don't do this sort of central planning around here

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Ed Davey seems to be a little confused as to his correct role in the matters of the world:

Investing in fossil fuels is becoming increasingly risky because global action to tackle climate change will curb demand, forcing companies to leave unprofitable reserves in the ground, Ed Davey, the energy secretary, has warned.

Financial authorities must examine the risks posed by coal, oil and gas companies to prevent pension funds investing in what could become “the sub-prime assets of the future”, Mr Davey said.

The comments are Mr Davey’s first intervention into the debate over the “carbon bubble”, the theory that the world’s existing fossil fuel reserves are overvalued because the majority must be left unburned in the ground if extremes of global warming are to be avoided.

Mr Davey told the Telegraph: “One has got to worry about the investments for pensioners.

"If pension funds are investing in companies or banks have on their balance sheets huge amounts of assets in fossil fuels, and those assets don’t give the return that people expect – because of changes in technology where low-carbon becomes cheaper or because of the world having to take action against carbon emissions – one has got to protect those pensioners and those investments.”

It's obviously entirely correct that the minister in charge of worrying about climate change should worry about climate change. Even, where and if action is necessary on the subject, suggest what action is necessary. However, in a market society that's as far as it goes. How people react to those plans and suggestions is entirely up to them and that includes where and how they invest their money.

Go away Mr. Davey, it's just none of your damn business.

As to the basic notion that fossil fuel reserves are going to be worth nothing in 50 years' time that's not particularly a problem. Anyone familiar with any part of the climate change debate should know about the controversy over discount rates: what interest rate should we use to consider the value of things that happen in the far future? Similarly, all should know that Stern and others have had to use a very much lower than market interest rate to reach the conclusions that they do. But note that these assets, the future values of fossil fuel reserves, are discounted at a market interest rate. Meaning that the value of reserves in 50 years' time is, in net present value encapsulated in share price4s, pretty much nothing. For that's exactly what discounting over long periods of time does: thus the problem that Stern had and the need to *not* use market rates in order to bolster the case to do something. This works both ways, of course it does. Just as the use of market rates would lead to future damage from climate change being so trivial in present values that we'd do nothing about it, the use of market rates to value reserves in the far future means that value is so trivial we do not much about them.

And yes, amazingly, markets do value reserves using market interest and discount rates.

Oh: and there's another thing. The big oil companies already include in their evaluations of those future values the effects of a substantial carbon price. They're already valuing everything after the effects of the policies that you're pursuing Mr. Davey.

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Energy & Environment Vishal Wilde Energy & Environment Vishal Wilde

Firms can pay us to recycle

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Recycling comes more instinctively for those on low incomes and who live in low-income countries compared to their respective high-income counterparts. To increase the amount that we recycle and conserve, we must privatise the process and enable private companies to people for recyclable goods. In many areas, if people put out more goods for recycling than their allotted quota, the local authorities refuse to collect it. Private companies, however, have incentives to collect as much as they can and would do otherwise. By further incentivising households via fair compensation, we could significantly increase the rate of recycling. Furthermore, why should we, as suppliers of recyclable goods, be expected to hand over our products for free?

Also, given the tough socioeconomic climate, extra income derived by providing an additional, monetary reward to households that recycle whilst cutting government expenditure would be helpful.

People who recycle out of necessity are aware of the economic value of those goods; in India, consumers are paid to hand over their recyclable goods such as glass bottles, plastics, newspapers, etc. by various private companies and this initiative is practiced voluntarily across society due to the mutual financial benefits it incurs. In the UK, there are some places where we can ‘cash in’ our bottles, cans and newspapers but they are few and far between – it is also inconvenient for us as suppliers. Furthermore, if firms in India are able to collect from peoples’ houses and also pay for those goods, why are our firms unable to do the same? One reason could be that India has a relatively flexible labour market and lower wages. However, even though higher wages are prevalent in Britain, relatively advanced technology can still make this feasible by keeping costs down and financially rewarding those whom they procure goods from. Alternatively, and preferably, we could ease up on immigration restrictions a bit more, remove the minimum wage and instantly make this business model feasible.

In the UK, the financial benefits of recycling are neither directly felt by the consumer nor properly managed by the collection authority. Instead, it is squandered by inefficient management and stunted by unfair outcomes. If government continues to subsidise and undertake this activity then this inefficiency and its corresponding sub-potential recycling volume will continue.

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

This is a case of too little capitalism, not too much

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The latest outrage that the Guardian tells us we should all be upset about is how the poor villagers of Nejapa, in El Salvador, get done over by the greedy capitalists taking all the water: Water everywhere for profit in Nejapa, but few drops for local people to drink While big companies make millions from El Salvador’s water-rich Nejapa municipality, locals have little or no access to water Hmm, gosh, that's bad. There is one very interesting little line in the piece though: Najarro says she pays $7 a month (£4.38; almost 10% of her salary) for municipal water, even though her taps often run dry and the water that runs from them may not be safe to drink. It's the local council that she gets her water through? And a quick look around tells me that pretty much all of the country gets its water through the government. And as Wikipedia itself says:

Tariffs and cost recovery ANDA tariffs ANDA tariffs average US$ 0.30/m³ and are below levels found in many other Latin American countries. Furthermore, ANDA tariffs are not socially equitable since the subsidies implicit in the low tariffs predominantly benefit the non-poor. First, users without access to the network, which are usually the poorest, do not receive the consumption subsidy. Second, users served by other providers than ANDA do not receive a subsidy for consumption. Third, among users that have ANDA service, the poor receive fewer subsidies than the non-poor as a consequence of the tariff structure. Tariffs are for both water and sewer services. As a result, there is a cross-subsidy from users without sewer connection to those with a sewer connection who are usually better off. For political reasons, adjustments of ANDA water tariffs have been infrequent. Between 1994 and 2006 ANDA tariffs were only adjusted twice, in 1994 and 2001. The inflation-adjusted tariff, however, barely changed. Tariffs by other service providers Tariffs paid by water users in rural areas do recover financial operating costs, since no direct subsidies are available. They are often much higher than tariffs paid by ANDA customers. Some rural water users in pumped systems receive a subsidy through the Fondo de Inversión Nacional en Electricidad y Telefonía (FINET), which subsidizes electricity tariffs. Cost recovery of ANDA The financial situation of service providers in 2006 did not provide any more for self-financing of investments. ANDA's working ratio was close to 1, indicating that the company barely covers its operating and routine maintenance costs. The reason for the reduced self-financing capacity is a significant increase in the unit costs of ANDA from US$0.21/m³ in 1994 to US$0.46/m³ in 2001, and US$0.63/m³ in 2004. The reason for the important increase of the unit cost in 2004 is not clear, but it could be due to the inauguration of the energy-intensive Río Lempa system that pumps water from the Rio Lempa to San Salvador in that year.

So, the government charges very little for water but this doesn't help the poorest as they're not even on the water system. And so little is charged for water that they're not able to actually build out the water system simply because they've not the money to do so. And this might also have an effect upon how much water there is to go around:

It is estimated that 90 percent of the surface water bodies are contaminated. Nearly all municipal wastewater (98 percent) and 90 percent of industrial wastewater is discharged to rivers and creeks without any treatment.

They "treat" sewage by dumping it in the nearest river. This is not a problem of excessive capitalism: this is a problem of too little capitalism. Recall what happened in our own water systems, here in Dear Old Blighty, when the nationalised water companies were sold off. Investment went up, water quality went up, environmental degradation went down. It's entirely true that in theory a government could, possibly, determine the optimal investment levels in a natural monopoly like water and sewage services. And that there's an argument why government should do so. Actual experience though seems to show that governments tend to allocate less than that optimal level. Which is why privatised systems almost always show a rise in the level of investment. Too little capitalism here, not too much.

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

The horrible, horrible, error in the IPCC's latest report

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Oh dearie me, this is something of an error at the heart of the IPCC's latest report into the perils of climate change. And it all stems from a thoroughly incomplete look at the economic models about what might happen. Here's what they say:

Without additional efforts to reduce GHG emissions beyond those in place today, global emission growth is expected to persist driven by growth in global population and economic activities (Figure 3.1) (high confidence). Global GHG emissions under most scenarios without additional mitigation (baseline scenarios) are between about 75 GtCO2eq/yr and almost 140 GtCO2eq/yr in 210016, which is approximately between the 2100 emission levels in the RCP 6.0 and RCP 8.5 pathways (Figure 3.2)17. Baseline scenarios exceed 450 parts per million (ppm) CO2eq by 2030 and reach CO2eq concentration levels between about 750 ppm CO2eq and more than 1300 ppm CO2eq by 2100. Global mean surface temperature increases in 2100 range from about 3.7°C to 4.8 °C above the average for 1850-1900 for a median climate response. They range from 2.5 °C to 7.8 °C when including climate uncertainty (5th to 95th percentile range)18.

It's important to understand something here. "Additional efforts" does not mean that we simply install more solar panels (just as an example) for price, ethical or market reasons. It means that policy is changed so that more solar panels (again, just as an example) are installed. It means that we've got to change the incentives under which people operate, through legislation or regulation, in order to get people to change their behaviour.

This has been true right from the start of the worries about climate change: business as usual forecasts of emissions look at varying levels of wealth, population and technology and assume that all of those various scenarios could happen without government intervention. "Mitigation", like "effort" here, means intervention to reduce emissions below some or any of those business as usual scenarios.

And here's the problem with the assumption they're making about future emissions. Absolutely no one (no one sane at least) believes that we're ever going to get anywhere near the levels they've just assumed above. As Matt Ridley has put it:

The IPCC commissioned four different models of what might happen to the world economy, society and technology in the 21st century and what each would mean for the climate, given a certain assumption about the atmosphere’s “sensitivity” to carbon dioxide. Three of the models show a moderate, slow and mild warming, the hottest of which leaves the planet just 2 degrees Centigrade warmer than today in 2081-2100. The coolest comes out just 0.8 degrees warmer.

Now two degrees is the threshold at which warming starts to turn dangerous, according to the scientific consensus. That is to say, in three of the four scenarios considered by the IPCC, by the time my children’s children are elderly, the earth will still not have experienced any harmful warming, let alone catastrophe.

But what about the fourth scenario? This is known as RCP8.5, and it produces 3.5 degrees of warming in 2081-2100. Curious to know what assumptions lay behind this model, I decided to look up the original papers describing the creation of this scenario. Frankly, I was gobsmacked. It is a world that is very, very implausible.

For a start, this is a world of “continuously increasing global population” so that there are 12 billion on the planet. This is more than a billion more than the United Nations expects, and flies in the face of the fact that the world population growth rate has been falling for 50 years and is on course to reach zero – i.e., stable population – in around 2070. More people mean more emissions.

Second, the world is assumed in the RCP8.5 scenario to be burning an astonishing 10 times as much coal as today, producing 50% of its primary energy from coal, compared with about 30% today. Indeed, because oil is assumed to have become scarce, a lot of liquid fuel would then be derived from coal. Nuclear and renewable technologies contribute little, because of a “slow pace of innovation” and hence “fossil fuel technologies continue to dominate the primary energy portfolio over the entire time horizon of the RCP8.5 scenario.” Energy efficiency has improved very little.

These are highly unlikely assumptions.

They're not just highly unlikely assumptions: they're near insane ones.

What has actually been done is to take current emissions levels (actually, from a few years ago) and then draw a straight line inference about what will happen if they carry on growing as they have been. Completely ignoring the fact that we've already done a great deal to change what's likely to happen in the future. After all, as we keep being told, solar PV is now just about cost competitive with coal and will be cheaper in only a few short years (by 2020 is a serious and sober prediction). At which point why on earth would people start to use more coal than we do today? For a higher portion of our energy desires?

That simply doesn't make any sense whatsoever. And that brings us to that distinction between "effort" and market processes. If solar PV does become cheaper than coal (as is obvious it will) then it becomes a market process to install it. No "effort" in the sense of government action is required.

Another way to make this same point is that the IPCC is completely ignoring all of the work that we've already done to try to beat climate change. They're not taking account of the fall in the costs of renewables and therefore not including the obvious fact that more renewables are going to be installed in coming years. Whatever governments do or propose. The same can be said for LED light bulbs (not quite right yet but they very soon will be) and myriad other technologies that have been developed in recent years.

It's a basic and obvious piece of logic that if we see that we've got a problem ahead of us we should, when we consider what we should do about it, take into effect the results of the things that we've already done to solve said problem. And it's this that the IPCC is not doing. They are predicting future emissions without taking account of the technologies we've already developed which will reduce emissions. They are thus arguing that there's too much still to do.

It's a horrible, horrible, mistake.

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Energy & Environment Tim Worstall Energy & Environment Tim Worstall

Breaking news: Paul Ehrlich still wrong about population

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There's a story floating around about how new studies show that even if there's another world war, or some mass pandemic, the human population of the world is going to keep on rising. That's true, for most of those who are going to have children in the coming decades are already alive and we've a reasonable enough idea of how many children each of them is likely to have. The bit that caught my eye though is that the paper is edited by Paul Ehrlich. That's usually a sign that there's going to be something wrong with it. And so there is:

Amoral wars and global pandemics aside, the only humane way to reduce the size of the human population is to encourage lower per capita fertility. This lowering has been happening in general for decades (27, 28), a result mainly of higher levels of education and empowerment of women in the developed world, the rising affluence of developing nations, and the one-child policy of China (29–32). Despite this change, environmental conditions have worsened globally because of the overcompensating effects of rising affluence-linked population and consumption rates (3, 18).

It's that "despite" that grates. For while female education and empowerment are indeed correlates of lower fertility, they are not the causes. It is that rise in affluence that is behind all of the three. In a subsistence economy there is no spare capacity to educate anyone, let alone women. And a subsistence economy is also going to be a human and animal powered one, an economy in which there's not going to be much empowerment of the physically weaker sex. It's only when a society gets richer that we can all start, male and female alike, using that attribute that makes humans different, our brains, as we leave the heavy labour to the machines. and it's also that greater wealth that leads to the falls in child mortality, the education of women, those correlates of falling fertility.

That is, Paul Ehrlich is still getting the drivers of human population numbers wrong.  Not that we should be too hard on him: probably a bit late in his career for a fundamental rethink, isn't it?

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