Former Liberal leader Malcolm Turnbull has used a speech in Sydney to deliver a vigorous defence of climate change science.

Delivering the Virginia Chadwick memorial lecture last night, Mr Turnbull said a war was being waged on scientists by “those opposed to taking action to cut emissions, many because it does not suit their own financial interests”.

Mr Turnbull lost the Liberal Party leadership in late 2009 over his decision to support the Rudd government’s carbon pricing scheme and his successor Tony Abbott once described the climate change science as “crap”.

Speaking to a predominantly Liberal audience, Mr Turnbull said taking action to curb emissions was not a cry from ultra-radical socialists, telling his audience even Margaret Thatcher advocated cutting greenhouse gases.

“The question of whether or to what extent human activities are causing global warming is not a matter of ideology, let alone of belief,” he said.

“The issue is simply one of risk management.

“If Margaret Thatcher took climate change seriously and believed that we should take action to reduce global greenhouse emissions, then taking action and supporting and accepting the science can hardly be the mark of incipient Bolshevism.”

Mr Turnbull said those parties currently attacking the Labor Party for its carbon tax would also attack the Coalition if it tried to implement its plan to reduce emissions.

“If we form a government and then seek to meet that 5 per cent target [by 2020] through purchases of carbon offsets from farmers and payments to polluting industry to cut their emissions, the opponents of the science of climate change will be criticising that expenditure as pointless and wasteful with as much vehemence as they are currently denouncing Julia Gillard’s carbon tax,” he said.

‘Don’t abandon the science’

Mr Turnbull said parties with vested interests were trying to muddy the waters on climate science to prolong the export of coal, comparing their actions to tobacco companies discrediting the connection between smoking and lung cancer.

“It is undoubtedly correct that there has been a very effective campaign against the science of climate change by those opposed to taking action to cut emissions, many because it does not suit their own financial interests, and this has played into the carbon tax debate,” he said.

“Normally, in our consideration of scientific issues, we rely on expert advice [and] agencies like CSIRO or the Australian Academy of Science, are listened to with respect.

“Yet on this issue there appears to be a licence to reject our best scientists both here and abroad and rely instead on much less reliable views.

“So in the storm of this debate about carbon tax, direct action and what the right approach to climate change should be, do not fall into the trap of abandoning the science.”

Vested interest

Mr Turnbull said Australia’s dependence on coal meant it should spend much more on carbon capture technology.

“Many would say no country has a greater vested interest in clean coal,” he said.

“Some people would say that as we have a vested interest in coal being burned, we should oppose that action on climate change and, rather like the tobacco companies who sought to discredit the connection between smoking and lung cancer, muddy the waters on climate science in order to prolong the export billions from coal mining.”

He also rejected the view Australia should wait for China and India to act, saying Australia’s emissions were much higher per capita.

Mr Abbott said this week that Australia’s emissions reduction target, backed by both sides of politics, was “crazy” because it would be overwhelmed by pollution increases in China.

But Mr Turnbull said Chinese emissions per capita were one-fifth of Australia’s and India’s were less than one-tenth.

“Our regular references to their [India and China's] emissions and ‘Why should we do anything until the Chinese and the Indians do something’ – they find those references incredibly galling,” he said.

“Those of us who have represented Australia at international conferences on this issue know how incredibly embarrassing statements like that are when you actually confront the representatives of those countries.”

Australia is the highest CO2 emitter per capita on the planet.

BEIJING (AFP) – China will introduce a pilot scheme for carbon emissions trading and gradually develop a national market as the world’s largest polluter seeks to reduce emissions and save energy, state media said.

China will promote the market’s development through “punitive” electricity tariffs on power-intensive industries and other new policies, Xie Zhenhua, a top climate official, was quoted by Xinhua news agency as saying on Sunday.

The report gave no timetable or other specifics on how the system would work.

However, China has said previously it hoped to introduce a pilot scheme in a handful of major cities by 2013 and expand it nationally in 2015.

Faced with severe pollution, a predicted surge in urbanisation and a struggle to ensure adequate energy supplies to fuel its rapid growth, China has outlined plans to reduce carbon emissions in its latest five-year economic plan.

Carbon trading typically involves the setting of absolute limits on how much carbon dioxide emitters such as industrial enterprises can produce.

Once those are reached they can then purchase the unused emission allowances of other parties who have come in under their limits.

Environmental analysts have said China is keen to get a functioning carbon trading market up and running soon, especially with the expiry of the Kyoto Protocol looming in 2012.

China and other developing nations have not been bound by the protocol to reduce emissions of the gases blamed for global warming and climate change.

But it remains unclear what a future new protocol would call for with China under pressure to rein in emissions growth since it surpassed the United States as the world’s largest greenhouse gas source in recent years.

As part of the carbon-trading push, China will promote development of green technologies and products through means such as preferential taxation policies, Xie, a vice minister with China’s top economic planning agency, was quoted saying.

It also would “manage growth in energy-intensive industries”, he said.

China has pledged to reduce the amount of carbon dioxide produced per unit of gross domestic product by 40 to 45 percent by the end of 2020 — essentially a pledge to slow emissions growth, but not a cut.

The release of the Productivity Commission’s report on Carbon Emission Policies in Key Economies last week was (‘surprisingly’) not met with unanimous enthusiasm. Particularly the Minerals Council of Australia and the Australian Coal Association voiced everything between concerns and misgivings about the accuracy, comparibility, and validity of the report’s findings, stating ”Australia is walking the plank” and “ahead of the world” with the looming carbon tax. 

I refer to the following documents:

1. MCA Briefing Note: Action or talk - an analysis of emissions reduction performance of key nations since 1990.
2. The Proposed Carbon Pricing Scheme – MW 2011 - Presentation by Seamus French, Chief Executive of Anglo American Metallurgical Coal;l and
3. A New Carbon Price Scheme - 10 reasons why a CPRS-style carbon pricing scheme is the wrong approach.

I will now highlight some of the factual errors and misinterpretations of Australia’s GHG emissions performance in the arguments and claims brought forward by the Minerals Council of Australia. 

The Minerals Council claims that the

correct measure of emissions intensity is CO2 emissions per GDP $, not emissions per capita, that Australia shows a far superior performance to both the US and EU with a 44% reduction from 1990 to 2008, and that based on current targets a further 45% improvement will be achieved by 2020.

Large parts of the figures the Minerals Council “quotes” in regards to Australian emissions intensity are taken from or based on a discussion paper by McKibbin, Morris & Wilcoxen (2010), Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord, which is part of the Harvard Project on International Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School.

It must be noted that in this paper

• McKibbin et al. assume the price signal and emissions targets in the policy scenario apply only to CO2 (only one of the six “Kyoto Protocol Greenhouse Gases”: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) from fossil fuel consumption from the energy sector, including combustion of coal, natural gas, and oil .
• Other GHGs and emissions sources, such as those from land-use change or industrial processes, are not considered.
• McKibbin et al. compare baseline intensity levels with a BAU and a Copenhagen Accord implementation level in 2020 based on converting all relevant Copenhagen Accord commitments to emissions intensity expressed in emissions per GDP $.
• The numbers of alleged emission intensity reduction for Australia that are referred to compare “Copenhagen Accord Emissions Commitments in Intensity Terms” (see below).
• The numbers for Europe and the United States are taken from a different source.
• The authors only reference their own work. A description or justification of their calculation approach and source of data is not provided.

According to McKibbin et al., in 2005, Australia’s CO2 emissions intensity level was a 0.56. Assuming a business-as-usual development, they project a CO2 emissions intensity level of 0.45, compared to 0.31 under the Copenhagen Accord. The reductions in emissions intensity are therefore not 44% from 1990 to 2008, with another potential 45% by 2020, but -20% (BAU), and -44% (Copenhagen Accord). It is also worthwhile comparing the intensity levels of the EU and United States to that of Australia – in either case is the emissions intensity level below that of Australia.

Average annual growth in GDP, energy demand and CO2 emissions, 2007 to 2009

Australian emissions have grown by just 3 per cent since 1990 despite recording the strongest economic and population growth amongst developed nations over this period [see below]

Australia’s emissions, including from Article 3.3 Land Use, Land Use Change and Forestry activities, were 103 per cent of the 1990 base period.

Minerals Council's Interpretation of Emissions Data

Actual Emissions Data 1990 - 2009, Annex I Countries (Source: UNFCCC)

• 20.25% reduction in the EU27,
• 5.6% increase in the United States, and
• 30% increase in Australia.

Edit June 15:

The Australian Department of Climate Change and Energy Efficiency has just released some fact sheets on international climate change action. Of particular interest should be the fact sheet Australia: Part of the Climate Problem – Part of the Climate Solution? Why? Well, because the Minerals Council states that Australia is responsible for “just 1.5%” of global emissions. Interestingly, the DCCEE used the same tool the Minerals Council used to come up with their numbers. Thus, it might be worthwhile comparing the Australian 1.5% to some other countries, such as Germany (2.6%), France (1.5%), or the United Kingdom (1.7%) – countries with a larger population, larger economy, and with an emissions trading scheme and/or a carbon tax in place.

Edit July 19:

The Australian Government has announced the implementation of a carbon tax. The key features of this tax are:

• The carbon pricing mechanism will commence on 1 July 2012 (three year fixed price period).
• The carbon price will start at $23.00 per tonne in 2012-13.
• The carbon pricing mechanism will transition to a flexible price cap-and-trade emissions trading scheme on 1 July 2015.
• The price ceiling will be set in regulations by 31 May 2014 at $20 above the expected internationalprice for 2015-16 and will rise by 5% in real terms each year.
• A price floor will apply for the first three years of the flexible price period, starting at $15 and rising at 4% in real terms each year.
• Unlimited banking of permits will be allowed in the flexible price period, limited borrowing of permits (up to 5%).
• Permits will be allocated by auctioning during the flexible price period.
• Broad coverage of emission sources encompassing: stationary energy; industrial processes; fugitive emissions (other than from decommissioned coal mines); and emissions from non-legacy waste. Agricultural and land sector emissions will not be covered.
• Only four of the six greenhouse gases counted under the Kyoto Protocol will be covered — carbon dioxide, methane, nitrous oxide and perfluorocarbons from aluminium smelting.
• A threshold of 25,000 tonnes of all scope 1 (direct) CO2-e emissions covered  will apply for determining whether a facility will be covered by the carbon tax.
• Australian carbon credit units (ACCUs) issued under the CFI will be eligible for compliance.
• The use of international units to meet carbon pricing mechanism liabilities will not be permitted in the fixed price period. Export of domestic permits will not be permitted in the fixed price period (with the exception of Kyoto ACCUs). Until 2020, liable parties must meet at least 50 per cent of their annual liability with domestic permits or credits.
• 94.5% of the industry average baseline for activities with an emissions intensity of at least 2,000t CO2-e/$m revenue or at least 6,000t CO2-e/$m value added. 66% of the industry average baseline for activities with an emissions intensity between 1,000t CO2-e/$m and 1,999t CO2-e/$m revenue or between 3,000t CO2-e/$m and 5,999t CO2-e/$mvalue added. Any changes to assistance arrangements that will have a negative effect on business will not occur before the sixth year of the carbon price.
• LNG projects will receive a supplementary allocation to ensure an effective assistance rate of 50% in relation to their LNG production each year.
• Administrative allocations of free carbon permits and cash payments will be provided to the value of $5.5 billion (nominal) in five separate instalments to generators with an emissions intensity of above 1.0 tCO2-e/MWh of electricity.
• More than 50% of the carbon pricing mechanism revenue will be used to assist households

The Australian Productivity Commission (the Commission) released its research report on “Carbon Emission Policies in Key Economies” on June 9. The Australian Government commissioned this report to help it, and the Multi-Party Climate Change Committee, assess the extent to which key economies are taking action to address climate change. The Commission consulted with government agencies responsible for emission-reduction policies in China, Germany, India, Japan, New Zealand, South Korea, the United Kingdom, and the United States, as well as Australia.

The Commission has been requested to examine and detail emissions reduction policies, either in place or committed in Australia and in other key economies such as the UK, the USA, Germany, New Zealand, China, India, Japan and South Korea; estimate the effective carbon price per tonne of CO2-e faced by the electricity generation sectors in these economies, and selected industries drawn from manufacturing and transport sectors in these and other countries where relevant and data permitting; and report on the methodology, assumptions and data sources used, so as to inform further analysis in this area.

In conducting the study and making recommendations the Commission would consult with the business sector, government agencies and other interested parties as appropriate in Australia and internationally and draw on credible evidence both nationally and internationally, including by utilising local research expertise in economies being examined.

The countries chosen for this study are all taking action to address climate change in various/different ways, e.g., through emission trading schemes, mandatory renewable energy targets, feed-in tariffs, energy efficiency measures and capital structures for constructing or installing sources of renewable energy. These countries also form seven of the top 10 two-way trading partners with Australia.

The Commission used five criteria in determining whether to include policies in its assessment:

1. In place or committed — meaning a high probability of being implemented and specific details having been released,
2. The explicit intent, or the effect, of reducing emissions,
3. Operating at the national or state/provincial level,
4. Penalise emissions or give an incentive for abatement, and
5. A material impact on a country’s emissions in a sector and/or impose significant total costs.

In particular, the Commission  assessed cross-sectoral policy measures, policy measures specific to electricity generation and transport, forestry and agriculture, as well as energy efficiency.

The Commission’s key findings?

The finding that average abatement costs are not particularly useful in assessing competitiveness means that they are also not particularly useful for setting assistance for emissions-intensive trade-exposed firms. The analytical framework for considering assistance issues under the mixed bag of policies that apply in most countries is perhaps even more challenging than it would be under explicit carbon prices.

In summary, while the overall impacts of the policy measures analysed appears to be relatively small for most countries, the consistent finding from this study is that much lower-cost abatement could be achieved through broad, explicit carbon pricing approaches, irrespective of the policy settings in competitor economies.

In other words, given the myriad of climate/emissions policies available and/or implemented, emissions trading and/or carbon taxation offer the more cost-effective ways of achieving emission reduction targets. Which of course links back to the debate “Which is better?”

It also raises the question whether these findings are particularly new or surprising (or even useful – a point the Commission identified itself). Obviously, the cost of emissions abatement and therefore choice of policy instrument will depend on various (national/domestic) factors.

Choosing the “right” policy consists of complex choices involving many stakeholders, including the industries to be regulated, suppliers, producers of complementary products, consumer groups (in Australia, read “working family“), and even the environment, our very own habitat. Obviously, the choice and design of virtually any policy instrument, be it ETS or carbon tax, will benefit some of these stakeholders and be less popular with others (e.g., Minerals Council of Australia, Australian Coal Association). Some will benefit from industry support, but still won’t like it. For example, permits allocated free to existing firms represent a valuable (tradable) asset transferred from the government to industry (windfall profits or “production subsidies”), while auctioned ETS permits and carbon taxes generally impose heavier burdens on emitters. Of course, a price on carbon will face both support and opposition from affected stakeholders.

I have already frequently noted, however, that both instruments in themselves are incomplete solutions and need to be complemented by a range of other public policy initiatives that encourage a reduction in the carbon intensity of our economy and lifestyles. Furthermore, an ETS or carbon tax that works well in one country may not work well in another country with different social norms and institutions, while on the other hand governments and firms may be able to learn from mistakes. The EU ETS’ permit price, for example, reached nearly zero in its first phase because permits were allocated based on guestimates before the availability of accurate historical emissions data in 2006 – Australia has its National Greenhouse and Energy Reporting framework in place since 2007. When climate policies are to be compared, it is important that the different levels of stringency, commitment and development are taken into consideration and adjusted accordingly. Climate policy will also need to be adjusted over time, based on new technology developments (e.g., renewable energy), international negotiations.

The Final Report of the “Garnaut Climate Change Review 2011: Australia in the Global Response to Climate Change“ has been released yesterday.

The Garnaut Climate Change Review—Update 2011 released a series of papers in February and March 2011 addressing developments across a range of areas including:

• climate change science and impacts,
• international mitigation progress,
• carbon pricing,
• land,
• innovation, and
• the electricity sector.

Professor Garnaut delivered his final report (summary of final report) to the Prime Minister on 31 May 2011.

Garnaut makes one good point – This is the fourth time that Australia has moved towards economy-wide carbon pricing (page 76).

Garnaut calls for an “umpire“, an “independent body to prevent policy being derailed by vested interests. So far so good. But… the independent reviewer who submitted an independent review recommends an independent body… get the irony?

Today (!), the Climate Commission (report author is Will Steffen) released its report on climate science titles “The Critical Decade – Climate Science, risks and responses”. The report has been reviewed by CSIRO, the Bureau of Meterology, the university sector, as well as the Science Advisory Panel of the Climate Commission. The purpose – A review of what the climate science is telling us about the need to act on climate change, and the risks of a changing of changing climate to Australia. The findings – Climate change is real, climate change has social, economic and environmental impacts,humans are responsible, and that we need to act now.

WOW! Who would have thought

Allegedly, the risk have never been clearer… sounds familiar. I wonder where I have heard that before?!

The key messages of the report are:

1. There is no doubt that the climate is changing. The evidence is overwhelming and clear.
2. We are already seeing the social, economic andenvironmental impacts of a changing climate.
3. Human activities – the burning of fossil fuels and deforestation – are triggering the changes we are witnessing in the global climate.
4. This is the critical decade. Decisions we make from now to 2020 will determine the severity of climate change our children and grandchildren experience.

This is not new. Yet another report that summarises information that has been in the public domain for years, but needed to be translated into Australian. Because if it was not researched here, it does not exist.

Now Australia will spent the next month arguing about this report, commission another report to verify the findings and another to refute it, and debate those before everyone starts at 0 again. This debate is going round and round and round and round…

Meanwhile in the UK and Denmark…

WRI experts take closer look at some of the myths, inaccuracies, and misinformation surrounding Environmental Protection Agency regulation of greenhouse gases.
- By James Bradbury and Stephanie Hanson.

In recent months, the debate over U.S. Environmental Protection Agency (EPA) regulations of greenhouse gas emissions took on a heated tone across the country. At the federal level, the Senate voted down several amendments (detailed summaries available here) that would have restricted EPA’s ability to regulate dangerous greenhouse gas (GHG) pollution. During the same week, the U.S. House of Representatives passed a bill that would severely restrict EPA’s authority to regulate GHGs, while taking the highly unusual step of overturning a scientific finding.¹ Meanwhile, opponents of pollution controls continue to press for further debate and additional votes on bills that would restrict or eliminate EPA’s authority.

Throughout the debate, some of the loudest voices have argued that EPA’s actions would be harmful to industry and the economy. Looking closer, however, we find that these claims are largely inaccurate – many of them are exaggerations or, in some cases, outright misinformation. WRI analysts set the record straight.

Myth #1: EPA does not have the authority to act on greenhouse gases.

The Facts: EPA is legally required to act, and is acting consistent with the authority that Congress has granted it.

EPA is acting to fulfill its obligations under the Clean Air Act, as charged by Congress and reinforced by the Supreme Court decision Massachusetts v. EPA. In that decision, the Supreme Court ruled that GHGs are air pollutants under the Clean Air Act. The court instructed the EPA to decide whether GHG emissions endanger public health and/or welfare, or if current science is too uncertain to make a reasonable judgment. In response to the Supreme Court decision, the EPA issued a scientific finding that “[t]he accumulation of CO2 and other greenhouse gases in the atmosphere can lead to hotter, longer heat waves that threaten the health of the sick, the poor, the elderly – that can increase ground-level ozone pollution linked to asthma and other respiratory illnesses.” This finding reflects similar statements made by the world’s leading scientific institutes.

Furthermore, laws require EPA to act reasonably. In the Clean Air Act and its amendments, Congress established limitations on EPA’s regulatory powers, requiring the agency to consider the cost of regulation and other impacts before regulating. In addition, federal courts review EPA regulatory actions to ensure the agency has not exceeded its authority. In practice, EPA has followed the rules and also been cognizant of the practical constraints of regulations. For instance, EPA decided in the tailoring rule, issued in 2010, that it would be unworkable to apply the Clean Air Act to all facilities that would be covered by the law; instead EPA has focused only on the largest emitters.

Read more at What Are Limits on EPA? Clean Air Act Holds Answers

Myth #2: EPA regulations of GHG emissions will cost up to 1.4 million jobs.

The Facts: The modeling study and accompanying testimony supporting these claims has been discredited by a number of well respected analysts and economists.

In her February 9th testimony before the House Committee on Energy and Commerce, Dr. Margo Thorning relied on an industry-funded modeling exercise to conclude that EPA regulations of GHG emissions would lead to up to 1.4 million job losses in the United States. Since then, these alarming job-loss numbers have been cited repeatedly by anti-EPA interests – industry, policy-makers and others – despite the fact that they are based on faulty modeling assumptions that have been discredited repeatedly by leading economists and analysts. In a recent joint statement by James Bradbury (WRI) and John “Skip” Laitner (ACEEE), Dr. Thorning was called into question for filing with the Energy and Commerce Committee the same discredited arguments for which she had been criticized by Nathaniel Keohane² and Dallas Burtraw³ just months earlier at the U.S. Court of Appeals. Dr. Thorning and those who rely on her unsupported jobs numbers have still not explained the basis for their assumption that a business-as-usual policy scenario is always optimal and that any public policy – including energy efficiency policies – can only slow economic growth and yield net job losses (an assumption that the economic literature has repeatedly shown to be false)⁴. The vocal anti-EPA interests who rely on Dr. Thorning’s opinion have yet to provide any evidence that the EPA’s preconstruction permitting process – which has been in effect for the past four months – will lead to any net costs for U.S. manufacturers, nevermind job losses. Dr. Thorning has also failed to provide any supporting evidence for her claim that U.S. manufacturers have done all that they possibly can to increase their energy productivity and that public policy has no role to play in removing barriers or otherwise increasing private sector investments in industrial energy efficiency.

Read more at Statement to the Committee on Energy and Commerce on Economic Implications of EPA Greenhouse Gas Regulations

Myth #3: EPA standards will hurt U.S. manufacturers.

The Facts: EPA regulations can help U.S. manufacturers make important upgrades.

EPA’s guidance can spur energy efficiency upgrades for manufacturing facilities in the United States. In addition to making them cleaner, these much needed efficiency improvements can result in significant cost savings for manufacturers. The manufacturers most exposed to risks from international competition and volatile fuel prices have the most to gain from efficiency. Studies have estimated that efficiency upgrades made with existing technologies could result in a 40 percent total energy savings for these companies.

Read more at EPA, The Clean Air Act, and U.S. Manufacturing

Myth #4: Current EPA regulations will affect small businesses and farms.

The Facts: Only the biggest emitters will be affected.

Contrary to industry complaints, the greenhouse gas regulations will only apply to the largest emitters in the United States, such as new and modified power plants and industrial facilities. “Mom-and-pop” stores, hospitals and other small businesses remain unaffected by the regulations. Furthermore, the EPA administrator has indicated that there are no plans to regulate these sources.

Read more at What Are Limits on EPA? Clean Air Act Holds Answers

Myth #5: EPA is imposing a “train wreck” of regulations that create deadlines that are difficult for industry to meet.

The Facts: The number of new regulations is small, and industry has known they were coming for years.

The electric power sector has had substantial notice–in some cases decades–that power plants would be subject to regulations to control dangerous pollutants. Half of the regulations under consideration by EPA have been in the regulatory pipeline for over a decade. Due to administrative delays and litigation resulting in court decisions remanding or vacating previous rules, many of these rules have not been finalized or the final rules were reversed. In many cases Congress has set statutory deadlines for EPA to act, EPA has missed the deadlines, and courts have ordered EPA to act.

A graphic circulating on Capitol Hill and in state legislatures claims a difficult regulatory timeline for industry. But upon closer examination, WRI found that many of the rules they claim refer to rules already in effect, remanded by courts, or don’t exist for other reasons.

Read more at Response to EEI’s Timeline of Environmental Regularions for the Utility Industry

Myth #6: Reliability of the electric grid will be impacted by EPA standards.

The Facts: The electricity industry has the tools to ensure that the lights stay on.

While there may be power plant retirements as a result of EPA standards, industry, states and federal regulators have numerous tools to ensure that all regions of the grid have sufficient power plant and other capacity (such as demand-reduction capability, transmission reconfigurations) to ensure that reliability requirements are met. Undoubtedly, some work still needs to be done to make sure that appropriate parties – power plant owners, state and federal regulators, regional transmission organizations, demand-side service providers, investors, and others – take action expeditiously and make prudent decisions. Nevertheless, the actions necessitated by the proposed EPA regulations are manageable and will render the resulting fleet of power generators more efficient and with lower emissions.

Read more at Electric Reliability Under New EPA Power Plant Regulations: A Field Guide

Myth #7: EPA standards will be expensive.

The Facts: The benefits of EPA regulation have historically outweighed the costs.

The White House Office of Management and Budget recently reviewed federal clean air and water regulations from October 1, 1999, to September 30, 2009 in its thirteenth annual Report to Congress. The report found that the estimated aggregate annual costs of these regulations range from $26 to $29 billion, while benefits range from $82 to $533 billion. Furthermore, researchers from University of Massachusetts Amherst found that compared to overall spending in the economy, on a per dollar basis, spending on environmental protection and clean-up employs more than twice as many workers in construction and 25 percent more in manufacturing.

Read more at For EPA Regulations, Cost Predictions Are Overstated

WASHINGTON (Reuters) – BP has agreed to pay a $25 million civil penalty plus interest to settle a federal investigation into a 2006 pipeline oil spill on Alaska’s North Slope, according to court papers filed on Tuesday.

The oil spill in Alaska is one of several environmental and safety problems has beset BP in the United States in recent years, including a deadly explosion at an oil refinery in Texas that killed 15 workers and most recently last year’s historic oil spill in the Gulf of Mexico.

To address the oil spill in Alaska, the company has “started implementation and operation of some corrective measures, including replacement of the Prudhoe Bay oil transit lines, improved leak detection on the oil transit lines, and improved operation and maintenance of the Pipeline System,” the proposed consent decree said.

U.S. officials are expected to announce the settlement later on Tuesday.

BP’s stock was down about 1 percent in both New York and London. The fine is small by oil industry standards at just $25 million.

The penalty is the result of BP violating the Clean Water Act when it spilled crude oil in waters on the North Slope of Alaska in the spring and summer of 2006.

The government said the company also violated the Clean Air Act when it improperly removed asbestos-containing materials from its pipelines during the same period.

BP also failed to perform certain corrective actions on its pipelines as ordered by the federal pipeline safety agency.

(Reporting by Jeremy Pelofsky and James Vicini; additional reporting by Tom Doggett; Editing by David Gregorio and Lisa Shumaker)

The Eureka Rebellion of 1854

Today’s AFR reports about the intensifying revolt over carbon pricing. Some of the rebel elements include BlueScope, OneSteel, and of course the the Business Council of Australia (BCA), which represents some of the most caron and energy-intesive business in Australia. 

While BlueScope and OneSteel indicate that they want to be exempt until 70% of world steel makers pay a carbon tax, the BCA brings forth the same arguments that have been rebutted before.

In a letter written to the Prime Minister last Friday, the BCA’s President Graham Bradley raises some “concerns” regarding a price on carbon:

1. Australia “going it alone” – Allegedly, the BCA’s members believe that an Australian climate policy should act “in tandem with international action, not ahead of it,” and that because Australia only accounts for about 1.5% of global GHG emissions, any mitigation effort would have only limited effect.Fact is that Australia is not ahead of international action, but rather trailing far behind, and that Australia’s commitment to reduce emissions has not changed in years (5% below 2000 levels by 2020). Alledged lack of a concerted effort to achieve global agreement appears to be an all to easy and convenient excuse to delay action. After all, 195 parties to the UNFCCC have to agree on a way forward. One country alone is sufficient to make this process a difficult one.

   As for the argument that Australia is responsble for “just” 1.5% of global emissions, one should keep in mind population figures. 1.5% of global emissions are caused by 22.6 million Australians – the current world population is estimated at 6.9 billion (feel free to do the math).

   While total emissions seem insignificant, the pictures changes dramatically when we consider per capita emissions.Only a few countries with the largest total emissions also rank among those with the highest per capita emissions because there is a strong relationship between emissions per capita and income per capita,with wealthier countries having higher emissions per capita due to higher rates of consumption and more energy-intensive lifestyles. Australia has the highest per capita emissions in the world, about 20.8t CO2-e per capita. Followed by the US (19.8t), and Canada (17.8t).  China’s per capita emissions stand at around 4.5t, about just 22% of that in Australia. Australia is a growing country, therefore, reducing growth in per-capita output would have a significant mitigation influence.

   While China, and to a lesser extent India, are major emitters of greenhouse gases, this does not discount the responsibilities for climate change by developed countries. One should not forget that a significant amount of goods produced in China are consumed in developed countries, including Australia, and that Australia supplies China with large amounts of coal for its power plants.

2. Compensation arrangements under the CPRS prposals are insufficient and carbon leakage is looming - Clearly, between 66% and 94.5% of permits allocated for free(!) to emission-intensive, trade-exposed businesses simply is insufficient.Compare this to Phase 3 of the EU ETS, where from 2013 onwards, free allowance indutsry assistance will be based on GHG performance-based benchmarks (10 % best performing installations under the EU ETS). Companies meeting the benchmarks will in principle receive all allowances they need, while  businesses that do not meet the benchmark will have a shortage of allowances and either lower their emissions or acquire additional allowances.

   This enormous disadvantage of insufficient free allocations or exemption clearly means that Australian jobs will move overseas, where it is ok to pollute countries with less stringent environmental and/or climate-related legislation. Especially agriculture will be affected because it is not even covered by the proposed carbon tax.

   In the end, it is clearly more importand to secure jobs before ensuring a biospehere which can sustain our life. After all, all this climate change is just based on some computer-modelling.

3.  Need to maintain the reliability of electricity industry and viability of private sector investment – This is an interesting one because the electricity sector (e.g., Origin) has already stated that the absence of an ETS would put a risk to investment. And what about the Queensland Gas Scheme, the CPRS-based Electricity Sector Enhancement Scheme or the Coal Sector Adjustment Scheme, or even the LRET/SRES scheme? Don’t these provide some guidance in regards to investment? What about NGERS, introduced 2007 by the Howard government, or the EEO Act 2006? Wouldn’t that have given businesses the opportunity to assess the carbon-intensity of hteir operations and allowed them towards reducing the liability under a price-on-carbon-scheme?