Adani beware: coal is on the road to becoming completely uninsurable



Insurers have to protect themselves against foreseeable risks. For insurers of fossil fuel projects, those risks are growing.
Shutterstock

John Quiggin, The University of Queensland

The announcement by Suncorp that it will no longer insure new thermal coal projects, along with a similar announcement by QBE Insurance a few months earlier, brings Australia into line with Europe where most major insurers have broken with coal.

US firms have been a little slower to move, but Chubb announced a divestment policy in July, and Liberty has confirmed it will not insure Australia’s Adani project.

Other big firms such as America’s AIG are coming under increasing pressure.

Even more than divestment of coal shares by banks and managed funds, the withdrawal of insurance has the potential to make coal mining and coal-fired power generation businesses unsustainable.

As the chairman and founder of Adani Group, Gautam Adani, has shown in Queensland’s Galilee Basin, a sufficiently rich developer can use its own resources to finance a coal mine that banks won’t touch.




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But without insurance, mines can’t operate.

(Adani claims to have insurers for the Carmichael project, but has declined to reveal their names.)

Why are insurers abandoning coal?

By the nature of their business, insurers cannot afford to indulge the denialist fantasies still popular in some sectors of industry. Damage caused by climate disasters is one of their biggest expenses, and insurers are fully aware that that damage is set to rise over time.

Even so, a sufficiently hard-headed company might choose to work both sides of the street – continuing to do business with fossil fuel companies, while also writing more expensive insurance against climate damage.

The bigger problem insurers face is the risk of litigation holding fossil fuel companies responsible for climate-related damage. For the moment, this is a potential rather than an immediate risk.

As US insurer AIG, yet to announce a divestment policy, has observed:

Based on our monitoring, while the overall volume of litigation activity has increased, past litigation seems to have largely been unsuccessful on numerous grounds including difficulties in determining and attributing fault and liability to a particular company, and the judiciary’s deference to the political branches of government on questions relating to climate change.

Recent development suggest these difficulties will be overcome.

It’s becoming easier to finger climate culprits…

Until recently, the most immediate problem facing potential litigants has been demonstrating that an event was the result of climate change as opposed to something else, such as random fluctuations in climatic conditions.

Scientific progress on this “extreme event attribution problem” has been rapid.

It is now possible to say with confidence that climate change is causing an increase in both the frequency and intensity of extreme weather and weather-related events such as extreme heatwaves, drought, heavy rains, tropical storms and bushfires.

The Bulletin of the American Meteorological Society has highlighted three extremes in 2016 that would not have occurred if not for the added influence of climate change:

  • a persistent area of unusually warm water that lingered off the Alaskan coast, causing reduced marine productivity and other ecological disruptions

  • the extreme heatwave that happened in Asia, killing hundreds and destroying crops

  • the overall global atmospheric heat record set that year.

…and to allocate liability

The second line of defence against climate litigation that has held so far is the difficulty of imputing damage to the companies that burn fossil fuels.

While it is true that all weather events have multiple causes, in many circumstances climate change caused by the burning of fossil fuels has been a necessary condition for those events to take place.

Courts routinely use arguments about necessary conditions to determine liability.

For example, a spark from a power line might cause a bushfire on a hot, dry, windy day, but would be harmless on a wet cold day. That can be enough to establish liability on the part of the company that operates the power line.

These issues are playing out in California, where devastating fires in 2017 caused damage estimated at US$30 billion and drove the biggest of the power companies, PG&E, into bankruptcy.

As a result there has been pressure to loosen liability laws, leaving the cost of future disasters to be borne by Californians in general, and their insurers.

Lawyers will be looking for someone to sue.

Adani is a convenient target

The question facing potential litigants is whether any single company contributes enough to climate change to make it meaningfully liable for particular disaster.

Adani’s Carmichael mine provides a convenient example.

Adani says the 10 million tonnes of coal it plans to mine will produce only 240,000 tonnes of carbon dioxide, but this is semantic trickery. The firm is referring only to so-called “scope 2” emissions associated with the mining process itself.

When the coal is burned it might produce an extra 30 million tonnes of carbon dioxide, amounting to about 0.05% of global emissions.

A 0.1% share of the damage associated with the California fires is US$15 million, enough to be worth suing for. Other similarly sized mines will face similar potential liabilities.

Once a precedent is established, any company in the business of producing or burning fossil fuels on a large scale can expect to be named in a regular stream of suits seeking substantial damages.

When governments are successfully sued…

The remaining line of defence for companies responsible for emissions is the history of courts in attributing climate change to decisions by governments rather than corporations.

In the Netherlands, a citizen action group called Urgenda has won a case against the Dutch government arguing it has breached its legal duty of care by not taking appropriate steps to significantly restrain greenhouse gas emissions and prevent damage from climate change.

The government is appealing, but it has lost every legal round so far. Sooner or later, this kind of litigation will be successful. Then, governments will look for another party that can be sued instead of them.

…they’ll look for someone else to blame

Insurance companies are an easy target with deep pockets. Despite its hopeful talk quoted above, AIG would find it very difficult to avoid paying up if Californian courts found the firms it insured liable for their contributions to a climate-related wildfires or floods.

This is not a message coal-friendly governments in the US or Australia want to hear.

But the decision of Suncorp to dump coal, just a couple of months after the re-election of the Morrison government, makes it clear that businesses with a time horizon measured in decades cannot afford wishful thinking. They need to protect themselves against what they can see coming.




Read more:
Explaining Adani: why would a billionaire persist with a mine that will probably lose money?


The Conversation


John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Pacific Island nations will no longer stand for Australia’s inaction on climate change


Michael O’Keefe, La Trobe University

The Pacific Islands Forum meeting in Tuvalu this week has ended in open division over climate change. Australia ensured its official communique watered down commitments to respond to climate change, gaining a hollow victory.

Traditionally, communiques capture the consensus reached at the meeting. In this case, the division on display between Australia and the Pacific meant the only commitment is to commission yet another report into what action needs to be taken.

The cost of Australia’s victory is likely to be great, as it questions the sincerity of Prime Minister Scott Morrison’s commitment to “step up” engagement in the Pacific.




Read more:
Can Scott Morrison deliver on climate change in Tuvalu – or is his Pacific ‘step up’ doomed?


Australia’s stance on climate change has become untenable in the Pacific. The inability to meet Pacific Island expectations will erode Australia’s influence and leadership credentials in the region, and provide opportunities for other countries to grow influence in the region.

An unprecedented show of dissent

When Morrison arrived in Tuvalu, he was met with an uncompromising mood. In fact, the text of an official communique was only finished after 12 hours of pointed negotiations.

While the “need for urgent, immediate actions on the threats and challenges of climate change”, is acknowledged, the Pacific was looking for action, not words.

What’s more, the document reaffirmed that “strong political leadership to advance climate change action” was needed, but leadership from Australia was sorely missing. It led Tuvaluan Prime Minister Enele Sopoaga to note:

I think we can say we should’ve done more work for our people.

Presumably, he would have hoped Australia could be convinced to take more climate action.

In an unprecedented show of dissent, smaller Pacific Island countries produced the alternative Kainaki II Declaration. It captures the mood of the Pacific in relation to the existential threat posed by climate change, and the need to act decisively now to ensure their survival.

And it details the commitments needed to effectively address the threat of climate change. It’s clear nothing short of transformational change is needed to ensure their survival, and there is rising frustration in Australia’s repeated delays to take effective action.

Australia hasn’t endorsed the alternative declaration and Canberra has signalled once and for all that compromise on climate change is not possible. This is not what Pacific leaders hoped for and will come at a diplomatic cost to Australia.




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Canberra can’t buy off the Pacific

Conflict had already begun brewing in the lead up to the Pacific Islands Forum. The Pacific Islands Development Forum – the brainchild of the Fijian government, which sought a forum to engage with Pacific Island Nations without the influence of Australia and New Zealand – released the the Nadi Bay Declaration in July this year.

This declaration called on coal producing countries like Australia to cease all production within a decade.

But it’s clear Canberra believes compromise of this sort on climate change would undermine Australia’s economic growth and this is the key stumbling block to Australia answering its Pacific critics with action.

As Sopoaga said to Morrison:

You are concerned about saving your economy in Australia […] I am concerned about saving my people in Tuvalu.

And a day before the meeting, Canberra announced half a billion dollars to tackle climate change in the region. But it received a lukewarm reception from the Pacific.

The message is clear: Canberra cannot buy off the Pacific. In part, this is because Pacific Island countries have new options, especially from China, which has offered Pacific island countries concessional loans.




Read more:
As Australia’s soft power in the Pacific fades, China’s voice gets louder


China is becoming an attractive alternate partner

As tension built at the Pacific Island Forum meeting, New Zealand Foreign Minister Winston Peters argued there was a double standard with respect to the treatment of China on climate change.

China is the world’s largest emitter of climate change gasses, but if there is a double standard it’s of Australia’s making.

Australia purports to be part of the Pacific family that can speak and act to protect the interests of Pacific Island countries in the face of China’s “insidious” attempts to gain influence through “debt trap” diplomacy. This is where unsustainable loans are offered with the aim of gaining political advantage.

But countering Chinese influence in the Pacific is Australia’s prime security interest, and is a secondary issue for the Pacific.

But unlike Australia, China has never claimed the moral high ground and provides an attractive alternative partner, so it will likely gain ground in the battle for influence in the Pacific.

For the Pacific Island Forum itself, open dissent is a very un-Pacific outcome. Open dissent highlights the strains in the region’s premier intergovernmental organisation.

Australia and (to a lesser extent) New Zealand’s dominance has often been a source of criticism, but growing confidence among Pacific leaders has changed diplomatic dynamics forever.




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This new pacific diplomacy has led Pacific leaders to more steadfastly identify their security interests. And for them, the need to respond to climate change is non-negotiable.

If winning the geopolitical contest with China in Pacific is Canberra’s priority, then far greater creativity will be needed as meeting the Pacific half way on climate change is a prerequisite for success.The Conversation

Michael O’Keefe, Head of Department, Politics and Philosophy, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Can Scott Morrison deliver on climate change in Tuvalu – or is his Pacific ‘step up’ doomed?



Pacific leaders don’t want to talk about China’s rising influence – they want Scott Morrison to make a firm commitment to cut Australia’s greenhouse gas emissions.
Mick Tsikas/AAP

Tess Newton Cain, The University of Queensland

This week’s Pacific Islands Forum comes at an important time in the overall trajectory of Prime Minister Scott Morrison’s very personal commitment to an Australian “stepping up” in the Pacific.

To paraphrase the PM, you have to show up to step up. And after skipping last year’s Pacific Islands Forum, Morrison has certainly been doing a fair amount of showing up around the region, with visits to Vanuatu and Fiji at the beginning of the year and the Solomon Islands immediately after his election victory.

Add to this his recent hosting of the new PNG prime minister, James Marape, and it is clear there has been significant energy devoted to establishing personal relationships with some of the leaders he will sit down with this week.

An ‘existential threat’ to the region

Regional politics and diplomacy in the Pacific are not for the faint of heart. It’s clear from the tone of recent statements by Foreign Minister Marise Payne and the minister for international development and the Pacific, Alex Hawke, that there is some disquiet ahead of the Tuvalu get-together.

And with good reason. For some time, the leaders of the region have been becoming increasingly vocal about the lack of meaningful action from Canberra when it comes to climate change mitigation.




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Yes, Morrison ‘showed up’ in the Pacific, but what did he actually achieve?


Most recently, ten of the Pacifc Islands Development Forum (PIDF) members signed the Nadi Bay Declaration, which advocated a complete move away from coal production and specifically criticised using “Kyoto carryover credits” as a means of achieving Paris targets on reducing emissions.

While this body does not have the regional clout of the Pacific Islands Forum, its membership includes key players, notably Fiji, Tuvalu, and the Republic of the Marshall Islands, whose leaders have all spoken out strongly on the need for stronger action on climate change.

In a speech last month, Fijian Prime Minister Frank Bainimarama urged his fellow Pacific leaders to withstand any attempts to water down commitments on climate challenge in the region and globally.

Bainimarama’s warning: ‘Our region remains on the front line of humanity’s greatest challenges’

Bainimarama is attending this year’s Pacific Islands Forum for the first time since 2007, and has already made his presence felt. Earlier this week, he urged Australia to transition as quickly as possible from coal to renewable energy sources, because the Pacific faces

an existential threat that you don’t face and challenges we expect your governments and people to more fully appreciate.

Losing credibility on its ‘step up’

Given the state of Australia’s domestic politics when it comes to making climate change action more of a priority, it is hard to see how Morrison can deliver what the “Pacific family” is asking for.

The recent announcement of A$500 million to help Pacific nations invest in renewable energy and fund climate resilience programs is sure to be welcomed by Pacific leaders. As is the pledge for A$16m to help tackle marine plastic pollution.

But none of this money is new money – it’s being redirected from the aid budget. And it does not answer the call of Pacific leaders for Australia to do better when it comes to cutting emissions.

An aerial view of Funafuti, the most populous of Tuvalu’s country’s nine atolls.
Mick Tsikas/AAP

Why does this matter? Because it’s becoming increasingly obvious that the inability – or refusal – to be part of the team when it comes to climate change is undermining Australia’s entire “Pacific step-up”.

If Morrison, and the Australian leadership more broadly, want to reassure Pacific leaders that Australia’s increased attention on the region is not just all about trying to counter Chinese influence, this is where the rubber hits the road.

This is not about whether China is doing better when it comes to climate change mitigation than Australia. The Pacific has greater expectations of Australia, not least because Australian leaders have been at pains to tell the region, and the world, that this is where they live – that Pacific islanders are their “family”.

And for Pacific islanders, if you are family, then there are obligations. This week, as has been the case previously, Pacific leaders will make clear that addressing climate change is their top priority, not geopolitical anxieties over China’s increasing role in the region.




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Everything but China is on the table during PNG prime minister’s visit


There is little doubt that Australia’s “Pacific step-up” is driven by concerns about the rising influence of China. But Morrison knows better than to voice concerns of that type – at least in public – while in Tuvalu.

Numerous Pacific leaders have made it clear that as far as they are concerned, partnerships with Beijing (for those that have them) provide for greater opportunity and choice.

While they welcome renewed ties with traditional partners like Australia and New Zealand, they maintain a “friends to all and enemies to none” approach to foreign policy. That is unlikely to change any time soon.

Tuvalu’s Prime Minister Enele Sopoaga has warned Australia that its Pacific ‘step up’ could be undermined by a refusal to act on climate change.
Mick Tsikas/AAP

Will Tuvalu prove a turning point?

Tuvalu Prime Minister Enele Sopoaga may well be hoping that when Morrison sees for himself how climate change is affecting his country, he will be so moved personally, he will shift Australia’s stance politically.

Indeed, on arrival in the capital of Funafuti this week, leaders are being met by children sitting in pools of seawater singing a specially written song “Save Tuvalu, Save the World”.

So what can Morrison realistically be expected to achieve during the summit? He will be able to demonstrate Australia’s commitment to other issues that are important to regional security, such as transnational and organised crime and illegal fishing.

He can also hope the personal relationships he has cultivated with Pacific leaders deliver returns by way of compromise around the wording of the final communique, if only to avoid a diplomatic stoush.

But if there is no real commitment to cutting greenhouse gas emissions, he will leave plenty of frustration behind when he returns to Australia.The Conversation

Tess Newton Cain, Adjunct Associate Professor, School of Political Science & International Studies, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

UN climate change report: land clearing and farming contribute a third of the world’s greenhouse gases



Farming emits greenhouse gases, but the land can also store them.
Johny Goerend/Unsplash, CC BY-SA

Mark Howden, Australian National University

We can’t achieve the goals of the Paris Climate Agreement without managing emissions from land use, according to a special report released today by the Intergovernmental Panel on Climate Change (IPCC).

Emissions from land use, largely agriculture, forestry and land clearing, make up some 22% of the world’s greenhouse gas emissions. Counting the entire food chain (including fertiliser, transport, processing, and sale) takes this contribution up to 29%.




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The report, which synthesises information from some 7,000 scientific papers, found there is no way to keep global warming under 2℃ without significant reductions in land sector emissions.

Land puts out emissions – and absorbs them

The land plays a vital role in the carbon cycle, both by absorbing greenhouse gases and by releasing them into the atmosphere. This means our land resources are both part of the climate change problem and potentially part of the solution.

Improving how we manage the land could reduce climate change at the same time as it improves agricultural sustainability, supports biodiversity, and increases food security.

While the food system emits nearly a third of the world’s greenhouse gases – a situation also reflected in Australia – land-based ecosystems absorb the equivalent of about 22% of global greenhouse gas emissions. This happens through natural processes that store carbon in soil and plants, in both farmed lands and managed forests as well as in natural “carbon sinks” such as forests, seagrass and wetlands.




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There are opportunities to reduce the emissions related to land use, especially food production, while at the same time protecting and expanding these greenhouse gas sinks.

But it is also immediately obvious that the land sector cannot achieve these goals by itself. It will require substantial reductions in fossil fuel emissions from our energy, transport, industrial, and infrastructure sectors.

Overburdened land

So, what is the current state of our land resources? Not that great.

The report shows there are unprecedented rates of global land and freshwater used to provide food and other products for the record global population levels and consumption rates.

For example, consumption of food calories per person worldwide has increased by about one-third since 1961, and the average person’s consumption of meat and vegetable oils has more than doubled.

The pressure to increase agricultural production has helped push about a quarter of the Earth’s ice-free land area into various states of degradation via loss of soil, nutrients and vegetation.

Simultaneously, biodiversity has declined globally, largely because of deforestation, cropland expansion and unsustainable land-use intensification. Australia has experienced much the same trends.




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Climate change exacerbates land degradation

Climate change is already having a major impact on the land. Temperatures over land are rising at almost twice the rate of global average temperatures.

Linked to this, the frequency and intensity of extreme events such as heatwaves and flooding rainfall has increased. The global area of drylands in drought has increased by over 40% since 1961.

These and other changes have reduced agricultural productivity in many regions – including Australia. Further climate changes will likely spur soil degradation, loss of vegetation, biodiversity and permafrost, and increases in fire damage and coastal degradation.




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Water will become more scarce, and our food supply will become less stable. Exactly how these risks will evolve will depend on population growth, consumption patterns and also how the global community responds.

Overall, proactive and informed management of our land (for food, water and biodiversity) will become increasingly important.

Stopping land degradation helps everyone

Tackling the interlinked problems of land degradation, climate change adaptation and mitigation, and food security can deliver win-wins for farmers, communities, governments, and ecosystems.

The report provides many examples of on-ground and policy options that could improve the management of agriculture and forests, to enhance production, reduce greenhouse gas emissions, and make these areas more robust to climate change. Leading Australian farmers are already heading down these paths, and we have a lot to teach the world about how to do this.

We may also need to reassess what we demand from the land. Farmed animals are a major contributor to these emissions, so plant-based diets are increasingly being adopted.

Similarly, the report found about 25-30% of food globally is lost or wasted. Reducing this can significantly lower emissions, and ease pressure on agricultural systems.

How do we make this happen?

Many people around the world are doing impressive work in addressing some of these problems. But the solutions they generate are not necessarily widely used or applied comprehensively.

To be successful, coordinated policy packages and land management approaches are pivotal. Inevitably, all solutions are highly location-specific and contextual, and it is vital to bring together local communities and industry, as well as governments at all levels.




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Given the mounting impacts of climate change on food security and land condition, there is no time to lose.


The author acknowledges the contributions to authorship of this article by Clare de Castella, Communications Manager, ANU Climate Change Institute.The Conversation

Mark Howden, Director, Climate Change Institute, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

New Zealand poised to introduce clean car standards and incentives to cut emissions



Australia and Russia could soon be the last remaining developed nations without fuel efficiency standards, with New Zealand proposing new rules and financial incentives to get more people driving cleaner cars.
http://www.shutterstock.com, CC BY-ND

Robert McLachlan, Massey University

The New Zealand government has proposed new fuel standards to cut greenhouse emissions, along with consumer rebates for cleaner cars – paid for by fees on high-polluting cars.

The long-awaited proposed changes would bring New Zealand in line with most other developed countries; apart from New Zealand, Russia and Australia are the last remaining OECD nations without fuel efficiency standards.

New Zealand’s long tradition of not regulating its car market, combined with substantial indirect subsidies for private cars, makes addressing emissions from the transport sector both challenging and highly significant.




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New Zealand’s second-rate car fleet

Land transport emissions – the single largest source of fossil carbon dioxide in New Zealand – grew 93% between 1990 and 2017. There are multiple causes. The population grew 44% during this period, mostly through immigration. The car ownership rate also grew rapidly, partly due to economic growth and deficiencies in public transport in the main cities. Car ownership in New Zealand is now the highest in the OECD and there are more motor vehicles than adults.

Fuel efficiency improved only slowly over this period, before stalling in recent years: at 180g CO₂/km, the emissions of newly imported vehicles in New Zealand are 50% higher than in Europe. Because of the lack of a fuel efficiency standard, importers provide less efficient versions of their bestsellers to the New Zealand market. Of the ten bestselling new vehicles, five are utes (which also benefit from a fringe benefit tax exemption, four are SUVs and one is a regular car.

In addition, half of all vehicles are imported secondhand, mostly from Japan. They are cheap, but less efficient than newer models. Emissions, and congestion, are likely to continue rising as the national vehicle fleet is increasing by 110,000 vehicles a year.

One bright spot in the present situation is the emergence of an electric vehicle segment, mostly driven by the availability of cheap second-hand Nissan Leafs from Japan and the construction of a fast-charging network by a private company. Although sales have stalled in the past year at a market share of 2%, there are now 15,000 electric vehicles in New Zealand. (Australia has around 10,000 electric vehicles.)

New Zealand’s history of fuel taxes

New Zealand does not have a strong record of taxing “bads”. The only goods subject to excise taxes are tobacco, alcohol and fuel. The fuel tax is moderate by international standards. Over the past decade, the fuel tax has been fully allocated to road construction and maintenance.

New Zealand has an emissions trading scheme. The current carbon price of NZ$25/tonne of carbon dioxide adds five cents per litre to the price of fuel. Clearly, any likely increases in the carbon price are not going to be enough to change car buying decisions. Research shows that consumers tend to focus on upfront costs, while underestimating future fuel and maintenance costs.

Despite that, a special Auckland fuel tax of 10 cents per litre that co-funds public transport investment provoked a brief but intense backlash from the public. Plans to extend the scheme to other centres were canned.

A two-pronged plan

The proposed fuel efficiency standard would require car importers to either meet it or pay a fine. The suggested standard is 150gCO₂/km in 2021, falling to 105gCO₂/km in 2025, with further falls thereafter. There are more than 3000 car importers in New Zealand, so this could prompt a major shakeup, including possible price adjustments.

The standards are similar to those proposed by the Australian Coalition government in 2016, which have not yet been taken any further. Internationally, fuel efficiency standards cover 80% of the light vehicle market.




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But the second component of the proposal, the clean car discount, has attracted more attention. Cars emitting less than the current threshold would received a discount, initially up to NZ$1800 for an efficient petrol car, up to NZ$4800 for a hybrid and up to NZ$8000 for a battery electric car. Cars costing more than NZ$80,000 would not receive a discount.

Known as a “feebate scheme”, those rebates would be paid for by increased fees for high-polluting cars, of up to NZ$3000. The amounts are designed so that the entire scheme would be revenue neutral to the government. Modelling suggests that the proposed standard and discount combined would save motorists NZ$12,000 over the life of a vehicle.

International clean car schemes and testing

There is international experience with similar schemes, and they have been broadly effective. France has been operating a “feebate” scheme since 2008 with periodic adjustments. New Zealand’s proposed scheme is similar to the French and Swedish schemes.

But there is also room to get it wrong. Tinkering with electric vehicle incentives has led to wild sales fluctuations in the Netherlands and Denmark.

The spread between tested and real-world fuel use has widened, up from 9% in 2001 to 42%. The new Worldwide Harmonised Light Vehicle Test Procedure testing cycle, currently being adopted by Japanese and European manufacturers, is believed to be more representative of real-world fuel use, as is the test already in use in the United States.

But overall, the New Zealand proposal has been received positively by car makers and across political parties.

One possible weakness is that it is entirely based on carbon dioxide. Other pollutants, including nitrous and sulphur oxides and particulate matter (soot), that are responsible for most of the immediate health impacts of vehicle pollution and are worse in diesel than in petrol vehicles, are not targeted. Nor are the underlying subsidies to the car-based transport system, which make a transition to active and public transport more difficult.

Any decisions made now will have impacts for decades to come. Switching the fleet to electric is different from just switching to more fuel-efficient cars. It involves new charging infrastructure and some behavioural changes from the public, and these challenges (rather than simply cost) are stumbling blocks worldwide to more rapid adoption.

These arguments have persuaded many countries to bring in electric vehicle incentives beyond simply targeting carbon dioxide. Norway is a famous example, where electric vehicles avoid purchase taxes and market share is already 60%. The UK has recently exempted electric company cars from fringe benefit tax.

As the global market share of electric vehicles still stands at only 2%, eight years after they became widely available, and the number of fossil-fueled vehicles is increasing by 48 million a year, stronger action on vehicle emissions is clearly needed worldwide.The Conversation

Robert McLachlan, Professor in Applied Mathematics, Massey University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia’s energy exports increase global greenhouse emissions, not decrease them


Frank Jotzo, Crawford School of Public Policy, Australian National University and Salim Mazouz, Australian National University

When unveiling government data revealing Australia’s rising greenhouse emissions, federal energy minister Angus Taylor sought to temper the news by pointing out that much of the increase is due to liquefied natural gas (LNG) exports, and claiming that these exports help cut emissions elsewhere.

LNG exports, Taylor argued, help to reduce global emissions by replacing the burning of coal overseas, which has a higher emissions factor than gas. In reality, Australian gas displaces a mix of energy sources, including gas from other exporters. Whether and to what extent Australian gas exports reduce emissions therefore remains unclear. Meanwhile, Australia’s coal exports clearly do increase global emissions.

The way Australia can help clean up world energy systems in the future is through large-scale production and export of renewable energy.




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In a statement accompanying the latest quarterly emissions figures, the Department of Environment and Energy stated:

Australia’s total LNG exports are estimated to have the potential to lower emissions in importing countries by around 148Mt CO₂-e [million tonnes of carbon dioxide equivalent] in 2018, if they displace coal consumption in those countries.

In truth, the assumption that every unit of Australia’s exported gas displaces coal is silly. The claim of a 148Mt saving is wrong and unfounded. The real number would be much smaller, and there could even be an increase in emissions as a result of LNG exports.

For the most part, exported gas probably displaces natural gas that would otherwise be produced elsewhere, leaving overall emissions roughly the same. Some smaller share may displace coal. But it could just as easily displace renewable or nuclear energy, in which case Australian gas exports would increase global emissions, not reduce them.

How much might gas exports really cut emissions?

Serious analysis would be needed to establish the true amount of emissions displaced by Australian gas. It depends on the specific requirements that importers have, their alternatives for domestic energy production and other imports, changes in relative prices, resulting changes in energy balances in third-country markets, trajectories for investments in energy demand and supply infrastructure, and so forth. No such analysis seems available.

But for illustration, let’s make an optimistic assumption that gas displaces twice as much coal as it does renewable or nuclear energy. Specifically, let’s assume – purely for illustration – that each energy unit of Australian exported LNG replaces 0.7 units of gas from elsewhere, 0.2 units of coal, and 0.1 units of renewables or nuclear.

Australia exported 70 million tonnes of LNG in 2018. A Department of Environment and Energy source told Guardian Australia that this amount of gas would emit 197 million tonnes of CO₂ when burned. We calculate a similar number, on the basis of official emissions factors and export statistics.

Under the optimistic and illustrative set of assumptions outlined above, we calculate that Australia’s LNG exports would have reduced emissions in importing countries by about 10 million tonnes of CO₂ per year. (See the end of the article for a summary of our calculations.)

They might equally have reduced emissions by less, or they might in fact have increased these countries’ emissions, if more renewables or nuclear was displaced than coal. But whatever the the actual number, it’s certainly a long way short of the 148 million tonnes of emissions reduction claimed by the government.

We also should consider the emissions within Australia of producing LNG. The national emissions accounting shows that the increase in national emissions of 3.5 million tonnes of CO₂-e compared with the year before is mostly because of a 22% increase in LNG exports. This means that LNG production in Australia overall may be responsible for 16 million tonnes of CO₂ emissions per year.

A full analysis of global effects would also need to factor in the emissions that would be incurred from the production of alternative energy sources displaced by Australia’s LNG.




Read more:
Whichever way you spin it, Australia’s greenhouse emissions have been climbing since 2015


Coal exports unambiguously raise emissions

The picture is more clear-cut for coal. If there was no Australian thermal coal (the type used in power stations) in world markets, much of this would be replaced by more coal mined elsewhere. The remainder would be replaced by gas, renewables or nuclear. As for the case of gas, the precise substitution effects are a matter of complex interactions.

The crucial point is that all alternative fuels are less emissions-intensive than coal. In the substitution of Australian-mined coal for coal from other sources, there could be some substitution towards coal with higher emissions factors, but this is highly unlikely to outweigh the emissions savings from the substitution to nuclear, renewables and gas.

So, removing Australian coal from the world market would reduce global emissions. Conversely, adding Australian coal to the world market would increase global emissions.

Australia exported 208 million tonnes of thermal coal in 2018, which according to the official emissions factors would release 506 million tonnes of CO₂ when burned. On top of this, Australia also exported 178 million tonnes of coking coal for steel production.

If a similar “replacement mix” assumed above for gas is also applied to coal – that is, every unit of coal is replaced by 0.7 units of coal from elsewhere, 0.2 units of gas, and 0.1 units of renewables or nuclear – then adding that thermal coal to the international market would increase emissions by about 19% of the embodied emissions in that coal. As in the case of LNG, this is purely an illustrative assumption.

So, in this illustrative case, Australia’s thermal coal exports would increase net greenhouse emissions in importing countries by about 96 million tonnes per year.

This figure does not consider the coking coal exports, nor the emissions from mining the coal in Australia and transporting it.

The real opportunity is in export of renewable energy

Thankfully, there actually is a way for Australia to help the world cut emissions, and in a big way. That is by producing large amounts of renewable energy for export, in the form of hydrogen, ammonia, and other fuels produced using wind and solar power and shipped to other countries that are less blessed with abundant renewable energy resources.

Even emissions-free production of energy-intensive goods like aluminium and steel could become cost-competitive in Australia, given the ever-falling costs of renewable energy and the almost unlimited potential to produce renewable energy in the outback. Australia really could be a renewable energy superpower.

Such exports will then unambiguously reduce global emissions, because they will in part displace the use of coal, gas and oil.

Once we have a large-scale renewable energy industry in operation, the relevant minister in office then will be right to point out Australia’s contribution to solving the global challenge through our energy exports. In the meantime, our energy exports are clearly a net addition to global emissions.


Summary of data and calculations

LNG emissions and displacement – illustrative scenario

Emissions inherent in Australia’s LNG exports of 69.5 million tonnes (in calendar year 2018) are 197 million tonnes (Mt) of carbon dioxide, based on emissions factors published by the Australian government.

If the same amount of energy was served using coal, emissions would be:

197Mt CO₂ + 148Mt CO₂ = 345Mt CO₂

Emissions under the mix assumed for illustration here would be:

0.7 x 197 (LNG) + 0.2 x 345 (coal) + 0.1 x 0 (renewables/nuclear) = 207Mt CO₂

That is 10Mt higher than without Australian LNG.

Coal emissions and displacement – illustrative scenario

Australia’s thermal coal exports were 208Mt in calendar year 2018. Emissions when burning this coal were 506Mt CO₂, based on government emissions factors.

Assuming typical emissions factors for fuel use in electricity generation of 0.9 tonnes of CO₂ per megawatt-hour (MWh) from black coal and 0.5 tonnes of CO₂ per MWh from gas, the emissions intensity of electricity generation under the mix assumed for illustration here would be:

0.7 x 0.9 (coal) + 0.2 x 0.5 (gas) + 0.1 x 0 (renewables/nuclear) = 0.73 tonnes CO₂ per MWh

This is 19% lower than the emissions intensity of purely coal-fired electricity, of 0.9 tonnes CO₂ per MWh.

19% of 506Mt CO₂ is 96Mt CO₂.The Conversation

Frank Jotzo, Director, Centre for Climate Economics and Policy, Crawford School of Public Policy, Australian National University and Salim Mazouz, Research Manager, Crawford School of Public Policy; and Director at EcoPerspectives, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

How to answer the argument that Australia’s emissions are too small to make a difference


Matt McDonald, The University of Queensland

After a recent foray into the debate over Australia’s so-called “climate election”, I received plenty of critical replies to my argument that Australians should take climate action more seriously. The most common rebuttal was that Australians were right to focus on other issues at the ballot box because Australia’s contribution to global climate change is small anyway.

This is precisely the argument Alan Jones advanced in a now notorious Sky News segment in which he used a bowl of rice to explain away Australia’s climate obligations.

Australia, Jones noted, contributes only 1.3% of global carbon dioxide emissions from human activity, which in turn represents just 3% of the overall amount of CO₂ in the atmosphere, which in turn makes up little more than 0.04% of the whole atmosphere. So why, he asked while triumphantly brandishing a single rice grain, are we so obsessed with Australia’s climate policy when the planet is so big and the consequences of our actions are so tiny?




Read more:
Why old-school climate denial has had its day


This is a powerful critique and, on the face of it, a simple and compelling line of argument, which is precisely why it’s so often used. Why bother, if we lack the power to do anything that makes a difference?

But there are at least three obvious responses to it.

The ‘per capita’ problem

The first and most obvious response is that Australia emits much more than our fair share.

Sure, our emissions are 1.3% of the global total. But our population is 0.3% of the global total.

This isn’t the only way to allocate national emissions targets. But if rich countries like Australia aren’t doing more to reduce their disproportionately high emissions, what possible incentive is there for developing countries to take the issue seriously? Nations such as India, Brazil and China can ask – as indeed they have at various climate talks – why they should reduce emissions when Australia does so little.

In this sense, Australia’s position on climate action is significant, not only for the 1.3% of greenhouse gases we produce, but for the potential influence on global policy.

As a nation so proud of “punching above its weight” in fields such as sport and technology, Australia is missing a big chance to show global leadership on climate.

The ‘coal exports’ problem

The 1.3% statistic is only true if we focus purely on greenhouse emissions within Australia itself. Fair enough, you might say, given that this is the way the Paris Agreement, and the Kyoto Protocol before it, measures countries’ emissions.

But this approach excludes some significant factors.

First, it fails to take proper account of emissions created in one country while manufacturing goods for export to other countries. Emissions due to Chinese-produced goods destined for Australian consumers, for example, count towards China’s emissions, not Australia’s. If we take this “consumption shadow” into account, the climate impact of developed countries, including Australia, becomes much higher.

Second, there is a similar issue with coal exports. Coal dug up by one country but burned in another counts towards the latter’s emissions. As one of the world’s largest coal exporters, this is clearly important for Australia.

In 2012, the campaign group Beyond Zero Emissions estimated that if Australian coal was factored into Australia’s emissions, our contribution to global emissions would be 4% rather than 1.3%. This would make Australia the world’s sixth-largest contributor to climate change.

Are we responsible for what other countries do with Australian coal? According to the Paris treaty, the answer is no. But drug barons and arms dealers use similar arguments to wash their hands of drug addiction and war.

What’s more, Australia already limits a range of exports based on concerns about their use in importing countries, including weapons, uranium and even livestock.

So there’s certainly a precedent for viewing exports through the lens of our international responsibilities. And with the UN secretary-general joining recent calls to end all new coal power plants, a global coal treaty or even embargo might eventually force Australia’s hand.

The ‘capacity to respond’ problem

The third rebuttal to Alan Jones’s arguments is that Australia has far more capacity to take climate action than many other nations. Again, this works at two levels.

First, we’re rich. Australia is a top-20 world economy in terms of both size and average wealth. This means we are more able than most countries to manage the economic costs of moving away from fossil fuels.

Second, thanks to decades of relative climate policy inaction and modest targets, there’s a lot of low-hanging fruit for Australia to ratchet up its climate ambition. This applies most obviously to the renewable energy sector, but also to areas such as energy efficiency and transport.

Australia’s land-clearing rates are also among the highest in the world – we are the only developed nation to feature in a 2018 WWF list of deforestation hotspots. Reducing this would significantly cut emissions while also protecting important carbon stores.

As economist John Quiggin has noted, the longer we wait to move away from fossil fuels, the more expensive it will be.

What does this all mean for Australia?

Jones’s argument is a beguilingly simplistic response to a wicked problem. Climate change is a global problem that requires global action. But the calculations around who should take the lead, and how much constitutes each nation’s fair share, are fiendishly complex.

But, by almost any measure, a country like Australia should be leading the way on climate policy, not being dragged kicking and screaming to take action that falls far behind that of comparable nations.




Read more:
Not everyone cares about climate change, but reproach won’t change their minds


The current reluctance to act seriously on climate change appears at best self-serving and at worst an outright moral failing.

We should take the argument that Australia’s climate contribution is insignificant with a grain of salt. Or perhaps rice.The Conversation

Matt McDonald, Associate Professor of International Relations, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.