A Parliament Without Trust or Legitimacy Must Go

The insults hurled by David Leyonhjelm at Sarah Hanson-Young recently put parliamentary discourse in the gutter. Leyonhjelm was roundly condemned, but not by our leaders. A limp rap across the knuckles from Turnbull and Shorten, then on to more pressing matters, hoping it will all go away.

But not so fast; in governance parlance “the fish rots from the head”. Our leaders need to acknowledge the amoral, unethical parliamentary morass they have created, and its implications.

Australian society today is not a pretty sight. Despite the hype around Australian “values”, years of neoliberal policy have seen money corrupt everything. The Banking Royal Commission, long resisted by the incumbency, is exposing not just a few bad apples but an industry rotten to the core from excessive remuneration, greed which is certainly not restricted to the finance sector. In sport, winning is everything, whatever the cost, but it long ceased to be sport in any true sense. Violence against women and minorities escalates, egged on by the Leyonhjelms of this world. Population pressure sees tolerance disappear. Inequality increases in leaps and bounds, exacerbated by mythical “trickle-down” economics. Drug and alcohol abuse is widespread. Terrorism threats and migration justify massive over-reaction in restricting individual liberties. Crass commercial media and shock jocks incite vindictive extremism. Continuing scandals suggest that few people in positions of public trust have any idea of the moral and ethical responsibilities which go with those roles.

Above it all sits a national parliament incapable of sane discussion on anything. Screamed abuse replaces reasoned debate, any sense of civility long gone. Little wonder societal standards decline when “leaders” set such an appalling example. But there are far more fundamental implications.

Concepts of left and right in politics long since became irrelevant to solving the critical issues facing Australia. The imperative is that those issues do actually get addressed, which is patently not happening.

The first priority of government, we are told, is to ensure the security of the people. In theory, we elect politicians to govern on our behalf to provide that security; politicians who, pre-election, profess undying commitment to public service.

What we get, with a few notable exceptions, are politicians who, once elected, focus largely on party machinations, getting re-elected or otherwise feathering their nest. Much sound and fury around minor issues, whilst the critical ones are ignored. It was not always thus; historically in politics and business there were statesmen and women prepared to set aside their personal interests in favour of the common good, but they are long gone since money came to dominate. Good people are elected to parliament, but their good qualities are rapidly subsumed by party politics.

Behind it all, the creeping cancer of the neoliberal agenda dominates the current government. Driven by right wing apparatchiks in the Institute of Public Affairs, the Minerals Council of Australia, the Business Council of Australia, the Murdoch press and elsewhere, every opportunity is taken to push deregulation, reduce the size of government, emasculate and politicise the public service making it subservient to ideologically-blinkered political advisers, with no regard for the “common good”. Power is concentrated in a few wealthy hands in the interests of “conservatism”, shorthand for maintaining the status quo for the benefit of existing elites. So dissent must be suppressed, activist groups muzzled, the ABC silenced, academic freedom undermined, public debate dumbed down and the public treated as fools. Few are even aware it is happening, except when the occasional stuff-up occurs as with Tony Abbott spilling the beans on the real intentions of the Ramsay project for the promotion of Western Civilisation.

This is where facism begins; the cancer must be stopped if we want a prosperous, sustainable and fair society.

In this, Australia is following the US, where the process is far more advanced. The insidious efforts of right wing billionaires such as the Koch brothers, to seize the levers of power has been going on for decades, the inevitable outcome flagged by Lord Acton long ago: “Remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely”.

The deterioration of US society, with increasing inequality, violence, crumbling infrastructure and much more has, to a significant extent been brought about by this venality. US and Australian neoliberals are inextricably linked in moving this agenda forward.

Except that the status quo can no longer be maintained, as neoliberalism has long since sown the seeds of its own destruction. The inevitable result of decades of exponential growth in both population and consumption is that we are now hitting the limits of the global biosphere, which cannot be circumvented. This is manifest in multiple ways, inter alia: increasing water stress, massive biodiversity loss, decreasing productivity of agricultural land, escalating social conflict over declining resources and associated migration. To the point that the economic growth model under which our economies operate is no longer sustainable, despite desperate efforts to keep it afloat with massive financial interventions such as “quantitative easing”.

Overshadowing it all is human-induced climate change.

Its risks are intensifying and the physical impact worsening, with global climate-related losses running at record levels. Despite 30 years of political and corporate rhetoric, nothing has been done to seriously address it, notwithstanding increasingly urgent warnings.

The result is that climate change is now an immediate existential risk to humanity. That is, a risk posing large negative consequences which will be irreversible, resulting inter alia in major reductions in global and national population, species extinction, disruption of economies and social chaos, unless carbon emissions are rapidly reduced. The risk is immediate in that it is being locked in today by our insistence on expanding the use of fossil fuels when the carbon budget to stay below sensible temperature limits is already exhausted.

To prevent temperatures rising above the upper 2degC limit of the 2015 Paris Climate Agreement, it is no longer possible to follow a gradual transition path. We have left it too late; emergency action, akin to wartime regulation, is inevitable. Market-based measures alone are insufficient.

Those still sceptical of this reality only have to look at the Northern Hemisphere now, particularly the Arctic, Asia and the US, as extreme temperatures trigger positive feedback loops, creating global climate conditions which make normal life impossible.

Neoliberals in the US and Australian fossil fuel industries long ago saw climate change as the greatest threat to the stranglehold on power from which they have benefited for so long. Accordingly billions of dollars have been devoted to discrediting climate science, raising doubts about its authenticity through every possible means, with much US money flowing in to support Australian campaigns. A process which has been remarkably successful, albeit nothing less than a crime against humanity.

But even the Koch brothers, the IPA and the MCA cannot change the laws of physics. The climate science has been rock-solid for decades and the cost of neoliberal disinformation is now coming home to roost. Unfortunately that cost is being borne by the poor who can least afford it, and groups like Australian farmers, rather than the elites who created it.

As Churchill put it: “Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong—these are the features which constitute the endless repetition of history

Which places Australia in an extremely dangerous position. We are one of the countries most exposed to the impacts of climate change, particularly our agricultural sector. Yet our dysfunctional parliament has left the country totally unprepared for what is to come.

The crux of the problem is that our government is in total climate change denial. Climate and energy policy is a shambles, the result of endless contortions trying to reconcile the irreconcilable. Namely expanding our fossil-fuel based economy, particularly coal, whilst pretending to meet our wholly inadequate voluntary commitments under the Paris Agreement. An Agreement which the government is doing its damndest to undermine, despite having ratified it in 2016.

Policy is dictated by scientifically and economically illiterate right wing hard-coalers, such as Messrs Canavan, Abbott, McCormack, Kelly, Christensen and Abetz who cannot understand that reliable, dispatchable and lower-cost power is now available from renewable energy sources far more effectively and cheaply than from coal. Even when coal continues to be massively subsidised, far more than renewables, by the lack of a sensible carbon price to account for its externalities, namely the enormous damage done by the health and climate impacts of coal use, which have been ignored since the Industrial Revolution. None of which matters if you are in climate denial.

They stamp their feet like petulant schoolboys whose favourite coal toy is being taken away. They lie and dissemble, misrepresenting and cherry-picking sound technical reports, twisting them to achieve their preferred pro-coal outcomes, irrespective of the severe implications for the wider Australian community, egged on by the serried ranks of the neoliberal cheer squad.

Just because we have large coal resources does not give us the right to use them if the result is an existential threat to humanity. Commodities come and go; coal is no different. Coal has created great wealth, but it’s time has passed as its climate impact, along with that of other fossil fuels, is now destroying the societies it helped create. The development of Galilee Basin coal, along with CSG in NSW and Queensland, and shale gas in the NT and WA, would be suicidal in current circumstances.

As Sheikh Yamani put it in the oil context: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil”.

Australia was built upon the innovative application of science. That is also its future, which the government is destroying with third-rate, anti-science policy such as the National Energy Guarantee. The certainty for energy investment which business and politicians crave will be non-existent until action on climate change is accepted as the absolute priority in determining energy policy.  The solutions are available and blindingly obvious, including a realistic price on carbon and bans on any further fossil fuel expansion.

We have many opportunities to invest in low-carbon alternatives for both domestic and export use which provide far greater potential than traditional commodities such as coal. Particularly in providing distributed energy across the rural community. This is where our aspirations must lie, not in massive investment in propping up coal-fired power stations or investing in new ones. The cost to Australia as these investments inevitably become stranded assets, will be enormous, along with physical damage to the country from their climate impact. Rather than holding back renewable energy development, which is clearly the objective of current policy, we should be accelerating it to the maximum extent possible along with dramatic improvements to energy efficiency and conservation.

Neoliberal climate denialists insist that Australia’s domestic carbon emissions, 1.3% of the global total, are such as small amount that nothing we do will have any effect in addresssing climate change globally. That is nonsense; if exports are included, which they must be given the rapidly accelerating climate impact, Australia is already the sixth largest carbon polluter globally and will soon be fourth given the ramping up of our LNG exports. In short, we are a very big emissions player. What Australia does mattters.

The pretence that the government is serious about addressing climate change becomes ever more ludicrous. The most recent example is the $500 million allocated in a futile attempt to repair climate damage to the Great Barrier Reef, via the Great Barrier Reef Foundation, whilst simultaneously advocating the opening up of massive new coal mines in the Galilee Basin which would compound that damage, totally decimating the reef, along with tourism and other industries far more valuable than coal.

Likewise the announcement from Minister for Agriculture , David Littleproud, about an agreement with state ministers to help farmers adapt to climate change. Why was this needed? Because the climate is changing. What are we doing to stop it? Nothing, just attempting to adapt whilst making the problem far worse by building new coal-fired power stations and mines. Just how long can this cognitive dissonance continue?

The Prime Minister proclaimed in 2010 that: “Our efforts to deal with climate change have been betrayed by a lack of leadership, a political cowardice, the like of which I have never seen — “. He promised never to lead a political party that did not take climate change seriously. He now revels in doing exactly that, placing the future of generations of Australians in jeopardy. An abject failure of principled leadership.

The Opposition are little better, continually sitting on the fence denying the urgency for climate action, and ambivalent toward new coal development such as Adani. Equally lacking in leadership and principle.

Many parliamentarians are climate deniers, but that does not absolve them of the fiduciary responsibility to set aside their personal prejudices and to act in the public interest with integrity, fairness and accountability. This requires them to understand the latest climate science; it is not acceptable for those in positions of public trust to dismiss scientific warnings in the cavalier manner which has typified the last few years. Particularly when the risk is existential.

Ministers in particular do not seem to understand that they have that fiduciary responsibility, along with the related public duty and a public trust.

As Sir Gerard Brennan puts it: “A fiduciary is a person to whom power is entrusted for the benefit of another. ——- Power is reposed in members of Parliament by the public for exercise in the interests of the public and not primarily for the interests of members or the parties to which they belong. The cry ‘whatever it takes’ is not consistent with the performance of fiduciary duty ———- All decisions and exercises of power should be taken in the interests of the public, and that duty cannot be subordinated to, or qualified by, the interests of the (parliamentarian or Minister)

Effective action on climate change must be raised above political infighting if the government’s first responsibility to ensure the security of the Australian people is to have meaning. But nowhere in the political spectrum is there evidence of leadership that might step up to the challenge.

In the corporate sector, the widespread abuse of power, declining ethical standards and falling community trust in business is calling into question corporations’ “social licence to operate”, and their right to enjoy the privilege of limited liability, which has been the cornerstone of business since the early 1800s, on the grounds that it should be a privilege to be earned, not an inalienable right.

Trust “is a belief that a person or institution will perform their role or function in accordance with its obligations, or where not bound by duty, in a predictable manner”.

Beyond trust is legitimacy “a recognised and well-founded right to claim a certain status, role or function.

Our parliament must be held to higher standards than the corporate world. But community trust in parliamentarians is non-existent. Further, a parliament that is incapable of firstly, understanding, secondly, addressing and thirdly, is deliberately worsening, the critical issues which Australia faces, particularly climate change, has forfeited any legitimacy. It has no right to continue in its present form.

When the risks are existential, it is not acceptable to allow parliamentary renewal to await the next election and the likely continuation of dysfunctional government. The parliament is on Winter Break; it should not reconvene. The Governor General should disband it and consider alternative national governance arrangements.

Different forms of democratic structure are being canvassed widely, recognising the profound weaknesses of the current system. This expertise should be used to create something akin to a wartime Government of National Unity, with leaders of foresight and integrity.

Because the brutal reality is that climate risk now has to be handled as an emergency. Either we act, or we face a bleak future. Parliament must work for the people, not destroy them.

Sometimes we have to do what is required” 

Published in Pearls & Irritations, 9th August 2019

Submission to the Review of Climate Change Policies 2017

 

 Contents:

  • Preamble
  • The Key Issue – Existential Risk 
  • The Rapidly Changing Context of Global Climate Change 
  • Practical Implications 
  • The Australian Context 
  • Existential Risk Management 
  • Reframing Australia’s Climate Change & Energy Policies

Author:   Ian Dunlop

Ian Dunlop has wide experience in energy resources, infrastructure, and international business, for many years on the international staff of Royal Dutch Shell.  He has worked at senior level in oil, gas and coal exploration and production, in scenario and long-term energy planning, competition reform and privatization. 

 He chaired the Australian Coal Associations in 1987-88. From 1998-2000 he chaired the Australian Greenhouse Office Experts Group on Emissions Trading which developed the first emissions trading system design for Australia.  From 1997 to 2001 he was CEO of the Australian Institute of Company Directors.  Ian has a particular interest in the interaction of corporate governance, corporate responsibility and sustainability. 

 An engineer from the University of Cambridge (UK), MA Mechanical Sciences, he is a Fellow of the Australian Institute of Company Directors, the Australasian Institute of Mining and Metallurgy and the Energy Institute (UK), and a Member of the Society of Petroleum Engineers of AIME (USA).

 Ian is a member of the Board of the ARC Centre of Excellence for Climate System Science based at UNSW.   He is a Director of Australia 21, Deputy Convenor of the Australian Association for the Study of Peak Oil, a Fellow of the Centre for Policy Development, a Member of The Club of Rome and a member of Mikhail Gorbachev’s Climate Change Task Force. He advises and writes extensively on governance, climate change, energy and sustainability.  He was a candidate in 2013 and 2014 to join the Board of BHP Billiton on a climate change and energy platform.

Preamble

Thank you for the opportunity to make a submission on Australia’s Climate Change Policies as part of the 2017 Review.

The Review Discussion Paper states that the Australian Government is “committed to addressing climate change —-“  and “is playing its role in global efforts to reduce emissions —-“ with “among the strongest targets of major economies (on a per capita basis) —–“.

Frankly that is a completed misrepresentation of Australia’s position over recent years, and particularly during the tenure of the present government, for the following reasons:

  • The objective of the December 2015 Paris Climate Agreement is to to hold global average temperature to “well below 20C above pre-industrial levels and to pursue efforts to limit the increase to 1.50C” [1]. A realistic assesment of the latest scientific and engineering mechanisms to achieve this objective indicates that, due to global inaction historically, it is now impossible to stay below 1.5oC, and it will require an extremely rapid, unprecedented technological, economic and societal transformation to have any chance of staying below even 2o
  • Australia signed and ratified the Paris Agreement, presumably accepting the necessity of addressing climate change urgently and achieving its objective . However our INDC emission reduction commitments, far from being among the strongest, when viewed in absolute terms are laughable, both in comparison with our peers globally, and in making a fair contribution to the Paris challenge.
  • Subsequent to Paris, the Federal Government has done its utmost to ensure the Paris objective will never be met by impeding the Australian transformation to a low carbon economy, favouring our traditional fossil fuel industries and discouraging rapid renewable energy innovation on the spurious grounds of “preserving energy security”. Our progress in taking up renewable energy is in spite of government policy, not because of it.
  • But most damning is the proposed opening up of an entire new coal province in Queensland’s Galilee Basin. This would be initiated with the Adani Carmichael coal mine, the largest ever built in Australia if it proceeds, with another six mines being contemplated. Most of this coal would be exported, but some earmarked for a new power station to underpin the development of Northern Australia.
  • This is hypocrisy at its worst. The domestic emissions from these coal developments would totally counteract our Paris INDC obligations for a start. But the global implications would be far more damaging, as one or two of these mines alone would ensure the world could never meet the Paris objective.

Only a government which does not believe anthropogenic climate change is a real issue, and has no intention of taking serious action, could have taken such positions. Previous governments of both political persuasions have been guilty of similar hypocrisy, with the result that the policies that do exist today are a dysfunctional and disconnected shambles brought about by years of denial and inaction. They are the cause of our so-called “energy crisis”.

The Review Discussion Paper, as so often with the climate change debate in Australia, defaults to important but essentially secondary sectoral issue.  It ignores the threshold policy determinant, and that is the urgency with which we must address climate change.

Time is of the essence. If the world seriously intends to address climate change, then far more urgent action is required than we are seeing thus far, particularly from Australia, who is a notable laggard despite the fact that we are one of the countries most exposed to climate risk.

In reality, it demands emergency action, akin to placing economies on a war-footing.  We have left it too late to achieve a smooth transition to a lower-carbon economy.  The rationale for this view is set out below:

The Key Issue – Existential Risk

Climate change is about global risk management.  Government policy, and the Discussion Paper, fails to recognise that climate risk is an existential risk beyond the conventional risk management experience of corporates, investors, financial markets and regulators.  It is an unprecedented challenge to humanity.

The concept of existential risk is not understood or accepted in our political and policy considerations:

It is a risk posing permanent large negative consequences to humanity which can never be undone. One where an adverse outcome would either annihilate intelligent life or permanently and drastically curtail its potential [2] [3]

Expert opinion considers this is the risk we are now exposed to unless we rapidly reduce global carbon emissions.  Our current global emission trajectory would lead to a temperature increase in the 4-5oC range, a world which would be “incompatible with an organised global community”, with global population dropping from 7 billion to below 1 billion as the impact of climate extremes takes effect [4].  The World Bank has pointed out that “There is no certainty adaptation to a 4oC world is possible[5].

Even the 2.7 – 3.5oC outcome which would eventuate if current voluntary Paris commitments were implemented, would result in outright social chaos in many parts of the world.   The US Military Advisory Board warns against a “failure of imagination” in thinking through these implications of climate change [6], which is exactly what is occurring in Australia at present. This is particularly dangerous given our exposure to climate risk.

Existential risk requires fundamentally different risk, and opportunity, management from conventional practice. This should be the over-riding consideration determining the climate change policies which Australia now requires.

The Rapidly Changing Context of Global Climate Change

Any balanced assessment of the climate science and evidence accepts that climate change is driven primarily by human carbon emissions from fossil fuel combustion, agriculture and land clearing, superimposed on natural climate variability, and that it is happening faster and more extensively than previously anticipated.

In this context, scientists have long been concerned about the extreme “tipping point” risks of the climate system; non-linear positive feedbacks which trigger rapid, irreversible and catastrophic change.

These feedbacks are now kicking in.  For example, Arctic weather conditions are becoming increasingly unstable as jetstream fluctuations warm the region 200C or more above normal levels; sea ice is at an all-time low with increasing evidence of methane emissions from melting permafrost [7].  Greenland and Antarctic ice sheets are melting at worst-case rates [8], with the potential for several metre sea level rise this century [9]. The Antarctic Larsen ice sheet and Pine Island glacier are showing signs of major breakup as a result of warming Southern Ocean waters, a process which is probably now irreversible [10] [11]. Coral reefs around the world, not least the Australian Great Barrier Reef, are dying off as a result of record high sea temperatures [12]. Global temperature increases are accelerating, with 2016 being the hottest year on record [13] [14].  Major terrestrial carbon sinks are showing signs of becoming carbon emitters [15]. And much more.

The social disruption and economic consequences are already devastating, leading to extensive forced migration and economic collapse in some countries.  The refugee crisis engulfing Europe, emanating from Syria and North Africa, is fundamentally climate change driven [16] and a precursor of greater conflict ahead. The viability of the Middle East in toto is questionable in the circumstances now developing [17] [18].  Major centres of economic activity, such as the Pearl River Delta, responsible for 40% of China’s exports, the Mekong River Delta and other parts of SE Asia are now under threat from climate-induced sea level rise prior to 2050 [19]. This has profound implications for Australia’s future.

Practical Implications

The Paris Agreement, the successor to the Kyoto Protocol, came into force on 4th November 2016. It requires the 195 countries participating to hold global average temperature to “well below 20C above pre-industrial levels and to pursue efforts to limit the increase to 1.50C” [20]. Regional temperature variations would be far greater than these global averages, rendering many parts of the world uninhabitable even at 20C, beyond the capacity of human physiology to function effectively.

Without rapid carbon emission reductions far greater than Paris commitments, the planet will become ungovernable. Dangerous climate change, which the Paris Agreement and its forerunners seek to avoid, is happening at the 1.20C increase already experienced as extreme weather events, and their economic costs, escalate. The negative impact on human health is already substantial [21] [22].

It is impossible to stay below the 1.50C Paris aspiration.  To have a realistic chance, say 90%, of staying below even 20C, rather than the unrealistic 50-66% chance upon which official analyses are based, means that there is no global carbon budget remaining today.  Thus no new fossil fuel projects can be built globally, that existing operations, particularly coal, have to be rapidly replaced with low carbon alternatives, and that carbon sequestration technologies which do not currently exist have to be rapidly deployed at scale [23] [24].  Even accepting the 50-66% risk levels excludes new projects in toto.

Most dangerously, the climate impact of investments made today do not manifest themselves for decades to come. If we wait for catastrophe to happen, as we are doing, it will be too late to act. However governments, business and investors are complacently allowing the continuation of such investment on the basis that the 20C limit is some way off, with a substantial carbon budget still remaining. Neither proposition is correct and the existential risk implications are being ignored.  Indeed, in circumstances of high uncertainty, which is the case currently with tipping points, even greater precautions should be taken than might be the case with better scientific knowledge.

The transition to a low-carbon economy is unprecedented. We have the technology, the expertise, wealth and resources to make it happen. What we lack is the maturity to set aside political ideologies and corporate vested interests to cooperate in the public interest.

And most importantly, time. Any realistic chance of avoiding catastrophic outcomes, requires emergency action to force the pace of change, starting with a serious price on carbon to remove the massive subsidy propping up fossil fuels. The irony is that this transition is the greatest investment opportunity the world has ever seen and Australia has some of the best low-carbon resources to benefit from it.

These views are not irrational alarmism. They may be regarded as extreme relative to mainstream debate within the corporate, financial and investment communities.  However they are well-grounded in the science and evidence, as set out in more depth in the “Climate Reality Check” paper referenced [25] and in the increasingly outspoken views of leading scientists [26].

The Australian Context

As the Prime Minister’s speech to the National Press Club on 1st February 2017 [27] implied, although this was not stated, climate and energy policy must be integrated and treated holistically, not in silos as we have beeen doing.

He emphasised the need for “affordable, reliable and secure energy”, denounced the States for their “unrealistic” renewable targets, encouraged energy storage, but then placed the emphasis back on coal. Priority would be given to “clean coal and carbon capture and storage (CCS) and onshore gas (CSG)”, implying that renewables were neither affordable or reliable. Further “The next incarnation of our energy policy should be technology agnostic – it’s security and cost that matter, not how you deliver it.  Policy should be ‘all of the above technologies’ working together to meet the trifecta of secure and affordable power while meeting our substantial emission reduction commitments”.

 This approach ignores numerous inconvenient realities.

First, the speech skirted around our biggest risk, namely accelerating climate change. Whilst Australia ratified the Paris Climate Agreement, our emission reduction commitments are not “substantial”. They are laughable both in comparison with our peers globally, and to have any chance of making a fair contribution to the Paris objective..

Second, to have a realistic chance, say 90%, of meeting the Paris objectives, the world should no longer emit any carbon to atmosphere.  We still emit record amounts today and need some fossil fuels to build the new low-carbon economy, so that is not going to happen.  But emissions must peak and decline rapidly.  There is no space for any new fossil fuel projects, coal, oil or gas.

Third, “clean coal” is neither new nor clean.  These technologies can reduce emissions by up to 40% relative to conventional practice, but that does not solve our problem when the global carbon budget has already been exhausted. Further, costs are increased by up to 30%, rendering coal even less competitive with renewables.

Fourth, years of research have failed to establish the basis for CCS expansion at scale.  CCS works where emissions are stored in depleted oil and gas reservoirs, which the oil industry has practised for decades.  Storage in other types of geological structures is far harder.  The few commercial operations in the world today are in the former category.  The substantial additional costs of CCS again reduce coal’s competitiveness, particularly if you refuse to price carbon, as the government are doing. CCS will be useful at the margin, but it will not save fossil fuels from their inevitable demise.

Fifth, energy prices rose largely because our flawed regulatory framework allowed power companies to invest  in unnecessary infrastructure on which they were guaranteed a return. Gas prices rose because the East Coast was opened up to the higher priced international gas market with the construction of export facilities at Gladstone.  The unseemly rush into CSG resulted in substantial processing overcapacity, with economic pressure increasing as CSG production was constrained by community objection to the damage caused to arable land and water.  Further, high methane leakage rates result in CSG having a greater warming effect than using coal, thereby negating its supposed benefit.

Sixth, there is nothing “agnostic” about choosing energy sources when the fossil fuel industry continues to enjoy a massive subsidy, far greater than renewables, by the lack of carbon pricing.  A subsidy the IMF estimate to be around 60% of coal’s market price [28]. And this is the nub of the problem. Our climate and energy policies are a disconnected and dysfunctional shambles, brought about by years of denial and inaction from Federal Governments of both persuasions who do not accept that climate change is happening.

But that game is up.  Climate change has moved from the twilight phase of much talk and relatively limited impact. It is now turning nasty.  Events are moving faster than expected as irreversible climate tipping points are crossed.  The economic and social costs of inaction can no longer be swept under the carpet, with regulators here and overseas demanding action to head off a climate-induced financial crisis.

The only way we can avoid catastrophic climate impact now is to initiate emergency action, akin to a war-footing.  That will be accepted before long as impacts bite and low carbon technology undermines the fossil fuel industry

Our antiquated electricity grids are undoubtedly in need of overhaul, but 100% renewable grids are being constructed around the world in only a few years, providing genuine energy security and making traditional concepts of base-load power irrelevant.

As for affordability, energy prices will rise given the extent and speed of change. It is irresponsible to suggest otherwise. However they will rise less with renewables than with coal, with greater prospects of cost reduction as technology improves.

We need a new narrative, built around our potential to prosper as a low-carbon society. We have the world’s best renewable resources, the science, the technology and engineering expertise to seize what is the biggest investment and job-creation opportunity this country has ever seen.  Government policy has been preventing that opportunity from being realised.

Existential Risk Management

The risks outlined above require that existential risk should now be the primary consideration in managing climate change and energy policy.  That policy should be built around existential risk management unlike anything being contemplated officially at present. The components would encompass:

  • Normative Goal Setting. “Politically realistic”, incremental change from “business-as-usual” is not tenable. This must be replaced with a normative view of limits which must be adhered to if catastrophic consequences are to be avoided, based on the latest science. Action is then determined by the imperative to stay within the limits, not by incremental, art-of-the-possible, change from business-as-usual.
  • Change Mindsets, to now regard the climate change challenge as a genuine global emergency, to be addressed with an emergency global response.
  • Genuine Global Leadership. Current responses reflect the dominance of managerialism – an emphasis on optimising the conventional political and corporate paradigms by incremental change, rather than adopting the fundamentally different normative leadership needed to contend with the potential for catastrophic failure.
  • Integrated Policy. Climate change, though difficult, is only one of a number of critical, inter-related, issues now confronting the global community, which threaten the sustainability of humanity as we know it. Rather than viewing these issues separately in individual “silos” as at present, integrated policy is essential if realistic solutions are to be implemented. Climate and energy policy needs to fit within a systemic Australian approach to emergency action.

There needs to be an honest articulation of the catastrophic risks and the integrated sustainability challenge we now face, with extensive community education to develop the platform for commitment to the major changes ahead. That has not happened thus far.

 Reframing Australia’s Climate Change and Energy Policies

I request that the Review of Climate Change Policies recognises and acts upon the following in developing their final recommendations:

  • Climate and Energy policy must be integrated and addressed holistically rather than in separate silos as they have been historically
  • Climate change already poses an existential risk to global economic, financial and societal stability. As such, addressing climate change must become the primary determinant of climate and energy policy
  • To limit temperature increase within globally agreed objectives, emergency action is now inevitable which must include economic instruments such as sensible carbon pricing, despite being repeatedly ruled out by successive governments.
  • Emission reduction objectives should be recast accordingly.
  • Existential risk management techniques are required which fundamentally differ from conventional practice.

All new fossil fuel investment should cease, particularly development of the Adani mine, the Queensland Galilee Basin coal province in general and CSG.

Emphasis must be placed on urgent programmes to transition to genuine low carbon energy sources.

Ian T Dunlop

Sydney

Australia

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References  

[1] UNFCCC Paris Agreement Article 2:

https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

[2] Existential Risk Prevention as a Global Priority”, Nick Bostrom, Oxford University, February 2013:

http://www.existential-risk.org/concept.pdf

[3] “Global Catastrophic Risks”, Bostrom & Cirkovic, OUP 2008:

http://www.global-catastrophic-risks.com/book.html

[4] http://grist.org/climate-change/2011-12-05-the-brutal-logic-of-climate-change/

[5] “Turn Down the Heat”, World Bank 2011:

http://documents.worldbank.org/curated/en/865571468149107611/pdf/NonAsciiFileName0.pdf

[6] “National Security and the Accelerating Risks of Climate Change”, Military Advisory Board, CNA Corporation, May 2014:

https://www.cna.org/CNA_files/PDF/MAB-201406508.pdf

[7] https://nsidc.org/arcticseaicenews/2016/12/arctic-and-antarctic-at-record-low-levels/

[8] http://www.smh.com.au/environment/sealevel-expert-john-church-resurfaces-at-university-of-nsw-amid-new-warning-signs-from-greenland-20161207-gt5qje.html

[9] https://www.theguardian.com/science/2016/mar/22/sea-level-rise-james-hansen-climate-change-scientist

[10] Antarctic tipping points for a multi-metre sea level rise, David Spratt, February 2017:

http://www.breakthroughonline.org.au/papers

[11] http://mashable.com/2016/12/03/nasa-photo-crack-larsen-c-ice-shelf/#GlKFT3rWbmqE

[12] https://www.theguardian.com/environment/2016/dec/09/great-barrier-reef-not-likely-to-survive-if-warming-trend-continues-says-report?utm_source=esp&utm_medium=Email&utm_campaign=GU+Today+AUS+v1+-+AUS+morning+mail+callout&utm_term=203508&subid=13317484&CMP=ema_632

[13] 2016 Warmest Year on Record Globally, NASA/NOAA, January 2017:

https://www.nasa.gov/press-release/nasa-noaa-data-show-2016-warmest-year-on-record-globally

[14] Global Heat Record Broken Again, Climate Council, January 2017:

https://www.climatecouncil.org.au/2016-hottest-year-report

[15] https://www.washingtonpost.com/news/energy-environment/wp/2016/11/30/the-ground-beneath-our-feet-is-poised-to-make-global-warming-much-worse-scientists-find/?utm_term=.2b40ab750c08

[16] http://www.pnas.org/content/112/11/3241.full

[17] The Roasting of the Middle East – Infertile Crescent, The Economist, 6th August 2016

http://www.economist.com/news/middle-east-and-africa/21703269-more-war-climate-change-making-region-hard-live-infertile

[18] Extreme Heatwaves could push gulf climate beyond human endurance, The Guardian 26th October 2015:

https://www.theguardian.com/environment/2015/oct/26/extreme-heatwaves-could-push-gulf-climate-beyond-human-endurance-study-shows

[19] How climate change will sink China’s manufacturing heartland, David Spratt & Shane White, 10th August 2016:

http://www.climatecodered.org/2016/08/how-climate-change-will-sink-chinas.html

[20] UNFCCC Paris Agreement Article 2:

https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

[21]  The Lancet Commission:

http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(16)32124-9.pdf

[22] Australian Academy of Science, Climate Change Challenges to Health:

https://www.science.org.au/supporting-science/science-sector-analysis/reports-and-publications/climate-change-challenges-health

[23] “Climate Reality Check”, David Spratt & Ian Dunlop, Breakthrough Institute, Melbourne, June 2016:

http://www.breakthroughonline.org.au/papers

[24] The Sky’s Limit, Oil Change International, September 2016:

http://priceofoil.org/content/uploads/2016/09/OCI_the_skys_limit_2016_FINAL_2.pdf

[25]ibid “Climate Reality Check”, David Spratt & Ian Dunlop, Breakthrough Institute, Melbourne, June 2016:

[26] “The World’s Biggest Gamble”, Johan Rockstrom, Hans Joachim Schellnhuber et al, AGU October 2016:

http://onlinelibrary.wiley.com/doi/10.1002/2016EF000392/abstract

[27] https://www.pm.gov.au/media/2017-02-01/address-national-press-club

[28] Getting Energy Prices Right, International Monetary Fund, July 2014:

https://www.imf.org/external/pubs/cat/longres.aspx?sk=41345.0

 

Submission to the Finkel Review of the National Energy Market

 

Contents:

  • Preamble
  • The Key Issue – Existential Risk
  • The Rapidly Changing Context of Global Climate Change 
  • Practical Implications
  • The Australian Context
  • Existential Risk Management
  • Request to Expert Panel

 Preamble

Thank you for the opportunity to comment on the Preliminary Report into the Future Security of the National Energy Market.  I congratulate the Expert Panel on a comprehensive analysis of the challenges faced by our ageing electricity grid system, the need for extensive reform to address the realities of 21st Century energy supply and the technological and market options available.

However I suggest that there is an overarching issue which the Preliminary Report does not adequately address, and that is the urgency with which we must address climate change, which in turn defines the context  in which reform of the NEM should take place.

Time is of the essence. It seems unlikely, given the lack of action to date and the accelerating pace of climate change, that global average surface temperatures can now be held below the 1.5oC to 2oC range adopted in the 2015 Paris Climate Change Agreement which Australia has ratified. If the world seriously intends to address climate change, then far more urgent action is required than we are seeing thus far, particularly from Australia who is a notable laggard in its emission reduction commitments.

In reality, it demands emergency action, akin to placing economies on a war-footing.  We have left it too late to achieve a smooth transition to a lower-carbon economy.  Reform of the NEM has a critical role to play in this process, but it must be set against realistic emission reduction objectives  far more stringent than the Government’s current emission reduction targets.

The rationale for this view is set out below:

The Key Issue – Existential Risk

The Preliminary Report does not recognise that climate risk is an existential risk beyond the conventional risk management experience of corporates, investors, financial markets and regulators.  It is an unprecedented challenge to humanity.

As such it requires fundamentally different risk, and opportunity, management from conventional practice. In turn this should be the over-riding consideration determining the extent and speed of reforming the NEM.

 

The Rapidly Changing Context of Global Climate Change

Any balanced assessment of the climate science and evidence accepts that climate change is driven primarily by human carbon emissions from fossil fuel combustion, agriculture and land clearing, superimposed on natural climate variability, and that it is happening faster and more extensively than previously anticipated.

In this context, scientists have long been concerned about the extreme “tipping point” risks of the climate system; non-linear positive feedbacks which trigger rapid, irreversible and catastrophic change.

These feedbacks are now kicking in.  For example, Arctic weather conditions are becoming increasingly unstable as jetstream fluctuations warm the region 200C or more above normal levels; sea ice is at an all-time low with increasing evidence of methane emissions from melting permafrost [1].  Greenland and Antarctic ice sheets are melting at worst-case rates [2], with the potential for several metre sea level rise this century [3]. The Antarctic Larsen ice sheet and Pine Island glacier are showing signs of major breakup as a result of warming Southern Ocean waters, a process which is probably now irreversible [4] [5]. Coral reefs around the world, not least the Australian Great Barrier Reef, are dying off as a result of record high sea temperatures [6]. Global temperature increases are accelerating, with 2016 being the hottest year on record [7] [8].  Major terrestrial carbon sinks are showing signs of becoming carbon emitters [9]. And much more.

The social disruption and economic consequences are already devastating, leading to extensive forced migration and economic collapse in some countries.  The refugee crisis engulfing Europe, emanating from Syria and North Africa, is fundamentally climate change driven [10] and a precursor of greater conflict ahead. The viability of the Middle East in toto is questionable in the circumstances now developing [11] [12].  Major centres of economic activity, such as the Pearl River Delta, responsible for 40% of China’s exports, the Mekong River Delta and other parts of SE Asia are now under threat from climate-induced sea level rise prior to 2050 [13]. This has major implications for Australia’s future.

Practical Implications

The Paris Agreement, the successor to the Kyoto Protocol, came into force on 4th November 2016. It requires the 195 countries participating to hold global average temperature to “well below 20C above pre-industrial levels and to pursue efforts to limit the increase to 1.50C” [14]. Regional temperature variations would be far greater than these global averages, rendering many parts of the world uninhabitable even at 20C, beyond the capacity of human physiology to function effectively.

Without rapid carbon emission reductions far greater than Paris commitments, the planet will become ungovernable. Dangerous climate change, which the Paris Agreement and its forerunners seek to avoid, is happening at the 1.20C increase already experienced as extreme weather events, and their economic costs, escalate. The negative impact on human health is already substantial [15] [16].

It is probably impossible to stay below the 1.50C Paris aspiration.  To have a realistic chance, say 90%, of staying below even 20C, means that no new fossil fuel projects can be built globally, that existing operations, particularly coal, have to be rapidly replaced with low carbon alternatives, and that carbon sequestration technologies which do not currently exist have to be rapidly deployed at scale [17] [18].

Most dangerously, the climate impact of investments made today do not manifest themselves for decades to come. If we wait for catastrophe to happen, as we are doing, it will be too late to act. However governments, business and investors are complacently allowing the continuation of such investment on the basis that the 20C limit is some way off, with a substantial carbon budget still remaining. Neither proposition is correct and the existential risk implications are being ignored.  Indeed, in circumstances of high uncertainty, which is the case currently with tipping points, even greater precautions should be taken than might be the case with better scientific knowledge.

The transition to a low-carbon economy is unprecedented. We have the technology, the expertise and wealth to make it happen. What we lack is the maturity to set aside political ideologies and corporate vested interests to cooperate in the public interest.

And most importantly, time. Any realistic chance of avoiding catastrophic outcomes, requires emergency action to force the pace of change, starting with a serious price on carbon to remove the massive subsidy propping up fossil fuels. The irony is that this transition is the greatest investment opportunity the world has ever seen.

These views are not irrational alarmism. They may be regarded as extreme relative to mainstream debate within the corporate, financial and investment communities.  However they are well-grounded in the science and evidence, as set out in more depth in the “Climate Reality Check” paper referenced [19] and in the increasingly outspoken views of leading scientists [20].

The Australian Context

The Prime Minister’s National Press Club speech on 1st February 2017 [21] emphasised the need for “affordable, reliable and secure energy”, denounced the States for their “unrealistic” renewable targets, encouraged energy storage, but then placed the emphasis back on coal. Priority would be given to “clean coal and carbon capture and storage (CCS) and onshore gas (CSG)”, implying that renewables were neither affordable or reliable. Further “The next incarnation of our energy policy should be technology agnostic – it’s security and cost that matter, not how you deliver it.  Policy should be ‘all of the above technologies’ working together to meet the trifecta of secure and affordable power while meeting our substantial emission reduction commitments”.

This approach ignores numerous inconvenient realities.

First, the speech skirted around our biggest risk, namely accelerating climate change. Whilst Australia ratified the Paris Climate Agreement, our emission reduction commitments are not “substantial”. They are laughable both in comparison with our peers globally, and to have any chance of making a fair contribution to the Paris objectives of holding global temperatures “well below 2oC above pre-industrial conditions and to pursue efforts to limit the increase to 1.5oC”.

Second, to have a realistic chance, say 90%, of meeting the Paris objectives, the world should no longer emit any carbon to atmosphere.  We still emit record amounts today and need some fossil fuels to build the new low-carbon economy, so that is not going to happen.  But emissions must peak and decline rapidly.  There is no space for any new fossil fuel projects, coal, oil or gas.

Third, “clean coal” is neither new nor clean.  These technologies can reduce emissions by up to 40% relative to conventional practice, but that does not solve our problem when the global carbon budget has already been exhausted. Further, costs are increased by up to 30%, rendering coal even less competitive with renewables.

Fourth, years of research have failed to establish the basis for CCS expansion at scale.  CCS works where emissions are stored in depleted oil and gas reservoirs, which the oil industry has practised for decades.  Storage in other types of geological structures is far harder.  The few commercial operations in the world today are in the former category.  The substantial additional costs of CCS again reduce coal’s competitiveness, particularly if you refuse to price carbon, as the government are doing. CCS will be useful at the margin, but it will not save fossil fuels from their inevitable demise.

Fifth, energy prices rose largely because our flawed regulatory framework allowed power companies to invest  in unnecessary infrastructure on which they were guaranteed a return. Gas prices rose because the East Coast was opened up to the higher priced international gas market with the construction of export facilities at Gladstone.  The unseemly rush into CSG resulted in substantial processing overcapacity, with economic pressure increasing as CSG production was constrained by community objection to the damage caused to arable land and water.  Further, high methane leakage rates result in CSG having a greater warming effect than using coal, thereby negating its supposed benefit.

Sixth, there is nothing “agnostic” about choosing energy sources when the fossil fuel industry continues to enjoy a massive subsidy, far greater than renewables, by the lack of carbon pricing.  A subsidy the IMF estimate to be around 60% of coal’s market price [22]. And this is the nub of the problem. Our climate and energy policies are a disconnected and dysfunctional shambles, brought about by years of denial and inaction from Federal Governments of both persuasions who do not accept that climate change is happening.

But that game is up.  Climate change has moved from the twilight phase of much talk and relatively limited impact. It is now turning nasty.  Events are moving faster than expected as irreversible climate tipping points are crossed.  The economic and social costs of inaction can no longer be swept under the carpet, with regulators here and overseas demanding action to head off a climate-induced financial crisis.

The only way we can avoid catastrophic climate impact now is to initiate emergency action, akin to a war-footing.  That will be accepted before long as impacts bite and low carbon technology undermines the fossil fuel industry

Our antiquated electricity grids are undoubtedly in need of overhaul, but 100% renewable grids are being constructed around the world in only a few years, providing genuine energy security and making traditional concepts of base-load power irrelevant.

As for affordability, energy prices will rise given the extent and speed of change. It is irresponsible to suggest otherwise. However they will rise less with renewables than with coal, with greater prospects of cost reduction as technology improves.

We need a new narrative, built around our potential to prosper as a low-carbon society. We have the world’s best renewable resources, the science, the technology and engineering expertise to seize what is the biggest investment and job-creation opportunity this country has ever seen.

Existential Risk Management

Climate change is existential risk management on a global scale.  The risk implications outlined above require that existential risk should now be the primary consideration in managing climate change and NEM reform.  It should be built around existential risk management policy unlike anything being contemplated officially at present. The components would encompass:

  • Normative Goal Setting. “Politically realistic”, incremental change from “business-as-usual” is not tenable. This must be replaced with a normative view of limits which must be adhered to if catastrophic consequences are to be avoided, based on the latest science. Action is then determined by the imperative to stay within the limits, not by incremental, art-of-the-possible, change from business-as-usual.
  • Change Mindsets, to now regard the climate change challenge as a genuine global emergency, to be addressed with an emergency global response.
  • Genuine Global Leadership. Current responses reflect the dominance of managerialism – an emphasis on optimising the conventional political and corporate paradigms by incremental change, rather than adopting the fundamentally different normative leadership needed to contend with the potential for catastrophic failure.
  • Integrated Policy. Climate change, though difficult, is only one of a number of critical, inter-related, issues now confronting the global community, which threaten the sustainability of humanity as we know it. Rather than viewing these issues separately in individual “silos” as at present, integrated policy is essential if realistic solutions are to be implemented. NEM reform needs to fit within a systemic Australian approach to emergency action.
  • There needs to be an honest articulation of the catastrophic risks and the integrated sustainability challenge we now face, with extensive community education to develop the platform for commitment to the major changes ahead. That has not happened thus far. Investors, corporates and regulators have a crucial role to play in articulating reality and in adopting constructive solutions.

Request to the Expert Panel

I request the Expert Panel, in developing their final recommendations for NEM reform, to recognise that:

  • Climate change already poses an existential risk to global economic, financial and societal stability.
  • To limit temperature increase within globally agreed objectives, emergency action is now inevitable.
  • Emission reduction objectives for the Australian electricity system should be recast accordingly.
  • The Final Report needs to incorporate the need for emergency action in NEM reform, with market arrangements and technological choices structured accordingly, including carbon pricing.
  • Existential risk management techniques are required which fundamentally differ from conventional practice.

Ian T Dunlop

Sydney, Australia

————-

Author:

Ian Dunlop

Ian Dunlop has wide experience in energy resources, infrastructure, and international business, for many years on the international staff of Royal Dutch Shell.  He has worked at senior level in oil, gas and coal exploration and production, in scenario and long-term energy planning, competition reform and privatization. 

 He chaired the Australian Coal Associations in 1987-88. From 1998-2000 he chaired the Australian Greenhouse Office Experts Group on Emissions Trading which developed the first emissions trading system design for Australia.  From 1997 to 2001 he was CEO of the Australian Institute of Company Directors.  Ian has a particular interest in the interaction of corporate governance, corporate responsibility and sustainability. 

 An engineer from the University of Cambridge (UK), MA Mechanical Sciences, he is a Fellow of the Australian Institute of Company Directors, the Australasian Institute of Mining and Metallurgy and the Energy Institute (UK), and a Member of the Society of Petroleum Engineers of AIME (USA).

 Ian is a member of the Board of the ARC Centre of Excellence for Climate System Science based at UNSW.  

 He is a Director of Australia 21, Deputy Convenor of the Australian Association for the Study of Peak Oil, a Fellow of the Centre for Policy Development, a Member of The Club of Rome and a member of Mikhail Gorbachev’s Climate Change Task Force. He advises and writes extensively on governance, climate change, energy and sustainability.  He was a candidate in 2013 and 2014 to join the Board of BHP Billiton on a climate change and energy platform.

Reference 

[1] https://nsidc.org/arcticseaicenews/2016/12/arctic-and-antarctic-at-record-low-levels/

[2] http://www.smh.com.au/environment/sealevel-expert-john-church-resurfaces-at-university-of-nsw-amid-new-warning-signs-from-greenland-20161207-gt5qje.html

[3] https://www.theguardian.com/science/2016/mar/22/sea-level-rise-james-hansen-climate-change-scientist

[4] Antarctic tipping points for a multi-metre sea level rise, David Spratt, February 2017:

http://www.breakthroughonline.org.au/papers

[5] http://mashable.com/2016/12/03/nasa-photo-crack-larsen-c-ice-shelf/#GlKFT3rWbmqE

[6] https://www.theguardian.com/environment/2016/dec/09/great-barrier-reef-not-likely-to-survive-if-warming-trend-continues-says-report?utm_source=esp&utm_medium=Email&utm_campaign=GU+Today+AUS+v1+-+AUS+morning+mail+callout&utm_term=203508&subid=13317484&CMP=ema_632

[7] 2016 Warmest Year on Record Globally, NASA/NOAA, January 2017:

https://www.nasa.gov/press-release/nasa-noaa-data-show-2016-warmest-year-on-record-globally

[8] Global Heat Record Broken Again, Climate Council, January 2017:

https://www.climatecouncil.org.au/2016-hottest-year-report

[9] https://www.washingtonpost.com/news/energy-environment/wp/2016/11/30/the-ground-beneath-our-feet-is-poised-to-make-global-warming-much-worse-scientists-find/?utm_term=.2b40ab750c08

[10] http://www.pnas.org/content/112/11/3241.full

[11] The Roasting of the Middle East – Infertile Crescent, The Economist, 6th August 2016

http://www.economist.com/news/middle-east-and-africa/21703269-more-war-climate-change-making-region-hard-live-infertile

[12] Extreme Heatwaves could push gulf climate beyond human endurance, The Guardian 26th October 2015:

https://www.theguardian.com/environment/2015/oct/26/extreme-heatwaves-could-push-gulf-climate-beyond-human-endurance-study-shows

[13] How climate change will sink China’s manufacturing heartland, David Spratt & Shane White, 10th August 2016:

http://www.climatecodered.org/2016/08/how-climate-change-will-sink-chinas.html

[14] UNFCCC Paris Agreement Article 2:

https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

[15]  The Lancet Commission:

http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(16)32124-9.pdf

[16] Australian Academy of Science, Climate Change Challenges to Health:
https://www.science.org.au/supporting-science/science-sector-analysis/reports-and-publications/climate-change-challenges-health

[17] “Climate Reality Check”, David Spratt & Ian Dunlop, Breakthrough Institute, Melbourne, June 2016:

http://www.breakthroughonline.org.au/papers

[18] The Sky’s Limit, Oil Change International, September 2016:

http://priceofoil.org/content/uploads/2016/09/OCI_the_skys_limit_2016_FINAL_2.pdf

[19]ibid “Climate Reality Check”, David Spratt & Ian Dunlop, Breakthrough Institute, Melbourne, June 2016:

[20] “The World’s Biggest Gamble”, Johan Rockstrom, Hans Joachim Schellnhuber et al, AGU October 2016:

http://onlinelibrary.wiley.com/doi/10.1002/2016EF000392/abstract

[21] https://www.pm.gov.au/media/2017-02-01/address-national-press-club

[22] Getting Energy Prices Right, International Monetary Fund, July 2014:

https://www.imf.org/external/pubs/cat/longres.aspx?sk=41345.0

 

Energy Security from Clean Coal, CCS & CSG – What could possibly go wrong ?

Every few years the fossil fuel industry pressures politicians to force “clean coal”, carbon capture and storage (CCS) and more recently coal seam gas (CSG) on an increasingly sceptical community to justify their continued expansion.

This cycle started with promotion of Adani’s massive Carmichael coal mine in Queensland, for coal export to India.  The South Australian blackout followed last September when violent storms blew down transmission towers, prompting instant Federal Government accusations that excessive reliance on renewable energy was the cause, despite clear advice to the contrary.  When the long-overdue closure of the Hazelwood brown coal power station was announced in November, energy security became the political battleground. In passing, Adani were to be offered a $1 billion subsidy to construct the Carmichael rail line, then a further subsidy for a new domestic coal-fired power plant at the mine was mooted to assist the development of Northern Australia.

The Prime Minister’s recent National Press Club speech emphasised the need for “affordable, reliable and secure energy”, denounced the States for their “unrealistic” renewable targets, encouraged energy storage, but then took an evangelical swing back to coal, straight from the fossil fuel industry hymnbook. Priority would be given to “clean coal and carbon capture and storage (CCS) and onshore gas (CSG)”, implying that renewables were neither affordable or reliable. Further “The next incarnation of our energy policy should be technology agnostic – it’s security and cost that matter, not how you deliver it.  Policy should be ‘all of the above technologies’ working together to meet the trifecta of secure and affordable power while meeting our (substantial) emission reduction commitments”.

So what could possibly go wrong with such sweeping vision?.  Well, pretty much everything.

First, the speech skirted around the biggest risk facing Australia, namely accelerating climate change. Whilst Australia ratified the Paris Climate Agreement, our emission reduction commitments are not “substantial”. They are laughable both in comparison with our peers globally, and to have any chance of making a fair contribution to the Paris objectives of holding global temperatures “well below 2oC above pre-industrial conditions and to pursue efforts to limit the increase to 1.5oC”.

Second, to have a realistic chance, say 90%, of meeting the Paris objectives, the world should no longer emit any carbon to atmosphere.  We still emit record amounts today and need some fossil fuels to build the new low-carbon economy, so that is not going to happen.  But emissions must peak and decline rapidly.  There is no space for any new fossil fuel projects, coal, oil or gas.

Third, “clean coal” is neither new nor clean.  These technologies can reduce emissions by up to 40% relative to conventional practice, but that does not solve our problem when the global carbon budget has already been exhausted. Further, costs are increased by up to 30%, rendering coal even less competitive with renewables.

Fourth, years of research have failed to establish the basis for CCS expansion at scale.  CCS works where emissions are stored in depleted oil and gas reservoirs, which the oil industry has practised for decades.  Storage in other types of geological structures is far harder.  The few commercial operations in the world today are in the former category.  The substantial additional costs of CCS again reduce coal’s competitiveness, particularly if you refuse to price carbon, as the government are doing. CCS will be useful at the margin, but it will not save fossil fuels from their inevitable demise.

Fifth, energy prices rose largely because our flawed regulatory framework allowed power companies to invest  in unnecessary infrastructure on which they were guaranteed a return. Gas prices rose because the East Coast was opened up to the higher priced international gas market with the construction of export facilities at Gladstone.  The unseemly rush into CSG resulted in substantial processing overcapacity, with economic pressure increasing as CSG production was constrained by community objection to the damage caused to arable land and water.  Further, high methane leakage rates result in CSG having a greater warming effect than using coal, thereby negating its supposed benefit.

Sixth, there is nothing “agnostic” about choosing energy sources when the fossil fuel industry continues to enjoy a massive subsidy, far greater than renewables, by the lack of carbon pricing.  A subsidy the IMF estimate to be around 60% of coal’s market price. And this is the nub of the problem. Our climate and energy policies are a disconnected and dysfunctional shambles, brought about by years of denial and inaction from Federal Governments of both persuasions who do not accept that climate change is happening.

But that game is up.  Climate change has moved from the twilight phase of much talk and relatively limited impact. It is now turning nasty.  Events are moving faster than expected as irreversible climate tipping points are crossed.  The economic and social costs of inaction can no longer be swept under the carpet, with regulators here and overseas demanding action to head off a climate-induced financial crisis.

The only way we can avoid catastrophic climate impact now is to initiate emergency action, akin to a war-footing.  That will be accepted shortly as impacts bite and low carbon technology undermines the fossil fuel industry.  In the meantime the damage created by political ideologues must be minimised, so no Adani, no coal-fired power, no CSG.

Our antiquated electricity grids are undoubtedly in need of overhaul, but 100% renewable grids are being constructed around the world in only a few years, providing genuine energy security and making traditional concepts of base-load power irrelevant. This is innovation at its best.

As for affordability, energy prices will rise given the extent and speed of change. However they will rise less with renewables than with coal, with greater prospects of cost reduction as technology improves.

We need a new narrative, built around our potential to prosper as a low-carbon society. We have the world’s best renewable resources, the science, the technology and engineering expertise to seize what is the biggest investment and job-creation opportunity this country has ever seen.

In addition, we need a task force which will pull together the resources and expertise required to initiate emergency action, led by statesmen and women from businesses with a concern to create a genuinely sustainable Australia.  It is their future which is being thrown away by fossil fuel industry pressure forcing government to remain firmly entrenched in the 20th Century.

Edited versions of this article were published in The Guardian and RenewEconomy on 3rd March 2017

Coal Industry – Wrong Way, Go Back!

Coal producers and lobbyists are yet again promoting “clean coal” as the justification for continued expansion of energy coal as we make the inevitable transition to the low-carbon economy. Conscious that they can no longer credibly reject the evidence of accelerating climate change, the Minerals Council of Australia (MCA) and the World Coal Association (WCA) claim that the latest “clean coal” technologies, in the form of lower emission coal plants and carbon capture and storage (CCS), are an effective response.

Last week, the MCA released a paper by the International Energy Agency’s (IEA) Clean Coal Centre contending that new high efficiency “ultra-supercritical” coal plants in 10 countries in South and East Asia, including India and China, could reduce carbon dioxide emissions by 1.1 billion tonnes per annum compared to less efficient “subcritical” coal plants. They also heralded the opening of a new coal-fired power generation CCS plant in Saskatchewan as evidence that commercial scale CCS is now available.

Whilst such technological advances are welcome, that argument displays a fundamental misunderstanding of the climate science, and is being economical with the truth to put it mildly.

The full IEA picture emphasises that to stay below 2°C of global warming, we can’t afford to add any additional coal plants to the existing stock, no matter how efficient they are, unless their emissions can be sequestered. Certainly we need to replace or convert older, dirtier plants to the new cleaner technologies, but no new ones. Every new unabated coal plant locks in decades of additional coal burning and carbon dioxide emissions that our planet cannot afford.

In the IEA’s scenario to meet the 2°C limit, by 2040 there is room for only 780 GW of unabated coal power generation, and all of this must be the most efficient ultra-supercritical coal plants. The size of the world’s current coal fleet is 1900 GW, with an additional 300 GW under construction. Therefore even if not another single additional coal plant was built from today, we still need to retire two-thirds of the world’s current coal fleet by 2040 in order to stay within 2°C.

CCS is presented as the solution to overcome this constraint and allow unbridled coal expansion. It is not rocket science; it has been done in the oil industry for decades, reinjecting carbon dioxide produced with oil and gas back into the geological formations from whence it came. However the global storage capacity in depleted oil and gas reservoirs is limited and they are rarely in close proximity to coal power generators. If other geological storage structures have to be used, and the carbon dioxide transported any distance, storage security, technical difficulties and costs escalate dramatically which is why progress has been slow and industry has been reluctant to invest strongly in its development.

Expert analysis suggests that to sequester around a fifth of global power generation emissions would require the creation of an industry far larger than today’s world oil industry; implying the construction of more than 3000 plants within the next 20 years to have any chance of making a realistic contribution to emissions reduction. It is not going to happen, not least because the MCA and WCA have continually undermined sensible efforts to introduce a price on carbon pollution, thereby weakening the incentive to develop CCS.

Despite decades of rhetoric, globally we have only the one coal power CCS operation in Saskatchewan and even that is sequestering its emissions in a depleted gas reservoir. The project cost $1.5 billion for a mere 110 MW of output. A study by Saskatchewan Community Wind found that investment in wind power instead of the CCS plant could have saved ratepayers more than $1 billion. CCS will be viable in limited, specific circumstances and should be encouraged where that is the case, but it is never going to contribute substantially to the emergency reduction of global emissions now required. The industry should stop pretending otherwise.

Commitments made so far by countries in the lead-up to the December Paris climate conference show global emissions continuing to grow to 2030, albeit at a slower rate than in the past, in stark contrast to the rapid reduction required to stay below 2°C. Yet dangerous climate change is already happening at the 1.0°C increase we are experiencing today. The refugee crisis engulfing Europe is fundamentally climate change driven, triggered over the last decade by the most severe drought in recorded history in and around Syria. India, supposedly the great market opportunity for Australian coal expansion, has experienced unprecedented climate change-related heat extremes in recent years and changes to its critical monsoon system. These are precursors of far worse to come unless emissions are reduced fast.

The coal industry justifies expansion on the basis of demand supposedly “forecast” under an IEA scenario which assumes only limited change from “business-as-usual”. As the IEA themselves put it, this cannot be allowed to happen: it would be a world where temperature increases by around 4°C on average, with greater extremes regionally, a world where economic activity as we know it ceases as global population rapidly declines.

In short, the world would be toast. Australia, as the hottest, driest continent on Earth, would be toasted first. Coal leaders need to rein in the MCA and WCA, and start restructuring their companies, and retraining their workforce for the real opportunities the low-carbon world opens up.

Ian Dunlop was formerly an international oil, gas and coal industry executive, chair of the Australian Coal Association and CEO of the Australian Institute of Company Directors. He is a Member of the Club of Rome.

An edited version of this article appeared in the Melbourne Age on 25th September 2015.