Australia’s Coal & CSG Delusion

September 26, 2017May 11, 2018 itdunlop

Energy policy is the issue to trump them all. We have already lost several Prime Ministers in its cause, and more will likely walk the plank before commonsense prevails. But the last few weeks have set new standards for national stupidity .

The political rhetoric grows ever more florid, starting with Prime Minister Malcolm Turnbull last October: “Coal is going to be an important part of our energy mix, there is no question about that, for many, many, many decades to come, on any view”. Just as he launched an independent review into the future security of the national energy market by Chief Scientist Alan Finkel; no pre-conceived ideas here.

Then, at the National Press Club on 1^st February 2017: “Old, high emissions coal-fired power plants are closing down, reducing baseload capacity. They cannot simply be replaced by gas –because it’s too expensive – or by wind and solar because they are intermittent. Storage has a big role to play, but we will need more synchronous baseload power, and as the world’s largest coal exporter we have a vested interest in showing that we can provided both low emissions and reliable baseload power with state-of-the-art clean coal-fired technology. —- The next incarnation of our energy policy should be technology agnostic – Policy should be ‘all of the above’, working together to deliver the trifecta of secure and affordable power while meeting our emission reduction commitments” And to ram the point home : ”Those people who say coal and other fossil fuels have no future are delusional and they fly in the face of all of the economic forecasts”.

Simultaneously, former Resource Minister Matt Canavan was spruiking the benefits of Galilee Basin coal, initially in the shape of the Adani Carmichael Mine, subsidised with a cheap loan from NAIF; then domestic High Efficiency Low Emissions (HELE) power stations; and finally the full blown development of five or six Galilee Basin mega-mines in addition to Adani. All very technology agnostic.

Unfortunately the independent reports commissioned by the government from Finkel and the Australian Energy Market Operator (AEMO), did not toe the party line. The experts set out sensible steps to solve the problems of our energy market, with the electricity system moving toward increasing use of renewable energy and no need for additional investment in coal – the result being lower electricity prices and no energy crisis. The pre-requisite is a sensible policy framework delivered by government; a big ask after two decades in which the abject failure of political leadership on these issues, from John Howard onwards, created the current mess.

Not to be diverted from the Minerals Council of Australia’s roadmap for a coal-based future, the government instantly twisted one AEMO recommendation, to establish a 1000MW flexible dispatchable reserve to maintain supply reliability in South Australia and Victoria over the coming summer, to claim we face a massive energy crisis. In a mind-boggling non-sequitur, it is now using this lie to justified its attempt to force AGL to keep open the oldest, least efficient and dirtiest baseload coal–fired power station in Australia, at Liddell NSW, for a further five years after its planned 2022 closure date. No one has apparently told the government that baseload coal-fired power is neither flexible nor dispatchable.

But the rhetoric soared: Matt Canavan assured us that “Renewables are just a short-term sugar hit”, Barnaby Joyce sternly lectured us that “We must not lose sight of the main game. Baseload coal-fired power it is, and will remain”. The Prime Minister insisted his energy policy was based on “engineering and economics, not ideology”.

Such visionary leadership brings to mind Field Marshal Earl Haig, commander of the British Expeditionary Force on the Western Front during WW1. In 1925, a decade after his disastrous WW1 campaigns, he still opined that: “Aeroplanes and tanks are only accessories to the men and the horse, and I feel sure that as time goes on you will find just as much use for the horse – the well-bred horse – as you ever have done in the past”. A sentiment that might appeal to the National Party, given its rural origins.

But the analogy goes far beyond horses. Haig’s pigheaded arrogance and failure to imagine the consequences of his actions, contributed to the death or injury of hundreds of thousands of men in the battles of the Somme and Passchendaele, including many Australians. Yet he learnt nothing from the experience.

Today, we see history repeating itself with the same pigheaded arrogance and failure of imagination, as both the Federal Government and Opposition avoid the over-riding issue which must determine energy policy, namely human-induced climate change, which the government is sweeping under the carpet to appease conservative climate deniers and their fossil fuel industry funders.

Climate change is no longer a benign theory which might have impact decades hence. It is happening now, faster and more extensively than expected, as escalating extreme events such as the spate of unprecedented hurricanes in the Atlantic and Gulf of Mexico, and the devastating monsoon on the Indian subcontinent demonstrate. The cost of these disasters is already a major constraint on economic growth, even in the USA. But worse lies ahead because climatic tipping points, where the climate jumps from one state to another far less conducive to human survival and prosperity, are beginning to trigger. Once such changes gather momentum, humanity’s ability to influence outcomes will rapidly disappear, bringing with it death and devastation on a massive scale. A substantial reduction in global population would result, with Australia, one of the driest and hottest continents on Earth, particularly impacted. In an ironic reversal of “Stop-the-Boats”, many Australians may find themselves having to migrate.

To have a realistic (90%) chance of staying below the 2^oC temperature increase which is the upper limit of the Paris Climate Agreement, global carbon emissions must reduce rapidly, with an immediate halt to all new investment in fossil fuel projects, as we have no carbon budget left. It is not a question of whether we transition to a low-carbon world; we have no choice. We have to make renewable technologies work as an absolute priority, dramatically improve the conservation and efficiency of energy use, and reboot our economic and social systems to operate within the biophysical constraints we now face. Business craves policy certainty before investing; but certainty, secure and affordable power will be mirages until emissions reduction becomes the top priority of energy policy. And those reductions have to be far greater than our wholly inadequate Paris voluntary commitments.

Denying this reality, the government dances to the tune of the fossil-fuel industry, trying to establish as many new coal, Coal Seam Gas (CSG), LNG and oil projects as it can before the shutters finally come down on the industry, which they will. But our leaders deliberately ignore the fact that the full climatic outcomes of these projects do not manifest themselves for decades hence. If they proceed, with lives of 30-40 years, the result will be suicidal globally – and nationally given the damaging impact of climate change on Australia’s water and soils. The massive Adani mine alone, in the absence of any further carbon budget, will push the world above the 2^oC limit. None of the arguments routinely trotted out to justify these projects, such as poverty alleviation or the HELE power stations being built in Asia and their supposed “emission reductions”, are credible in these circumstances. Demands to expand CSG fracking are particularly flawed, given that experience demonstrates CSG’s global warming impact is worse than using coal, due to methane leakage, quite apart from its disastrous effects on agricultural productivity and water availability.

The current Federal government energy policy, to the extent it exists, is criminally negligent. So what should be done? We need bipartisan agreement to three principles on which policy must be based:

First, human-induced climate change now represents an immediate existential risk to humanity. Second, an emergency response is essential if that risk is to be managed realistically. Third, it must be based on action to achieve clearly defined objectives, rather than accepting “politically realistic”, and wholly ineffectual, pathways.

An existential risk poses large negative consequences to humanity which can never be undone, and which would either annihilate intelligent life or drastically curtail its potential. The risk is immediate as, in the absence of any carbon budget, our actions are locking-in irreversible, existential outcomes today. Sensible risk management addresses risk in time to prevent it happening and that time is now.

Having accepted the principles, politicians should then get out of the way, taking their ideology with them, and let the experts, who really do understand engineering and economics, reform our energy system accordingly. And that includes pricing carbon to remove the greatest subsidy of all, which the fossil fuel industry has enjoyed since the Industrial Revolution by not having to account for the full costs that they impose on society, such as health and climate impact.

Australia’s low-carbon energy resources mean its potential to prosper in the low-carbon 21^st Century is far greater than in the high-carbon past. The Prime Minister’s real duty is to ensure the Australian people can realise that potential, not see it thrown away in the delusional pursuit of coal and CSG. His grandchildren, and mine, deserve better than the appalling leadership failure we are seeing at present – and the destructive, nihilistic nonsense being spouted by Tony Abbott. Unconscionable indeed!

Published in Pearls & Irritations and RenewEconomy

The Leaders We Deserve ?

May 15, 2017May 11, 2018 itdunlop

Rarely have politicians demonstrated their ignorance of the real risks and opportunities confronting Australia than with the recent utterances of Barnaby Joyce, Matt Canavan and other ministers promoting development of Adani and Galilee Basin coal generally, along with their petulant foot-stamping over Westpac’s decision to restrict funding to new coal projects. Likewise, Bill Shorten sees no problem in supporting Adani.

The media are no better; discussion instantly defaults to important but secondary issues such as Adani’s concessional government loan, the project’s importance to the economy, creating jobs for North Queenslanders and so on.

Nowhere in the debate is the critical issue even raised, namely the existential risk of climate change which such development now implies. Existential means a risk posing large negative consequences to humanity which can never be undone. One where an adverse outcome would either annihilate life, or permanently and drastically curtail its potential.

This is the risk to which we are now exposed unless we rapidly reduce global carbon emissions.

In Paris in December 2015, the world, Australia included, agreed to hold global average temperature to “well below 2⁰C above pre-industrial levels and to pursue efforts to limit the increase to 1.5⁰C”, albeit the emission reduction commitments Australia tabled were laughable in comparison with our peers and with the size of the challenge.

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. 1.6^oC is already locked-in as the full effect of our historic emissions unfolds.

Our current path commits us to a 4–5^oC temperature increase; a totally disorganised world with a substantial reduction in global population, possibly to less than 1 billion people from 7.5 billion today.

The voluntary emission reduction commitments made in Paris, if implemented, would still result in a 3^oC increase, accelerating social chaos in many parts of the world with rising levels of deprivation, displacement and conflict.

It is already impossible to stay below the 1.5⁰C Paris aspiration. To have a realistic chance of staying below even 2⁰C means that no new fossil fuel projects can be built globally, coal, oil or gas, and that existing operations, particularly coal, have to be rapidly replaced with low carbon alternatives. Further, carbon capture technologies which do not currently exist have to be rapidly deployed at scale.

Climate change has moved out of the twilight period of much talk and limited impact. It is now turning nasty. Some regions, often the poorest, have already seen major disasters, as has Australia. How long will it take, and how much economic damage must we suffer, particularly in Queensland, before our leaders accept that events like Cyclone Debbie and the collapse of much of the Great Barrier Reef are being intensified by man-made climate change? Of that there is no doubt, nor has there been for decades. The uncertainties, regularly thrown up as reasons for inaction, relate not to the basic science but to the speed and extent of climate impact, both of which have been badly underestimated.

The most dangerous aspect is that the impact of fossil fuel 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. Time is the most important commodity; to avoid catastrophic outcomes requires emergency action to force the pace of change. Australia, along with Asian regions to our north, are now considered to be “disaster alley”; we are already experiencing the most extreme impacts globally.

In these circumstances, opening up a major new coal province is nothing less than a crime against humanity. The Adani mine by itself will push temperatures above 2^oC; the rest of the Galilee basin development would ensure global temperatures went way above 3^oC. None of the supporting political arguments, such as poverty alleviation, the inevitability of continued coal use, the superior quality of our coal, or the benefits of opening up Northern Australia, have the slightest shred of credibility. Such irresponsibility is only possible if you do not accept that man-made climate change is occurring, which is the real position of both goverment and opposition.

Likewise with business. At the recent Santos AGM, Chairman Peter Coates asserted that a 4^oC world was “sensible” to assume for planning purposes, thereby totally abrogating in one word his responsibility as a director to understand and act upon the risks of climate change. Westpac’s new climate policy is a step forward, but fails to accept that no new coal projects should be financed, high quality coal or not. The noose is tightening around the necks of company directors. Personal liability for ignoring climate risk is now real.

Yet politicians assume they can act with impunity. As rumours of Trump withdrawing from Paris intensify, right on cue Zed Seselja and Craig Kelly insist we should do likewise, without having the slightest idea of the implications.

The first priority of government, we are told, is to ensure the security of the citizens. Having got elected, this seems to be the last item on the politician’s agenda as climate change is treated as just another issue to be compromised and pork-barrelled, rather than an existential threat.

We deserve better leaders. If the incumbency is not prepared to act, the community need to take matters into their own hands.

Edited versions of this article were published in the Canberra Times and RenewEconomy on 19th May 2017

Submission to the Review of Climate Change Policies 2017

May 4, 2017May 11, 2018 itdunlop

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 1.5^oC, and it will require an extremely rapid, unprecedented technological, economic and societal transformation to have any chance of staying below even 2^o
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 4-5^oC 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 4^oC world is possible” ^[5].

Even the 2.7 – 3.5^oC 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 4^th 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 1^st 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

————-

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, 6^th 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 26^th 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, 10^th 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

March 3, 2017May 11, 2018 itdunlop

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 21^st 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 1.5^oC to 2^oC 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

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 4^th 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.

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].

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.

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 1^st 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.

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.

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 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, 6^th 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 26^th 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, 10^th 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 ?

February 28, 2017May 11, 2018 itdunlop

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 2^oC above pre-industrial conditions and to pursue efforts to limit the increase to 1.5^oC”.

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.

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.

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.

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

The Australian Elites Have Failed Us On Climate Change

June 21, 2015May 11, 2018 itdunlop

The recent utterances of Maurice Newman, Chair of the Prime Minister’s Business Advisory Council, suggesting that climate change is nothing more than an attempt to establish “a new world order under the UN”, engendered some hilarity. They should not, because his comments highlight a fundamental failure of leadership on the part of Australia’s elites which is potentially disastrous.

The Business Advisory Council comprises some of the great and the good of Australia: Chairs of our leading mining, manufacturing, communications and construction companies and banks, ex-heads of the Prime Minister’s Department, Treasury and the Productivity Commission.

Whilst Maurice Newman’s writing is prefaced with the disclaimer that his views are his own, they clearly carry great weight in setting government policy. Whether it be the removal of carbon pricing, the pretence that Direct Action is serious climate policy, an ideological anti-science agenda reminiscent of the Dark Ages, or the charade of cutting the RET to reduce consumer costs when its own advice demonstrated exactly the opposite, the Federal Government’s actions have made it abundantly clear that it has no intention of taking climate change seriously.

In the real world, human-induced climate change is accelerating. It presents risks that humanity has never previously experienced, as evidence mounts that extremely dangerous “tipping points” in the Arctic, Antarctic, the Oceans and elsewhere are being activated, probably irreversibly. Current government policies would lead to a temperature increase of 4-6⁰C before 2100, a world where population would drop from 7 billion today toward 1 billion or less. Even meeting the “official” target of a 2⁰C temperature increase would halt population growth.

Due to lag in the climate system, the dangerous warming impact of fossil-fuel investments made today only becomes fully evident decades hence. Nonetheless, governments, investors and business are irresponsibly accelerating such investment, ignoring the risks. Waiting for catastrophe to happen before acting, which is in effect what Maurice Newman, and even “lukewarmers” such as Dick Warburton, Bjorn Lomborg and Nigel Lawson advocate, means that it is too late to act. It is precisely this scenario that sensible risk management is designed to avoid. Indeed, given the implications of passing “tipping points”, even greater precautions should be taken.

What are we to make then, of the deathly silence from other members of the PM’s Business Advisory Council in response to Newman’s very public stance? For example: Jac Nasser, chair of BHP Billiton which claims global leadership on climate change, Catherine Livingstone, former chair of CSIRO, one of the world’s leading climate change research organisations, now chair of the Business Council of Australia, Michael Chaney, former chair of NAB, another corporate sustainability leader, now chair of Wesfarmers. They will be well aware of climate risk; if not, as corporate directors they should be.

Perhaps there are whispered conversations in the corridors of power suggesting that Maurice might be wrong; if so they are singularly ineffective. The only conclusion is that the Council is comfortable with the charade of current climate policy despite the glaring contradiction with individual member’s corporate views. If not, given the risk we face, and the missed opportunities, they should be saying so, loudly and publicly; for disclaimer notwithstanding, the public perception is that Maurice Newman represents Australian business’s attitude to climate change.

This is reinforced by the fact that not a single Chair or CEO of a major company, bank or investment manager has spoken out against the Federal Government’s blatant climate denialism, and in particular, the government’s undermining of the new low-carbon industries on which Australia’s future depends. No comment on the lack of any strategic vision in the flood of Green and White papers on energy, defence, agriculture, immigration and infrastructure, all of which totally ignore the single biggest issue which should be driving policy – climate change.

Not that our elites shrink from taking a public position; witness the speed and anger of the big iron ore miners when our free market government proposed a Senate inquiry to explain how the free market works. A pity the same energy is not devoted to demanding sensible climate policy.

In 2008, with the Global Financial Crisis rapidly accelerating, Queen Elizabeth, in discussion with experts at the London School of Economics asked: “Why did no one foresee the timing, extent and severity of the GFC ?”. After some time, the British Academy responded that “A psychology of denial gripped the financial and political world, —— The failure of the collective imagination of many bright people to understand the risks to the system as a whole.”

Just so with climate change, as the same denial grips the elite of Australia, only the risks now are far greater. Quite simply, the future of humanity.

Remuneration is a major factor: “It is hard to get a man to understand a problem if his salary depends upon him not understanding it”. At present, our elites are being paid an obscene amount of money to, in effect, destroy the planet. They now need to lead and publicly take up the climate change challenge. We have solutions, but not if the elites hide in the shadow of Maurice Newman. Our grandchildren deserve better.

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 21st June 2015: http://www.theage.com.au/comment/the-australian-elites-have-fundamentally-failed-us-on-climate-change-20150619-ghsb9d.html

From Global Drivers to Strategic Risks

March 1, 2012May 11, 2018 itdunlop

Since the Industrial Revolution the world has undergone an unprecedented transformation, largely a result of human activity. To the point, as proposed by Paul Crutzen, that we are now arguably in a new geological epoch – the Anthropocene 1, where humanity is the dominant force in world evolution.

The changes have been particularly marked since WW11 as the developed world has enjoyed rapidly rising standards of living and wealth creation. But in the euphoria created by this good fortune, we have failed to recognize that the global drivers behind it have been gradually turning into major strategic risks; that is risks to external to any institution which have the potential to fundamentally change that institution, for better or worse, whether it be at the level of business models or national security. In essence, they reflect an increasing gulf between narrow self-interest and the common good.

As population rises from 7 billion today toward 9 billion by 2050, and possibly 10 billion by 2100, the inevitable logic of exponential growth in both population and consumption is now hitting the limits of global ecosystems and resource availability. The immediate pressure points are energy security, climate change, biodiversity loss, water and food availability, issues which along with the related matter of financial instability, are converging rapidly in an unprecedented manner. But these are only the tip of the broader global sustainability iceberg; further constraints and limits are fast becoming evident as major developing countries, particularly China and India move up the growth escalator.

This situation is not unexpected; it has been anticipated for decades going back before the 1972 publication of “The Limits to Growth”. In the meantime the developed world has created a political and capitalist system which has proved incapable, so far, of recognising that the most important factor for its own survival is the preservation of a biosphere fit for human habitation.

The aftermath of WWII bred statesmen and women in both government and business intent upon creating a better world, re-building society, avoiding further conflict and genuinely prepared to take a long-term view. The results were far from perfect, but that vision did provide the foundations for the increasing prosperity the West has enjoyed ever since.

But with prosperity came complacency; the assumption that growth within a finite system can continue indefinitely. Hardly surprising, given that power and influence accrue to those who prosper under capitalism, and that technology until recently has enabled us to push back or ignore any physical limits. Enormous political and personal capital is now vested in preserving the status quo. As a result, our institutions have become predominantly short-term focused; politically due to electoral cycles and corruption of the democratic process; corporately due to perverse subsidies and incentives, particularly the bonus culture which became the norm through the 1990’s. Managerialism – “doing things right”, replaced leadership – “doing the right things”, statesmen all but disappeared, ethical standards deteriorated, so that we now find ourselves uniquely ill-equipped to handle the long-term challenges which lie ahead.

As London Financial Times columnist Gillian Tett put it recently: “Just as the past four years have raised questions about the way modern finance works, they are raising profound questions about our systems of government: we have no institutions to plan for the future, nor institutions that can quickly respond to a crisis. This is one of the reasons faith in so many public institutions is collapsing, alongside faith in the bankers. It’s why you’ve got this Occupy Wall Street protest.”

The upshot is a series of escalating crises, most recently the 2008 Global Financial Crisis (GFC), which is now cascading into a multitude of other crises as global leaders desperately attempt to reboot an outmoded 20th Century system of economic growth.

The developing world had been intent on slavishly following our example. However in the last decade that began to change as the reality of pollution, resource scarcity and increasing inequity hit home, and it became obvious that the developed world model has serious flaws.

The limits we now face are global, rather than regional, and cannot be circumvented as we have done in the past. What was workable in a relatively empty world of 2-3 billion people post-WWII is not workable in today’s full world of 7 billion, let alone the 9 or 10 billion to come. Humanity today requires on average the biophysical capacity of 1.5 planets to survive 7. If everyone lived at US levels, we would require 5 planets, at Australian levels around 4 planets. This cannot continue indefinitely as we are fast destroying the global “commons” of clean air, water and the fertile soil and oceans on which we depend for our food supply and life support.

Our ideological preoccupation with a market economy, based on political expediency and short-term profit maximization, is rapidly leading toward an uninhabitable planet, as sustainability issues of theoretical concern for decades manifest themselves physically, particularly in regard to climate and energy.

Source for graphic: Global Footprint Network

Economic Crises and Their Impacts

May 28, 2009May 11, 2018 itdunlop1 Comment

Sean Costigan (http://www.gpia.info/node/357) interviews Ian Dunlop (http://cpd.org.au/user/iandunlop) on the economic crisis and its impacts on energy and the environment.