Australia’s Coal & CSG Delusion

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 1st 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 2oC 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 2oC 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 21st 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

 

September 26 / 2017
Author itdunlop
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Facing “Disaster Alley”, Australia Shirks Responsibility

 

The first responsibility of a government is to safeguard the people and their future wellbeing. The ability to do so is increasingly threatened by human-induced climate change, the accelerating impacts of which are driving political instability and conflict globally. Climate change poses an existential risk to humanity which, unless addressed as an emergency, will have catastrophic consequences.

An existential risk is an adverse outcome that would either annihilate intelligent life or permanently and drastically curtail its potential.

In military terms, Australia and the adjacent Asia-Pacific region is considered to be “Disaster Alley”, where the most extreme impacts are already being experienced. These risks are either not understood or wilfully ignored at the leadership level in Australia, which is a profound failure of imagination, far worse than that which triggered the Global Financial Crisis in 2008. The management of existential risk cannot be handled with conventional, reactive, learn-from-failure techniques. We only play this game once, so we must get it right first time.

This should mean an honest, objective look at the real risks to which we are exposed, guarding especially against the more extreme possibilities which would have consequences damaging beyond quantification, and which human civilization as we know it would be lucky to survive.

Instead, the climate and energy policies adopted by successive Australian governments over the last twenty years, largely driven by ideology and corporate fossil fuel interests, have deliberately refused to acknowledge this existential threat to our future well-being, as the shouting match over the wholly inadequate reforms proposed by the Finkel Review demonstrates only too well. Our leaders have access to the best possible scientific advice and to the overwhelming evidence that we have badly underestimated both the speed and extent of climate change impact. In such circumstances, to ignore this threat is a fundamental breach of the fiduciary responsibility with which political, bureaucratic and corporate leaders are entrusted by the community they are supposed to serve.

A hotter planet has already taken us perilously close to, and in some cases over, tipping points which will cause profound changes in major climate systems: at the polar ice-caps, in the oceans, and the large permafrost carbon stores. Physical impacts of global warming include a hotter and more extreme climate, more frequent and severe droughts, desertification, increasing insecurity of food and water supplies, stronger storms and cyclones, and coastal inundation.

Climate change was a significant factor in triggering the war in Syria, the Mediterranean migrant crisis and the “Arab Spring”, albeit this aspect is rarely discussed. Our current global carbon emission trajectory, if left unchecked, will drive increasingly severe humanitarian crises, forced migrations, political instability and conflicts.

Australia is not immune, domestically or regionally. We already have extended heat waves above 400C, catastrophic bushfires, intense storms and flooding. The regional impacts do not receive much attention but they are striking hard at vulnerable communities in Asia and the Pacific, forcing them into a spiral of dislocation and migration. Impacts on China and South Asia will have profound consequences for employment and financial stability in Australia.

In the absence of emergency action to reduce Australian and global emissions far faster than currently proposed, the level of disruption and conflict will escalate to the point that outright regional chaos is likely. Militarised solutions will not be effective. Australia is failing in its duty to its own people, and as a world citizen, by downplaying these implications and in shirking its responsibility to act.

Yet people understand climate risks, even as political leaders wilfully underplay or ignore them. 84% of 8000 people in eight countries recently surveyed for the Global Challenges Foundation consider climate change a “global catastrophic risk”. The figure for Australia was 75%. Many people now see climate change as a bigger threat than other concerns such as epidemics, weapons of mass destruction and the rise of artificial intelligence threats.

So what is to be done if our leaders are incapable of rising to the task?

First, establish a high-level climate and conflict task-force in Australia to urgently assess the existential risks of climate change, and develop risk-management techniques and policy appropriate to that challenge.

Second, recognise that climate change is now a global emergency which threatens human civilisation, and  contribute to building practical steps internationally for a coordinated global emergency response

Third, launch a domestic emergency initiative to decarbonise the economy no later than 2030 and build the capacity to drawdown carbon dioxide from the atmosphere.

Fourth, build more resilient communities domestically, and also in the most vulnerable nations regionally by high-level commitments and development assistance; build a flexible capacity to support communities in likely hotspots of instability and conflict; and rethink refugee governance accordingly.

Fifth, ensure that Australia’s defence forces and government agencies are fully aware of and prepared for this changed environment; and ensure their ability to provide humanitarian aid and disaster relief.

Sixth, establish a national leadership group, outside conventional politics, drawn from across society, charged with implementing the national climate emergency programme.

A pious hope in current circumstances? Our leaders clearly do not want the responsibility to secure our future. So “Everything becomes possible, particularly when it is unavoidable”.

————-

An edited version of this article appeared in Fairfax Media. It is extracted from “Disaster Alley: Climate change, conflict and risk”, by Ian Dunlop and David Spratt: 

 

June 22 / 2017
Author itdunlop
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The Leaders We Deserve ?

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

Our current path commits us to a 4–5oC 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 3oC 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 2oC; the rest of the Galilee basin development would ensure global temperatures went way above 3oC.  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 4oC 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


 

 

 

 

 

 

 

 

 

May 15 / 2017
Author itdunlop
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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

————-

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

 

May 04 / 2017
Author itdunlop
Comments No Comments

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

 

March 03 / 2017
Author itdunlop
Comments No Comments

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

February 28 / 2017
Author itdunlop
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Stop Spreading Disinformation on Coal Demand

In their book Climate Change, Capitalism and Corporations, published prior to the Paris climate change meeting last December, Chris Wright and Daniel Nyberg highlighted how the dominance of neoliberalism in recent decades has locked the global economy on to a path of “creative self-destruction”, built around the oxymoron of “green capitalism”. Events since Paris have confirmed their thesis.

Just before Paris, the New York state attorney general, via the US Securities and Exchange Commission, secured undertakings from the world’s largest coal company, Peabody Energy, for violating state laws prohibiting false and misleading conduct in regard to Peabody’s public statements on risks posed by climate change. In part by misrepresenting the projections of the International Energy Agency (IEA).

For the past two decades, major companies, industry bodies, media and governments have been guilty of similar disinformation in Australia, a practice which is again evident in this election campaign.

Long ago, the IEA recognised the risks posed by human-induced climate change. It accepted that climate and energy were inextricably linked and dangerous climate change could only be avoided with fundamental change to the global energy system. Specifically by rapidly weaning ourselves off fossil fuels and transitioning to low-carbon energy supply.

The IEA has become a leading authority exploring this transition, regularly quoted by governments and business alike. It is subjected to great pressure by them to lean in suitably accommodating directions.

It handles this pressure by publishing, in its annual World Energy Outlooks (WEOs), its perspectives on the energy sector over the next 25 years. These explore the implications of taking alternative climate and energy pathways. Key scenarios are: current policies (CP) which assumes business-as-usual, new policies (NP) which extends CP with policy governments have committed to but not yet implemented, and the 450 scenario which is the pathway to keep global average temperature increase below 2C.

These scenarios are highly influential in justifying investment decisions. For Australia, global coal demand is one of the factors of greatest interest. In the WEO 2015 released last November, under CP assumptions demand would increase by 43% by 2040 compared to current levels, under NP by 12%, but under 450 scenario it declines by 36%.

The IEA takes NP as their central scenario as this is where we are headed if governments implement their commitments. However the IEA make it clear that NP is not a sustainable future. In its report, executive director Fatih Birol says: “We look to the negotiators in Paris to destroy our projections in our central scenario, which we show to be unsustainable, in order to create a new world in which energy needs are met without dangerously overheating the planet.” The Paris meeting agreed to keep global average temperature below 2C and pursue efforts to limit to 1.5C.

Warming would see global population and economic growth in steep decline or stalled. Poverty would massively increase as poorer countries are disproportionately hit by climate extremes. This is already happening.

As with Peabody, Australian organisations, through the Minerals Council, regularly misrepresent the IEA’s position. Typically they publicise the CP or NP outcomes and ignore the 450 scenario despite the fact that they publicly support the 2C limit. These inflated coal demand figures are then claimed to be IEA “forecasts”, justifying further coal investment and government support.

These organisations participate in IEA advisory committees and should be aware that scenarios are not forecasts. Scenarios demonstrate the outcome of certain choices and the IEA make it clear that CP and NP are choices we must not make. To suggest otherwise is blatant disinformation of the worst kind given the potentially catastrophic implications of distorting the IEA’s advice.

The Minerals Council of Australia has been one of the worst offenders, even in the current election campaign inconsistently using NP outcomes while claiming to support the 2C limit. The Minerals Council represents companies like BHP Billiton and Rio Tinto, who vehemently proclaim leadership on climate change and the urgent need to follow a 2C path, yet this disinformation is allowed to continue from the Minerals Council.

This propaganda is parroted by ill-informed politicians, such as energy minister Josh Frydenberg, claiming that,“The IEA tells us that 40% of today’s electricity demand is met by coal and by 2040 it will still be 30%”, and trade minister Steve Ciobo: “Global demand for coal is still going through the roof”. NP figures again, which imply an absolute increase in coal use of 23%. However the 450 scenario, to which the government supposedly committed to in Paris, shows coal’s share of electricity demand falling from 40% to 12% by 2040, an absolute reduction in coal use of 57%, which certainly requires no new coal mines.

Parts of media also to be blamed. The Australian is a serial offender but even the more balanced Fairfax press falls into the same trap. Not surprisingly, it still features prominently on coal company websites.

The government and opposition, who accept donations from fossil fuel interests which Wright and Nyberg refer to, both sing the praises of the Adani Carmichael mine in the Galilee Basin, Shenhua’s Watermark Mine on the Liverpool Plains, Kepco’s Bylong Valley adventure and Hume Coal in the Southern Highlands. All based on ill-informed premises and substantially contributing to increasing global temperatures well above 2C.

The cost to Australia, if this irresponsible misallocation of resources proceeds, would be enormous. Among other things, stranded assets as these mines are forced to shut down as climate impact intensifies; the lost opportunity of not investing in low-carbon future; the loss of agricultural productivity as mining disrupts prime farming land and water supply; and the social disruption caused to regional communities from abandoned operations. Plus, the full impact of potentially catastrophic climate change in a country more at risk than any other.

In the national interest, Australian regulators, including federal and state attorney generals, ASIC, the ASX and the Press Council urgently need to stamp out this misinformation as their overseas counterparts are doing. Particularly if we are serious about promoting “innovation, jobs and growth”.

An edited version was published in the Guardian on 1st July 2016 

 

July 01 / 2016
Author itdunlop
Category Uncategorized
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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.

September 29 / 2015
Author itdunlop
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Coal – The Captain’s Call & It’s Catastrophic Implications

The last few days have demonstrated just how far out of touch the Australian media and political incumbency are from critical climate change events happening around the world.

The Australian recently launched yet another tirade against supposed bias in the ABC’s handling of climate change, followed up by a stern Editorial lecture (Media Watch fails abjectly as a guardian of standards, 4th August 2015). Pretty rich from an organization which supposedly accepts the climate science and the need for urgent action, but spends its time trawling the literature for the slightest micro evidence that climate change is either not happening, or is of far less concern than the mainstream science is indicating. As well as providing an ever-open platform for absolute climate deniers to sow further disinformation and obfuscation, based on no science or hard evidence whatsoever, disrupting the development of sensible climate policy.

The Australian Financial Review subsequently condemned “eco-activists” for the costs they are supposedly inflicting on the Australian community (Eco-activism is a major cost to the community, 6th August 2015) after the courts overturned Federal Government approval of the Carmichael Mine in the Galilee Basin. Instead of condemnation, these activists should be congratulated for their fiscal responsibility in trying prevent substantial economic damage and wasted assets, which will be the outcome if the Galilee Basin coal developments are allowed to proceed.

Predictably we then had the Prime Minister’s Captain’s Call. Coal, we are told yet again, is essential for the future of humanity, and for the alleviation of poverty in countries like India. Every other consideration must now be subjugated to the interests of these major projects proceeding. Not just in the Galilee Basin, but also the Shenhua Watermark mine in the Liverpool Plains, coal seam gas everywhere and a host of others.

The preservation of biodiversity, such as the snakes and skinks in Galilee is important, but the real issue is climate change. Clearly the incumbency does not understand the implications of the latest climate science and evidence of climate change impact around the world.

Climate change is happening far faster and more extensively than officially acknowledged, largely driven by human carbon emissions.  We are experiencing substantial economic and social disruption at the 1oC warming which has already occurred relative to pre-industrial levels, let alone the additional 1oC to which we are probably committed by virtue of historic emissions. The official limit of 2oC warming is not safe, it is now highly dangerous.

If the Galilee Basin and Watermark projects proceed, it will have catastrophic climate consequences, akin to other large high-carbon expansions such as the Canadian Tar Sands.  Quite simply, as the IMF, IEA, World Bank and other authorities state, these developments cannot be allowed to happen.

Poverty, far from being alleviated by them, will be created. Have the incumbency “experts” thought about the implications of the extreme events happening right now on the Indian Subcontinent – unprecedented heat last week, unprecedented rainfall now, to which climate change is contributing significantly? Not to mention extensive damage in North America from extreme drought and fires as the El Nino intensifies, as we will no doubt experience shortly. All occurring at only 1oC global warming.

Those who lead economic debate in this country need to wake up to the fact that climate change will be the factor having the greatest impact on the Australian economy and society from now, to the point that it will fundamentally change our economic and business models.  It should be at the top of the agenda for the forthcoming National Reform Summit being promoted by both newspapers, but it is a fair bet it will not even feature.

This Captain’s Call, if the Prime Minister gets his way, will be the biggest economic disaster in Australia’s history and will fundamentally undermine our National Security. Sounder heads must prevail.

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, a Director of Australia21 and a Fellow of the Centre for Policy Development.

 An edited version of this article appeared in Renew Economy on 7th August 2015: http://reneweconomy.com.au/2015/coal-the-captains-call-and-its-catastrophic-implications-88298

August 07 / 2015
Author itdunlop
Category Uncategorized
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The Australian Elites Have Failed Us On Climate Change

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 

 

June 21 / 2015
Author itdunlop
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