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26 July 2007

POLLUTION + CLIMATE CHANGE

In my last post (19th July, below) I analyzed the reports of the UNFCC, the IPCC, and the Stern Review. Those organizations produced reports on anthropogenic generated greenhouse gases (GHG). I found reputable and persuasive citations that claimed bias in IPCC4 and Stern. Even assuming that IPCC and Stern were without bias, the central estimate of IPCC 4 was that there was a warming effect equivalent to an 0.15% increase in the radiant energy of the sun, and that there was a 90% certainty that half of the warming was caused by GHG, and that the sea level would rise by less than one meter by 2100 AD.

In most professions (e.g. Engineering, Criminal law, Psychology,) a 90% probability is not sufficient to establish a case.

It is not good enough to merely suggest "better be safe than sorry". We should consider the probable cost of the damage that would be caused by GHG warming and compare that with the probable cost to our economy of halting or reducing GHG concentrations.

What is the cost of the damage by GHG? Stripped of the alarmist hyperbole, it is predicted that by the year 2100 there would be a two degree centigrade temperature rise, a one meter sea level rise, and (as a result of the elevated temperature) there might be increased weather damage to housing and industry. The weather patterns would move to higher latitudes with negative effects on agriculture in some latitudes, positive effects on agriculture in others. (I note that Stern could have copied his expected damage predictions, (chapter 5 of Part 2 of his review) directly from the prediction that I made more than a year earlier). Earlier IPCC worries that nett agricultural production might be adversely affected seem to have dissolved as it was realized that worldwide crop production would probably benefit from the increased CO2 concentration, although Stern has stated categorically (no cite noted) that a higher than 2 deg C temperature increase would be disastrous.

The Stern report has estimated that the tax on carbon to reduce or prevent further increase of GHG might have to be set at $200 per ton. To put that figure in comprehensible perspective:

The gravimetric analysis of crude oil is about 85% carbon, SG is about 0.85, so one liter of crude contains about 0.85*0.85~720 grams of carbon. There are about 160 liters in a barrel of oil, hence about 115 Kg of carbon. A carbon tax of $200/ton on crude oil would thus add about $23 (which is approximately 30%) to the cost of a barrel of oil. This would (after refining and distribution) produce a price rise of over $US1 per US gallon of gas, or around 30 Australian cents per liter.

I ask my reader to reflect on the effect of such an increase in the price of fuel (~30%). It would have a huge impact on our economy and cost of living. Especially after the multiplier effect that would inflate production costs in farming, manufacturing and transport.

The effect of those carbon taxes would fall disproportionately upon the most financially distressed in our own (and other) countries.

HOWEVER:

Although I am not convinced by the disaster scenarios painted by the alarmists at UNFCC, IPCC and Stern, I am nevertheless concerned about pollution. I am old enough to remember that fifty years ago the sunrises in Australia were white, not red. Anecdotally, "Mary in Hawaii" claims that the atmosphere in Hawaii is thick with pollutants (presumably from China). When US President Bush grounded aircraft for two days after 9/11, many reported that the stars over the USA became visible.

Our air is thick with particles generated by the dirty burning of carbonaceous fuels. The right to dump those pollutants in the atmosphere is an untaxed benefit to the polluter, and an uncompensated nuisance and health hazard to the world population.

So although I am unconvinced that global warming is purely anthropogenic, and further unconvinced as to the merit of full rectification of GHG, I nevertheless agree that pollution should be reduced. To that end I believe that we should adopt the strategy suggested by Economists more than a decade past (eg Nordhaus). There should be a tax on the dumping of pollutants in the atmosphere, and that tax should be paid by the polluting industry at source, and should be proportional to the pollutants dumped. The value of the tax would be determined by the market in the following manner:

First we would divide the total world pollution by the world population, and get the world "per capita pollution index" (PCPI), units would be "tons of GHG equivalent per person per annum".

Next we must decide on the GHG tax rate and who should benefit from that tax. My vote would be to divide the world GHG tax income and (nominally) pay it equally to each person on the planet. Presumably nation states would accept the tax on behalf of their citizens, and also police collection of tax from industries that produced taxable GHG, and pay a rebate to industries that removed GHG from the atmosphere.

From there we could develop a market in pollution credits (units "tons of GHG"). A secondary market ("GHG futures") would rapidly develop, and a price per ton of GHG efficiently established. In this way, the various industries from food production to manufacturing to energy sales would be able to adjust their cost structure in an economically efficient manner.

Most of the Liberal Representative Democracies, OECD and major oil producing nations are probably producing more than their PCPI. Countries like China, India & Brazil and the Asian tigers are probably in approximate balance, and the rest of the world would be owed money for their unused pcpi share. I would suggest that the value of those credits be set at such amount as was required to repair the damage done, and additionally compensate in part for the nuisance created.

I have so far ignored the fact that the world is rapidly running out of crude oil. Existing reserves would, at forecast growth, be exhausted by 2040. Such anticipated exhaustion would provide further upward pressure on crude oil prices, and produce even greater incentives for the development of alternative energy sources for transport. Of course we could transmute the other carbon minerals (shale, tar sands, coal) into fuel. Such transmutation is costly (adding upwards of US$70 per barrel) and the process produces large quantities of GHG.


19 July 2007

GLOBAL WARMING

A previous post on GW was done in 2005. This is the first of two new posts on Global Warming.

PREAMBLE.

There are three instrumentalities that have made a contribution to the Global Warming conversation. These are the Intergovernmental Panel on Climate Change (IPCC), the UN Framework Convention on Climate Change (UNFCCC) together with it's better known amendment, the Kyoto Protocol, and the UK government commissioned Stern Report.

Back in 1990, environmentalists concerned about the observed increase in green house gas (CO2, CH4) concentration (CO2 went from 0.028% circa 1900 to around 0.035% circa 1990) persuaded their governments to form the IPCC. Governments submitted lists of interested scientists, and from those lists panel members were selected by the conveners. Since then the IPCC has brought out four reports at approximately five year intervals.

SUMMARY AND CRITIQUE OF THE REPORTS.

The First Assessment Report of the IPCC (FAR1990) reported that environmental scientists on the committee agreed that there had been about a one degree Fahrenheit rise in mean surface temperature since 1900. This might have resulted from man's activities, or could be explained by natural variation. The FAR predicted that there would be a further one degree F rise over the next decade.

The Second Assessment Report of the IPCC (SAR, 1995) confirmed the findings of the FAR, and noted that GHG had increased, and that aerosols were countering the warming effect. It noted that the reliability of climate models had increased. The SAR was a controversial report. Leading scientist panel members claimed variously that "policy makers altered their final draft", and that there was "corruption of the peer review process" and that the summary had been altered to result in alarmist conclusions. The politically appointed convener of the summary stated that "none of the changes made was politically motivated".

The Third Assessment report of the IPCC (TAR2001) reported that there had been a 1.1 degree F rise in mean surface temperature since AD 1900. The models were getting better  It was predicted that GHG concentrations would continue to rise, the mean surface temperature would continue to rise, (by a further ~3F to 8F by AD 2100) and the sea level would rise by between 10 and 90 centimeters by AD 2100. Again leading panel members claimed that the report was biased by ignoring or misrepresenting their results, and that damage estimates had been exaggerated by modifying economic variables.

The Fourth Assessment Report of the IPCC (IPCC4, 2007) determined that the level of the ocean would rise by about half a meter over the next 100 years. There was general agreement that the world has warmed by above half a degree centigrade in the last few decades. There was disagreement as to whether these changes are responsible for an increase of more than about 1% of hurricane activity. The consensus is that there is no persuasive evidence that weather patterns have substantially moved from the normal range. According to IPCC4, there is a 90% probability that 50% of (the one degree Fahrenheit of) global warming measured since the 1960's was caused by green house gases (GHG).

Most economists in the IPCC seem to assume that global warming has more costs than it has benefits. One of the obvious costs is that in a warmer world we would use an air conditioner more frequently, so would need more electricity and air conditioners. Other costs are more speculative, such as increased hurricane activity leading to damage to property. In temperate regions, (such as Dakotas, Canada, Northern Europe, Russia, Patagonia) global warming is expected to increase agricultural yields. In other places, such as Mediterranean Europe, Southern California, failing rainfall is expected to decrease yields. Another cost is expected to result from rising sea levels (less than one meter by 2100) either flooding lowlands (e.g. Bangladesh, Manhattan, Egyptian delta), or requiring construction of a dike system such as in Holland. So far as I am aware, the IPCC did not quantify the damage.

The KYOTO PROTOCOL

This was a 1997 amendment to UNFCCC 1992 which protocol came in to force on February 16th 2005. Two "Annex I" (industrially advanced) countries (Australia and USA) have not ratified the protocol. The protocol determines a "carbon quota" for the "Annex I" countries, and exacts a 30% penalty on countries that exceed their carbon quota. It now appears that some of the various countries that ratified the protocol acted precipitously. Some of the more enthusiastic countries (e.g. Canada's obligation was to reduce GHG by 6%, currently they have increased output by 27%, Spain was to reduce by 8%, currently increased by 49%) have exceeded their treaty obligations by a very wide margin. Since so many countries are failing to meet their quotas, it will be interesting to see how they avoid paying the penalties.

More recent activity on the global warming issue has been led by economists. The raison d'etre for economists is the optimization of "utility". Utility has a precise meaning in economics, which differs from the meaning in everyday English. It is an economist's word for the enjoyment and satisfaction that people experience from the things that they do, such as spending or saving money or camping out or whatever.

Economists have created a plethora of models for financial modeling of the economy, most of which have well known failings and strengths. As far back as 1992 economists like William Nordhaus of Yale were publishing in Nature that a carbon tax of $5/ton was the optimum utility price for carbon. He reasoned that the right to pollute is an untaxed benefit. There is no financial reason for a polluter to reduce pollution. Nordhaus had calculated that a tax was an appropriate way for society to persuade polluters to reduce their pollution. Taxes are the optimum method for controlling the production of price sensitive goods. On the other hand, economists have found that permits are the optimum method for controlling price insensitive goods.

Expanding on this insight, the UK government commissioned public servant Nicholas Stern to produce a "White Paper" on the economic cost of climate change. This white paper became known as the Stern Report. Stern was originally an academic who recently (1999) turned his hand to the bureaucratic plowshare. Like all government "white papers" the Stern Report was not peer reviewed, and has met a lot of criticism from academics on that basis.

  1. Stern has introduced little new science or economics in the review.
  2. The review is considered unsound by many leading scientists because peers were not consulted and procedures were not transparent in the selection of appropriate environment and economic models and in the selection of values for applicable variables.
  3. Leading scientists (e.g. Noordhaus) are critical that Stern appears to have utilized models and selected variables that have resulted in a "worst case scenario".
  4. KYOTO introduced the world to the necessity of reducing GHG for the sake of environmental protection, in the hope of reducing serious but nonspecific damage. Stern has brought the Kyoto public closer to modern economist's thinking by application of the concept that an economic analysis of the effects and consequent costs of global warming should be used to determine our response.

Environmental economists agree that while Stern's numbers might be extreme, the very important issue publicized by The Stern Review is that we do not want the cost of reducing environmental damage to exceed the cost which would be incurred as a result of that environmental damage.

Comments.

  1. I have done some calculations on just how significant is the carbon that is added anthropomorphically to the atmosphere each year.

    The total carbon in the atmosphere could be obtained by the formula:mass of atmosphere * proportion of carbon in 1 Kg air.

    Mass of atmosphere can be approximated by multiplying the surface area of earth by atmospheric pressure at mean sea level, and divide by gravity:

  2. (Pi * D^2) * (NTP) / g = (Pi * 12,700,000^2) * (101,300) / 9.81 = 5.3 * 10^18 kg.
  3. Proportion Carbon by weight is volumetric proportion * molar mass of CO2 / molar mass air * proportion of C in CO2 = (0.038/100) * 44 / 29 * (12/(12+2*16)) = 0.157 g/Kg.

    So mass of carbon in atmosphere is 5.3*10^18 *15.7 / 1000 = 83.2 * 10^9 tons.

    From the US energy agency, world anthromorphic CO2 is 30 billion tons, which is 30*12/44 = 8.2 billion tons of carbon per annum. http://www.eia.doe.gov/oiaf/ieo/emissions.html
    In other words, it would take about 100 years at current carbon usage levels to double the carbon dioxide concentration in the atmosphere.

    Comment by barvennon — 3 September 2007



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