# Bringing Harmony to the Global Warming Debate

For some time now, our regular contributor James Glover been promising me a post with some statistical analysis of historical global temperatures. To many the science of climate change seems inaccessible and the “debate” about climate change can appear to come down to whether you believe a very large group of scientists or a much smaller group of scientists people. Now, with some help from James and a beer coaster, you can form your own view.

How I wish that the title of this article was literally true and not just a play on words relating to the Harmonic Series. Sadly, the naysayers are unlikely to be swayed, but read this post and you too can disprove global warming denialism on the back of a beer coaster!

It is true, I have been promising the Mule a statistical analysis of Global Warming. Not only did I go back and look at the original temperature data but I even downloaded the data and recreated the original “hockey stick” graph. For most people the maths is quite complicated though no more than an undergraduate in statistics would understand. It all works out. As a sort of professional statistician, who believes in Global Warming and Climate Change, I can only reiterate my personal  mantra: there is no joy in being found to be right on global warming.

But before I get onto the beer coaster let me give a very simple explanation for global warming and why the rise in CO2 causes it. Suppose I take two sealed glass boxes. They are identical apart from the fact that one has a higher concentration of CO2. I place them in my garden (let’s call them “greenhouses”) and measure their temperature, under identical conditions of weather and sunshine, over a year. Then the one with more CO2 will have a higher temperature than the one with less. Every day. Why? Well it’s simple: while CO2 is, to us, an “odourless, colourless gas” this is only true in the visible light spectrum. In the infra-red spectrum, the one with more CO2 will be darker. This means it absorbs more infrared radiation and hence has a higher temperature. CO2 is invisible to visible light but, on it’s own, would appear black to infrared radiation.  The same phenomenon explains why black car will heat up more in the sun than a white one. This is basic physics and thermodynamics that was understood in the 19th century when it was discovered that “heat” and “light” were part of the same phenomenon, i.e. electromagnetic radiation.

So why is global warming controversial? Well, while what I said is undeniably true in a pair of simple glass boxes, the earth is more complicated than these boxes. Radiation does not just pass through, it is absorbed, reflected and re-radiated. Still, if it absorbs more radiation than it receives then the temperature will increase. It is not so much the surface temperature itself which causes a problem, but the additional energy that is retained in the climate system. Average global temperatures are just a simple way of trying to measure the overall energy change in the system.

If I covered the glass box containing more CO2 with enough aluminium foil, much of the sunshine would be reflected and it would have a lower temperature than its lower CO2 twin. Something similar happens in the atmosphere. Increasing temperature leads to more water vapour and more clouds. Clouds reflect sunshine and hence there is less radiation to be absorbed by the lower atmosphere and oceans. It’s called a negative feedback system. Maybe that’s enough to prevent global warming? Maybe, clouds are very difficult to model in climate models, and water vapour is itself a greenhouse gas. Increasing temperature also decreases ice at the poles. Less ice (observed) leads to less radiation reflected and more energy absorbed. A positive feedback. It would require a very fine tuning though for the radiation reflected back by increased clouds to exactly counteract the increased absorption of energy due to higher CO2. Possible, but unlikely. Recent models show that CO2 wins out in the end. As I as said, there is no joy to being found right on global warming.

So enough of all that. Make up your own mind. Almost time for the Harmony. Perusing the comments of a recent article on the alleged (and not actually real) “pause” in global warming I came across a comment to the effect that “if you measure enough temperature and rainfall records then somewhere there is bound to be a new record each year”. I am surprised they didn’t invoke the “Law of Large Numbers” which this sort of argument usually does. Actually The Law of Large Numbers is something entirely different, but whatever. So I asked myself, beer coaster and quill at hand, what is the probability that the latest temperature or rainfall is the highest since 1880, or any other year for that matter?

Firstly, you can’t prove anything using statistics. I can toss a coin 100 times and get 100 heads and it doesn’t prove it isn’t a fair coin. Basically we cannot know all the possible set ups for this experiment. Maybe it is a fair coin but a clever laser device adjusts its trajectory each time so it always lands on heads. Maybe aliens are freezing time and reversing the coin if it shows up tails so I only think it landed heads. Can you assign probabilities to these possibilities? I can’t.

All I can do is start with a hypothesis that the coin is fair (equal chance of heads or tails) and ask what is the probability that, despite this, I observed 100 heads in a row. The answer is not zero! It is actually about 10-30. That’s 1 over a big number: 1 followed by 30 zeros. I am pretty sure, but not certain, that it is not a fair coin. But maybe I don’t need to be certain. I might want to put a bet on the next toss being a head. So I pick a small number, say 1%, and say if I think the chance of 100 head is less than 1% then I will put on the bet on the next toss being heads. After 100 tosses the hypothetical probability (if it was a fair coin) is much less than my go-make-a-bet threshold of 1%. I decide to put on the bet. It may then transpire that the aliens watching me bet and controlling the coin, decide to teach me a lesson in statistical hubris and make the next toss tails and I lose. Unlikely, but possible. Statistics doesn’t prove anything. In statistical parlance the “fair coin” hypothesis is called the “Null Hypothesis” and the go-make-a-bet threshold of 1% is called the “Confidence Level”.

Harmony. Almost. What is the probability that if I had a time series (of say global temperature since 1880) that the latest temperature is a new record. For example the average temperature in Australia in 2013 was a new record. The last average global temperature record was in 1998. I think it is trending upwards over time with some randomness attached. But there are all sort of random process which produce trends, some of which are equally likely to have produced a downward trending temperature graph. All I can really do, statistically speaking, is come up with a Null Hypothesis. In this case my Null Hypothesis is that the temperature doesn’t have a trend but is just the result of random chance. There are various technical measures to analyse this, but I have come up with one you can fit on the back of a beer coaster.

So my question is this: if the temperature readings are just i.i.d. random processes (i.i.d. stands for “independent and identically distributed”) and I have taken 134 of these (global temperature measurements 1880-2014) what is the probability the latest one is the maximum of them all? It turns out to be surprisingly easy to answer. If I have 134 random numbers then one of them must be the maximum. Obviously. Since they are iid I have no reason to believe it will be the first, second, third,…, or 134th. It is equally likely to be any one of those 134. So the probability that the 134th is the maximum is 1/134 = 0.75% (as it is equally likely that, say, the 42nd is the maximum). If I have T measurements then the probability that the latest is the maximum is 1/T. So when you hear that the latest global temperature is a maximum, and you don’t believe in global warming, then be surprised. As a corollary if someone says there hasn’t been a new maximum since 1998 then the probability of this still being true, 14 years later, is 1/14 = 7%.

So how many record years do we expect to have seen since 1880? Easy. Just add up the probability of the maximum (up to that point) having occurred in each year since 1880. So that would be H(T) = 1 + 1/2 + 1/3 + … + 1/T. This is known as the Harmonic Series. It is famous in mathematics because it almost, but doesn’t quite converge. For our purposes it can be well approximated by H(T) =0.5772+ ln(T) where ln is the natural logarithm, and 0.5772 is known as the Euler-Mascharoni constant.

So for T=134 we get from this simple beer-coaster sized formula: H(134) = 0.5772+ln(134)= 5.47. (You can calculate this by typing “0.5772+ln(134)” into your Google search box if you don’t have a scientific calculator to hand). In beer coaster terms 5.47 is approximately 6. So, given the Null Hypothesis (which is that there has been no statistically significant upward trend since 1880) how many record breaking years do we expect to have seen? Answer: less than 6. How many have we seen: 22.

Global temperatures* – labelled with successive peaks

If I was a betting man I would bet on global warming. But there will be no joy in being proven right.

James rightly points out that the figure of 22 peak temperatures is well above the 6 you would expect to see under the Null Hypothesis. But just how unlikely is that high number? And, what would the numbers look like if we took a different Null Hypothesis such as a random walk? That will be the topic of another post, coming soon to the Stubborn Mule!

* The global temperature “anomaly” represents the difference between observed temperatures and the average annual temperature between 1971 and 2000. Source: the National Climate Data Center (NCDC) of the National Oceanic and Atmospheric Administration (NOAA).

# Action and reaction on climate change

Regular guest contributer James Glover (@zebra) takes a closer look at the Coalitions climate change policy.

Malcolm Turnbull, an Australian MP, did a rare and risky thing last week. He actually broke away from the political spin-cycle and explained some figures underlying the cost of the Coalition’s “Real Action on Climate Change” policy. Naturally he was attacked by both the Labor government, who are having trouble selling their own Carbon Tax policy, and his own party colleagues who were horrified that he didn’t stay “on message”. The Coalition quickly bunkered down under orders from the top to avoid discussing Turnbull’s “outburst”. So what was he saying anyway and why was it so controversial?

To see why we need to explain the difference between the Labor Party and conservative Coalition’s policies. There are really only two broad differences. Both policies recognise that anthropogenic climate change is scientific fact, not speculative political fiction. Both recognise the need for action (ie. spending money) on combating climate change. But where they differ is in how global warming should be reversed and how to raise the money to do so. It is not commonly understood but the real difference between the policies is the former.

The Carbon Tax (or its close relative the CPRS) aims to reduce carbon emissions by making carbon pollution relatively more expensive than cleaner, alternate sources of power (and really it’s all about power generation). In order to do this they need to raise the price of carbon powered energy sufficiently to tip the balance in favour of wind, wave, geothermal, biofuels or solar energy (as explained in a recent post here on the Mule). Of the money raised by the Carbon Tax, about half goes back to subsidising the increased power bills of the less well-off. Of the remainder, most goes to developing cleaner sources of energy at lower cost. As explained in the earlier post, when there is no more carbon pollution then there is no more carbon tax to distribute. So ultimately, unless the cost of alternate energy comes down to the levels currently enjoyed by coal, gas or oil based power, in the long run the less well off will be much less well off.

While the Coalition’s “Real Action on Climate Change” has more than a whiff of policy-on-the-run, it can be presented as a respectable alternative. It says that we should ignore the fruitless and expensive attempt to cheapen alternative power and accept carbon pollution as a fact of life. In order to mitigate the effects of carbon pollution, though, we need to remove it from the atmosphere after the pollution has occurred, not at the source. This will cost money. A lot of money. Australia alone currently produces about 0.2 billion tonnes of carbon (not C02) each year. That’s a cubic block of carbon approximately 500m x 500m x 500m*. Each year. Anybody who thinks sequestration is the answer has to find somewhere to put all that carbon for a start. Or plant several million trees a year. The only hope for this reactive approach to reducing carbon is that some method is found which removes large amounts of carbon from the atmosphere at a relatively small cost: and much smaller than the likely Carbon Tax price of \$20-40 per tonne. While such methods are conjectured, for example spreading iron filings in the ocean to increase carbon uptake by marine organisms, to say they are untested is an understatement. Equally we could allow carbon to increase in the atmosphere but mitigate the effects of global warming by using giant sunlight reflecting shields. Or paint the Sahara Desert white. Hey, stranger things have happened. But at the moment all these methods remain firmly in the province of science fiction.

So what did Malcolm Turnbull actually say that was so exciting to friend and foe alike? Well, using Treasury forecasts of population and economic growth, that 500m carbon cube will have grown to 850m wide by 2050 (650m tonnes) if we do nothing. Assuming we can mitigate the effects of carbon pollution, or pay someone else to do it for us, the cost could be as low as \$15 per tonne or \$18bn per year. Assuming the population has doubled by 2050 that’s about \$500 per person, or an extra \$50 per week on the average household tax bill. Given the extreme rubberiness (definitely not vulcanised rubber) of these figures, that’s pretty much what the Carbon Tax will cost as well. If the initial price of the Carbon Tax is set at \$30 per tonne, then over time this should come down as alternate energy becomes actually cheaper due to technology improvements and economies of scale, not just relatively cheaper. Indeed if the Real Action plan involves buying permits from other countries who have set up some sort of CPRS and use alternate energy sources, then the equilibrium cost of both plans is probably pretty much the same, i.e. \$15 per tonne. The real action policy really only comes out ahead if one of the fanciful ideas for removing carbon en masse, post production, pays off.

Of course the Coalition’s policy has to be funded somehow, and herein lies the second difference between the two. The Coalition’s policy will involve raising taxes, and probably income taxes as opposed to the Carbon Tax favoured by Labor. So any claim on the Coalition’s part (a point made by Mr Turnbull) that the major benefit of their policy is that it won’t raise electricity prices is totally spurious. Both policies will lessen household discretional spending. By the same amount. That’s all voters ultimately care about. Turnbull also claimed that their policy had the advantage that if “climate change is crap” as Tony Abbot famously is purported to have said, then it can all be dismantled without much cost. For that statement alone, sending a dog-whistle to his party’s climate skeptic supporters, Mr Turnbull deserved the public flaying he got, if not for the right reason.

*Note: in the above I have assumed that 1m cubed of carbon weighs 2 tonnes which is the density of graphite. It obviously depends on the form of carbon used. It is intended as an indicative figure only. Though I wish someone would actually build a structure of that size and point out to everyone this is how much carbon a year we are producing

# Carbon tax

Our regular guest writer James Glover (@zebra) returns to the Stubborn Mule today to look at the real cost of carbon tax…and who pays the cost.

It is no surprise that the latest Newspoll shows the Labor Government sinking under a concerted attack by the Opposition, and its supporters in the media, over the Carbon Tax. The incessant cry of “a great big new tax” was bound to have an effect on the marginal voters who derive their political views in atavistic ways. In fact most of the political arguments lately recently seem to revolve around the distinction between levies and taxes. The trick seems to be if your opponents propose it then it is a tax and if you propose it is a levy—the latter being used by both sides to describe variously the flood levy (Labor) and the parental leave levy (Coalition). Taxes, as opposed to levies, apparently lead to profligate spending and are downright un-Australian. It makes you wonder what they use to fund hospitals, schools and roads.

So how does the Carbon Tax work? And what does it mean to say it is “revenue neutral”? Is it really a tax or “not really a tax” as the Treasurer, Wayne Swan, claims? Suppose the government wants to set up a Carbon Tax for the purposes of reducing carbon emmissions. It does this by imposing a tax (or levy or fee) on the price of goods and services that are deemed to ultimately cause high but avoidable (hence no agriculture) emissions of carbon. This of course raises the price of these goods e.g. electricity. If we impose a Carbon Tax on coal-generated electricity (the sine qua non of carbon emitters) then expect the power companies to pass on all or most of the increase to consumers. Now here’s the thing, the money the tax raises will have gone to subsidise the increased power bills of these very same power consumers. By exactly the same amount as the price should rise. So in effect nothing happens. In other words, at a base level the Carbon Tax does nothing. It has no benefits and no costs. Isn’t it really “a great big snooze tax” and not “a great big new tax”?

The Carbon Tax has one (fully intended) important consequence. If power emitters want to increase their profits they can do so by switching to lower carbon emitting alternatives. These might already be available or they can pay to research and develop them. And because of the tax what was previously uneconomic will now be made viable. Since these alternatives are really more expensive than coal-based power, without the tax, you might ask what is really happening at the cost end. It seems like a tax which costs nobody nothing, magically makes alternatives to carbon emitting industries economic. Voila!

Well that’s what the government would have you believe. On closer examination though it is precisely when the Carbon Tax has its intended effect that the cost gets passed onto consumers. But not when the Carbon tax is first introduced. To see why let’s have a look at an example.

Suppose the cost per unit of producing electricity from coal is \$100. The power company charges \$110 to consumers and so makes a \$10 profit. The Govt introduces a 20% Carbon Tax on the cost of producing electricity using coal. This raises the price to \$130 in order for the company to maintain its \$10 profit margin. That’s \$100 for the coal, \$20 for the tax and a profit of \$10. The extra \$20 gets passed onto the consumer whose bill is now \$130 per unit. However after the \$20 subsidy (paid for by the \$20 proceeds of the tax) they still only pay \$110.

In other words: the producers, the consumers, and the government are no better or worse off immediately after a Carbon Tax is introduced. But what happens if the Carbon Tax is successful in reducing emissions? That is when consumers end up paying more. The cost to the company, including the tax, of producing one unit of electricity is \$120. Suppose an alternative non carbon-emitting energy source is found which costs \$115 per unit. This is more than the coal-based cost before the tax, but less than the cost with the Carbon Tax as this carbon-free energy source, let’s call it “sunshine”, attracts no Carbon Tax. So the company, in order to maintain their profit of \$10, charges \$125 per unit, less than coal based power with a Carbon Tax. But now the consumer receives no subsidy either so even though their total bill has dropped from \$130 (with carbon tax and a subsidy) to \$125 without a subsidy. It now actually costs them \$125, an increase of \$15 over the cost before the carbon tax was introduced and even immediately afterwards. This of course is the extra \$15 per unit that it costs to produced electricity from sunshine rather than coal.

That is how the Carbon Tax really works and ends up costing the consumer. You start out with a Carbon Tax which costs nobody anything and end up without a Carbon Tax that everybody ends up paying more for. When it has its intended effect, and there is no coal based power, but also no more money for subsidies. And, in principle, no more carbon pollution.That of course though is really the point. There is a (currently) hidden cost of producing carbon as carbon dioxide and methane in global warming and that is, if the system works, the \$15 extra you pay to solve the problem by removing carbon from the economy.

My now traditional annual pilgrimage to the South coast of New South Wales saw the rainiest weather I can remember. While it was nothing on the scale seen in Queensland and Victoria over recent weeks, it did take its toll on some of the wildlife: we saw dozens of dead porcupine puffers washed up on the beach, apparently the victims of an algal bloom triggered by the rains. On the plus side, the lack of sunshine did help me to catch up on a bit of overdue reading, including a review copy of a Beginner’s Guide to R which you can expect to hear more about when I manage to finish writing the review.

I also read two books about climate change, which were very different in style and content.

### Merchants of Doubt

The first was Erik Conway and Naomi Oreskes’ Merchants of Doubt (How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming). The book is not really about climate change per se, but rather the modus operandi of a number of key climate skeptics. In the process it sheds some interesting light on a question I considered here on the blog about a year ago: why does belief or disbelief in the reality of climate change tend to be polarised along political lines? Most of the protagonists in the Merchants of Doubt are scientists, many of whom were physicists involved in the original US nuclear weapons program. The thesis that Conway and Oreskes build is that these scientists were committed anti-Communists and as the Cold War began to thaw, they saw threats to freedom and capitalism in other places, particularly in the environmental movement. That, at least, is the explanation given as to why the same names appear in defence of Ronald Reagan’s “Star Wars” missile defence scheme, in defence of the tobacco industry (first arguing against claims about the health risks of smoking, later about the health risks of second-hand smoke), dismissing the idea of acid rain and finally casting doubt on claims of human-induced climate change.

While I would not expect the book to sway any climate change skeptic, it should at least encourage people to think a bit harder about messengers as well as the message. It certainly prompted me to do just that. When reading the chapter on the second-hand smoke controversy, I immediately thought of an episode of the Penn and Teller’s very entertaining pseudo-science debunking TV series Bullshit*. The episode in question, as I remembered it, did a convincing job of portraying the risks of second-hand smoke (SHS) as dubious at best. Watching it again was eye-opening. Looking past the scathing treatment of the anti-SHS activist, I focused instead on the credentials of the talking heads who were arguing that the science was not settled. The two main experts were Bob Levy from the Cato Institute, a libertarian think-tank, and Dr Elizabeth Whelan, the president of the American Council on Health and Science.

Levy’s voice immediately suggests he is a smoker, which does not, of course, disqualify him from questioning the science of SHS. More intriguing is the fact that the Cato Institute regularly appears as a company of interest in the Merchants of Doubt. Conway and Oreskes draw a number of links between the Cato Institute and both the defence of the tobacco industry and skepticism of global warming, particularly in the person of Steven Milloy who, before joining Cato, worked for a firm whose main claim to fame was to provide lobbying and public-relations support for tobacco giant Phillip Morris.

As for the American Council on Health and Science, it sounds at first like some kind of association of health professionals (which is presumably why Warren chose the name). It is in fact an industry-funded lobby group…sorry, I mean an independent, nonprofit, tax-exempt organisation. Exactly how much of their funding comes from where is now shrouded in mystery, but here are the details as of 1991.

Of course, scrutinising the backgrounds Levy and Whelan does not prove that their claims are wrong. It does, however, raise the question of why Penn and Teller did not interview anyone more independent, perhaps even a scientist, who expressed the same doubts.

### What’s the Worst That Could Happen?

The second book on climate change that the rain helped me to read was Greg Craven’s book What’s the Worst That Could Happen?. I bought this after watching Craven’s amusing, if flawed, video “The Most Terrifying Video You Will Ever See”. Craven, a high-school science teacher in Oregon, has clearly workshopped the issue of climate change extensively with his students and the insight he wants to share in his videos and his book is essentially that the whole problem can be viewed from a game-theoretic perspective. Rather than trying to decide what is true or not (are the skeptics right or are the warmers right?), the important question is should we be acting or not.

Craven’s Global Warming Decision Grid

In his video, Craven uses an action versus outcome “decision grid” to argue that the consequences of not acting in the event that global warming turns out to be true are worse than the consequences of acting (i.e. economic costs) if it turns out to be false. The argument is entertaining, but unfortunately flawed. The problem is that it can be applied to any risk, however remote. As he writes in the book:

Simply insert any wildly speculative and really dangerous-sounding threat into the grid in place of global warming, and you’ll see the grid comes to the same conclusion–that we should do everything possible to stop the threat. Even if it’s something like giant mutant space hamsters (GMSHs).

The book is an attempt to rescue his idea by developing a series of tools to help sift through the arguments for and against climate change without having to actually understand the science. Along the way, he includes an extensive discussion of confirmation bias which I enjoyed as I am fascinated by cognitive biases. Ultimately though, his conclusions rest on an argument from authority. While he makes an excellent case for the important role that authority plays in science, this approach will not win over the skeptics I know: I can already hear their riposte in the form of the establishment’s rejection of Albert Wegener’s theory of continental drift.

Skeptics aside, What’s the Worst That Could Happen? is an extremely accessible book (perhaps even too folksy in its style for some) and is probably best read by those who are not already entrenched in one camp or another and are just sick of the whole shouting match.

* Long-time readers may remember that Bullshit has been mentioned on the blog before in this post about bottled water.

# Who are the big carbon emitters?

Earlier this week, @pureandapplied brought to my attention the emissions data that has been published by the Department of Climate Change in Australia. Their report comprises data for the 2008-09 reporting year provided to the Greenhouse and Energy Data Officer by corporations whose greenhouse gas emissions exceeded 125 kilotonnes*. A few corporations are missing from the list for a number of reasons, including failure to provide their data in time for the report’s publication (a sorry excuse indeed). Nevertheless, the data makes for some interesting reading. As @pureandapplied remarked, for example, Qantas was responsible for more emissions than Shell: those air points are producing a lot of CO2-equivalent emissions!

The data is reported in two categories, “Scope 1” and “Scope 2” emissions. The definitions of the two scopes are as follows:

Scope 1 emissions are the release of greenhouse gases into the atmosphere because of activities at a facility that is controlled by the corporation. An example of this would be gases emitted by burning coal to generate electricity at an electricity production facility (i.e. a power station).

Scope 2 emissions in relation to a facility, are the release of greenhouse gases emitted at a second facility because of the electricity, heating, cooling or steam that is consumed at the facility. An example of this would be greenhouse gases emitted to generate electricity, which is then transmitted to a car factory and used there to power the car factory’s lighting. The greenhouse gas emissions are part of the factory’s scope 2 emissions. It is important to recognise that scope 2 emissions from one facility are part of the scope 1 emissions from another facility.

The report is very careful to note that these two scopes should be used warily. In fact, it warns that the two figures “should not be used individually, or added together” to estimate liabilities under any emissions abatement scheme. That is a red rag to a Mule, so I will indeed look at them individually and added together. The chart below shows the top 25 emitters in the Scope 1 category.

Top 25 Scope 1 Emitters

It should come as no surprise that the big Scope 1 emitters are primarily power generators, although there are a number of mining companies in there, along with Qantas thanks to its burning of jet fuel. Scope 2 tells a somewhat different story.

Top 25 Scope 2 Emitters

Here “poles and wires” make an appearance: Transgrid and the like, move energy from place to place that has been generated elsewhere. So, the Scope 1 emissions are counted by the generator, but the tranmission company wears the Scope 2 emissions. Woolworths manages an impressive fifth place, perhaps thanks to the lights in all of their supermarkets? Wesfarmers, the owners of the Coles supermarket chain, rank higher still.

Finally, here are the top 25 emitters by the combined total of Scope 1 and Scope 2 emissions. Not surprisingly, the generators dominate once more.

Top 25 Scope 1+2 Emitters

Also included in the data is the total amount of energy consumed by each corporation. It is in these numbers that I stumbled upon something of a puzzle. Envestra produced a reasonably sizeable 627,161 tonnes of Scope 2 CO2-equivalent, but had one of the lowest levels of total energy consumption at only 193 GJ. What have they been up to? Guesses are welcome!

* Also included are those corporations holding a reporting transfer certificate.

# Left, Right and Climate Change

In the wake of the singularly unproductive COP15 Climate Change conference in Copenhagen, I have been reflecting on the polarisation of views on climate change along political lines. Whether or not human activity is leading to climate change is a question of scientific fact: it is either happening or it is not. So knowing someone’s politics should not help to predict their attitudes towards climate change, and yet it does.

It is not conclusive of course. Most people do believe that climate change is occurring and this includes people of a full range of political views. But, climate change skeptics seem to sit overwhelmingly on the right side of the political spectrum, while those most concerned about the effects of climate change are largely left of centre. Why is this?

Some would offer conspiracy theories to explain the dichotomy. The Australian Liberal senator Nick Minchin is an outspoken critic of climate change and in November last year he claimed that the left has been intentionally stirring up fears about global warming. While his comments elicited a storm of angry responses, including from his then party leader, Malcolm Turnbull, these views are widely held among skeptics. Indeed the controversy about climate change within the Liberal Party and its coalition partner the National Party was an important contributing factor to the downfall of Turnbull from his leadership position a few weeks later. For another conspiratorial slant, Ian Plimer regularly argues that academics are pushing the idea of climate change simply to help boost their research grant money.

# Hot and Dry Days Ahead for Australia

Earlier this month, the Australian Bureau of Meteorology released the October figure for the Southern Oscillation Index (SOI). It showed a precipitous plunge of almost 20 points down to -14.6. Just how significant a drop this is can be seen in the chart below, which shows the distribution of monthly changes in the SOI going back to 1876 (-14.6 is at the lower 5% quantile, which means that a fall as big as this, or bigger, has only occurred 5% of the time).

Distribution of SOI changes (Jan 1876-Oct 2009)

But what exactly is the SOI and what is the significance of this decline in the index? The index is the standardised anomaly of the monthly average difference in sea-level air pressure between Tahiti and Darwin. “Standardised anomaly”  means that the index measures the deviation of this pressure difference from the long-term average and is scaled by the standard deviation of the pressure difference and then multiplied by 10. The significance of the index lies in its relationship to the El Niño weather phenomenon. According to the Bureau of Meteorology:

Sustained negative values of the SOI often indicate El Niño episodes. These negative values are usually accompanied by sustained warming of the central and eastern tropical Pacific Ocean, a decrease in the strength of the Pacific Trade Winds, and a reduction in rainfall over eastern and northern Australia. The most recent strong El Niño was in 1997/98, although its effect on Australia was rather limited. Severe droughts resulted from the weak to moderate El Niño events of 2002/03 and 2006/07.

The chart below gives a historical perspective of the SOI over the last ten years. To get a better sense of the trends in the index, I have overlaid two different types of curve smoothing: a lowess (“locally-weighted scatterplot smoothing”) curve and a spline curve. The two give very similar results and make the 2002/03 and 2006/07 SOI downturns clearly visible. The timing of these downturns suggest that the corresponding droughts follow with something of a lag.

Southern Oscillation Index (Jan 2000-Oct 2009)

Over the last couple of years, the SOI has been solidly in positive territory and, again with a lag, there has followed an improvement in drought conditions. Indeed, New South Wales recently replaced the tight water restrictions which had been in place for a number of years with the less onerous “Water Wise” rules. Unfortunately, this change may turn out to have been premature. If the downward trend in the index seen over the last few months persists, Australia may face a return to severe drought conditions.

For anyone who is interested in how these charts were created, here is the R code. It is also available from the Stubborn Mule files section.

UPDATE: at the request of singingfish, here is a chart showing the full recorded history of the SOI back to 1876. The blue line is a spline smoothed curve.

Southern Oscillation Index (1876-2009)

# Rudd, Carbon and the Price of Petrol

Australia’s Prime Minister, Kevin Rudd, triggered waves of protests from environmentalists this week when he annouced that Australia’s target for emissions for 2020 would be a mere 5% reduction from the levels in 2000. With substantial commitments to emission reductions from other countries around the world, this target would be increased to 15%. The Government was at pains to point out that Australia’s population growth makes this target more ambitious than it sounds. However, by world standards Australia’s emissions are very high, whether measured per capita or by gross domestic product. This means that Australia should have more scope for relatively inexpensive emissions reductions than many other countries.

So 5% does seem to be a very unsatisfactory target. If you are a climate-change skeptic, even a 5% target is a needless waste of time and money, while if you take forecasts of climate-change seriously it seems woefully inadequate. However, rather than focusing on the target itself, in this post I will look at the implications that the Government’s plan will have where consumers will see it most directly, on the price of petrol.

In their White Paper on the carbon reduction scheme, the Government proposes a cap on the price of carbon of \$40 per tonne for the next 5 years while, for their financial impact modelling, a price of \$25 per tonne has been assumed. In an earlier post I calculated the impact of the price of carbon on the price of petrol. Here are the results for a range of carbon prices.

 Cost of Emissions (\$/tonne) Petrol Price Increase (cents/litre) 10 2.4 20 4.8 25 6.0 30 7.2 40 9.6

So, if the Government’s assumption is correct that the price of carbon will initially be around \$25 per tonne, we can expect an increase in petrol prices of 6 cents per litre. Even if the price of carbon reaches the \$40 cap, the impact on petrol prices will only be around 10 cents per litre. I say “only” because that 10 cents is small compared to extraordinary moves in petrol prices seen over the last year due to movements in the price of crude oil. From July to November, the price of petrol in Sydney fell by almost 40 cents per litre, according to prices published by the Australian Automobile Association, and based on my observations has fallen another 20 cents since then. Even compared to the 38 cents per litre fuel excise, 10 cents seems a modest figure. The chart below shows the dramatic moves in petrol prices along with projected prices based on the daily price of Singapore 95 refined oil, based on a regression model I have used in a number of posts in the past.

Introducing an emissions trading scheme for carbon will eventually affect a wide range of consumer prices, but based on the relatively small increase in petrol prices that it will produce, the scheme is not likely to have a significant impact on consumer behaviour. The scheme will do all its work on the behaviour of businesses and, given the dire financial straits we find ourselves in today, this is presumably why the Government has been so unambitious with their target. But this does also highlight that there is a lot more that the Government could be doing to reduce consumer carbon emissions beyond the trading scheme itself.

Photo Source: Foto43 on flickr (Creative Commons).

# The Garnaut Report and “Tit-for-Tat”

For those outside Australia, the Garnaut Climate Change Review is our equivalent of the Stern Review and last week a draft report was released. In this report, a nation’s decision as to how to act in the face of climate change is compared to the prisoner’s dilemma:

Effective international action is necessary if the risks of dangerous climate change are to be held to acceptable levels, but deeply problematic. International cooperation is essential for a solution to a global problem. However, such a solution requires the resolution of a genuine prisoners’ dilemma. Each country benefits from a national point of view if it does less of the mitigation itself, and others do more. If all countries act on this basis, without forethought and cooperation, there will be no resolution of the dilemma.