Climate Change Mitigation May Well End

This Submission sets out a more rational basis for setting targets for greenhouse gas emission reductions than that of all current proposals, and shows that such targets do not need to be as severe as commonly supposed. It then queries the apparently already firm decision of the Garnaut Review to adopt the HowardShergold preference for an emissions trading scheme (ETS) as the method of choice for implementing emission reduction targets, and shows that a system of payments of bounties to those who reduce emissions is preferable. The ETS will have deleterious effects on the Australian economy, especially if initial allocations of credits are auctioned, as already proposed by Garnaut, and on its own will have zero net impact on emissions. Worse than that, the ETS will encourage dumping of captured carbon either in the ocean, or near built-up areas, with unimaginable consequences. Garnaut’s choice of the Prisoners’ Dilemma as his model of how to deal with the problem of securing international agreement on reducing emissions of the so-called dangerous greenhouse gases appears to be fallacious, and the outcome of the Bali process in December implies as much. R.H. Coase’s work on the problem of social cost is far more relevant. This Submission then outlines the arithmetic and other errors (if not prima facie scientific fraud) in the claims by the IPCC and by Canadell et al. (2007a and 2007b) that the efficiency of the natural earthly sinks of carbon dioxide is declining when in fact it is increasing. Finally, the Submission notes the absence of econometric analysis showing the claimed adverse economic effect of greenhouse gases in both the Stern Review and the IPCC’s AR4, and outlines some evidence showing the beneficial economic impact of the major “greenhouse gases”, namely water and carbon dioxide, which the Garnaut Review will perversely seek to reduce. Ross Garnaut’s answer to the question he posed in his recent S.T. Lee lecture was that “climate change and poorly designed responses to it could bring the Platinum Age to an end”. This Submission will suggest it is Garnaut’s apparent decision that his 1 Formerly Investment Adviser, Treasury, Papua New Guinea (Crown Agents, World Bank, and GoPNG, 1988-1999), Economic Adviser in EU Delegations in Kenya, Egypt and Nigeria (1976-1988), senior executive Lonrho Ltd, London (1973-1976), director Maxwell Stamp Africa Ltd., Nairobi (1971-1973), adviser to East African Community (Ford Foundation, 1970-1971), Lecturer in Economics, Universities of Rhodesia and York (UK) (1964-1970). He has published widely on the economics of population growth, education, and forestry in developing countries. Review will propose an emissions trading scheme (ETS) that may well, if adopted both in Australia and globally, wreak far more havoc on the world economy in general, and on Australia in particular, than even the most pessimistic of the many IPCC scenarios of the impact of climate change by 2100, without achieving any net reduction in emissions of greenhouse gases. Garnaut’s decision that emission trading, rather than carbon taxation, is the way to go seems strange when it is not required by his Review’s terms of reference, and shows surprising conformity with the Howard government’s adoption of the ETS recommended by the Shergold Report (2007). Moreover most economists, notably in America, favour taxes – but see also Humphreys (2007) and the cogent criticisms of the Shergold scheme by Robson (2007). This Submission puts forward a third option, which consists of paying bounties to emitters that succeed in reducing their emissions. That has many advantages: it is direct, addresses the problem at source, and avoids all the complications of an ETS, including both deadweight transaction costs and zero impact on emissions. I begin with some comments on the incomplete analysis of climate change by the IPCC, with the nearly total disregard, and even denial, by many of its thousands of Nobel Peace Prize-winners of the extraordinary rapid rate of growth of the photosynthetic uptakes of carbon dioxide emissions by the oceanic and terrestrial biospheres. The Stern Review, so often cited by Garnaut, does not analyse this phenomenon in depth, yet it is crucial to understanding of the carbon cycle. Moreover, while there are no direct measures of the extent of net photosynthesis, the reasonably well measured levels of both emissions of carbon dioxide from burning of fossil fuels and of the level of the atmospheric concentration of carbon dioxide, yield the actual level of global uptakes from this accounting identity: ΔA = E – U, where ΔA is the change in the atmospheric concentration of carbon dioxide from year to year, E is annual emissions, and U is total Uptakes derived as a residual from U = E – ΔA (see also Curtin 2007, Annex II below). This identity necessarily shows that since the rate of growth of carbon dioxide emissions has been over 2 per cent a year since the 1980s, but has been rising to over 3 per cent p.a. since 2003, it must be accompanied by an at least similar growth of uptakes, since the reported increase in the atmospheric concentration of carbon has been increasing at only 0.4 per cent p.a. since 1958 (but rising to about 0.5 per cent a year since 2003). My Fig.1 shows that despite the increasingly rapid growth in fossil fuel emissions, the airborne fraction (AF) of all carbon dioxide emissions from burning of fossil fuels that is retained in the atmospheric CO2 concentration, as measured at Mauna Loa since 1958, has actually been falling. This implies a more than proportionate increase in the photosynthetic uptakes. It also follows from the identity that if there is any under-recording of total global emissions of carbon dioxide, including respiration from human beings and all other living animals and plants, as well as decaying vegetation and animal matter – and there are no extant global measurements of these sources of carbon dioxide – this necessarily implies larger total Uptakes. For example, given the IPCC data that total 2 E.g. Nordhaus and Boyer 2000.