Why the risks of climate change have been engineered away

One of the greater challenges we engineers face is telling our clients that their dream project doesn’t work.  If it costs too much, they usually accept our advice with ill grace.  Sometimes, it is technically impossible. Then they have great difficulty in believing us.  For instance, few will accept our advice that the ideal of creating a low carbon world within our lifetimes is probably not achievable.

The evidence that a low carbon world within our lifetimes is an unachievable dream is clear.  In 1998, the then developed nations signed the Kyoto Protocol, which placed legally binding commitments on them to reduce their emissions below 1990 levels. Global emissions in 1990 were 22.6 billion tons of carbon dioxide (CO₂).  Fossil fuels made up 88% of the primary energy supply. In 2012, when the first Kyoto commitment period came to an end, global emissions were 34.5 billion tons, over half as much again as in 1990, and fossil fuels made up 87% of the primary energy.  So much for legally binding commitments!

Of course, the developing nations did not foresee the rapid development of China.  That put paid to the Kyoto ambitions.  Recently, there has been much cheering about China’s offer to start reducing its emissions after 2030.  It is perhaps not as encouraging as at first appears. Today China emits nearly 10 billion tons; business-as-usual until 2030 will see its emissions rise to nearly 18 billion tons.

And if the development of China was overlooked, then the possible similar surge in India’s emissions seems to have been forgotten. India has rejected outright any similar offer to reduce its future emissions, citing the need to develop its economy before it can take such a step. Today India emits about 2 billion tons; by 2030 it is likely to be emitting over 5 billion, and rising rapidly.

So the dream appears unachievable.  The question is then whether it will turn into a nightmare.  There are many who claim that a higher carbon world will be wracked by disaster. In this scenario, the seas will rise, storms will rage, drought will strike, and the biosphere will disappear. These are the predictions of many climate models. While all agree that the models are not very good, the question has to be asked – Suppose the models are right?

Back to the engineers.  Today, humanity depends on us engineers to provide the defences against the seas, floods, droughts and even fires and earthquakes.  Generally we do quite a good job.  Many people stay warm and dry, have enough to eat and drink, and rarely experience the disaster of fires or earthquakes.  Of course, our solutions come with a cost, and there are some who are still trapped in poverty whom we have not yet found ways to save.  But this is largely a social problem. We engineers recognise that while we can make a contribution, poverty is not something we alone can solve.

If this is the state of the world today, then the disaster scenario predicted by the climate models implies that the defences we engineers have built will be found wanting.  In this case, to address the risks, we need to enquire where the existing defences may be too weak to withstand a fiercer onslaught.   

Will the seas rise and drown our cities?  The Dutch have done a good job of teaching the world how to live normally below sea level, so that is not an insuperable problem.  Will there be greater floods than ever known?  Generally engineers design for a one-in-a-hundred-year flood. If we start to get more than that, we should have some time to improve the design to cope with the new one-in-a-hundred.  Will droughts strike with greater frequency and severity?  Our water supplies are already reasonably robust, and over half our water is used quite inefficiently for agriculture. It seems likely that we could withstand more extensive drought, particularly if supplies can be boosted.

This is the basic message that seems to have been lost in the panic about the risks of climate change – we already have a high degree of resilience against the climate, thanks to generations of engineers working in the service of humanity.  That resilience needs maintenance if it is to continue to provide the desired level of protection. It may need reinforcement if the climate should become more extreme.  But the risks presented by climate change are by no means insuperable. The costs are most unlikely to be as excessive as some doomsayers would have us believe.

Moreover, some of the benefits of more carbon dioxide in the atmosphere should not be overlooked.  Satellite images show the world greening and deserts retreating. Many European greenhouses are being controlled at over 1000 parts per million CO₂, two-and-a-half times atmospheric levels. This has been found to boost vegetable and fruit production very significantly.

So the risks that climate change may prove unduly destructive are almost certainly overstated, while the supposed driver of climate change, carbon dioxide, is proving beneficial to life. The proposed “solutions” to climate change, such as carbon taxes, can now be seen to be the chimeras they really are.

Anyone for a carbon tax?

Our Treasury seems wedded to the idea of a tax on carbon emissions.  In this, they are cheered on by the Department of Environmental Affairs, but the Department of Energy and the Department of Public Enterprises both seem to be having some reservations. If it is proving difficult to finance Eskom, and economically undesirable to hike the cost of power any more, why would we want to increase the power cost yet further in the vain hope of saving the planet?

It all goes back to that proud moment in November 2009, when our State President stood before the world at a gathering in Copenhagen. He offered to reduce our carbon emissions by large amounts provided the developed nations would help with the costs of the reductions.  At the time, it was seen as a noble gesture on our part.  Now, the gilt has fallen from the offer, not least because the anticipated help has been conspicuous by its absence.  The developed nations have come face-to-face with the economic downturn. Saving the planet has moved lower on the list of priorities.

There are three major things wrong with the tax idea.  First, the plan announced by President Zuma wasn’t a plan in the first place.  What he said was:

With financial and technological support from developed countries, South Africa for example will be able to reduce emissions by 34% below ‘business as usual’ levels by 2020 and by 42% by 2025.

This was a scenario from the Long Term Mitigation Scenarios, which was called “Required by Science.” Now scenarios are not plans, they are sketches of what might be possible.  Moreover, science does not require anything; it merely provides a platform for understanding.  But the Department of Environmental Affairs sprang upon the scenario with glee, believing in their zeal that science really had produced a plan out of some magic hat.  With no further thought of the implications of what they were doing, they set about trying to implement something that had every chance of not being possible. The carbon tax is part of their plan of implementation.

The second thing wrong with it is that it is an economic disaster.  Treasury evaluated the impact, and found it made the rich richer and impoverished the poor. Indeed, the impact was hardest on the poorest. To understand why it is a disaster, you need to recognize that there is a very strong relationship between economic growth and the consumption of energy.  To grow the economy, you have to provide more energy. But over 90% of South Africa’s energy comes from fossil fuels. Most of our energy gives rise to carbon dioxide emissions.  So economic growth means more energy which means more emissions.

It is possible to reduce the linkage between economic growth and energy consumption, but this cannot happen overnight.  Nowhere in the world has there been delinkage at the rate that the Long Term Mitigation Scenarios would require – and, note well, the scenarios were long-term to begin with.

It is also possible to reduce the reliance on fossil fuels.  Indeed, this is precisely what the Department of Energy’s renewable power programme is designed to do.  But even the latest Integrated Resource Plan Update would not produce the sort of drop in reliance that the Mitigation Scenario would require.

The Department of Environmental Affairs recognizes these problems, so it has come up with a different plan.  It aims to set up a carbon trading platform, which will allow companies that produce carbon in excess of some arbitrary limit (which the Department will set) to buy emission credits from companies which produce less carbon than the limit.  Treasury, advised by a group of would-be carbon traders, has agreed to this ploy. 

There are at least three objections – on Treasury’s own calculations, there is insufficient volume of tradable carbon to support such a scheme; a few industries which have found ways to save carbon have already cashed in on the various pre-existing schemes such as the Clean Development Mechanism; and, most damning of all, it would establish a bureaucracy within the Department of Environmental Affairs which could control emissions and thereby the entire economy at the merest whim. The fact that carbon trading platforms have been a disaster in the US and have cost the European Union billions in ineffective support (and lost VAT) has not been sufficient to persuade either the Department or Treasury that such a scheme is ill-advised. Treasury is doubly culpable in this – the foxy carbon traders showed it how to design a carbon henhouse, a sure-fire way to lose the chickens!

The third thing wrong with a carbon tax is that it would achieve nothing.  There seems to be some sort of zeal in our Government to save the world from a possible carbon hell.  South Africa emits around 1% of global emissions.  Suppose we were to reduce our emissions by a quarter, which would probably wreck our economy for good, the global impact would be absolutely nil. 

It might be justified if the rest of the world had similar zeal, but it demonstrably has not.  The Kyoto Protocol came into effect in 2005. In the first commitment period, 2008-12, many developed countries agreed to legally binding limits on their emissions. What happened? Well, between 2008 and 2012, global fossil fuel use went up by 8.5%, and the contribution of fossil fuels to global primary energy supply was unchanged at 87%.  Is it worthwhile committing economic suicide to protest the failure of others to observe legally binding limits?

Moreover, with every passing year the whole rationale for reducing carbon emissions is becoming weaker and weaker.  In the past 16 years, emissions have gone up 40%; global temperatures have been stationary.  Indeed, there has been only a short period in our history when the hypothesis that carbon emissions and global temperatures are linked was supportable. That was between 1970 and 1997. Before then, the world cooled as emissions increased, and since then the temperature has not changed.

Instead, a different hypothesis has emerged. This proposes that there will be more extreme weather in a warmer world.  However, it is not demonstrable.  To the contrary, it has been possible to extend many measures back to the late 1800’s. We can now see how extreme the weather was in earlier times.  Even though the world has demonstrably warmed over the past 150 years, there has been no detectable change in the frequency or severity of extreme events.  One of the surprises has been that the world has not become measurably wetter, which seemed very likely in a warmer world.

So the rationale behind a carbon tax is now very weak.  It always was weak.  The idea that a tax will encourage a change in social behaviour is seductive, but a little thought will soon show the flaws.  It was long hoped, for instance, that swingeing taxes on tobacco would reduce smoking, but it had little effect. Other laws became necessary to bring about the desired social change.  Alcohol consumption continues unabated – the annual increase in the sin tax has an imperceptible effect.  At least with tobacco and alcohol, it is possible to cut down on consumption.  Carbon, with its direct linkage to energy and wealth creation, can only be cut back by greater efficiency. Most large users of energy have already done much to improve their efficiency as far as possible.  Further improvement is up against the law of diminishing returns. 

Carbon emissions are therefore inelastic, in economic terms. Adding a cost to energy has an impact on the demand by closing otherwise profitable industries. Jobs are then lost.  It is happening in our economy right now. That is ultimately the reason why there are no grounds for taxing carbon.

The C-c-c-razy Concept of a C-c-c-arbon Tax

Our Treasury proposes to introduce a carbon tax from 2015.  It is a serious mistake.  Not only are the reasons advanced by Treasury flawed, but international experience has shown that carbon taxes do not achieve what is hoped, namely a reduction in carbon emissions.  Instead, they capture wealth that could easily put to better use. They cost jobs. The burden of the tax falls largely on the poor. Treasury’s own paper shows this.

Treasury sought to justify a carbon tax in its 2010 discussion paper.  It claimed that climate change was an example of market failure, in that the environmental costs of climate change were not factored into energy prices. That, of course, presumes that one can determine the environmental costs.  A huge pan-European team laboured for 15 years. It found that the total environmental costs – health impacts from emissions, acid rain impacts on crops, water chemistry changes on fish life and climate change - amount to something between about €0.20 and €0.75/kWh.  That sounds horrendous, but the cost of not having energy, i.e. the benefit of energy, is about €25/kWh, so society is far better off! The market failure thesis fails.

Treasury also argued that South Africa was one of the largest emitters of greenhouse gases in the world.  That overlooks the fact that we are actually quite a populous nation.  When the number of South Africans is taken into account, we are only 34^th in world rankings. We contribute a little over 1% to the total.  Anything we did to reduce our emissions would be invisible against the background of surging output elsewhere in the world.

A third reason Treasury advanced was the possibility that failing to address our emissions might result in trade sanctions.  Our primary trading partners all emit more per capita than we do, so the risk of sanctions would seem remote.

Finally Treasury held out the hope that we might develop some wondrous low-carbon technologies, which would enable us to develop new markets.  Yes, it is possible that we might, but the world is so heavily dependent on fossil fuels that any change towards a lower-carbon energy scene will not happen rapidly.  At best, Treasury’s hopes can only be regarded as a long shot.

So the reasons Treasury put forward for wanting a carbon tax in the first place are all flawed. Matters get worse when we turn to Treasury’s economic arguments.

First, its own models predict a significant loss of economic growth.  It admits its models are inexact, but they produce some surprising results.  For instance, a carbon tax would have, apparently, no impact on electricity sales – yet most of our emissions come from generating electricity! Nevertheless, Treasury’s admission that we will nearly all get poorer seems to be one of those sacrifices we need to make to save the world.

What is really surprising is Treasury’s calculation of where the burden of poverty will fall hardest.  I did not think I would live to see a day when an organ of this Government would seriously propose impoverishing the poorest of the poor while enriching the richest of the rich.  That is precisely what Treasury estimates.

But is there any hope that a carbon tax could achieve what it sets out to achieve, namely reduce our carbon emissions? Treasury has looked at a number of instances of carbon taxes elsewhere, but has not checked the effects.  In the EU, for instance, cited with approval by Treasury, emissions have levelled off – but the price of carbon has recently collapsed, and the Germans are quietly taking full advantage of the collapse by building 23 new coal-fired power stations. The Finns introduced a carbon tax as early as 1990 – and their emissions have grown relentlessly. Costa Rica introduced a carbon tax in 1997, since when its emissions have grown by over 60%.  India slapped a carbon tax on coal in 2010, since when its consumption has grown by nearly 30%.  Australia introduced a carbon tax in July 2012; by July 2013 the economic damage ran to billions, which cost Julia Gillard her government, and Kevin Rudd, her successor, immediately ditched the tax. We introduced a tax on gas-guzzlers, and the streets have grown more crowded with SUV’s.

Why does a carbon tax not work?   Most (over 80%) of global energy comes from fossil fuels, so energy use and emissions go hand in hand. Energy is an absolutely necessary element of wealth creation. It is not sufficient, because other factors such as skilled labour play their part, but without energy you cannot grow the economy, and you cannot create jobs.  As a developing nation, we need to grow our economy. That means our emissions are going to grow whether carbon is taxed or not.  In economist’s terms, the demand for energy is inelastic. Of course, it may become possible to produce energy economically without emissions, but it is going to take a long while to move away from the global level of more than 80% reliance on fossil fuels.

How could Treasury have gone so astray?  I think they were first misled when Government tried to turn the Long Term Mitigation Scenarios into plans. Scenarios explore extremes that have little chance of being realized in practice.  They have also been poorly advised by a British economist, Lord Stern.  Lord Stern moved into Tony Blair’s office in 2007 to produce a political excuse for a carbon tax.  His economics have been severely criticized by fellow economists, so that he has had to rely on ethical arguments to justify his belief in a carbon tax.  Invoking ethics usually means you have lost the argument.  Britain has not followed his prescriptions – why should we?

I can only conclude that Treasury’s proposals are flawed from start to finish.  But does that mean we should just give up on a lower carbon world?  Of course not.  The US has recently managed to get its emissions back to where they were twenty-five years ago.  An analysis by Yale university staff has shown that the arrival of shale gas is largely responsible; energy efficiency, less thirsty cars and fewer miles flown have also helped. We could easily do something similar.  Most nations get about a third of their energy from natural gas; we get only 3%.  If we grew our gas consumption by 20%, and cut our coal consumption by 20%, we would reduce our emissions by nearly a third.  Rather than destroy our economy with a carbon tax, let us explore vigorously for gas.   

Will Government stop dithering and positively encourage gas in all its forms?

Severe weather events

It is one of the great perceived truths of today, that severe weather events are on the increase.

If this were so, one would expect more and more people to be dying as a result of floods, hurricanes, typhoons, lightning, snow and all the rest.  There are, after all, many more people than there used to be, so even if the severity of the weather were not on the increase, one would expect more to lose their lives.  Add more people to a hypothetical greater severity, and you would expect many more fatalities - right?

Wrong! Very wrong.  Not only has the risk of being killed fallen, but the absolute numbers dying from extreme events has also fallen:

Source

The average dying each year from extreme weather has fallen from nearly half-a-million a year in the 1920's to about 30 000 a year today.  Extreme events may indeed be getting more frequent, but we engineers have become better at coping with the forces of nature.  So do not be panicked into striving unnecessarily for a low-carbon world - we engineers have already taken the essential precautions!