That carbon tax - again

Government has just announced that it is forging ahead with a carbon tax for South Africa. A carbon tax is a crazy idea. Government's rationale, expressed in its discussion paper, is to help pay for the costs of climate change - but there are no costs readily attributable to climate change. Certainly not now, because climate change is barely detectable, and probably not for a long time to come. Another excuse is that the playing fields should be leveled, so that renewable power can compete - another way of saying that renewable power is not competitive, and we should therefore pay more for our power. However, this makes us as a country less competitive than out rivals in world trade. The only nations to have agreed to carbon taxes are in the EU. A carbon tax is a Brussels idea. Should we be the only developing country in the world to commit economic suicide in this way? Say No! to carbon taxes -No!, No!! and No! again.

A carbon tax in South Africa?

Last year, Treasury issued a discussion paper on a possible carbon tax. It concluded that a tax of R75 per ton of CO2, with an increase to about R200 per ton CO2 (at 2005 prices) would be both “feasible and appropriate.” As a coal-fired power station emits about 1kg CO₂ per kWh, the carbon tax would add between 15 and 40% to the present cost of electricity. Is such an increase merited?

Treasury’s discussion paper starts by reviewing the effects of climate change. It gets the effects wrong, and always in the wrong direction. For instance, Treasury claims “Average temperatures have increased over the past 50 years at a rate of 0.2°C per decade, largely as a result of human activity.” The HADCRUT official data, variance adjusted, gives 0.13°C per decade for 1960-2010.

Similarly, Treasury believes “the atmospheric concentration of these gases could reach 550ppm of carbon dioxide equivalent (CO₂e) by as early as 2035, committing the earth to an average temperature increase of about 2-5°C.” The IPCC, which is nothing if not conservative about these matters, says that with a very gloomy view of the world (its A2 scenario), it expects an average temperature increase of about 2-5°C about 2095, not 2035! Less gloomy IPCC scenarios give 1.8-2.8°C about 2095.

Likewise, Treasury claims “Warming is expected to increase mosquito prevalence, with a concomitant rise in malaria.” The IPCC says “Climate change is expected to have some mixed effects, such as a decrease or increase in the range and transmission potential of malaria in Africa.” This is IPCC-speak for “We don’t know!”

Why was it necessary for Treasury to overstate the case in this way? Did it honestly believe we should be scared into accepting its new tax? A guide to the true impacts of climate change is the last century. There was detectable global warming, but the impacts can barely be seen. We live in a water-stressed country. Yet our own Weather Service reports “Higher temperatures will influence the rainfall, but it is still uncertain how the annual rainfall will change. It could increase in some parts of the country, and decrease in other parts.” The IPCC couldn’t have put it better!

Treasury’s Paper then considers the rationale for a tax. “Command and control regulations and market based instruments are used to control pollution.” Is carbon dioxide a pollutant? A dictionary definition of pollution is “The contamination of air, water, or soil by substances that are harmful to living organisms.” Carbon dioxide is not harmful to living organisms. To the contrary, it is the very basis of life.

The Paper then argues “Climate change and its effects are the result of GHG emissions, which are not paid for by the emitters.” That may be so, but many costs are born by society as a whole. Society can agree to build a bridge to cross a river. The costs may born by society, or the bridge may be tolled and paid for by users. The implicit assumption in the Paper is that ‘tolling’ is the only solution.

The Paper lists some issues underlying the design of a carbon tax. The first of these is “Environmental effectiveness – The ability of the tax to reduce GHG emissions.” Suddenly the rationale has moved from concern about the external costs associated with emissions to the emissions themselves.

It is futile to worry about South Africa’s emissions alone. Climate change is a global problem. Each year, South Africa emits about 125 million tons of carbon. China’s emissions are growing by an additional 200 million tons of carbon each year. South Africa could cut its emissions to nil, and the effects of climate change would still be there.

Until there is agreement on a global solution there is no purpose in placing additional imposts on our economy. A carbon tax would be a cost with no detectable benefit.

The only countries to have imposed carbon taxes are in the European Union. There is also a Canadian province, British Columbia. No developing nation has seen any merit in the idea.

This is not altogether surprising. Development demands ever more energy. There is a direct relationship between energy consumption and GDP. Over 80% of the world’s energy is derived from fossil fuels. The International Energy Agency predicts this may fall to slightly less than 80% by 2035. However, ongoing economic growth will see a 30% increase in greenhouse gas emissions by then.

Why should we slavishly follow the Europeans? There is absolutely no basis for a carbon tax in South Africa.

The Greenpeace Prescription

Greenpeace has urged the South African government not to get caught up with short-term political agendas, but rather to consider what scientists said was required to address climate change.

Me, I'm a scientist, and I think the past is quite a good guide to the future. The temperature rose by ~0.7 degrees C in the 20th century and there was effectively no change in any of Africa's climate indicators. There were no real regional trends in rainfall, for instance - a bit more here, a bit less there, but nothing Africa-wide.

So to address climate change, we need to do absolutely nothing - and the money saved can be used to address a real problem, like the million who die each year from a preventable disease like malaria.

If that is the message that emerges from COP 17, it will be worthwhile. Instead we will be told we need Africa to curb its emissions and preserve its forests. When Africa is about 2% of the global emissions? Purlees!

UN Econononsense

A report by the UN Environment Programme (UNEP), said that channelling 2%, or $1,3-trillion, of global gross domestic product into greening sectors such as construction, energy and fishing could start a move toward a low-carbon world. The investment would expand the global economy at the same rate, if not higher, as under present economic policies.

This is a typical piece of UN econononsense. Channeling $1.3 trillion of investment into ANYTHING would boost jobs! The question is whether it would be sustainable, i.e. whether there would be a reasonable return on the investment. If there isn't, then destroying wealth on that scale would be criminal - the lost opportunities alone would be sufficient to haul the UN before the tribunal on genocide. There is absolutely no evidence that the investment "would expand the global economy at the same rate." People will invest in greening projects if they are more profitable than other avenues of investment. The problem has been to find profitable ones. Most are only profitable because of Government subsidies - and these are clearly unsustainable.

Carbon taxes

There is growing concern that carbon taxes will make the economy uncompetitive. South Africa seems determined to lead by example in curbing its carbon emissions. This is futile, because its total emissions (about 125Mt carbon a year) are less than the annual increase in China's emissions. The IRP2010 draft could have yielded an excellent result. Instead, it was corrupted by forcing the model to accept expensive wind energy, such that within a few years there was an huge excess of generation capacity. That made little impact on emissions, so then the Department of Energy removed coal-fired power stations from service the moment they reached their nominal end of life - regardless of the fact that they produce the cheapest energy and that refurbishment to extend their life is easily the most cost effective way of meeting the demand. In that way, the cost of electricity increased considerably, all to achieve a target which was set, not by some carefully considered plan, but by a scenario exercise. It all goes to prove that scenarios should never be used for planning - they merely set the bounds on plans

Telkom gives management marching orders

Today, it is reported that Telkom is finally starting to cut into its overheads. Managers are being offered voluntary retrenchment packages. It can't happen quickly enough, as far as I am concerned. Telkom has been wrapped in a cocoon. We have all suffered appalling deprivation. Telecoms were supposed to have been liberalized back in 2001 - instead this Telkom brand of incompetence has given us the most expensive comms in the world, and of a quality that beggars description. Hurrah that they are finally being shown the door!

Disaster strikes!

Eskom has just destroyed a generator at Duvha. The loss of 600MW of generating capacity for "many months" is a disaster. The reserve margin is already low. Read Eskom's medium term risk mitigation report if you want to understand just what this means. Tighten your belts, and await power cuts. So much for job creation!