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Australia’s carbon tax and global temperatures

July 3, 2012

Australia now has a carbon tax , and there is now much chatter  about how this will impact on the economy. There has been less discussion about the potential impact on the environment.

Andrew Bolt has continued to ask all comers about how the Australian carbon tax will impact on global temperatures, and most people have refused to answer. So he decided to work out his own estimate. Using the calculations of Damon Matthews, who suggests that a tonne of co2-e will change temperatures by 0.0000000000015 degrees, and given that the government plans to reduce our emissions by 160 million tonnes, then Bolt estimates that our carbon tax will change the global temperature by about 0.00024 degrees. Fair enough.

From the other side of the fence, the only person I have seen willing to put their name to an estimate is John Quiggin, who thinks the carbon tax will be 100 times more effective and reduce temperatures (compared to “business-as-usual”) by 0.02 degrees. Quiggin should be congratulated for putting his name to an estimate, and it’s appropriate to note his caveat “as should be pretty obvious, it’s not meant to be precise, and claiming precision would be silly in any case”. Fair enough.

It is worth having a look at some of the assumptions made by Quiggin:

Australia is currently responsible for a about 2 per cent of global emissions. Under business as usual projections, our emissions were expected to grow by 20 to 30 per cent between 2000 and 2020. If we achieve the target of 5 per cent below 2000 emission, that implies a reduction of 25 per cent relative to business as usual, 0.5 per cent of global emissions. That’s about 1 per cent of what is needed if the world is to cut total emissions by 50 per cent over the next couple of decades, as is necessary in a stabilisation scenario.

If the stabilisation scenario meant that temperatures increased by 2 degrees instead of 4 degrees under business as usual (BAU), then the benefit would be a “saving” of 2 degrees… and if Australia makes up 1% of that saving (as suggested by Quiggin) then our contribution is 0.02 degrees. So far, so good.

There are a number of key assumptions here, including:

* Australia will be responsible for about 2% of emissions into the future
* A 50% reduction in global emissions over BAU will put us on a stabilisation scenario
* All countries will contribute equally to emission reductions
* The carbon tax is the only policy responsible for reaching the 5% reduction goal

All of these assumptions are questionable. On the first point, Ross Garnaut estimated that Australia contributed about 1.5% of emissions in 2005, and that would drop to 1.1% by 2030 and then continue to decrease in the future, as developing countries (China, India) increased their emissions.

Second, Quiggin suggests that a stabilisation scenario requires a 50% reduction in emissions, which is a common goal of activists (for example, see this EU paper). However, while other activists have called for a 50% reduction in total emissions, Quiggin is talking about a 50% reduction from the “business as usual” counter-factual, which is a very different goal. Since global emissions are expected to double by 2030 in a business-as-usual scenario, then Quiggin’s goal actually represents an increase in global emissions, which is not consistent with his stabilisation goal.

What happens if we re-do the Quiggin approach but change the above assumptions?

Since future Australia will account for about 1% of global emissions and we are reducing those by 5%, that implies a reduction of 0.05% of global emissions thanks to Australia, which is 0.1% of the effort needed to reach the desired 50% global reduction in emissions. If we keep our earlier assumption of a 2 degree “saving” then Australia’s contribution to global temperatures is 0.002 degrees.

The above analysis assumes that all countries will contribute equally to emission reductions. It is widely expected that developed countries will need to reduce their emissions by more than developing countries, and Garnaut estimates that Australia will need to reduce our emissions by about 90%. If we use this goal in our working, then Australia’s 5% reduction will mean that we only contributes 0.06% of the global effort needed to reach stabilisation, and so can only take the credit for 0.0011 degrees of temperature change. That is still more than four times higher than the Bolt estimate, but the disagreement is significantly smaller.

Finally, if the carbon tax is responsible for all of the reduced emissions, that implies that all other carbon policy  achieves nothing — despite costing about $1 billion each year. It is doubtful that this is true, and it is doubtful that Quiggin believes this to be the case. This same mistake exists with Andrew Bolt’s estimate.

In summary, that leaves us with the following estimates:

 Andrew Bolt  0.00024
 Basic Quiggin  0.02
 Half Quiggin  0.002
 Modified Quiggin  0.0011

As an aside, it is interesting to note that Australia’s 5% emissions reduction is expected to be achieved though buying foreign carbon permits. In other words, Australia will continue to increase emissions, but we will pay other countries to decrease emissions on our behalf.

UPDATE 

John Quiggin has pointed out that there is also a significant problem with the Bolt estimate, since it only calculates the benefit from reduced emissions for one year (2020) instead of adding up the cumulative reductions over multiple years. Good point. This means the Bolt methodology just got a while lot more complicated since it now requires an expected future emissions time series and an expected future emissions time series counter-factual. That task is too big for me at the moment, but it’s fair to say that such a number is going to be quite a bit higher than Bolt’s original estimate.

Quiggin does a “back-of-the-envelope” analysis and multiplies Bolt’s estimate by 100 to come up with a new estimate of ~0.02, the same as his original estimate.

Also, I’ve run across two more estimates of the global temperature change from Australia’s policy — one from Christopher Monckton (0.00005 by 2020) and one from Michael Bachelard (0.0038 by 2100). Obviously, these use different end dates. To make them comparable, if you assume that the Monckton number applies every year between 2020 and 2100 then 0.00005 * 80 = 0.004 which is remarkably similar to the Bachelard estimate… and also similar to the “half Quiggin” estimate above.

*****

I have unplugged comments on this article because I don’t want my nice calm peaceful blog to play host to a flame war about climate change. Sorry.

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  1. Aaron
    July 4, 2012 at 2:26 am

    One point: all of the estimates are orders of magnitude below what can be measured. We may as well be arguing about the number of angels that can dance on the head of a pin.

  2. Milton Von Smith
    July 4, 2012 at 5:28 am

    Let’s take the modified Quiggin as being correct. Bolt is wrong by 0.00086 degrees, whilst the naive Quiggin estimate is wrong by 0.0189 degrees. So, as usual, Bolt is closer to the truth than Quiggin.

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