I've written before about the Australian's war on science (see Part I II III IV V VI VII VIII). According to the Australian global warming isn't happening and we're not causing it and stopping it would destroy the economy. Now, in a barking mad editorial (entitled, I kid you not, "Reality bites the psychotic Left") they offer us this:
Rather than objectively assess the realities of climate change and the practical task ahead they [the psychotic Left] advocate symbolic, but ultimately futile, penance. By persisting with a misguided campaign to turn back the clock and demonise the Howard Government for not being harsh enough, once again, the debate has passed them by. Kyoto is giving way to a new global compact at which the US and Australia are at the centre. As research into clean coal technology for electricity generation looks set to become not just a reality but much quicker than even optimists had expected, those who advocate a return to dark nights and cold showers again look foolish.
So after claiming Stern put the cost of CO2 stabilisation way too low at 1% of GDP, they've back flipped and it's now going to be cheaper than Stern expected. But this is bad news for the psychotic Left. As, presumably would be the case if the cost was higher than Stern. Or the same.
And this bit is pretty funny when you consider the contempt the Australian displays for science, scientists and the scientific method:
In their retreat from modernity, the wrongly named progressives part company with Marxism which, despite its fatal flaws, was at least grounded in the spirit of the enlightenment, progress through scientific inquiry.
John Quiggin has the background on the Australian's descent into madness. It seems that the New Matilda published a piece by Clive Hamilton about how the Australian threatened him with a lawsuit in an attempt to force him to remove his criticism of the Australian from his book about global warming. The Australian's response to Hamilton was quite dishonest:
CLIVE Hamilton calls himself an author but surely he's a comedian. How else to explain the following? Yesterday, New Matilda ran Hamilton's latest piece in which he said of The Australian: "No news organisation in Australia has done more to silence critics and independent voices." Now, here's the pay-off: this was run on the same day that The Australian published Hamilton's latest research paper. So while Hamilton was complaining that The Australian was silencing critics, The Australian was publishing Hamilton.
Late last year, The Australian also published a report produced by the Australia Institute, of which he is executive director, on the subject of corporate pedophilia.
Which would have been a good comeback if the Australian had published Hamilton. But they hadn't. And they didn't publish a report from the Australia Institute late last year either. They did publish news stories that mentioned the reports and then rebutted them, but that is not the same as publishing him. And note how they avoid mentioning the reason why Hamilton said they were trying to silence him.
I am wondering exactly what they mean by "clean coal". Sounds like a nice idea, but I haven't seen any credible claim that it is close to reality.
This newspaper truly beggars belief. The inconsistencies with their editorial line are just staggering. As my grandmother-in-law would say - silly as a two-bob watch. I'd roll about laughing if it wasn't so dangerous.
There are several different technologies referred to collectively as clean coal.
The closest to full commercialisation is integrated gasification combined cycle. Several pilot plants (with rates up to several hundred megawatts) have been operating since the 1990's.
Several full-scale commercial plants (1000 megawatts and up) are currently under construction.
The oxyfuel process is less advanced but has the potential to be retro-fitted to existing plants.
Clean coal cops it from both sides - nukes-or-nothing alarmists like Tim Curtin don't like it because it undercuts their gloom and doom predictions. Green purists don't like it because they're fixated on renewable energy.
An interview with Rupert Murdoch on the subject of global warming.
I bought a watch in China for less than 2 bob and it's still working. :)
Australian wrote: "The AustralWhere The ian published Hamilton's latest research paper" they should have written "The Australian published about Hamilton's latest research paper". I think their general point was that they have not hidden Hamilton's work.
Anyway, no newspaper or private enterprise has the power to silence critics. Only the government can do that. Hamilton's Australia Institute has never published anything by a libertarian, but that doesn't mean that he is silencing us.
Don't defend a newspaper's editorial commenter over something like that particular typo John! It's too telling that a rag like the Oz thinks that what it's done by making its silly comments on a paper is "publish it". This is not a random blogger being loose with language, rather it goes to the heart of the Oz's latter day antiscientific, ideological slant. They're not worth defending over it.
"Anyway, no newspaper or private enterprise has the power to silence critics. Only the government can do that."
Umm, defamation? As Hamilton's article states, the Oz raised the prospect of a defamation action in an attempt to censor his book. Obviously the government could repeal defamation laws, but your claim is stretching a long bow otherwise.
Ian Gould: Thanks for the citation at #3, but it is not correct, I have nothing against clean coal as long as it does not cost much to achieve it.
But I would welcome your input on the following: according to the Allen Report "Deep cuts in greenhouse gas emissions" (March 2006), in their "early action" scenario, real GDP grows at 2.1% p.a. to reach $2 trillion by 2050, around 6% less than in the base BAU case. I believe there is a fallacy here. Their base case is expressed in fixed 2002 prices; however their early action requires in effect a carbon tax on all CO2 emissions from all emitters, starting at $0.7 per tonne CO2 in 2013, rising to $186 by 2050. This is of course a change in the price of producing energy, but even if we suppose it only affects final energy consumption in the CPI (6% weight) and has no impact on production costs of other goods and services in the CPI, the impact on the CPI is apparently (subject to correction by you) to raise it from 100 flat in 2013 and 2050 as per Allen to 113 by 2050, with a % increase from 2049 of 1.68%; this means that REAL GDP growth by 2050 is not their 2.1% pa but 0.4% pa and still falling (as the carbon tax runs on at $180+).
Also, in the early years of the Allen model, surely their CO2 tax can have little impact, starting as it does at $0.7, even if rising at 16% pa., as the implicit cost of CO2 in electricity is around $120 here (ACTEWAGL), so $0.7 will have no discernible impact on anyone's energy bills, which means their claimed reduction of emissions up to around 2041 is unlikely to emerge; only then when their tax gets above $100 then is it likely to produce their "deep cuts". The problem appears to be that their "6% lower GDP in 2050" arises only from the annual cost by 2050 of reducing BAU emissions then to 60% below the 2000 level, and ignores all other effects.
Over to you!
If you have questions about the Allens report, which I haven't read, I suggest you take it up with the authors.
As a general comment, you appear to be overlooking the second- and higher-order effects of a change in the price level in a general equilibrium econometric model.
As a minor illustration only, a price in the price of petrol won't simply increase inflation. Possible other effects include a decrease in petrol imports leading to a lower current account deficit; a higher US dollar and a downward pressure on interest rates. Conversely, a rise in ptetrol prices is likely to encourage consumers to buy smaller cars which are more likely to be imported resulting in lower Australian car production and reduced employment ion the Australian car industry. This is, of courses a very minor and incomplete example dealing only with one form of fossil fuel.
As you should know, there are literally hundreds of such impacts meaning that your argument based on the one-off first-order impact on prices is far too simplistic.
Thanks Ian, I have; the Allen Deep Cuts Report is easily available:
Perhaps you could also address your patronising remarks to them? The point is that as it seems to me their Report ignored the effect on the CPI of their GHG Tax or emissions charge.
Speaking of a "war on reality", I notice that the "upgraded" ABC News website no longer has an Environment section.
The science section has merely been downgraded and removed from the front page.
I guess if you don't have any news about the environment you can't have any bad news about the environment.
Indeed JQ -- you are right that individuals & businesses can use defamation laws to silence people. But this is only possible thanks to the government.
If Clive was simply complaining about a threat of defamation, then my sympthaties are reversed. Clive should be free to do as much bad economics and irrational fear-mongering as his heart desires without the threats of lawyers swarming up from hell.
Firstly I kept my example simple and my language clear because I know most the people who read this blog aren't economists. I suppose if I had wanted to intimidate rather than inform I would have used a lot of essentially extraneous jargon.
Secondly, I was trying to avoid having to point out again, so soon after economic growth debacle, that you have once made an elementary error in economics.
Real GDP, Tim, is GDP AFTER ADJUSTING FOR INFLATION. That includes the inflationary effects of the proposed carbon tax. CGE models quite explicitly include inflation projections and the projected inflation in turn feeds into the next round of calculations so the effects on business investment; interest rates; and consumption.
Ian: Read the Allen Report. It does not take into account the impact on the CPI of their "tax" or whatever on CO2, either on the prices of households' direct consumption of petrol and electricity etc or on the prices of their consumption of food and manufactures etc. Allen explicitly assumes ALL prices remain at 2002 levels for ever, as you will see if you develop their assumptions into your own spreadsheet as I have done. BTW I do not need you to tell me what real GDP is.
Tim C: "Allen explicitly assumes ALL prices remain at 2002 levels for ever."
Then please explain the following text from page 42 of the report:
"Figure 4.14 below shows the wholesale electricity price under the 'early action' and
'delayed action' scenario, relative to the base case.
Early action scenario
By 2025, the price of electricity under the 'early action' scenario is forecast to be
17 per cent higher than the price of electricity under the base case, with this
differential growing to 53 per cent by 2050.
The relative increase in electricity prices under the 'early action' scenario can be
largely explained by the adoption of cleaner -- although relatively more expensive
-- electricity generation sources from 2022 onwards, and by the imposition of a
carbon price and/or abatement costs (for example, CCS) on more greenhouse-
intensive generation such as coal.
Delayed action scenario
By 2025, the price of electricity under 'delayed action' is forecast to be 12 per cent
higher than under the base case, growing to 175 per cent higher by 2050 --
significantly higher than under the 'early action' scenario (53 per cent higher in
From paper on an earlier greenhouse modelling run ussing MMRF Green:
Check page 19 re. price effects. For some reason I can't get Acrobat to let me quote from the text but you want the paragraph that starts:
"In MMRF-Green price-induced substitution effects generate emissions reductions."
Feel free to e-mail me a copy of your spreadsheet.
The Productivity Commission also seems to be under the impression that MMRF Green not only includes but requires price changes.
Refer page 34
Para starting "The commodities and GHGs covered..."
John Humphrey's comment
Indeed JQ -- you are right that individuals & businesses can use defamation laws to silence people. But this is only possible thanks to the government.
has got to win the libertarian double quack speak award for the month if not the year.
The libertarian answer to everything is take it to court, so you take it to court and then they say that taking it to court is only possible because of government. Well duh. See you on the dueling grounds tomorrow morning John.
you are right that individuals & businesses can use defamation laws to silence people. But this is only possible thanks to the government
I'm not so sure that's true. The UK, US and Australia all have common law systems, ergo it's quite possible that precedent rather than statute has established our libel laws, or at least partially.
The UK, US and Australia all have common law systems, ergo it's quite possible that precedent rather than statute has established our libel laws, or at least partially.
Partially, regularized and enforced by government.
Among many achievements, Henry II institutionalized common law by creating a unified system of law "common" to the country through incorporating and elevating local custom to the national, ending local control and peculiarities, eliminating arbitrary remedies, and reinstating a jury system of citizens sworn on oath to investigate reliable criminal accusations and civil claims. The jury reached its verdict through evaluating common local knowledge, not necessarily through the presentation of evidence, a distinguishing factor from today's civil and criminal court systems.
Re: "I have nothing against clean coal as long as it does not cost much to achieve it."
Tim C., there is no such thing as clean coal. It's a term created by the fossil fuel industry to make it seem palatable to the general public and to make them think that there are no pollutants which result from its combustion. This is patently false, as not only CO2 and nitrous oxides are emitted, but also dangerous particulates which have led to skyrocketing asthma rates and respiratory ailments/diseases in the United States and anywhere else which uses coal. So, not only does coal combustion contribute significantly to AGW, it also is a serious public health nightmare.
Gasification eliminates the particulates.
Burning in a pure oxygen atmosphere (the oxyfuels process) eliminates NOx by removing the nitrogen from the combustion process.
Climate scientists keep telling us we need to reduce GHG emissions by 60-80%. This is not the same as eliminating them entirely.
Natural gas, for example, produces about one quarter as much co2 per unit of energy as conventional coal. If we could completely substitute natural gas for coal we could meet the 60-80% reduction target will maintaining or increasing fossil fuel use for energy production.
In practice what we need is a combination of energy efficiency and conservation measures; increased renewables and nuclear power use and a graduated phase-out of fossil fuels. Starting with the most-polluting fossil fuel plants and replacing them with the cleanest possible fossil plants - i.e. natural gas and IGCC coal plants - is the logical way to manage that long-term transition at minimal economic cost.
Re: "Starting with the most-polluting fossil fuel plants and replacing them with the cleanest possible fossil plants - i.e. natural gas and IGCC coal plants - is the logical way to manage that long-term transition at minimal economic cost."
I agree that all these plants need to become far cleaner. However, this will never happen as those who finance these plants will not spend the millions of dollars more for cleaner technology. They will always go for the bare-bones variety which costs less and produces more electricity. The only way for this to actually happen is if governments enact what some would call "draconian" legislation mandating clean plants. The industry lobby groups will prevent this from happening, of course.
Regarding coal itself, I agree that technology is there to greatly reduce the pollution emitted from the combustion process. However, it is still not entirely clean and certainly not as clean as those "Clean Coal" advocates would have us believe.
Ian Gould: many thanks for your excellent links. The question is not whether prices are used to engineer emission reductions but how the price changes are modelled. Compare Adams et al with Allen - there are notably different outcomes from the same MMRF model: first it says a CO2 tax of $44.33 is needed to achieve Australia's Kyoto target of 108% of 1990, then it says that level of tax is not needed until 2041 to achieve the ALP target of 40% of 2000 by 2050.
Without having looked at Adams my first inclination is to ask when the Adams et al paper was written.
We've had several years of relatively slow growth in emissions which can be ascribed to the drought (which leads to reduced land clearing related emissions in Queensland) and higher petrol prices.
The base has shifted and if higher petrol prices are a semi-permanent new feature of the economy then the carbon tax required for a given emission reduction in the transport sector is lower.
Ian: I got the Adams paper from you! Philip has now told me it came out in 1999. The rest of your #25 sounds like special pleading, you must have been a lawyer in a previous life!
Tim, you think it'd "special pleading" to suggest a rise in the oil price has a similar impact as a carbon tax?
Ian: the oil price has about tripled since 9/11 without any discernible impact on emissions. The Allen Report's "tax" of $0.7 per tonne of CO2e in 2013 would add all of $0.001 per kWh to my ACTEW electricity bill here in Canberra, but miraculously achieve a 13.5 Mt reduction in emissions. Dream on!
And how much would it add to Alcoa's electricity bill, Tim?
More fundamentally, the tax is imposed on the producer (who admittedly will try to recover the tax from the customer).
ACTEW will have an incentive to source power from less carbon-intensive sources.
As for fuel prices - we certainly seem to be seeing reduction in emissions in the US resulting, in part from higher prices for petrol and heating oil.
I love your description here:
According to the Australian global warming isn't happening and we're not causing it and stopping it would destroy the economy.
Others have pointed out, these denialists talk like a street criminal in a TV crime drama. "I didn't murder him because I wasn't even in the room at the time! And even if I was in the room, I didn't have my gun. And even if I had my gun, I couldn't shoot him because I forgot my glasses." "But Mr. Squigglioni, nobody has told you yet that the murder was accomplished with a gun." "Well I'm just sayin', I didn't have my gun."
I heard a lot the same shiftiness in the runup to the second Iraq war...
Ian @#29: 1. "And how much would it add to Alcoa's electricity bill, Tim?" An emission cost (under an EU-type emission trading scheme) of US$2 per tonne CO2-e would increase Alumina refinery cash costs in Australia by US$0.9 per tonne alumina; so a charge of A$0.7 as proposed by Allen would be even more trivial and unlikely to close the industry down, which is what is required by the Rudd/Allen 60% reduction in emissions over the 2000 level (given that transport emissions are likely only to grow, especially aviation's, so the main burden has to be born by closing down industry). I don't have to tell you that the alumina-aluminium processes require power 24/7, so you can forget wind and solar. Ironically, aluminium is nearly indestructible so is easily recycled at minimum extra energy cost, too bad that you and our Kev are set on sending Australia's refineries to China. The Allen Deep Cuts Report that you endorse projects its emission charge needing to rise to A$186 per tonne by 2050, which would almost certainly put Alumina out of business vis a vis its competitors in South Africa and China etc, even if it could recover some of this cost by passing it on to its Australian consumers. Although the Allen Report like Stern ignores retail price increases, consumers of Coke etc will notice.
2. what "reduction in USA"? - surely none in absolute terms, but some decline in intensity per $ of GDP, a long-run trend over the last 100 years or so?
Tim C "too bad that you and our Kev are set on sending Australia's refineries to China."
Tim, I worked for the Queensland government as an environmental economist including work on greenhouse, I was privy to discussions between industry and government which I am obviously not at liberty to discuss in detail.
Suffice to say that electricity cost, while important, is just one of the numerous factors which go into determining where aluminium refineries go.
"what "reduction in USA"?"
I linked to it somewhere (probably earlier in this thread). US emissions fell in absolute terms, not relative to GDP.
Hi Ian: The International Energy Annual 2004 Table H1 shows that the USA's carbon dioxide emissions from the flaring and consumption of fossile fuels amounted to
1,612.42 millions tonnes of carbon equivalent in 2004, the highest ever.
Re aluminium, obviously I referred to a cet.par situation, with just energy prices forced up by a carbon tax. The Rudd-Allen $186 puts AWAC into the 3rd quartile of world costs, shifting to say PNG would return them to 1st quartile and earn a lot of carbon credits from using that country's cheap gas or hydro (from the Purari River) - Comalco looked at this seriously back in 1997 but turned it down then not knowing of our Kev's plans to save the planet and wreck Australia. They will live to regret their short-sightedness.
Tim C.: "The International Energy Annual 2004 Table H1 shows that the USA's carbon dioxide emissions from the flaring and consumption of fossile fuels amounted to
1,612.42 millions tonnes of carbon equivalent in 2004, the highest ever."
That's nice Tim.
However I was referring to 2006 emissions.
"Science Daily -- U.S. carbon dioxide emissions from burning fossil fuels decreased by 1.3 percent in 2006, from 5,955 million metric tons of carbon dioxide (MMTCO2) in 2005 to 5,877 MMTCO2 in 2006, according to preliminary estimates recently released by the Energy Information Administration (EIA)."
Ian: so they don't need to ratify Kyoto? - but those are preliminary figures from the Bush administration, how can you be so gullible as to believe anything from that WMD mob?! let's wait for the IEA, their 2006 Report is due soon.
Ian and Tim
The Stern Review (and the backup papers) goes into some discussion of locational decisions of industries based on power costs.
The bottom line is that alumina and aluminium smelters are the most effected (by a considerable margin). No other major industry comes as close.
So you are arguing about the *one* industry that is *most* likely to be affected: aluminium has wisely been called 'electricity in solid form'. It's for this reason Iceland is attracting new smelters (geothermal power).
On a global basis, a rise in the price of aluminium due to higher electricity prices would simply mean we would recycle more (about 5% of the electricity cost of making new): for c. 90% of uses new v. old doesn't matter.
Note that you *can* run aluminium plants on alternative energy. You get your power off the grid, so as long as the grid as a whole is reliable in supply of power, you don't care whether it comes from a renewable or non renewable source.
Generally the big shifts arising from a consumption tax on carbon will come in the electric power industry, first-- price elasticity of substitution is relatively high. The more difficult challenge will be transport.
(note on coal and Australia, half by volume (and more than that by value) of Australian coal exports are *metallurgical* coal. We don't have an easy answer to the question of metallurgical coal: it's not in ready world supply, and primary steel making needs it-- AFAIK there is no alternate technology. However an observation of a mature economy (US) notes that steel consumption per capita has fallen since the 1970s). Even in a world of carbon pricing, Australia will still ship metallurgical coal-- there just aren't that many suppliers in the world.
Most steam coal, by contrast, is consumed in the country of production. Something like 85% of world steam coal consumption is domestically mined.
Europe has committed to build 12 clean fossil fuel plants by 2015, which will sequester their carbon emissions underground.
The MIT coal study suggests IGCC may not be the way to go, but at least some of those plants may be IGCC (which has the virtue of reducing mercury and particulate emissions by up to 90%).
There is also the US FutureGen plant, although that has been delayed.
I'll predict that by 2030 no new power plant will be built in the world, that doesn't bury its exhaust. By that time, in any case, solar will be an increasingly attractive option for most utilities.
I'm not sure if you're familiar with Gladstone here in Queensland. It's host to the third largest alumina refinery in the world. (Last I checked anyway. with the expansion plans then in place it may now rank higher.)
While Comalco was originally attracted to Gladstone by cheap coal and an excellent harbor, it's effectively anchored there now by a $10 billion + sunk investment; a highly skilled workforce; highly efficient infrastructure shared with other bulk metal processors in the region and Australia's political and economic stability.
The idea that Rio Tinto Aluminium will write off that sunk investment and go swanning off to PNG because of a rise in the electricity price here is frankly absurd.
That's why the whole time the metal processors have been spouting gloom and doom over emissions trading, they've been continuing to expand their Australian presence.
But I'm sure that just as Tim C. knows more than all the environmental economists, he also knows their businesses better than they do.
Thanks Valuethinker, but my point original point was about factoring in the rise in energy prices resulting from emissions trading or taxes, this the models appear not to do. And thanks Ian for the testimonial, can I add it to the CV? I said Comalco would live to regret their 1997 decision not to locate to PNG, not that they could or would reverse it now. But China is looking at PNG for refining alumina operations. Unfortunately it needs donors' finance for the Purari hydro, and they are too terrified of Greenpeace hostility to dams to touch it.
Furtehr to my last, I have now sighrted the IPCC volume on carbon Capture & Storage (CCS).Unlike Stern & Allen/Monash, who seem to take a sanguine view on the feasibility and likely costs of Carbon capture and storage (CCS), the IPCC comes clean with a wide estimated range for the costs of CCS per tonne of CO2 avoided, at US$40-90 for natural gas combined cycle, US$70-220 for pulverized coal, and US$40-220 for Integrated combined gasification cycle (ICGC). What do such figures mean for you or me? My current electricity costs (from ACTEWAGL in Canberra) amount to around A$2,500 p.a. on total usage of 15,000 kWh, with a current CO2 emission level of 22.32 tonnes. In effect one could say I am buying that amount of CO2 for A$2,500, or A$15.6 per tonne. The IPCC cost estimates, taking the midpoint of their ranges, would add a minimum (without allowing for any mark-up) of A$65 per tonne if ACTEWAGL use only natural gas combined cycle, or A$170 for pulverized coal, and A$156 for Integrated Gasification Combined Cycle (ICGC). The implied additions to my annual bill are respectively A$1,750, A$4,572, and A$3,500, bringing my bill to A$4,250, A$7,000, or A$6,000 as the case may be. I am happily in a position to afford such higher charges without inconveniencing myself by reducing my electricity usage at all, but what about the poor? The average household might well want to receive a subsidy of at least A$2,000 a year - and that subsidy will presumably mean either even higher power bills for somebody like me or higher income taxes, or a bit of each. The situation is worse for what is admittedly Australia's largest CO2-emitting industry, alumina and aluminium smelting and refining, which according to the Monash group emitted over 6 billion tonnes of CO2 in 1993/4. The cost of avoiding that level of emissions would be A$2.7 billion (or $1.6 billion if only 60% has to be avoided)on the average of the IPCC's CCS mid-range cost basis. Having to incur that kind of level of charges would probably wipe out both Comalco and AWAC, the JV between Alumina Ltd and Alcoa (profits of the former from its 40% share of AWAC were A$546.6 million in 2006). When should I sell my shares?
Tim c: "Australia's largest CO2-emitting industry, alumina and aluminium smelting and refining, which according to the Monash group emitted over 6 billion tonnes of CO2 in 1993/4."
Tim, Australia's total emissions are less than 600 million tonnes per year.
Energy emissions, where most of the emissions related to aluminium production are accounted for is less than half that.
Oh and Tim, IGCC has much greater thermal efficiency than conventional coal (which is the whole point of developing it) meaning fewer tonnes of carbon dioxide for a given level of electricity consumption.
Your 23 tonnes of carbon dioxide would fall to less than 16 with IGCC or less than 6 with gas.
You may also want ot do an energy audit of your house.
2005 greenhouse gas emissions for the ACT stationary energy sector were ca. 900,000 tonnes. However this is misleading because most of the ACts power is imported from New South Wales.
A more accurate estimate of emissions can probably be gaiend by adding together the NSW and ACT emissions and dividing them by the combined population.
That gives us emissions of ca. 80,000,000 tonnes (which includes both industrial and household use) for a little over 7 million people - call it 12 tonnes per capita. Of which say 4 tonnes is used by industry.
That suggests you're using around three times the average.
Now I'll grant you Canberra is a lot colder than Sydney but so is a lot of New south Wales. Adjusting for climate I'd say that you're using about 50% more than the Canberra average. (Or alternately that you took the total ACT emissions, attributed them all to the power sector and simply divided by the resident population.
A correction: carbon dioxide emissions to generate a kilowatt of power using natural gas are around 50% of the emissions for coal according to the first handy source.
I have seen much lower figures but I don't propose to hunt for them.
The Comalco refinery produced ca. 830,000 tonnes of aluminium in 2005 and just over 700,000 tonnes of co2-e in GHGs.
Assuming Tim's absolute worst-case scenario, a 60% reduction in emissions would require the sequestration of 420,000 tonnes at a cost of US$220 a tonne (ca. A$270 at current exchange rates).
That's equivalent to an additional cost of A$110 per tonne of aluminium.
Alumium currently trades for around US$1.20 a pound.
That's circa A$3,000 per tonne.
So Tim's worst-case scenario is for an approximately 4% increase in the price of aluminium.
Of coure, the industry has slashed emissions per tonne of aluminium over the past decade but that's no reason to assuem they can reduce it any further in future.
Just like there's no reason to assume that the aluminium industry might by offsets from other energy users fr farmers of foresters.
And of course only an idiot would suggest that most of Comalco's competitors will be facing similar price pressures come 2050.
Or that Comalco is part of a vertically-integrated operation reaching from bauxite mining to metal product distribution which provides its owners with important strategic advantages (e.g. a guaranteed market for their bauxite and a guaranteed aluminium supply to their fabrication operations) which greatly enhance its value.
Although I appreciate the thorough dismantling of the TimC clown argument and I can clearly picture him as a punch-drunk palooka signaling Ian to come out for another round, I feel it is my duty to say that 99.999999984526% of the planet is convinced TimC has zero credible arguments*.
Thus, spending what is obviously quality time debunking a face-down clown is time that could be better spent.
* that is, TimC's mommy and 6 losers.
To be honest Dano, I'm coming ot the same conclusion.
Tim C. will, of course, interpret this as a sing of victory so we can look forward to many more years of arithmetical and economic howlers.
The truly, truly sad thign though is that I don;t really get a xchnce to exercise my policy analysis abd research skills in my current job and I rather enjoy doing so.
Sorry to disturb your love-in, Dana and Ian.
1. I realised I had typed billion for million, but left it to see if you would notice that the calculations I reported had used million.
2. Ian: as you know, Rio Aluminium is an integrated operation, from bauxite through alumina refining to aluminium smelting. You have muddled the last two.
3. Rio's Annual Report 2006 sets out the following data for Rio Aluminium (worldwide):
CO2-e emissions (all Al. operations) 12 Mt
Total Aluminium (finished product): 845 kt
CCS at 60% of CO@-e: 7.2 Mt
Cost CCS at Gould's figure of US$220/t: US$1.58 BILLION
Total sales of Rio Aluminium Division; US$3.49 BILLION
EBITDA: US$1.365 BILLION
Net Earnings: US$746 MILLION
But let's go back to the IPCC figure for the average cost of CCS, at around US$120 pt. That produces a total cost of CCS that would still exceed the net earnings of Rio Aluminium in 2006. Now Rio have in fact ongoing emission reduction programs in the ordinary course of business, but cet.par the above data would wipe out the profits of their Aluminium business.
It's like a car crash, you just can't look away.
Your consumption of electricity is extraordinary. I doubt many poor families use that much power?
I use 4000 KWhr per year, and I live in a house which would cost c. $1m Australian, and is 1500 square feet in London.
My parents live in a part of North America with a similar summer to Queensland, and a winter of 0 to -10 degrees centigrade. And they heat electrically. Their house is about 1800 sq ft (say 170 m squared). They use less than you do.
You need to install some insulation, mate. Or replace your air conditioner, and use more CFL lightbulbs.
I don't think Australia is crippled whether or not RTZ runs an aluminium operation in Queensland. But, again, you happened to have picked the *most* sensitive industry to electric power prices in the world.
RTZ as a company makes far more money from copper than from aluminium.
I understand completely, Ian. My last place didn't have much policy analysis & research, this one does for now. Anyway, watch out! The palooka may be playing rope-a-dope with you!
Valuethinker: So how much will you offer me to cutback?! Actually we think we are quite modest - but note that we do not cook or heat with gas. To our electricity bill add about A$600 per year for firewood for our slow burner fire (except when as this year we are about self-sufficent from our own garden. The house is double brick walled with insulated roof, and this year we used the air con so far for perhaps one week, not more. Winters are quite cold, even -7 sometimes, to max 7 as today. I realise that aluminium is a special case, but an important one for Australia all the same. I never said that Rio would go under, only their Aluminium division.
Ian and your loverboy: why not head for the Rio AGM and give them a piece of your mind? All data from them or IPCC or Ian, not me.
Blow insulation between the walls if you have not. What color is your roof? If not white or reflective silver, paint it. Have you had a thermal survey of your house done? Do the windows leak, etc.
And frankly dear, we are not impressed
Where are you burning the power? If not air conditioning?
Is it in electric baseboard heating?
You might want to think about an air-source heat pump (a ground source one would be even better).
Maybe your power is simply too cheap? We pay 9 pence/ kwhr which is about 22 cents Australian? I think you are paying 6 cents Australian?
I must admit that 15,000 kwhr p.a. sounds like a lot for a 'poor' family.
In general incidence studies of carbon taxes show the poor don't do badly *if* there is revenue neutrality via a reduction in payroll or sales taxes. The gain in economic efficiency is known as 'the double dividend'.
That's because the poor don't consume in a high carbon fashion. They don't drive much (if at all). They use the bus or walk. They don't fly. They don't have big houses with lots of electronic gizmos or that cost a lot to heat and cool.
Where the poor do get hurt is they tend to have old appliances (a modern fridge uses 1/4 of the electricity of a 30 year old one) and they can't afford to invest in, say, insulation for their homes.
Now the Australian have published an "article" by Martin Durkin Hostage to a Hoax about why we shouldn't be;lieve in AGW because it's all political and its the sun anyway.