Ocean CO2 uptake update

The IPCC AR4 Scientific Basis report is a real goldmine of information, even if it isn’t perfect, as I recently pointed out.

As I discussed in a previous post, an idea I later developed a little, policies to address global warming must rely on an understanding of how natural systems will respond to the increase in atmospheric CO2.  Will the oceans keep absorbing a couple of GtC worth of CO2 each year (as estimated since 1990 - AR4, p.26, as referenced previously) or more (as implicitly assumed by many) or less?  And will land ecosystems manage to take up more or less carbon than in the past?  Especially if we continue to reduce the area of ecosystems able to do this - since agricultural land clearly does not progressively store carbon.

I’ve been looking at a critical section in AR4 on ocean uptake of CO2.  This is 5.4.2.2 on p.403-5 (though the main section on the carbon cycle is 7.3, p.511 ff).  I quote:

“The fraction of net CO2 emissions taken up by the ocean (…) was possibly lower during 1980 to 2005 (37% +/- 7% [that is, 118 +/- 19 of 283 +/- 19GtC of emissions]) compared to 1750 to 1994 (42% +/- 7% [that is, 53 +/- 9 of 143 +/- 10 GtC of emissions)...  The decrease in oceanic uptake fraction would be consistent with the understanding that the ocean CO2 sink is limited by the transport rate of anthropogenic carbon from the surface to the deep ocean, and also with the nonlinearity in carbon chemistry that reduces the CO2 uptake capacity of water as its CO2 concentration increases".  (my inserts in [ ]’s - based on Table 5.1, p.404).

And we also have to worry about “a decrease in CO2 uptake capacity” as the ocean warms.

On the other hand section 7.3.2.2.5 (p.521) notes that:

“The ocean uptake has increased by 22% between the 1980s and 1990s, but the fraction of emssions (fossil plus land use) taken up by the ocean has remained constant.”

though of course the ocean “knows” nothing about emissions - all it can possibly be affected by is the level of CO2 in the atmosphere.

We really need to get a handle on what the oceans are going to do in the future since it makes such a huge difference to the level of carbon emissions we can get away with.  It’ll be the first section I turn to in AR5.  As AR5 is due around 2012 (I suppose), maybe we should have a think about where we focus scientific resources now…

Some thoughts on sorts of science sources

OK, it’s not quite up there in the tongue-twister stakes as my best creation: “We’re wearing weird red wellies”. Try saying that quickly after a few pints!

About 10 days ago my Sunday morning was spoilt by the sight of the really rather scary, formerly reassuringly plump (maybe he’s become a vegan) ex-Chancellor of the UK Exchequer Nigel Lawson on Andrew Marr’s weekly political couch-fest. Why had he crawled out of his coffin? Well, to plug his book, of course. It is indeed one of the world’s great mysteries why the BBC is so careful not to mention products by name (to utter “Coca-Cola” without permission would be blasphemous in Beebland), yet so shamelessly allows so many people to promote their products. The occasion of Ryanair’s financial results, for example, seem to provide a free 1 minute advertising slot for Michael O’Leary. I’m surprised he doesn’t move to quarterly reporting.

Presumably, if you have good PR help, a public profile or the right connections, you can get as much time to plug a book on the BBC as you want, because, blow me down if I didn’t hear Count Lawson again on the radio a few days ago, on some type of pick of the week show on Radio 4. At least he was being grilled this time - listen and learn, Andrew Marr. But surely there should be some criteria for whether a book is worthy of BBC airtime? E.g. positive reviews by experts in the field?? Tricky, but how could anything be worse than the apparent old school tie basis of selection we have today?

Get this, Lawson’s book was turned down, he said on TV, by 7 UK publishers, but he has a “good agent” who managed to get it published overseas. Makes you wonder if it’s really worthy of promotion in the mainstream media, don’t it? I was therefore going to put TV bottom of the list of reliable science sources.

But then I read the Times’ review of Nigel Lawson’s contribution to the debate. Astonishingly, the reviewer, an Alexander Cockburn, chides Lawson for accepting the anthropogenesis of global warming! In fact, Cockburn’s review leaves me with the impression that Lawson may be saying something useful. A view dispelled by a somewhat more comprehensive (family connections?) review in the Spectator. Lawson, it seems (before I rush out to buy his work), doesn’t deny global warming, he merely downplays it, in order to argue against doing anything much at all (I’ll be more specific when I’ve read the book - which I will likely do, because, unfortunately, publicity grants de facto credibility, requiring a response). Insidious.

So, let’s award 0/10 for the informativeness of the mainstream print media (Times) and 1/10 for the broadcasters (BBC), who at least attempt to be impartial. Let’s give general current affairs (Spectator) 2/10. And let’s give published works 3/10. At least the publishers tried to stop Lawson, if to no avail; perhaps his memory of the Spycatcher affair stood him in good stead.

Now, compare this piece by Gwyn Prins from the Guardian’s Commentisfree site. For all I know, Gwyn Prins makes similar points about the ineffectiveness and counterproductivity of existing policy responses to GW as does Nigel Lawson, but at least he does not base his argument on false premises. In fact, I was interested enough to download Prins’ paper “The Wrong Trousers: Radically Rethinking Climate Policy” (written jointly with Steve Rayner). Prins & Rayner argue that GW is serious and urgent, but the Kyoto mechanism ineffective. They therefore advocate “enlightened self-interest” (ouch!). Still, a step forward from the “downplaying” strategy of a failed UK Chancellor (the Lawson Boom was followed by an inflationary bust - anyone else notice a pattern starting to develop? - let’s ignore problems until it’s too late, shall we, Nigel?).

So, let’s say 4/10 for op-ed (as the Yanks call it), and 5/10 for online publications.

But what I want to draw attention to are the exchanges in the comments on Prins’ piece. First, let’s backtrack a little. Lawson (like Nigel Calder) apparently claims the Earth is no longer warming, since annual average global temperatures have not returned to their 1998 record level. Now, as we all know, temperatures are bound to fluctuate from year to year about a long-term warming trend. All the scatter of annual mean temperatures tells us is that the annual variability of transfer of heat from the surface of the oceans exceeds the amount of heat gained by the planet each year. But, if the oceans were to cease gaining heat, without an overt cooling cause (such as a volcano) then GW theory would be in trouble - it would imply (since the oceans are so large and important in this context) that the Earth is no longer cooler than it needs to be for it to be in energy balance. Unfortunately, this is exactly what the IPCC’s 4AR implies. Yes, Fig. 5.1 on page 390 shows the oceans cooling over the last few years. Does the IPCC really explain this anomaly? No. It is “bottom-up” science - based more on observation than theory-driven.

So, say 8/10 to the IPCC. Maybe they need to put a bit more effort into the coherence of the whole package, and resolve or at least discuss these sorts of problems before rushing their 900 pages to CUP.

Anyway, I was mulling over this problemette when I noticed it discussed by PacificGatePost and deconvoluter in the comments on Prins’ Guardian piece. Phew! It turns out there was a problem with the measurements. deconvoluter refers to a Realclimate piece that gives chapter and verse.

So let’s give blogs (Commentisfree) 6/10 and specialist blogs (Realclimate) 9/10. Now we’re getting somewhere.

But there’s more. The Prins piece was in response to an article in Nature, by Roger Pielke et al arguing that the IPCC scenarios (actually I consider these unrealistic and irrelevant, but let’s put that to one side for now) are over-optimistic. The scenarios - shock!, horror! - assume some carbon “savings” will occur without specific policy to reduce emissions (um, anyone seen the price of oil today?). Now, even though the Pielke article and a Nature editorial are accessible on the internet, much of their content is subscriber only, so it does rather perturb me that so much debate (rather than actual science) is being conducted (in Scienglish) in the pages of Science and Nature. Not their fault, but what are the mainstream media doing? I believe as many people as possible need to develop their own understanding of the science and the issues. “Trust me, I’m a scientist” is only going to get us so far.

So, 7/10 in our informativeness competition to science magazines.

I gave the Realclimate site 9/10 - for trying to bridge the gap between the scientific world and normal people - but they’re not the real winner. 10/10, and the top prize goes to - yes, you’ve guessed it! - the internet itself which has made all this possible. Without it, I suggest the GW debate would be years behind even where it is now.

Confused by carbonates

Somebody please help!

I’m having great difficulty reconciling two things that I’ve read:

1. There is a carbonate “saturation horizon” at a specific depth in the oceans. Below this depth carbonates dissolve because of the high pressure. (The “saturation horizon” depth is also less where it is colder).

What’s going on is that there is a chemical equilibrium:

Ca²⁺ + HCO₃^- <–> CaCO₃ + H⁺

Adding CO₂ to the oceans - a result of adding it to the atmosphere - makes the problem worse. It acidifies the water, driving this equilibrium to the left, in effect dissolving carbonates, such as the shells of marine organisms. (The big danger is that this process will raise the carbonate saturate horizon to the surface in the polar oceans, leading to a sudden increase in acidity in the absence of the carbonate buffer, which will reduce the ability of the ocean to absorb carbon dioxide, as well as prevent organisms from making carbonate exoskeletons).

2. There is a plan afoot to dump carbon dioxide underground, in gas and oil fields and in saline aquifers (”carbon capture and sequestration” or CCS). There was an interesting article on this by Fred Pearce in last week’s New Scientist (subscriber’s only, I’m afraid). Now, said Fred, “… the chemical reactions might gradually convert the CO₂ into carbonate rock…”. But Fred also mentions the Frio project when the CO₂ “…acidified the brine allowing it to dissolve metal-oxide minerals in the rock…” which “…might eventually create tunnels in the cap rock through which CO₂ might escape”.

My question is, why wouldn’t the CO₂ in general form an acid (I assume there’s plenty of water about) and dissolve the rock? In particular, how could it form carbonate rock, when, as we see in the oceans, CO₂ in solution forms an acid which dissolves carbonate rock - more effectively at pressure? Surely this could only happen once all the CO₂ had been converted to some intermediate form? - since otherwise any remaining CO₂ would form acid and dissolve the carbonate. Can we therefore always rely on the sequestered CO₂ staying where it’s put?

Of course, I’ve consulted “Sustainable Fossil Fuels” by Mark Jaccard who notes that: “… the CO₂ may eventually either dissolve into the aquifer water (hydrodynamic trapping) or precipitate as a solid carbonate mineral by reacting with the surrounding rock (mineral trapping).” OK…

When I look at the IPCC Special Report on CCS, I see they go into all this in more detail, of course. I guess I’m happy with the chemistry - on its own - and I’m happy with the mechanics - permeability, cap-rocks etc. - on its own. It’s the interaction between the chemistry and the physics of the rock formations that bothers me. The IPCC notes that:

“Reaction of the dissolved CO₂ with minerals can be rapid (days) in the case of some carbonate minerals…” (section 5.2.2.3, p.209).

and that:

“Reaction of the CO₂ with formation water and rocks may result in reaction products that affect the porosity of the rock and the flow of solution through the pores. This possibility has not, however, been observed experimentally and its possible effects cannot be quantified.” (section 5.2.2, p.210).

Perhaps we’d better quantify it before we get our hopes for CCS up too high. What was the Frio project if it wasn’t an experiment? Puzzlingly, the IPCC report only mentions the Frio project as 1600tCO₂ “pilot” (Table 5.1, p.201) and one of several that:

“…demonstrate that subsurface injection of CO₂ is not for the distant future, but is being implemented now for environmental and/or commercial reasons.” (section 5.1.2, p.204).

What is this? A scientific evaluation or a sales brochure?

In general, is the approach being adopted to evaluating CCS one of identifying all the problems so that we can avoid them when we roll-out the technology, or one of trying to show that there are no problems, so that we can carry on planning to burn fossil-fuels (and building coal-fired power-stations) with as few qualms as possible?

One other annoying fact: liquid CO₂ is less dense than water, so if there is enough pressure and the reservoir is not sealed, it’s the CO₂ that will leak out, not the H₂O.

Any comments that might help allay my fears are more than welcome.

Save the forests, save the world

It’s amazing what you can do with Excel. I thought I’d have another quick look before breakfast at my 450ppm stabilisation scenario (hey, kids, you can play this game at home!).

Here’s what I was referring to yesterday (all numbers approximate):

To some extent I’m being optimistic. The 4AR mostly refers to scenarios that we would not now countenance as we’ve come out of denial over the last few years (I suggest they review their approach for the next report, 5AR). But if we look at the Scientific Basis, page 791 (I kid you not - strictly I should also be using a 3 line reference to the chapter - 10, section 4.1 as it happens), we see some discussion of stabilisation scenarios. The IPCC suggest a higher peak in fossil fuel emissions (about 12GtC/yr compared to the 9GtC I’ve shown), but with a steeper reduction. Their scenario allows 596GtC over the 21st century, whereas I came up with 566GtC. But the key point is that the IPCC also calculate some scenarios with positive carbon cycle feedbacks - that is, when we listen to the science and assume that warming will cause ecosystems to release carbon, or in actual fact merely to take it up more slowly than at present - and in these scenarios taking account of carbon cycle feedbacks we are “allowed” to emit 105 to 300GtC less. That is, even an aggressive scenario to stabilise CO2 at 450ppm relies on a get-out-of-jail-free card.

A more rigorous analysis - I would next separate out land use change (deforestation) from the fertilisation effect altogether - is unlikely to give a different conclusion, because the sanity check (total fossil fuel emissions) succeeds. This simple spreadsheet, adding together the main parts of the the carbon cycle is compatible with the sophisticated models cited by the IPCC. And it shows that, at first approximation (as the scientists say) we have to manage both components we can influence - fossil fuel burning and land uptake of CO2.

The critical point is that, if we want to save the planet, we’ve got to make sure that land carbon uptake over the next century - by natural ecosystems, such as forests, wetland and grassland - increases, not decreases. And if we plough them up and plant even more crops, then they will release carbon for a while and then store a roughly constant amount.

This is the macro reason why promoting biofuels is a really, really bad idea. In fact, it’s difficult to think of a worse policy response to the threat of global warming.

Baffled by BERN, but beware of biofuels

Today’s project - well it was going to be this morning’s project - was to evaluate the two papers I recently tried to summarise one here: from Hansen et al and from Kharecha and Hansen.

The first question I asked myself was whether the conclusions of these papers are compatible with my Deep Green perspective. What is the Deep Green perspective? You may well ask. The point is that we have to attend to all parts of the Earth’s carbon cycle.

Both papers referred to something called the BERN carbon cycle model. At first I thought BERN was a place, then that it was a person (short for Bernie, perhaps). It turns out of course, thanks to Part 1 of the 4th IPCC Assessment Report (4AR, for short) - best doorstop I ever bought (tip, always ask for a discount) - that BERN is an acronym. I don’t know what BERN stands for, but I have learnt that it is an example of an EMIC - an Earth System Model of Intermediate Complexity, believe it or not.

What it seems is built in to BERN is the idea that a “pulse” of carbon emissions put into the atmosphere is gradually absorbed over time, such that a defined proportion remains in the atmosphere after t years (though it seems the model does allow this to be modified in order to simulate carbon cycle feedbacks). The equation is a series of exponential functions, given in Khurecha and Hansen. This is fine if we’re talking about a single emission of carbon - say a volcano going off in an oilfield - and its gradual re-absorption over time. But what appears to be being done is to try to apply this principal to emissions over a number of years by “integrating the results from 1850 to year t“. After much thought and fiddling with spreadsheets, I’m still baffled why anyone would want to do this.

Tied in with the BERN equation is the idea of the Airborne Fraction (AF) of fossil-fuel emissions, which has been observed to be remaining roughly constant at about 60% (AR4, p.139).

The justification behind both the BERN equation and the (dangerous) AF concept is, it seems, the idea that the processes that remove carbon dioxide from the atmosphere - ocean uptake and the fertilisation effect on land - remove a (roughly) fixed proportion each year of the difference between the current atmospheric level of CO2 and the equilibrium value.

Now, my point is that there is, in the real world, no necessary relationship between our emissions and the rate of uptake of carbon by the biosphere. Our emissions go into the atmosphere changing the level of CO2 - now over 380ppm, compared to about 280ppm before industrialisation - but the uptake processes depend on the level in the atmosphere, not the annual change in the level. It is therefore very dangerous to drift into assuming a constant AF.

To test my hypothesis, I stuck some numbers into a spreadsheet - mainly the rough CO2 levels and emissions between 1960 and the present, calculating absorption rates based on IPCC data (AR4, p.26) extrapolating into the future (spreadsheet available on request). All I’m doing is adding what carbon we’re putting in to the atmosphere, and what’s being taken out each year, to what’s already there to produce a time-series. And, lo and behold (actually I was a tad surprised), it is indeed the case that the AF is fairly constant under these assumptions at about 60%.

The trouble is, to my mind, thinking in terms of an AF and integrating annual pulses of emissions is really odd way to look at the problem.

The simple way to expose the limitations of this approach is to see what happens if you start to decrease emissions. And, sure enough, the AF drops considerably (and can even go negative) if you do this. In other words, the whole approach only works while CO2 emissions and atmospheric levels are increasing at a fairly steady rate.

But this is only a minor problem. The AF is extremely sensitive to saturation of the processes to remove CO2 from the atmosphere. And it appears that removal by the oceans is indeed saturated (AR4, p.26 & elsewhere).

If we allow for the fact that the rate of carbon uptake by the oceans is not going to increase, then (of course) we see that the AF increases, if our emissions continue to increase, as in the graph below:

The implication of all this is rather important. If we continue to increase our emissions, then we face a double whammy. A higher proportion of the higher level of emissions will remain in the atmosphere.

At this point I realised that I had constructed a rough carbon cycle model in my spreadsheet. I was able to test different emission scenarios, varying the behaviour of other parts of the carbon cycle. And I can report that we are indeed in big trouble. Here are some preliminary conclusions:

1. If we’re to keep CO2 levels below 450ppm - the absolute optimistic minimum to prevent dangerous climate change of 2C or more - global carbon emissions have to peak by 2015 and decline steeply, that is, by about 1.5% pa - my 2045 peak example led to 630ppm by 2070. I don’t believe anything faster than 1.5% is feasible - in fact, even that looks like a silly number to me, though I’m open to persuasion.

2. In a scenario where we do stabilise CO2 levels, then (of course) the AF declines dramatically, and eventually goes negative. The AF is a double-edged and misleading concept if used as part of a causal explanation. It can only be sensibly used - IMHO - to make the rhetorical point that increasing our rate of carbon emissions will make our problems much worse very quickly.

3. In my spreadsheet carbon cycle model, the outcome is sensitive not only to the emission peak and rate of decline and to the timing of the peak rate of ocean uptake (I’ve assumed 2010, which may be optimistic - AR4 implies it has already peaked). Critical, also, is the rate of land uptake of CO2. My model has the fertilisation effect dependent on the area of natural ecosystem. Now, here we have another double whammy. If we clear forest (and, worse, wetlands) to create grazing land, or to grow more crops - for example, biofuels - then we not only emit carbon as we do so, we also reduce the rate of carbon uptake by the fertilisation effect.

4. If land (and/or ocean) uptake of CO2 goes into reverse as the planet warms we are completely screwed, to put it scientifically. If this happens it will be almost impossible to keep atmospheric CO2 (not CO2 equivalent, just CO2) below 45ppm.

In fact, my conclusion is that it will be practically impossible to keep CO2 below 450ppm unless we:

1. Start reducing fossil fuel carbon emissions within the next decade; and

2. Significantly increase the area of forest and wetland over the next century.

Given point 2, it might be a good idea to suspend all incentives and quotas for biofuels.

More on the immorality and hazard of policy based on moral hazard

They say that the 1930s Depression was a result of a crisis exacerbated by policies to maintain a strong dollar. When the history of the 2000s Crunch comes to be written, they’ll say it was a result of a crisis exacerbated by policies to maintain another sacred cow - the idea of moral hazard. Both policies may have made sense in the 19th century, but not in today’s world.

Let’s first ask ourselves what the priorities of the central bankers should actually be. Well, I’m in the UK and it seems to me that Mervyn King’s overwhelming priority right now should be to slow the impact of the liquidity crisis on asset values, principally housing. Since this is not being done, the danger now is that price declines become self-fuelling, of a housing-market correction turning into a crash. Over the last year or so, I’ve wavered between predicting just a shake-out in the buy to let* (BTL) market in the UK and expecting large house-price declines across the board. The swingometer right now is well into the red of a general crash. And the people who will suffer most are people like the le Roux family reported in Saturday’s Guardian. Working people, IMHO, should be able to afford to buy the house they live in (um, isn’t that why we’re building these houses?). Ensuring they can should be King’s no.1 long-term objective - but more about that some other time.

The point of this post is to clarify my views on moral hazard. I may previously have given the impression that I consider the concept worthless. This is not the case. I consider it a special case of expectations. Expectations matter. If I expect to be robbed in a particular district I won’t go there. Or, say, if I expect a government to expropriate my assets I won’t invest in that country - or will at least demand a higher return for the political risk.

The idea of moral hazard is that we should be wary of behaving in a way that may lead people to think that we will behave the same way in future, when, in fact, we want to give the opposite impression. That is, we should not reward undesirable behaviour. If a child throws a tantrum and is rewarded with sweets to make them stop, then they will learn that next time a screaming fit is a good way to get hold of some more candy. So far, so good, but “punishing” banks - and specifically their shareholders - for becoming illiquid is a bad policy on a number of counts:

1. It is ineffective because it hurts the wrong people. In more ways than one.

a. Subtle differences are important. The devil is always in the detail. For example, it is absolutely critical, as I pointed out a while ago, and as Daniel Gros notes in today’s FT, that US mortgages are “no recourse”. This is not the case in the UK. Northern Rock couldn’t sell or borrow against its mortgages because everyone was in a panic, not because the Rock took on daft risks. The Rock went under because of a US crisis, not a UK one. The institution that has been “punished” is secondary to the crisis, and, here’s another “subtle” distinction, not insolvent, but illiquid. The Rock has been allowed to fail partly because it was relatively small. Larger banks more directly involved in the dodgy lending are likely to survive.

Because we now have an interconnected global market for capital, institutions around the world have been affected by the credit crunch. Central banks should not allow any to fail simply because they are illiquid (at least so long as, prior to a crisis they have met clearly-defined capital ratio and other regulatory requirements). Banks should be allowed to go under only if they are insolvent.

b. But how can you “punish” an institution? Individuals made the decisions that caused the problem. I’m sure many of the Bear staff who’ve (literally, I read) been crying on the stairwells were not involved in buying CDOs based on sub-prime mortgages.

The shareholders in both Rock and Bear have been (pending legal action) pretty much wiped out. This is unreasonable not just because (as noted above) they have not necessarily invested in a business that has allowed its liabilities to exceed its assets, but also because there is no mechanism in place for them to exert control over management to the extent that they could prevent it running into liquidity difficulties. If the FSA couldn’t do it, how could the Northern Rock shareholders?

And what’s more, the shareholders at the time a bank runs into problems are not the same as those at the time decisions are made. Specifically, in the case of both Rock and Bear, large holdings were owned by institutions and individuals who saw the companies as recovery prospects. As I noted before, (more than once, or even twice, it seems) at least some of these investors were prepared to put more capital in to these institutions.

2. Moral hazard based crisis management also has rather serious unintended consequences.

As we already know, in the UK we don’t have “no recourse” mortgages. In fact, Gordon Brown has just created real-life counter-terrorism units - I kid you not, 24 should sue for breach of copyright - to be staffed with real-life Jack Bauers who will no doubt, among their other duties, hunt down people who don’t pay their mortgage. So, a company like HBoS is not going to go bust. But what have we got? Short-selling. Now, there’s nothing wrong with short-selling - as Nils Pratley notes in today’s Guardian - but it’s wrong not just to profit from spreading false rumours, but also if the aim of short-selling is to drive a company out of business. And in the financial sector this is possible if the central banks allow runs to occur. Short-selling can undermine the confidence in an institution and cause investors to make an otherwise irrational decision (given that they lose out by withdrawing funds early). This was a factor in the downfall of Northern Rock, and it seems Bear, as well as in the attack on HBoS last week. Rumours are probably impossible to prevent and in any case, the sight of a falling share price may be enough when everyone is on edge. And if destructive short-sellers are actually rewarded - by, say, the nationalisation of Northern Rock, to take an example at random - why, of course they’ll do it again… Hmm, aren’t we talking about moral hazard?

No, if central banks don’t stand behind institutions - or stand behind them sharpening their knives - then it is inevitable that there will be attempts to force some institutions out of business to make a profit.

Readers will be forgiven at this point for thinking that moral hazard based crisis management is more about an assertion of authority, a demonstration of power, than actually solving the problem. Perhaps central banks don’t want to feel they are becoming just another market participant in the global market-place. And perhaps they are playing as well to the mainstream media, who - as is a recurring theme on this blog - consider themselves now to be the conscience of our society, ever ready to allow subjective value judgements to take priority over cold rational, objective decision-making. Maybe I’m being too harsh. I’m sure that ultimately the problem is that people want to read exciting stories of good and evil, not abstruse analysis of systemic failures! JPM good, Bear bad? Yeah, right.

3. Moral hazard based crisis management is an obstacle to fixing the real problem.

Citibank has pointed this out. “They [the BoE] still seem to be concerned about moral hazard, but we are long past that. It is not a question of bailing out the City. We’re faced with the threat of unnecessary damage to the real economy,” say Citi. Exactly right.

But here’s one response: “Isn’t this the bank that has already written off in excess of $20bn, or thereabouts? Doesn’t that mean, by simple rule of thumb, at a 5% Tier 1 capital requirement, this bank has just had to withdraw up to $400bn from the credit markets?”

This commenter has answered his own question. We read that credit markets are seized up, but that US Treasurys are flying. Why? Because the banks have had to write down capital. They can’t therefore lend out deposits without screwing up their capital ratios. But what they can do is lend it to the US Gov’t (or UK for sterling) by buying gilts because then they effectively hold cash. The inflated price of Treasuries tells us, I suggest, that there are plenty of deposits - whether retail or money-market - in the system (cash has to be put somewhere and it’s generally not under the mattress these days), but not enough shareholders’ capital to cover the perceived default risk - or more likely the liquidity risk - of investing it either in mortgages or existing debts, however low risk and profitable they might be. That is, if I find a stash of cash in the attic, and deposit it in my bank, it won’t allow them to write a mortgage for someone else, however low a risk they might be, because this set of transactions would increase the risk of all the mortgages on their books (and no-one will buy mortgages off them). On the other hand, if I suddenly discover I have some money in a bank account, withdraw it, and invest it in new shares in the same bank, then the bank would be able to issue more mortgages far in excess of the amount of money I have invested, because I have invested some more money in covering the risk associated with those mortgages.

I stress that banks can’t lend because they are worried not just about default risks, but also about liquidity risk (otherwise the price of debt would, I suggest, have found a floor by now), that is, to put it bluntly, by the risk of a bank run. Because the central banks (OK at least the Fed and the BoE) have not drawn a line in the sand, no bank is safe from becoming the next Northern Rock or Bear. So the markets are seized up, I suggest, as a direct result of moral hazard driven crisis management. I hope everyone feels better that the “greedy bankers” have been punished (and here’s silly me thinking that the way to deal with inequality is by policies to deal with inequality, not by destroying institutions that have taken many decades to create, reducing competition, and thereby making banking services more expensive for everyone in the future, allowing the surviving bankers to pay themselves even more…).

Now, the problem is not going to resolve itself until we get more capital into the banking system. Since the sovereign wealth funds may not do this, I suggest the banks make rights issues.

Unfortunately, thanks to moral hazard madness, for a bank to suddenly announce a rights issue would be a sign of weakness, and they’d be torn apart by the wolves.

Ergo, the correct central bank policy is to take the illiquid assets onto their books, albeit at a penalty rate, committing to rolling the facility over for (say) 6 months. But, I’m a taxpayer, thanks very much, not in the mortgage business, so the quid pro quo must be that the central banks make the banks commit to substantial rights issues over that 6 month period. At the end of it, they’ll have the capital they need to take the assets back off the central banks and start trading amongst themselves.

It’s very simple. If a huge hole gets blown in the capital base of the world’s banking system then it’s got to be filled in again. Blathering about moral hazard does not achieve this.

4. Moral hazard crisis management is a poor substitute for effective long-term expectation setting.

If setting expectations is going to work - and I agree that it is necessary - then it has to be done on a deep, long-term basis. It has to be drilled into the nation’s psyche over a long period of time.

Just punishing almost at random a few managers, employees and shareholders - most of whom simply happen to be in the wrong place at the wrong time - will not be effective. It will simply leave these people feeling unfairly treated and aggrieved. Maybe they’ll simply invest their time and money in some other sector of the economy.

The sort of expectation it might be worth setting over time is that you have to pay your debts. This would have helped prevent the US housing meltdown spilling over into the whole global economy. Heck, it might even have helped prevent the bubble developing, since, at the margin, a few people might have questioned whether they really could afford the debt they were taking on. Clearly, though, no-one is ever going to be able to sell “no recourse” mortgages on the open market ever again.

Hmm, maybe we shouldn’t say never! This is the problem with moral hazard based policies. Those who are punished essentially leave the game. Those who profit (e.g. the banks that survive) are re-affirmed. JPM good, Bear bad. Yeah, right. And we end up repeating the same mistakes in the next cycle, because no-one’s left to remember the lesson.

5. An underlying cause of instability is the propensity of housing markets to develop bubbles. A moral hazard based approach will not prevent this, since it is not irrational to participate in a bubble (as I said before). Policies are needed to stop prices rising too steeply.

So the underlying cause is the fault of the regulatory authorities.

And their response has made the crisis worse.

Good work guys. But you’re right about one thing. It really is time to put those thinking caps on. This is starting to get a bit irritating for the rest of us.

* Postscript: I meant to say why BTL “investors” deserve to be hunted down by Jack Bauer. They don’t have the excuse of simply wanting somewhere to live, but nevertheless made reckless bets that house prices would continue to rise. They could make no money any other way than by capital gain. The point is that their market was tenants who couldn’t afford to buy property (at first it was people renting for convenience…). How, pray tell, can a rational investor expect tenants to pay the mortgage on a property they can’t afford to pay the mortgage for (otherwise they’d have bought it) and cover agency fees in order to provide the “investor” with a profit? Unbelievable.

Implications of “peak oil” - Tim’s Translation Service

No sooner had I digested the Target Atmospheric CO2 paper than another one (pdf)* arrived, courtesy of James Hansen’s mailing list.

The paper “Implications of ‘peak oil’ for atmospheric CO2 and climate”, Pushker A. Kharecha and James E. Hansen (pdf)* makes a similar argument to that in “Target Atmospheric CO2″, though there are some differences.

I’ll try to keep the translation brief this time.

Summary

The paper seeks to show that we can keep CO2 below 450ppm [Hansen argued for less in "Target Atmospheric CO2"] by avoiding burning coal to the atmosphere, and using a high price of CO2 to deter the use of unconventional (e.g. tar sand) and other expensive sources of oil. Various Peak Oil scenarios imply that we can keep below 450ppm CO2, based on the Bern carbon cycle model, with both a static pulse response function (PRF) and a dynamic PRF. That is, even if some carbon cycle feedbacks are allowed for, CO2 can be kept below 450ppm if we burn all the existing conventional oil and natural gas reserves.

Points of note

1. The authors acknowledge that the concept of “reserves” of fossil fuels is flawed - if the price of oil (say) goes up, “reserves” magically grow, simply because more of the resources become economically exploitable.

2. The authors acknowledge that they have provided only “an approximate lower bound for the proportion of fossil fuel CO2 emissions that remain airborne.” i.e. they are being optimistic. But they don’t consider that climate feedbacks will kick in below 450ppm, so as long as we stay below that we’ll be OK.

3. We have to keep “cumulative global emissions from coal between the present and 2050… to ~100GtC or less” (note that the IPCC considers proven global coal reserves to be >1200GtC).

*Postscript (9/4/08): There were some problems with the links to the Hansen and Kharecha a paper. These now refer to teh Arxiv version, which will hopefully stay there.

Target Atmospheric CO2 - Tim’s Translation Service

The venerable James Hansen has drafted a paper (pdf) taking a broad step-back look at global warming (GW) science. This is important, because I don’t believe all the bad news is yet in the market. Unfortunately the paper is written in the Scienglish dialect, so I will try to translate.

Summary

Estimates of the temperature rise due to emissions of greenhouse gases (GHGs) only take account of “fast feedbacks”. The expected temperature rise should therefore be doubled (it turns out) if we take long-term “slow feedbacks”, such as changes in the planet’s albedo (reflectivity) due to the melting of ice-sheets. Therefore, to keep the temperature below dangerous levels, we need to keep atmospheric CO2 below 350ppm. We can do this by not burning coal to the atmosphere - carbon capture and sequestration (CCS) would be OK - and by ensuring agriculture and forestry practices capture and retain carbon.

Argument

Point 1. The global community, e.g. the UN’s Framework Convention on Climate Change (UNFCCC) in 1992, has agreed that greenhouse gas (GHG) levels in the atmosphere must be stabilised at a level preventing “dangerous anthropogenic [caused by humans] interference with the climate system”. But what does this mean?

Point 2. The EU considers a rise of 2C or more over pre-industrial levels to be “dangerous”, the intergovernmental panel on climate change (IPCC) goes for a 2-3C rise. Hansen goes for 1.7C (or 1C after 2000). All much the same, given the uncertainties.

Point 3. The big question is what level of CO2 in the atmosphere will prevent more than a 2C rise? In this paper, Hansen et al argue that we have to take long-term feedbacks into account. The magnitude of these can be determined from looking at what has happened in the past.

Point 4. If CO2 is doubled i.e. to about 560ppm from pre-industrial levels, then temperatures would increase by 3C (a best guess). This doubling - due to fast feedbacks - represents an increase in energy (a “forcing”) of about 4W/m2 averaged over the planet. Climate sensitivity is therefore about 3/4C per W/m2 forcing. This can be validated by comparing temperature and atmosphere records over the last few ice ages (this information is known from Antarctic ice core and other records).

Point 5. But, argues Hansen, over the ice age cycle the changes in the albedo (reflectivity) of the planet were secondary or long-term feedbacks, resulting over a longer time period from the warming/cooling caused initially by changes in the Earth’s orbit and amplified by changes in GHG levels. Changes in GHGs are (according to the paper) a fast feedback and only slowly affect the distribution of ice and hence the albedo (reflectivity) of the planet. Well, the paper might be saying what I just wrote, but is relying only on the simpler point that when gauging the effect of increased GHG levels over a long period of time, we should ignore other forcings - these should be treated as secondary. Anyway, if we do this and ignore everything except GHG levels, the actual forcing changes to produce the ice age cycle temperature fluctuations of 5-6C averaged over the globe were only about half that to produce the short-term feedbacks. i.e. climate sensitivity is nearer 1.5C/W/m2.

Point 6. So, argues Hansen, as well as the 0.6C warming we’re all being told is already in the system (due basically to seas taking centuries to warm up fully), there’s also another whopping 1.4C after that [assuming atmospheric GHG levels remain where they are now (385ppm CO2, ~420ppm CO2 eq) indefinitely]. “This further 1.4C warming in the pipeline is due to the slow surface albedo feedback”.

Point 7. But is this conclusion from the ice age period valid as the Earth warms from where we are now? To decide this we have to look at the whole Cenozoic, i.e. the last 65.5 million years (my), i.e. since bye-bye dino time. Over the period from 50 million years ago (mya) to the ice ages, the global temperature fell 14C and CO2 in the atmosphere from 1000-2000ppm to less than 500ppm over the last 35my when we’ve had icecaps - the Antarctic iced up when we got down to around 450ppm is Hansen’s best estimate. So yes, is the answer. The Earth’s temperature will rise by 2.5-3C per W/m2 of forcing from the current temperature, presumably due to loss of the remaining ice-sheets and darkening of N continental areas.

Point 8. But we can overshoot the forcing that would produce long-term feedbacks, because they are um, slow.

Point 9. What should the target be? Hansen is mainly concerned about CO2. Other GHGs (principally methane, NH4 and nitrous oxide, N2O) can be controlled. Answer: 350ppm max. The current level - about 385ppm - is already too high.

Point 10. Because “a large fraction of fossil fuel CO2 emissions stays in the air a long time”, must leave some fossil fuels in the ground, by phasing out coal (unless the carbon emissions are captured and sequestrated, i.e. we employ CCS technology) by 2030.

Point 11. Just leaving coal in the ground (but burning all the gas and oil) is not quite enough. But reforestation and carbon sequestration in soil (by creating “biochar” by pyrolysis of organic material, e.g. rather than “slash and burn”) can make up the 50ppm difference by 2150. CCS from biofuel would be even more rapid.

Point 12. Need a CO2 price that forces CCS to be used, and to reward agricultural practices that sequester and preserve carbon.

The paper includes quite a bit of “Supporting Online Material”, including:

• an analysis of ice age forcings (GHGs and ice-sheets) which implies a sensitivity of 3/4 +/- 1/4C per W/m2.
• the variability of the forcing caused by orbital changes - the Milankovitch forcings which triggered the ice ages and deglaciations - are relatively small, < +/- 3W/m2. (This assumes “present-day seasonal and geographical distribution of albedo”).
• an analysis of the reserves of oil, gas and coal.
• a graph showing that the “CO2 airborne fraction”, i.e. the proportion of annual CO2 emissions remaining in the atmosphere, has been moreorless constant at about 56% since 1957 (when Keeling first measured atmospheric CO2 accurately).

Northern Rock nonsense: deconstructing demonisation

OK, I know I said I wasn’t going to write any more about the Rock.

But this story in Saturday’s Guardian Money section has been bothering me all weekend.

I read the Guardian because, like at least some of the people who write it, I believe in a fairer world, with a great deal less inequality. Maybe it’s incipient middle-age, but it’s becoming increasingly apparent to me that, whereas I live in a world where the economy is based on people buying and selling goods and services, in short, on markets, this is not the case on Planet Guardian. Yes, across vast distances of time and space, in this strange and wonderful world, under the rose-tinted light of a gentle star, people seriously believe that if we vote for the right people they’ll create a fairer society by willpower alone. Nevertheless, I continue to believe I share core values with the institution that produces the newspaper - such as a belief in objectivity. This conviction is still being sorely tried over Northern Rock, although the newspaper’s triumphalism that accompanied the nationalisation of the bank - and the attempted expropriation of the assets of the shareholders - was mercifully short-lived. But it still seems that editorial policy is - in common with the other papers - to demonise Northern Rock.

I was very interested to read “The families who bear the brunt” on Saturday to get a feel as to where the credit crunch is leading. And it’s not pretty.

But it’s not purely NR’s fault. The article doesn’t say how typical the le Roux family are of NR borrowers, nor whether NR have a higher proportion of customers in difficulty than do other lenders. But let’s let this pass. This is a human-interest story in a newspaper, not a peer-reviewed academic paper in an economics journal.

I’ll also ignore the way Northern Rock is referred to ad nauseam throughout the piece, which could otherwise have been presented as an example of a problem no doubt affecting many borrowers with many different lenders. The paper needs a hook for the story. And it would attract fewer readers if the strapline was: “They are trapped in a Bath Building Society mortgage…”

But what I can’t ignore is the apparent spin put on the story itself. First, we are told that:

“The crux of the problem is that they [les Roux] owe nearly £170,000 to Northern Rock, but their home is only worth an estimated £152,000.”

But (OK, OK, I can see I’ve got “but”ter typing fingers today!) when we read the article carefully, we see that:

“They also have a £15,000 secured loan on the house from a company called Welcome Finance that is costing them a further £307 a month.” [My emphasis].

This, it seems to me, is the crux of their problem.

Without this loan they would just need to roll over a mortgage - £139,630 - secured on a house valued at £152,000. Lenders look at two things: the security on a loan and the customer’s ability to pay back the loan. Surely, in the case of the le Roux family, they’d have a sporting chance of remortgaging, were it not for the Welcome Finance loan. They need about 92%. Heck, if they had a car they could trade down they ought to be able to get it down to 90%. But who’s going to touch them with the extra 15 grand secured on the house? Lenders will be put off by the Welcome Finance loan secured on the property much more than they will be by the unsecured NR loan.

Then there’s the ability to pay. In addition to the mortgage, les Roux have not one but two chunky debts. And whilst a lot of borrowers will have the extra unsecured loan with NR or any of the lenders that have offered similar deals, it seems to me the killer is the Welcome Finance loan - an extra £307 a month they have to find. In comparison, the NR unsecured loan would cost les Roux £390 a month if they take their mortgage to another lender.

And the NR loan at least is not at a punitive rate. A box in the article is headed: “The cost of quitting? A massive 15.59%”. I hardly think 15.59% interest on an unsecured loan is excessive (try borrowing on a credit card). At random, there was an ad from Jessops, the camera chain, in the same edition of the Guardian. Jessops’ buy now, pay later deal charges a lot more than 15.59% for credit (though just a relatively small fee if you only need to borrow for less than 12 months). And is 15.59% really a lot more than les Roux are paying on their Welcome Finance loan? Their repayment to Welcome of £307 a month is £3684 a year. If £1500 of this is repayment of capital (i.e. we assume it’s a 5 year loan with constant payments and that the average balance outstanding is half the principal), this works out at a rate of approximately 14.4%.* But (oops, sorry) maybe it’s a 10 year loan (at about 19.5%) since, if we look at the Welcome Finance website, they’re currently offering secured loans from 22.1% or 19.9% for cars (of course, these rates could be a lot higher than those on offer last summer, because of the credit crunch). Welcome’s unsecured loans are a bargain at 64.1% (sic(k)).

So the interesting questions in the Guardian’s human interest story (perhaps we can have another exciting instalment next week) are around the Welcome Finance loan:

• how did les Roux come to have this additional debt?
• did it already exist when “[t]hey borrowed £169,630 from Northern Rock last summer“? [my emphasis - actually they changed the security on the debt by moving house]
• if so, did they tell NR about it?
• if not, how come they’ve gone further into debt? If I was lending money secured on a property I’d want to know about (and probably veto) any other debt to be secured on the property. Did NR know about the Welcome debt?
• was the Welcome Finance loan an attempt to keep paying the NR mortgage les Roux could never afford to pay in the first place?
• is the Welcome Finance loan anything to do with why NR “is not offering them anything else in terms of deals” and that “they would be better off taking their business elsewhere”? Would NR have offered to roll over their mortgage were it not for the Welcome debt?

There’s a lot about this story that is puzzling. But (doh!) my point is this: I get the distinct impression that the Guardian is still - consciously or unconsciously - trying to paint as bad a picture as possible of NR.

The psychologists will eventually have a field day with all this. This is the situation: we now all feel bad because we’ve all been borrowing too much and gloating over our rising house-prices. Now the chickens have come home to roost. So what we’re doing is bundling up all those bad feelings (the shrinks would say) and loading them onto the banks, and specifically the fattest scapegoat that makes the best sacrificial offering - aka Northern Rock. How do I know this? Amazing what you pick up in an MBA these days!

The point about scapegoating is that it does not necessarily - and usually doesn’t - address the root causes of a problem. I’m told that ancient South American civilisations would regularly sacrifice their priests when droughts came. Maybe there were a few fewer mouths to feed, but the value of this behaviour in preventing or even predicting the next drought was approximately nil. If only they’d known about the El Nino climate phenomenon! (Actually, there’s reasonable evidence that some farmers in the region are able to predict an impending El Nino by changes in cloud patterns. Maybe a few priests were on the verge of spotting this when they were slaughtered…).

For some reason I thought the Guardian would be immune from the scapegoating syndrome. I now ask myself why I thought this. How could I be so wrong? I guess it’s because I thought it was in the Guardian’s DNA to be against prejudice of any kind. They don’t even have “actresses” any more on Planet Guardian - we all have to work out some other way whether the “actors” we’re reading about are male or female. A small price worth paying for whatever it is we’re trying to achieve, of course. They have principles at the Guardian. Heck, they’re not even prejudiced against Old Etonians.

* Postscript: this method is highly dubious for the hypothetical 5 year loan - it’s too few years to make the simplifying assumption of even payment of principal. A spreadsheet suggests that paying £3684 a year for 5 years would in fact pay off £15,000 lent at about 7% which is unlikely. Over about 7 years would come in around 15% and 10 years around 20% as I suggest. Incidentally, the £390pcm doesn’t pay off the NR unsecured loan - at 15.59% this just covers the interest.

April 15th: Biofools Day - Downing Street, London, be there

I was reading Flat Earth News by Nick Davies this morning. Flat Earth News is all those misconceptions and false stories that flood the media. It seems to me that the potential for Flat Earth news is greatest where the flaws of the scientific process slam headlong into the flaws of the mainstream media. Especially when numeric arguments are involved, because, of course, journos don’t have to be numerate.

Biofuels is a case in point.

I was at a talk last night about Wicken Fen near Cambridge. Apparently the idea (the “Wicken Vision”) is, over time, to expand the existing wetland reserve to an area of 50 sq kms. The National Trust is snapping up farmland in the designated area as fast as it can. It hopes to own the whole area in 100 years.

There was a lot of discussion of peat. Much of the whole area east of Cambridge - north towards the Wash, south through Essex - much, much bigger than 50 sq kms - was covered in peat, metres deep, up to a few centuries ago. Now, this is what got me scribbling during the talk. Get this, just this 50 sq km area would once, the speaker claimed, have held 27Mt** of carbon.

Now 27Mt over 50 sq km is 5000 tonnes of carbon per hectare [for any journos reading, there are 100 hectares (100m x 100m) in a sq km (1000m x 1000m). 27 000 000 tonnes (i.e. 27Mt) divided by 5000 hectares is about 5000 tonnes/hectare, rounding down.].

[Is this feasible? Yes. 5000 tonnes/hectare is 500 kg/sq m (100x100=10000 sq m in a hectare), i.e. 5 kg per 10cm x 10cm area. I choose this area because at the density of water 10cmx10cmx10cm (1 litre) is 1kg. So could we have 5kg of carbon in 10cm x 10cm x (say) 3m (300 cm) of peat? Yes, I would have thought so.* This is just a sanity check - all I'm doing is re-engineering the calculation that gave us the 27Mt/hect, which would have been based on empirical measurements of the average amount of carbon actually stored per sq m of peat.].

Virtually all this 5000 tonnes/hectare has been emitted to the atmosphere as a result of farming the land.

Now, remember we have established that crops grown to produce biofuels in Europe can displace at best 2 tonnes of carbon emissions (before allowing for fertilizers and energy inputs and so on) per hectare per year.

And remember that devoting even existing farmland to biofuels will inevitably cause further human encroachment into the world’s remaining wilderness areas.

Let’s say we look ahead for the next century. If we grow biofuels continually we may “save” 100 x 2 = 200 tonnes of carbon emissions per hectare of land devoted to biofuel crops (it needn’t be the same land every year).

What would the odds of food production being displaced onto wetland somewhere in the world have to be for us to justify diverting existing farmland in the UK (or anywhere else in the world) to the production of biofuel feedstocks?

Let’s do some division: Carbon cost of 5000 tonnes/hectare divided by “saving” of 200 tonnes/hectare = 25.

Conclusion (1): Even if there is as little as a 1 in 25 chance that devoting land in the UK to growing biofuels displaces other activities (such as growing food) onto wetland somewhere in the world, it’s not worth growing the biofuels. Remember, this argument applies to the one reason alone of loss of wetland and takes no account of all the other arguments against and costs of producing biofuels.

Now, it might be worth bearing in mind that one area of the world where farming is likely to be displaced into if we increase the human ecological footprint is - as the world warms - further north than is farmed at present in Canada, Russia, Scandinavia etc. Because these areas are cold, there is a lot of wetland, and peat, even if much of it is frozen a lot of the time right now. (Much of the tundra is, of course, frozen peat, and - since it seems it stores something of the order of 5000 tonnes of carbon/hectare - it might be a good idea not to warm it up at all!). Of course, tropical wetlands exist also and are already being drained - some for biofuels - in Indonesia, for example.

I’d say the chance - if we divert a hectare of farmland to biofuels here in Europe, and instead import a hectare’s worth more food from elsewhere in the world - that this will lead to a hectare more wetland being drained and turned into farmland somewhere in the world, than would otherwise be the case, is a lot higher than 1 in 25. Wouldn’t you?

We can look at this on the small scale as well. The Fen peat, last night’s speaker said, was laid down over the period from 7000 to 2500 years ago. That is, over about 5,000 years (rounding up). That is, at the rate of about 1 tonne carbon/hectare/year. Now, in this argument I can’t make the generous assumption that growing biofuels will displace 2 tonnes of carbon per hectare. We have to look a little deeper at the cost of producing biofuel. To justify growing biofuel on land to the east of Cambridge, taking account only of the slow process of laying down peat (i.e. ignoring all the trees etc. that would also grow on the less boggy bits of the land) that could otherwise be allowed to revert to wetland (with all manner of co-benefits) we’d have to be convinced that cultivating biofuels would result on a sustained long-term basis in the displacement of at least 1 tonne/hectare of carbon. And, even using UK Government figures, such a claim cannot be justified (e.g. see my paper on Biofuel Payback Periods).

Further conclusion (2): We’d be better off letting farmland near Cambridge return to its natural wetland state than we would growing biofuels on it. We don’t even have to plant trees, or worry about them burning down.

Final conclusion (3): It is not worth devoting land to growing biofuels. It only conceivably makes sense to use crop residues to produce biofuels, so that no land additional to existing farmland is required to produce biofuels.

Methinks it might well turn out that it would be better to leave crop residues in the soil (e.g. to reduce the need to use fertilizer) than turn them into biofuels with clever GM bacteria.

But, even if we don’t look too closely at the pros and cons of using crop residues to produce biofuels, let’s just ask if it is a sensible policy to subsidise biofuels and force everyone to use them through targets such as the UK’s RTFO, from April 15th 2008.

We don’t have to look far. We need to know how to turn crop residues into biofuels. Do we, perchance, actually know how to do this? That is, do we know how to make biofuels from cellulose?

This is what Scientific American (April 200 has to say: “…no company has yet demonstrated a cost-competitive industrial process for making cellulosic biofuels. … ‘The oil companies say that it takes 10 years to fully commercialize an industrial processing route’ warns [the expert]…”

So in the meantime we only have first generation biofuels - produced from food rather than “waste” (though I have my doubts whether this term is valid) such as stalks. Remember this the next time someone says “not all biofuels are bad”. What they are in fact talking about are things that do not yet exist.

Yet I find in my Inbox this morning, courtesy of Biofuelwatch, the information that the Gallagher Review of “The Indirect Effects of Biofuels” starts from the assumption that: “Biofuels have the potential to deliver significant environmental benefits,…” (the start of the terms of reference). No, no, no! This is what we’re trying to establish. The fact that the Gallagher Review has been set up is great news, but it’s important that it starts with a clean sheet of paper.

And it’s shocking that the RTFO has not been suspended pending the Gallagher Review. Instead, it will come into force on 15th April - Biofools Day.

So if anyone can make it please go to the demonstration in London against the RTFO at 6pm on 15th April.

*Postscript: a study on Indonesia (pdf) suggests between 45 and 90kgC/m3 of peat - here I’ve derived a value of about 165 kgC/m3 (5kg in 3/100 m3), but then the UK’s temperate climate and Indonesia’s tropical one are likely to produce peat with different characteristics, and my estimate of peat depth was a guesstimate - there’s therefore no reason to disbelieve the estimate from the National Trust.

**Postscript (2): The 27Mt is from the notes I took at last night’s meeting. The link supplied gives 1.5 times the annual emissions of the UK’s cars. The total UK road transport emissions in 2006 were about 32MtC (based on DEFRA data), so the 27Mt figure tallies, as 18MtC/year from cars is compatible with 32MtC/year for all road transport (I don’t know where to find a breakdown).