Uncharted Territory

June 20, 2012

Rio+20 Mañana

One of my New Year 2012 resolutions was to report here about events I attend. Trouble is I always seem to put it off – “mañana”, I think – and after a few days there’s another event to report on. In fact I’m already one event behind (thorium – mañana) but am nevertheless starting by reporting on the Alternative Rio+20 Summit organised in London by the Campaign against Climate Change (CCC).

My expectations were moderate to low – I was hoping for a briefing on what Rio+20 is all about and maybe some interesting talks and discussions. I can’t say these aims were met. The CCC is about climate change and that’s not the main topic at Rio, so the conference wasn’t focused as well as it might have been. And whereas a few years ago CCC conferences were excellent and informative, they now seem to be a gathering mainly of “activists” all keen to promote their cause. The Q&A sessions were therefore largely hijacked, most annoyingly by a social networking bedwetter carrying around a 3ft dragon soft toy as a way to attract attention, and a woman wearing Mickey Mouse ears with text proclaiming something about “McNulty”. She was campaigning against proposed cuts in rail services. The effectiveness of her interjections may be judged by the fact that I had to google “McNulty rail” to find out who the guy was. Both campaigners, using the term loosely in the case of Mr Twitter-will-save-the-world, not only spoke off-topic in the plenary, but in subsequent breakout groups too. Most people in the breakout meetings will have attended the plenary.

The likelihood is extremely low that any intelligent debate can be organised around topics so vaguely defined as “sustainability” and “development”. Compounding the problem, “sustainable development” is – if these words mean anything at all – an oxymoron. So what I found most interesting about the whole Alternative Rio+20 event were the reflections on the history of international negotiations made by a couple of academics from the host institution, the School of African and Oriental Studies (SOAS). Harald Heubaum spoke about how Copenhagen failed for procedural reasons and suggested that the G77 group of countries was less unified than at the original Rio (the “Earth Summit”) and the West less inclined to make concessions. My initial thoughts were that perhaps the Earth Summit was too successful and, as well as taking all the low-hanging fruit (so how could any subsequent conference possibly match its ambition?), locked in unhelpful features, such as the distinction between “developed” and “developing” countries, with no mechanism for movement between these groupings. Of course, dividing the world in this way is madness, but the very idea of countries negotiating in the way they do is flawed. The interests of states is not the same as the interests of their people, so we end up with bizarre assertions, such as that the “right to develop” is a human right. It’s not, “development” is collective, human rights refer to individuals.

As far as climate change is concerned, these international talks are becoming increasingly fruitless, at least in terms of action (as opposed to exchange of ideas). The whole exercise has become entirely dominated by demands from developing countries that the developed countries are unable to meet. “Development” is in any case not something that can simply be given, or prevented. What’s clearly needed is to establish technocratic institutions that are able to say these are the rules for burning coal, preserving forests & oceans, wherever they are in the world. That’s right – we need the same rules for everyone.

Reading about the Rio talks – such as the draft text – is profoundly depressing. There’s little clarity, but the question our leaders are apparently asking is something like: “How can the aim of preserving the environment be prevented from conflicting with ‘development’?” The “needs” of the economy rather than the need to preserve the environment are taken as a given. Common sense, such as the observation that there are indigenous peoples who just want things left as they are and who aren’t really bothered about “development”, would suggest turning the whole thing round. “How can we protect the planet from the Malthusian juggernaut of industrialisation?” Clearly there’s a process – economic growth or “development” – that may be a good thing or may be a bad thing, but has certainly been accelerating for a couple of centuries, a process that will, if left unchecked, consume the planet. This process simply needs to be constrained. Such an observation would suggest that we need to simply protect remaining biodiversity wherever it is, leave fossil fuels in the ground wherever they are and so on. The tools currently being employed by the global community are not achieving this, and are never likely to.

We don’t need Rio+20. We don’t need any more COPs (Conferences of the Parties), such as Copenhagen. What we need is an entirely different process that starts from the environmental problems we’re actually trying to solve. The interests of nation states (or those of any other institution) should not be represented, since these will obviously conflict with the goal. Sovereignty must be delegated, else solutions are impossible. The technocrats would simply need to decide what the best mechanism is for preserving each resource – outright bans on exploitation perhaps in some cases, but most likely some form of pricing – and how best to implement it.

I do have more to say, but the morning is over. I’ll try to find some time to finish. Mañana.

December 3, 2009

Problems with Wood Chips: Why Copenhagen’s Piecemeal Approach to Preserving Forests will Fail

Filed under: Forests, Global warming, International climate deals — Tim Joslin @ 4:30 pm

We all share the same atmosphere. Wood is an internationally traded commodity. How is it, then, that, simultaneously, governments in East Asia are urging their citizens to reduce their consumption of wooden chopsticks whilst wood-burning boilers are being promoted in the UK?

Such a lack of consistency is typical of attempts to preserve forests, including the proposals apparently being discussed in the lead-up to the Copenhagen climate-change talks.

I’m finding literature supplied by the NGOs to be a lot more useful in understanding the Copenhagen discussions than anything I’ve seen in the mainstream media. A WWF “Pocket Guide” to “The New Copenhagen Climate Deal” was included with the Guardian early this week. I immediately turned to the section on forests (not apparently available online, but with some overlap to this page on WWF’s site). I highlighted the following passage about REDD which, according to WWF stands for “reducing emissions from deforestation in developing countries”:

“There is no point paying to protect one forest, if the loggers and farmers simply go somewhere else and tear that down (in the jargon, this is called ‘leakage’) – or come back in a couple of years after REDD has paid out (the challenge of ‘permanence’).”

Very succinctly put.

Why, oh why, then would we even contemplate a REDD framework that does not meet the conditions of avoiding leakage and ensuring permanence?

As far as I can tell, Copenhagen is likely to spawn a variety of different schemes for preserving forests. These seem to fall into 3 main categories:

1. Carbon-trading REDD schemes

Specific areas of land are ring-fenced from deforestation (and/or reforested or afforested) and the amount of carbon “saved” compared to “business as usual” (i.e. if the land had not been protected). This carbon is then amortised over a number of years and traded as carbon credits for each of those years.

I don’t think I’m pre-empting a lot of discussion by suggesting that such schemes meet neither of the two criteria of avoiding leakage and ensuring permanence.

2. Preservation of specific forest areas

Despite New Scientist’s flippant headline, a scheme in Ecuador to preserve part of the Amazon rainforest (which happens to sit on a lot of oil) makes considerable sense:

“Ecuador said it would abandon plans for drilling in Yasuni National Park, one of the few pristine regions of Amazon rainforest remaining, if it was paid half of the $7 billion that it expected to earn from tapping the oilfield.”

The critical point is at the end of New Scientist’s report:

“…the UN Development Programme is expected to announce plans to hold contributions in a trust fund, passing along only the fund’s interest to Ecuador. … this will give future Ecuadoran governments an incentive not to start drilling for oil, while also encouraging other nations to pay up.”

This model could at least meet the challenge of permanence.

3. National commitments to reduce deforestation rates

The Copenhagen talks are unfortunately turning into a battle between the “developed” North and the “developing” South. This artificial distinction has spawned a counter-productive “them and us” mentality. It makes it even more difficult to define, let alone agree, sensible solutions to the problem of global warming.

Likely we are past the point where reducing deforestation rates is enough. Ultimately, we will probably need to significantly increase the forested area of the planet to absorb carbon that’s already in the atmosphere. But let’s put that issue to one side for now.

The problem with the “North” buying reductions in the rate of deforestation from countries in the “South” is the leakage criterion.

WWF has defined REDD as “reducing emissions from deforestation in developing countries”. This makes absolutely no sense. We need to preserve temperate and boreal forests as well as tropical forests. You can’t assume a lot when it comes to the increasingly baroque Copenhagen negotiations, but I’d wager that none of Russia, Canada and the Scandinavian and Central European countries, not to mention Australia, Japan and New Zealand are classified as “developing”. It seems to me that the best that could happen under schemes aimed at reducing some national deforestation rates is that timber exports from those countries decrease, whilst they increase from countries not included in the scheme.

What is actually needed is a global Forest Endowment Fund which provides an income stream in perpetuity to any and all custodians of the world’s forests (and other ecosystems, in particular wetlands) in approximate proportion to the carbon stored in their trees and soils, as long as the forest remains in a defined state. Only this way is it possible to meet the key criteria, correctly identified by WWF, of avoiding leakage and ensuring permanence.

November 4, 2009

Some Contrarian Climate Change Ideas

I had a day (well afternoon and evening) out of the home-office yesterday. I took the train to Cambridge and caught the first hour or so of a Cambridge Energy Forum on UK buildings before heading to the Guildhall for a well-attended public meeting on “what Copenhagen means for you”.

Maybe I’m an unreconstructed contrarian, but I find myself disagreeing with much of what I’m being told on the topic of global warming. Here are my latest musings.

What’s the target?

The Guildhall meeting started with a very competent whirlwind summary of the science of climate change by Emily Schuckburgh of the British Antarctic Survey. In particular she showed a rather longer graph than I’d seen before of historic temperatures and CO2 concentrations derived from ice-core analysis: around 800,000 years worth. During all this time the level of atmospheric CO2 had varied only between 180 and 280ppm, in close correlation with the temperature.

Furthermore, when temperatures have briefly spiked up during inter-glacials they have reached levels somewhat higher than at present (or in the entirety of recorded human history for that matter). Schuckburgh suggested temperatures may have been 4C higher than her baseline (presumably the pre-industrial average temperature, 0.8C lower than at present) for brief periods (and -8C lower during ice ages). Scary stuff.

Why then, do we think we’ll manage to keep temperatures within 2C of pre-industrial levels – and they’ve already risen 0.8C – at the sort of CO2 concentrations implied by the discussions at Copenhagen? We’re at around 390ppm right now and it doesn’t look like the proposed policies have much chance of keeping us below, at best, 450ppm.

And on top of that, CO2 isn’t the only greenhouse gas. Some have only just been invented! If we can’t get all the methane (CH4) and nitrous oxide (N2O) down to natural levels and the anthropogenic alphabet soup of CFCs, HFCs and so on down to negligible levels, then we’ll be even warmer.

Here’s my contrarian position (1): we need to get CO2 levels back down to the natural range of 180-280ppm. Presumably we’d aim for 280ppm, since 180 implies an ice age!

At present the strongest mainstream positionsupported by reputable scientists and prompted by James Hansen’s landmark paper – is that we should aim for 350ppm.

The theory – perhaps I should say hope – is that we can “stabilise” levels at 350ppm and a 2C temperature rise. This is wishful thinking poppycock. In fact, the climate system is not a stable one. In particular, it will not be stable at 350ppm and a 2C temperature increase. It will have a tendency to warm further, for example, as ice melts, darkening the planet’s surface; as CO2 levels rise further as forests burn in the occasional much hotter summers we’d experience; as wetlands dry out and release their carbon too; and as the ocean circulation gradually slows due to the reduced temperature differential between the poles and the equator, removing less and less carbon from the atmosphere as time goes on.

We’ve opened Pandora’s box – we have to put all the demons back in, not just some of them.

Will the Gulf Stream slow and keep Britain cool?

This was meant to be a post about policy, but I’ll get the other science point out of the way, since this old chestnut came up in the Q&A at the Guildhall.

The point is that the Gulf Stream (as the North Atlantic branch of the ocean’s circulation is popularly known) can be disrupted by lots of fresh water flowing into the North Atlantic. Such water floats (because it’s fresh which makes it lighter, even though it’s cold which tends to make it heavier) and would prevent the circulation whereby (salty) cold water sinks as it approaches the pole, drawing more warm surface water up from equatorial regions, keeping Northern Europe, including the UK, a lot warmer than other regions at such a high latitude.

As the world emerged from the last ice age (and previous ones), it seems vast quantities of meltwater from the North American ice-sheet poured into the North Atlantic as ice-dams gave way. This disrupted the oceanic circulation and caused warming to reverse for a while, at least in the North Atlantic region.

It’s possible that meltwater from Greenland could have a similar effect to that from Canada, but unless someone’s asleep on the job, this isn’t imminent, since we’d see the water pooling in Greenland.

So, what will happen to the Gulf Stream in the absence of disruption from a sudden flood of meltwaters?

Here’s my contrarian position (2): the ocean circulation will strengthen in the short-term (which, depending largely on future greenhouse gas emissions, is likely to be a century or two), then gradually weaken as the ice-caps disappear. There’s no get out of jail free card for the UK, certainly not in our life-times.

The point is that the circulation is ultimately driven by the temperature difference between polar and equatorial regions.

More heat is captured by the atmosphere in the tropics than at the poles, that’s why you have a circulation in the first place. With the presence of greenhouse gases, even more heat is captured in equatorial regions and tends to be transported poleward either in the oceans or the atmosphere. More warm water stays near the surface until it cools as it approaches the poles. The result is a stronger circulation.

The presence of ice (Antarctica, Greenland, permafrost) keeps the polar regions from warming. Until this ice melts, more heat will be transported poleward. Indeed, the heat uptake by ice melt that drives the circulation.

Of course, the heat transport itself progressively melts the ice. When it’s eventually all gone, temperatures will tend to equalise between the poles and the equator, weakening the circulation. We’re not there yet, though.

I should remind readers that the ocean circulation is one of the major ways in which carbon dioxide is removed from the atmosphere.
[5/11/09 Afterthought: Oops, this throwaway comment could be a bit misleading. In fact, the ocean circulation returns CO2 to the atmosphere, so, if the circulation increases in strength, as I’m suggesting it will over the next century or two, the net effect will be for the ocean to take up less CO2 (net, the oceans are currently absorbing CO2 because the ocean and atmosphere are out of equilibrium because of the “extra” anthropogenic CO2 in the atmosphere). This mechanism represents a positive feedback during deglaciation warming phases, and, if my hypothesis is correct, during the current phase of global warming. When the ocean circulation is interrupted, then there is a positive cooling feedback as the ocean releases less CO2 due to the reduced circulation, taking up more net. This could explain the persistence of cooling phases during deglaciations (warming periods after ice ages), such as the 1000 year long Younger Dryas event.].

Therefore, as I said in my first heresy, we’d better get temperatures and CO2 levels back down before the ocean circulation strengthens too much. [5/11/09: Amended this sentence, see previous note in square brackets].

Burning wood is not a good idea

Everyone loves Julian Alwood! (He taught on my MBA programme). He told an amusing anecdote yesterday about how some well-meaning foreigners had tried to introduce a more efficient stove in Malawi. The problem was Malawians bash the meat while its cooking, apparently, and the new stoves didn’t last very long.

But the main point is that the big problem in Africa is burning wood. It releases carbon (and, almost as important, retains moisture). “Reducing deforestation” (George Orwell would have loved the double negative!) was mentioned by Chris Hope, among others, yesterday as the cheapest way to avoid deforestation. What’s really needed in Africa is a robust solar stove design, but more about that another time.

So why then was a picture shown at the Cambridge Energy Forum of a supposedly virtuous Briton carrying some logs to put on his fire?

I’ve harped on about the biofuel topic on this blog previously and will no doubt do so again (see the Biofuel category in the box on the right), but here’s my contrarian position (3): Everyone should avoid the use of all forms of biomass as fuel.

Here’s something you may have missed. A radio programme a day or two ago was discussing a satellite that has just been launched to detect moisture levels from space. The point was made that if forecasters had realised that European soil moisture levels were so low in 2003 they would have been able to forecast that year’s heatwave much more accurately.

Interesting factoid. I don’t know about you, but it suggests to me that one way we could adapt to global warming here in Europe is to increase soil moisture levels. How do we do that? More trees (including decaying ones), less arable farming, that’s how. And how do we achieve that change? We ban agrofuels (the right-on term for biofuels) and discourage biomass burning. Simple isn’t it, when you think things through?

Trying to reduce UK (or other comparable country’s) energy consumption is a waste of time, effort and money

I have to say I was stunned by the facts and figures thrown at me by the Cambridge Energy Forum (and in Michael Kelly’s talk on a similar topic in the Guildhall). I think they’ll put up a report of the meeting and slides on their site, in due course, so I won’t try to cover everything that was said.

Let it suffice for me to report that improving the energy efficiency of the UK’s housing stock turns out to be a Sisyphean task. (And even if we succeeded, energy consumption would tend to rebound as we spent the money saved! I won’t go into all this again – my most recent post on the topic is here). After you’ve insulated the loft and put in the low-energy lightbulbs – and anyone who doesn’t take the simple steps is an idiot – it starts to get really expensive.

And you can’t wait for new low-energy houses to be built to replace the existing housing stock because that would take 20,000 years. Or something.

The UK will not reduce its energy consumption by 50%. It won’t happen. The effort is futile. It’s a dead parrot of a policy.

The reason is economics. Importing solar-generated electricity can be achieved at a fraction of the cost per kWh. Promoting that sort of scheme is what everyone should be putting their effort into. And the Desertec plan was only mentioned once, en passant, in the Guildhall.

And then there are the economic reasons. People want to be richer, not poorer. They don’t want to be turning their thermostats down. And what’s more, people are tending to get richer over time – despite a raft of policies promoted by governments round the world designed by a secret global committee with the objective of halting this process – ultimately because technological (and learning) advances mean productivity tends to steadily increase (especially when regular economic recessions purge the least efficient).

The fact that more people are getting richer all the time suggests that policies based on changing people’s behaviour through taxation have had their day. We need to think again about behavioural taxes on everything from alcohol to carbon.

The main advantage (probably the only one, at least in this contrarian’s view) of a carbon tax (championed by the even more lovable Chris Hope last night), or any other way of pricing carbon, is that it makes dirty energy more expensive than clean energy, encouraging companies to invest in renewable energy production. This presupposes, though, that the main reason companies aren’t investing in renewable energy projects is price. And when I read in New Scientist magazine on the train home that “over 5 gigawatts of [UK] wind power are currently stalled by aviators’ objections” to possible radar interference alone, I really wonder whether price rather than the planning system really is the problem.

Nevertheless, internalising the carbon cost must be part of the solution. The problem with introducing a UK tax on carbon is that it will use up an enormous amount of political capital. To be effective there would have to be a huge shift to carbon taxes. And I can see the headlines already. “Driving is just for the rich in Cameron’s Britain”! Not going to happen, is it?

People certainly don’t like being morally preached at (as Chris Hope pointed out), but they like being taxed, and changes to how they’re taxed, even less.

The problem with a tax on carbon in general is that it sets no limit on emissions – so, since a tax simply redistributes spending power, could turn out to be ineffective.

A lot of intellectual effort seems to be going into working out what is the “right” price for carbon. The Kyoto idea of carbon trading may have had a lot of problems, but the principle of letting the market determine the carbon price (by squeezing supply) was the right one.

So what’s my contrarian position? OK (4): Right now energy policy should focus entirely on removing all obstacles to the development and roll-out of renewable forms of energy. Let’s see how far that gets us.

Guilt is not an appropriate emotion for dealing with this problem

Chris Hope was the only one last night who explicitly mentioned that the West caused the problem and should pay to fix it.

Well, I’m sure that “from each according to their abilities”, despite its connotations, might be a principle that could reasonably be applied in the context of international climate change negotiations. But what appears to be happening in the Copenhagen negotiations (I was hoping to find out more last night) is that the aid agenda has taken over the global warming agenda.

For starters, I don’t see a lot of evidence of binding emission targets being linked to these large transfers of money. But for the main course, we’ve brought some more presuppositions with us. There are serious doubts that aid is what’s needed to promote development. Yeap, for decades we’ve been following a seriously flawed policy. For example, Paul Kagame, President of Rwanda, wrote in yesterday’s Guardian, that “Africa must attract broad investment, not rely on handouts, if we are to sustain development”.

What’s needed is trade, not just aid.

Aah, you say, the Copenhagen largesse is investment. Well, maybe some of it will be spent wisely. But there is plenty of money in the world – too much in fact (that’s what caused the credit crisis) – looking for investment opportunities. Why do we need billions more?

A cynic, and I am one, so I’ll carry on, might even conclude that the $100bn or whatever comes out of the wash in Copenhagen, is in fact a further Keynesian stimulus for sluggish western economies. Think about it. Many of those pounds, dollars and euros are going to be spent on – to hazard a guess, as the details are not very clear – engineering projects that will be carried out by western companies. And I would have thought Gordon Brown (who’s driving this handout) is savvy enough to know this. Watch shares in Aggreko and Balfour Beatty when this deal is done!

And what happens when the money runs out? When we eventually decide we don’t need to pay developing countries for a climate deal, or decide that they’re not keeping their side of the bargain (whatever that is)? The money will be like aid, creating dependency.

On the other hand, and let’s call this my final contrarian position (5): paying for ecosystem services – and here’s some good news that could come out of Copenhagen – and/or energy, such as desert solar, will (if executed properly) provide countries with sustainable income streams which will support their further development.

October 31, 2009

“Carbonomics” Critique, Part 1

I began reading “Carbonomics” by Steven Stoft late yesterday. I’m only just starting Chapter 3 (of 31) but I can already reach a conclusion.

My very first impression was that “Carbonomics” brings some logical thinking to the debate. I see no reason to change my view: there is no doubt a lot of good material in the book.

But within minutes I could see that Stoft’s overall prescription, sadly, is in dreamland.

I’m posting my initial thoughts immediately whilst I am still in a state of shock.

The history of thought is littered with discarded, but complex and sophisticated, bodies of knowledge, from scientific theories – the Ptolemaic universe perhaps, to political programmes – communism, for example; indeed more than bodies of knowledge, entire institutions, even civilisations, all built on foundations that later proved to be constructed of no more than intellectual straw.

Some of the foundations of “Carbonomics” consist of no more than straw.

I am indeed stunned. I started reading and first came across some encouraging comments in the Preface (a chapter which should never be skipped). The author notes the inefficiency of current policies to improve energy security and global warming and promises to “fix energy policy”. He will be guided by the story of physics, and produce Mr Tompkins in Wonderland for economics. “The hardest part of learning new ideas is giving up misconceptions”, he writes.

I must admit that by this point I was already starting to feel a little uneasy. I don’t, for example, believe that “physicists have a tradition of explaining advanced ideas to the public just because they find the concepts fascinating.” No, they do it to try to prove how clever they are (except for a small number who simply have Asperger’s syndrome). And, given that their belief system doesn’t hang together (relativity and quantum physics are as yet unreconciled) they hope that the more positive feedback – or pats on the back – they can extract from their audience, the truer what they have told them will become. Stoft notes that Einstein “found the uncertainty of quantum mechanics… so disconcerting that he never accepted it”. Quite right. Einstein was a holistic thinker. That was his genius. All the facts had to be taken into account, however alien a theory eventually resulted. He understood that all may not be as it seems, but he could not accept contradictions into his world view, even if others could live with them. So in asserting that “God does not play dice”, Einstein was not being a stick in the mud, but demonstrating he was on the side of the good guys. Even if he didn’t have the whole answer, at least he knew there was a question.

I labour the point because it soon became apparent that Stoft’s thinking is not sufficiently rigorous. He is not prepared to accept inconvenient truths.

It’s a shame, because Stoft starts so well with an excellent account of the effects of the 1970s oil price spike. When the Great Depression is so often mentioned as the worst of economic times, I often feel that the discourse is US-centric – cultural domination perhaps. For the 1970s was as decisive for modern Britain as the 1930s was across the Pond. Inflation and unemployment, a pervasive sense of decline tinged with incipient anarchy. The Punk Era, swept away by the Thatcher Revolution.

Never mind, my point is that Stoft’s prescription will fail. Reading his first chapter I assumed Stoft would urge measures to keep the oil price high. But it suddenly dawned on me that his prescription is the precise opposite!

There’s a why Stoft is wrong, which owes something, I feel, to a US-centric world view.

And then there’s the how Stoft is wrong. I’m afraid to say he has not followed his own prescription in the last line of his Preface, to “pay close attention to the way governments and markets really work”.

Stoft, it seems, still bears grudges against OPEC. On page 4 he explains how he wants to avoid “paying OPEC another trillion dollars in tribute”. He writes of how, by 1986 “OPEC had been crippled”. On p.5 he notes how he will explain “how to crush OPEC again”. On page 6 he reminds us that “conservation… crushed OPEC in the early 1980s”. There’s a bit of a lull while he advocates a “consumers’ cartel” to counter OPEC and worries about how to deal with “free rides”…

Powerful stuff. Where have I heard this sort of thing before? Oh, yes, I remember now – it’s eerily reminiscent of Russia railing against NATO. Yes, that’s right, Russia’s demon is a mutual-defence pact. To many in Russia (unfortunately many of those in positions of power), the idea of Ukraine or Georgia joining NATO – to ensure, as sovereign nations, their own defence – is little short of an invasion of the Motherland itself. I wonder, I just wonder, if OPEC members feel the same way. Let’s just step into Wonderland for a moment. Maybe they feel they have a right to the riches under the desert (or wherever). I know, I know, I’m of the view that oil wealth is a fortunate (or often not so fortunate) windfall. But the actual state of affairs is what we have to deal with – and de facto those countries endowed with generous fossil-fuel reserves are determined to maximise the value of those reserves.

In solving the problem of global warming (and energy security) we have to deal with the world as it is, not how we would like it to be.

Maybe I can lay down something of a more specific principle here. Short of war, there will only be progress in international negotiations if win-win situations are created. Sorry about the cliche. Maybe I can get rid of it. Because, actually, we’re in a multilateral situation and we need win-win-win… in fact a win superscript n, win raised to the power of the number of interest groups.

Stoft is writing from the US. Let’s put to one side that he hasn’t even convinced his own country’s body politic to take the problem seriously yet, let alone of his particular approach. Let’s pretend he manages to do that. Even if that were to happen, I’ve got news for him. The world out there is not full of buddies who will be happy to participate in a “consumers’ cartel”. In fact, it may be unfair only to Canada & Australia to say that the US has only one reliable sidekick with any clout at all on the world stage. Yeap. Be nice to the UK. OK, I’m being facetious – there is some alignment of national interests, at least with the EU and Japan. But the problem is that several populous developing countries show no clear sign of wanting to play ball.

I feel I’ve written moreorless enough for a first reaction, so it’s fortunate that how Stoft is wrong has already been touched on in previous episodes of Uncharted Territory.

The general problem is the Displacement Fallacy, though I appreciate that Stoft intends to avoid this through international agreements, starting with China. Good luck, mate, but I don’t think you’ll manage it.

Reflections on Oil supplemented by Reflections on Reflections on Oil considers how the oil market will react to attempts to choke off demand. The important point is that the oil producers themselves will act as buyers of last resort.

Before I sign off I should mention that Stoft’s discussion of a tax on fossil-fuel and an “untax” (general distribution of the tax revenues) will not work as he seems to expect for imported products. Stoft is clearly unaware of the Man in the Wardrobe fallacy. Oil at $80 + $20 tax (Stoft’s example in ch.2, on p.21) will not have the same outcome as oil at $100. In the first case, the importing country still has $20 to spend, perhaps on more oil imports or perhaps on other goods, the sellers of which can themselves then afford to import more oil.

I haven’t read enough yet to determine whether Stoft is aware of the rebound effect or Jevons’ Paradox, whereby using a resource more efficiently can actually increase consumption in the long term. The signs aren’t good, though.

Although I’m disappointed with Stoft’s overall vision, I will read on, because large parts of Stoft’s analysis are sound. The first part of chapter 2 shows, for example, how cheap it would be to move away from reliance on fossil fuels.

Watch this space.

—–
As an unreferenced endnote, I admit hypersensitivity to inaccuracies or ambiguities and two have been particularly irritating:
– in Ch.2, footnote 1, p.19 Stoft writes of a policy “that would ‘cap the long-term concentration of greenhouse gases [GHGs]… at 450 [ppm]’. We are now just over 380 ppm.” CO2 alone is at “just over 380 ppm”. I can only guess whether the policy proposal referred to is to keep all GHGs at a CO2 equivalent level of 450ppm or to keep CO2 below 450ppm – which, it’s now becoming clear, would be too high.
– at the start of Ch.3, on p.21 Stoft remarks that: “Back in the 1800s… Jevons predicted peak coal in England”. Maybe it’s a cultural thing, but to me “the 1800s” refers to the decade 1800-9, inclusive. Stoft means “the 19th century”, here. Jevons in fact wrote “The Coal Question” in 1865 (Wikipedia). And, btw, he was probably talking about Britain, not “England” (Wikipedia thinks so). No offence taken.

October 20, 2009

Copenhagen and a Cornucopia of Conundrums

Filed under: Concepts, Economics, Global warming, International climate deals — Tim Joslin @ 5:40 pm

I was over at Zero Carbon earlier and happened to mention the Man in the Wardrobe fallacy. It is one of several problems that arise when you try to put a price on carbon. The purpose of this post is to identify and distinguish 4 of these policy-killers: the Dutch Disease (formerly known as the Curse of Oil); the problem of Displacement; Jevon’s Paradox or the Rebound Effect and the Man in the Wardrobe fallacy, first proposed by myself one evening this summer at CB1 cafe, Mill Road, Cambridge.

Today’s FT suggests that the EU is indeed very keen on the idea of the “developed” countries giving $100bn/year to the so-called “developing” countries in return it seems for some kind of ineffectual agreement to reduce emissions. As I’ve mentioned already, Lord Stern is a keen proponent of such bribery.

Clearly the dozy delegates are unclear about the subtle difference between “cash” and “capital”. Turning the former into the latter is a process fraught with difficulties. The problem is that injecting cash into an economy for something other than a sustainable industry creates the first of our problems: what I learn today in the FT is termed the Dutch Disease. The main symptom is an overvalued currency – normally as a result of revenues from resource exports – choking off the development of productive, value-add industries. The syndrome is quite common, apparently, with a recent outbreak in the UAE and a programme of antibiotics instituted just this morning in Brazil. I say antibiotics rather than a vaccine, because the disease is expected to develop resistance.

The EU’s annual $100bn largesse (more than $100 p.a. each from every man, woman, pensioner or not and child in the developed world) may well slow the rise in carbon emissions from some of the world’s poorest economies, not by nudging them onto a low-carbon growth path, but by simply undermining their economies. (I assume the money is destined for the poorest countries, but who knows? Maybe the EU intends to send some to countries such as China which as I’ve been discussing lately already has too much foreign currency).

I’d feel differently, of course, if I felt the $100bn was going to help develop sustainable industries e.g. in ecosystem services. The FT provides a quote I can only describe as “interesting”:

“Yvo de Boer, the UN’s top climate change official… encouraged rich countries to do more. ‘This has nothing to do with signing blank cheques. It’s about building trust and showing that you are serious [about climate change].’ “

Building trust, eh? Wouldn’t building livelihoods be more appropriate?

So much for Copenhagen. What of other options?

Well, let’s suppose we don’t achieve a water-tight global agreement to restrict carbon emissions. Unthinkable, I know, but just bear with me for a minute. All that will happen is that carbon-intensive activities will relocate to countries where controls are lax – Displacement. Oil tankers will be diverted mid-ocean and some multi-1000km gas pipeline projects brought to fruition whilst others are canned.

In a slightly different context I note that the UN now accepts that biofuel production leads to land use changes (and therefore carbon emissions) elsewhere by displacement of other land use activities.

OK, let’s now imagine that we somehow succeed in raising the price of carbon by creating an effective emissions trading scheme with a ceiling on the carbon price or even imposing a tax on carbon emissions. Will this succeed in reducing emissions, compared to not having the emissions trading scheme or tax?

I’m afraid to say I’m not so sure. The problem is that increasing the price of carbon (or fossil fuel) without effectively capping the supply (the crucial point) will simply favour activities that use carbon to create a lot of value over those that use it to create less. Because these efficient activities (e.g. cars with smaller engines) are such good value, their use will increase. And the increase could even lead over time to an increase in overall carbon emissions. We’ll use fossil-fuel more efficiently, but, by the Rebound Effect could end up using more overall.

Furthermore, if we create more efficient internal combustion engine cars, say by mandating them, as is the usually preferred policy option, because taxes are unpopular, the hurdle before electric cars become a superior value proposition becomes even greater! Efficiency improvements can become an own goal.

Now, the Rebound Effect is subtly different from the Man in the Wardrobe fallacy. Let’s imagine the UK decides unilaterally to impose a swingeing tax on carbon. Such a tax would be purely internal to the UK economy, like the old Beano joke of the removal man helping his mates by climbing into the wardrobe and carrying the clothes. Such a tax would in itself make no difference at all to the UK’s ability to afford to import fossil fuels.

The Man in the Wardrobe fallacy could manifest itself in two main ways:
– the tax would reduce consumption by heavy carbon users e.g. owners of big-engined cars, and levy high taxes on such people. But below average carbon users would be better off. They could afford to drive more. This case could – I’m tempted to say “would” – lead to increased fossil-fuel consumption. How? The UK economy as a whole would become more efficient – we’d be able to produce a unit of exports for less per unit of imports, and exports would increase or the £ rise against other currencies – and we’d be able to import more fossil-fuel.
– the UK might consume less fossil-fuel as a result of the tax. This would leave us with some spare dosh. We could import something else instead, I don’t know, fine Australian wine, say. But the production (and transport) of that wine will have involved various forms of fossil-fuel emissions – potentially even more than the fossil-fuel we would otherwise have imported. Or, to look at the problem another way, the foreign currency we provide to the Aussie wine-grower may simply be spent on fossil-fuel imports to Australia.

Problems, problems. What a tangled web we weave, when first we start trying to manipulate the market! And I haven’t even mentioned remuneration accommodation (I just coined that term) whereby salaries and (bonuses etc) adjust over time as prices rise. For example, a punitive tax on flying would lead over time, to a realignment of enough people’s wages with the cost of flying, so that people could once again afford to consume all the flights the available resources are capable of providing.

I’m going to move to a conclusion, and it’s this: no amount of demand-side financial jiggery-pokery will succeed in keeping fossil-fuels in the ground. The only viable policy options to reduce carbon emissions are those which involve a global reduction in carbon supply. Prices will just have to do whatever they’ve gotta do in response. Let the horse lead the cart.

—-
PS It gets worse. This just popped up on the “wire” (Yahoo! Finance). I quote:

“Britain’s Chancellor Alistair Darling delayed his flight to try and salvage a compromise agreement, which would have seen the nine rebel countries accept commission figures that would commit the EU to some 100 billion euros each year from 2012 to help meet developing world needs.”

That’s not $100bn p.a. for the entire “developed” world, that’s euros from Europeans. That’s around 300 euros each! Have you all gone nuts? Isn’t the electorate going to ask some pretty searching questions about what it’s going to get for its money?

Look, Brown, Darling, you’re not going to save the world in 50 days. I doubt you’re even going to save your own careers. Take a step back. Relax. Breathe.

PPS I’ve just checked the “wire” again and AP reports some more realistic figures:

“Poland, Romania and Hungary led a group of eastern European countries opposing a burden-sharing plan intended to come up with at least euro15 billion a year in new aid to help the world’s poorest countries cope with climate change.

The European Parliament’s environment committee urged EU nations to offer at least euro30 billion ($45 billion), double the euro15 billion Barroso proposed last month.”

I can’t keep up with all this superhero action! Still, 30 billion euros is around 75 each.

October 19, 2009

Paper Dragons: The Nature of Currencies, with Particular Reference to China’s $2trn Problem

My previous post, 50 Days to Save the World! made a simple point. If we’re planning an economic solution to the climate change problem, it’s critical that, first, we fully understand the phenomenon we’re trying to modify – the global economy, in this case.

We also need to have at least an outline understanding of the shape of the global economy of the future. My thinking has been stimulated by today’s column in the Guardian by Larry Elliott, Eastern promise holds little hope for west. But Larry doesn’t consider what will happen to China’s currency peg to the dollar. We need to listen to Bernanke, among others.

What is a currency? I expect if we surf a bit we’d find a definition that lists the characteristics of a currency. A currency, I’m sure we’d find, must be fungible (exchangeable) and act as a store of value. But these attributes are only a matter of degree. All currencies are only exchangeable under specific circumstances, some more specific than others. And some store value better than others. In fact, these attributes are shared by many physical and promissory items that are not generally regarded as currencies: gold, oil, works of art, debts (certificated or not), company shares and so on all share many of the properties of currencies.

Now, my point is that we all agree that the value of gold, oil, works of art, debts and company shares all depend on supply and demand. Currencies, such as the dollar and the yuan are no different. To attempt to peg their value is akin to defying a law of nature. Just as the tide reached Canute, so currencies will resist an attempt to confine them. Eventually the dragon will breathe flame.

China has amassed a surplus in excess of $2trn and they’re not the only culprit. The future depends to a large extent on what happens to that surplus.

Let’s first consider the problem in terms of supply and demand for dollars. China’s $2trn will lose value to the extent that the supply of dollars increases and/or there is a decline in supply of what those dollars could buy.

On the supply side, QE, for example, will tend to inflate the dollar. But so, too, will releveraging as the global economy starts to grow and any increase in trade imbalances and attempted hoarding of dollars by surplus countries.

On the demand side, though, the dollars will become worth less or more, the less or more there is to buy with them. If, for example, oil becomes priced in euros, then the store of dollars will be worth less.

Let’s make some observations:

1. The value of China’s supply of dollars depends on the dollar-yuan exchange rate only to the extent that holders of dollars wish to purchase Chinese goods (requiring a foreign exchange transaction). Externally to the Chinese economy, the dollars will still be worth $2trn, should China revalue the yuan.

2. Foreign currency reserves are being held in dollars because there are things that can be bought with dollars. Holding reserves in gold or Swiss francs, say, would introduce a currency risk. More than that, in fact, the supply of gold or Swiss francs would exceed what can be bought with them. And, to repeat a critical point, if oil should become denominated in currencies other than the dollar, then China’s dollar reserves would immediately become worth less.

3. China relies on US demand for dollars, not just for Chinese goods. If the US reduces demand for dollars by fiscal tightening (i.e. by reducing the supply of government bonds) and by controls on lending (reducing money-market rates), then China’s dollars will be worth less.

4. If China’s dollars become worth less then the value of something – probably many things – they could buy will inflate.

Now let’s try to identify some scenarios depending on US and Chinese behaviour and then consider what other players might do.

0. Asset bubbles in US: China keeps peg, US borrows

I’ve added this case later for completeness. We might, I suppose, simply repeat the Credit Crunch. It’s possible, but unlikely, that we will simply go round the same loop again. But US consumers are no longer credit-worthy and the US is obliged to try to improve its fiscal position.

1. Asset bubble: China keeps peg, US is prudent

In the most likely outcome, China tries to be cautious, maintains its export-led growth and amasses ever larger dollar reserves, whilst the US also repairs its public and private finances. It will be impossible, though, for the US to repair its trade deficit, at least with China (and other dollar peg currencies). The surplus dollars create asset and commodity price bubbles before the inevitable crash.

Even worse, there is another aspect to the problem: dollars will be exchanged for other currencies where growth prospects provide better returns. Increasingly investors will bet (like Soros on the pound) on a gain when the dollar peg finally snaps.

There must, surely, come a point when China cannot further relax currency exchange controls without immediately being forced to reflate. Surely, as soon as China starts to allow trade in yuan, no-one will want to trade at the official dollar rate. People will assume that in the future they’ll be able to buy more with yuan (i.e. demand for yuan will increase) and seek to accumulate them. The yuan will inevitably rise against the dollar much as the dollar rose against the pound post-WWII. Eventually China’s trade position will reverse. Plus ca change…

2. Inflation saves us: China keeps peg but experiences inflation

I spent an hour or two last week reading about the Bretton Woods system. My scepticism as to the worth of currency pegs was reinforced. All currency pegs do (unless they prove to be a step towards successful currency unification, of course) is slow down currency movements and force them to happen with unnecessary drama and disruption, rather than by (at least sometimes) smooth market movements.

The problem is that the currency of the trade surplus country has to inflate to restore the balance. But there is no mechanism for this to happen in an orderly fashion. Rather, the trade surplus country benefits from improving economies of scale – and it’s no accident that manufacturing leads to increasing trade surpluses, for it is in manufacturing that productivity improvements are easiest to achieve – and the only way inflation can occur is through asset-price bubbles. The Great Depression is an example of what can happen.

The risk for China, of course, is that it finds itself in the eye of the storm of a second Great Depression (or at best a Lost Decade, like Japan) when asset bubbles burst. China would no doubt wish to avoid this by evening out across the economy any inflation that took place, but this is difficult. Allowing workers’ wages to rise would actually lead to productivity increases and an even greater surplus! If commodity prices are the focus then, again, industry will use these more wisely…

3. China keeps peg, but has to spend dollars on commodities

If the price of oil (and commodities such as iron, uranium and so on) goes stratospheric and China cannot wean itself off, then more of the dollar surplus will transfer to the resource exporting countries.

This scenario could lead to something resembling stability, at least for a time. The global economy would become characterised by a kind of triangular trade. China exports to US, which exports technology and knowledge products to resource countries, which export commodities to China.

The problem, of course, is that China will tend to find substitute products for scarce commodities and, because of the currency peg, restore its surplus.

Ultimately, too, the resource exporting countries will rely on US demand for dollars.

There is great danger, too, that this scenario would lead to 1970s style global inflation.

4. China relaxes peg

The only rational course for China is to relax its currency peg to restore a rough trade balance with the US. Why risk asset bubbles (1) or try to manage internal inflation (2) or global, commodity-led inflation (3)?

What about the UK?

Well, our policy aims should be:

1. Reduce our trade deficit so that we are less prone to asset bubbles arising from lending of foreign sterling reserves to consumers in the UK.

2. Reduce our fiscal deficit to ensure we can withstand future economic crises and to reduce demand for sterling. Forcing banks to purchase government debt reinforces this policy.

3. Further reduce demand for sterling by controls on lending.

The result will be that sterling used to purchase imports to the UK (or invested overseas) must be spent on exports. Other places it can go will be minimal.

Sterling, which, fortunately, is a truly floating currency will decline until its value ensures approximate trade balance.

One thing the global economy certainly does not need right now, though, is a transfer of a further $100bn a year from trade deficit to trade surplus countries.

50 Days to Save the World!

Filed under: Concepts, Economics, Global warming, International climate deals — Tim Joslin @ 12:59 pm

It sounds like Gordon Brown now inhabits a comic-strip world. His retreat from reality began when he metamorphosed from Stalin to Mr Bean. He’s now a comic-strip character, Flash, aah-aah saving the universe (OK, world) on a regular basis.

Some guy on Radio 4 this morning was arguing that the Copenhagen climate talks are irrelevant because nations will not agree to something that is not in their narrow national interests. He’s probably right.

But there is a much more fundamental problem with the way the discussion is going.

In yesterday’s Observer, Nicholas Stern wrote how “The world’s future is being decided this weekend” (wot, no 50 days? – clearly we need an entire team of superheros!). But the way Supernick – he can bash out a 500 page report faster than a civil servant on speed! – frames the problem makes it insoluble. In Stern’s words:

“Rich countries must give their backing to these plans by providing developing countries with $100bn a year by the early 2020s, for measures to reduce emissions (much of which could be delivered by the operation of carbon markets), and a further $100bn to help them adapt to the effects of climate change that cannot now be avoided. Developing countries are likely to doubt the credibility of such commitments unless the rich countries also set an intermediate target of $50bn per year by 2015.”

Let’s analyse the first couple of words. What does “rich” mean? Well, usually it refers to those who have a lot of money. Who are we talking about, then, when we refer to “rich countries”? China? Apparently China has a couple of $trillions stashed away. No, we’re not referring to China. China, it seems is one of the “developing countries” pressing for a “credible agreement”.

What Stern seems to be arguing is that the price of a global agreement to limit carbon emissions is a tax on the current citizens of countries with “historic responsibility” for carbon emissions. The idea is that this tax is distributed to “developing countries”.

Let’s not get into a discussion of the morality of the tax, though in my opinion the blame game is an obstacle in the way of solving the problem. Here I’m just concerned about the practicalities.

It seems to me that Stern and the Superheroes need to take a look around the world.

A number of developing countries – China being the prime example – are currently holding their currencies artificially low, with the result that they have a massive trade surplus and huge foreign exchange reserves. Do they really need another $100bn a year?

Further, several of the developed countries who are supposedly to find this money are in fiscal difficulties. That is, in several cases, the state – who would have to be the agent transferring this money – is at the limit of what it can actually raise in taxes from its own citizens, or even “non-doms”.

Stern, it seems, wants to transfer money from those who have a lot of it to those who don’t have enough.

But perhaps there is a way to raise an extra $100bn a year. Developed countries’ currencies could be devalued compared to those of developing countries, such as China, so that they import less and export more, making it easier to find some surplus cash. This would lead to more economic activity in developed countries at the expense of developing countries. Is that what Stern wants?

Or we could simply transfer the $100bn – by printing money (aka QE), for example. Besides simply providing cash for imports, such a transfer would tend to devalue the $ (or other developed countries’ currencies used), tending to encourage greater imports into developing countries and making it more difficult for them to export. Is that what Stern wants?

What Stern presumably does want is to achieve less carbon-intensive economic growth in developing countries – wind turbines rather than coal-mines – not merely less economic growth in developing countries. Transferring $100bn a year will not make this happen. The only policies that will make low carbon growth happen are ones that create greater incentives to employ low-emission technologies than those causing high levels of emissions.

We have to be careful not to confuse cash with actual activity. On the micro scale, I can, if I have the cash, go out and buy some product or service. But when we start to consider the global scale you can’t simply translate cash into material. The amount of both cash and material available determines the rate of exchange between the two.

Providing developing countries with $100bn a year – or whatever number – does nothing for the supply side of developing countries economies. And it is the supply-side that we are trying to change. Cash injections merely create demand for goods and services denominated in dollars (or whatever developed country currency is used). Ultimately this will lead to more economic activity in developed countries and less in developing countries.

Development is a very tricky business. You can’t measure “development” by how much money a country has in the bank. It follows that you can’t promote development simply by transferring some wealth in the form of money.

If we define a country’s level of development as some sort of quantification of its ability to produce goods and services, then we might realise that the problem can’t be simply solved. Developing countries are fearful of limits on their carbon emissions because such limits might limit the rate at which they can acquire the ability to produce goods and services. Cash is simply not a substitute for such ability.

The “Copenhagen” discourse seems to entwine the problems of climate change and development ever more tightly. But in fact the two problems must be disentangled – we’d be a lot better off if we dealt with the two issues as separate problems.

It might seem that all we have to do is pay developing countries not to emit carbon, but the world is not quite that simple.

October 9, 2009

Researching and Reflecting on REDD

Filed under: Forests, Global warming, International climate deals — Tim Joslin @ 3:15 pm

My last post was in response to a spread in the Guardian on REDD – Reducing Emissions from Deforestation and Degradation.  (The last D doesn’t stand for “in Developing countries” as I suggested last time.  I can’t identify the exact source [later: actually it was Friends of the Earth who repeat the mistake all over their output], but I can see why I made the error, as the UN appends this clause when it expands the abbreviation – more about this idiocy later).

Yesterday, though, I found myself delving into two numbers that were quoted by the Guardian:

– the estimate of 160 tonnes of carbon an acre stored at Rukinga ranch in Kenya;

– John Vidal’s note en passant that “(T)here are 32 REDD proposals”.   The link in the previous sentence is to a different version of the same Q&A that appeared in the print version of the Guardian on Tuesday (6th Oct).  The number “32” led me to understand that “Redd could be the cornerstone of a Copenhagen deal, putting forests at the frontline of tackling climate change for the first time”, as Vidal puts it (not in the print version which had the negative organised crime spin I criticised last time).  If this happens it will have profound consequences for a large proportion of the world’s population and have wide-ranging indirect effects on the rest of us.  And so it should, if we’re going to tackle global warming.  But you’d never believe we could be on the threshhold of such change from the level of media coverage (this informative article in the Economist is an exception).

It seems REDD is coming into being both from local action and as a global initiative.  Are the bottom-up or top-down approaches compatible?  Which yields the best model for a global solution?

REDD on the ground: the Rukinga case

First, where does that figure of 160 tonnes of carbon an acre lead us?  Before we can do too much we need to clarify the units – I’m going to have to assume that what is meant is 160 tonnes of carbon dioxide equivalent (CO2eq) per acre, i.e. the carbon in the trees and soil doesn’t weigh 160 tonnes, but if burnt the CO2 would weigh that much.  This makes sense as 160 tonnes of carbon (tC) per acre is way too high and the Rukinga owners would be interested in the tonnes they can trade – the EU’s Emission Trading Scheme (ETS) operates in tonnes of CO2eq.

Now, it turns out that Rukinga ranch is owned by a private American company, Wildlife Works.  In fact a 30% holding is advertised (pdf) as for sale.  (Where the 80,000 acres drops to 75,000 and then 74,490 – hey, why not round up to 100,000? – Rukinga is also described as on the boundary of the 22,000 km2 Tsavo National Park – my suspicions aroused lead me to check Wikipedia which gives Tsavo East as 11,747 km2 and Tsavo West as 7,065 km2, a total of 18,812 km2 – actually 20,812km2, since the Kenya Wildlife Service [who are to blame – you can see the 7,065km2  in broken links returned by Google from their old page about the reserve] now gives 9,065km2 [I’ve just corrected Wikipedia], leaving us 1,188km2 short – though Wikipedia’s maps show adjacent reserves in Kenya and over the border in Tanzania).

All that delving into numbers has made me lose the thread of my argument!  Perhaps I should move on now to the point that the Rukinga case study shows how much bureaucracy is going to be required if we try to implement precise carbon accounting.  If we want to get money quickly to those who deserve it – who, more to the point, we are relying on to preserve “standing carbon” (trees) – then it seems to me that it would be much more intelligent to start with quick and dirty estimates and gradually refine them over time.  Vidal notes that the Rukinga owners have spent $400,000 (rounded up, perhaps, he says cynically) measuring the trees.  Not everyone is going to have access to this amount of up-front capital.  Tsavo National Park, uncertain though its exact size is, is some 65 times the size of Rukinga, even at the figure of 20,812 km2 I arrive at [20,812 km2 is 2,081,200 hectares against Rukinga’s 32,000], so it would presumably cost $26,000,000 to measure its trees.  In the Amazon we’d be talking about millions of km2 (some inaccessible), so at over $1000/km2, we’d need $billions before we even get started!  No, embarking on exact accounting is to put the wrong foot forward.  We’ll do a Stephen Fry and end up in the water!

But what of that figure of 160 tonnes/acre?  Now, I just happen to be familiar with the numbers for this sort of thing.  Let’s first convert into some acceptable units.  I want tonnes of actual carbon per hectare (tC/ha).  As I said, pending clarification by the Guradian, I’m assuming the real estimate is 160 tCO2eq/acre.  There are approx. 2.5 acres (American or otherwise) in a hectare.  So ~400 tCO2/ha.  Converting to tC requires multiplying by 12/44 giving us about 109 tC/ha.

Now just to compound my frustration, the latest IPCC report (the 4th, published in 2007) doesn’t follow the same chapters as the previous report, so where, if anywhere, among the 3,000 odd pages, they’ve put the latest estimates of carbon stores, I simply don’t know.  I would have thought the data should be fairly prominent, so I downloaded and searched numerous pdfs yesterday evening – to no avail.

Anyway, in 2001, the IPCC did publish a number of tables, and this morning I’ve found a hard copy of Table 3.2 from Ch.3 (of the Scientific Basis) on the Carbon Cycle.  Lucky I occasionally file things in a sensible fashion.   Now, Table 3.2 gives 2 sets of estimates for the carbon density of different biomes (ecosystem types). Much may hinge on this, but a look at the pictures on Rukinga’s site suggests we’re talking about “tropical savannah and grassland” rather than “forest”.  And we’re proposing to pay to stop this turning into “desert or semi-desert” (I’m being generous here – “croplands” might be a more realistic comparison).  We can average the numbers for these biomes given by the IPCC:

– “tropical savanna & grassland”, according to the studies cited by the IPCC,  typically holds 29 tC/ha in the plants (to show how clever they are the IPCC scientists use MgC/ha, but a megagramme is just a big word for a tonne), both estimates being the same and (117+90)/2 = 103.5tC/ha in the soils, a total of 132.5 tC/ha.  This is in fact higher than the 160 tonnes [CO2eq] an acre – 109 tC/ha – estimated at Rukinga, though their figure makes some sense as, according to John Vidal, it’s “only a decade” since “cattle were banned”.

– “deserts and semi-deserts” typically hold, says the IPCC, (2+4)/2 = 3 tC/ha in the plants and (42+57)/2 = 49.5 tC/ha in the soils, a total of 52.5 tC/ha.

Subtracting these two figures suggests that, as a very rough estimate, we should expect to be paying the owners of Rukinga ranch for safeguarding about 132.5 – 52.5 = 80 tC/ha.

How much is this going to cost us, per tonne of carbon saved?

Annoyingly, carbon is traded in tCO2eq, so let’s convert back to that unit.  We can estimate that, very roughly, the continued existence of Rukinga will prevent the eventual emission of 80*44/12 = 293.3 – call it 300 tCO2eq/ha. (The original claim of 160 tonnes an acre translates to 400 tCO2eq/ha, so we’re not miles out!).

Now, an annual income of $2m is anticipated.  I’d dearly love to know how this is arrived at, but let’s see how much it is per tonne of “carbon” (CO2eq).  Multiplying Rukinga’s 32,000 hectares by 300 gives a total of 9.6 MtCO2eq saved.  Call it 10 million tonnes, what the hell!  The reckoning therefore is that maintaining a store of 1 tonne of CO2eq that would otherwise be emitted to the atmosphere is worth $0.20 per year.  Bargain!

Or is it?

Let’s compare this to the price of carbon which right now is €13.40 equivalent to $13.40*1.4757 (the rate quoted by the FT at the moment) = $19.77438, call it $20/tCO2eq.

I have to say that the payment of, apparently, 1% (20 cents is 100th of $20) of the price of carbon per year is less than I anticipated.

There are 2 problems, though:

– the current carbon price is way too low.  It needs to rise to $100s/tonne (a typical car emits 125 gCO2/km, or would have to travel 8,000 km to emit 1 tonne!  Who’s going to change their driving habits for $20/8000 = 0.25 cents/km?).  Tying remuneration for preventing deforestation/degradation to the carbon price may therefore not necessarily be a great idea.

Further, Vidal notes:

“Rukinga is on the frontline of global deforestation: every month, dozens of large gangs of commercial charcoal-makers are caught cutting down trees and building crude fire pits to make cooking fuel for the port city of Mombasa 100 miles away.”

True, we have to get away from using wood-based fuel (even though it has become bizarrely virtuous in the UK), but one man’s REDD is another man’s sustainable harvesting of firewood; one man’s looter is another man’s indigenous person.  In other words, the REDD revenue is worth fighting over.  And wouldn’t we have more plant biomass if we had fewer elephants eating it all day?  Maybe we’d better introduce such income streams gradually so that we can deal with the problems.

– we need REDD all over the world for it to be effective.  How much would that cost?  Well, accurate estimates are hard to come by, but the world’s forests hold around as much carbon as the atmosphere – say 750GtC (my estimate of what could be emitted from plants and soils if we lose the lot – the 2001 IPCC report estimated total stored carbon in global ecosystems to be >2000 GtC, i.e. 2 TtC) or 2750, call it 2500 GtCO2eq.  At 20 cents/tCO2eq we’re talking about $500bn/year.  Hmm.  And if we put a realistic price on carbon – say 10 times the current price – then we’re already in credit crunch territory – trillions of dollars a year!

[This figure is so high I feel I should calculate it a different way as a check.  Rukinga’s 32,000 hectares (or 320 km2) is expected to yield $2m p.a.  But we need to protect billions of hectares (10s of millions of km2) from deforestation/degradation worldwide – say 50m km2 as a rough guess.  At $2m for 320 km2 Rukinga’s REDD costs $6,250/km2 to protect each year.  50m km2 will therefore cost $(50m * 6,250) = $312bn/year.  The discrepancy from $500bn is attributable to the fact that other areas of forest – think Indonesia, Congo, Amazon – store rather more carbon per km2 than Rukinga, which is not densely forested].

Now, I do happen to think we’re going to eventually have to pay these sorts of sums to protect natural carbon stores (“forests”), but this sort of money is not available right now.

It makes no sense to spend all the available money on protecting a few small areas of forest.   The problem is known in the trade as “leakage”.  Demand e.g. for timber, will simply move to areas outside REDD schemes.

The Rukinga case suggests at least 4 major issues with the bottom-up approach:

– leakage – a show-stopper;

– the up-front cost of estimating carbon content – and authenticating such estimates;

– too little cash to create enough schemes;

– the need to make an accommodation with land-users.

Surely what we should be doing is designing a global scheme that takes account of these problems from the outset?  Could it be that that is actually happening?

Global REDD: Copenhagen and all that

My first port of call to find out what is actually happening globally was Friends of the Earth. When I last gave my presentation “Save the Forests, Save the World” or whatever I called it that day, a woman in the audience was shaking her head vigorously while I spoke.  Certain cues in her appearance suggested she might be an FoE  stalwart.  Well, I’m a “Supporter” too (not very democratic are they, these NGOs?), and receive regular mailings.  I was curious to discover what I might have said that was so evil…

Soon I found an article, “Into the woods” by Henry Rummins, Earthmatters 74, autumn 2009, Friends of the Earth’s Newsletter (not apparently available online, though a rather more thorough FoE discussion is available here).

Rummins says:

“Government plans to preserve rainforests are a con…  There are much fairer alternatives – like local people deciding how to protect them”.

Dreamland, IMHOP.

First, sustainable forestry – e.g. removing certain trees or “timber that has fallen naturally” (which Rummins mentions) – IS degradation.  Fallen trees store carbon for decades and are one way it ends up in the soil.

Second, indigenous people have to make tough choices to raise money.  Did anyone else see that episode of the BBC’s “Into the Volcano” where they went to the village in Papua New Guinea?  The elders explained that they needed to pay for medical care and education, so felt under pressure to deal with the loggers.

Third, it’s simply not going to happen.  Governments and those who think they own land or rights over it now are not about to simply sign it over to someone else.

Some money is going to have to change hands.

I agree with FoE though, that tying REDD into the current (dysfunctional) carbon market is probably not going to work.

Next I tried the UN.  When in doubt go straight to the top, I say.  It turns out that bureaucracies have already been established.  But what’s the plan?

A few clicks later I found a page referring to something called “The Little REDD Book”.  And this document, dear reader, is where you will find the “32 proposals”.  But don’t download from the UN.  You need “The Little REDD+Book” from the Global Canopy Programme.

What a nightmare!

The chance of reaching agreement on a comprehensive REDD framework at Copenhagen seems small.  There are too many areas of disagreement.  Especially when all the energy is going into spats over reducing fossil-fuel emissions.

For what it’s worth, it seems to me that we need a two-pronged approach at this stage.  My cunning plan is that we need to:

(1) Keep as much fossil fuel in the ground as possible;

(2) Preserve as much as possible of the world’s natural stores of carbon, for which we can use the shorthand term “forests”.

Now, I don’t see much hope at all of a meaningful deal on emissions at Copenhagen, for inter alia the simple reason that I think the US is right.  There’s no point in simply continuing to move industrial emissions from one part of the world (the so-called “developed” countries) to another (China and other developing countries).

If I were the UNFCCC I’d use Copenhagen to try to make an agreement on REDD, and design an agenda to ensure the solution is global and comprehensive – the piecemeal approach which is evolving will cover nowhere near enough land to prevent “leakage”.

In particular, a few minutes thought will expose the fatal flaw of dividing the world into increasingly artificial groups of “developed” and “developing” countries. There’s plenty of forest we need to preserve in Russia, Canada, Europe, Japan and so on, even the US – and opportunities for reforestation in these countries.

After the Fairtrade coffee-break we might be ready to accept that a comprehensive solution to protect all the world’s forests will be impossible if we rely on deals with individual landowners.  We need to create a funding stream into one big kitty and from there pay out to everyone responsible for some forest.

Assuming the UN can silence the cacophony of vested interests for long enough to engage in some intelligent thought, the advantage of focusing on REDD would be twofold:

– it would provide a “quick win”.  We could all reconvene in a few years time with visible evidence of success.  I believe the deforestation juggernaut can be stopped in its tracks and left to rot on a half-built road to nowhere in the jungle.   The graphs of atmospheric CO2 increase would start to level off.

– we’d learn some lessons.  Maybe carbon-trading isn’t the best way to monetise carbon emissions or ecosystem services on a global scale.  Maybe carbon-trading will only be effective (the track record isn’t very good so far) within contained, delimited sectoral markets or geographic areas.

October 6, 2009

Better REDD than Dead

Filed under: Forests, Global warming, International climate deals — Tim Joslin @ 6:30 pm

Typical Guardian.  p.2 of today’s edition directs the reader to its website to read about John Vidal’s “look into plans to pay poor countries to protect their forests”. I resolved to get online as soon as I’d finished my coffee.  But the paper has sold itself short – the same content appears as a double-page spread in the print edition (p.22-23).  And very informative it is too (as far as it goes) – as I might have mentioned before, the issue could hardly be more important.

But what distresses me is the spin: “UN’s forest protection scheme at risk from organised crime, experts warn” in the online version, and “UN forest scheme is invitation to corruption, experts warn” in the print version.  [I’d really love to know how the Guardian determines the subtle differences between its online and print readership, choosing the most appropriate wording for these overlapping communities!].

It seems to me that the headlines mislead.  The real questions should be:

– Are we better off with REDD (Reducing Emissions from Deforestation in Developing countries, i.e. the UN’s scheme) or without it?

– What are the weaknesses of the REDD mechanisms currently proposed?

– Is it possible to design a better REDD scheme?

Now, I’d say we’re in a desperate situation, forest-destruction wise.  As I explained way back, we need to reverse deforestation to have any chance of avoiding dangerous climate change.  18 months later, the world seems slightly less in denial.  So any initiative that creates incentives to preserve what remains of the world’s forests is certainly worth supporting rather than undermining.

Let me emphasise the objective.  Our goal is simply to preserve the world’s forests.  It’s not to be “fair” – as I implied in an entirely different context earlier on, the world is not fair, and if we try to make it fair at the same time as solving global warming, well, then, we’re unlikely ever to solve any problems at all.

Summing up the criticisms of REDD as that it may be “unfair” is perhaps an oversimplification.  There appear to be two principle types of objection:

– the schemes may provide opportunities for fraud;

– money may not go to the right people.

These quite separate issues are conflated in some of the quotes in today’s Guardian.  But fraud clearly mainly includes “claiming credits for forests that do not exist”.  Clearly such fraud undermines REDD schemes, but hardly invalidates them.  If we’re not prepared to deal with frauds of this kind, then we may as well just give up.  Trees rarely walk and when they do, it’s a very slow process.  Satellites, for example, can be used to monitor forests.  It’s not rocket science.  Or rather, yes it is!

Rather more challenging is the problem of land rights.  Another article in today’s Guardian spread describes the problem:

“Landowners [in Papua New Guinea] claimed they had been forced to sign over the rights to their forests by ‘carbon cowboys’. The scandal is embarrassing because Papua New Guinea, which has a history of rampant, illegal logging, is leading world efforts to have Redd schemes backed at the UN climate change talks which culminate in Copenhagen in December.

Elsewhere, Redd projects are widely expected to reward political and commercial elites with billions of dollars of public money, with little or nothing reaching the communities who will be expected to protect the forests. In Indonesia, where 40 million people depend on forests, potential Redd projects are in limbo because much of Indonesia’s forests have never been surveyed, and land ownership is fiercely disputed.”

Now let’s consider the logic of the situation.  It’s clear from the quote that there are  already land rights problems – REDD isn’t causing them.  The problem is that local people – who might help to preserve forests – are being dispossessed by various outside groups in order to exploit their land by destroying the forests.  REDD, it seems, might lead to the same or other outsiders expropriating funds due to local people for not destroying their forests.  We’re better off in two distinct ways:

– the forests are preserved;

– as a result, it might eventually be possible to correct the financial situation.  REDD will need to continue indefinitely.   Governments and courts can in principle resolve conflicting land claims and ensure future REDD income is allocated accordingly.

The article does say “potential REDD projects are in limbo” because of land disputes.  Sorry, why can’t funds be held pending the resolution of such disputes? – giving an all sides in a dispute an incentive to preserve the forest, in case they eventually get awarded the accrued funds.  It’s just a matter of setting up the necessary bureaucracy.  OK, not a trivial task maybe, but not impossible either.

Most important, though, land ownership disputes are a problem however you try to preserve forests.  If governments are unable to protect forests either by ensuring the owners or (the term I prefer) custodians can be paid (or otherwise rewarded) to not allow them to be cut down, and/or by edict, outlawing destruction of the forest (for which the government itself would require an incentive), then it is simply impossible to prevent deforestation.

The problems of land ownership and the treatment of forest peoples certainly make REDD schemes more difficult to implement.  But REDD doesn’t cause these problems. They have to be dealt with separately.

We should press ahead with REDD.

—–

That was the good news.  Now for the bad news.

There are massive problems, with REDD schemes as currently proposed.  The schemes are too cumbersome and piecemeal, and the principal of “avoided emissions” is logically flawed.

Consider one scheme described in the Guardian:

“British conservationist Rob Dodwell and California-based dotcom millionaire Mike Korchinsky, the ranch’s two main shareholders, say they have spent $400,000 (£251,000) over six months measuring Rukinga’s trees and getting their Redd application validated. Despite the deep concerns of many observers about how open to fraud Redd projects are, the pair are determined to show it can be done properly.

The carbon stored has been provisionally estimated at around 160 tonnes an acre, which at the present world price of carbon could earn Rukinga nearly $2m a year — a big return for land bought only 10 years ago for around $10 an acre.”

I can’t help mentioning that 160 tonnes an acre is a lot – perhaps it should be per hectare [especially as Rukinga is earlier in the article described as “32,000 hectares” – remember this is a daily newspaper and, as I’ve noted elsewhere, institutional innumeracy is endemic in the sector].  Anyway, my point is: who said this has to be an exact science?  No one.  More to the point, it doesn’t.  No need to thrash ourselves with this particular rod.  This problem is tied in with the piecemeal approach.  If we pay for preserving every bit of forest on the planet (and the second D in REDD is a shame – forest doesn’t know whether it’s in a “developing” country or not), then we can just use rough estimates of the carbon per hectare.  In any case, carbon storage is not the only ecosystem service we might want to reward, so it’s a bit daft to get anal about it.

But why would we want to “pay for preserving every bit of forest on the planet”?  Surely we just need to preserve the bits someone is about to chop down?  When I put it like that, it sounds a bit stupid, doesn’t it?  Yeap, it’s our old friend, or perhaps I should say enemy, displacing the problem.  If we pay the owners of Rukinga to preserve their trees, then, yes, we have helped ensure the future of a wildlife sanctuary, but we haven’t reversed total net global deforestation.  And, unfortunately, that’s what we need to do.

I’ll endeavour to describe a better scheme another time (I have a presentation on the subject which I’m slowly writing up).  Here’s a clue, though: if we do way with the rod we’ve made for our back of demanding accurate estimates of carbon stored in forests, then it follows that we can do away with another rod we’ve created.  It makes no sense to include REDD carbon in fossil-fuel carbon emissions trading schemes.

KISS – Keep It Simple, Stupid, as Jack Lang (the Cambridge entrepreneur not the French politician or the Australian politician!) is fond of saying.

July 29, 2009

Confident in Copenhagen?

Filed under: Energy policy, Global warming, International climate deals — Tim Joslin @ 8:04 am

I’ve been thinking that, rather than just add them to my thousands of Firefox bookmarks, I should start to flag up interesting articles which catch my eye.

I can’t help but agree with Gideon Rachman’s pessimistic comments in the FT. He notes:

“The Indians and the Chinese have so far refused to accept binding targets on CO2 emissions. Even if they change their position during the Copenhagen negotiations – and that is far from certain – that will come at a price. The proposed deal is that rich countries essentially bribe poorer countries to cut emissions and adopt cleaner technologies. China has proposed that developed nations should all agree to contribute 1 per cent of gross domestic product to help poorer nations fight global warming.

Now imagine that you are Mr Obama trying to sell a deal like that back home. The US is running a budget deficit of 12 per cent of GDP. The Chinese are sitting on the world’s largest foreign reserves. The president would have to ask the American people to write a large cheque to China to combat global warming – while simultaneously praying that the Chinese graciously consent to keep buying American debt to fund the deficit. It does not sound like a political winner.”

Quite.

Rachman’s comments are echoed by the latest FT report today – subtitled Countries at odds over climate change – of the facts on the ground in the ongoing G2 dialogue.

There’s general agreement that the US’s own legislation to reduce its own emissions lacks real bite. A report from the National Academies of Science also suggests a lack of real ambition. CNET’s commentary notes:

“In assessing the transportation sector, the study’s authors concluded that petroleum will continue to fuel the country’s cars and trucks in the next three decades, although maintaining domestic petroleum production will be challenging. Once again, the best near-term option to cutting oil consumption is better vehicle efficiency.

Making liquid fuels from biomass, such as wood chips, and from coal with carbon capture and storage could replace about 15 percent of today’s fuel consumption. But both approaches still have significant technical barriers. Also, there are potential environmental problems from using large amounts of land for biofuels and coal-to-liquid fuels would increase emissions without carbon capture and storage, according to the study.”

Sounds to me like they’ve reached a “conclusion” which doesn’t in fact follow from their own analysis. That’s the scientific establishment for you!

What’s needed is not technologies like CCS and biofuels to shore up today’s fossil-fuel-based energy-supply technology, but a paradigmatic change – a technological revolution, disruptive innovation – to most probably an almost entirely electricity-based energy system. Transport, buildings, industry all powered by electricity generated by renewable and nuclear technologies. Replacing what’s current with current perhaps. Yes, it’s a big job. But then so was building all the fossil-fuel infrastructure. That is virtually all less than 40 years old, so surely we can replace it by 2050. Just get on with it!

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