ECONOMIC AFFAIRS: by Colin TeeseNews Weekly
Nuclear power, ethanol can cut CO2 emissions
, June 9, 2007
How could Australia slash its carbon emissions with minimum adverse effect? Colin Teese looks at the options.The debate about climate change and its causes isn't so much raging as plodding along. Meanwhile, a certain scepticism remains in the minds of some, including, that of the Prime Minister John Howard, notwithstanding his apparent conversion. Not that the views of prime ministers - or, for that matter, opposition leaders - matter much any more.
Circumstances and responsible opinion seem to have taken over the issue, not merely here in Australia, but also abroad. In Australia, the prestigious CSIRO has linked arms of conviction with perhaps the best-informed body in the United States, the space research organisation, NASA.
What remains is to decide what, if anything, might be done about it - "if anything" being the operative words.
Material prosperity goes hand in hand with economic and industrial development; and we know that the most developed and prosperous industrialised society, the United States, is the largest generator of carbon emissions, both per capita and in total.
We also know that, following in its wake, are the industrialising economies of China and India. And we know, further, that these two nations, each with populations many times larger than that of the US, aspire to reach the same standards of living.
We also know that they do not believe they should be held back in order to help fix a problem they consider, rightly or wrongly, to be of others' making.
So is the problem of dealing with carbon emissions insoluble? Maybe. Most of the international community obviously believes otherwise. Its collective response has been to conclude an international treaty, the Kyoto Protocol, based on the underlying idea of buying and selling the rights to generate and eliminate carbon emissions.
The US and Australia are the only significant non-signatories to that agreement. Despite this, many US state governments are going it alone in their efforts to deal with carbon emissions. And their actions have crossed party-political lines. California's Republican Governor is among the most active in intervening to cut back carbon emissions in his state.
Strongly-based political opposition by supporters of the Republican Party in Washington DC may be a major factor behind the opposition of President George W. Bush to any form of international cooperation - market-based or otherwise - for containing carbon emissions. It is also true that in any concerted international action, the US has most to lose.
The position in Australia is less clear. Until recently, the Prime Minister appeared to be opposed to international cooperation because he did not believe there to be a problem. Whatever his beliefs, he continues to hold out against Kyoto.
Meanwhile, others - including some on Mr Howard's side of politics - continue their efforts to find ways around the problem.
While the value of an international approach remains questionable, such a search is probably worthwhile. Nevertheless, it remains likely that the problems associated with carbon emissions in the United States, China, Europe and the rest of the world, require their own separate approaches.
International cooperation could help in defining the problem, but countries may have to tailor make their own solutions. Perhaps, given what is happening within its individual states, the US is already coming to this realisation.
What then might be appropriate for Australia? This writer has discussed possibilities with an Australian businessman friend whose mind is finely tuned to this and other policy considerations from a distinctly Australian perspective. He is specifically concerned what Australia might develop and how it might implement its own policies to contain and ultimately drastically cut back on its carbon emissions.
They are based on a careful analysis, both scientific and political, of the nature of the problem in Australia.
But first, consider the facts. Per capita, Australia is high on the list of carbon emissions. This is hardly surprising. Ours is a well-developed and prosperous economy - and our habits relating to power generation are based upon the limitless availability of cheaply-produced, though polluting, coal. We are also a huge coal-exporter. Thus we contribute, directly and indirectly, to carbon emissions worldwide.
Whether the importers of our coal - either directly or indirectly - will continue to accept the pollutant effects of all this is a matter for our trading partners and our coal industry to resolve.
But the problems at home are within our capacity to solve, independently of the world. As a matter of fact, our domestically-generated carbon emissions contribute in an insignificant degree to a worldwide problem. Accordingly, if we were to cut our emissions to zero, it would have virtually no effect on the world's pollution problems.
So why do anything? Some here in Australia think that we should be setting an example to the rest of the world. Standing alone, that argument does not seem to have much to recommend it.
But consider this: with the right policy approach, it is perfectly possible - with little adverse effects on us - to cut our carbon emissions to extremely low levels, perhaps close to zero.
That would be an example worth setting. We could keep our air-conditioners and our motor vehicles, without the need to have partly electrically-driven cars - the downsides of which are already being uncovered.Nuclear power
A combination of gas-fired and nuclear power generation to replace coal would reduce emissions from power generation to extremely low levels and is the obvious starting place.
As for cars, we are well placed to embrace the ethanol option - better, perhaps, than almost any other country on earth. While it is well established that ethanol is capable of being produced from a number of crops, it is also true that sugar is regarded as among the best sources of ethanol. We already have a well-developed sugar industry and, given the right kind of policy framework, it could be developed further, based on ethanol.
Sugar, it will be recalled, is the basis of the ethanol program in Brazil and is a vital part of that country's energy production and use policy. We could, and should, integrate sugar and ethanol into our energy production policy mix in the same way.
But that should not be the end of it. We have the acreage to plant other crops for extremely large-scale ethanol production, given the right policy approach. The boost this would give to agriculture is, of itself, a great incentive for such an approach.
If these simple changes are so obvious, why have they not already been advanced and implemented? Well, for a start, they raise a number of important and difficult policy dilemmas for any ideologically-driven government - and for any of its media and academic fellow-travellers - who remain committed to free-market economic solutions.
Quite how policy and ideology come into conflict needs perhaps some explanation. So far as ethanol production is concerned, on the scale which is being suggested, both production and distribution would need to be coordinated by government.
It would make no sense for such a program to be developed and for the output to find its way into markets - both here and abroad - by normal commercial processes. To solve our carbon-emission problems, most, if not all, would need to be reserved for domestic consumption - and even, (perish the thought!) for the sake of the wider economy, its price regulated in time of shortage.
The position with power-generation is no less complicated. Obviously a bipartisan approach to nuclear power would have to be developed. If cheap polluting coal were replaced with gas and nuclear power, unit prices to the consumer would need to rise. But the effect of this on households' regular accounts needs not be catastrophic. Less wasteful use of domestic power could result in offsetting savings, providing it was not the commercial suppliers' purpose to encourage as much use of electricity as possible.
As to the coal industry, its future should be left in its own hands. It could remain in the game if it could compete on price with clean coal against the alternative power-generators. This is its future anyway, unless the government chooses to confer upon it a preferred position as an energy supplier through taxpayer-funded subsidies.
Whatever may be the Government's wish, even this may not be possible. Trading partners who are cleaning up their own pollution have already suggested they may impose a tax on our exports to the extent that they have been processed with cheap polluting coal. In future, to make it saleable, the raw product itself may need to be supplied in a clean form.
Apart from any of this, there is another gain available, and it concerns renewable energy. Much has been made of the virtues of wind and wave power by environmentalists. Nevertheless, it does not seem feasible to consider this as a realistic alternative to the other sources for power generation. But it could be the major source of energy for desalinisation. It seems to have a vast number of advantages over all other sources for this purpose.
So there it is - an entirely practicable solution to the specific problems of Australia without any of the artificiality of so-called market-based solutions, such as carbon-trading, which in any event does not seem to have worked very well up to now. The result could be a huge cut in our emissions with minimum adverse effect.
All that stands in its way are politics and ideology. For now, we can expect they will continue as road-blocks.
The more likely outcome for the moment is that we will attach ourselves to some kind of market-driven solution, which is inappropriate to our needs and which will advantage others more than us. But who knows? If things get desperate enough, we might be forced into considering something sensible.- Colin Teese is a former deputy secretary of the Department of Trade.