Jennifer Marohasy

a forum for the discussion of issues concerning the natural environment

Economics

Typo in 2002 Australian Report Responsible for Plastic Bag Mythology

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The plastic bag is the latest useful item to fall victim to a factually challenged campaign aimed at achieving a world-wide ban in the false name of being ‘green’ or ‘saving the planet.’ Australia has to take much of the blame for this, due to a 2002 report misinterpreting the original 1987 Canadian Study in Newfoundland claiming that 100,000 marine mammals and birds were killed by ‘plastic debris.’ In a 2002 report commissioned by the Australian Government into the environmental effects of plastic bags, ‘plastic debris’ became ‘plastic bags.’ The report became known as the Nolan-ITU report. In 2006 the report was updated. The same sentence was repeated but ‘bags’ was changed back to ‘debris’ with an explanatory note stating that the original article actually referred to ‘fishing nets.’ The damage to the reputation of the plastic bag was already done.

Read the excellent 8th March Times article, ‘Series of blunders turned the plastic bag into global villain’ online

or see a pdf version here.

Plastic Bags.jpg

The carrier bag industry is attempting to fight back and swim against the tide using the Carrier Bag Consortium website:

The following myth-busters are copied from ‘Useful Soundbites for the Media:’

SPEAK THE SCIENCE
BIN THE SPIN

1: OFFICIAL VIEWS

• A levy on plastic bags in Ireland only made matters worse… people underestimate how many plastic bags are used to put out recycling or are substituted for plastic bin bags. “We have got to remember that taxes and levies can have perverse effects – such as making people use more plastic not less” … Liz Goodwin, Chief Executive WRAP (Government’s Waste Resources Action Programme) The Daily Telegraph 28 Sept 2007

• “This (voluntary) agreement is working – with retailers offering shoppers reusable bags-for-life. We don’t think a ban or levy is the right way to go. In Ireland, people just bought more bin liners to replace free carrier bags, so the volume of waste stayed the same.” … DEFRA, The Guardian, 3 October 2007

• “But until supermarkets reduce the energy used in their stores, minimise food miles and treat farmers better, saving a few plastic bags is just window dressing.”…Tony Juniper, Friends of the Earth, Daily Mail, 28 January 2008

• “There have been unforeseen consequences in the Irish Experience … increase in the use of paper bags which are actually worse for the environment …” … Ben Bradshaw, UK Environment Minister, 4 August 2006

• “A number of unintended consequences appear likely to be connected with the proposed levy … the net environmental impact is an issue of considerable dispute … the Committee therefore recommends that Parliament does not agree to … the Bill” … Unanimous Conclusion (including the Green party) of the Scottish Parliament, Environment and Rural Development Committee, after two years of investigations, 2006

• “0.2% of the average household dustbin is plastic carrier bags … hence a tax on plastic carrier bags alone would be unlikely to have any significant impact on volumes of waste” (Plastic Bag Tax Assessment, HM Treasury, December 2002)

• Because so many plastic bags are re-used for domestic waste disposal, the following increase in bin liners and refuse sacks occurred after the tax in Ireland:
o Tesco – 77% increase in pedal bin liner sales
o SuperQuinn – 84% increase in nappy disposable bag sales
o SuperValue/Centra – 75% increase in swing bin liner sales
Evidence to Scottish Parliament, Environment and Rural Development Committee Hearings 2005

• The use of plastic bags in Ireland (including substitute bin liners) analysed through HM Customs figures shows the amount of plastic bags imported into Ireland has actually gone up after their bag tax from 29,846 tonnes in 2001 to 31,649 tonnes in 2006… HM Customs statistics (analysed by Mike Kidwell Associates/PAFA 2007)

• “They represent a fraction of 1%* of waste going to landfill. Retailers of all types are well on the way to reducing the environmental impacts of bags by 25%. They are doing that with the cooperation of customers by rewarding re-use, giving away sturdier bags-for-life, enabling and encouraging recycling and reducing the amount of plastic in bags” Kevin Hawkins, Director General, British Retail Consortium, 13 July 2007

• *The fraction of landfill represented by plastic shopping bags is 0.05%. This is based on domestic waste being 17% of landfill and plastic bags being 0.2% of the average dustbin. Packaging and Films Association 2007.

• 59% of people re-use ALL their lightweight plastic bags and a FURTHER 16% say they re-use MOST of them. … WRAP Survey 2005

2: THE SCIENCE

• The manufacture of plastic bags uses one third of the energy, results in half the pollution and one eighth of the raw material requirement of paper bag production (Winnipeg University Studies)

• Paper bags weigh 6 times more than plastic on our roads and are 10 times the volume in storage. Switching to paper as result of plastic bag bans or taxes will put an extra 32,000 lorries on London’s roads. Extrapolated by CBC from Simpac Ltd Studies presented to Scottish Parliament ERDC Hearings, 2006

• The average round trip to the supermarket is 12 miles, the petrol equivalent of 210 plastic bags (typically one year’s usage of bags per person in the UK) … Dr Gerard McCrum, Oxford, The Daily Telegraph 24 July 2007

• “(plastic bags) contribution to climate change is miniscule. The average Brit uses 134 bags a year, resulting in just (2.6) kilos of the typical 11 tonnes of carbon dioxide he or she will emit in a year. That is one five thousandth of their overall climate impact.” George Marshall, The Guardian, Thursday September 13 2007

• In Scotland alone, taxing plastic carrier bags would have created an EXTRA 13,500 tonnes of (largely paper) waste going to landfill. (This would mean an EXTRA 150,000 tonnes of waste created in the UK) Extrapolated from Scottish Executive Impact Assessment Studies 2005

• Taxing plastic bags will send more paper to landfill where it will degrade to give off greenhouse gases in direct contravention of the EU Landfill Directive. Plastic remains inert and will not give off CO2 or Methane in landfill. Packaging and Films Association 2002.

• Plastic has a higher calorific value than any other element of waste. The energy released in clean-burn municipal incineration by a single carrier bag keeps a 60 watt light bulb burning for one hour. APME/Plastics Europe 2006

• No other shopping container can carry 2,500 times its own weight and stay strong when wet. CBC 2001

• A typical plastic carrier bag uses 70% less plastic today than 20 years ago. No other industry has a better track record in material reduction. Packaging and Films Association 2003

• Plastic bags do not waste oil, they are derived mainly from oil refining by-products (naptha, ethylene, etc) which would otherwise be flared off. So plastic bags are an excellent use of otherwise waste products. All plastic packaging of all types uses no more than 2% of total oil extraction compared with 29% for transport and 35% for heating/industry. Plastics Europe 2007

3: THE RETAIL EFFECT

• The Irish tax has cost small to medium retailers an estimated €24.3m (after the first year of operation) mostly as a result of theft plus additional theft of €10m in “push out” thefts (where unbagged and unpaid for goods are wheeled through the doors due to absence of carrier bags as evidence of purchase) (Note: This is more than the income “generated for the good of the environment” and includes the theft of trolleys and baskets) … RGDTA – Irish Grocers Association and Irish Trade Journal “Shelf Life” estimates 2003,

• A 10p tax per carrier bag represents a tax level of 1400% on cost price. If applied equally across popular goods, a can of Coke would cost £8 and a packet of crisps £5. Simpac Ltd Study for CBC 2005

Articles on Australia’s Carbon Canutism

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THE Rudd Government is prepared to stare down a demand to compensate power producers for the effects of the carbon trading scheme foreshadowed in its review of climate change policy.

Power producers say that without structural assistance the value of their assets will fall sharply and investors will be reluctant to commit to new plants, causing power shortages.

The Australian, ‘No to carbon payout claims’

SINCE May 2002, when interest rates again started to rise, home loans in Australia have grown to about a trillion dollars today. Business borrowing has now passed $700 billion.

Were interest rates 3 per cent lower today, as they were in 2002, the national annual interest bill would be about $50 billion less. And although there may now be signs of changing buyer behaviours, such sustained lifts in interest costs have had little observable impact upon the appetites of households and businesses for debt, so far.

In the same period, petrol costs have increased by about 10 cents a litre per year. Were petrol prices the same today as in 2002, the national fuel bill would be $25 billion lower each year. Yet we are buying more cars, travelling further and using more petrol than ever before even as petrol prices continue to lift.

The Australian, ‘Helping neighbours is key to cuts’

STRIKING greenhouse gas reduction deals with big developing countries, particularly our trading partners, might be a better method of dealing with climate change than pursuing a plan focused on imposing increasing costs on domestic energy users.

Writing in the opinion page of The Australian today, leading corporate figure Ziggy Switkowski questions whether relying solely on a gradual build-up of energy costs is the most effective strategy for achieving reductions in greenhouse gas emissions.

Dr Switkowski’s entry into the debate comes as the Rudd Government formulates Canberra’s response to climate change, with its adviser Ross Garnaut arguing that the planned carbon-trading scheme should not compensate coal-fired power stations.

The Australian, Greenhouse deals ‘beat carbon trading’

Reminder: New Paper from the Virtual World: Stabilizing Climate Requires Near-Zero Emissions

Breakfast with Czech President Vaclav Klaus

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The 500-strong contingent of skeptics currently in New York for The 2008 International Conference on Climate Change were up early for a second day. Breakfast was again at 7am and the first speaker was given a standing ovation – a man who had travelled all the way from Prague, the President of the Czech Republic Vaclav Klaus.

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Vaclav Klaus is a well know global warming skeptic and was re-elected President just two weeks ago.

In his speech President Klaus talked about the “robust relationship between carbon dioxide emissions and economic growth” and went on to suggest there are three types of countries in Europe based on their emissions profile and level of economic growth. He described the less developed countries of the European Union (EU), including Greece, has trying to “catch-up” since the signing of Kyoto and in the process increasing their level of carbon emissions by 53 percent. The post communist countries were described as seeing their heavy industry disappear and experiencing a decline in GDP and a drop in emissions of 33 percent Then there are countries like France and Germany which have seen their emissions increase on average by 4 percent.

The President said that “the dream” to reduce emissions in the EU by 70 percent in the next 30 years could only be achieved if there was a dramatic de-industrialization of Europe (likely associated with a dramatic drop in GDP), a dramatic drop in population or a technological revolution.

President Klaus outlined previous attempts in Europe, for example the Soviet Union under Brezhnev, to impose radical economic change and the “innocence of climate alarmists” to currently mastermind society including their belief in their own omnipotence.

The President concluded with comment that “uncompromising lessons about the collapse of communism” need to be re-learnt:

“We have to restart the discussion about the very nature of government and about the relationship between the individual and society. Now it concerns the whole of mankind, not just the citizens of one particular country. To discuss this means to look at the canonically structured theoretical discussions about socialism (or communism) and to learn the uncompromising lessons from the inevitable collapse of communism 18 years ago. It is not about climatology. It is about freedom. This should be the main message from our conference.”

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Standing ovation, including from London-based Kendra Okonski and former advisor to Russian President Putin Andrei Illarionov . New York based Statistician William M Briggs is the tall guy in the background to the immediate left of Dr Illarionov.

Thanks again to conference sponsor’s The Heartland Institute .

More on day 3 soon.

—————-
You can read a perspective on day 3 of the conference from William M Briggs here: http://wmbriggs.com/blog/2008/03/04/heartland-conference-day-3-and-wrap-up/.

You can read my perspective on day 1 of the conference here https://jennifermarohasy.com.dev.internet-thinking.com.au/blog/archives/002809.html and day 2 here https://jennifermarohasy.com.dev.internet-thinking.com.au/blog/archives/002813.html .

Economic Implications of Climate Change Measures: Alan Moran

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A matter that has received less attention than it should is what are the energy consumption and cost implications of the measures proposed to abate carbon dioxide and what would be the economic consequences of success in this.

There are many emission abatement goals that have been floated. Perhaps the two most conservative are an emission stabilisation goal and a 20 per cent reduction goal. In Australia and England the respective Garnaut and Stern reports have envisaged much deeper cuts than these.

The first chart show business-as-usual – with emissions in 2030 projected forward at the 1990-2004 rates of 1.3 per cent for the OECD and 5.7 per cent for the developing countries; the former Soviet bloc is held constant. This shows emissions at an aggregate 43 billion tonnes, almost 50 per cent higher than 2004.

Chart 1

Alan Chart 1.jpg

Even though emissions in the developing world probably overtook those of the OECD in 2007, their per capita emissions were very much lower 2.4 tonnes compared with 11.5 tonnes (with the former CPEs at 7.9 tonnes). Notwithstanding the fast growth of the developing country emissions in business-as-usual 2030 they remain little more than a quarter of those of the OECD.

If now we were to call for a 20 per cent reduction on 2004 levels and apportion that equally in per capita terms, the outcome is a standard 2.5 tonnes per capita. For the OECD countries this is a dramatic reduction. The OECD’s aggregate 16 billion tonnes under BaU (12 tonnes per capita) becomes 3.3 billion tonnes. Developing countries, though above their 2004 levels are well below their BAU on a per capita basis, as are the former soviet bloc countries. Chart 2 illustrates this.

Chart 2

Alan Chart 2.jpg

The most recent Australian report on the emission control measures, by Professor Garnaut, acknowledges that the easy gains in emission reductions have been made, especially with the dismantling of the command economies of the Soviet bloc and China. Those countries’ CO2 intensities have now stopped falling, in fact are rising. Indeed, China has already surpassed the magic 4 tonnes per capita which would be the level required for stabilisation of emissions and has only pulled a fifth of its population out of poverty.

Mr Garnaut suggests that Indonesia and PNG could become vast sinks to offset other countries’ emission levels. This is a pipe dream. It may allow for a windfall gain for the two economies but there are not enough trees for this to offer anything but a pinprick.

Ominously, Garnaut hints strongly about the necessity of trade pressures on developing countries to reinforce their sense of public spirit. That in itself would destroy the world trading regime and retard all countries’ living standards. And, the process is already underway with the EU negotiations of bilateral “Free Trade Agreements” with developing countries. As Rasheed Sally points out, “The EU is also increasingly interested in linking trade policy to climate change. New FTAs will likely contain trade-and-sustainable-development chapters, which could house climate-change provisions in the future.”

If targets for reduced carbon dioxide emissions could be met by replacing baseload power stations with nuclear power, the cost increases for most countries would be relatively small. For countries like Australia, where coal is cheap and massively abundant, a premium on existing prices of perhaps 30-40 per cent would be expected. Many European countries would face no cost increases since nuclear is already the cheapest option.

However, several of these countries have already gone a good way to a nuclear power based electricity industry. And this illustrates the difficulties in making the required level of cuts. Even France with over 70 per cent nuclear emits 6 tonnes per capita. France is therefore way above the magical 2.5 tonnes of CO2 per capita and has already used up its scope to make the cuts by substituting out of carboniferous fuels.

And France, like many other European economies has outsourced many of its energy intensive industries like smelting to areas like Eastern Europe and the Gulf where energy is cheap but greenhouse emissions are no less than if the production was left at home.

Chart 3 Emissions and GDP per Capita

Alan Chart 2.jpg

The impossibility of meeting emission reductions by replacing coal with nuclear, in itself the least fearsome solution, is illustrated by the relative shares of electricity and gas in the emission profile.

All OECD countries are a bit different but the magnitudes are similar. For Australia, electricity is only 35 per cent of emissions and this starts to define the maximum that can be achieved by making the use of coal prohibitively expensive.

Chart 4

Alan Chart 2.jpg

The report to the former Australian government examined the switch to emission levels at 80 per cent of 1990 levels by 2020 . This estimated the CO2 equivalent trajectories were as follows.

Chart 5

Alan Chart 5.jpg

Noting that a 37 per cent reduction was required, it argued, “To illustrate the magnitude involved, this is equivalent to, for example, replacing Australia’s entire existing fossil fuel–fired electricity generation capacity with electricity from nuclear energy while at the same time removing all existing vehicles from our roads.”

Moreover, these measures are not taking place in a vacuum. A great many greenhouse mitigating regulatory programs are in place even in those Kyoto recalcitrants which used to comprise Australia as well as the US. For Australia:
• There is a vast number of subsidies for emission management renewable energy technology and installations,
• We have regulatory impositions on electrical equipment and most importantly on new houses which have to meet a “5 Star” energy efficiency standard; this is a convenient means by which those that presently have their own homes can shift costs onto those looking to buy them and salve their consciences without incurring any expense – indeed profiting since the higher costs of new houses is automatically transmitted to the value of the existing stock,
• There are obligations on electricity retailers to use a specific and growing share of renewables in their mix of energy sources. These renewables, as well as requiring costly additional management expenditures to deal with their intermittency, are about twice the cost of conventional coal fired electricity. By 2020, 20 per cent of electricity is to be from renewables, less than 6 per cent of which will come from commercially viable hydro sources.

These existing measures are the equivalent of a tax on stationary sources of electricity of about $10 per tonne, or 30 per cent of the ex-generator cost.

A carbon tax or auction of permits would come in over and above this. Early work on the level of such a tax that would be required put the level on $10. That is a distant dream. Stern put the number at US$100 but also had a lot of persuasion and education to assist – calling upon what the economist Lionel Robbins famously referred to as “that very scarce commodity, human love”. And by bending the rules of finance and allocating very low discount rates to the net present value estimates of costs, he managed to argue that the costs would be minor and swamped by the benefits.

Energy costs have already risen strongly in OECD countries in the light of self-inflicted measures to reduce CO2 emissions. To do the task that is sought by those promoting the notion that catastrophic human induced global warming will take place in the absence of rigorous control measures will result in massive industrial disruption and loss of income as investment is diverted to energy resources that offer poor productivity and as industries and consumers reduce and restructure their demand.

The emission reductions required are much greater than the previously horrific calls like 20 per cent below 1990. For OECD countries, we are talking about emission levels of a quarter and less of current levels. Moreover, none of this will do very much for emission controls if Developing Countries are not also forced into making emission reductions or holding them at current levels. In the absence of this we would see emissions of developed countries being largely transferred to developing countries and the emission intensive goods being imported.

To combat this requires a comprehensive new form of currency in the form of carbon ratings. All goods would need to be rated and their producers would be required to demonstrate the required credits. In the case of imports that did not meet these stipulations, the importer would be required to meet the deficit. Pretty soon we would see a world trading economy unrecognisable from that we now have.

At the very least this will create tensions as developing countries will maintain that they are being denied the opportunity to reach the levels of economic wellbeing that the OECD countries have achieved.

In addition, developed countries themselves, aside from denying themselves cheaper goods from the third world, will be incurring inefficient expenditures on investments in green energy (an especially favoured approach by the two Democrat candidates for the US Presidency). This reduces the overall productivity of investment thereby reducing income levels over and above the transitional costs incurred in economic reconstruction.

This is a copy of the address by Alan Moran, Institute of Public Affairs,
to the The 2008 International Conference on Climate Change , New York, March 3, 2008

Weblog Cost-Recovery

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Xanthomera2.jpg

Do you see what I see? There is a new ‘Donate’ feature on the home-page of The Politics & Environment Blog. Its purpose is self-evident and it is hoped that members of our weblog community will consider availing themselves of the facility to help share the load, as it were.

Since the 14th April 2005, when the site was first launched, over 1,515 entries have been published eliciting some 41,440 comments. It has become quite the gathering place for our community of interest. Whilst we are often conflicted by ideology on issues raised, we also embrace strong environmental values, which for many would include sustainability and ‘user-pays’. It could be said that expenditure and environment often make for strange bedfellows, but the fact is, there is a growing cost to the maintenance and operation of the weblog.

In another popular gathering place, visitors to the Daintree rainforest consistently express strong expectations that the destination will reveal sightings of some of Australia’s most unique wildlife in natural habitat. Unfortunately, the majority are unsuccessful and not because the ecological values of the landscape fall short of the mark, but that the travel-style is so completely contradictory.

Three-quarters of the half-million (or so) travellers per year are bound to the travel-intensive itineraries of day-visitation out of Cairns or Port Douglas; only a quarter stay overnight. There is also a significant destination bias, with summer holidays from the northern hemisphere and escapees from the winter chill of southern states, supplying the largest numbers of overnight visitors to the winter rainforest at is most dormant.

Elusive encounters with rainforest beauties, like the (above) male Orange-thighed tree-frog (Litoroia xanthomera), are few and far between. Visitors would be well-advised to travel into the rainforest at the hottest, wettest time of the year and to engage the expertise of a local inhabitant, to maximise prospects for successful sightings. However, to do so they would need to stridently go against the flow and direct their travel dollars more purposefully.

Perhaps the same could be said of the weblog; a purposeful direction of economic support might bolster the vitality of the forum even more substantially than the rigour of free comment.

Stern Report Reviewed

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Dear Jennifer,

Australia’s Productivity Commission has finally reviewed the Stern Report [the report commissioned by the British government on the economics of climate change] and according to newspaper reports has attacked it for its advocacy and dubious costings.

The Productivity Commission document is available via http://www.pc.gov.au/research/staffworkingpaper/sternreview

Reports in The Age, Sydney Morning Herald and The Australian are available at the following links

http://www.theage.com.au/news/national/challenge-to-climate-change-report/2008/01/24/1201157560374.html

http://www.smh.com.au/news/environment/think-tank-questions-stern-review-on-costs/2008/01/24/1201157560512.html

http://www.theaustralian.news.com.au/story/0,25197,23105165-11949,00.html

The ABC is currently silent on the matter.

Cheers
John McLean