Thursday, July 31, 2008

Conservation council rethinks logging position

ABC News Online, Posted Thu Jul 31, 2008 1:47pm AEST

The Conservation Council of Western Australia has adopted a new policy that opposes the felling of any native trees.

The council once supported logging of native regrowth forest but now wants all native forest left untouched.

Beth Shultz from the council says the forests are necessary to help counter climate change.

"Logging and burning of forests actually contributes to climate change," she said.

She says it makes no sense to continue the practice when trees can be logged from plantations.

However, the Forest Products Commission's Paul Biggs disagrees.

"We know the economy of Australia needs to develop towards more use of renewable materials, and of course timber is one of the best of those," he said.

Mr Briggs says the council's policy would only encourage the use of plastics or steel.

Wednesday, July 30, 2008

Major Arctic ice shelf cracks

ABC News Online, Posted 10 hours 45 minutes ago

http://www.abc.net.au/news/stories/2008/07/31/2319617.htm

Two chunks of ice together measuring almost 20 square kilometres have broken off an Arctic ice shelf, the biggest break-up of Arctic ice in three years, Canadian officials announced.

Two floating islands of ice - measuring four to five square kilometres and 14 square kilometres - formed after the chunks broke from the Ward Hunt Ice Shelf off Ellesmere Island in the Canadian Arctic Archipelago, officials said.

"The first broke off sometime around July 22 and the second in the night of July 23 to 24," Luc Desjardins, a senior iceberg forecaster for Environment Canada's Ice Service, said.

Scientists confirmed the phenomenon in a fly-over of the first mass of ice and by analysing satellite data.

It was the largest break-up of an ice shelf in the Arctic since the Ayles Ice Shelf broke off the Ellesmere Island coast in 2005 and formed a floating island of ice roughly the size of New York city's Manhattan, or about 66 square kilometres.

The August 2005 event emitted energy detected by Canadian seismology equipment 250 kilometres away, but it was not until scientists analysed satellite data that they realised what had happened.

Five vast ice shelves surround the north side of Ellesmere Island in Canada's Nunavut Territory. Ward Hunt is considered the largest, with a surface area of 443 square kilometres.

The ice shelves, vast plateaus of thick ice floating on ocean but attached to land, began to form more than 4,000 years ago, Canadian scientists believe.

- AFP

PNG has 'role to play' in combating climate change

By PNG correspondent Steve Marshall

ABC News Online, Posted Wed Jul 30, 2008 12:05pm AEST

http://www.abc.net.au/news/stories/2008/07/30/2318748.htm

Great Britain is calling on Papua New Guinea to play a leading role in combating climate change.

Climate change is the number one issue on the UK's foreign policy agenda and Papua New Guinea is home to a third of the world's rainforest.

After a recent meeting between the two country's prime ministers, British high commissioner to PNG David Dunn said the tiny South Pacific nation could play a lead role in combating climate change.

"Countries like PNG who traditionally probably haven't been central players in the global discussions now are, they are custodians of a third of the world's rainforests, so they really have a role to play."

The British Government is helping PNG forge a climate change policy ahead of the United Nations Climate Change Conference in Denmark next year.

Innovative preventive measures are needed


It is like insuring a house against fire. We are not sure it will happen, but it is prudent to insure against such a loss.

CLIMATE change mesmerises public opinion. More than 90% of Australians believe climate change is already occurring due to human action, and are concerned about its consequences. Scientists are uncertain about global weather trends, but the risk of climate change is real, and potentially catastrophic.

The risks include melting polar caps and a rising sea level, potentially obliterating nations such as the Maldives and Bangladesh; desertification with huge agricultural impact in Australia and Africa; extinction of coral reefs and plankton that are the basis of the world's food pyramid, and frequent droughts, fires, storms and cyclones.

This year, the Organisation for Economic Co-operation and Development estimated the economic damage that climate change could cause to major cities, starting from Miami with $US3.7 trillion ($A3.87 trillion) in real estate losses, and Shanghai with $US2.3 trillion. Alaska is already sinking as its permafrost soil is melting, and all its towns are being relocated at a cost of $US140,000 per person.

Public policy must find preventive measures. It is like insuring a house against fire. We are not sure it will happen, but it is prudent to insure against such a loss.

Prudence indicates we should be willing to pay 1-2% of the world's gross domestic product to decrease the carbon dioxide emissions that industrial society has caused in the past 60 years — about 25-30 gigatonnes a year. There is general agreement about the fairness of such an insurance "premium", and that 1-2% of the world's GDP would be reasonable to avert the worst scenarios of climate change.

My proposal is to extend the reach of the Kyoto Protocol after 2012, the first global agreement that limits the world's carbon emissions, in two ways:

■ Create financial mechanisms that will bring the developing nations to limit emissions appropriately.

■ Introduce existing technologies that capture and store carbon in a way that decreases carbon in the atmosphere and are thus called "negative carbon". The protocol became international law in 2005, and we need to extend it beyond its 2012 limit.

Today the Kyoto Protocol does not provide emission limits for developing nations, which will become the world's largest emitters.

The most prominent feature of the Kyoto Protocol is its "carbon market" that I introduced and wrote into the protocol, which trades now $US50 billion a year and could become the world's largest commodity market.

Through the "clean development mechanism", this market invests in clean technology projects in developing nations, helping them productively while insuring against climate change.

I proposed the carbon market because it is a market solution to a market problem. Globalisation intensified the trade and use of fossil fuels that were exported by developing nations to fuel with coal, gas and oil the rapid industrialisation of the OECD nations since World War II. Fossil fuels generate 89% of the energy used in the world, and energy is needed for economic development.

I propose another financial mechanism, one that is based on the carbon market and that will provide economic incentives for developing nations to accept the equivalent of emissions limits, in a way that conforms to Article IV of the 1992 Climate Convention and is thus acceptable for developing nations.

Article IV establishes that developing nations will not have emissions limits imposed unless they are appropriately compensated.

The mechanism I propose precisely achieves this purpose, through financial engineering, and is based on the protocol's carbon market. This will be acceptable for developing nations and will reach the goal that Australia's Opposition insists should be reached before the creation of Australia's own internal carbon market: bringing developing nations such as China and India to accept appropriate emissions limits.

Australia can make an international proposal in the direction I propose and in doing so help the world — Prime Minister Kevin Rudd is now the representative of the OECD nations in the climate negotiations and therefore this would be its natural role. After all, Australia emits only 1% of global emissions — but the developing nations emit about 40% of the total, so the impact could be enormous.

The second proposal involves Australian technology, which could play a fundamental role in the global negotiations. Developing nations such as China want new clean technology. It is the only way to ensure development and a safe environment.

The key is to produce energy safely. Most carbon emissions originate in power plants. Australia is already considering "clean-coal" power plants — it is negotiating a $US3. 1 billion plant with General Electric, to be built in NSW or Queensland.

My proposal is to move further into newer technologies that not only make coal "clean" but involve "negative carbon". With existing technologies that extract carbon dioxide from air, carbon-negative coal plants can be built that reduce carbon dioxide in the atmosphere — twice as much as the plant emits itself. The more electricity is produced, the more carbon is reduced. This could be called "green coal" because it uses coal to clean the atmosphere at the same time it produces electricity.

Australia emits only 1% of global emissions, but with "negative carbon technologies" it could reduce, for example, 20% of the global emissions — and can be compensated through the Kyoto Protocol's carbon market at about $30 a tonne of carbon reduced.

Making a profit while doing good would give a major boost to Australian business, and would involve using economic incentives that an Australian carbon market can induce. Australian business could react very positively to such a market-based scheme.

Professor Graciela Chichilnisky is the originator of the carbon market of the Kyoto Protocol that was voted on by 163 nations in 1997 and became international law in 2006. She is a professor at Columbia University in New York and Sir Louis Matheson Distinguished Visiting Professor at Monash University.

Break-up after 3000 years

Edmonton, Canada 
The Age, July 31, 2008
http://www.theage.com.au/environment/breakup-after-3000-years-20080730-3neu.html

A CHUNK of ice about 18 square kilometres in size broke off Canada's largest remaining ice shelf last week, a researcher says.

Trent University's Derek Mueller said he wouldn't be surprised if more ice broke off this summer from the Ward Hunt Ice Shelf, a vast frozen plain off Ellesmere Island in Canada's far north. In a development consistent with climate change theories, the huge icy plain broke free some time last week and began slowly drifting into the Arctic Ocean. The piece had been a part of the shelf for 3000 years.

A crack in the shelf was first spotted in 2002. Last spring Canadian Rangers found the weakness had spread into an extensive network of cracks, some 40 metres wide and 18 kilometres long. Formed by accumulating snow and freezing meltwater, ice shelves are large platforms of thick, ancient sea ice that float on the ocean's surface.

Ellesmere Island was once entirely ringed by a single enormous ice shelf that broke up in the early 1900s. At 440 square kilometres in size and 40 metres thick, the Ward Hunt shelf is the largest of those remnants - even bigger than the Antarctic shelf that collapsed this year.

Despite a period of stability in the 1980s, the shelf has been steadily declining since the 1930s, said Dr Mueller, who would not specifically blame climate change, but said the break-up was consistent with the theory.

AP

Tuesday, July 29, 2008

Giant chunks break off Canadian ice shelf

Tue Jul 29, 2008 1:17pm EDT


By David Ljunggren

OTTAWA, July 29 (Reuters) - Giant sheets of ice totaling almost eight square miles (20 square km) broke off an ice shelf in the Canadian Arctic last week and more could follow later this year, scientists said on Tuesday.

Temperatures in large parts of the Arctic have risen far faster than the global average in recent decades, a development that experts say is linked to global warming.

The ice broke away from the shelf on Ward Hunt Island, an small island just off giant Ellesmere Island in one of the northernmost parts of Canada.

It was the largest fracture of its kind since the nearby Ayles ice shelf -- which measured 25 square miles -- broke away in 2005.

Scientists had already identified deep cracks in the Ward Hunt shelf, which measures around 155 square miles. The shelf is one of five along Ellesmere Island in the northern Arctic.

"Because the break-off occurred between two large parallel cracks they're thinking more could go this summer before the freeze sets in," said Trudy Wohlleben of the Canadian Ice Service.

Asked to be more specific, she told Reuters: "More could be a piece as large as the Ayles ice shelf."

Ellesmere Island was once home to a single enormous ice shelf totaling around 3,500 square miles. All that is left of that shelf today are five much smaller shelves that together cover just under 400 square miles.

"The break-off is consistent with other changes we've seen in the area, such as the reduction in the amount of sea ice, the retreat of the glaciers and the break-up of other ice shelves," Wohlleben said.

She said a likely reason for the shelf breaking away was a strong wind from the south.

Warwick Vincent, director of the Centre for Northern Studies at Laval University in Quebec, said much of the remaining Ward Hunt ice shelf is now in a vulnerable state.

"It underscores the fact that each year we're now crossing new thresholds in environmental change in the High Arctic, and of course our concern in the longer term is that these may signal the onset of serious change at all latitudes, much further to the south, for example," he told Reuters.

Derek Mueller, an Arctic ice shelf specialist at Trent University in Ontario, said he was concerned by the rapidity of changes in the High Arctic over the last few years.

"It's a bit of a wake-up call for those people who aren't yet affected by climate change that there are places on earth that are, and the same could be true for them (these people) if you fast-forward a decade or two or three," he said.

Mueller initially estimated that 1.5 square miles of ice had broken off the shelf but increased that figure to eight square miles after studying the data more closely.

"Whatever has kept this ice shelf in balance for 3,000 years is no longer keeping it in balance," he told Reuters, saying he too would not be surprised to see more ice breaking away from the Ward Hunt shelf this year.

Wohlleben said the ice shelves, which contained unique ecosystems that had yet to be studied, would not be replaced because they took so long to form.

"Once they've broken off they're gone," she said. (Reporting by David Ljunggren; Editing by Peter Galloway)

Giant chunks break off Canadian ice shelf

ABC News Online, Posted 50 minutes ago

http://www.abc.net.au/news/stories/2008/07/30/2318537.htm

Giant sheets of ice totalling almost 20 square kilometres broke off an ice shelf in the Canadian Arctic last week and more could follow later this year, scientists said overnight.

Temperatures in large parts of the Arctic have risen far faster than the global average in recent decades, a development that experts say is linked to global warming.

The ice broke away from the shelf on Ward Hunt Island, a small island just off Ellesmere Island in one of the northernmost parts of Canada.

It was the largest fracture of its kind since the nearby Ayles ice shelf broke away in 2005.

- Reuters

Monday, July 28, 2008

Climate change hurting marine snails

ABC News Online, Posted Mon Jul 28, 2008 1:10pm AEST 

Updated Mon Jul 28, 2008 3:49pm AEST

http://www.abc.net.au/news/stories/2008/07/28/2316452.htm

Tasmanian scientists are concerned a microscopic marine snail species found in the Southern Ocean may soon die out due to climate change.

The scientists say it is field evidence that sea life in the Southern Ocean is being affected by warmer water.

They took an expedition deep into the Southern Ocean on board the Aurora Australis in February, and collected a number of microscopic marine snails.

The smail shells have been analysed in the laboratory ever since and the scientists have found the snails have dropped half their shell weight over the past decade.

Dr Donna Roberts says it is evidence that climate change is affecting sea life in the Southern Ocean.

"Many researchers have been assuming we would see this kind of result for the past 50 years and this is the first time we've got a measured response to the changing of the ocean chemistry," she said.

Dr Roberts fears if the snails die out there could be dire effects on the food chain.

"It's interesting to know what's going to happen to commercial fish that eat them because a change in their diet might mean a change in where they actually are living, so it's not just we might loose one variety of snail it actually could change the whole eco-system of the southern ocean.

"That's what we're most worried about that it could completely upset our commercial fish stocks."


Who needs coal when you can mine Earth's deep heat?


SURROUNDED on all sides by desert, over 1000 kilometres from the nearest city, lies the tiny town of Innamincka, South Australia.

Innamincka has a permanent population of just 12, but each year up to 50,000 tourists swell their numbers, keen to experience the Australian outback, if not its lack of creature comforts. To keep these visitors cool, the tiny town runs up diesel bills of roughly $250,000 each year.

Come next January, however, the town could be powered for free, with electricity generated from heat mined from subterranean "hot rocks".

Conventional geothermal power taps hot water rising naturally to the surface from shallow beds of volcanic rock. By contrast, hot rock, or engineered geothermal systems, depend on heating water by circulating it through rock as far down as 5 kilometres, that has been shattered to make it porous. Neither type of geothermal power emits much in the way of greenhouse gases, but while volcanic rocks are rare, EGS can harvest heat from common types of hot subterranean rock, raising the possibility of a continuous, affordable, green power supply anywhere on Earth.

"There is an enormous amount of energy in the Earth's upper crust," says Ingvar Fridleifsson, director of the United Nations University Geothermal Training Programme in Reykjavik, Iceland, and author of a 2008 report on geothermal energy for a meeting of the Intergovernmental Panel on Climate Change. "If EGS can be proved economical on a commercial scale, its development potential will be limitless in many countries." A recent study led by the Massachusetts Institute of Technology suggested that for a government investment of $1 billion dollars EGS could provide more than 100 gigawatts of affordable electricity in the US by 2050 - 6 per cent of its current needs.

"There is an enormous amount of energy stored in the Earth's upper crust"

After decades of development, heat mining is now at a pivotal point. The first 1.5-megawatt power station at Europe's experimental EGS plant in Soultz, France, will soon begin operating continuously, and a second 3-MW EGS power station in Landau, Germany, is already selling electricity, albeit heavily subsidised. Meanwhile, the US Department of Energy has announced plans to fund research geared towards commercialising EGS, raising hopes that the US will again become a major player in hot-rock technology after first proving the concept in the 1970s at Fenton Hill, New Mexico.

However, while these plants have proved the technology works, they have yet to show that it is cost-effective, and this is where Innamincka comes in. The town sits on a 1000-square-kilometre slab of granite that reaches a depth of 10 kilometres. This slab is heated by naturally occurring radioactive elements, and covered by four kilometres of insulating sediment - the gas-rich Cooper Basin - on top of which sits the town. It is the biggest, shallowest, and at up to 290 °C, the hottest, non-volcanic rock formation in the world. This makes it an ideal place to try producing electricity from EGS, as the heat reserve in the granite is large enough to allow developers to rapidly build up to commercial-scale operation.

Also in the site's favour is Australia's pro-mining mindset. Government and private investors are ploughing money into EGS, comfortable with the high upfront costs for exploration and development, and the idea that wealth can be dug out of the ground. A total of 33 companies are exploring EGS in every state in Australia. One of these, Brisbane-based Geodynamics, has sole exploration rights to the granite beneath Innamincka.

"We are predicting a resource potential of 5 to 10 GW in this one slab of granite - 20 per cent of Australia's electricity requirements - based on its geology, temperature, and our estimates of how efficiently we can extract the heat," says Doone Wyborn, Geodynamics's chief scientist and executive director.

The only drawback is that the slab is 500 kilometres from the national electricity grid. Building the power line to the grid will add to initial start-up costs, but Geodynamics is happy to provide Innamincka with free electricity to prove the technology works.

Since 2003 Geodynamics engineers have drilled two 4-kilometre-deep wells, dubbed the Habanero wells after a particularly hot chilli. They have also forced water at high pressure down the injection well and through the rock to expand natural fractures, converting it into a porous, underground heat-exchanger. Earlier this year, they ran tests which showed that water could be circulated down the injection well, through the rock and up the production well at speeds that would make it possible to extract enough heat at the surface to run a power station. This is crucial, as if the flow is too slow it risks becoming uneconomic; too fast and it becomes unsustainable, with heat being extracted more rapidly than it can be replenished by conduction from adjacent rocks.

This week Geodynamics plans to inject a dye into the system and then monitor its concentration at the production well for two months. The dye will "smear out" as the water passes through the cracks, telling engineers the size of the underground network. This data will be used with temperature recordings to calculate how much heat can be mined from the two wells. If all goes to plan, Geodynamics will be able to "declare the reserve", meaning the company will release an audited statement of how much energy it can reasonably expect to extract from its wells. The company hopes to declare up to 10 MW, or enough electricity for a town of 10,000.

By January 2009, it plans to have a 1-MW demonstration plant in place to power Innamincka. Three years after that, Geodynamics hopes to go commercial, initially with nine wells and a 50-MW power plant at the site, expanding tenfold by 2016. "The whole world is waiting to see what happens. They are very brave to go in on such a scale," says Fridleifsson.

Whatever the outcome, experts agree that it will take more than one successful demonstration of commercial-scale EGS for the technology to go mainstream. "To bring the risk down so that banks will invest, we're going to need three to five demonstrations, at different locations, running for at least five years," says MIT's Jefferson Tester.

Those sites will inevitably be less favourable than the Cooper Basin area, requiring heat to be mined from rocks that are cooler, deeper and liable to fracture less favourably. But Tester, Wyborn and others are confident it can be done, with a little help from spiralling oil and gas costs. Besides making alternative energy sources like EGS appear cheaper in comparison, the ever-more desperate search for fossil fuels is spurring the development of faster, cheaper ways to drill very deep wells into very hot rocks, just the sort of technology that is needed to ensure that EGS becomes economically viable.

Australian exploration companies are taking a gamble on that happening. According to government figures, they forecast spending $800 million dollars between 2002 and 2013 on geothermal exploration.

As for Innamincka, it won't be getting free power in perpetuity. Ten or so years after its installation, the demonstration plant will be shut down, and the town's electricity meters will start spinning.

Energy and Fuels - Learn more about the looming energy crisis in our comprehensive special report.

From issue 2665 of New Scientist magazine, 17 July 2008, page 24-25

Pump up the heating

Of all the ways to harness the Earth's heat, growth in only one is exponential: geothermal heat-pump systems. Rather than produce electricity for heating and cooling, these systems simply exchange heat between the ground and a building, taking advantage of the Earth's capacity to store huge amounts of heat.

Heat-pump systems have been installed in over 33 countries, with capacity greatest in the US and Sweden. China is catching up fast, however. The amount of space it heats with pumps almost quadrupled between 2004 and 2007 to 30 million square kilometres, according to a report at a renewable energy meeting in L├╝beck, Germany, in January. The units typically comprise two loops of plastic piping. One loop circulates water through the building, while the other circulates water through the ground, allowing it to reach ambient ground temperatures of 5 to 30 °C.

The pump, which replaces the building's furnace or boiler, transfers heat from the ground loop to the building loop, raising its temperature to the 38 °C or more needed for heating. The cooled water then goes back to the ground to pick up more heat. In the summer the process is reversed for cooling.

For every unit of electricity put in to circulate the fluids and operate the heat pump, you get three to four units of heating or cooling from nature for free. Greenhouse gas emissions are 30 to 50 per cent lower than fossil-fuel-fired heating systems.

Why wait for the world when the world can't wait?

As more of the developed world embraces the need to reduce carbon emissions, the Coalition risks being awkwardly out of step.

IN FEBRUARY 1983, back in the days when climate change meant the difference between sun in the morning and rain in the afternoon, the Liberal Party launched its federal election campaign at the Malvern Town Hall. Its slogan, set to a song performed by Colleen Hewitt on a stage full of blue-bloods including then prime minister Malcolm Fraser, John Howard and Jeff Kennett, was "We're Not Waiting for the World". Alas, the Liberals' non-waiting game didn't succeed; Labor (not to mention the world) passed the Coalition by, leaving it in the cold for 13 years.

Flash forward to July 2008. A federal Labor Government is again in power; climate change has become a major national and international concern; and the Coalition is rephrasing its refrain of '83 simply by removing the negative: "We're Waiting for the World" has become the alternative government's catchcry — which is what it said in government, less than a year ago, when Mr Howard held to the all-together line, preferring, like his ally George Bush, to wait for all global offenders to join the carbon-emissions fight before committing his country. Since then the Rudd Government has ratified the Kyoto Protocol, and has released its green paper on emissions in response to the Garnaut report; three weeks ago, the US supported the G8 accord to at least halve the world's carbon emissions by 2050. Although there are still formidable obstacles — China and India, the most obvious — the significance of recognising that there is a goal to realise is in itself a substantial advance.

This newspaper's position has been consistent: climate change needs a holistic approach and, if it is to be tackled successfully, this must happen swiftly. Earlier this month, in endorsing the draft of Ross Garnaut's final report, The Age said: "As a nation we must change the way we live if we are to mitigate the grave consequences of climate change, which, if left uncontrolled, will have significant long-term effects on the economy and society in general." So, given this sense of urgency, what is the Coalition doing? It appears to be out of step, still waiting for the world to share the climate-change battle.

Opposition Leader Brendan Nelson is wrong to think that he will benefit from taking a tougher line on the proposed carbon trading scheme — that his standing within his party and within the electorate will be bolstered. The go-slow policy appears to be heading for endorsement at tomorrow's party room meeting in Canberra. However, Dr Nelson is playing shortsighted wedge politics — against some in his party and against the Government — and is failing to grasp the opportunity to demonstrate true leadership on one of the most important issues of our time. Dr Nelson may be unduly focused on trying to silence the environmental credibility of shadow treasurer and ever-hopeful leader-in-waiting Malcolm Turnbull, and of the shadow climate change minister, Greg Hunt. Both men, who have favoured carbon-trading schemes, are showing signs of diluting their arguments. On Friday, Mr Turnbull said "international agreement is vital" for effectiveness; and Mr Hunt, in an interview published in The Age today, takes issue with Professor Garnaut's references to "climate-change deniers", saying "people have not just a right but a responsibility to question it for themselves". These statements weaken the previously stated positions of Mr Turnbull and Mr Hunt.

While clouds form within the Coalition party room, these are minor compared with what is happening in the wider world. As Professor Garnaut has said, too many years have already been wasted in debating climate change to spend any more time in futile delay.

Yet despite such dire warnings, Dr Nelson is calling for another delay, arguing that Australia should not launch a carbon trading scheme until the world's big emitters sign up to similar processes. He is right to worry about the economic handicaps Australian businesses may face. He is wrong to wait for the world. He should be arguing for bigger investments — public and private — in research and development.

As the Rudd Government has correctly noted, Australia needs leadership on climate change now. It needs to launch a carbon trading scheme as soon as possible — a scheme that lowers emissions while building in safeguards to allow the biggest emitters time to adjust their production processes and develop and implement new technologies. It will be ideal if this can be achieved by 2010. If it takes until 2011 or 2012 to build the most appropriate scheme, so be it. The scheme can be amended when more of the world signs on to the cause.

Sunday, July 27, 2008

Market meltdown? Carbon trading is just warming up

First, the price of the EU's credit allowances crashed. Now shares in companies that trade in them are falling too. But getting polluters to change their ways will be a process of trial and error, says Mike Scott

The Independent, Sunday, 27 July 2008

http://www.independent.co.uk/news/business/analysis-and-features/market-meltdown-carbon-trading-is-just-warming-up-877996.html

Is the carbon market a success or not? If you were to look at the share prices of companies involved in generating carbon credits, you would conclude that this was a business to steer clear of.

Analysts New Energy Finance reported in May that shares in the carbon credit groups EcoSecurities, Camco International and Trading Emissions had plummeted 75 per cent, 50 per cent and 20 per cent respectively from their highs last year, while Agcert, once a leader in Clean Development Mechanism carbon credit markets, saw its shares fall 99 per cent before they were suspended in February. EcoSecurities' shares dropped further last week when it emerged that it was suffering delays in getting UN-certified credits.

However, in the first six months of 2008 the global carbon market was worth €38bn (£30bn), almost as much as the €40bn recorded for the whole of 2007. There is a perception that the carbon market is a failure because of one event – the crash in prices of EU allowances in 2006. Yet in many ways that price crash was a vital step in the market's evolution. It came about when it emerged that virtually all EU member states – the UK was an honourable exception – had issued too many allowances, after intense lobbying from industry. This meant that the high emissions industries covered by the scheme had no incentive to cut their carbon usage and so would not need to buy allowances.

The victory turned out to be a pyrrhic one for business because it made the European Commission more determined to have tighter national allocation plans and create a meaningful carbon price in the market's second phase, which runs from 2008 to 2012. As a result, the price is fairly robust at €24 and a shortage of allowances is predicted, meaning that companies will have either to cut their emissions or buy allowances from others that have done so.

"The over-allocation would be disastrous if it was continuing, but it was a Phase 1 issue," says Sam Fankhauser, managing director of IDEACarbon, which recently launched a carbon credit ratings service. "Phase 1 was a learning phase, when we did not even know what emissions installations were responsible for. We know that now and Phase 2 looks much more robust."

In the third phase of the Emissions Trading Scheme, from 2013, the Commission plans to centralise the allocation process rather than have 27 member states deciding on their individual allocations.

"As a pure financial product, the carbon market is working well," says Lionel Fretz, chief executive of Carbon Capital Markets, which avoided the share price drops of its peers only by virtue of not being listed.

"However, it is in generating credits that we are having problems – and it seems to be getting worse, not better."

The Clean Development Mechanism is a victim of its own success, says Mr Fankhauser. It cannot issue credits quickly enough because it does not have enough trained staff but it has also tightened up its criteria so developers are not receiving all the credits they had hoped for – and in some cases had already sold. Project validators – who ensure that emissions cuts have been made – such as SGS, Lloyds and DNV are also suffering from staff shortages. The upshot is that projects are being delayed.

This is a real problem, says Bruce Usher, chief executive of EcoSecurities. "It is good that the verification and accreditation process is strict, but it just takes too long – projects are stuck in the pipeline for one to two years and there are only four and a half years left until the Kyoto Protocol expires."

Projects do not start generating carbon credits until they are registered by the UN, so such lengthy delays can be costly, especially for companies that have sold on the credits, known as CERs (certified emissions reductions), to buyers who need them to comply with their Kyoto targets. If they cannot deliver the CERs, they could suffer the same fate as AgCert, a Dublin-listed company forced into examinership (the Irish equivalent of administration) after running short of cash.

As if that weren't bad enough, on the other side of the process, there is a hold-up in one of the key parts of the carbon market infrastructure, the link between the UN registry (the International Transaction Log or ITL) and the registry for the EU Emissions Trading Scheme (the CITL, or Community Independent Transaction Log). This seemingly arcane link is vital for the carbon market because the current phase of the Emissions Trading Scheme coincides with the compliance period for the Kyoto Protocol. Without it, businesses that need to buy credits cannot use Clean Development Mechanism credits – which are cheaper than EU allowances – to meet EU compliance requirements.

The European Commission says it is testing the link now and that "it will definitely be up and running by the end of the year", a statement that does not inspire huge confidence, given that it said that about its April 2007 deadline and the December 2007 deadline. There is much more at stake this time, though – 2008 contracts for settlement must be delivered in December.

If the link is not established, companies that have sold contracts forward will be unable to deliver the credits they promised, with one observer suggesting there would be "market meltdown". However, these are teething problems, or issues for particular companies that have failed adequately to manage their risks, says Matthew Whittell, finance director of Climate Exchange, who adds: "In any rapidly growing free market, there will be winners and losers. The market is bigger than any individual participant."

The carbon credit market is risky, adds David Metcalfe, chief executive of the research firm Verdantix, and if companies such as EcoSecurities do not perform well, that is just part of the learning process in getting the business model right. "It is a new market that is entirely regulation-driven, and those regulations change regularly," he says. "On top of that, you have to operate in countries that do not necessarily have a great market structure themselves."

EcoSecurities' Mr Usher agrees that his company's travails are teething problems, albeit fairly challenging ones. "This is a new market and we will get some of it right and some of it wrong. Not only do I see nothing wrong with this, I don't think we have any choice. Anyone who thinks we can do this perfectly is deluded, and anyone who says we cannot do anything until it is perfect is just wrong."

However, he says that the long-term prospects for carbon markets globally are good. Most market observers think that the US will have a federal cap and trade scheme within the next few years. If it does, it will dwarf the EU market, with New Energy Finance predicting that it could be worth $1 trillion by 2020.

Australia has just announced plans for its own emissions trading scheme, and the EU has said its scheme will continue regardless of what happens in negotiations to create a post-Kyoto climate change agreement. These are moving slowly, although it is hoped they will speed up when the US gains a new President.

"Ultimately, the market will be judged on whether they deliver environmental benefits at a relatively low cost," says Climate Exchange's Mr Whittell. "The carbon price is changing the way emitters do business. None of us is clever enough to work out what is the best way to tackle climate change, but if we have a global carbon price, the market sorts it out. Even with the over-allocation in Phase 1, the EU Emissions Trading Scheme still saved about 100 million tons of carbon. Phase 2 should be even more effective."

Interesting? Click here to explore further

Saturday, July 26, 2008

Opposition 'ducking and weaving' on emissions trading

ABC News Online, Posted 10 minutes ago

http://www.abc.net.au/news/stories/2008/07/27/2315693.htm

The Federal Government has taken a fresh swipe over apparent tensions within the Opposition on emissions trading.

A clarification of the Opposition's stance on climate change will be near the top of the agenda when Coalition MPs meet in Canberra this week.

This morning Opposition treasury spokesman Malcolm Turnbull denied that he and Opposition leader Brendan Nelson had different positions on the issue.

"Whatever emerges from the party room meetings we'll see a Liberal Party that is united and committed to a common goal."

But Climate Change Minister Penny Wong says it is time the Opposition clearly stated its position.

"What we do know is Australians want responsible action taken on climate change, that is what the Rudd Government is committed to, that's what we're focussed on," she said.

"Unfortunately what we see from the Liberal Opposition is more ducking and weaving, seeking to avoid taking yet again these type of decisions when it comes to climate change."

Earlier today, Opposition environment spokesman Greg Hunt told ABC1's Insiders there were good reasons to review their policy.

"Well there's a green paper which the Government has put out and two things come out of that green paper," he said.

"Firstly, they've managed to mess up the clean energy sector and what that means is that the clean burning LPG sector for cars, the cleanest of the auto fuels, is about to be plunged into a high tax regime. The clean burning LNG sector which is the base fuel which we export to China and to other developing countries may be taxed out of existence.

"And what we've seen is an incapacity to manage the task of climate change and of clean energy and the Australian economy.

"That's why we're reviewing our response to this quite disastrous beginning."

Climate change warning

ABC News Online, Posted Sat Jul 26, 2008 10:06am AEST

Tasmania's most senior health official has warned that climate change could have a bigger impact on the state's medical future than our ageing population.

The State Government has pledged to reduce Tasmania's greenhouse gas emissions by 60 per cent by 2050, based on 1990 levels.

The focus until now has been on the economic cost of reducing emissions.

The Public Health Director, Roscoe Taylor, says the potential health impacts from climate change are enormous.

"They can range from effects in our water systems through to the food supply," Dr Taylor said.

"Also vector-borne diseases, that's mosquito-borne diseases, food-borne illnesses could all be aggravated by climate change," he said.

Dunlop calls for emergency plan!

From ABC RN Ockham's Razor, 27.7.08  

Speech by Ian Dunlop

Listen to the speech or download the full transcript at –

http://www.abc.net.au/rn/ockhamsrazor/stories/2008/2313512.htm

Ian Dunlop:
IN the UK in 1945, my mother handed me my ration book with the far-sighted admonition 'Keep it safe, you will need it again'. Fortunately I am a hoarder!
But as if peak oil was not enough, there is another problem: global warming and the need to radically reduce our carbon emissions from fossil fuel use, probably to completely decarbonise the economy by 2050, far more than is being admitted politically. This will itself raise fossil fuel energy prices as carbon is properly priced, via mechanisms such as emissions trading, to reflect its environmental cost.
There are solutions to these converging issues, but they take time to implement, and we should have been planning for this year ago. We did not do so and we are now facing the consequences. Some obvious solutions, for example increasing coal consumption, or coal conversion to liquids as Martin Ferguson recently proposed, are carbon emission intensive, and in the absence of carbon capture and storage, which is still unproven for large scale application, would be extremely detrimental to solving global warming. The two issues are inextricably linked and need to be treated with consistent and holistic policy. So what would that policy look like?
First, we need an honest, public acknowledgment by the government and business leaders of the real challenges we now face.
Second, urgent education campaigns to inform the community and gain support for the hard decisions ahead.
Third, we must establish an emergency, nation-building response plan to place the economy on a low-carbon footing, minimising the consumption of oil, akin to a 21st Century version of the 1950s Snowy Hydro Scheme, but much bigger and broader, or the Marshall Plan, which reconstructed Europe post World War II.
The components would be
1.         major focus on energy conservation and energy efficiency;
2.         large-scale conversion to renewable energy;
3.         major investment in efficient public transport, rail, bus, cycling, etc and an immediate halt to investment in freeway and airport expansion;
4.         rapid phase-out of high carbon emission facilities such as coal-fired power stations unless safe carbon capture and storage can be introduced within 10 years;
5.         urgent introduction of high-speed broadband to minimise travel and improve communication efficiency;
6.         continued investment in low emission technology;
7.         rapid reform of the tax system to remove the perverse incentives which encourage oil use and carbon emissions.
We face major changes to our lifestyle. It is not just high oil prices and global warming but the very question of the sustainability of humanity on the planet as population rises from 6.-1/2-billion people today to 9-billion in 2050, all aspiring to an improved quality of life. New technology will undoubtedly come to our aid but that will not be enough; our values must also change. Conventional economic growth in the developed world will have to be set aside in favour of a steady-state economy where the emphasis is on non-consumption and the quality of life rather than the quantity of things.
There will be far more focus on local food production, opening up new opportunities for rural areas; cities will be redesigned using high-density sustainability principles to avoid urban sprawl, and properly integrated with public transport to minimise energy consumption. Work centres will be decentralised. Rail, powered by renewable energy, will become a major transport mode for both freight and high-speed passenger traffic. Air travel will reduce unless new technology develops jet fuel from, for example, bio sources, and even then emission constraints may limit its use. The internal combustion engine will disappear in favour of electric vehicles for many applications. Cycling and walking will become major activities for both work and pleasure - obesity and diabetes will decline!
The challenge is enormous, but it is the greatest opportunity we have ever had to place the world on a sustainable footing, for what we are doing currently is not sustainable. We must not waste this opportunity, but it needs far bolder and broader thinking than we are seeing at present.
Which raises the question of the ability of our democratic system of government to implement such change. It will require statesmanship of the highest order, a quality sadly lacking in both national and global debate. Different forms of government will be needed, but that is a discussion for another day.

Ian Dunlop
Deputy Convenor of the Australian Association
for the Study of Peak Oil
Sydney

Presenter - Robyn Williams

Friday, July 25, 2008

Economy in climate of changes


WHAT will be the greatest micro- economic reform of the Rudd Government's time in power?

Sorry, that was a test question. If you don't know the answer, go to the bottom of the class.

As the Minister for Climate Change and Water, Senator Penny Wong, was at pains to emphasise in her speech to the Australian Business Economists this week, the centrepiece of the Rudd Government's economic reform agenda is its carbon pollution reduction scheme.

(This is the new and more descriptive name for the emissions trading scheme.)

Wong said the scheme would "reform and transform the Australian economy". "In its ability to change the economy over time, the carbon pollution reduction scheme is likely to be on par with past economic reforms such as trade liberalisation, opening up the economy, and floating the dollar," she said.

"Those tough economic reforms of the 1980s and 1990s … mean that Australia now has a resilient and flexible economy which is well placed to undertake this new reform."

As Wong acknowledged, implementation of the scheme will be a test of the Government's economic leadership.

If you're in any doubt that tackling climate change is an economic issue, let me explain. Putting "the environment" and "the economy" in separate boxes makes no sense because the economy exists within the natural environment.

Economic activity has many adverse effects on the environment and, when that activity has done sufficient damage to the environment, the environment has adverse feedback effects on the economy.

That's the point we've reached with climate change.

The potential damage to the economy from climate change and a rising sea level is well known. The cost of this damage is likely to far exceed the cost of reorienting the global economy to largely eliminate the emission of greenhouse gases.

The broader point, however, is that if humankind is to survive and prosper, we'll have to pay a lot more attention to ensuring our economic activity stays within the physical constraints imposed by the natural environment.

The threat to the environment from economic activity is something humans have begun realising only relatively recently, say in the past 30 or 40 years.

In the case of greenhouse gas emissions, that's because we can't see them. Likewise, it takes a long time to realise that the extinction of species upsets the balance of the ecosystem.

But the main reason damage to the environment went unnoticed for so long is that it largely affects aspects of our surroundings that aren't privately owned — rivers, the sea, native forests, the air and the atmosphere.

And because environmental assets aren't privately owned, there isn't an owner objecting to the damage being done and demanding protection or compensation.

The trouble is that market exchange is built on private ownership, so it's only private interests that are reflected in the prices produced by the interaction of supply and demand. So, the market system can't cope with the wider damage to the environment such as from pollution or emissions done by private transactions.

Such "social costs" are simply outside the market system, which is why economists refer to them as "externalities". But here's the trick: just because something's outside the market system doesn't mean it's unimportant.

This is why economists acknowledge that environmental externalities are an instance of "market failure" problems we can't rely on the market to fix. So governments have to intervene in markets to fix those problems.

They could do this just by passing laws prohibiting people and businesses from doing certain things or forcing them to do other things, or they could do it by "internalising the externality". That is, by taking steps to ensure social costs (the costs of damage done to people who aren't parties to the relevant economic transactions) are incorporated into private costs (the costs faced by buyers and sellers).

And this, of course, is exactly what the carbon pollution reduction scheme seeks to do.

It seeks to incorporate the social cost of the emission of carbon dioxide and other gases into the private costs (prices) of the goods and services whose production or consumption has involved such emissions.

How will we know the social cost of those emissions? We're setting up a market for buying and selling permits to emit, say, one tonne of carbon dioxide. The social cost of emissions will be the price the market sets.

But in this newly created, artificial market, the Government will, on the one hand, require relevant businesses to hold permits to cover all their emissions while, on the other, control the supply of permits.

It will gradually reduce the supply of permits available as it reduces the "cap" (limit) on permitted emissions, in line with emissions targets. As it does so, the social cost will rise.

So that's another reason fighting climate change is just a new dimension of micro-economic reform: the device we'll use to reduce emissions is an "economic instrument", one aimed at harnessing market forces to reduce environmental damage and doing so at minimum cost in terms of lost growth in the economy.

I have a feeling that tackling climate change will just be the first of many reforms we will need to make to reduce the destructive conflict between the global economy and the natural environment that sustains it. So get used to it.


Short-term view reveals the error of warm-earth deniers

AS THE Liberal Party turns into a battleground between those who believe Australia should do its share to tackle global warming and those who deny that global warming exists, the graph at right is worth seeing.

Will you start reducing your power consumption to prepare for emissions trading?Click here to vote.

It is the raw data on which deniers base their claim that since 1998, the world has stopped warming, and begun to get colder.

The data comes from the UK Meteorological Office and the Climatic Research Unit at the University of East Anglia. It shows how temperatures each year differed from a base period (1961-90). It's one of just three data sources on global temperatures, but the one deniers like to use. Look at it, and you might wonder why. The warming trend during the 20th century is unmistakeable, as is the series of skyscraper readings in recent years.

But critics such as geologist Bob Carter (BusinessDay, 16/7) want us to focus on those recent years. Note that the highest reading was back in 1998. Note that temperatures in 2006 and 2007 were lower than the years before them (and 2008, so far, is sharply lower). What's that telling us?

Carter's readout is blunt: "Earth has not warmed since 1998, and has been cooling since 2002," he argues. "And this, despite an increase in atmospheric CO2 (carbon dioxide) of almost 5%."

But that assumes that annual shifts in temperature or rainfall are a guide to long-term trends. It's like saying that a hot year or two means the earth is warming, or that since 2007 was wetter than 2006, then Australia is getting wetter.

You don't need to be a climatologist to know what's wrong with that logic.

Yes, the weather varies, from month to month, from year to year. It always will. But that tells us nothing about long-term trends.

So climatologists use an 11-year rolling average  shown here as the black line  to define the trend. The line here appears to end at 2002, but only because that's the midpoint of the 11 years from 1997 to 2007. The trend is clearly up.

On its website, Climate Research Unit director Phil Jones sums up what they think the data tells us. "The year 2007 was the eighth warmest on record," he says. "Twelve of the 13 warmest years in the series have now occurred in the past 13 years. The period 2001-07 is 0.21 degrees warmer than the 1991-2000 decade ... the warmest complete decade.

"Analysis of over 400 proxy climate series (from trees, corals, ice cores and historical records) shows that the 1990s is the warmest decade of the millennium, and the 20th century was the warmest century."

And the likely cause? "Increased concentrations of greenhouse gases in the atmosphere due to human activities."