Transcript Oceanic uptake of CO2 estimated from CFC observations

Climate Change and the Economy:
Australia’s Threats and Opportunities
Ben McNeil
University of NSW
The Importance of Greenhouse Gases
Predict the temperature on Venus?
167°C 470°
15°C
C
Extreme Greenhouse
Effect
-63°C
Climate Change is Beyond the Science!
2008
2007
Stroeve et al. GRL 2007
Climate Change is Beyond Polar
Bears!
Climate Change is about the
economy.
Climate Change,
Cutting Carbon
Emissions…
Economic
Growth, Jobs…
The Myth of Climate/Carbon
Versus the Economy
1. Australia’s Economy is Climate-sensitive (Garnaut)
2. Australia’s biggest export has the highest carbon exposure to
the world
3. Carbon obesity will shut out low carbon foreign investment
4. Protecting Australia’s high carbon economy shuts out the
fastest growing area for new export wealth and opportunity clean technology
Australia’s Economic Threats and
Opportunites :
1) Climate Sensitivity
Direct Economic Impact
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Civilization was geographically built on relatively stable
climate patterns - a changing climate will reorganize
human settlements and where civilization can live.
Extreme Events, Water Security, Droughts, Tourism (Great
Barrier Reef and Kakadu), Sea-level rise, infrastructure and
real estate damages, agricultural productivity ….
Ross Garnaut ~5-7% of Australian GDP by end of
century, indirect costs??
Australia is one of the most economically vulnerable to
climate change
Australia’s Climate Sensitivity
IPCC, 2007
Australia’s Economic Threats and
Opportunities :
2) Low Carbon Energy Trade
The Inevitable Clean Industrial
Revolution
Old Industrial
Revolution
Global
Economic
Growth
New Clean
Industrial
Revolution
Global
Greenhouse
Emissions
1800
Today
2050
Why is a future low carbon economy
inevitable?
1. Oil - Finite and Costly
2. Energy Nationalism (particularly in the US)
3. Climate Change
4. China Diversification from Coal
5. Energy Efficiency
Any indicators that the shift is on?
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In 2008 Global Investment in Clean technology 30% Higher than Fossil Fuels
(UNEP,2009)
Shadow Price of Carbon Already in Place in Developed World (TXU,
Australian investment 98% gas/renewable)
Many regional examples: eg. Ontario example of phasing out 14 coal-fired
power stations, China $200 billion in clean-tech, UAE $500m clean tech and
Masdar city….
Australian Energy Trade in a Low-Carbon
World?
Coal
$25billion
•
The Future of Australian Coal
: Adapt or Die?
Australia’s Economic Threats and
Opportunities :
3) Low Carbon Foreign Investment
Australia is Coal Addicted for Energy
Installed capacity by fuel type - 2000
Non-grid
Dual fuel
Hydro
Oil
Gas
Coal
12
10
8
6
4
2
Source: Electricity Australia 2001, ESAA
SMA
NT
TAS
WA
SA
QLD
VIC
0
NSW
'000 MW Installed
14
Australian Economy is Carbon
Obese
China
Saudi Arabia
Australia
Canada
World Average
India
United States
Indonesia
New Zealand
Germany
Spain
Japan
Mexico
Iceland
Italy
Denmark
United Kingdom
Ireland
Brazil
France
Sweden
Norway
Switzerland
Higher carbon exposure
from global low
carbon trade shifts
0
200
400
600
800
Carbon Intensity of Economy
1000
1200
Example: Would Google invest in Australia?
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Data centers ($500m, employing hundreds)
Extremely Energy-Intensive long lived assets
Google is going Carbon Neutral
• Google have self-imposed a carbon price for their investments
REASONING: A ‘shadow carbon price’ “will enable us to
calculate a more accurate cost of power as one of the key
criteria in site selection for our data centers. The cost of carbon
is not yet recognized by the U.S. market, but may soon become
so through legislation. Pricing carbon is an important tool to
reducing the financial risk that our energy investments face.”
•
•
Last two data-centers were positioned along the Columbia River
for access to low carbon stable energy
That leaves Australia’s high carbon grid exposed
Australia’s Economic Threats and
Opportunities :
4) Clean Technology Export Opportunites
The Clean Technology and Jobs
Revolution
Global Needs for a Low-carbon Economy
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Low carbon materials/plastics/carbon fibre, low carbon steel
Biofuels, waste recycling, efficient home design,
Clean energy (biomass, geothermal, wind, solar thermal)
Energy storage technology, advanced battery technology
Infrastructure for low carbon economy (rail, roads, gas networks, transmission
grids..)
Water purification technology, energy efficiency/automated systems/IT
software/carbon financial markets……
One example: Oil-free Transport
Network and Job Potential
Electric Vehicles
Production and manufacturing of
car itself, battery technology, the
smart energy grid, building
exchange stations and use
=10000’s of new green jobs
Economic Opportunity in the Clean
Industrial Revolution
Optimistic Case
•
•
600 billion tonnes of carbon avoided until 2050 (limit 2degC)
– $25/tonne = $15trillion opportunity (~$375 billion/year)
– $40/tonne = $24trillion opportunity (~$600 billion /year)
Pessimistic
Case
100 billion tonnes of carbon avoided until 2050
– $25/tonne = $2.5trillion opportunity (~$60 billion/year)
– $40/tonne = $4trillion opportunity (~$100 trillion /year)
How Should Australia Respond to
the Inevitable Global Low Carbon
Economy
At least 1% of GDP (~$10billion) annually into low
carbon/clean R&D/ infrastructure
How?
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Clean Energy Targets to spur private investment
Upscale in Public R&D
Government incentives for local clean technology innovation and
manufacturing
A meaningful carbon price to boost low carbon private innovation
Isn’t a carbon price going to hurt
industry?
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Stock Price Index (%)
Early Carbon Price = Economic Advantage
140
120
•
20
$3.3
/gallon
100
80
$3.0
/gallon
60
$2.0
/gallon
40
Ja pa n
USA
$1.4
/gallon
0
-20
-40
Date
Japanese government fuel efficiency standards and R&D led to
competitive advantage
Conclusion: Big
economic danger in
locking in high-carbon
interests
** Australia is Climate Sensitive
and Carbon Intensive which
means we must be a global leader
in decarbonising our economy to
ensure the immense
opportunities and job creation are
created locally
The Need for A Meaningful Carbon
Price
It will boost the level of clean technology private capital investment
Clean Technology
Investment?
The Accidental Environmentalist
Historical Nuclear Costs in the USA
•
~Analysis of 100 Nuclear Power Reactors in the US
Levelised
Electricity
Costs in 2004
(US$/MWh)
UMPNER
Review Costs
Koomey and Hultman, 2007
Summary of Nuclear Costs
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Overseas historical experience suggests the first fleet of nuclear reactors to be at least $90-100/MWh
Irrespective of these costs a liberalised energy market in a western democracy face huge hurdles for
nuclear power:
–
construction cost blowouts and delays
–
cumbersome regulations
–
accident liability
–
long time for investor returns
–
Non-existent skills/industrial base
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NIMBY
–
new terrorist threat
–
water-use and coastal site constraints
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ultimately a high risk premium for investors
The only way nuclear power could potentially be introduced into the Australian energy market would be
:
1. Government imposing a Mandatory Nuclear Energy Target (MNET)
2. Government underwriting of loans/accident/terrorist/waste liabilities
3. Overcome EXTREME NIMBY