I came across a nice organisational chart just now for the Australian Energy Markets Operator (aka. AEMO). I like the way it has grouped organisational units into rows to distinguish between their strategic function. /managementspeak.
AEMO Org Chart
Category: Energy
A recent copy of New Scientist had a number of interesting articles on the current economic growth paradigm and how it is damaging to the earth which sustains us. A common theme is the issue of consumer demand and particularly, consumption of short-lived disposable goods. Disregarding the arguments for a service based economy, changing this paradigm would appear to present cash flow problems to businesses.
In essence, the perfect product for the consumer and/or for the environment is not necessarily the perfect product for the producer. Apple would be far less profitable if it didn’t have a new model iPod, iMac, iThing out every year to make the previous model a tech toy cum fashion accessory faux pax. This is the other side of the coin that needs to be addressed if talking about the dangers of the economic growth model driven by consumption.
For a real example, we need only look to forestry, where it is the lower revenue, high volume uses such as mulch, firewood or pulp for paper that drive significant native forest logging. These activities provide the cash flow that support any higher value added uses such as structural timbers and furniture. In the case of forestry, the negative environmental impacts can be addressed by sustainable, best-practice, plantations. But the aforemented forestry products are non-durable by nature, genuine consumables. Whereas, for white goods, electronics, apparel etc., they are – or are supposed to be – more long lived, durable products that have been manufactured for obsolescence. The solutions here then must be based around extended producer responsibility and ‘cradle to cradle’ principles. For an alternate revenue model, leasing is likely to fit the above scenarios more aptly than ‘buy-to-own’. So, we will lease cars, tvs, white goods and other semi-permanent durable goods which would provide cash flow to businesses. There are still issues though since innovation will be required and innovation usually requires significant investment in R&D, which often requires prompt repayment upon product launch from high purchase prices of goods (e.g. Sony Playstation 3). Under a leasing/cash flow model, this quick payback would be more difficult, but if the money for R&D was lent on a longer term basis, then the cash flow from operations would aim to cover the debt repayments.
Sorry, went off on a bit of a tangent near the end there and lost some focus… No time to tidy things up, paid work to do!
More info:
New Scientist, 2008, “The Folly of Growth: How to Stop The Economy Killing the Planet”, 18th October.
Europe is now at a critical point in terms of the future of climate change policy in the EU and around the world.
http://www.iht.com/articles/2008/10/14/europe/union.php
With the policy focus now firmly on the financial crisis an a looming recession, climate change is seen as risky territory for politicians. Britain provided the framework to the EU for tackling problems in the financial system, Australia could have provided – and still has a chance to provide – a framework for the world for tackling climate change.
The same issues are arising in the EU as in Australia, namely:
- Where and how should the burden fall?
- Who, if anyone, should be protected and to what extent?
- How should funds generated from pricing carbon be redistributed?
- What is the correct framework for handling countries with fewer emission ’sins’ to atone for (i.e. developing countries who are yet to emit levels that developed countries have to date, but are well on their way).
If Australia can answer the questions above when it presents its final paper on the issue (originally due early next year I believe but perhaps delayed now?), then it will do the world a great service and any actions we take will be noticed on the world stage. The Garnaut Review made some good inroads to answer these questions, although stated targets were disappointingly low.
The Garnaut Review has modeled the cost to Australia for mitigation of 1.1% of GDP by 2020 under a 550ppm scenario and 1.6% of GDP by 2020 under a 450ppm scenario. I won’t get into discussion of the correct interpretation of these figures here, although that is very important, but, I want to provide another assessment – using a different methodology to that of the Garnaut Review – done recently by McKinsey & Company, looking at the Australian cost curve for GHG abatement. They concluded that:
A signi?cant reduction in Australian GHG emissions is achievable—30 percent
below 1990 levels by 2020 and 60 percent by 2030 without major technological
breakthroughs or lifestyle changes.
Reducing emissions is affordable—with an average annual gross cost of
approximately A$290 per household to reduce emissions in 2020 to 30 percent
below 1990 levels.
And these are 1990 levels, I’d like to know what happened to using 1990 as a baseline since I thought that was the Kyoto agreed approach, yet Garnaut’s discussion focuses on reduction from 2000 levels. This could be in the report, I haven’t read it in full and may have missed this.
Ross Garnaut’s conclusions in the supplimentary report – targets and trajectories – are disappointing, and arguments about economic ‘costs’ misguided. The global climate issue (and wider environmental issues) is one which will require creativity and innovation to solve. Ross disappointingly concludes that global agreement on an international agreement is unlikely and so it is not economically justified for us to proceed alone in more seriously reducing emissions.
This can be likened to a driver of a car – in traffic – headed towards a cliff, resolving to not turn the wheel and change course, because nobody else is and because changing course may consume more fuel.
For policy makers out there, the following line from the supplementary draft (p.214) is important
The costs of climate change mitigation come earlier and are better
known than the costs of climate change. (p.214)
Continuing with the analogy above, this is telling us that we know what the potential extra fuel costs are, but we don’t know how far we will fall if go over the edge of the cliff. In this scenario, surely the rational choice is to choose a known risk, rather than an unknown one. Furthermore, in the same line of analysis, a very important distinction to make is that we are masters of our economy, but the scale of our economy depends on the health of the global ecosystem from which we obtain natural resources and benefit from ecosystem services. While our economic actions have an impact on the local and global ecosystems, we are not yet proven to have the skills in being the ‘masters’ of the global ecosystem. In-fact, we have – to date – thoroughly proven our incompetence in this regard. So, rather than risk damaging that which we can’t control – although can impact on -, the global ecosystem, we need to focus on changing was we can control, our economic system.
Economic development and wealth creation rely on creation, destruction and renewal (of human constructs/industries which impact on ecosystems). Innovation is the key here and if we look at the world in terms of opportunity and abundance, rather than risk and scarcity, we would see the enormous opportunity awaiting us once we get serious about tackling climate change and more broadly, embrace sustainable development. Both inaction and action will result in a vastly different global construct to that which we live in today. Inaction will result in unorganised chaos, action will result in organised chaos.
I don’t have time at the moment to put any figures around what i’m about to write about, but if someone feels like doing so, please go for it (likewise if you can point out any papers or books which have covered this issue).
So, what is it that I am going to write about. Well, in looking at the issue of green house gas emissions and the relationship to global warming, forestry frequently comes up. Given the sequestration benefits which forests provide, a way to tackle climate change has been to a) slow deforestation of existing forests, b) carry out reforestation of areas cleared.
Now, an issue which occurs to me is that, this problem is multi pronged. Let us cast our minds back to pre industrial revolution times, lets start at 1800 for arguments sake. So, at this point in time, we had a certain percentage of the earth covered in forests, providing their sequestration and carbon storage benefits. Trees grow and die, releasing and re-capturing carbon in the process, this carbon was all – excuse my lack of scientific eloquence here, this is a work in progress – above ground carbon.
So, we have that base state, with a relatively stable amount of carbon in the atmosphere/earth system continually being cycled through a process of sequestration-emission-sequestration. Now, things get interesting once the industrial revolution kicks off in earnest. Firstly, we have massive amounts of deforestation to feed industrial processes, beginning at the start of the 1800s. This reduces the number of trees participating in this sequestraion-emission cycle. The result, a net increase in emissions as trees are removed from this process. Consider this the ‘left punch’.
The ‘right punch’ comes around the beginning of the 1900s and accelerates with particular voracity from the 1950s onwards. This takes the form of fossil fuel related emissions. These are in effect carbon/green house gases which were previously not part of the atmospheric/earth system and were locked away under ground. By extracting and processing these, resulting in emissions into the atmosphere, we add to the volume of green house gases in this system.
The result here, combining these two factors is that, a) greater concentrations of GHG in atmosphere from deforestation with fewer trees to sequester carbon, b) even greater concentrations of GHG in atmosphere due to new inputs into atmosphere from fossil fuels.
What is the point of all this? The point – and the issue as I see it – is that, to reduce climatic conditions back to a natural cycle representing a state with minimal anthropogenic influences, we need two things. 1) Forest coverage to be returned to pre-industrial revolution areas, 2) removal of net increases in GHG as a result of fossil fuel combustion since 1900. OR in fact, potential – and contentiously – a third option, being, to offset any climatic impacts with global scale abatement methods (giant sun ray deflecting mirrors anyone?).
I have no definite conclusions regarding these thoughts yet, just some things to ponder on and consider when people talk about reducing GHG emissions and atmospheric concentrations.
Australia is continuing in it’s tradtion of being a resource focused economy with a ban lifted on uranium mining and along with bilateral support by the two major parties. Now, my post isn’t about the suitability or otherwise of nuclear as far as our energy/environmental problems are concerned, that is a complex issue that I’ll avoid here.
My point is mainly that it is disappointing to see that Australian governments still have such a resource focused mentality – as opposed to knowledge and technology, value adding etc – and that along with support for nuclear power, they should be suitable encouraging other alternatives to coal or gas fired power generation. Namely, renewables such as solar and wind.
The reason this came to my attention was because of an article I read recently (actually one of three) about a solar researcher who is leaving Australia because of lack of financial support for his solar based approach to large scale power generation. Australia has had and still continues to have a competitive advantage in the research and development side of solar power. If backed by suitable government support and initiatives, we could become a world leader in this area not just academically, but economically. Anyway, for now it seems there is no interest in this from the current government, lets hope that as well as supporting uranium mining, the opposition Labour Party will also support other ernergy and economic alternatives.
Articles about David Mills leaving Australia and why:
http://www.abc.net.au/ra/innovations/stories/s1860693.htm
http://www.abc.net.au/rn/scienceshow/stories/2007/1841239.htm
…compact fluorescent lightbulb light that is.
Check it out, california plans to ban the good old incandescent light bulb by 2012.
On this topic, these bad boys are already everywhere in China. Most commercial establishments solely use CFs, not incandescent. I don’t know if it’s a leglisation or economics thing, but I definitely notice that they are already heavily in use here. I don’t recall seeing many at all in Australia and only discovered that they existed last year. I guess I should check the lightbulb section more often for the latest…
anyhoo, which would you rather have? Think about it…