From Greatest Greenhouse Polluter to Least?

[This is the first of an occasional series on what we can do to make our presence on Earth tolerable to the rest of the biosphere, and mostly should do anyway, regardless of one’s view of the dangers or possible means of salvation.  It will be filed under ‘Solutions’.]

Australia is one of the largest emitters per capita of greenhouse gases.  We are also the world’s largest exporter of coal, which is the dirtiest fuel in terms of greenhouse gas emissions.  We must therefore be the world’s worst citizens regarding global warming.  However we could be rapidly cleaning up our act, and diversifying and improving our economy in the process.

The importance of the mining industry as a whole to Australia’s economy is greatly exaggerated in public perceptions.  Although the mining industry accounts for about 9% of GDP, it accounts for less than 2% of total employment, and exchange rate and other effects actually reduce the contributions of other sectors, so the net benefit to the economy is reduced.  Coal is said to provide cheap electricity, but the coal industry receives direct and indirect subsidies, up to a billion dollars a year in NSW aloneSubsidies to Australian mining are estimated to be well in excess of $10 billion per year.  Coal exports are rising rapidly, mainly to China and India, and it is claimed we are only responding to demand, so if we didn’t sell them coal someone else would.

Such arguments overlook both the distortions of the present energy market and the great opportunities we have to develop clean alternatives and to export those to the world.  Instead of encouraging the developing world along the same dirty-energy path we have followed, we could be teaching them to move directly into clean, efficient and safe energy paths.

The quickest and most cost-effective improvement we can make is to stop wasting energy.  We waste so much energy, compared with current best practice, that a study by McKinsey Australia estimated in 2008 that we could save $50-200 per ton of greenhouse emission avoided, mainly by improving building designs, air handling systems and industrial motor systems.  These savings could fund further low-cost gains that would reduce our greenhouse emissions by 20% below 1990 levels by 2020.

In other words, because of our sloppy habits, we are actually paying extra to pollute the world.  We could go well beyond the Government’s timid goal of a 5% greenhouse emission reduction by 2020 for essentially no cost to the economy.  Many studies of the US economy have reached similar conclusions.

Such claims are commonly disbelieved or disputed, but their plausibility has already been demonstrated on the large scale.  Between 1975 and 2005 the energy intensity of the U.S. economy (the ratio of primary energy end uses to GDP) decreased by 46%.  The energy thus liberated for other uses by greater efficiency was four times as much as the energy provided by new generation facilities, and its cost was equivalent to about $12 per barrel of oil.

The reasons we don’t take advantage of this great opportunity seem to be several.  It is easier to keep doing things the way we always have.  Up-front costs are often lower, even though the payback time for a small extra investment in better design is short.  Builders, architects and designers don’t pay the on-going costs of inefficient buildings and factories, so they have no incentive.  Fossil fuel industries keep up a steady chorus of disinformation, claiming that alternatives are expensive and impractical.

It is notable that these reasons win out even though we could save a lot of money, collectively, by changing our sloppy ways.  It shows that market incentives that already exist are not working.  This clearly implies that weak additional incentives like the Government’s carbon price scheme will have little effect.

What is needed instead are active programs that address these impediments.  We could teach the professionals and trades-people how to improve building design and performance.  It costs time and money to change practices, so these need to be compensated so people will adopt better practices.  Once they start to become widespread, laggards will have to follow and transition costs will fall.

We can demonstrate model contracts that give architects and builders incentives and rewards for improving efficiency.  For example some of the savings on energy costs could be shared back to builders over the first few years’ operation.  Unless efficiency is a made a design goal from the beginning, many opportunities are lost.  However a well-integrated design yields synergies that can result in dramatic savings, reducing energy costs not just by percentages but by factors of 2, 4 or more.

California in the 1980s demonstrated an innovative way to overcome resistance to up-front costs, though in that case it was for retrofitting rather than new construction.  Electric utilities were required to offer small loans to people so they could reduce their homes’ energy use [1].  The loans could be paid back through the electric bill.  Smaller electricity use compensated for some or all of the extra repayment on the loan, so it was a relatively painless way for home owners to improve home energy efficiency.

The Californian electric utilities actually invested in lowering electricity use.  This approach addresses one of the most widespread market failures behind resource over-use:  usually, the more we use the higher are the suppliers’ profits.

You could say the utilities were investing in the end-result of energy use:  comfortable homes.  It was possible because electric utilities were regulated, because of their natural monopoly.  It shows that government can be good.

As such practices are applied and refined, the ideas can be passed to developing countries so they can build efficiently from the start.  We would be investing in a comfortable planet.

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1. von Weizsäcker, E., A.B. Lovins, and L.H. Lovins, Factor Four:  Doubling Wealth, Halving Resource Use. 1997, St. Leonards: Allen & Unwin.

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14 thoughts on “From Greatest Greenhouse Polluter to Least?

  1. Meah Wood

    Dear Geoff Davies,
    my daughter and son have just returned to Sydney from the Woodford Fest. and told of the talks given there by Clive Hamilton and others. I was particularly encouraged to here them relate the ‘plan’ to reduce carbon emissions by 2020, using renewable engineering techniques.
    I just feel so heartened by their belief in the whole renewable ‘sector’….the genYers 🙂
    Thank you for your commitment to the planet.
    Meah.

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  2. Dino Legovich

    Comment deleted.

    I’m sorry Dino, I don’t allow personal abuse here, and I have to be consistent regardless of which side of the argument you are on.
    Geoff D.

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  3. Ronald Bastian

    Agree totally with the comments in general Geoff, however, the last section regarding our status-quo poor design and building practices, is a subject that there really is no excuse for.
    We in Australia have some of the best eco-architects there are and the problem seems to be that “they” are not teaching the building trade apprentices coming through the system so it’s a case of “Monkey see – Monkey do”.

    I have witnessed over the last 3 decades, the same bad practices by builders that just never get any better. Poor design and even worse workmanship.

    Award winning architects like Glenn Murcutt is where the building industry should be taking notice of. Retro-fitting is more expensive but the idea that loans could be offered to retrofit older homes to reduce energy demand has to be a win-win for everyone and it really should be no more expensive to build an ecologically sustainable home from the initial design to the finished product as proven by Murcott. Unfortunately, award winning architects are not cheap, but the ideas are already procurable through bodies such as the Alternative Technology Association (ATA)

    Governments need to bite the bullet and open up the purse-strings by making available interest free loans for accredited retrofitting as well as removing taxes on products required exclusively for energy use reduction.
    Surely it can’t be all that hard.

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  4. Greig

    ” … we could be teaching them to move directly into clean, efficient and safe energy paths”

    Geoff, isn’t that just a tad patronising and condescending to the Chinese and Indians? It is also confusing, that you spend the rest of the article decrying our “sloppy ways”. i.e. who are we to be teaching anyone?

    Also, if energy conservation can be done at “essentially no cost to the economy”, why would “Governments need to bite the bullet and open up the purse-strings”? Are you acknowledging that energy efficiency weighs on the cost side of cost/benefit, which is why it’s uptake is steady and progressive, rather than a “big bang”.

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  5. Geoff Davies Post author

    No Greig, it’s not patronising if we’re richer and can better afford to develop and road-test energy-efficient practices and technologies.

    Nor do I assume that the Chinese and Indians won’t come up with good innovations themselves, the more the better. However Australia is being used as an excuse for lack of action by some in the developing world, so we can certainly stop being such a poor role model, as well as stop being dumb by not taking opportunities.

    It wasn’t me who said “open up the purse strings”, it was Ronald, but there is certainly a place for some well-placed support to get new industries going (using savings from current wasteful practises). This is how Japan, Korea, et al. kick-started their robust industrial economies. We should let go of our free-market purism and do the same. As well as not subsidising the planet’s demise through coal burning.

    Also, as the article makes clear, there are many non-financial barriers to new practices, including inappropriate regulations, that governments can attend to.

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  6. Greig

    I am agree on the issue of regulation, especially in the building industry. I have a background in environmental engineering, and we definitely do not do enough now with passive solar design. But what we do here is rather irrelevant (we are tiny), it is what is happening in the emerging Asian economies that matters, because that is what will dictate global emissions over the next decades.

    “Australia is being used as an excuse for lack of action by some in the developing world”

    Do you have any evidence for that statement? In my view the developing world is so hell-bent on getting their populations out of poverty, they don’t need any excuses to industrialise with maximum productivity at minimal cost. And even if they did need an excuse, they don’t care about what Australia does. Australians have the habit of inflating our role as world leaders because we are relatively rich. Our wealth does not automatically make us anyone’s role model, so spending our wealth on trying to show the way is more likely to make us a laughing stock than a leader.

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  7. Geoff Davies Post author

    Greig, Chinese spokespersons have made pointed comments about developed countries getting their own houses in order before lecturing them. They are well aware of what Australia does. No I don’t have a reference, but I follow the news. You could too.

    You recognise the potential of solar passive designs, why do you implicitly dismiss every other possibility by speaking of “spending our wealth”? I’m talking about saving our wealth, and increasing it.

    I don’t know why anyone would strenuously oppose the efficiency path. The entry cost is very small and incremental (as opposed to huge up-front costs of big-tech), and we can learn as we go (as opposed to not finding out for a decade or three whether big-tech projects will help). If the possibility is there, why wouldn’t we try it?

    Unless we’re opposed to changing the status quo for entirely other reasons.

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  8. Greig

    Geoff,

    You make claims, and then when asked for evidence you have a habit of waving your hand and demand that I do my own research. Which Chinese spokesperson? Can you quote them? I follow the news as much as anyone else, I don’t think I have ever heard of anyone lecturing the Chinese, nor the Chinese telling anyone else what they should be doing. It is inconceivable to me that anyone in diplomatic circles would engage in the manner you suggest, so I really question your point.

    Passive solar design is definitely underutilised, but you seem to think there are no costs associated with this. The upfront costs are actually quite large, and pay back is very long-term. For example, for a house on a standard block in Sydney to be designed and built on PSD principles will typically add $10-20k to the price. Payback in energy savings is less than $500/year. It’s not an easy sell. It certainly doesn’t result in increasing wealth (in the short-medium term). But with energy prices increasing, I would expect that building regulation standards should become much stricter in the coming years.

    You paint a picture of inactivity on energy efficiency which is quite inaccurate, as if it is some new and unutilised magic bullet for fixing climate change. I studied environmental engineering at uni 25 years ago, and it was then, and is now, a very important component of engineering design in nearly every industry. I don’t see anyone “strenuously opposing” the energy efficiency path. Currently steady progress on energy efficiency improvements is actually the status quo. e.g. There is something a revolution occurring right now in improving the energy efficiency of white goods, appliances and computers which is yielding very significant results.

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  9. Geoff Davies Post author

    Greig, just because you find something inconceivable doesn’t mean it’s wrong. And I didn’t make the story up.

    I’m talking about more dramatic efficiencies, where you save factors of 2, 4 or more. If synergies in design are exploited, there are savings that balance some of the costs. Then the payback is much quicker. RMI is the best source.

    Those who don’t ignore the efficiency often strenuously oppose it, in my experience. Efficiency is perhaps my most repeated message, here and in various media, and whenever I raise it there is either a deafening silence or people like you come along and tell me why I’m wrong headed – as you have in fact done here, even though you partially agreed on one aspect.

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  10. Greig

    Geoff, energy efficiency, like technological development in general evolves discontinuously over time. It is the nature of inovation. So I don’t think you are wrong-minded to think positively about energy efficiency – as I have said it already commands a strong focus in modern engineering design practices. However I think you are hopelessly idealistic to think that we can achieve the dramatic step change that you propose over a short period of time.

    I also think that Australia is not responsible for leading the world by investing our wealth and resources in a unilateral Great Leap Forward. The whole world is in this together. It is with concerted widespread effort, respect for intellectual property, and sharing of technology through joint R&D and funding, that continued economic and environmental advances will occur.

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  11. Geoff Davies Post author

    Greig –
    If your mention of “step change” refers to big increases in efficiency (factors of 2, 4 …), the designs already exist. They just need to be promoted. Their widespread adoption will take time (a decade or two?), but it will still be a lot quicker than the big-tech solutions that many are focussed on. So no, that is not hopeless idealism.

    However I think it is idealistic to talk about the whole world working together on this problem, when it is failing spectacularly to get beyond the barest beginning. The “concerted widespread effort” is not happening. You sound like a tree-hugging leftie. As any good right-wing capitalist should know, things happen when someone takes a lead.

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  12. Greig

    Geoff, we agree that energy efficiency is important. We also agree that making a big change a reality requires promotion. What we disagree on is the goal and the timeframe.

    You say “concerted widespread effort” is not happening”. I differ. We are seeing steady progress around the world (McKinsey give numerous examples of this), notwithstanding China’s lack of regard for intellectual property, and the developed world’s unnecessary resistance to sharing critical technologies as part of focussed aid programmes. It is not a rapid process, nor can it be, because that is the nature of innovation and diplomacy.

    Set your sights regarding timeframes lower to a more realistic target (decades rather than years), and I think you will see that energy efficiency is an important part of the long term advancement of economic and environmental solutions, but it is not a magic bullet.

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