An Australian History lesson......Ken

Quadrant: September 2008

Satanic Gas
The Politics of Carbon Dioxide.

Ray Evans

Carbon is the sixth element in the periodic table. It is unique among
the elements in the vast number and variety of compounds it can form.
With hydrogen, oxygen, nitrogen, and other elements, it forms a very
large number of compounds. There are close to ten million known carbon
compounds, many thousands of which are vital to organic and life
processes. Carbon is essential to life.

As we now see in the Commonwealth government's Green Paper Carbon
Pollution Reduction Scheme, and newspaper sub-headings ("Carbon's a
diabolical foe" Australian Financial Review) carbon is now being
demonised by the media and by ministers of the Crown.

How did we get to a situation where fantasy has triumphed over

We can begin this particular episode in the ongoing battle concerning
the demonisation of carbon with the testimony given by James Hansen, a
scientist with NASA's Goddard Institute for Space Studies, to the US
Senate Committee chaired by Al Gore (then Senator for Tennessee). The
date was 20 June 1988, a date which had been predicted as likely to be
hot and humid in Washington. Hansen told the Committee that he was "99
percent sure . . the [human caused] greenhouse effect has been
detected and it is changing our climate now." He stated that his claim
was based on computer models and temperature measurements. We now know
that the night before the hearing, the air-conditioning had been
turned off, and the windows opened, so that the Committee Room was hot
and very humid, and the TV cameras were able to focus on the sweat
dripping off the various participants.

At the same time the British Prime Minister Margaret Thatcher, anxious
to revive the nuclear power industry in Britain (which had been badly
tarnished by the 1986 Chernobyl disaster) encouraged the Royal
Society, with substantial benefactions, to rally behind the 'carbon
dioxide is a pollutant' doctrine, in order to get the Greens, deeply
hostile to nuclear power, sidelined out of the debate. This particular
ploy was used by John Howard from time to time, and for the same
reason. It was a particularly stupid ploy, in that it was obvious to
anybody who understood what was driving the Greens that they were
never, ever, going to countenance, let alone embrace, nuclear power;
and at the same time it legitimised Green claims about the evils of
anthropogenic carbon dioxide

The carbon-dioxide-as-pollutant doctrine then swept through the
Western world like a firestorm. The Environmentalist movement,
naturally, promoted it with energy and flair, and the Left, then
subdued by the rapid collapse of communism, embraced it with alacrity.
The elite classes also got on board and Andrew Peacock, for example,
took the Liberal Party into the 1990 election with a commitment "to
reducing greenhouse gas emissions by 20 percent by 2010".

This doctrine, which has captured an extremely rich and influential
constituency in the West, can be summarised in one sentence. Carbon
dioxide is a greenhouse gas which, as atmospheric concentrations
increase, will generate increasing global temperatures, and unless we
dramatically curtail our emissions, at some point soon we will reach a
"tipping point" and climatic catastrophe will engulf us.

The only evidence which can be used to justify this belief is that
between the years1976 and 1998 global temperatures did rise, as did
atmospheric concentration of carbon dioxide. Since 1998, however,
global temperatures have either been stationary or, since 2002, in
decline, but despite that, CO2 concentrations have continued to

From a theoretical point of view, the carbon-dioxide-as-pollutant
community had to deal with the problem that as carbon dioxide
concentrations in the atmosphere increase, the impact on the radiation
balance declines logarithmically. Thus increases above 100 ppmv (it is
now about 380 ppmv) have only a trivial impact on the radiation
balance and thus on global temperatures. To get over this problem the
climate modellers, whose computers and time were paid for by the
various promoters of this faith (operating mostly through governments
and using taxpayers' funds), introduced positive feedbacks into their
models. In this way small increments of CO2 were amplified into very
large changes in the radiation balance, mainly through the use of
water vapour as a magnifying agent.

As Christopher Monckton has demonstrated, these positive feedback
mechanisms are not to be found in the real world. But the predictions
of climate catastrophe continued to grab headlines.

Since the early nineties the only significant political leaders in the
Western world to challenge belief in carbon dioxide as a pollutant
have been Czech President Vaclav Klaus, and Senator James Inhofe,
formerly chairman of the US Senate's Environment and Public Works
committee and, since Nov 2007, its ranking member. Boris Johnson, the
newly elected Mayor of London, and a well-known global warming
sceptic, triumphed against all predictions in his contest with Ken
Livingstone, who campaigned specifically on Johnson's alleged disdain
for the environment and for the future of the planet.

In business communities throughout the West any company which
publically set its face against the campaign against carbon dioxide
was subject to continuing vilification and harassment.. Exxon-Mobil,
the largest oil company in the world, under the leadership of former
CEO Lee Raymond, sought to stand firm against all the nonsense, and
was therefore subjected to sustained and extraordinary attacks from
(apart from Environmentalists generally) US congressional leaders, and
from shareholders such as the Rockefeller family. When Lee Raymond
retired, Exxon-Mobil surrendered.

On Tuesday, 29 July, 2008, the day the Australian stock market dropped
another 1.5 per cent, and the super funds announced losses between 6
and 9 per cent for the year, the shadow cabinet met in Canberra and
decided, after a week or more of speculation that Brendan Nelson would
get support to resile from the path of decarbonisation which John
Howard had adopted in June 2007, to stay with the Howard legacy. The
next day there was a vigorous debate at the full party room meeting,
and it is now very difficult to determine where the Coalition now
stands on Kevin Rudd's plans for a Carbon Emissions Trading Scheme.
Presumably the battle between reason and fantasy on the place of
carbon in our lives is still going on within the Coalition party
rooms, and it seems that it will be some little time before an outcome
can be discerned.

We can presume that Prime Minister Rudd will continue to put pressure
on the Opposition in order to get bipartisan support for a bill
establishing an Emissions Trading Scheme which will then sail smoothly
through the Senate. If he achieves this goal we will then be set on a
path which will take us inexorably into increasing economic
dislocation and impoverishment. Once we are sinking in this quicksand,
pulling ourselves out will be very difficult, despite the economic
hardships which decarbonisation will bring. Amongst other things,
property rights will have been created, which if they were to be wiped
out through repealing legislation, would immediately lead to claims
for compensation under Section 51:xxxi of the Constitution.

Because the Rudd Government has, in its Green Paper, adopted the
Howard policy (with a few extra concessions) it is now necessary to
summarise the evolution of John Howard's policy on the decarbonisation
issue, and the rhetoric he used to defend that policy. He assumed
office in March 1996. The Keating government had ratified the UN
Framework Convention on Climate Change (December 1994) but that
convention specified no particular obligations on the parties.
Obligations to begin the process of decarbonisation were to be
formalised at the UNFCCC meeting scheduled for Kyoto in December 1997,
and so the first issue the Howard Government had to resolve was its
position in the negotiations leading up to Kyoto.

The EU, which was driving this whole project, was demanding an across-
the-board CO2 emissions cutback of 10 per cent on 1990 levels.
Australia demanded separate targets for every signatory to the Kyoto
Protocol; targets which were to be tailored to their special
circumstances. Developing countries were happy either way as long as
they weren't expected to accept any limits and provided also the
developed countries agreed to put serious money into their economies
under the pretence they were helping to reduce emissions.

Before Kyoto the EU backed down on its demand for across-the-board
national cuts and accepted different national targets but, in
addition, during the negotiations at Kyoto, the Australian delegation,
led by the minister, Robert Hill, also got "the Australian clause" up,
which allowed for tree clearing to be included in the carbon tally.
Australia's Kyoto target was 108 percent of 1990 levels which, when
cessation of tree clearing was added , amounted to 128 percent.

This was seen by Environmentalist critics at home and abroad as
outrageous, and when questions were raised at a US Senate Committee
hearing concerning the extremely favourable treatment which Australia
had received, the answer, given by a senior member of the US Kyoto
delegation, was that in order to get its vote, Australia would have
got anything it wanted,.

This response demonstrated the key role which Australia had occupied
in these debates. If Australia had maintained from the outset a "do
your worst" policy towards the Europeans, and had not strongly
contested the across-the-board cuts as the EU wanted, then the debate
would have been very different, and the outcome much less confused.
Australia could not have been a signatory to the Protocol, let alone a
ratifying party.

This deliberate ambiguity characterised Howard's policy and rhetoric
for the remainder of his period in office. Although he let it be known
privately that he was skeptical of the claims made by the IPCC, the
CSIRO and the Australian Greenhouse Office concerning anthropogenic
CO2 emissions and the earth's climate, publicly he never voiced any
criticism of these institutions. He had established the Australian
Greenhouse Office in 1998, and funded it annually with hundreds of
millions of taxpayers' dollars, money which that office used to
promote the global warming scam, and to systematically buy up economic
consultancies and university research programs to carry out "research"
into the impacts of global warming, (a phrase which in due course was
metamorphosed into "climate change").

By 2002, Howard's policy on Kyoto was to refuse to ratify the Protocol
on the grounds that it was "not in Australia's interests", but at the
same time he and his ministers were always proclaiming Australia's
virtue in being "on track" to satisfy the 108 percent Kyoto target
(but not including cessation of land clearing at huge personal cost to
those hapless farmers who had taken out huge mortgages on properties
which required tree-clearing to become economic, and who now found
themselves bankrupt).

John Howard also used, as Margaret Thatcher had done before him, the
claimed connection between carbon dioxide emissions and climate
control to promote the argument that Australia should have a nuclear
power industry, and he commissioned Ziggy Switkowski to conduct a
review on the issue. Dr Switkowski concluded his report with the
unsurprising result that if the coal-burning power stations had to pay
a carbon tax of some $30 per tonne of emitted carbon, then nuclear
power would compete with coal as an economic electricity source. Even
this figure was contested as being too low.

Thus for almost 11 years, John Howard straddled the fence. But the
carbon demonisers had all the money. In October 2005 the Climate
Institute was established with a grant of $10 millions from the Poola
Charitable Foundation and Bob Carr was installed as chairman,. The
Climate Institute commissioned a variety of econometric studies which
predicted that Australia would probably benefit economically from
decarbonisation. At the same time the CSIRO was spending many millions
on modelling the climate to produce the temperature rise conclusions
which they and their political supporters required.

John Howard dismissed a cabinet submission in 2002 presented by the
Departments of Treasury, Environment and Prime Minister and Cabinet,
which proposed the introduction of a carbon tax. He was aware at that
point of the potential economic damage which would follow such a

But his tacit acceptance of the argument that anthropogenic emissions
of carbon dioxide had caused global warming stymied the many global
warming sceptics in the cabinet and the party room, and convinced the
rent-seekers and the decarbonisers within the environmentalist
movement that it was only a matter of time before they would win the
policy debate. And in December 2006 they were proved right.

That month PM Howard commissioned his department head, Peter Shergold,
to chair a joint government-business Task Force on Emissions Trading.
The terms of reference included fulsome remarks about Australia's
uranium reserves, and the Task Force was asked to advise on the
"nature and design of a workable global emissions trading system in
which Australia would be able to participate".

Thus the bugle call to retreat was sounded. On 31 May, 2007, the Task
Force dutifully reported that "Australia should not wait until a
genuinely global agreement has been negotiated" and that the "most
efficient and effective way to mange risk is through market
mechanisms." "An Australian emissions trading scheme would allow our
nation to respond to future carbon constraints at least cost". Howard
announced soon after that he would set up our own Emissions Trading
Scheme and that he would announce a target for CO2 reductions in 2008.

This decision was the most damaging U-turn of John Howard's political
career. It destroyed the legitimacy of his refusal to ratify the Kyoto
Protocol. It destroyed the confidence of a core constituency who were
prepared to forgive Howard for all his other mistakes (including
financial profligacy of a serious kind) on the basis that he would not
take Australia down this path. It reinforced the perception that the
Howard Government was desperately trying anything to curry favour with
the chattering classes. Like Napoleon at Waterloo, but with far less
justification, the Prime Minister had lost his nerve.

Once Howard had sounded the retreat on this issue, the scene began to
resemble a battle field with one army in complete disarray. Of course
the Labor Party and the Greens attacked Howard for not doing nearly
enough to solve the problem of climate change. Howard had no answer
except to scamper after his retreating followers. It was an
ignominious finale to an otherwise distinguished career.

It is worth noting in this context what Peter Shergold said in a
speech on 14 June, 2007, two weeks later after the release of his

"This is the one thing on which I think we are pretty clear: that we
are not necessarily sure on what the government should do, but we are
bloody certain what the government shouldn't do,"

"And what the government shouldn't do is simply use the revenue to
subsidise the power bills of individual households.

"In case that sounds a bit mean, think about what we are trying to do
here. We are trying to change the behaviour of industry and

If we consider this statement in the cold clear light of day, we see
the most senior public servant in Canberra telling us that a
decarbonisation policy which will seriously impact on the daily lives
of everyone but the well-off should be imposed on the nation; and that
although the poorer sections of the community are to be compensated,
that compensation cannot allow them to maintain their current
consumption of electricity or petrol. Somehow or other, therefore,
vouchers for feather doonas, woollen underwear, woollen socks, and the
other means of keeping warm in winter that were employed during the
Great Depression would be issued. No doubt bicycles would also be
heavily subsidised. As for air conditioning during summer, that would
simply not be allowed.

Can anyone imagine a political party going into an election on such a
platform? Can anyone imagine the arguments that would be employed to
justify such a policy?

That statement should have rung loud alarm bells in Howard's office.
But nobody raised the alarm and it became open slather on "doing
something about climate change", a contest which Howard could not

So John Howard went to the people on 26 November 2007 with this
policy. Although Kevin Rudd had made a big issue of "climate change"
we must assume that most people thought he was promising them an end
to the droughts which had made life extremely difficult for our rural
industries, particularly, ever since the pastoral industry began to
expand in the 1820s.

Despite the results of the Gippsland by-election, in which the future
of the brown coal power stations in the Latrobe Valley played a
significant part, and where the swing against Labor in that part of
the electorate was particularly severe, the Liberal Party still
doesn't know whether to support the government or oppose it. A good
example of this bi-polar behaviour is found in the article published
in The Australian on July 28, by Shadow Foreign Minister Andrew Robb,
who rightly castigated the Rudd Government for its policy toward India
with respect to uranium sales.

Before losing office John Howard negotiated with the Indian Government
arrangements for Australian sales of uranium to India. Upon taking
office Rudd very quickly announced that his government would resile
from this arrangement because India was not a signatory to the Non-
Proliferation Treaty. This is not the place to discuss the details of
the arrangement which hade been negotiated by Prime Ministers Howard
and Singh, but it was important in the context of Indian domestic
politics in that Prime Minister Manmohan Singh faced a difficult time
getting his treaty with the US on these arrangements accepted by a
majority in the parliament.

That important bridge has now been successfully crossed. The Indian
parliament passed an historic vote of confidence in the Singh
Government on 23 July, 2008.

But it is disturbing to find Andrew Robb, of all people, using the oft-
repeated nonsense about nuclear power and greenhouse gases to justify
Australia's sales of uranium to India.

Australia is one of those few countries where coal reserves are so
plentiful, and so cheap, that nuclear power only becomes competitive
if coal is penalised by carbon taxes so draconian as to put the coal-
based power stations out of business.

Most other countries - Japan and Britain are good examples - need
nuclear power stations as an important factor in guaranteeing security
of energy supplies. France relies on nuclear power for 80 per cent of
its electricity supply. Nuclear power stations need refuelling only
once a year. Thus a country with ample nuclear power resources cannot
be held in hostage by the interdiction of supplies of coal or gas from
abroad. Both India and China are expanding their nuclear power
industry, as well as their coal-based electricity resources.

Although virtually no Western political leaders have attacked the
campaign to demonise carbon, in the East governments have a very
different view of the world. On 30 June, 2008, Manmohan Singh outlined
eight key elements of India's National Plan on Climate Change, a
report which he launched that day at a meeting of India's National
Council for Climate Change. Most of the press coverage in India
focussed on India's determination to proceed down the path of rapid
economic growth, and given that serious riots had occurred two months
previously in Uttar Pradesh, when police fired teargas to disperse
crowds which had blocked roads and railway lines, attacked police
vehicles, set fire to an electricity transformer and attacked
electricity workers, such a focus was more than justified. The cause
of the riots was the failure of the electricity supply authorities to
provide power for prolonged periods during a serious heat-wave. More
than 250 people were arrested.

It is an indictment of Australia's media that there was virtually no
press coverage in Australia of Singh's statement and its implications.
Only the Herald-Sun's Andrew Bolt commented on the story. An important
comment in the Indian document was the dismissal of the IPCC "science"
on global warming with the following words:

"No firm link between the documented changes described here and
warming due to anthropogenic climate change has been observed."

The Report then discussed changes in surface temperatures, rainfall,
extreme weather events, changes in sea level, and changes in the
Himalayan Glaciers. On the glaciers the Report stated

'The available monitoring data on Himalayan glaciers indicates while
some recession of glaciers has occurred in some Himalayan regions in
recent years, the trend is not consistent across the entire mountain
chain. It is accordingly, too early to establish long-term trends or
their causation, in respect of which there are several hypotheses.'

By contrast, the IPCC (WG II Ch. 10 p. 493) says of Himalayan glacier

'The receding and thinning of Himalayan glaciers can be attributed
primarily to the global warming due to increase in anthropogenic
emission of greenhouse gases.'

The other major points in the Indian document were:

* Need for energy to meet the developmental aspirations of the

* Promote energy efficiency and development of alternative sources of

* Every citizen of the planet should have an equal share of the
planetary atmospheric space;

* Rejection of any national emission target.

Singh reiterated these points at a meeting of the G5 held immediately
prior to the meeting of the G8 held in Hokkaido, Japan, in mid July.
On 9th July he said

"The first and overriding priority of all developing countries is
poverty eradication.

More than 600 million people in India are still without access to
modern energy sources and a quarter of our population lives on less
than a dollar a day.

The imperative for accelerated growth is even more urgent when we
consider the disproportionate impact of climate change on us as a
developing country with little choice but to devote even more and huge
resources to adaptation in critical areas of food security, public
health and management of scarce water resources.

And, this comes at a time when we are faced with an ever increasing
energy bill putting our energy security at extreme risk.

Sustained and accelerated economic growth is, therefore, critical for
all developing countries and we cannot for the present even consider
quantitative restrictions on our emissions. . .

India is determined that even as we pursue our economic growth and
development, our per-capita emissions will not go beyond those of the
developed countries. "

Andrew Bolt noted that this means India won't consider any constraint
on carbon emissions (now at 1.02 tonnes per capita) until Western
nations agree on per capita ceiling for their own citizens. Given that
the US is now 20 tonnes, and Australian is 16 tonnes, per capita, the
Indians have a lot of leeway to make up.

The importance of India to Australia's future was indirectly
summarised by Deepak Lal in a recent and comprehensive analysis of
India's economic path since the British Raj.1 He concluded thus.

"It might not be too rash to predict that India will be able to grow
at about 10 percent per year, which with a population growing at at
1.5-1 percent would lead to a per capita income growth of about 8.5 -
9 percent per year, for the next two decades. The foruth economic
miracle I have personally witnessed in my lifetime Japan in the
early 1960s, Korea in the early 1970s, China in the 1990s, and now
India would be in place"

India will soon be the largest English-speaking country in the world.
It has survived as a functioning political democracy despite very
great religious and sectarian differences, since 1947. Bangalore, the
rapidly growing IT centre of India, is approx 4000 miles from Perth,
compared with 4,500 miles from Shanghai to Brisbane. It will surpass
China as the wealthiest and most influential power in our region by
the mid-twenties.

For Kevin Rudd to snub the Indians in this calculated, condescending
and gratuitous way, shows a combination of incompetence and arrogance
which, in an Australian prime minister, is alarming.

Four days after Manmohan Singh made his speech in New Delhi, Professor
Ross Garnaut used the National Press Club in Canberra as a launching
pad for his Third Interim Report on Australia and its response to
"climate change", ( 4 July 2008).

Garnaut beamed benevolently throughout his speech. The contrast
between his happy, smiling face and the "diabolically" bad news he was
bringing to his fellow countrymen was a curious one. He has a wide gap
between his two front teeth. There is an old wives' tale which states
that such a gap indicates considerable personal wealth. In this case
it is accurate. Garnaut can, on the one hand, reassure the poorer
sections of the community that whilst they would be unable to consume
electricity and petrol at their current levels of consumption, they
would nevertheless be compensated through tax changes or social
service benefits for the increased prices for electricity and petrol
that are required if we are to save the planet. Like Peter Shergold
before him, Ross Garnaut's consumption of electricity and petrol can
continue unconstrained. He will scarcely notice any change to his

Garnaut's Press Club speech was yet another version of Exodus Chapters
7 to 11, the ten Mosaic plagues visited upon the Egyptians in order to
force Pharaoh to let the Israelites go. The current version eschews
plagues of gnats, rivers turning to blood, boils that will not heal,
and finally the death of all the first-born sons. Instead we have the
confident certainty that by the end of the century, the Murray-Darling
Basin will be almost barren; the Great Barrier Reef will be destroyed;
skiing in Australia will be a distant memory; annual Australian
economic output will decline by 4.8 per cent; and real wages will be
slashed by 7.8 per cent. Not 4.7 or 7.9 per cent, but 4.8 and 7.8.

In Exodus, God told Moses to strike the Nile with his rod to turn the
water into blood. The contemporary equivalent of Moses' rod is the
computer models of the world's climate and Australia's economy. It is
these magical things which tell us, through the prophetic voice of
Ross Garnaut, what catastrophes will be visited upon us if we do not
repent and adopt the Garnaut plan for decarbonising Australia's

The audience at the National Press Club gazed at the Professor with
rapt attention. No one laughed. It would have been akin to laughing
during a mediaeval sermon from Johann Tetzel on Purgatory and

Just two weeks later, on July 16, Climate Change Minister Penny Wong
launched the Government's Green Paper entitled "Carbon Pollution
Reduction Scheme at the National Press Club . As Ross Garnaut watched,
his heart must have become increasingly heavy. That afternoon he
became yesterday's man and his 500 page or so Interim Report became
completely irrelevant. Any future reports he issues will be of no
consequence. How quickly he fell. How great was the fall thereof.

But, despite all of the rhetoric, at home and abroad, describing the
catastrophes which will engulf the world if we don't reduce our carbon
emissions by 50 or 60 per cent by some future date such as 2050, Penny
Wong's Green Paper is not by Ross Garnaut, but by Peter Shergold and
John Howard, with the additional concession to the electorate that
petrol will be struck of the list of pollutants (for three years) and
diesel fuel for one year. The mechanism for this exclusion is to
counterbalance the carbon tax with a commensurate reduction in fuel
excise. For farmers and miners who don't pay excise on diesel used on
the farm or the mine, it's bad luck.

Why has the Rudd Government dumped Garnaut in favour of Howard?

The political calculus is straight forward. Particularly after the
Gippsland by-election, the Prime Minister understands that without
bipartisan support for a policy which will cause unpredictable, but
potentially very serious, economic dislocation and consequent hardship
to a core part of Labor's traditional constituency, his political
future becomes uncertain at best, and short-lived at worst.

So for Prime Minister Kevin Rudd, John Howard's legacy becomes very
important. If he can use the Howard policy to break the Liberal Party
on this issue, he will have a chance to survive and at this point it
seems that he has at least kept that option alive.

So now the calculations of the rent-seekers, and the energy-intensive
industries whose primary concerns have been getting promises of free
permits or some other concessions which will enable them to survive,
if only for a little longer, take as a starting point the introduction
of an Emissions Trading Scheme. The brown-coal power stations have
been promised an allocation of free permits; the black-coal power
stations, compensation, albeit unspecified. The liquified natural gas
(LNG) industry, which has a very big future here (if it doesn't get
taxed on its CO2 emissions) has also been promised dispensation. But
given that petrol is to be exempt (for at least three years) and
diesel for one year, and LNG production (which is very energy-
intensive) is going to be exempt forever, it is becoming difficult to
find anyone who is actually going to be forced to reduce their
emissions. How can any industry or company in this situation take
these promises seriously?

The electricity supply industry, for example, is faced with the
following dilemma. Sales between the electricity generators and the
retailers are of two kinds. About 70 per cent is on long-term
contracts, typically 3 to 5 years. The remainder is bought and sold on
shorter contracts with, historically, about 5-10 per cent sold on the
spot market; prices on the spot market can reach very high levels - up
to $10,000 per Mwhr.

All of the current contracts expire in 2011. No new generating
capacity is being installed. No one is prepared to write a long-term
contract to come into effect in 2011. Presumably, at that point, the
spot market (and intra-company sales of the integrated suppliers like
AGL) will operate for 100 percent of sales and current estimates of
prices that will then begin to balance supply and demand show that
wholesale electricity prices will increase by at least 70 per cent.

We are now beginning to face reality. We cannot decarbonise the
Australian economy without causing immense economic dislocation. Just
talking about decarbonisation, when the talk comes from the Prime
Minister and the Opposition Leader, is stopping all investment in much-
needed new generating plant, and causing energy-intensive industries
to update their exit strategies.

We have to remember that Ross Garnaut is very clear about shutting
down our coal-based power stations and replacing them with either wind
or solar or other unknown renewable sources of power.

The Prime Minister has repeatedly endorsed swingeing emissions
reductions of 50 or 60 percent by 2050. This is simply not possible
unless all our coal-based power stations are replaced by nuclear
plants. Even then such a target is highly problematic. People who have
to make investment decisions worth many billions of dollars take great
heed of these statements.

The only thing we need to know about all of the econometric models
which have been used to demonstrate either no pain, or some pain, or
even real economic benefits from decarbonisation, is that none of them
are worth the paper they are printed on. Forty years ago, Nobel
Laureate Kenneth Arrow remarked "Linear programming of whole economies
are either trivial or dangerous." Despite the vastly increased power
and speed of computers since the 1960s, that remark is still valid.
For example, Treasury estimates of revenues for the next twelve months
have been wildly in error for the last 11 years. During the Peter
Costello era, Treasury underestimated revenue by an average $7
billion. A forecasting record which is consistently wide of the mark
in the same direction for eleven years in a row, under circumstances
of economic stability, suggests that something is very wrong.
Participants in this decarbonisation debate, who take any notice of
what a Treasury model predicts decades ahead under circumstances in
which the Australian economy has been deliberately hit with the most
severe upheaval since the Great Depression, have lost all touch with

The Australian's Paul Kelly is, regrettably, one such participant. On

30 July he wrote:

"Nelson forgot the reason Australia pledged [under Howard] to an
emissions trading regime: it is because the longer the delay, the
greater the economic penalty mitigation will impose on the Australian
people and business community."

Another is Geoffrey Barker, a senior journalist now at the ANU, who
wrote in the AFR on 21 July: ,

"Intellectually all governments understand that the costs of doing
nothing or very little about climate change might in the long run be
greater than the costs of acting now to start reducing carbon

These declaration bring back to mind the occasion when the Duke of
Wellington was walking in Hyde Park with an attractive lady whose name
was Mrs Smith, when a stranger accosted him with the greeting: "Mr
Smith, I presume". To which the Duke replied: "Sir, If you believe
that you'll believe anything".

Where do Paul Kelly and Geoffrey Barker get this nonsense from?
Clearly from the econometric models employed by Nicholas Stern and the
climate models employed by the IPCC.

Econometric models are useful in considering small perturbations in an
economy characterised by stability and relative freedom from sovereign
risk. Otherwise Kenneth Arrow's description applies. But what
decarbonisation will do to the Australian economy can be likened to an
edict issued by the Government in the late 1940s, requiring every
third merino sheep to be put down this year, and another third next
year, and so on, every subsequent year. In those days Australia rode
on the sheep's back. Today we ride on the huge dump trucks which carry
the coal from the open cuts to the rail-head or to the nearby power
station. One doesn't need any computer models to be able to work out
that there is going to be huge but unpredictable economic and social
dislocation as we begin shutting down that proportion of our coal
industry which serves our domestic requirements.

If Paul Kelly thinks that this upheaval will save us from climate
catastrophe of some kind, then he should consider what Christopher
Monckton has to say about the climate models which are used to justify
this belief:

The models have not projected the current multidecadal stasis in
"global warming": no rise in temperatures since 1998; falling
temperatures since late 2001; temperatures not expected to set a new
record until 2015 (Keenlyside et al., 2008). Nor (until trained ex
post facto) did they predict the fall in surface temperatures from
1940-1975; nor 50 years' cooling in Antarctica (Doran et al., 2002)
and the Arctic (Soon, 2005); nor the absence of ocean warming since
2003 (Lyman et al., 2006; Gouretski & Koltermann, 2007); nor the
behavior of the great ocean oscillations (Lindzen, 2007), nor the
magnitude nor duration of multi-century events such as the Mediaeval
Warm Period or the Little Ice Age; nor the decline since 2000 in
atmospheric methane concentration (IPCC, 2007); nor the active 2004
hurricane season; nor the inactive subsequent seasons; nor the UK
flooding of 2007 (the Met Office had forecast a summer of prolonged
droughts only six weeks previously); nor the solar Grand Maximum of
the past 70 years, during which the Sun was more active, for longer,
than at almost any similar period in the past 11,400 years (Hathaway,
2004; Solanki et al., 2005); nor the consequent surface "global
warming" on Mars, Jupiter, Neptune's largest moon, and even distant
Pluto; nor the eerily-continuing 2006 solar minimum; or the
consequent, precipitate decline of ~0.8 C in surface temperature from
January 2007 to May 2008 that has canceled out almost all of the
observed warming of the 20th century.

The predictions of climate catastrophe on the one hand, and
imperceptible economic pain on the other, and the obvious desire on
the part of many to believe them, are manifestations of a retreat from
reason in the West, and a belief in magic, which bodes ill for our

There is one final point to be made in the current state of the
debate. Political leaders such as Martin Ferguson, Federal Minister
for Energy and Resources, and John Brumby, Premier of Victoria, are
anxious to preserve the coal industry and the coal-based electricity
industry in a viable if not flourishing state. They have pinned their
hopes on so-called "clean coal", a slogan which describes a process of
carbon capture and sequestration (CCS) which separates the carbon
dioxide from the flue gases of power stations and other energy-
intensive processes such as cement works, and then buries the carbon
dioxide underground, in secure storages.

They have been sold this particular magical elixir by the coal
industry, notably Rio Tinto, one of the largest coal producers in the
world. In the June issue of Quadrant I noted that "the most recent CCS
cost estimates for the Latrobe Valley brown-coal power stations, where
the carbon dioxide is to be injected into Bass Strait, is $160 per
tonne of carbon dioxide, which is equivalent to an increase in the
cost of electricity of $103 per Mwhr. (Recall their current production
costs of less than $30 per Mwhr.) Such an impost would make these
power stations worthless".

There are fundamental laws of physics and chemistry, laws which have
been understood for a long time, which make such a process very
expensive. No legislation can change those laws. No amount of
political rhetoric can bring down the cost.

But above all, the belief that carbon is a demonic element, and that
carbon dioxide is a satanic gas, is a retreat into fantasy of the most
primitive and dangerous kind.


1.Ray Evans is Secretary of the Lavoisier Group. His article "The
Chilling Costs of Climate Catastrophism" appeared in the June issue.
Christopher Monckton's paper, "Climate Sensitivity Reconsidered" is on
the website of the American Physical Society at