7   Greenhouse mitigation: How economists get it wrong

Ted Trainer, 20.8.08

At last, after decades of our pleading and haranguing about limits to growth, they have come to realise the greenhouse and energy problems are very serious. However the current public discussion is characterised by two extremely strong and unquestioned assumptions/faiths. The first is that the problems can be solved without any need to think about significant change from this society’s fierce commitments to affluent living standards and economic growth, and the second is that they can be solved at little economic cost (maybe 1% of GDP according to Stern).

I have written three lengthy papers arguing that these assumptions are mistaken. (See the references below on Stern, Garnaut and the IPCC Reports, Trainer 2007, 2008a, 2008b.) If I am right then current thinking on what to do in response to the problems is seriously wrong-headed and is helping to keep us on the spiral down to oblivion.

My concern in this brief note is mainly to indicate the way that the narrowness of conventional economic theory has misled mitigation thinking, and often leads to faulty conclusions. I must stress that this is not to question the climate science the reports present. It is only to dispute their analyses of CO2 mitigation.

Stern takes as the 2050 energy supply goal an approximately 1100 EJ energy target. This is the approximate figure the International Energy Authority estimates we are heading for. However it is a misleadingly low target to take because it would give 9 billion people less than half the present Australian per capita energy use, and maybe one-quarter of the likely 2050 amount. The issue should be discussed in terms of providing for 9 billion people (which Garnaut does), not just for moral or equity reasons but because the Third World is hell-bent on rising to rich world "living standards". So whether you like it or not you had better think about the implications of 9 billion trying to live as we intend to.

Stern takes the CO2 emission goal as reduction to 18 GT/y by 2050, corresponding to an atmospheric concentration of 550 ppm. Few would now dispute that this is far too high. The general view would seem to be that 400 - 450 ppm is the more appropriate goal. Hansen et al. (2008) say it should be 350 ppm. (We are already on 385 ppm.) Warming effects are being observed ahead of IPCC expectations, so in the near future a 550 ppm target is likely to be regarded as having been much too lax.

One of the most misleading aspects of Stern’s analysis is the failure to make clear that the reduction to 18 GT/y emission in 2050 is all we have to do by 2050 in order to be on the path to 550 ppm, but that after 2050 this path requires massive further reduction. The Report reads as if we need to cut from the present 26 GT/y to18 GT/y by 2050 in order to have solved the problem, but this is just the beginning of what we have to do. The situation is made clear in the IPCC Fourth Assessment Report SPM 7 graphs where the dramatic fall after 2050 is shown.

The combined effect of these three points is that Stern has made the task seem far easier than it would be if satisfactory assumptions and conditions had been set.

However these are minor issues compared with the analyses/assumptions to do with mitigation. The most important fault in the Stern, IPCC and Garnaut Reports is the failure to deal with the limits to alternative technologies. They all simply assume that we can move off fossil fuels just by substituting nuclear, geosequestration and renewable technologies. The UK and Australian governments are aiming at 60% reductions in emissions by 2050. Many others (including Garnaut) are saying this is far too little and perhaps 90+% cuts are required. The IPCC graphs show that for 450 ppm the range of estimates for the 2100 emission target is between 4 and minus 15 GT/y, i.e., we will probably have to be taking a lot of CO2 out of the atmosphere every year. The underlying, never-questioned assumption, is that all we have to do to achieve such goals is to be more efficient in energy use and switch to renewable technologies.

This is where the economists have been grossly misleading. The mitigation potential analysts have simply taken the conclusions of economic modelling studies, with no recognition that these fail to deal with the crucial issue of the limits to alternatives. "Top down" economic modelling studies look at the reduction likely if, for instance, a carbon tax of a certain magnitude is imposed. "Bottom up" studies look at the amount of emissions that could be eliminated if $1 of wind power, for example, is introduced. They then set an amount of fossil fuelled power they would like wind to replace, multiply the two numbers, and arrive at a dollar cost for the replacement…with no thought as to whether it will be technically or ecologically possible to achieve such a huge scaling up, i.e., whether there might be limits to the magnitude of the contribution the various alternative sources can make.

This failure is probably due in part to the almost complete absence of a critical literature on the possible limits to renewable energy. My Renewable Energy Cannot Sustain A Consumer Society, (Trainer 2007), offers an interpretation of evidence accessible in the early years of this century and the summary paper Trainer 2008c advances the analysis in the light of more recent evidence. It therefore might not be surprising that in the absence of any substantial literature on the topic, analyses of the potential for carbon emission mitigation have proceeded without recognising that there might be limits to the contribution renewables could make.

Following is an indication of the reasons why it will not be possible to scale up the alternatives by anything like the enormous amounts that would be required by 2050 to achieve the likely supply target of 1100 EJ, which Stern and the IEA indicate. (For the detail see Trainer 2008c rather than 2007.)

Stern assumes c.62 EJ from wind, but this is about 120 times world wind capacity when he wrote. Where are you going to locate all that? Trieb, an advocate of renewables, estimates total European capacity on and off shore at 4 EJ. Then how are you going to integrate this into the supply system, e.g., coping with maybe 20-30% of supply coming on and off line within a few hours, and days with system capacity at under 10% (the German and UK situations, see Eon Netz, 2004, Sharman, 2005, Oswald, 2006.)

Stern’s assumed quantity of PV energy would require 130 billion square metres of panels (at Sydney average solar radiation and thus much more in Europe, in winter), i.e., about 15 square metres per person for 9 billion people. Could that be afforded… for 10% of energy, and what would substitute for it every night when the entire PV system was delivering nothing?

Stern’s assumed 110 EJ from biomass is implausible as it corresponds to a forest plantation area of about 850 million ha, in a world with only 1.4 billion ha of cropland and 4 billion ha of forest, and great and increasing demand and stress on all lands. In any case this would only provide 9 billion people with 4 GJ of ethanol each, about 6% of the present Australian per capita transport fuel consumption.

What about nuclear energy? If 9 billion were to receive 10% of their energy from nuclear reactors all recoverable Uranium (assuming 4 million tonnes) would probably be exhausted in 2 years. Thus nuclear energy is almost irrelevant to the global energy future, unless fusion or breeder reactors are assumed.

Solar thermal electricity will undoubtedly be one of the most important contributors, but output in winter is low. The best prospect could be dishes storing via ammonia dissociation, although how this will perform in winter is uncertain, and embodied energy costs will be high. Despite the capacity to store heat these systems suffer an intermittency problem, set by the occurrence of sequences of cloudy days. (For a detailed discussion see Trainer, 2008d.) It seems clear that solar thermal cannot plug the gaps left by the wind and PV.

Geosequestration can’t capture more than 80-90% of CO2 generated and it can’t be applied to vehicles. If the emission limit is 5 GT/y of CO2e (the IPCC’s lower limit for 2050) and if 80% is captured then geosequestration can only provide 93 EJ of electricity. If we take their highest limit, 13 GT/y, and assume 90% capture is possible, we would get about 340 EJ/y of electricity. This would be about enough to give the present Australian per capita electricity to 9 billion, but it would leave none for the much bigger transport energy problem. However global coal use would then be 3.5 times the present amount and coal resources would probably last less than 30 years.

A factor all three reports ignore is the large energy losses involved in the conversion of electricity into needed forms. If you want to run a vehicle on hydrogen produced from wind energy then you will probably need 4 times as much wind electricity as the vehicle wheels are to use. (Bossell, 2004.) This is one of the reasons why we are not likely to have a "hydrogen economy." (See Chapter 6 in Trainer 2007.) After electricity and transport were accounted for there would be another 15% of energy to be found, much of it in liquid or gaseous form, so after conversion this would probably require generation of at least another 250 EJ of electricity.

If we take these kinds of numbers and limits and try to explain where the 2050 1100 EJ could come from…it can’t be done. (See the final pages of Trainer, 2008c.) You can only make that budget work if you take highly implausible assumptions about the numbers of windmills that can be used, integration, storage, etc. Note again this is to do with a target that is only one-quarter the size it would have to be to give all 9 billion the per capita energy Australia is heading for by 2050, and it assumes much use of coal when none is likely to be permissible by 2100.

At least it should be clear from this that there are many formidable questions to be dealt with before you can assume it is possible to solve the greenhouse problem. Stern, the IPCC Working Group 3 Reports and Garnaut do not discuss these issues at all. Yet they all assert confidently that the greenhouse problem can be solved, at negligible cost and with no threat to the commitment to affluence and growth. Again the main reason for this is that they have accepted without question the conclusions of the economic modellers with respect to mitigation strategies, when the modellers have taken into account only dollar considerations, and the crucial issues do not depend much on dollar costs.

This is an instance of the basic general fault in conventional economics, the refusal to attend to anything but dollar values. It draws conclusions on what is to be produced, who is to get it, levels of "welfare" and "efficiency", without making any reference to psychological, social, cultural or ecological costs and benefits. When a factory is closed there can be immense social and psychological costs but these are ignored because they are not measured in dollars. Thus we have a calculus which is a delight for those who own capital, because it allows the focus to be on cutting monetary costs and maximising monetary benefits, and it allows them to ignore all social etc. costs -- which means someone else has to pay them. A satisfactory economic theory would take into account all costs and benefits to do with things like social cohesion, justice, the quality of life, and the planet’s ecological systems, and it would give these priority over considerations of mere monetary profit and loss.

In my view these three reports reinforce the determination to pursue disastrously mistaken and futile policies, especially the attempt to reduce emissions through technical fixes without recognising any need to cut consumption dramatically. Tech-fixes within consumer-capitalist society cannot make anything like a sufficient difference. There must be vast change to radically different economic, political and cultural systems The rich consumer-capitalist societies appear to have exceeded sustainable levels of production and consumption by at least a factor of 8. For instance by 2050 the amount of productive land on the planet will average no more than 0.8 ha per person, but the present Australian use is over 7 ha per person, about 9 times as great. Yet the supreme and never-questioned goal is to increase incomes, consumption and GDP -- for ever.

Then there is the little matter of a global economy that is massively, inevitably, and irredeemably unjust. It siphons most of the world’s wealth to the rich countries, and prevents development in the Third World that might devote its productive capacity to meeting its own needs. (See Trainer, 2006.) Markets cannot do anything else, because they are systems in which resources go to those who can pay most for them. By definition they do not and cannot attend to need, the environment, social cohesion, justice or future generations.

The point is that the now alarming global problems of sustainability and justice cannot be solved within a consumer-capitalist system. There has to be vast and radical transition to some kind of Simpler Way in which we can live frugally mostly in small scale and highly self-sufficient cooperative/participatory local economies, with no economic growth…and according to values which contradict some of the core commitments of Western culture. In my view our chances of such a transition are negligible….mainly because none of this is on the agenda of official or public discussion. Attention is given only to finding technical-fixes that will allow the consuming frenzy to accelerate, without inconvenience. The economic modellers and conventional economic theory must take much of the responsibility for this state of affairs.

Bossel, U., (2004), "The hydrogen illusion; why electrons are a better energy carrier", Cogeneration and On-Site Power Production, March – April, pp. 55 – 59.

E.On Netz, (2004), Wind Report 2004,

Hansen, J., et al., (2008), "Target atmospheric CO2; Where Should humanity aim?", Climate Progress,

Oswald Consulting, 2006, 25GW of distributed wind on the UK

electricity system, An engineering assessment carried out for the Renewable Energy Foundation, London.

Sharman, H., 2005, 'The dash for wind; West Denmark’s experience and UK energy aspirations'.

Trainer, T., (2006), Third World Development,

Trainer, T., 2007, "The Stern Review; A critical assessment of its mitigation optimism", (in press),

Trainer, T., (2008a), "A critical discussion of the IPCC analyses of carbon emission mitigation possibilities and costs",

Trainer, T., (2008b), "The Garnaut Report: A critical comment."

Trainer, T., (2008c), "Renewable energy – cannot sustain an energy-intensive society",

Trainer, T., (2008d), Estimating the potential of solar thermal power,

Trieb, F., (undated), Trans-Mediterranean Interconnection for Concentrating Solar Power; Final Report, German Aerospace Center (DLR), Institute of Technical Thermodynamics, Section Systems Analysis and Technology Assessment.