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A carbon tax is only likely to foster the much more efficient use of energy, and substantially reduce carbon emissions, if it provides a price shock.

Supply/demand economics says that the demand for a product is inversely proportional to price, the higher the price the lower the demand. In theory, as a carbon tax would increase energy prices, then people should search out ways to use less electricity.

However, demand for electricity is largely insensitive to price, unless of course the price increase is large and sudden.

For example, there is no doubt that over the last year or two household electricity prices have increased. Has this reduced demand? I don’t have any access to data, but anecdotally for the large majority of households I think not. And the reason for this, I would argue, is that whilst the increase may have been in the order of say 15%, the increase has not been enough for energy consumers to consciously focus on reducing their energy usage. Sure, the price increase is enough for many of us to complain. But not enough to take action to reduce our consumption.

Electricity prices in Australia are very low compared to wages. For most organisations the cost of energy is only around 1% of their total operating costs. If the price increases by 20% its not exactly damaging the bottom line.

AGLs chief economist has warned of power prices doubling by 2015. Contrary to popular opinion, electricity price rises to 2015 will be driven more by network and generation capacity constraints than by carbon pricing.

Surely a doubling in electricity prices over the next 5 years would reduce electricity consumption? Yes, I think it will, but not by much. But a doubling over a one or two year period would probably significantly reduce electricity consumption.

For example, lets take a business that has a 20% gross profit margin, and spends 1% of its income on energy. An increase over one year of energy prices of 20%, will reduce its gross profit by just 1%. This is unlikely to get much interest. On the other hand, if electricity prices doubled, the gross profit would by cut by 5%. This is more likely to get attention drawn to it and foster action to reduce electricity usage.

The science, as recently highlighted again by Professor Ross Garnaut,  is very clear that we must reduce carbon emissions. Therefore a carbon tax, if it significantly increases the price of power over a short time period, is likely to drive energy consumers to use less energy. Many energy consumers will seek to use energy more efficiently, whilst still getting the same outcome from their use of energy.

And, contrary to popular perception, cutting energy consumption by 50% or more is possible with today’s technology. But you have to genuinely want to reduce your energy use to do that. A number of our clients have halved or nearly halved energy consumption in their schools or offices, with a payback typically of 5 years or less.

If you really want to, you can probably cut your energy consumption by 15% to 20% AT NO COST. A company of lawyers we worked with cut electricity usage in their office by 19% without any investment in equipment, just by choosing to waste less power. Our low electricity prices relative to wages mean that Australians are very wasteful of energy.

From a scientific perspective we must reduce GHG emissions rapidly. Anything that therefore reduces the consumption of fossil fuels and drives the demand for renewable energy is to be welcomed.

To be confident of a stable future climate, the science says slash carbon emissions now. A carbon tax that produces a price shock will help achieve this. Energy efficiency will help us cope with the price shock. Electricity at $0.50/kWh in 2012 would be great to help slash emissions.

It has been a turbulent time during the last few weeks regarding the climate change issue. There have been a number of natural disasters all around Australia all linked to weather pattern changes. Although, some may argue that these would have happened anyway –saying that these have nothing to do with global warming- it is unlikely. There has been an increase of floods all around the world in the last few years as well as extreme temperatures resulting in bush fires or heavy snow falls in countries where they don’t normally have these. And the list goes on. But I won’t go on about this as it is a huge issue in itself, just look at Bruce’s previous blog with the weather map of Australia; it sums it up succinctly.

What is a concern is that the first reaction of the Australian federal government is to cut back on the environment budget in order to rebuild flood-affected areas. Fair enough some of those policies were real duds anyway but weren’t some of these catastrophes caused by the fact that we have been putting too much carbon dioxide in the atmosphere? So it would make more sense to try to reduce these to minimise the occurrence of more natural disasters. However, this is not the case. According to an article in The Age (http://www.theage.com.au/environment/climate-change/greenhouse-emissions-to-double-unless-action-taken-20110211-1aqnb.html) quoting Ross Garnaut the way we are going at the moment Australia’s greenhouse emissions will increase by 24% by 2020 (based on 2000 levels). Hang on; weren’t we supposed to reduce our emissions by an incredible 5% by then? Oh, yes but we still haven’t got any decent policies in place such as a carbon tax after years of debating it. Instead the current and the previous federal governments have spent around $5.5 billion on mediocre and piece meal abatement programs some of which were very poorly-managed indeed.

Overall all these approaches will not make hell of a lot of difference to Australia’s greenhouse emissions and we paid a very high price for the minuscule CO2 that we did manage to curtail, which is estimated to be about one-tenth of that famous 5% target. See: http://www.theage.com.au/environment/climate-cash-goes-up-in-smoke-20110214-1atnh.html). On a state government level (referring to our home state Victoria) the recently-elected government doesn’t seem to have much to say about Climate Change –so far. They are not too concerned to the extent that some of them don’t even believe in it and suggest the commissioning of more brown coal power stations to keep up with the ever increasing electricity demand.

The only ones that are actually rolling their sleeves up and are really doing something about reducing greenhouse emissions are our local governments with the support of their constituents. There are many passionate people in these organisations that are constantly doing the right thing. In many cases they are ignoring the financial cost of implementing strategies in order to improve their environmental impact. Those higher up should learn from them.

It is paramount that we as a country start doing something about Climate Change. The longer we wait the more it will cost the economy to retool and the longer we wait the worse it will get when it comes to natural disasters.

According to many commentators the recent weather in Australia cannot be linked to climate change.

So check out this weather map… (caution, contains strong language)

As with many people climate change science has been on my mind with the devastation of the floods and now hurricane Yasi in Queensland.

Sea level rise is one of the likely impacts of climate change, driven by a melting of the Greenland Ice cap. The melting of the Greenland Ice cap will lead to a sea level rise of around 7 metres. I was a bit sceptical about this number when I learnt of it. How could the ice melt from such a seemingly insignificant place on the world (after all, who do you know who has been to Greenland?) cause such a high sea level rise? So I did some quick investigation, found out that most of the Greenland ice shelf was over one km thick, and a rough calc showed that this estimate of sea level rise was about right. But how long would this take? Surely it would be over hundreds or thousands of years?

If you have ever seen a presentation by David Suzuki or can remember your high school science, or understand compound interest, you should appreciate the concept of exponential growth. For example, which would you prefer – $1 million or 1 cent that doubles every day for the next thirty days? If you opted for the 1 cent that doubles after 20 days you’d only have a little over $5,000, but after 30 days you would have over $5 million. With exponential growth nothing much seems to be happening, then suddenly things seem to change very quickly.

The Climate Code Red blog has recently reported on research by NASA scientist James Hansen that indicates that the rate of mass loss from the Greenland ice shelf is doubling roughly every 5 to 6 years. Hansen is quick to point out that the data records are too short to be sure of the doubling time. But if the rate of mass loss does double every 6 years, after 60 years the rate of mass loss will be over 500 times what it is today. And this exponential growth in the rate of loss of ice is what Hansen has predicted could translate into a 5 metre sea level rise by 2095.

Over the last century the sea level rose by somewhere between 150 to 200mm (according to the USA’s environment protection authority). Lets assume that that the sea level rose by say 2mm in 2010, in line with the average yearly rise in the century before. If we take the crude approximation that sea level rise also takes place exponentially, and we are looking at a sea level rise of 5 metres by 2095, by how much will the sea have risen between 2010 and 2020? By just 30mm – surely nothing to make the alarm bells ring or make coastal property values plummet. By 2030 the rise will be 80mm – mmm. By 2050 the rise would be 330mm. Probably still not enough for some sceptics to acknowledge climate change. In fact it would only be until 2068 that sea levels were a metre above 2010 levels.

Now I’m not a climate change scientist and the numbers above have been generated from some very rough calculations that wouldn’t stand up to peer review. But my point is that sea level rise – seen as one of the great threats of climate change – will probably creep up on us. Just because its happening slowly now doesn’t mean sea level rise will always be slow.

Reports recently published in newspapers indicate that the government’s mandatory energy star rating schemes of homes is rather inaccurate. The scheme has been heavily-criticised by the building industry (HIA and MBA) and they are calling on scientists and the Department of Climate Change and Energy Efficiency to review the way the star rating is calculated for new houses.

Applying the same software to the whole continent is not the right approach either. Most importantly there is another fundamental issue that relates to the way a home is used –which has more to do with the occupants than the actual construction of the house itself.

The main problem cited by the building industry involves the three government-approved tools used to award the star six star rating. Basically it means that there are unacceptable differences between the star ratings produced by the various software tools when assessing the same house. The flaws in the star rating system were discovered after industry representatives, private companies and scientists commissioned independent studies to test the software tools on identical houses. For example the independent testing showed that the same Brisbane house had a variation of 3.2 stars when different software tools were used to audit it. In addition the software tools are easy to manipulate to get the desired results. A side issue is the under-qualified assessors who don’t operate under any quality programs.

The second issue relates to the fact the same software tools are used Australia-wide. Since the software tools mainly deal with heating and cooling to deliver a star rating they don’t take into consideration the varying climates found in Australia. In each part of Australia there will be different contributions of heating and cooling and we have little real data to help us in our understanding of by how much, or whether at all, star ratings will help reduce consumption. A respected scientist explained that the star rating doesn’t actually measure the electricity demand in a given house. So basically there is no correlation between the stars and GHG emissions.

It has been suggested that end-use metering study should be commissioned to determine overall home energy use, energy use by home appliances and the assessment of the thermal performance of the building shell for different housing types. Also, the overall performance of the recently-built six star homes should be assessed to create a valid database to establish if the star rating scheme has in fact helped reduce energy consumption.

The third observation was expressed by a university professor who explained that in reality the behaviour of the occupants of a house dictate the energy consumption. It doesn’t matter how many stars a home has if the occupants don’t use it responsibly. It could be stacked with electrical appliances like LCD screens, fridges or with inefficient halogen lighting. The software tools merely calculate the potential savings based on the fabric of the house, insulation, wall materials and of course the likely heating and cooling. Therefore, it is really up to the individual to act responsibly and to have an interest in reducing greenhouse emissions and of course their electricity bills.

For more detailed information and pdf file go to this site: https://carbonetix.com.au/why_your_5_star_energy_efficient_home_isnt.php

(Ref: http://www.theaustralian.com.au/news/features/eco-threat-to-house-prices/story-e6frg6z6-1225904124270 and
http://www.theaustralian.com.au/news/investigations/energy-star-ratings-in-disarray/story-fn6tcs23-1225899270215 )