Crunching the carbon price numbers

Labor, the Coalition and the Greens debated climate policy last week and it became clear that the carbon price will have little impact on the economy.

Three politicians and three experts debating climate change may seem a bit old hat, but there was a full house at Melbourne University last week for an event with a difference. Hosted by the Department of Mathematics and Statistics the topic was ‘Transforming data into votes’, which took the clash between science and politics head on.

Each of the speakers presented their main arguments, focussing on key numbers and graphs – thereby proving that you can not only have your own opinions, but also your own facts and even utilise the units that best support your argument.

For Labor's Parliamentary Secretary for Climate Change, Mark Dreyfus, the prime number was the slight 0.9 per cent impact he said the carbon tax would have on the CPI. His equation was the government would deliver 140 million tonnes (MT) of carbon abatement for a carbon price of $23 – whereas the Coalition would only deliver 40 MT for a cost of $50 a tonne.

Coalition Parliamentary Secretary for the Environment, Simon Birmingham's riposte was that paying money to producers of 140 MT to reduce emissions avoids taxing all 600 MT of carbon emissions. He cited Treasury modelling predicting Australian CO2 emissions would rise from 578 MT to 2000 to 621 MT by 2020 because 75 per cent of the abatement, 94 million tonnes, would occur overseas – representing a massive drain on national wealth.

As the mathematicians tried to get those numbers to add, Greens leader, Christine Milne focussed on 450 parts per million (ppm). At this CO2 concentration microscopic ocean life dies, removing the base of the marine food chain. In any event, she said the issue was not about information but values (moral rather than numerical). She warned against setting arbitrary targets, such as a 5 per cent reduction by 2020, and urged a public campaign by scientists to "stand up to the nonsense by fighting the argument on evidence".

Milne used geometry to attack the Coalition's Direct Action Plan, which originally claimed 150 MT of abatement through carbon farming would need 100 square kilometres. When it was pointed out this meant 1.5 tonnes of carbon per square metre – the claim was adjusted to 100 kilometres square (ie 10,000 square kilometres) needing just 15 kilograms of carbon per square metre – still the equivalent of a half inch layer of carbon absorbed each year.

Professor Philip Adams from the Centre for Policy Studies at Monash University was a big fan of mathematical modelling. His computation predicts the carbon price will reduce growth in GDP by 1.4 per cent and growth in real incomes by 3 per cent, spread over the next 40 years. Expressed annually, this cuts an average 3 per cent growth in incomes to 2.96 per cent – a negligible change.

However, impacts could be potentially significant in some industries and regions. His modelling predicts that Western Australia and the Northern Territory will be net beneficiaries of a carbon price whilst, in order, the losers will be Tasmania (-1 per cent), South Australia, Victoria, New South Wales and Queensland (-3 per cent).

Adams supported targeting abatement measures – highlighting the electricity sector which produces 36 per cent of emissions but only contributes 3 per cent to GDP – so big reductions are possible at little cost. At the other end of the spectrum the transport sector emissions are inelastic and not impacted by even large price increases.

Simon Shrapel, the President of ACOSS, presented reams of ABS data to breakdown the impact on households. Utility prices are already a major pressure on low income families with rises of 87 per cent over the last 10 years compared to a CPI of 34.4 per cent.

However he said the carbon price will only add 0.68 per cent (less than the Dreyfus estimate) made up of 0.2 per cent through electricity prices, 0.03 per cent through gas, 0.08 per cent through food and 0.33 per cent from other prices. This growth is far less than the impact on CPI of the GST (2.3 per cent), the mining boom (1.6 per cent) or even Cyclone Larry (0.8 per cent).

The impact on the top 20 per cent of wage earners would be $12 a week or about 1 per cent of income, whereas the impact on the bottom 20 per cent would be halved – at $6 a week but this represented 7 per cent of their income, so their sensitivity to change was greater. ACOSS had done detailed modelling for many family types across income ranges however, and was satisfied the compensation left everyone better off.

Professor David Karoly from Melbourne University spoke last and drew ironic cheers for being the first person to present graphs with error bars. He demonstrated the research consensus that a 0.8 degree increase in global temperatures occurred over the last century and the fallacy that readings for 1998 and 2010 represented a downward trend.

He pointed to the fact that 90 per cent of the net energy absorbed by the globe was captured in the ocean - a staggering 2.0 x 1022 joules – that is 20 million million million kilojoules.

As the audience stretched their minds around that number, Professor Karoly turned to  the 30 per cent increase in Australian emissions since 1990 which had been offset by one off (and not repeatable) land use changes.

He concluded by discussing different ways in which the "allowable" 1000 billion tonnes of CO2 could be apportioned between different countries in order to stay below the "maximum tolerable" 2 degree warming level. The most equitable global formula would require Australians to reduce their average current emissions of 19 tonnes per capita to 3 tonnes per capita per annum. A big ask.

Fittingly, the final question came from a climate sceptic bearing two large folders of "evidence", who asked why no-one would listen to his proof of the "corruption of climate scientists". Simon Birmingham warily agreed to meet if he sent an email explaining who he was.

With the eloquence only possessed by a QC, Mark Dreyfus gave the questioner both barrels. He firmly asserted that western government was founded on rational thought, that science must remain the root of democratic thinking and a progressive society must stand up to "delusional" ideas. It was a speech worthy of the early Renaissance and the mathematicians went home greatly affirmed.

No audience vote was taken, but the applause made clear those for action on climate change clearly had the numbers on the night by an order of magnitude.

Andrew Herington is a former Labor Ministerial Adviser now a Melbourne freelance writer.

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