Do Nobel laureates endorse Abbott's Direct Action?

Greg Hunt has been suggesting economics Nobel laureates co-opted by Bjorn Lomborg endorse the Coalition's Direct Action policy. Is it true?

Greg Hunt has a habit of citing experts that he says support his Direct Action program but which, on closer inspection, don’t. His speech in Adelaide hosted by the Grattan Institute continues this pattern.  

In his speech outline, Hunt makes reference to Bjorn Lomborg’s authoritatively titled Copenhagen Consensus exercise in support of his Direct Action scheme.

Hunt states:

"Lomborg summarised the findings of Nobel economic laureates (and climate change believers) Finn Kydland, Thomas Schelling and Vernon Smith thus:

"One of the most striking characteristics of the expert panel’s findings, obviously, is the verdict that short term carbon emission reductions through carbon taxes are a ‘poor’ response to global warming. It bears pointing out that the expert panel also noted in their findings that cutting carbon through cap and trade would be an even poorer solution.”

"Let me just summarise. A considered panel of the world’s most eminent pure market economists concluded that of 15 different systems for cutting emissions, the three worst, the three least effective, the three most costly per tonne of abatement were variations of the carbon tax or ETS."

In Hunt’s Melbourne speech he suggested that they had endorsed Direct Action:

"The top three approaches were direct investment in technology. You don’t have to agree with what they chose, but they argued that the best chance and the cheapest way, and therefore the greatest emissions reduction, would come from direct investments in technology."

So I thought I would do a little bit of research into Lomborg’s Copenhagen Consensus. What I found suggested Hunt was gilding the lily to imply that this represented an endorsement of his Direct Action policy. It also poses broader questions about the wisdom of Hunt relying on Bjorn Lomborg for his policy advice.

The ranking of measures to combat climate change by Lomborg’s hand-picked committee are below:

Graph for Do Nobel laureates endorse Abbott's Direct Action?

Clearly, Hunt was not lying when he said that the CO2 taxes were ranked down the bottom (for reasons that are problematic which I’ll go into later).

But Hunt can hardly suggest that the recommendations are consistent with an endorsement of Direct Action. The top-ranked measures, and in fact a number of the other measures, could not in any way be construed to represent something similar to Direct Action.

As far as I’m aware research into marine cloud whitening and research into stratospheric aerosol insertion won’t qualify for funding under his reverse auction. In addition, such measures could have very dangerous unintended consequences. But if Hunt does plan on allowing these measures to qualify I’m sure we’d be very interested to learn about the methodology he thinks could be used to quantify the effective abatement from such initiatives.

In terms of priority 2 – ‘Technology-led climate response’, according to Lomborg’s so-called experts (by the way, they aren’t experts) on this topic this involves governments making, long-term commitments to invest in energy-technology research and development, financed by a slowly rising ‘carbon tax’ to promote low-carbon technologies over the next century.

This measure doesn’t involving an auction to purchase lowest cost abatement, it involves government handing cash to scientists to do research which might or might not deliver abatement a decade or more into the future. Also, they’ve ruled out any form of carbon tax that might be used to fund technology research.

In terms of priority 4, Hunt’s colleague Ian MacFarlane has essentially written-off carbon capture and storage as an expensive pipedream. In addition the Coalition have said they’d scrap funding to the CCS Institute (but Rudd beat them to it). So again this doesn’t seem all that compatible with Coalition policy. 

Priority 5 and 6 also don’t qualify because they don’t deliver CO2 abatement over his outlook period to 2020. Hunt has also ruled out funding abatement activity outside of Australia so that would cut out priority 7 as well as priority 9.

That leaves him with priorities 8, 10 and 11. However, cutting black carbon is probably not that useful in Australia because there is little ice nearby (black carbon’s warming effect is due to it darkening ice and reducing the reflection of the sun’s energy into space).

What about the poor ranking of the carbon tax?

Now before you say, 'aha, but the carbon tax has been ranked poorly', it helps to understand some of the broader context about Lomborg’s whole Copenhagen Consensus exercise. 

Lomborg promotes his 2009 exercise  as “experts in climate economics examine the best ways to reduce suffering from global warming”.  However, while the panel of five people that came up with the list of priorities are respected economists, their research is most certainly not focused on climate change economics.

Secondly, he frames the prioritisation exercise in a way that is biased against the use of a carbon price.

For a carbon price to be effective it needs to be in place over several decades acting to slowly but surely drive changes in investment patterns. Its effects in reducing emissions within a decade of introduction will be limited because pollution is heavily driven by long-lived equipment and infrastructure that takes time to wear out and be replaced. But Lomborg forces those involved in his consensus exercise to look at spending a fixed budget of money only to 2020.

In addition, if you take the time to read up on more of the background surrounding this Copenhagen Consensus you’ll find that the actual climate economists involved don’t entirely agree with Lomborg's spin on things.

To inform an earlier 2008 Copenhagen Consensus exercise, Lomborg commissioned climate economist Gary Yohe (and others) to prepare a background paper to help inform his panel of prioritisation experts.  Here’s what Yohe had to say about how Lomborg twisted this work to suggest countries should refrain from a cap or price on carbon emissions:  

Bjorn Lomborg, author of The Sceptical Environmentalist, makes headlines around the world by arguing that capping carbon dioxide emissions is a waste of resources….. To support his argument, Lomborg often cites the Copenhagen Consensus project … as one of the authors of the Copenhagen Consensus project's principal climate paper, I can say with certainty that Lomborg is misrepresenting our findings thanks to a highly selective memory…

Downplaying the threat of climate change allows Lomborg to focus on his claim that "unlike even moderate CO2 cuts, which cost more than they do good, we should focus on investing in finding cheaper low-carbon energy". He attributes this finding to our analysis as well but, again, he overlooks a key element of our work.

Of course, the world needs to make significant investments in cheaper, low-carbon energy. But making those investments without also implementing a constraint on emissions would fail to address the problem.

In short, we never advocated research into new technologies as a stand-alone way to fight climate change, nor did we accept Lomborg's dismissive attitude toward the threat climate change poses.

I wonder why Yohe wasn’t invited back by Lomborg to help inform the non-climate economists in the 2009 exercise? 

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