Is Abbott enveloped in a London Fog?

Our first go at industrialisation saw Londoners choking on coal smoke. An extraordinary alliance of world leaders and economists has shown what commonsense already tells us - that is not the only recipe for economic success.

Do you think the world is beyond improvement?

When you look around the city or town you live in, do you see everything working as it should and nothing going wrong?

When you look around your workplace do you see a finely tuned, humming machine where everyone works perfectly in sync?

And thinking about your workmates, friends and family ... they don’t make mistakes that should have been foreseen, take the easy way that makes things harder later, or let emotion overwhelm logic – do they?

Are there ever things you continue to do out of habit even though you suspect there’s a better way, simply because it gets the job done and you’d have to put in some effort to change habits?  

Everything is perfect, right?

All around us we see things that with a bit of forethought, a bit more planning and people making more effort to talk to one another could be so much better, or at least less worse. Yet for some reason popular economic models assume any government-steered departure from the status quo means a departure from the optimal.

A new study has been released questioning this orthodoxy, suggesting that we could contain global warming to 2 degrees without making a noticeable dent in economic growth and welfare.

The report is a product of an extraordinary international collaboration of political leaders, businessmen and senior economists. This includes: the former leaders of Chile, New Zealand and Mexico; the chairs and chief executives of companies such as Unilever, Bank of America, Bloomberg and Deutsche Bank; and leading economists from the OECD, IMF, World Bank and International Energy Agency.

The report is intended to help inform world leaders as they converge on New York for a special United Nations summit on climate change next week (or in Tony Abbott’s case, visiting New York at the same time but avoiding the summit ... despite a face-to-face invitation from Ban Ki-moon).

The chart below acts to summarise the measures the report authors believe could reduce carbon emissions while, in many cases, making the world’s population better-off (ignoring the rather big benefit of reduced global warming).

Graph for Is Abbott enveloped in a London Fog?

According to the report, between 2015-30 the globe can be expected to invest somewhere around $89 trillion in new infrastructure in transport, buildings, power and agriculture. It then suggests that if we made this investment in a less ad hoc manner, with a greater focus on optimising the overall system – rather than doing it the way we’ve done it in the past with a focus on saving some pennies in the short-term – we could dramatically lower carbon emissions and the overall cost would be $93 trillion, or just 4.5 per cent extra. 

Then, to compensate us for this extra investment, we’ll end up with major savings in operating costs and improved amenity. This is because we’ll have more energy-efficient and comfortable buildings, more fuel-efficient transport, more convenient public transport and power generation that has negligible fuel costs.  

Figure 2: Approximate global infrastructure investment requirements 2015 to 2030 – $US trillions (2010 dollars)

Graph for Is Abbott enveloped in a London Fog?

This may seem incredible – but not when you stop to think more deeply.

Urbanisation and industrialisation of the western world took place with a level of population vastly lower than what we are dealing with now. This places a much greater premium on efficiency of resource use.

In addition, our technological options and scientific knowledge are vastly improved.

So, why on earth would India want to follow a car-dependent, low-density, resource-intensive urbanisation path reminiscent of Los Angeles or Melbourne? The congestion and smog make it completely unworkable given the size of India’s urban centres. And does LA represent an inherently better place to live than New York or Copenhagen, anyway?

The report provides the infographic below which illustrates this in stark terms by comparing Barcelona and Atlanta. Both have similar populations but the carbon intensity of transporting Barcelona’s people is one-tenth of Atlanta’s.

Graph for Is Abbott enveloped in a London Fog?

In addition, why would you undertake a vastly expensive exercise to string up electrical wires to dispersed populations in rural areas when it’s likely to be cheaper, faster and less polluting to give them a solar system with batteries and high-efficiency electrical equipment?

Also, why would we want to repeat the mistakes of the London Fog – where increased availability of energy was accompanied with pollution that cut short people’s lives – when we now know how to avoid it at moderate cost? The report details how the increased mortality from particulate pollution, if translated into lost economic output, equates to 10 per cent of GDP in China and 4 per cent globally. We are heavily subsidising energy costs to improve people’s lives which results in seriously damaging their health – this is false economy.

Graph for Is Abbott enveloped in a London Fog?

According to the report, coal-fired power has a financial advantage in much of Southeast Asia, at costs of $US60-70 per megawatt-hour. But properly accounting for air pollution can add a cost of $US40/MWh or more – enough, they note, to bridge or exceed the cost gap to cleaner alternatives.

Looking at our own lives, we often choose a pathway to get something done that is easier and more straightforward, but not necessarily ideal. We even have a phrase for it – ‘quick and dirty’. But as we regularly find, it’s often better to take the time and effort to do things right the first time, rather than fix them up later.