Blogroll update

I need to update my list of links: some blogs I link to have ceased to be updated or even to exist and there are new blogs on the scene I haven't yet included.

If you think there are any glaring omissions, please leave a comment. Given Oikos' theme, I try to link to really good blogs about environmental economics, Australian economics or Australian environment - or truly outstanding blogs about the environment or economics more generally.

Bali wrap up

I think this cartoon by Alan Moir pretty much sums it up!

I'll post some more thoughts soon...

Will the US be rewarded for failing to ratify Kyoto?

The Sydney Morning Herald reports today:

Three options in the draft Bali deal will be put to international environment ministers who will meet on Wednesday... and the hope is that a deal will be signed by Friday.

The most favoured option is a two-track process. Under this, countries that have ratified Kyoto - Australia has taken the step towards ratification - would continue separate negotiations on the need for deep cuts by 2020 and 2050, and discuss binding targets.

A second process would look at commitments from developing countries and the US, which would not be binding but include renewable-energy and energy-efficiency targets, and emissions cuts from polluting industries.

Is it really the case that Australia has ratified the Kyoto Protocol just in time to be bound by deep cuts it otherwise wouldn't have been required to make?

New-ish environmental economics blog

While I've been galavanting around Europe with its surprising lack of wireless internet, I've missed the appearance of a new addition to the healthy and growing stable of blogs around the world with an environmental economics focus.


Common Tragedies is a play on the 'tragedy of the commons' concept, the tendency for overexploitation of common resources. The blog chronicles thoughts on environmental and energy economics and policy from a group of research assistants at Resources for the Future, an environmental policy research centre.

An Inconvenient Truth: US doing better on climate change than Europe?

Yesterday's Wall Street Journal reports some suprising figures on US greenhouse emissions:

The Bush Administration announced last week that U.S. emissions of carbon dioxide fell by 1.8% from 2005 to 2006. Output of all greenhouse gases was down 1.5% last year. All this while the American economy grew by 2.9%. It's the first time since 1990, when the U.N. began counting these things, that the U.S. has reduced emissions without also suffering a recession...

The EU hasn't yet released figures for 2006. But from 2000 to 2005, the U.S. outperformed Western Europe. Carbon emissions were up 3.8% in the so-called EU-15 during those years, versus 2.5% in the U.S. Over the same period, there has been virtually no difference between the increase in all greenhouse emissions in the U.S. and EU-15.

The WSJ goes on to make some odd inferences from this:

the reductions were in part due to higher energy prices and favorable weather. But greater use of lower-carbon energy sources, including natural gas, also played a big role. The U.S. reduction also suggests that letting markets work through higher prices will reduce carbon emissions more than the cap and trade mandates favored by environmental lobbies and most Democrats. [emphasis added]

I'm not sure what the WSJ is suggesting here. Markets won't just "work" and magically ascribe higher energy prices due to help save us from climate change. Governments actually need to somehow interfere in those markets to increase the prices of carbon-intensive energy sources. And there are two basic ways: impose a tax on emissions or require permits for emissions, issue a limited amount of permits and allow them to be traded (cap and trade). Either way, you're putting a price on emissions: only after you've place some constraint on the market can you stand back and let the market "work" to find efficient ways to reduce emissions.

But I think these US figures are worth examining for a few reasons:

1. They suggest that emissions can be reduced without much of an impact on economic growth. Economic / Business consultants McKinsey have released a study this week that indicates that the US could reduce emissions substantially with little economic cost.


2. They suggest higher energy prices (and by inference a carbon tax) can be quite effective.


3. They might give us clues as to what sort of action could be effective. What was different about 2006 to previous years? Why did the use of natural gas for electricity generation increase?

If you're interested, the full report is available (in pdf) from the US Energy Information Administration website.

Bali high - or ballyhoo?

Now that Australia has ratified the Kyoto Protocol, I'd expect that Kyoto-related debate and discussion in Australia would focus on:

1. Can we meet our emissions targets in the first commitment period (2008 - 2012)?
   
2. What happens after 2012? What will the new Kyoto Protocol or alternative post-Kyoto agreement look like?

For the first issue, the die is really cast: there's not much we can change now in terms of domestic policy that will pay big dividends within the next 5 years.

The Bali conference will kick off international discussions on the second issue - probably one of the most important things to get right in the coming century.

What do you think should be the essential ingredients of Kyoto Protocol Mark II?

Australia's political climate change

Australia has today ratified the Kyoto Protocol.

Cat and I are back home after a great trip, to a new federal government and some important developments on climate change.

Climate change was a prominent issue in the election campaign. My impression is that, while policy differences between the parties on this issue had narrowed since the former Liberal government announced earlier this year that it would establish a carbon trading scheme, the Liberals' regular climate skeptic rhetoric over the past decade (which only really changed this year) resulted in the distinct feeling that they were not genuine about climate change action.

A new government was sworn in this morning and its first official act was to ratify the Kyoto Protocol. This will enable Australia to participate properly in international negotiations on climate change for the first time in many years. It also leaves the United States exposed as the only wealthy country that has failed to ratify Kyoto. Whether this will have an impact on domestic politics in the US, particularly with a presidential election in the coming year, will soon be seen.

In Australia, the new government has set a long-term target of a 60% reduction in emissions by 2050, with a national emissions trading scheme to be implemented by 2010 to work towards that target.

The Bali climate change conference kicked off today, with new Prime Minister Kevin Rudd, Environment Minister Peter Garrett and Minister for Climate Change and Water Penny Wong, to lead the Australian delegation.  The first commitment period under the Kyoto Protocol begins next year and runs until the end of 2012.  The signatories to the Kyoto Protocol have committed to achieving certain (fairly modest) emissions targets on average over this 5 year period. The big task for the international community over the next couple of years, starting in Bali, is to negotiate what happens after 2012.  It will be positive for Australia now to be more engaged in this process.