ALS: thoughts on freedom

Australia’s large emissions aren’t really so big.

Professor John Quiggin made the following claim in a recent thread titled, ‘The litterbug argument”.

…………… Australia currently generates about 2 per cent of global emissions of greenhouse gases. That’s comparable to Britain or France. The fact that these countries have several times our population is cancelled out by our much higher emissions per person.

Maybe I’m wrong, however I think the professor makes some startling errors of omission with that claim.

France produces around 99.8% of its energy needs by nuclear power while according to the link; the UK produces 19% of its power by nuke and imports 8% from elsewhere in Europe.

In France, as of 2002, Électricité de France (EDF) — the country’s main electricity generation and distribution company — manages the country’s 59 nuclear power plants. As of 2004, these plants produce 99.8% of both EDF’s and France’s power production (of which much is exported), making EDF the world leader in production of nuclear power by percentage. In the same year, 425.8 TWh out of the country’s total production of 540.6 TWh was from nuclear power (78.8%).

I then checked out the UK.

UK electricity production is about 400 TWh gross, from 74 GWe capacity. Net imports are about 8 TWh. Annual consumption is 355 TWh, or about 5750 kWh/person.

In 2006 UK nuclear plants generated 19% of UK electricity (69 billion kWh of some 380 billion kWh net), compared with 36% from gas and 38% from coal. In 2007 this dropped to 15% (57.5 TWh). There are 19 UK reactors totaling 11 GWe capacity. In addition, about 3% of UK electricity demand is met by imports of nuclear power from France, so overall nuclear total in UK consumption is about 22%.

As far as I know neither France nor the UK are large producers of aluminum, which accounts for around 13% of our energy consumption. Neither possesses any large-scale mining operations that happen to be big emitters, as in any energy intensive mining operation, while Australia’s does obviously (our mining/aluminum industry is export oriented).

Surprisingly our cattle industry, which is also basically export oriented accounts for about 12% of Australian emissions through cow farts according to a recent claim.

It is fairly simple to figure out where lies the emissions differential between the three countries. We don’t produce any of our energy by nuclear reactor. We have a large aluminum/mining industry that chews up a lot of power and we have 25 million head of cattle. So no wonder we’re a larger emitter than either France or Germany.

We could reach the same emission levels of France or Germany easily enough. All we have to do is introduce nuclear reactors, close down our mining industry and kill off our cattle herd ☺

It seems to me this comparison is not only invalid. It is downright misleading.

To get a proper comparison one would have to adjust for industry composition, the nuclear issue and many other factors.

Surely the professor obviously understands some of the most basic economic laws. It would surprise only a few that export industries like Agriculture and mining are the result of Australia’s comparative advantage in those sectors. In particular Aluminum would be, as Al requires a large energy input component. We happen to be “blessed” with cheap to use and abundant coal deposits providing a cheap energy source, lots of agricultural land and plenty of minerals in the ground. All these export sectors are emissions intensive. France and the UK aren’t. In fact I would argue that our cheap energy source is actually an absolute advantage.

Let me make this prediction : The Aluminum industry will move to some place like China or India after the ETS with the overall effect that the global emissions situation would worsen, as I’m more than a little suspect these countries wouldn’t be as careful or worried.

But perhaps the law of comparative/absolute advantage has been made redundant. If it has I would like to know.

July 20, 2008 Posted by jc | General | 102 Comments