Comparing Australia’s emissions is a tough job

emissions

Climate Spectator editor Tristan Edis recently ran a chart comparing various major countries, including Australia, in terms of their greenhouse gas emissions per capita.  A similar comparison, using slightly different data sources, is made in the chart below.

Edis claimed that Australia’s position at the top of the league for emissions per capita would see intense international pressure on the Australian Government to offer major emissions cuts in the lead up to the major Paris climate negotiations.  These negotiations are meant to progress an international agreement for post-2020 emissions cuts.

 

chart1

 

There is no doubt that the per capita figures are about right, and even though our emissions have fallen recently they remain high on this metric. But if the intention is to identify the global leaders or laggards, there are many alternative measures.  Each of these will produce different league tables, and each needs to be considered very carefully.

One response to the per-capita comparison is that of course our emissions are high on this basis – we have few people on a global scale, but a huge modern economy.  In late 2014 a Deloitte paper commissioned by Origin Energy argued that Australia’s emissions intensity was a more appropriate point of comparison: how much we emit per unit of Gross Domestic Product.

The chart below makes a similar comparison, using GDP at both market exchange rates, and the so-called Purchasing Power Parity (PPP) approach, which attempts to compensate for the fact that a unit of local currency in many countries will buy more goods, services and quality of life than the market rate would suggest.

 

chart2

 

By these intensity measures, Australia does not appear distinctive – in the middle of the pack on market rates, and slightly higher at PPP.  Countries like Indonesia are more intensive, particularly at market rates. Does that mean Australia is off the hook, or under less pressure?

Not so fast. As always, there’s another perspective. Australia may produce less CO2 per unit of GDP than Indonesia, but we do produce a lot of GDP and we have comparatively few people.  Beyond a certain point, countries tend to reduce their emissions intensities as they become richer, largely because their growth is increasingly weighted towards the less emissions-intensive services sector.

And an argument that countries with lower emissions intensities bear less responsibility for reducing emissions therefore takes us into difficult ground. For example, it could be used to argue that richer countries should bear less of the burden of reducing emissions, and poorer countries more.

Both the per capita metric and the emissions intensity metric tell us something, but not the whole story.  What if we combine them?  The chart below plots the major economies against two metrics: emissions intensity, and GDP per capita.

A simple linear trend provides a reasonable fit to both distributions, particularly at market exchange rates, confirming the relationship – at least among developing or developed economies – between higher income and lower emissions.  And on this basis, Australia stands out as being relatively emissions intensive for a rich country.

 

chart3

 

Again, this is not the last word. Canada stands out similarly; both have similar economies shaped by large endowments of resources that are emissions intensive to extract and process – coal, gas, oil, minerals and more. Should we be punished for being home to resources that the world needs and which are globally cost effective to produce?

In turn, the counter-argument is to ask whether we should be rewarded with lighter obligations because of our resources endowment, when that endowment provides considerable benefits not enjoyed by other nations.

One conclusion to draw from all this is that we should be careful about jumping directly from any single emissions comparison to conclusions about how much or how little effort Australia should make in reducing emissions. It is difficult to capture all the relevant features of an economy in such comparisons; a truly accurate description will contain much of the explanation for that economy’s emissions levels; and difficult, highly debatable ethical judgments need to be made to go from description to prescription.

With two official efforts underway to define Australia’s post 2020 emissions targets – one by the Department of the Prime Minister and Cabinet, another by the Climate Change Authority – it is important to remember that one-dimensional arguments are not enough.

Sources: Emissions data from CAIT; GDP data from IMF; Population data collated by Wikipedia

Does this article change your position on Australia’s appropriate emissions reduction targets? Share your views below.

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Tennant Reed
Tennant is Principal National Adviser – Public Policy at Ai Group. He has worked heavily on climate and energy issues, advising Ai Group’s Leaders’ Group on Energy and Climate Policy and developing reports on natural gas supply, energy prices and energy efficiency. He also works on a range of issues related to manufacturing and innovation. Previously he was an adviser in the Department of Prime Minister and Cabinet, working on fiscal policy, stimulus and infrastructure.

3 Comments

  1. Tim Gillespie

    The assumption underlying this article is that CO2 emissions per say are bad. What if they are not? What if all CO2 were eliminated? How would we grow food ? What if we are actually helping the planet grow more crops and feed more people by emitting more CO2?
    Particulate pollution is bad and many third world countries suffer badly from this. But no CO2 = no crop production or growing forests.
    I always felt the AIG was about helping industry and manufacturing not about saddling us with ridiculously high energy costs thru RET and Carbon taxes. But perhaps I am wrong.

    Reply
    1. Tennant ReedTennant Reed (Post author)

      Thanks for commenting, Tim.

      As you say, the natural carbon cycle is central to agriculture, forestry and indeed life in general. There is no question that carbon dioxide is essential – it’s what we breathe out. Not surprisingly, the scientific discussion around concentrations of greenhouse gasses (including carbon dioxide) does recognise this fact. Rather the issues relate not to CO2 per se but rather the concentrations of greenhouse gasses that go well beyond the natural cycle. These extra concentrations pose risks to the global climate.

      Ai Group’s involvement in the policy responses to the risks associated with growing concentrations of greenhouse gasses is to try to ensure that policy not only achieves the desired management of climate risks but also that it respects the role of industry and its competitiveness.

      Governments of all stripes want to do something about greenhouse gas emissions, and there are good arguments for doing so. But they need to minimise costs, maximise benefits and avoid a situation where unevenly applied policies disadvantage Australian businesses.

      Reply
    2. Dr Adam Lucas

      No, it is not the assumption that all CO2 emissions are bad, and you are making a straw man argument. Human CO2 emissions have gone up by 35% since industrialisation, and because CO2 is a climate forcing agent, and correlates with global average temperature rises, we have an obligation as human beings to not push those temperatures past where they have been for the last 1 million years or so, which enabled human evolution in a relatively stable climate over that period. You sir, are arguing disingenuously and from ignorance of the facts. What has saddled Australia with ridiculously high energy costs is $40 billion in grid and network infrastructure investment informed by an outdated assumptions about the continued necessity of a centralized grid, half of which was a complete waste of money, and which we are all now paying for, with an extra 10% profit margin loaded on for the gentailers. The impost of the carbon tax was no more than 10% (and it’s now gone anyway), in a scenario in which all electricity prices have gone up 110% over the last ten years.

      Reply

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