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Energy options

By David McMullen - posted Monday, 2 April 2007

During his recent visit to Australia, Sir Nicholas Stern repeated his famous claim that drastic cuts in CO2 emissions will only cost a relatively painless 1 per cent of world GDP. Even if we leave aside the common criticism that the costing is a gross under-estimate, there is still one other big problem. The denominator is wrong. The costing should be expressed as a percentage of rich country rather than world GDP because the developing countries have made it clear that they are not coming to the party. They are not prepared to accept such a tax on economic growth.

There are a number of ways in which rich countries could carry the full burden. They could speed up the research and development (R&D) required to reduce the cost of CO2-free energy, subsidise the adoption of the latter by developing countries, introduce faster countervailing mandatory cutbacks in their own emissions or apply a combination of all three.

Energy consumption by developing countries is already almost half of the world total and is going to quadruple over the next 50 years, so the subsidy or countervailing approaches will become increasingly unattractive, leaving increased R&D as the only long term option.


There is no shortage of projects which could benefit from increased government funding. To begin with we need to get the next generation of nuclear power plants off the ground. These will be cheaper, safer and use uranium more efficiently.

Enhanced or "hot rock" geothermal energy will be a massive resource once we have developed the technology to drill to extreme depths.

CO2 capture and storage is still in its infancy. A range of capture methods are being considered for extraction both at the energy production stage and from the atmosphere. Once captured, CO2 can then be injected into oil and gas wells, aquifers or the ocean. We may also find an economical way of converting it into carbonate rock.

Renewable resources still have many areas for improvement. Photovoltaic cells need to be made from cheaper materials that convert more solar energy to electricity. Wind power would benefit from totally new wind turbine designs.

We also need to ensure that sufficient funding goes into the nuclear fusion program so that the technology is commercially viable by mid century. In particular this means no delays in the construction and operation of the internationally funded experimental plant (ITER) currently planned for the south of France. This is expected to be the last major step before the construction of the first commercial power plant.

Spending on energy R&D can expand considerably without being a detectable economic burden. For example, the US Department of Energy R&D budget for financial year 2006 was US$8.4 billion which is only about 0.06 per cent of the country's GDP.


A boost to energy R&D has the added advantage of not being something we would regret if climate change predictions turn out to be wrong. It is needed anyway because of market failures that lead to under-spending. First, the benefits to society from new knowledge exceed any commercial benefit that energy firms can capture. Second it is not in their commercial interest to develop new technologies that are going to devalue their existing capital stock and expertise.

While we are spending big on R&D, we can take a more leisurely and less hysterical look at the question of climate change. After all, the dire predictions are only the projections of computer models. Despite claims to the contrary, nothing very alarming has happened so far.

Here are my favourite ten generally recognised non-alarming facts just to be going on with:

  1. current temperatures are where they were at the time of the Vikings;
  2. there has been no global warming trend in the last eight years;
  3. recent warming in the Arctic is just a return to the temperatures of the 1930s;
  4. the Antarctic ice sheet as a whole is growing not shrinking;
  5. sea levels rose by less than a foot during the last century or so and peer reviewed research has not detected an acceleration in the rate of increase;
  6. there is no evidence that hurricanes have become more frequent and their greater intensity in the North Atlantic fits a cyclical pattern;
  7. most of the mid latitude glaciers we hear about such as the one at Mount Kilimanjaro have been melting for a century or more and the rate has actually slowed down in recent decades;
  8. river flow data for the last 50 years or so shows no signs of increased flooding;
  9. droughts in the USA have become less frequent, widespread and severe during the last 80 years; and finally
  10. recent reports that Atlantic ocean currents were slowing down are now acknowledged to have been a mistake.
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About the Author

David McMullen lives in Melbourne and can be found at Simply Marxism. Follow him on Twitter at @dfmcmullen.

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