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Emissions already well short of forecasts

By Mark S. Lawson - posted Friday, 8 October 2010

With the Federal Government considering ways of forcing organisations to reduce carbon emissions, the problem of reducing carbon dioxide in the atmosphere is not nearly as difficult as it is generally believed to be. For there is much less of it there than forecast in the first place, although no one seems to be have realised this.

As readers will recall at the Copenhagen conference in December, and elsewhere, various prominent personalities declared that carbon emissions were running at the top of projections. But how do they know this? The pronouncements never cited any sources or reasoning. Instead, the point was simply stated and accepted at face value, without the parties involved realising that the records that can be examined show exactly the opposite, as we shall see.

When climate modellers started making dire forecasts about future temperatures in the late 1980s they looked at the undoubted increase in carbon dioxide in the atmosphere in the preceding decades and leapt to the conclusion that concentrations would double during the course of this century. That was a big leap, but that supposed doubling became an accepted figure, with various experiments to test the reactions of sea creatures to future environmental conditions using much higher concentrations.


To give the projected doubling more substance, in the late 1990s the Intergovernmental Panel on Climate Change set some economists to work on projections for industrial emissions, a task which proved to be considerably more complicated than the panel had previously suspected. For to make useful estimates of the increase of the two main greenhouse gases, carbon dioxide and methane, in the atmosphere the economists first had to estimate increases in economic activity over the next 10, 20, 50 years and more. In addition, the economists had to take into account changes in population and energy intensity (the amount of energy used in generating economic activity).

That was all bad enough but the really tricky part was comparing the sizes of different economies. The easiest way to do this is to simply convert everything into American dollars, so the Chinese economy would be compared to the American economy by converting the total GNP of China in Yuan to US dollars. Then if you know something about emission intensity you can say something useful about total emissions generated by the two countries.

The problem is that the Market Exchange Rate (MER) approach of comparing economic size is known to produce wrong answers due to vagaries in the exchange rates. In particular, it is known to greatly under-estimate economic activity in developing countries which usually have weaker exchange rates. Instead, economists use Purchasing Power Parity, which is a lot more difficult. One way of looking at this, which isn’t quite right but will do as an explanation, is how far will a dollar stretch in New York, as opposed to a Yuan in Beijing; or for how long someone earning the average wage in either country will have to labour to buy a set basket of goods. The magazine The Economist occasionally publishes a big mac index by calculating how long the average wage earner in each country has to labour to buy a big mac, given that McDonalds strives to makes it product consistent worldwide. Economists most emphatically do not rely on the big mac index but that illustration should give you an idea of what is meant by PPP.

The IPCC went through the exercise of working out just what the world economy will be doing over the next century, to produce a host of emission scenarios using different values for the variables mentioned above, packaged into a Special Report on Emission Scenarios (SRES) issued in 2000. Its available on the IPCC website. Unfortunately, the IPCC economists used MER analysis to compare economies instead of PPP, an approach which sparked a row between the panel and two distinguished Australian economists, Ian Castles and David Henderson.

The now late Ian Castles was a former Australian Chief Statistician and David Henderson was formerly head of the economic and statistics department at the OECD. Their objections found favour with other economists (although very few seemed to be have looked at the issue) but the IPCC labelled the campaign as “disinformation” in a press release. In chapter three of the the 2007 report the IPCC agrees that PPP should be used where practical, but says the relevent data is not available for a number of the economies in the forecast. In any case, the panel’s economists did not think the end result would be any different.

Henderson has since stated loudly and publically that the end result of the IPCC approach was to wildly overstate the emission growth in high economic growth scenarios. As noted, the MER approach makes the economies of developing economies appear smaller, but some of the IPCC scenarios have those emerging economies growing to be on a par with the US economy per capita, with correspondingly stronger exchange rates. In other words the economies of those countries are set up to be small at the beginning of the scenarios and very rich at the end, with corresponding increases in emissions.


The IPCC approach has its defenders but as the emission scenarios were released 10 years ago it is possible to cut through much of the argument by comparing the scenarios with actual data, albeit with yet another complication. The forecast emissions are in gigatonnes of carbon dioxide equivalent, which have to be converted into the expected concentrations in the atmosphere expressed in parts per million for CO2 and in parts for billion for methane, which means we have to know something about how long those gases hang around in the atmosphere. Let us wave away those complications and skip to the final projections for concentrations given in a table appended to the 2007 IPCC report.

The lowest projection for methane for 2010 is 1,839 parts per billion (the forecast is given in 10-year increments), and the highest is for nearly 2000. But the actual result for mid 2010 is about 1,790. In other words, just 10 years out, the projections for methane are hopelessly wrong. The panel’s economists used very sophisticated analytical techniques and economic modelling but, in essence, they forecast that the increase in methane concentrations evident in the decades before 2000 would continue and even increase. Instead the growth in methane concentrations stopped; no one knows why.

The 2007 IPCC report discusses this point in detail but does not offer a useful conclusion. The results for methane can be seen in the graph cribbed from the site of the National Oceanic and Atmospheric Administration (NOAA), a part of the US Department of Commerce.

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The material in this article has been adapted from his recently launched book, A Guide to Climate Change Lunacy - bad forecasting, terrible solutions, published by Connor Court.

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About the Author

Mark Lawson is a senior journalist at the Australian Financial Review. He has written The Zen of Being Grumpy (Connor Court).

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