Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

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Sunday, March 19, 2017

Hope and despair


When I look at the problem of global warming I alternate between hope and despair.

There's hope,  because the costs of wind and solar and concentrated solar power and batteries and electric cars are all falling, some precipitously, and many are now cheaper than their fossil fuel equivalents, and if they're not, they soon will be.  The old argument by the Right was that renewables were so costly that if we installed them, the economy would suffer, and living standards would fall.  You can see the most cynical and dishonest version of this argument when they claim, with crocodile tears, that  the desperate millions of India/Africa/you name it are being consigned to further poverty because we Lefties want to stop using coal.  Just for the record, that's a feeble as well as a dishonest argument: the cheapest way to bring electricity to the 24% of India's population who don't have it now is via mini-solar panels with batteries and LED lights.   And anyway, utility-scale renewables are cheaper than coal in India, even leaving out the significant environmental and health costs of coal.  Almost everywhere, renewables are cheaper than coal and comparable to gas.  And renewables are still falling in cost, so the gap with fossil fuels will only widen.  In a rational world, we would be embracing them with joyous cries.

This year the sticker price of EVs will match the average price of petrol cars.   There will still be cheaper cars to buy than EVs: the cheapest new cars sell for around $16,000.  Electric cars with 200 miles/320 kilometres of range will still cost more than that in 2020.  But by 2025 even cheap petrol cars will be more expensive than EVs.  As EVs are already much cheaper to run, people will stop buying petrol cars and buy only EVs.  Which means that by 2030 or 2035 emissions from oil in transport will have fallen dramatically.

All good.  Except.

The rate of increase in global temperatures seems to be accelerating.  I know climate scientists will point out that we have too few data points, and they're right.  But if it were a share price or GDP, I would says that it was accelerating, because you can't wait for 100% confirmation in markets before you move.  And the same applies to policy:  governments can't wait either.  They need to accelerate the switch to renewables.  This summer in Australia, for the first time, I was really afraid of the heat.  It was relentless and unforgiving.  Fruit bats in South Australia died in their trees, from the heat.  The electricity grid across eastern Australia came close to failing several times because of the demand for power to run air conditioners.  The Great Barrier Reef started to die.  Even now, in late autumn, it is still over 30 degrees C in daytime.  And I was thinking this afternoon, it'll cool down as the earth radiates its heat back into space.  And I realised that that's exactly the problem.  Thanks to the rise in CO2 in the atmosphere, the earth can't radiate its heat away.  Oh, we will get winter, and soon, I hope, but even winter is warmer than it used to be.  What will next summer be like?  And the one after?

But still you meet denialists.  Our governing party, misleadingly called Liberal,  is in hock to dotty rabid right denialists and people who are clearly in the pay of coal and oil companies.  In the USA, Trump and the venal, dishonest politicians who have ascended to Congress and the Senate and the Administration on his coattails, are doing the best they can to stop this otherwise peaceful revolution.  Despite record heat in February.  Despite an Arctic which is several degrees centigrade warmer than normal.  I don't, when I'm rational, believe that they can stop this revolution, because it is driven by technological advances and plunging costs.  But we have seen the depths to which they will stoop.  And even if they don't stop it, they can slow it.  We can't afford that.  We need to speed up the switch to renewables, to electric cars and electric transport generally, not slow it down, because we are perilously close to runaway positive feedback processes which could raise the earth's temperatures by a degree over the next two decades.

One doom-loop feedback has already started, in the Arctic.  Less sea ice means the seas are darker so they absorb more sunlight, which makes them warmer, which means there's less sea ice, and so on and so on.  The same processes are happening on land in the Arctic too.

But there are other feedbacks: drought in the Amazon is causing the rain forest to die, which in turn is reducing water vapour in the atmosphere, which leads to further droughts and more rain forest dying and burning.  This isn't just potentially disastrous for global weather, it also means that the Amazon rain forest, a huge carbon sink, is releasing its carbon into the atmosphere which will drive global temperatures higher.

Then there are methane clathrates, in the Arctic and on shallow continental shelves in high latitudes.  Methane clathrates are essentially methane frozen into water, forming a crystal.   The trouble is, though the methane released when clathrates melt eventually decays into carbon dioxide, until is does it is a far more potent greenhouse gas than carbon dioxide.  Over 20 years, it is 86 times as potent as CO2.  The melting of methane clathrates 55 million years ago is thought to have caused the PETM (Paleocene-Eocene Thermal Maximum) when global temperatures were 5 to 8 degrees C higher than they are today.  There were no ice sheets, because they melted.  If the Greenland and Antarctic ice sheets melt now, sea levels will rise 70 metres (230 feet).  Of course, it won't happen overnight, but the risk is, with all the positive feedback processes, that it happens much faster than we're hoping for, that the one metre rise forecast by 2100 turns into 3 metres.

Yet despite the risks, I still find the gullible (who believe the lies spread by the right-wing press, media and twitterverse), the venal (who know it's true but want to still make money while they can), the ignorant (too busy focusing on celebrities and soap operas) and the plain stupid (who think fighting culture wars with the Left is more important than saving the earth and our civilisation.) I find too many of them. Too many who say, well, the earth's always had a variable climate, so why worry.  Too many who spread lies, saying renewables are more expensive than fossil fuels.  Too many who accuse scientists of "cooking the books", when in fact it's the planet that's cooking.  Too many people who say "we can always go to Mars" (at $500,000 per person!) when they won't support politicians and activists who urge the switch to renewables, "because it will be too expensive".  Duh.

I started this blog to talk about politics and economics, but it became obvious to me that the greatest danger we face is global warming.  And I, and all the others out there who are also trying to raise the alarm and encourage action, are just lone voices, crying out in the darkness, while venal, dishonest and dishonourable cretins hold public office, determined to slow and reverse the "Leftist", "greenie"  revolution which would save the world from runaway global warming, megadeaths, and the consequent collapse of our civilisation.

So I despair.

But I will not give up the fight.  I'm going to keep up the struggle to inform my readers.  I'm going to keep on urging you to vote for politicians and political parties who do not flat out lie about climate change.  I'm going to continue to urge you to discuss it with your friends, to call out denialism when you find it, to push and press and nag, until the great logjam of public opinion breaks up and we act,  to save ourselves and our planet.

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