Australia is worst casualty of Paris: Big hit to GDP, wages, dollar, trade balance for nothing

Australia Wins The Global Patsy Award 2019

The Brookings Institute released a report that claims everyone is better off economically by sticking to Paris, but check out the devastating graphs. Economically, everyone is a loser, but the three biggest losers are Australia, Russia and OPEC.

Australia is doing more, paying more, suffering more and yet will make almost no difference to the global emissions tally in anything other than a purely symbolic impress-your-dinner–guests kind of way.

If Australia left the Paris Agreement, even the left leaning Brookings Institute can’t find much difference in total global man-made emissions. Australia is forcing the renewables transformation faster than anywhere else, it will lose GDP, wages, jobs, investment, and the dollar will fall. All that, and no one could even tell the difference between Paris with Australia, and Paris without.

Clearly Australian negotiators at the UN are incompetent on a whole new scale. If they had Australian’s interests at heart, even a little bit, they would have done this study themselves, and gone to Paris with some realistic comparative data to argue that we are cutting too fast and paying too much. Finalists for most useless Global Negotiator of the Decade are Kevin Rudd, Julia Gillard and Julie Bishop. Wayne Swan, treasurer of the year, deserves a mention.

Australians basically walked in to Paris and said “hit me”.

Don’t miss these fun graphs:

Bad news for the Australian dollar:

Who needs Trade balance anyway?

At least our falling dollar will help to stop Australians importing so many goods.

Spot the difference: If Australia left The Paris Agreement the world not even notice

Theoretically, this graph below shows how much global emissions would be reduced should the unthinkable happen and everyone actually met their Paris promises. The lowest red line is the glory of Paris “success” with Australia included.

The dashed line on top of that is Paris success if Australia bailed. Exactly.

Despite the title on the graph above, this is not Global CO2 emissions at all which are around 750 billion tons. This, obviously, is the insignificant man-made part.

Go on, let’s add Global Emissions to the scale…

Everyone’s economy will shrink

Less energy means less economy.

Three regions will be the worst hit — Australia, OPEC and Russia.

Large drop in jobs coming

Whichever way you look at it, jobs are going. Just that in Australia they’re going faster. We apparently outdo the rest of the world til Russia (allegedly) catches up. Then some magical assumption happens in 2021. (Trump becomes our PM, perhaps?)

Notice no country on Earth will get richer because of Paris

Australians are getting rid of evil capitalist wages faster than anyone, though apparently OPEC puts on a good finish in the race to the bottom.

The three biggest losers of wealth — Australia, Russia and OPEC

This graph says something.

Australians will be consuming less, are you looking forward to that?

Did I mention rubbery figures?

The researchers do some serious economic-number-mashing, converting everything into a carbon tax.

From the Brookings Institute press release:

[The researchers]… use a multi-region model of the world economy to analyze the economic and environmental outcomes that are likely to result from these [Nationally Determined Contributions] NDCs. To construct the modeling scenario, the authors convert the disparate NDC formulations into estimated reductions in CO 2 emissions relative to a baseline scenario with no new climate policies. They then solve for the tax rate path on CO 2 in each region that achieves the NDC-consistent emissions reductions in the target year, 2030 for most regions.

Then funny things happen where the carbon tax they calculate bears little relation to the actual emission reductions. Could it be because a tax on a universal molecule essential to life is a stupid economic idea? Some of the players won’t respond because energy needs are inelastic, and most of the players won’t respond because they are blue-green algae, or otters, or E.Coli. And some of the players who do respond pick windmills and solar panels for reasons which defy any economic or scientific analysis.

Comparing projected 2030 CO 2 tax rates to the same year’s percent emissions abatement relative to baseline, the authors find that declines in CO 2 emissions do not necessarily correlate with the CO 2 tax rate. For example, under Paris, Japan’s emissions decline the most of all regions, but its CO 2 tax is the fourth lowest at about $US 16 per ton. India and the United States share a common goal for percent reduction of emissions relative to baseline, but India’s tax rises to about $US44 per ton in 2030, about 70 percent higher than the $US 26 tax in the United States in its target year of 2025.

Rubbery figures meet Rubbery assumptions

– The Australian:

The paper assumed a gov­ernment-introduced $5-a-tonne carbon tax from 2020 — which neither the Coalition nor Labor has foreshadowed — to cut ­Australia’s carbon emissions by a promised 26-28 per cent on 2005 levels by 2030.

Now lets pretend there are benefits from cutting CO2

Santa Claus says reducing an airborne fertilizer is a benefit they can put a hundred billion dollar figure on.

And this comes from the Brookings Institute – friends of Big Government. Imagine if sensible independent engineers wrote it?

Whatever happens: It’s gonna cost you

At least Warwick McGibbon is honest telling us that economic pain is inevitable. Furthermore he admits that if you just care about jobs and wages not the climate, you’d quit Paris.

Warwick McKibbin, an ANU economics professor and one of the report’s authors, said ­Australia could not avoid ­economic pain by pulling out of the agreement.

“If we stay in, we’re better off because if we pull out, we’ll still be getting most of the economic damage — other countries won’t be buying our ­resources so much — but miss out on the benefits of curbing carbon emissions such as less pollution,” Professor McKibbin told The Australian.

“You don’t have to believe in climate change at all to support staying in Paris. That said, if you just cared about jobs or real wages but didn’t care about climate or pollution, you’d stay out.”

– The Australian

He sings an ode about beating the mythical pollution ogre. Even if CO2 actually caused much warming, Australian emissions are irrelevant, CO2 is a well mixed gas, and there is a very substantial benefit, thankyou, in raising CO2 on a dry agricultural nation.

Frank Jotzo, Professor at ANU in Climate Policy tweeted:

Paris Agreement modelling by @ WarwickMcKibbin and colleagues: meeting 2030 emissions targets to yield net economic benefits to individual countries (before taking into account avoided climate change damages)

No mention by him that Australia got one of the worst deals globally. It’s not like he is supposed to be serving The Australian Taxpayer.

Academics, we can’t sell them fast enough.

Hat tip to Pat

REFERENCE

Liu, McKibben, Morris and Wilcoxen (2019) Global Economic and Environmental Outcomes of the Paris Agreement” (PDF), Brookings Institute.

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