Ian Lowe’s ‘Quarterly Essay’ on climate change and the nuclear option

Ian Lowe’s Quarterly Essay entitled Reaction Time: Climate Change and the Nuclear Option is a well-informed, well-reasoned and timely contribution to the current debate. He brings an unusual level of credibility to the debate. He is an engineer and physical scientist by training, with a doctorate in physics, and currently emeritus professor of science, technology and society at Griffith University–an orientation which fits him exceptionally well to handle the multi-disciplinary character of the issue. Interestingly, his early academic years in the UK in the 1970’s saw him as a supporter of nuclear power, and a participant in early policy reviews. In this essay he recounts the accumulation of data and experience that lead him to the opposite position. He is now President of the Australian Conservation Foundation, and has a clear position against nuclear power as a solution to global warming.

His essay covers a lot of ground, and is worth reading by anyone who wants an informed, although clearly–and unapologetically directed–view of the issues. He reviews the energy demands of the world, centreing on the emerging peak of oil availability, and outlines the global dilemmas implicit in this trend. In this he doesn’t retreat from a consideration of quality of life and well-being issues, or of distribution impacts between the developed nations and the poor of the world. He notes some important precursors in attempts to restructure societies in more sustainable energy directions (such as Alberta, Canada).

He summarises the evidence for climate change–evidence which he regards as incontestable–and the generic technical solutions: cleaner fuels and energy efficiencies. He then moves to a consideration of the nuclear option. He takes head-on the idea of nuclear technologies as the only ‘clean’ technology capable of addressing global warming. He covers the true costs of nuclear power, which he argues make it uneconomic; the world-wide retreat from nuclear reactors; the long time lags needed to bring nuclear energy on line; the threat from nuclear accidents, such as Chernobyl, and of nuclear weapons proliferation; the almost inconceivable lengths of time over which nuclear waste will have to be stored effectively, and the lack of a technology to do so; and the problems of low-grade uranium ores:

“Total life-cycle analysis has concluded that fuelling nuclear power stations from lower-grade ores actually releases more carbon dixoide per unit of delivered energy than burning gas. . .there is no doubt that the fuel energy, consequent greenhouse emissions and the dollars needed to produce uranium all increase rapidly as the ore grade declines.”

(This is a point referred to in my posting of August 20).

Lowe looks in some detail at the techical problems associated with economic projections over the long periods required by the analysis of energy options, and particularly the problem of discounting, which places far greater weight on the well-being of present as distinct from future populations. He analyses incisively the rather ludicrous policy developments in Australia, as the federal government has attempted to marshall some kind of ‘expert’ opinion in favour of nuclear power, in support of its economic objectives. He flags the agenda for nuclear enrichment in this country and the dangers inherent in it. He dissects the current policy, of both parties, to sell uranium into a deeply unstable international political environment. He notes the real possibility that Australia is headed for the role of a nuclear waste dump for the US.

Against this Lowe promotes the growing credentials of wind and solar power to provide an increasing proportion of the world’s energy requirements at reasonable costs. Notably, he points out that the current level of energy demand is not a given which has, at all costs, to be met: at the level of material prosperity enjoyed by this country in the 1960’s, he argues, a sustainable world could be equitably enjoyed.

Although this is a polemical document, its marshalling of arguments against the nuclear energy option and in favour of renewable energy options is an important statement, and one that, under the present push by the nuclear industry to rebadge itself as clean and green, to what it hopes will be a compliant and intellectually cowed society, is greatly needed. It should be widely read.

Link to The Quarterly Essay here.

Melbourne Centre for Financial Studies presentation

Here is a presentation I made to a Forum of the Melbourne Centre for Financial Studies on May 17, 2007 on measuring Carbon Value-at-Risk/ Value-of-Gain. This builds on the material presented to the Melbourne Financial Services Symposium in March 2007 (see Business Papers post). It lays out the sequence of steps by which the carbon exposure of a firm can be quantified. In this process the strategic and tactical alternatives open to the firm for managing carbon can be precisely identified.

Link to the Forum presentation here.

The moral obligations of climate change

It’s increasingly becoming clear that global warming has a leading dimension of global social justice. Firstly, the physical impacts of global warming are likely to fall unequally across the planet. The tropics will become wetter, triggering more floods and landslides. The temperate zones will become drier; and this includes sub-Saharan Africa. The island nations are particularly vulnerable to rises in sea-levels and the destruction of the coral reefs. Some of the world’s largest and poorest populations live in these regions. They are already at survival levels: they don’t have the ability to adapt to such enormous environmental changes. Secondly, since global warming persists for long periods of time, it follows that the present trend has been created predominantly by the developed nations; notably the US and Western Europe. There is a retrospective responsibility for this global situation, whatever the current balance of national global emissions.

Comment from ‘The Guardian link here.

Melbourne Financial Services Symposium presentation

Download slides and text of the presentation I gave to the Melbourne Financial Services Symposium March 6th 2007 on sustainable investment.

The audience was composed of analysts and executives from superfunds, asset consultants, fund managers, banks, insurance companies and consultants.

The main idea that I wanted to convey to this audience was this: The impact of sustainability factors–environmental, social and governance–on corporate performance is usually assessed through checklists, called ‘screens’. For example, does a company’s use of energy and water, and its production of waste and emissions, meet the targets it has set for itself? But this information is, in my view, largely hand-waving: it has more to do with reputation and branding than actual performance. In particular, it doesn’t yield anything like the rigorous data that investment and risk analysts require of everything else they look at in valuing a company.

I’ve argued that there are many more sustainability factors influencing a business than is usually assumed. Moreover, they have a big impact on valuation: running the numbers yields variances to the usual valuations of up to 50%, or more. This kind of quantitative work is difficult: it’s multi-disciplinary, and deals with large, complex, highly volatile systems. But I’ve argued we can’t walk away from it. And we do have the tools we need, if we’re prepared to cross boundaries and open ourselves to learning about things we never thought we’d have to know.

Valuation frameworks underpin both management and investment. They are the core of modern business decision-making. They are fundamental to the conduct of modern business. Now it’s critical that they include sustainability factors. It can be done. This is the thrust of my presentation.

Link to my presentation here.