Suddenly the climate change debate has moved away from such abstract topics as the future of the planet, and homed in on something both politicians and punters can understand: jobs.
Green jobs versus brown jobs is the new battle in climate politics. Will reducing carbon emissions cost jobs in mining industries, or create jobs in the renewable sector? Will the new jobs make up for the old jobs? Will the economies of entire regions have to shut down, as Queensland Nationals Senator Barnaby Joyce often likes to claim, or will a price for carbon spur the innovation and entrepreneurialism of a super-charged green economy?
In the brown corner, we have the Minerals Council of Australia and its laconic spokesman, Mitchell Hooke. The Minerals Council represents Australia’s big miners — about 85 per cent of the mining output of the country, in fact. That’s a lot of carbon emissions.
Hooke himself is something of a professional lobbyist. He has made a career out of representing big business industry groups, including the Australian Food and Grocery Council and the Grains Council. Since heading up the Minerals Council, Hooke has made climate change — and specifically, protecting big miners from any costs of responding to it — his number one priority. It’s therefore not surprising when we find out that Hooke was a part chairman of that industry club of sceptics and deniers, the Australian Industry Greenhouse Network.
Last week, the Minerals Council released its latest salvo in the increasingly querulous climate jobs debate. Authored by notorious greenhouse sceptic Dr Brian Fisher, former head of ABARE and now of Concept Economics, this report claims that if the Rudd Government implements its dastardly Carbon Pollution Reduction Scheme, 23,510 jobs will be lost in the mining and minerals industries by 2020. It predicts a devastating 66,480 jobs will be lost by 2030. Queensland will be the hardest-hit state, owing to the sheer scale of Queensland’s vast coal mines.
Over in the green corner, we have the Climate Institute. This non-profit institution is one of the most credible and best funded of the green groups vocal on climate change, and acts as the de facto opposition to the greenwash spun out by the big polluters and their lobby groups like the Minerals Council and the Australian Petroleum Production and Exploration Association.
The Climate Institute has also just released a report entitled Regional Employment and Income Opportunities Provided by Renewable Energy Generation which is authored by the economic modellers McLennan Magasanik Associates (MMA). The report argues that 26,200 jobs will be created by renewable energy projects "if all planned and committed clean energy projects go ahead". The clean energy projects on the drawing boards will be "bigger than the Snowy" in their energy generating capability.
MMA are an extremely interesting choice as modellers for this study, as they have also contributed to some of the modelling undertaken for the electricity generation sector. Indeed, it’s noteworthy that MMA authored one of the reports that the Energy Suppliers Association of Australia used to predict the shutting down of many of Australia’s power stations.
What is the evidence for these claims and counter-claims? Well none, actually. Both reports are predictions: models of the future based on a set of assumptions about the world right now. So they are both, in a sense, guesses about what the future of the economy might look like in 11, 21 or more years hence.
As I discussed at length in an article on carbon leakage last year, the problem with many of the economic models used to discuss the climate change debate are the assumptions built into them. This goes beyond the obvious issues of how many mandated carbon emission reductions the government will eventually pass into law, and when it will do so.
No, the more general issue with this kind of modelling is the highly speculative nature of the models themselves. The Concept Economics report doesn’t even use its own modelling, by the way. It uses Access Economics "Regional General Equilibrium Model" with which to forecast possible job losses.
As I explained in October last year, all equilibrium models are deeply flawed. Not only do they fail to incorporate recent advances in economics like Daniel Kahnemann’s discoveries about the in-built judgment biases of humans, they also make heroic assumptions about the way economies function that simply aren’t true: things like perfect competition, perfect information, complete markets and rational individual consumers. Many of them can’t even explain unemployment! No wonder Joseph Stiglitz argues that equilibrium models "have serious inadequacies".
(For those of you interested in this topic, it’s worth examining Benjamin Mitra-Kahn’s fascinating monograph on the history and nature of computable general equilibrium models. This paper concludes that equilibrium models require so many assumptions that they have almost no sound basis in the real world.)
And then there are the errors. Brian Fisher at Concept Economics might have been the long-standing boss of an entire government economics bureau, but he can’t get his citations right when it comes to the Australian Bureau of Statistics. On page 6 of the Concept report, Fisher and his co-authors, Dr Stephen Beare and Stephanie Szakiel, cite the ABS mining employment figures as 142,000. The actual ABS figures for 2006–7 are 117,500, as anyone can check online. That’s an 18 per cent increase on the ABS figures. The 142,000 figure actually comes from none other than the Minerals Council of Australia in a 2008 fact sheet entitled The Australian Minerals Industry and the Australian Economy.
The Climate Institute’s paper by MMA also contains a model, but it at least is a model based on detailed micro-economic data from a database of 405 renewable plants, including their published employment levels. And unlike Concept’s paper, the MMA report contains a formal methods section which describes how its figures are arrived at. MMA has also been careful to try and under-estimate job creation where existing data is patchy or unavailable.
What can we conclude? MMA’s paper on job creation in the renewable sector is more detailed, rigorous and supportable than Concept’s paper on job destruction in the minerals sector.
There is a broader point here: however many reports we produce, the broad outlines are obvious. In the future, our economy will be greener. Over time, industries which employ people to spew out planet-warming pollution will gradually be displaced by industries which employ people to produce cleaner types of energy. This is the fundamental aim of any meaningful effort to tackle climate change.
It’s time politicians like Kevin Rudd and Penny Wong stopped pretending that the government can manage and compensate away the employment effects of climate change. It’s patently ridiculous to pretend emissions reduction won’t be painful. It will. If we want to save the planet from catastrophic warming, we’re going to have to stop burning carbon. This means some Australians will lose their jobs.
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