Southerly by David Haywood

123

A Tale of Two Iceblocks: Part 1 (Or How Analysis of Greenhouse Gas Emissions in New Zealand Can Cause Us To Do the Wrong Thing)

Here are two iceblocks that you can buy at your local dairy:

The iceblock on the left is made by Tip Top in New Zealand. The iceblock on the right is made by Streets in China.

Let’s estimate the carbon dioxide emissions from each iceblock. Most of the energy in manufacturing iceblocks from raw materials* of refined sugar and clean water will be down to cooling, so we can calculate the following approximations (assuming cooling of water from room temperature at 20°C to freezer temperature at -20°C):

Cooling energy required
TipTip Popsicle (76 g) = 35 kJ
Streets Paddle-pop (71 g) = 33 kJ

We can also estimate the proportion of dirty (i.e. carbon dioxide emitting) energy based on the average energy mix for electricity in New Zealand (around 80 per cent renewable) and China (around 25 per cent renewable):

Dirty energy component
TipTip Popsicle = 7 kJ

Then we can make some assumptions based on typical figures in terms of coal thermal power plants (typical efficiency around 35 per cent) and industrial freezers (typical coefficient of performance around 2.5). We’re rather unfairly assuming that all New Zealand’s dirty energy is sourced from coal (with an energy density around 30 MJ/kg), which it’s not:

Coal required in manufacture
TipTip Popsicle = 0.2 g

This finally allows us to work out the carbon dioxide emissions from each iceblock (using typical figures of 2.4 kg of carbon dioxide emitted per kilogram of coal):

Carbon dioxide emissions from manufacture
TipTip Popsicle = 0.5 g

But here’s something that you may not have considered before. Let’s look at the data that would be recorded in terms of assessing New Zealand’s contribution to greenhouse gas emissions (at the end of the manufacturing process, i.e. excluding transport energy input):

Contribution to New Zealand’s greenhouse gas emissions
TipTip Popsicle = 0.5 g

When we’re attempting to reduce New Zealand’s greenhouse gas emissions this final set of figures is all that’s considered. So what happens when we ask the question (based on our data): “How can we reduce New Zealand’s contribution to global warming in terms of iceblock manufacture?” The answer is obvious. In fact, the answer deserves its own paragraph in bold:

Q: How can we reduce New Zealand’s carbon dioxide emissions?

A: Encourage importation of iceblocks from China and discourage manufacture of iceblocks in New Zealand.

While this answer seems completely stupid (because this strategy would actually raise global carbon dioxide emissions—since the Chinese Paddlepop emits more carbon dioxide than the New Zealand Popsicle) it is actually technically true. This strategy would lower New Zealand’s greenhouse gas emissions according to the accounting system that we currently use—and therefore be the desirable course of action to take.

The problem here is that greenhouse gas emissions from energy production are attributed to the country where the actual gases are emitted (which can be calculated easily and reliably using the guidelines of the UNFCCC). A more meaningful system would be to attribute the greenhouse gas emissions to the country where the energy is actually “consumed”, i.e. the country where the energy embodied in goods and services actually ends up. Unfortunately this would be impossible to accurately calculate at the moment (although it can certainly be estimated); and it would require a complicated global system of traceability to produce reliable numbers. So for now we’re stuck with the current system of attribution of greenhouse gases.

To repeat this last paragraph in terms of our iceblocks: under our current system the carbon dioxide emissions from manufacturing the Tip Tip Popsicle (0.5 g) are attributed to New Zealand (because that’s where they are physically emitted); the carbon dioxide emissions from the Streets Paddlepop are attributed to China (1.7 g). A more correct approach would be to attribute the energy emissions of both iceblocks to New Zealand (a total of 2.2 g of carbon dioxide) since this is the country where the manufacturing energy embodied in the iceblocks is actually “consumed”.

If we don’t acknowledge this serious flaw in the official system of greenhouse gas accounting then we can end up (as we saw with our iceblocks) in taking the opposite action to that which would achieve our desired goal. In other words: our objective is to reduce global greenhouse gas emissions—but by considering New Zealand’s emissions under the current system, we discourage a clean energy product from New Zealand (the Tip Top Popsicle), in favour of a dirty energy product from China (the Streets Paddlepop), i.e. exactly the opposite of our stated objective.

All of this seems so obvious that it’s hardly worth writing down here. The problem, unfortunately, is that the well-intentioned strategies suggested by our political parties (and some policy analysts)—such as an ETS or a “straight” carbon tax (even a revenue-neutral version) on coal, gas, oil, and limestone burnt in New Zealand—all have the effect of sending price signals to discourage the consumption of products manufactured in New Zealand in favour of imported products. And it’s entirely possible, as with our iceblocks, that these imported products may well make a greater contribution to global greenhouse gas emissions than the products manufactured in New Zealand.

The possibility of increasing global greenhouse gas emissions (in a well-intentioned attempt to reduce them) is true of anything we do that increases the price of carbon dioxide emissions solely from energy produced in New Zealand. Furthermore the same effect will also occur in terms of price signals exported across our borders to overseas markets. By increasing the price of New Zealand’s goods and services via any added cost to our dirty energy then we discourage the consumption of our products overseas.

To return to our iceblocks, if we levy a cost on the dirty energy component in manufacture of the popsicle then we will increase the total price for the exported product. A consumer in Australia, for example, would then receive a price signal encouraging purchase of the dirty energy Streets Paddle-pop from China rather than the clean energy TipTop Popsicle from New Zealand. This would also be true in terms of encouraging purchase of high-emissions milk solids from Britain rather than lower-emissions milk solids from New Zealand. Both would tend to cause a global increase in emissions of greenhouse gases.

Clearly, therefore, any disincentive that we apply to the production of dirty energy in New Zealand must satisfy three criteria:

1. Any disincentive must be applied to the embodied dirty energy for goods and services imported into New Zealand.

2. Any disincentive must also be applied to goods and services within New Zealand.

3. Any disincentive must be removed from goods and services exported from New Zealand.

(An alternative, of course, is to incentivize clean energy in New Zealand, but that is much more complicated proposition—not least because the obvious place to fund such a scheme would be from taxing dirty energy, which puts you right back where you started.)

All of this sounds like a recipe for doing nothing to reduce greenhouse gas emissions in New Zealand. But it’s certainly not meant to be. We can do something, and indeed we already have a tax on goods and services that meets the above three criteria in terms of price signals (though not specifically on dirty energy, of course).

In a follow-up to this post, I’ll suggest a way to tweak GST so that it only applies to the dirty energy component of goods and services, and therefore provides the correct incentives to reduce carbon dioxide emissions in New Zealand.

Dr David Haywood is an energy engineer who is happy to offer pro bono advice on energy policy to any political party.

* Depending on where the sugar is sourced there may also be a very significant dirty energy input in terms of harvesting and refining (the same may apply to water).  The source of sugar or water for any particular iceblock is hard to establish and so the energy input won’t be considered in our rough approximation here.

123 responses to this post

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• For nigh on 20 years I’ve been attempting to explain this point to people outside the field of energy engineering—with almost zero success (which I’m sure is down to my limited communication skills, alas). I’m hoping that by discussing this in terms of something that all humanity loves and understands—viz. iceblocks—then I might finally manage to make a breakthrough.

Apologies to those already familiar with the problem (of accounting for New Zealand’s GHG emissions according to the UNFCCC guidelines) if I have made this explanation overly simplistic.

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Atmospheric Injury and the Blockheads
I think you have the problem licked!
But there is one sticking point…
the stick: plastic or wood?
- where is the wood sourced?
and is it not also sequestered energy and carbon?
and to wrap up..
the wrapper – plastic or paper?

I am glad that these considerations had no impact back in my youth, raised as I was in Sydenham – a mere two blocks from the Tip Top factory (next to the railways goods sheds) – it was a regular thing to call by after school to see if there were any broken or damaged ice-creams, coming back on the delivery trucks, that needed to go back into the energy cycle – best stoked by feeding to growing children rather than throwing out!

Christchurch • Since Dec 2006 • 7953 posts Report Reply

• I'm very happy to have a civil discussion on this topic, but -- it just occurred to me -- for some people anthropogenic climate change is a rather emotion-laden issue.

Could we possibly avoid a stooshie (sp?) about whether the climate scientists and atmospheric physicists are right or wrong -- and concentrate purely on the subject of aligning price signals in New Zealand with desired behaviour in terms of global greenhouse gas emissions?

Many thanks for your anticipated co-operation!

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• I only buy Nice Blocks - from a New Zealand company which pays a living wage to its employees. Can you factor that into the equation? And what if you make your own in your own fridge?

Wgtn • Since Jun 2008 • 3229 posts Report Reply

• David Haywood, in reply to Ian Dalziel,

But there is one sticking point…
the stick: plastic or wood?
- where is the wood sourced?
and is it not also sequestered energy and carbon?
and to wrap up..
the wrapper – plastic or paper?

Yes, you're quite right, Ian -- I just didn't want this to get too complicated! My main point at the beginning of the piece was to demonstrate that no matter what attention you invested in calculation, the GHG emissions of the "foreign" iceblock were not included in NZ's total (and therefore could lead to exactly the wrong outcome if a price is implemented on New Zealand's "official" emissions).

The energy/GHG sequestered in the wooden stick is also an interesting issue. I'm willing to believe that a new forest (that will remain on that site forever) is genuinely sequestering carbon dioxide. I'm not very convinced about some of the creative GHG accounting in terms of iceblock sticks and similar...

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• David Haywood, in reply to Hilary Stace,

I only buy Nice Blocks – from a New Zealand company which pays a living wage to its employees. Can you factor that into the equation?

Yes, there are, of course, ethical issues in terms of buying an iceblock from abroad so as to avoid paying health & safety costs, etc. that you would demand in your own country.

I'm now wondering if my choice of example was excessively delicious, and will (understandably) distract the minds of readers onto the earthly pleasures of iceblocks -- rather than the fact that our current system of accounting for GHGs can lead to an increase in GHGs (from well-intentioned efforts to reduce them).

Nice Blocks are my favourite, too...

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Ian Dalziel, in reply to David Haywood,

stooshie (sp?)

Stoush: a brawl or other fight...
:- )

Christchurch • Since Dec 2006 • 7953 posts Report Reply

• David Haywood, in reply to ,

I’m surprised the NZ electricity generator and lines company’s haven’t pointed out that Solar panels and battery’s cost lots of carbon to make, so putting solar panels all over the roof rather than using the hydro dams, isn’t as cosmic as it looks.

It's all very headache-inducing, Steven. The short answer: because someone might point out how much carbon dioxide was released when making the concrete for the hydrodams, not to mention the methane released by the anaerobic decomposition of the original vegetation under the dam waters!

To evaluate this stuff you can work out a GHG payback period, i.e. when the renewable energy from the manufacture of the dam or solar set-up “pays back” the GHG that would have been released from the dirty electricity that the hydrodam or solar set-up displaces. (Hopefully this period is considerably shorter than the life of the dam or solar set-up!)

Much as I like the storage of hydro, it does have its problems in New Zealand. Only after the Alpine Fault goes off will we be able to evaluate the true cost of those dams.

It’s enough to give you a terrible headache, quite frankly…

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• David Haywood, in reply to Ian Dalziel,

stooshie (sp?)

Stoush: a brawl or other fight…

Sorry Ian, I had momentarily lapsed into Scottish! It would be interesting to figure out the directionality of development of those words: was stoush or stooshie (sp?) first?

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Alfie, in reply to David Haywood,

was stoush or stooshie (sp?) first?

It seems that the word ‘stoush’ applies primarily in New Zealand and Australia and appears to be derived from the Scottish word stooshie. And your spelling was correct David.

While appreciating your desire for ice block simplicity, surely the Chinese block travelling thousands of kilometres to market whilst remaining frozen also increases its total emissions?

Dunedin • Since May 2014 • 1440 posts Report Reply

• David Haywood, in reply to Alfie,

It seems that the word ‘stoush’ applies primarily in New Zealand and Australia and appears to be derived from the Scottish word stooshie. And your spelling was correct David.

Thanks, Alfie – very interesting!

While appreciating your desire for ice block simplicity, surely the Chinese block travelling thousands of kilometres to market whilst remaining frozen also increases its total emissions?

Yes, you’re quite right, of course – although the actual transport by ship doesn’t add much in the way of emissions (small in comparison to transport via land in trucks). There’s also the effects of storage in NZ (manufacturing all year but selling mainly in summer, etc.). Not to mention the differences in shipping distances for the sugar and so on. That’s why I decided (as stated) to only consider cooling of the water and neglect transport and anything else. Turns out you could just about write a Ph.D. on GHG emissions from iceblocks alone.

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• David Haywood, in reply to ,

There’s the modern idea to mitigate some of the cost.

There are certainly some fascinating plans along these lines, Steven (a case where I had underestimated human ingenuity in the past)…

My own memory of the Hoover Dam relates to my intention for an un-American walk along the top. A policeman with a gun stopped me by saying; “You may think you can walk that far without collapsing, but I’m here to tell you that you can’t”. It was 45degC from memory, so he may have had a point.

If you rode a bicycle in Las Vegas then you have me (partially) to thank for not having to wear a helmet.

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Alfie wrote:

… surely the Chinese block travelling thousands of kilometres to market whilst remaining frozen also increases its total emissions

Yes, of course. But as David keeps re-iterating in his comments, the details of the ice-block are irrelevant. The ice-block is merely an example, to show how taxing carbon for goods manufactured in NZ will send the wrong price signal to the market, so it would favour the worse outcome for the world.

Edit: I'd just like to re-assure you, David, that at least one person out here understands what you did, and is pleased to have been educated on why taxing carbon is a tricky problem.

Auckland • Since Nov 2006 • 620 posts Report Reply

• David Haywood, in reply to Brent Jackson,

I’d just like to re-assure you, David, that at least one person out here understands what you did, and is pleased to have been educated on why taxing carbon is a tricky problem.

Cheers, Brent! I think that brings my total to about four people in maybe 18 years (I suppose on an annual basis that's not too bad -- nearly 1/4 person per year)!

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• I didn’t really want to post these charts since the one on the right is very approximate. This is a ball-park analysis that I did in 2009 quickly updated for the 2014 year. The intention of the analysis was to show a ballpark figure for GHGs embodied in imports, and to explore the probable(-ish) upper limit for agricultural emissions.

The key point is that by using the standard UNFCCC “production” methods you get a very different analysis than the more correct “consumption” approach.

For example, in the standard accounting system agriculture (the blue area) is about 50 per cent of all emissions. But because all that embodied methane & NO is exported out of the country then it’s (guessimated here) to be actually no more than 25 per cent.

Looking at the first chart some might say there was little point in doing anything about NZ’s GHG emissions because of the difficult-to-fix methane. Looking at the second chart you can see that there’s lots to be achieved via the easier-to-fix area of energy (the red area).

Hopefully this will further explain my point (though don’t quote or rely on these numbers)…

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• I know that there was a team looking at exactly my example above for NZ before the earthquakes 2009. But I'm on a very old computer here (with actual brontosaurus damage, I think), and I can't find the results.

If anyone can locate them then I'd be grateful if they could post them here...

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• To address the policy issue: it wouldn't be a problem if the countries we imported from also put a price on carbon. Then the cost would be built right in.

For imports from countries without such pricing, a border carbon tax is justified.

Palmerston North • Since Nov 2006 • 1717 posts Report Reply

• Rob Stowell, in reply to Idiot Savant,

I think you’re onto it Ian. Part of the point of a carbon tax is to signal to the world that we are serious about reducing carbon – so hey, how about you? Price signals to consumers* are one part of the project – but only one part. International signalling is important too.
Clearly to have any chance at a decent impact, taxing carbon needs to be global. Trade agreements in future will almost certainly work along these lines (unless the world sees a Trump presidency. In which case, all bets are off. For pretty much everything!)
[*A carbon tax isn’t just – or even primarily? – aimed at consumers, but at producers, too, of course. Isn’t it possible that the NZ iceblock manufacturer will (in response to a carbon tax) even further reduce their dirty energy consumption, install a wind generator, avoid any carbon tax at all and end up doing ok – especially as dirty energy gets phased out in China?]

Whakaraupo • Since Nov 2006 • 2120 posts Report Reply

• I don't recall hearing the import side but various Act leaders and farmers have made the argument about sending production to dirtier climes offshore. So David has not been alone here all this time.

Wellington • Since Nov 2006 • 1115 posts Report Reply

• David Haywood, in reply to Idiot Savant,

To address the policy issue: it wouldn’t be a problem if the countries we imported from also put a price on carbon. Then the cost would be built right in.

Exactly.

For imports from countries without such pricing, a border carbon tax is justified.

That's the appeal of modifying GST into a PGST (Polluting Goods and Services Tax), which therefore wouldn't be violating the conditions of any of our trade agreements.

The important thing is not to implement any policy that would have the effect of unintentionally increasing global GHG emissions. There's a whole bunch of genuine emissions from New Zealand that we can relatively easily do something about (and that will genuinely reduce global GHG emissions). Let's actually work on that...

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Ian Dalziel, in reply to Alfie,

It seems that the word ‘stoush’ applies primarily in New Zealand and Australia and appears to be derived from the Scottish word stooshie. And your spelling was correct David.

Apologies - Och! My Caledonian ancestors will be rolling in their graves and tumbling in their tumuli - I see 'stushie' is an acceptable variant as well - one learns summat new every day...

Christchurch • Since Dec 2006 • 7953 posts Report Reply

• David Haywood, in reply to Rob Stowell,

[*A carbon tax isn’t just – or even primarily? – aimed at consumers, but at producers, too, of course. Isn’t it possible that the NZ iceblock manufacturer will (in response to a carbon tax) even further reduce their dirty energy consumption, install a wind generator, avoid any carbon tax at all and end up doing ok – especially as dirty energy gets phased out in China?]

This is a complicated area. The problem is that GHG emissions have a genuine cost, which will be paid by people in the future. If manufacturers can avoid this genuine cost (by passing it onto future generations) then -- generally speaking -- they can undercut competitors who don't.

Yes, the carbon tax is ultimately aimed at the "manufacturers" who produce the GHGs, but it seems to me that this is most effectively done via the consumer, i.e. so that the price of a product signals the true cost (including GHG emissions). Then consumers will be incentivized to purchase products from manufacturers who can minimize prices by minimizing their GHG emissions.

Of course, purchasing decisions are not based wholly on price, but -- all other things being equal -- it will be an extremely important determining factor.

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• a C O' grief...
Local taxes only make sense if the damage done can be kept local – as the atmosphere is a global phenomena a globally uniform solution is required and tax ain’t the answer, a massive paradigm shift is…
I recommend Paolo Bacigalupi’s debut novel The Windup Girl for a glimpse into the world our present course may leave behind…

Christchurch • Since Dec 2006 • 7953 posts Report Reply

• David Haywood, in reply to Lyndon Hood,

Yes, although unfortunately their arguments are usually accompanied by the “New Zealand is too small to make any difference, so let’s not do anything” fallacy.

Ultimately anywhere can be broken down into an area that’s too insignificant to matter (I heard the same argument from a neighbour when I lived in Berkeley: “Why should Berkeley bother with a scheme to reduce emissions when it’s too small to make any difference”). And hence everyone has an excuse to do nothing by this logic.

ACT and I differ in that I would say that every individual has a logical responsibility to do what they can. If everyone did then we could solve practically all of society’s problems.

I shall be leading all readers in a chorus of Kumbayah later this evening…

Dunsandel • Since Nov 2006 • 1156 posts Report Reply

• Brent Jackson, in reply to David Haywood,

If everyone did then we could solve practically all of society’s problems.

Auckland • Since Nov 2006 • 620 posts Report Reply