Remarks at the Launch of Thank God for Carbon

Ray Evans

Adelaide, 27 January 2009

Ladies and Gentlemen,

First I wish to thank Senator Cory Bernardi for launching TGFC this morning. This action on his part will no doubt be held against him by some of his colleagues in the parliamentary Liberal Party. I do hope that when push comes to shove, those of you who are here today, and are in a position to influence opinion within the Liberal Party, will support Cory with all your strength.

Rather than regurgitating pieces from TGFC I want to raise with you this morning two issues, not discussed there, one short term and urgent, the other longer term, but vital to the health of Australian democracy.

The first issue is the impending bankruptcy of the Latrobe Valley Power Stations.

From a South Australian point of view what happens in the Latrobe Valley may seem of little consequence. But South Australia obtains some of its electricity from the Latrobe Valley, and what happens there will affect the five states which operate under the National Electricity Market Managing Co (NEMMCO) QLD, NSW, VIC, SA and TAS.

The background is this.

In 1992 the Kennett Government came to power in Victoria facing a financial crisis. Victoria was deep in debt, the state budget in a hopeless condition, the unions had welded trams to the tram lines in the CBD in pursuit of pay demands.

One dramatic response to this crisis was the privatisation of the old SECV, and so the four large power stations of the Latrobe Valley were sold to consortia of overseas interests and Victoria reaped many billions from the sale.

At that time these power stations were regarded by the banks as blue chip investments, and so the consortia were able to borrow 80 percent of the purchase price. Ownership of these power stations has changed hands since the original sale, but typically the owners are a mix of domestic and overseas interests.

The amount of debt outstanding on these power stations is estimated to be in the order of $5 billions. Of itself this would not matter. The LV power stations are the most efficient in Australia, producing the cheapest electricity, and producing good returns for the investors. But these loans are due to be rolled over beginning in 2010, and given the oft-declared intent of the Rudd Government to reduce emissions of CO2 from Australian power stations, and the Opposition's apparent acquiescence in this policy, and because the LV power stations are, as the Greens put it "Australia's worst polluters", and given the state of global financial markets, it will be impossible for the power station owners to find anyone in the world to refinance their loans.

It has to be said, over and over again, that this situation is wholly the responsibility of governments and oppositions, acting in concert. The Latrobe Valley Power stations are the most efficient in Australia. They produce the lowest cost power. They produce more CO2 and H2O per unit of output than any other power station because the brown coal they burn, typically comprises 70 per cent moisture. But the coal is very low in sulphur and the flue gases that can just be discerned coming out of the huge stacks, are as clean as any in the world.

Because this fantasy about anthropogenic carbon dioxide and controlling the world's climate has seized the minds of the political classes in the West, and the rent-seekers see huge gains to be made from trading tax receipts in the form of carbon credits, we are now faced with a crisis in the electricity industry.

Once it becomes clear that these loans cannot be refinanced, the owners will face bankruptcy and will have to walk away from the power stations. At the moment there is a conspiracy of silence about this matter. The owners don't want it known that they are facing this problem, but pretty soon the Australian interests will have to 'fess up that they are facing an impending crisis with serious revenue implications.

Neither the Victorian Government nor the Commonwealth Government wants to know about this problem. As politicians are wont to do, they assume that somehow or other, these problems will sort themselves out and they won't have to worry about losing 30 percent of Australia's electricity supply.

The Australian banks are looking at just how they can benefit from this situation and it seems that they have worked out a scheme for taking over ownership of the power stations at bargain prices, and then ramping up the price at which they will sell the output.

This will not be a good thing for any government seeking re-election in 2010. My prediction is that the Commonwealth Govt will find the $6 billions required to roll over the loans, and thus allow the power stations to continue to operate as before. This will then give the Commonwealth Government an interest in the financial viability of the brown coal power generators, and may think it unwise to render them worthless through the imposition of a carbon tax, however well disguised and however pushed forward into the future it may be.

These events tell us that it is not a good idea for governments to seek to impose their fantasies upon the real world. Here the fantasy is controlling the climate through decarbonisation. A decarbonised world is an even greater fantasy than that dreamed of by the socialists of the 19th century where the world would be managed so that people would live according to the maxim "from each according to his abilities - to each according to his needs."

That fantasy led, as we now know, to the deaths of countless millions.

The other issue I wish to bring to your attention is the total failure of our gate-keeping institutions, using the term which David Archibald has used, to carry out their basic social functions. I refer particularly to the CSIRO, but also to the universities.

The word "gate-keeping" is a useful one because it does give us an image of a gatekeeper who controls who comes in and who is kept out.

Governments are made up of people who have spent most of their lives climbing up the greasy pole of political preferment. It used to be the case that members of parliament came from a wide range of professional pursuits and business enterprises. Farmers were well represented, lawyers of course, but it was very rare for a political issue to arise concerning which at least one member of the party room, did not have an intimate knowledge, based on personal experience.

Today, things are very different and increasingly parliamentarians have known nothing but political activity from their university days on. This means that politicians are particularly susceptible to being conned by expert advisers, who have substantial research staffs, much experience in turning ministers in the direction required by their own interests, and often their own political or ideological agendas. It has been tragic watching successive Liberal Ministers for the Environment being captured by the Department within weeks of their appointment.

So the role of independent arbiters in disputes of a scientific or technological kind is a critical one. And it has to be stated emphatically that neither the CSIRO nor the universities, have discharged this role. To be blunt, they have sold themselves.

The CSIRO Division of Atmospheric Research has become one of the most blatant examples of taxpayer funded, AGW proselytizing to be found. Bill Kininmonth, who was director of the BOM's National Climate Centre from 1986 to 1998 saw how it happened from the inside and this the story he relates.

    In the 1970s BOM and CSIRO joined forces to establish the Australian Numerical Meteorology Research Centre for the development of weather forecasting models and supporting climate research. This only lasted about a decade as hostility at the most senior levels of BOM and CSIRO Meteorological Research resulted in the bust-up of ANMRC. Numerical Weather Prediction went to BOM and CSIRO's case for numerical meteorology and climate was weakened (which was the BOM management intent---only room for one kid on the block). The wily CSIRO management saw an opportunity in AGW and went to the then Commission for the Future to make a case for a major effort in climate modelling. The Commission for the Future bought the story and established a major PR campaign to promote the AGW story (you might remember the posters of Canberra with the parliament house flag pole emerging from Lake BG!). Then Minister for the Environment Graham Richardson saw votes in the issue as a promotion of the environment protection cause. BOM, then in the Dept of Administrative Services, was recalcitrant and not supporting the scare. The government of the day then had an administrative reorganisation and brought BOM into the Dept of the Environment. The upshot was that the government gave special funding to CSIRO outside of the ARGC process to develop climate modelling, and BOM was left to get on with weather prediction modelling,

So Graham Richardson bought the CSIRO for, I think $180 millions, and once committed to the AGW story line the CSIRO was stuck with it.

Garth Paltridge, who was Director of the Antarctic CRC based in Hobart, and which was funded jointly by the CSIRO and the ARGC tells the story how one Easter he had made sceptical comments in the press about the global warming 'consensus', and returning to his desk on Easter Tuesday was threatened by a CSIRO functionary with major funding cuts to the Antarctic Research programme for which he was responsible if he uttered such blasphemy again.

Now the CSIRO's public reputation is based largely on the work of Sir Ian Clunies Ross, who was appointed chairman in May 1949.

Reflecting CSIRO's dominance of Australian science and the sound foundations laid by David Rivett, Ian Clunies Ross was able to reap the benefits of a series of glittering successes. Radio astronomy, the discovery of the role of minor elements in animal and plant physiology, the dissemination of myxomatosis virus for the control of rabbits, and improvements in wool processing combined to propel the organization, and its chairman, to national prominence.

Ian Clunies Ross was a charismatic speaker who spoke to audiences all over Australia whenever he could. I still remember him speaking to a packed church at South Camberwell Methodist Church in the heart of the Bible Belt in Melbourne, when I was a young boy aged about 12 or 13.

But now that the AGW story line is coming apart, and more and more people become aware that it was always a scam, at some point a future Commonwealth Govt is going to have to make a decision about the future of an organisation which costs the taxpayer quite a few hundreds of millions, but whose reputation as a credible source of advice will be in tatters.

The same problem arises with the universities which, without exception, have tried to milk the taxpayer by riding in the global warming cart. The most egregious example is the Vice Chancellor of my own alma mater, Professor Glynn Davies, who chaired the Prime Ministers' summit of the best and brightest held on 19-20th April last year, and rode his global warming horse for that occasion with great enthusiasm. I would like to think that the vice-chancellors of my day would have never allowed themselves to behave with such disregard to the reputation of their universities.

The problem of government funding of science and universities is examined in historical detail by Terence Kealey, Vice Chancellor of Buckingham University and a clinical bio-chemist by profession. Buckingham University is a successful, completely private university.

Kealey's latest book is entitled Sex, Science & Profits and deals with the nature of science, the history of technology and the role of governments in promoting economic growth. It provides a devastating critique of states' failure to fund economically useful knowledge, and suggests that all spending on "technologies of the future" is likely to wind up down the drain.

Professor Kealey explodes the notion of private "underinvestment" in R&D, which is based on flawed economic theory rather than industrial fact. He also highlights the counter-productiveness of government technological promotion, using two prominent British examples. Before he became Prime Minister, Harold Wilson, in the early 1960s, promoted the "White Heat" of technological revolution, using the Soviet Union as a model. His Labour government greatly increased public R&D spending, which yielded the first commercial nuclear reactor, the first jet passenger aircraft, the first commercial computer and (half of) the first supersonic commercial aircraft.

But what all these "achievements" had in common was that they were financial disasters, and accompanied a precipitous decline in the British economy.

This book will be a must for all those who see the universities as one of our most serious institutional examples of intellectual decline in Australia, and aer trying to think of a way out of our predicament.

A useful current example of government investment in completely useless technology is the many millions of tax payers money being spent on carbon capture and sequestration; surely one of the most obvious no-brainers of our time.

I'll now hand over to our Chairman to conduct Q&A.

Lavoisier the Man
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