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Credit Agency Warns Debt Could Lead To U.S. Downgrade

by Bloomberg on December 22, 2011

Huffington Post…

NEW YORK (Daniel Bases) – Fitch Ratings on Wednesday warned again that the United States’ rising debt burden was not consistent with maintaining the country’s top AAA credit rating, but said there would likely be no decision on whether to cut the rating before 2013. Last month, Fitch changed its U.S. credit rating outlook to negative from stable, citing the failure of a special congressional committee to agree on at least $1.2 trillion in deficit-reduction measures. “Federal debt will rise in the absence of expenditure and tax reforms that would address the challenges of rising health and social security spending as the population ages,” Fitch said in a statement. “The high and rising federal and general government debt burden is not consistent with the U.S. retaining its ‘AAA’ status despite its other fundamental sovereign credit strengths,” the ratings agency said. In a new fiscal projection, Fitch said at least $3.5 trillion of additional deficit reduction measures will be required to stabilize the federal debt held by the public at around 90 percent of gross domestic product in the latter half of the current decade. Fitch, when it lowered its outlook to negative, had said it was giving the U.S. government until 2013 to come up with a “credible plan” to tackle its ballooning budget deficit or risk a downgrade from the AAA status. “A key task of an incoming Congress and administration in 2013 is to formulate a credible plan to reduce the budget deficit and stabilize the federal debt burden. Without such a strategy, the sovereign rating will likely be lowered by the end of 2013,” Fitch reiterated. Rival ratings agency Standard & Poor’s cut its credit rating on the United States to AA-plus from AAA on August 5, citing concerns over the government’s budget deficit and rising debt burden as well as the political gridlock that nearly led to a default. On November 23, Moody’s Investors Service, warned that its top level Aaa credit rating for the United States could be in jeopardy if lawmakers were to backtrack on $1.2 trillion in automatic deficit cuts that are set to be made over 10 years. The plan for automatic cuts was triggered after the special congressional committee failed to reach an agreement on deficit reduction. Moody’s said any pullback from the agreed automatic cuts to take effect starting in 2013 could prompt it to take action. (Reporting By Daniel Bases; Editing by Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Credit Agency Warns Debt Could Lead To U.S. Downgrade

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Robert F. Kennedy Jr.: Big Carbon’s Sock Puppets Declare War on America and the Planet

by on November 25, 2011

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It’s now become de rigueur among the radical right wing rhetoricians to characterize any government support of America’s green energy sector as wasteful, fruitless, and scandalous. They greeted with glee the collapse of the government supported solar company, Solyndra, America’s first major casualty in our race with China to dominate the “new energy” economy. With Solyndra dying on the battlefield — its marketplace choking on inexpensive Chinese solar panels — the right wing’s response was to hoist the white flag and declare defeat in the war for global cleantech leadership. That brand of “Can’t Do” cowardice is a boon to the carbon and nuclear power incumbents who fund so much of the right wing’s activities — but it’s bad for America. Leveraging the aberrant Solyndra bankruptcy, these groups have launched an orchestrated series of attacks against the renewables sector by trying to discredit other companies, even those that are driving America forward with innovative solutions that actually do compete on a global basis. For example, last month, Fox News ran a story insinuating that SunPower received a loan guarantee for its Central Valley Solar Ranch project because of its political connections Congressman George Miller. The story also suggested that SunPower was struggling financially and posed another risk to taxpayers — a la Solyndra. The truth is that SunPower is one of America’s strongest solar manufacturing companies and Mr. Miller had nothing to do with the company receiving a loan guarantee for its Central Valley Solar Ranch Project. To Fox News and other right wing media sources, the facts meant very little. Their intent is only to suggest wrong-doing in an attempt to undermine the Obama Administration and its clean energy goals. Last week found the right wing echo chamber, from Fox News to the New York Post , and the conservative blogosphere in an anti-green frenzy based on faux facts from a new book, Throw Them All Out . The author of this far-fetched screed is Peter Schweizer, Sarah Palin’s foreign policy guru, currently employed by the Hoover Institution, a think tank funded largely by oil interests (e.g., Exxon, ARCO, Transamerica, and Richard Mellon Scaife’s oil and banking fortune) to craft the philosophical underpinnings for unregulated pollution, unrestricted corporate profit taking, and massive corporate welfare for the carbon/nuke incumbents. Thanks to a mention in Schweizer’s far-fetched opus, I got a shout out, last week from most of these crackpot gas bags. The Daily Mail summarized my supposed crimes in its headline : “JFK’s nephew received $1.4 billion dollar taxpayer bailout for his struggling green energy firm.” All of the reported “facts” in this blogosphonic barrage were Schweizer’s inventions. Schweizer claims that BrightSource Energy received a government bailout due to political influence exerted on behalf of VantagePoint Capital Partners, where I am a partner and which is the largest institutional shareholder of BrightSource. The actual facts do not support Schweizer’s claims. BrightSource Energy did not receive a bailout. Rather, the Ivanpah project, a 392 megawatt solar thermal project in the Mojave Desert that will provide clean power to 140,000 homes, received a loan guarantee from the Department of Energy (DOE). Ivanpah, which broke ground in October 2010, is majority owned by Google and energy giant NRG. BrightSource is a minority owner of and the technology supplier to the Ivanpah project. The underlying loan from private investors is fully secured, and pays interest that will earn a healthy return for U.S. taxpayers. Unlike Solyndra which received corporate financing from DOE, and which had no assurance that it would be able to sell its product, Ivanpah and the Central Valley Solar Ranch projects have contractual commitments from California’s largest utilities to buy all of its power at fixed prices. This is comparable to building a new hotel with the guarantee that it will have 100% occupancy rates for 20+ years. Schweizer’s claims that the loan guarantee works out to a cost to taxpayers of $1 million per job is also a canard. The Ivanpah project is one of the largest infrastructure projects in the nation and the largest solar thermal plant under construction in the world. The project’s three year construction phase will create 1,400 highly-skilled trade, engineering and construction jobs at peak. These are high paying union jobs in a region plagued by one of America’s highest unemployment rates. The project will generate $250 million in earnings for these construction workers and, over its 30 year life, will produce $650 million in earnings for workers on the site, including the 90 permanent jobs required to operate the plant. Finally, the $2.2 billion Ivanpah project is an investment in America’s future with substantial indirect economic benefits locally and across the nation. The majority of the project’s supply chain is being sourced domestically across 17 states, driving investments throughout the country and creating additional jobs in other areas of the United States that have been adversely affected by the economic downturn. The Ivanpah project is also generating $300 million in state and local tax revenues over its life. The right wing’s campaign against the DOE’s support of renewable energy is not in our national interest. The DOE loan guarantee program has been extremely successful in providing debt financing to innovative energy projects in the wake of the 2008 credit market challenges. Access to capital is a crucial component of building innovative energy infrastructure and creating economic benefit. The DOE loan guarantee program has also been very successful at attracting private capital to these projects. Each dollar appropriated for the program leverages $13 dollars in private sector investment. As of August 2011, DOE had made commitments to 37 clean energy projects, leveraging private investment of more than $40 billion. This includes more than 10 utility-scale solar power projects in the Southwest, including SunPower’s Central Valley Solar Ranch and BrightSource’s Ivanpah. These projects are estimated to create tens of thousands of jobs across the country. Where is the Right Wing Opposition to the Obscene Subsidies to Carbon and Nuke? The frenzy against government support for green energy is ironic considering the silence from those same quarters regarding the hundreds of billions of dollars in annual subsidies and externalized costs flowing from government and the American public to the carbon and nuke companies that fund the right wing think tanks and the conservative blogosphere. The same DOE loan guarantee program that supported the solar projects gave an astonishing $8.3 billion loan guarantee — many times the size of the solar projects — to Southern Company to build two nuclear power plants. Nuclear power is an industry with a product so expensive it cannot compete in any version of free market capitalism. Big nuke is totally dependent on massive, monstrous public and government subsidies at every stage of its life. Oil is a close second. A comprehensive inventory of oil subsidies by former California EPA Chief Terry Tamminen, in his acclaimed book Lives Per Gallon, calculates U.S. subsidies to the oil industry at upward of one trillion dollars annually! The Rise of Green Energy This blogosphere wrangling is part of a larger struggle pitting disruptive technologies like LED lights, electric cars, and renewable energy such as wind and solar — the clean, green democratic, abundant, and patriotic fuels from heaven — against the powerful incumbents of coal, oil, and nuke — the destructive, plutocratic, largely foreign owned, addictive, poisonous, destructive, and war breeding fuels from hell. The green fuels are winning. Solar power is now at or near grid parity in many U.S. states. That means that solar generators can deliver electricity to consumers at or below the cost of coal or oil, without even considering the catastrophic health and environmental costs that these dirty sources create. Energy industry giants like NRG, which owns coal and nuke fleets, are moving aggressively into solar. “Solar is the future,” says NRG CEO David Crane. “Over the long term, solar won’t need the government to drive adaptation — the pace of innovation is so rapid and the costs are dropping so quickly that the marketplace will ultimately force the transition. Government incentives are important in that they will drive a quicker adaptation and keep American companies in the game.” Crane points out that his vendors are already offering solar panels at slightly less than $1.00 per watt, leading to an all-in cost of installed solar on a distributed basis of $2.50/watt. This, according to Crane, translates into 12¢/kilowatt hour, making home grown solar energy cheaper than the grid in 20 states. Experience shows that these industries are demonstrated jobs producers. There are already more Americans employed by the solar industry (110,000) than there are coal miners (90,000), and the wind industry (75,000) is rapidly expanding its workforce. The only questions now are: How fast will the transition occur? Which nations will lead the way and reap the financial rewards of that leadership? Unfortunately, due to the outsized influence of big coal, oil, and nuke on our Congress, America is lagging. China’s Leadership China’s bold strategy is to dominate the new energy economy with giant investments in wind, solar, LED light bulbs, smart grid systems, and electric cars. Despite our strong lead among entrepreneurs, the American government’s willingness to compete with the Chinese in these domains has been anemic. The Waxman-Markey bill, which passed the House and then died under pressure from the carbon cronies in the Senate, would have increased solar deployment in America by a mere 37% by 2020. The Chinese have already committed to increase their solar development by 20,000% during that period and wind development by 1200%. While the right wing whines about a $1.6 billion loan guarantee to a solar project, the Chinese are funneling $758 billion to their solar and wind industry over 5 years. I commend the Chinese for their commitment to transition to a green energy economy. But I refuse to accept the right wing narrative that America can no longer compete in the world marketplace. Americans still lead the world in patents filed and the other indicia of entrepreneurship. The promising new technologies and young green tech companies that I see daily are challenged principally by a lack of capital available from our banks and government. This is more than an issue of national wealth and prosperity — our national security is also at stake. The war by America’s carbon and nuclear energy industries and their right wing allies, against our country’s burgeoning cleantech industry is damaging our economy and subverting our national security, just as it has in the past led us into oil wars. When I was a boy, America owned half the wealth on Earth. We lost that advantage mainly due to our carbon addiction, which still causes us to hemorrhage nearly $750 billion annually in American wealth — the cost of importing foreign oil. The Chinese would naturally like us to spend what’s left of our national wealth purchasing Chinese solar panels, Chinese LED lights, and Chinese wind turbines and electric cars. Democrats and Republicans in Congress, many in the thrall of Big Carbon, are sitting on their hands as the hemorrhage continues. The incumbents are able to control the political process in Washington with the support of their right wing media flacks, and with hundreds of millions in annual contributions and lobbying. Such investments allow the incumbents to reap hundreds of billions in annual subsidies from U.S. taxpayers, artificially ballooning their profits. These are self-destructive policies for America. With the same resolve that established America’s industrial and technological greatness in the 20th century, leading the transition to a new energy economy is America’s best hope for true national security, prosperity, and restoring our global leadership and moral authority. Robert F. Kennedy, Jr. is President of Waterkeeper Alliance, Senior Attorney for the Natural Resources Defense Council, and a Partner in VantagePoint Capital Partners

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Robert F. Kennedy Jr.: Big Carbon’s Sock Puppets Declare War on America and the Planet

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Obama Takes His Debt Ceiling Case To The American People

July 16, 2011

WASHINGTON — Racing the debt clock, Congress is working on dual tracks while President Barack Obama appeals to the public in hopes of influencing a deal that talks have failed to produce so far. “We have to ask everyone to play their part because we are all part of the same country,” Obama said Saturday, pushing a combination of spending cuts and tax increases that has met stiff resistance from Republicans. “We are all in this together.” In his weekly radio and Internet address, Obama said the wealthiest must “pay their fair share.” He invoked budget deals negotiated by GOP President Ronald Reagan and Democratic House Speaker Tip O’Neill – which included a payroll tax increase – and Democratic President Bill Clinton and Republican Speaker Newt Gingrich. “You sent us to Washington to do the tough things, the right things,” he said. “Not just for some of us, but for all of us.” As a critical Aug. 2 deadline approached, the chances that Obama would get $4 trillion or even $2 trillion in deficit reduction on terms he preferred were quickly fading as Congress moved to take control of the debate. At a news conference Friday, Obama opened the door to a smaller package of deficit reductions without revenue increases. Obama’s communications director, Dan Pfeiffer, said Saturday the president, Vice President Joe Biden and White House aides were discussing “various options” with congressional leaders and House and Senate aides from both parties. The White House held out the possibility of arranging a meeting with the leaders on Sunday. House Republicans prepared to vote this coming week on allowing an increase in the government’s borrowing limit through 2012 as long as Congress approved a balanced-budget constitutional amendment, which is highly unlikely. In the Senate, the Republican and Democratic leaders worked on a bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit reduction in the proposal in hopes of satisfying House Republicans. A weekend deadline that the president gave congressional leaders to choose one of three deficit reduction options became a moot point after House and Senate leaders made it clear to the White House on Friday that they were moving ahead with their own plans. In the Republicans’ address Saturday, Sen. Orrin Hatch of Utah argued for passage of a balanced-budget amendment. He blamed Democrats for failing to embrace adequate budget cuts and said “the solution to a spending crisis is not tax increases.” An amendment that requires a balanced budget, he said, “would put us on a path to fiscal health and would prevent this White House or any future White House from forcing more debt on the American people.” The government said Friday it was using its last stopgap measure to avoid exceeding the current $14.3 trillion debt limit. Administration officials, economists and the financial markets have warned that missing the Aug. 2 deadline and precipitating a government default would send convulsions through an already weakened economy. Obama had held five straight days of meeting with congressional leaders at the White House, but none of the three options he proposed – deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years – were unlocking enough support to increase the debt ceiling by the $2.4 trillion Obama wants to make it last beyond the 2012 elections. Essentially declaring those discussions over, Senate Republican leader Mitch McConnell said Friday: “”Now the debate will move from a room in the White House to the House and Senate floors.” By day’s end, House Speaker John Boehner held at least two top-level meetings, one with White House Chief of Sta ff Bill Daley and Treasury Secretary Tim Geithner, and the other with House Democratic leader Nancy Pelosi. In search of a deal, Obama has used a combination of private meetings with congressional leaders and high visibility press conferences, radio addresses and public statements in an effort to win the public to his side. His pitch is also aimed at independent voters, to whom he is presenting himself as a willing compromiser. In a White House video distributed Saturday by Obama senior adviser David Plouffe to supporters, Obama is shown praising the virtue of compromise to a group of Democratic, Republican and independent students. He noted that President Abraham Lincoln’s Emancipation Proclamation permitted slavery in border states loyal to the Union, in an attempt to hold the nation together. “Here you’ve got a wartime president whose making a compromise around probably the greatest moral issue that the country ever faced because he understood that `right now, my job is to win the war and to maintain the union,’” Obama said. “Can you imagine how the (liberal news outlet) Huffington Post would have reported on that? It would have been blistering. Think about it, `Lincoln sells out slaves.’” He told the students: “The nature of our democracy and the nature of our politics is to marry principle to a political process that means you don’t get 100 percent of what you want.” __ Online: Obama address: www.whitehouse.gov GOP address: www.youtube.com/gopweeklyaddress

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Brett Caine: How To ‘Green’ Your Business

April 22, 2011

With Earth Day upon us, sustainability is a term we hear a lot but rarely as it relates to business economics. For most, the perception still remains that sustainability practices are at odds with financial realities. The recent data released by MIT Sloan and Boston Consulting Group in its Sustainability & Innovation Survey of global corporate leaders, certainly supports this point. Less than 9% of SMBs surveyed were classified as “embracers” of sustainable business practices, and only 34% of companies with more than 10,000 employees. However, sustainability is essential to helping today’s companies achieve many of their major business priorities, including attracting and retaining great talent and reducing capital expenses. In honor of Earth Day, I’d like to challenge the view that ‘green’ is incompatible with running a business by sharing the return on investment (ROI) we see achievable with four basic and “modernizing” changes to your business operations. Let’s face it, soaring gas prices and the stress of a challenging economy add a huge burden on today’s business owners. Adopting business practices that are good for your company’s long-term welfare as well as our global community is certainly a step in the right direction — not only on Earth Day, but every day. Here are some suggestions for consideration. Implement a telework program . You couldn’t have a greener commute than from your bedroom to your home office! Did you know that if most of the Americans that were able to telework actually did so just half the time, we could reduce our greenhouse gas emissions by about 51 million tons – the equivalent of taking the entire New York state workforce off the roads – and reduce Persian Gulf oil imports by almost half? These are a few of the findings from a new report our company commissioned called State of Telework in the U.S., which was conducted with the Telework Research Network. The report highlights the growth of U.S workers using telework, or workshifting as we call it, as a method of commuting. Happy workers make for a happy business. Flexible working can boost your company morale and be an attractive enticement for potential new recruits. Furthermore, why compromise the quality of the employees you are able to recruit by leashing them to a physical building? With so many amazing, easy-to-use, and affordable online collaboration and business tools, there are countless ways you can ensure remote employees are fully engaged and productive wherever they choose to work. Our research has found that workshifting actually increases productivity by some 27% and it turns out that workshifters are typically 55% more engaged than their office-bound counterparts (statistic courtesy of Right Management). Rethink your office space . In a 2010 Second Quarter “Facilities Snapshot” survey from the International Facility Management Association, sustainability ranked high on managers’ priorities. Almost half increased their sustainability efforts, actively seeking ways to conserve energy and reduce their carbon footprint. With the way we work evolving as the workforce becomes more distributed and mobile, there are key changes you can make to your office design that will go a long way in helping the environment. These changes include reducing square footage, not allocating full-time desk space to employees who workshift, and evaluating lighting, carpeting and air conditioning needs. For further insights please see here . Reduce costs associated with unused physical space and free up funds that can be directed to critical investment opportunities for the company. According to a study we conducted last year, if the 64 million Americans who could workshift did so just half the time, U.S. business would save $124 billion in office costs alone. This is a staggering statistic and one which should make all leaders take note. Increase energy efficiency . By giving employees more flexible work options, you can also install heat and motion detection lighting systems that will decrease energy consumption in the office and save money. Other ways your IT manager can increase energy efficiency is by replacing hard disk drives with solid-state drives in PCs, energy efficient chips in laptops, and switching from Alternating Current power to Direct Current power. Reducing facility operations costs and adding energy-efficient technology can chip away at unnecessary business expenses that could be better applied to investing in your business strategy and growth. For example, it has been calculated that virtualizing 100 servers could save $38,271 in energy costs per year. Use modern waste management techniques . When throwing away that paper coffee cup you picked up on your way into the office or the plastic container your sandwich came in, have you ever stopped to think about how much this adds to landfill? Perhaps it’s time for your company to consider reducing its waste and helping employees to do the same. Recycling paper is great, but there’s a lot more you can do. Composting, for example, not only reduces waste, it also enriches the soil. For small businesses on a budget, the costs of recycling and composting onsite may be a barrier. In that case, look for other companies in the area to start co-op recycling programs with or check into participating in a municipal composting program. From our own experience at Citrix Online, a robust recycling program has allowed our Santa Barbara headquarters to divert 42% of our waste from landfills in 2010; this increased to 58% in Q1 of this year. That’s good for the planet, can help improve sustainability processes and potentially reduce operating costs, not to mention giving employees an opportunity to participate in sustainability causes. And if you need any more evidence, the MIT Sloan and Boston Consulting Group survey mentioned at the beginning of this blog also found that the “embracers” were the highest performing businesses in the study, based on employee engagement, innovation, stakeholder appeal — and, yes, profitability.

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California Air Resources Board Appoints Propel Fuels Executive to Low Carbon Fuel Standard Advisory Panel

February 15, 2011

Jim Iacoponi to Bring Perspective of Low Carbon Fuel Consumers and Fleets to Policy Discussion

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Despatch Industries Hires Ellen Cheng as Taiwan Region General Manager

February 15, 2011

MINNEAPOLIS, MN–(Marketwire – February 15, 2011) – Despatch Industries, the world’s leading thermal technology and equipment provider, is pleased to announce that the company has named Dr. Ellen Cheng as General Manager of Despatch Industries Taiwan, Ltd. effective February 14. In her position, Dr. Cheng will be responsible for driving, managing and achieving Despatch’s business objectives in Taiwan for the company’s Solar, Carbon Fiber and Thermal Technology business groups. 

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How Clean Is Obama’s Clean Energy Standard?

January 26, 2011

NEW YORK — President Obama wants 80 percent of the nation’s electricity to come from clean energy sources by 2035. Achieving this, he says, will take a mix of solar, wind, nuclear, and even fossil fuels like natural gas and coal. It may also take a liberal definition of “clean.” Obama’s plan is to force the generation of electricity from coal and natural gas, which together account for 70 percent of the nation’s fuel mix, to get cleaner. At the same time the government would spur the growth of nuclear power and renewables like wind and solar. The president also pointed to biofuels as a way to “break our dependence on oil” and predicted the country would have one million electric vehicles on the road by 2015. But what exactly will be considered clean or dirty is not yet known. The answers will depend on whether the concern is greenhouse gases like carbon dioxide or hazardous chemicals like mercury and sulfur dioxide, or, most likely, some combination of both. It will also depend on whether the environmental hazards caused by mining coal or uranium, drilling for gas or plowing new fields to grow biofuel crops will be considered along with the hazards of burning them for power. How “clean” is ultimately defined by the administration and congress will determine how the nation’s energy mix changes over the coming decades – if at all. The White House says the U.S. now gets 40 percent of its electricity from the sources it considers clean. Obama’s vision calls for increasing amounts of clean power to be added to the nation’s energy mix over the next quarter century. His “clean energy standard” differs from renewable energy standards adopted by many states by making room for nuclear power and fossil fuels like coal and natural gas. Under the plan, nuclear and renewable sources would count toward federal clean energy requirements while what Obama calls “efficient natural gas” and “clean coal” would get partial credit toward the requirements. “If your objective is to minimize emissions of greenhouse gases or emissions of other pollutants, a clean energy standard makes more sense than a renewable energy standard,” says Hugh Wynne, an analyst at Sanford C. Bernstein & Co. “You are focused on an objective as opposed to pushing one solution.” The standard could lead to what Christine Tezak, an energy policy analyst at RW Baird, calls a “significant shift” in the nation’s energy portfolio. Here’s what Obama’s plan could mean for today’s energy sources: _Coal Coal accounts for 45 percent of the nation’s electricity generation – but 81 percent of the carbon dioxide emissions and 94 percent of the emissions of sulfur dioxide. To meet the President’s goal, conventional coal generation must be cut by more than half. Some companies aim to capture carbon dioxide and storing it underground, but this so-called clean coal technology is proving extremely difficult and expensive to do on a large scale. The cost of a pilot plant being built in Indiana by Duke Energy has risen to $3 billion from $2 billion since it was proposed in 2007. _Natural Gas Burning natural gas produces about half of the carbon dioxide of coal, and almost none of the hazardous chemicals. It is also now plentiful in the United States, as a result of new drilling techniques and discoveries. Those drilling techniques are raising some environmental concerns, but given its availability and cost, natural gas power will almost certainly grow from its 23 percent share of today’s mix. _Nuclear The nation’s 104 nuclear reactors provide about 20 percent of the nation’s electricity, and at extremely low cost. Generating nuclear power produces no carbon dioxide. But mining for uranium does, and there is still no long-term plan for storing the radioactive waste produced by a nuclear reactor. And the cost of a new reactor is prohibitive. Even companies in line for federal loan guarantees to build one are shying away because of the cost. New nuclear plants could more viable if Obama’s clean energy standard forces utilities to use power that doesn’t emit carbon dioxide. _Wind and Solar Wind energy produces about 2 percent of the nation’s power. With current subsidies, wind can compete with conventional electricity when electricity prices are high. But electricity prices have fallen because natural gas prices have dropped. This has badly stunted the growth of the wind industry. Solar, while even more expensive than wind, is still growing rapidly with the help of state subsidies. But it currently produces less than 1 percent of the nation’s electricity. A clean energy standard would give both wind and solar a big push forward. Though a renewable energy standard would have done more. _Biofuels The federal government is already backing biofuels three ways. It offers tax credits, it mandates that refiners use a growing amount of it, and it bars imports. Corn ethanol is now nearly 10 percent of the nation’s fuel mix and has reduced gasoline demand. But environmentalists and policymakers say it produces more greenhouse gases than gasoline. The biofuels industry hasn’t been able to produce so-called advanced biofuels, which come from non-food sources and produce fewer greenhouse gases, despite federal mandates to do so. Obama said he wants to increase investment in clean energy technologies by one third next year. Advanced biofuels could benefit from research and development help. _Electric Vehicles To reach Obama’s goal of 1 million electric vehicles on the road by 2015, automakers would have to sell 200,000 of them per year between now and then, about 2 percent of annual new vehicle sales. JD Power and Associates predicts sales of fully electric vehicles will be just half that level by 2020. The goal makes more sense if the president includes hybrid vehicles, which can be plugged in and run for short distances on electric power.

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Zachary Karabell: Cancun and Climate: Government Won’t Act, But Business Will

November 29, 2010

Over the next two weeks, Cancun will be in the spotlight for something other than spring break madness. As host of the annual climate summit that once saw such promise in Kyoto in 1997, Cancun in 2010 is framed by the spectacular failure of last year’s Copenhagen talks and by the stark realization that nearly 200 nations simply cannot agree on anything of consequence. No matter how unequivocal the scientific evidence is that climate is changing and human activity is a central factor, nearly 7 billion people loosely represented by a few hundred governments are agreed on nothing. We know the reasons why action on climate is frozen: emerging countries such as China, India and Brazil will not accept limits that stifle their rapid emergence; developed countries such as the United States and the European Union can’t or won’t subsidize efforts abroad; and the U.S. federal government can’t even agree on binding limits for America itself. While everyone shares the sentiment that they do not want to destroy the earth or ruin it for their grandchildren, there is no consensus on how to shift global economic activity in a more sustainable direction. That should be cause for despair, and much of the commentary this week will likely conclude that we are on an inexorable and negative path towards deleterious climate change. But that is only because we collectively focus too much on government and its failings rather than on business and its successes. For many in the self-identified community that identifies climate change as humanity’s greatest challenge, big business is seen as an obstacle to a better future. That attitude is a legacy of the 1970s, when the green movement ranked big business as a culprit that couldn’t be redeemed but might be coerced. Today, however, global businesses aren’t being pulled kicking and screaming to innovate and become more sustainable: they are racing ahead of government and may in the end be the one real hope for the future. They aren’t doing so because management has gone green or awoken to some moral environmental imperative. They’ve done so because of the current imperatives of the market: with the price of raw materials skyrocketing in the face of China rapid industrialization and economic growth in the affluent world flat-lining, companies have ample new markets but no real pricing power. In short, they can sell, but any rising input costs they have to absorb. That is a powerful spur to use less stuff, to become more efficient, and to embrace sustainable growth. My recent book Sustainable Excellence (co-authored with Aron Cramer) charts just how companies are doing that. They are too numerous to list, and range from behemoths such as Walmart (yes, Walmart – which has aggressively pushed for more sustainable products), Unilever, Nike, Marks & Spencer, Nestle, and Shell to newer less familiar companies such as Better Place (which is trying to redefine transportation), Masdar (which is building a carbon-neutral city in the deserts of Arabia), Schneider (which is at the forefront of meters and energy efficiency), ICICI Bank (an Indian financial power that is addressing rural poverty), and hundreds of others. They are addressing consumer needs and recasting global supply chains, and doing so in a way that reduces their costs and thus, their carbon footprint. They are doing so largely in spite of government inaction and inconsistency. And they show no signs of reducing their efforts after the financial crisis of the past two years. If anything, that crisis led to redoubled efforts to use less stuff and enhance efficiency. And so while there will be hand wringing and consternation at what Cancun will not achieve, that should be placed against a backdrop of incredible dynamism in corporate land, driven not by idealism but by the urgency of the market. Costs of everything raw are spiking; that includes food, fertilizer, iron ore, copper, rare earths, oil, and even coal in China. And with costs soaring, innovation is as well. It would be lovely if governments were to find concord, and better for the world. But it won’t happen in the coming weeks, and it may not need to. Humanity has always been in tug-of-war between the ability to destroy life and the inexorable capacity to save it and create it. We don’t know which force will win in the future. But we are here now, and that says something about which has come out on top so far. This post originally appeared at www.time.com at http://curiouscapitalist.blogs.time.com

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Don Tapscott: Macrowikinomics: Opening the Kimono on Climate Change

November 15, 2010

This article is the third installment in series to be written by Don Tapscott and Anthony D. Williams, authors of the newly released book Macrowikinomics: Rebooting Business and the World. Mark Parker, the CEO of Nike calls it “A masterpiece. An iconic and defining book for our times.” The Economist says it’s a Schumpeterian story of creative Destruction.” The book argues that many of the institutions of the industrial age have finally come to the end of their lifecycle, and now being reinvented around a new set of principles and a networked model. Today’s blog is about climate change. **** In an economic and political environment where progress on global warming seems to have ground to a halt, climate change advocates in America are wondering how to move forward. A Republican-controlled House surely spells doom for climate change legislation and other measures that could stimulate the green economy. But those who support taking action on climate change should not be discouraged. Around the world there are already hundreds, and probably thousands, of collaborations occurring; everyone from scientists to school children are mobilizing to do something about carbon emissions. And the most forward-looking political leaders recognize that amplifying these grassroots energies could be our best short-term hope for meaningful action. Already a leader in addressing climate change, the British Columbia government recently lit a fire under Canadian software developers by open sourcing hundreds of its best climate datasets and asking for innovative Web-based and mobile apps that could raise awareness of climate change and inspire action. As an incentive, the government put up $40,000 in prize money. One of the winning apps allows helps students mange their carbon footprints. Users can track their bathing, eating, transportation and entertainment habits, and the app spits out an impact statement with annualized kg of CO2 equivalents generated. Another app aimed at small and medium size businesses, enables business owners to measure their company’s emissions and then benchmark their score against peers in industry. Executives with the B.C. Ministry of Citizen Services tell us that collaborations like these provide a low-cost way to tap new ideas and skills in pursuit of the government’s climate goals. In fact, the initiative cost BC taxpayers very little. The government contributed its data. Private sector partners contributed the funds for the prize money. Software coders and local businesses provided their labor and ingenuity. And none of the initiatives spurred on by the contest require new rules or new legislation to move forward. Should other governments be following BC’s lead? To be sure, most climate change experts generally agree that the surest way to accelerate action on climate change boils down to simple economics: if you want discourage carbon intensive activities, make pursuing them more expensive. Putting a price on carbon (through a cap and trade system or a straightforward carbon tax), for example, would help usher in a new mind-set among consumers, investors, farmers, innovators and entrepreneurs that in time will make a big difference. Make people and businesses pay the full environmental costs of what they produce and consume and suddenly every investment and purchasing decision made in retail stores, financial markets and small and large companies around the world would be made in pursuit of the least-cost low-carbon option. Weaving carbon emissions into every business decisions would drive innovation and deployment of clean technologies to a whole new level, and make investments in energy efficiency much more attractive. Industries would need to invent and adopt new technologies that boost efficiency to limit their emissions. And consumers would curtail their own carbon footprints as the prices they pay for things like air travel and exotic fruits begin to reflect their true costs to the planet. However, while it is true that centrally managed taxes, credits and incentives provide important levers for steering society toward low-carbon solutions, these are not the only levers. And while Congress is unlikely to take action, there is no shortage of valuable initiatives that can both help us better understand the causes and consequences of climate change and marshal the knowledge and talent required to advance sensible solutions. In fact, everyone – including climate skeptics – stands to benefit from initiatives that, like the BC apps contest, make information that was once inaccessible and hard to understand available to policymakers and the broader public. Today, insufficient information about which economic activities–and, by extension, which communities, companies and nations–are contributing most to climate change undermines society’s ability to target remedial actions and assign responsibility for correcting damaging behaviors. The right amount of transparency in such cases can change perceptions, reveal new factors that alter the stakes, or compel other participants to accept the need for and legitimacy of new regulations. Getting our hands on comparable CO2 emission data for all industrial facilities and other human activities such as logging, fishing or mining, would be a goldmine for scientists, policy-makers, environmentalists, investors and ordinary citizens. Even better would be the ability to measure the impact of those activities on our climate in the same way companies apply financial metrics to their investment decisions to understand the bottom line impact. We’re not there yet. But over the past few years, a cornucopia of initiatives has emerged to make climate change information more accessible to the public and key institutions, including the investment community, regulators, and government purchasing organizations. Whether mapping the world’s oil spills, simulating the effects of sea-level rises, tracking mammals on the verge of extinction or showing national per capita CO₂ emissions, the initiatives tend to emphasize the use of bold visual formats help communicate complex phenomena in a way that both scientists and laymen can easily grasp. Carbon Monitoring for Action (CARMA), for example, maps the CO2 emissions of over 50,000 power plants and 4,000 power companies across the world. The data for current and planned installations is easily accessible through a Google Map on the project’s website as well as through an API. “Our role is to translate” says CARMA’s lead researcher, David Wheeler. “We take reams of data which are available out there and translate them into an easily accessible format. There are few other institutions that have the incentive to do this – most scientists don’t as it doesn’t affect their publication records, and policy people are either too busy or not sufficiently technical to do the work.” CARMA’s work is particularly important as the energy sector is the single largest contributor of greenhouse gas emissions, at around 65% of the world total. The power of the platform became apparent one day when Wheeler received a call from a friend at the World Bank inquiring about a plant being built in Mmamabula, Botswana. It turned out that the installation would be a major polluter, which piqued Wheeler’s interest – what else is the World Bank funding? Scrolling over to India he found plans for another coal plant, the Tata Ultra Mega, which ultimately would become one of the biggest emitters of CO2 in the world. Wheeler’s finding led to a large campaign by the not-for-profit Environmental Defense Fund to institute stricter standards at the World Bank. The following year new legislation was put in place to limit the types of projects that would be eligible for funding. The Carbon Disclosure Project (CDP) targets people with lots of money and enormous influence on the companies in which they invest. Institutional investors–the big mutual and pension funds–are a critical audience in the effort to accelerate business action on climate change. After all, they pretty much own the economy. Paul Dickinson, the organization’s founder, has calculated that access to capital will become a powerful lever for encouraging companies to reduce carbon once a critical mass of investors and lenders starts attaching risk premiums to companies with climate liabilities and those without sound carbon management plans. The CDP aims to speed the transition by helping the investment community better understand how companies are positioned in relation to the risks and commercial opportunities associated with the transition to a low-carbon economy. CDP’s analysis is based on information it receives from some 2500 private and public organizations, including many of the largest corporations in the world. Less altruistic operators might have chosen to keep the data proprietary and make money by selling access to institutional subscribers. But Dickson thinks the public value of exposing the data to a broader audience exceeds the commercial potential. “Our goal is to apply the intelligence of the world to the climate change problem. Anyone that wants to look at the data can go to the website and download it.” Scientists are getting on board too. Greg Asner and Carlos Souza, two scientists at the forefront of forest science, are now working with Google to gather petabytes of historical and present satellite imagery. This information will help uncover the location and rates of deforestation around the world and allow colleagues to pitch in on research that will determine the links with climate change. The evidence accumulated to date is already having an impact. We now know, for example, that emissions from tropical deforestation are comparable to the emissions of all of the European Union, and greater than those of all the cars, trucks, planes, ships and trains on the planet. And thanks to the work of economists such as Nicholas Stern, we also know that protecting the world’s standing forests is one of the most cost-effective ways to cut carbon emissions and mitigate climate change. Of course climate deniers, and those who see the world’s attempt to control climate change as a threat to their business interests, aren’t necessarily interested in the truth. They will continue to unleash their armies of lobbyists to water down policy, spread bogus science, and block innovations that might threaten their business models. But the best way to counter back-room lobbying and misinformation is not to hunker down as some climate scientists have in the wake of the climategate scandal, but to foster greater transparency and open debate around the risks of not acting now. Tim Palmer, a climate scientist at the University of Oxford whose current work focuses on quantifying and managing the uncertainties surrounding climate change, suggests that everyone concerned by the climate change issue, particularly those who are skeptical, ask themselves exactly how large the probability of serious climate change should be before we should start cutting emissions? 0.1%, 1%, 10%, 50%? “Considered this way,” says Palmer “it’s clear that the black and white dichotomy between the ‘climate believers’ versus ‘climate skeptics’ is indeed a false one.”4 And if you happen to be one of those people who believe that action is merited today, there is no point waiting for the political gridlock gripping the country to recede. Thanks to Web, we have the most powerful platform ever for people to learn about climate change, inform others and self-organize. Follow Anthony Williams on Twitter: www.twitter.com/adw_tweets

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John Feffer: Take This Job and… Transform It

October 5, 2010

The song Take This Job and Shove It hit No. 1 on the country music charts in 1978. The blue-collar worker in the song that Johnny Paycheck made famous was working up the nerve to leave the factory after 15 years on the production line. It wasn’t necessarily the best time to mouth off at the line boss. The U.S. economy wasn’t so hot. Unemployment was 6.1 percent , which politicians considered unacceptable. Real wages, which peaked in 1973, were in a long tailspin. Unions continued to hemorrhage members. Workers were angry, and the song captured some of that feeling. But the song came out before the rise of China and India, before computers facilitated outsourcing, before free-trade agreements further eroded the U.S. manufacturing sector. The hero of the song wasn’t working in the golden age of American labor. But he had a good shot at getting another factory job. Three decades later jobs are a precious commodity. The unemployment rate is hovering just under 10 percent, and the debate is hot and heavy over how to create more jobs. In The New York Review of Books , economists Paul Krugman and Robin Wells recommend “practically everything that might stimulate the economy. If more spending on infrastructure is politically impossible, at least make the case for it and pound its opponents for their obstructionism.” That was certainly the message this weekend when tens of thousands of people came to Washington, DC to push the government on the jobs issue. Union members, in their different-colored shirts, turned the Mall into a multi-hued quilt. Religious leaders stood beside GLBT activists and proponents of immigrant rights. Concerned at the tea party’s momentum and the prospect of Congress shifting to the right after the mid-term elections, progressives have attempted to pull together into some semblance of coalition. And jobs are the glue that holds this coalition together, at least for now. The other fixative that binds this coalition is opposition to war spending. Virtually all the speakers at Saturday’s rally mentioned the enormous amount of money we’re wasting on the wars we’re waging in Afghanistan, Iraq, Pakistan, Yemen, and elsewhere. Lawmakers are all sharpening their knives to make cuts in federal spending to bring down the deficit. Defense Secretary Robert Gates wants to economize on some military operations, through only to pour the savings into other Pentagon programs. Otherwise the U.S. military has resisted attempts to slash its budget. “More Jobs, Less War” seems like a perfect rallying cry for progressives. But here’s the problem. Many unions, although perhaps willing to oppose the war in Afghanistan, are hesitant to advocate cutting Pentagon spending. With a base that continues to shrink, they fear losing dues-paying members who manufacture weapons. Politicians, too, don’t want to appear anti-job by voting for anything that would close down production lines in their district. There’s a way around this impasse. We need to update the Johnny Paycheck song. The new refrain should be Take This Job and…Transform It . “The obvious solution to the current economic crisis in the United States is to reduce military spending and apply those savings to a green technology initiative that reduces our dependency on fossil fuels, shrinks our carbon footprint and creates jobs,” Miriam Pemberton and I write in AlterNet . “Such a ‘green stimulus’ could pull our economy out of recession.” In our new Green Dividend report , we show how this “obvious solution” can become a politically feasible one by playing matchmaker. We need to identify, community by community, the existing manufacturing capabilities and workforce skills and match them to the requirements of new green manufacturing. “After the Cold War ended, the United States missed a golden opportunity to use a ‘peace dividend’ to fund a large-scale conversion program to transform the defense sector into the core of a new manufacturing system,” we write. “The green dividend is perhaps our last shot at transforming the U.S. economy. We have been given a second chance. If we blow it this time, there will not likely be another.” The military sector has already prepared its fallback option. If the Pentagon starts cutting contracts, its contractors will try to boost military exports. What the Pentagon won’t buy, other countries have lined up to purchase. The Obama administration has begun to change the rules — simplifying the approval process for arms sales — to expand the U.S. share of the export market. The United States, as Foreign Policy In Focus columnist Conn Hallinan explains in a 60-Second Expert version of his recent column , has been No. 1 in this dubious category for many decades. We export war not only with our troops, but with our arms sales. The military sector uses the jobs argument to maintain the status quo even at a time of troop draw-downs in Iraq and canceled weapon systems. Meanwhile, in a misguided effort to craft a foreign policy that boosts jobs at home, the Obama administration is falling back on its predecessors’ free-trade arguments. Cutting tariffs and regulations, Washington argues, will create jobs. So Obama is preparing to move forward on the U.S.-South Korea free trade agreement, which the legislatures in both countries have yet to approve. Lawmakers are right to be cautious. “Opening markets only means more intense competition and downward pressure on worker wages,” write FPIF columnist Christine Ahn and FPIF contributor Martin Hart-Landsberg in Forget the FTA Fix, Just Say No . “The experience of past decades of trade liberalization should be proof enough. A case in point: both U.S. and Chinese workers have seen their working and living conditions deteriorate while dominant transnational corporations and their national allies in both countries have gained enormous profits.” The United States is No. 1 in military spending, No. 1 in military exports, and No. 1 in promoting free trade agreements. We’re not near No. 1 in the categories that matter in the 21st century, such as generating green energy. If we don’t transform military jobs into green manufacturing jobs, the United States won’t simply lose its ranking in the global economy. Worse, we will be dragged down by a self-reinforcing and self-defeating policy: peddling weapons and wars that perpetuate the itch they are meant to scratch. Subscribe to FPIF’s World Beat here . Sign up with FPIF on Facebook . Follow FPIF on Twitter. Follow John Feffer on Twitter.

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A CONVENIENT TRUTH: Gearing Up For Climate Change Could Supercharge The Job Market

September 28, 2010

(This is Idea No. 5 in Huffington Post’s ongoing America Needs Jobs series; see the introduction .) Could one major crisis be solved…. by solving another? If we’re talking about the nation’s desperately poor job market on the one hand, and the dire threat of climate change on the other, then the answer is: Quite possibly, yes. The solution to both would be an enormous investment in green technology and green jobs — creating a robust “clean energy economy” while reducing carbon emissions; putting millions of Americans back to work while increasing our energy independence; rebuilding our manufacturing base while saving consumers money on their energy bills; and saving the planet. It certainly sounds a heck of a lot cheerier than the alternative. And it makes sense that to genuinely restart the American jobs engine, you’re going to need something really big. Here’s University of Texas economist James Galbraith putting today’s need in historical perspective: The illusion of stimulus was that the economy would “return to normal” with a little “fiscal boost.” The reality is that having exhausted (however imperfectly) the 1940s agenda of middle-class housing, the 1950s highways agenda, the 1960s health-care agenda and the 1990s information-technology bubble, the economy needs a new strategic direction. The clear and pressing priorities are energy and climate change. To address these challenges is a grand task, requiring decades of research, careful planning and many investments, if we are to pass on a livable planet and a decent living standard. Institutionally it will require new lending agencies to assure that the funds needed are available over the long term. And the work can provide jobs for millions, for many years. In a major report issued last year, John Podesta and colleagues at the Center for American Progress described the characteristics of a clean energy economy . Among its attractive qualities, it promises to revive the American middle class: Solving global warming means investment. Retooling the energy systems that fuel our economy will involve rebuilding our nation’s infrastructure. We will create millions of middle-class jobs along the way, revitalize our manufacturing sector, increase American competitiveness, reduce our dependence on oil, and boost technological innovation. These investments in the foundation of our economy can also provide an opportunity for more broadly shared prosperity through better training, stronger local economies, and new career ladders into the middle class. Reducing greenhouse gas pollution is critical to solving global warming, but it is only one part of the work ahead. Building a robust economy that grows more vibrant as we move beyond the Carbon Age is the greater and more inspiring challenge. Famed venture capitalist John Doerr is an evangelist for clean energy and one of seven business leaders (also including Bill Gates and Jeff Immelt) who make up the American Energy Innovation Council (AEIC). That group is calling for “both robust, public investments in innovative energy technologies as well as policy reforms to deploy these technologies on a large scale.” Here’s how Doerr explains the group’s thinking : Well, today, we are in a worldwide race for the next great global industry. And I believe, and my partners believe, the president and members of Congress believe that is the new clean-energy technologies…. [I]f you look at the top 30 companies around the world in new clean energy — that’s the top 10 in wind, the top 10 in solar, and the top 10 in advanced batteries, the sort that would power our electric vehicles — only four of those 30 are American companies. If I compare that to the Internet, it’s — it’s as if, gosh, Microsoft and Apple and Google and Intel and Yahoo! were all companies headquartered in Europe or Asia, and only Amazon was a company here in the United States. So, we have got to make choices, make decisions now about whether we want to be making our own energy future with American jobs, or if we want to be buying that future from China and other countries around the world. There are many different paths to a green jobs future. The AEIC’s plan, for instance, calls for $16 billion in annual federal government investment in clean energy innovation. Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) is still pushing for a “Green Bank,” at a cost of $10 billion a year, that would facilitate “significant and sustained investment” in new clean-energy technologies. (Bingaman, however, will be lucky if he can win passage of his bipartisan Renewable Energy Standard bill , written with Republican Senator Sam Brownback of Kansas, which would require utilities to get 15 percent of their power from renewable energy sources like wind and solar by 2021.) So what may be the last, best hope for major federal clean-energy investment is a retooled green bank proposal that former FCC chairman Reed Hundt is pushing . Bowing to the political realities — that, as he puts it, “Congress won’t appropriate any money now for any cause, no matter how worthy” and that unemployment is a more urgent priority than clean energy — Hundt is advocating a nonprofit Energy Independence Trust (EIT) that he bills as a massive jobs generator, and that he says would not require appropriations because it would just be borrowing money from the Treasury. At the core of the proposal is Hundt’s embrace of one of the many facts that deficit hawks try to ignore: that despite concerns that high deficits will force the U.S. to increase interest rates, the Treasury is currently able to borrow money — i.e. sell Treasury bills — at stunningly low rates . “You want to take the astoundingly low interest rates that the government has to pay to borrow money, and you want to transfer that to the degree possible to productive, revenue-producing businesses,” Hundt told HuffPost. “There’s a huge unmet need for productive new investment, but the only way to really prime the pump is to put in really cheap capital.” The investments Hundt is talking about, however, need to generate returns. “You want to build toll roads, not roads; dams that produce electricity, where you get paid back after a long period of time; electric transmission lines, where the revenue comes in from carrying the electricity; wind farms, where the revenue comes in from selling the electricity.” The Treasury would sell securities at very low interest, lend the money at cost to the EIT, and the EIT would then turn around and lend it to private investors. Hundt calls this “really, really, low, wonderfully low, cheap capital for investors who will build these clean energy systems.” And everyone would eventually get paid back. “It’s really pretty simple. In fact, it’s what China does,” Hundt said. “And in fact China has used low-cost lending to stimulate about twice as much clean energy investing as we have in the United States.” But how many jobs would this create? “Roughly speaking, $1 billion in capital is 10,000 direct jobs and about 50,000 indirect jobs,” Hundt said. “So one way to do it is say: How many jobs to you want? “So if you tell me you want a million jobs, then I need $100 billion of investment, which means that I need probably about $30 billion of cheap capital, because the rest would come from other forms of capital.” Meanwhile, that $100 billlion would buy an awful lot of clean power. “Everyone knows that we need to build a clean energy system to replace a dirty energy system,” Hundt said. The plan also allows for private industry and the states to be the decisionmakers. “I don’t believe that we need some kind of federal, national comprehensive, Washington-dictated solution. Electricity is a very local business,” Hundt said. “But I do believe if we said to all the states and all the businesses: Here’s a once-in-a-lifetime opportunity for very cheap capital… then we would be opening the door to a variety of technological solutions that would be selected on the local level…. “If you want to rebuild the country, this is a golden opportunity.” ************************* NEXT IN THE AMERICA NEEDS JOBS SERIES: A Shorter Work Week (Want to learn more about the series? Read the overview . Got an idea you think we may have overlooked? Email froomkin@huffingtonpost.com . ) ************************* Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail , bookmark his page ; subscribe to RSS feed , follow him on Twitter , friend him on Facebook , and/or become a fan and get e-mail alerts when he writes.

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Jeffrey Rubin: High Energy Prices, Not Wind Turbines, Make Copenhagen Green

August 31, 2010

The first thing you notice as you fly into Copenhagen, where I recently made a speech, is the ring of wind turbines surrounding the city . I guess that’s why it was chosen to be the backdrop for the world environmental summit last December. There is certainly much to be said for Denmark’s leadership in green energy. While North American carbon emissions have risen by around 30 per cent since 1990 (the reference point for the Kyoto Accord), Denmark’s emissions are actually lower than they were two decades ago. That’s generally ascribed to the fact that a world-leading 20 per cent of the power generated in Denmark comes from wind. Less commonly known is the source of the other 80 per cent. I was surprised to discover that it comes from good old King Coal. In fact, coal’s share of power generation in Denmark’s power grid is basically the same as it is in China. Since green energy technology accounts for 12 per cent of the country’s exports, I can understand why Denmark wants to showcase its wind turbines instead of its smokestacks. But it’s power from those smokestacks that turn on the lights in Copenhagen, at least for the most part. How, then, has Denmark been so successful in managing its carbon emissions? The answer lies not with the source of power, but with the price of power. At 30 cents per kilowatt hour, electricity costs anywhere from three to five times what the average North American would pay. And, not surprisingly, Danish households consume a fraction of the power that we do. But I bet if you charged 30 cents per kilowatt hour for power in coal-burning states like Wyoming and West Virginia, they, too, could cap their emissions, and without having to install a single wind turbine. The other reason commonly cited for Denmark’s success at carbon management is cars–or, more precisely, the lack thereof. Nearly everyone in Copenhagen seems to be riding a bicycle . At first I thought this was testament to the environmental consciousness of the populace, or at a minimum, to a commitment to physical fitness. Then I checked out what it costs to buy a car. Depending on how many horses are under the hood, Danish car buyers pay a tax ranging anywhere from 100 to 180 per cent of the sticker price of the vehicle. In other words, when you purchase a car in Copenhagen, you can pay almost as much as if you were buying three cars in North America. At that tax rate, I’d be riding a bike too. What I learned from my trip to Copenhagen is that you don’t have to be a world leader in green energy technology to cap your carbon emissions. Just charge 30 cents per kilowatt hour for power, and slap a 180 per cent surcharge on vehicle prices. Consumers will do all the rest.

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Sunil Sharan: Deregulation, the Forsaken Panacea for Climate Change

August 23, 2010

Congress has abandoned yet another climate bill. Gridlock in the august body looms large come November, dampening hopes of effective energy legislation in the foreseeable future. America is stuck. Yet deregulation, a concept all but renounced by the country a decade back in the wake of California’s energy crisis, holds the potential to unlock the gates to climatic heaven. Many American utilities have for long operated as virtual monopolies in their respective jurisdictions so much so that the service territory itself is quite often ingrained into their name. Georgia Power, Southern California Edison, Detroit Edison, Nevada Power, the list is seemingly endless. Aspiring utilities have traditionally found it prohibitive to enter the domain of incumbents. In such an uncompetitive environment, customers are relegated as “rate-payers,” with little choice of suppliers or services. Deregulation would herald competition and break down the bastions of utility protectionism. The European Union mandated liberalization (their term for deregulation) throughout the region four years ago. The fear of a behemoth like EDF of France coming into Italy and snatching a chunk of its customers made the Italian utility Enel roll out the largest grid modernization project in the world five years ago. It thereby transformed its one-trick energy delivery pipe into a multi-faceted platform for customer care. Countries like Germany and Spain have become global leaders in renewable energy. Competition has driven industry consolidation, with big fish such as EDF, Enel, E.ON, and Vattenfall snapping up smaller utilities and improving productivity through economies of scale. Choice now on tap, customers are finally able to dump dirty energy purveyors and switch to greener providers. No wonder Europe is far ahead of the rest of the world in deploying almost every type of clean energy. Currently only about a dozen states in the U.S. allow consumers a mostly-restricted form of choice of electricity providers, with Texas, the largest electricity market in the country, being the most free-wheeling. Deregulation there was phased in beginning in 2002 and is now implemented in over half the state. It is ascribed to have instigated large-scale deployments of smart-grid and wind-energy technologies. Companies like Green Mountain Energy that sell power generated purely from renewable sources have sprung up. Electricity prices in the state, after many years of hovering substantially above the national average, are trending downward, almost touching the mean this year, allaying the fear held by some that deregulation causes prices to rise unsustainably. Texas has become the bellwether for the rest of the country to open up electricity markets. What a contrast from how California went about deregulating itself in the late nineties. In fact, to even call its half-baked experiment as deregulation is a misnomer. The state allowed new entrants into electricity wholesaling while freezing consumer rates, setting the stage for wholesale prices to be manipulated by the likes of Enron when demand for electricity outstripped supply. For deregulation to succeed, both the retail and wholesale ends of electricity have to be opened up, just as Texas has done, so that demand and supply can track one another. Things went so awry for California that the entire nation stood spooked, effectively putting the idea of deregulation in cold storage. Some states still tinkered with the notion but Bush-era feds all but washed their hands off it. The Obama administration decided that clean energy in the country needed a jump start and proceeded to offer utilities a generous stimulus package. Deregulation would still remain off the agenda. Many utilities, already flush with cash, were now able to double dip into two set of pubic funds, the stimulus as well as “rate case” dollars, to enhance their operational infrastructure, without touching their own money. (A rate case transfers the cost of approved capital expenditure to rate-payers, typically as an ongoing monthly charge.) Most other industries have no such luxury; they have to leverage their cash flow for operational upgrades. With hopes fading for another round of clean energy stimulus, and other carbon-reduction schemes such as a capping of emissions or a federal standard for renewable energy generation subject to the vagaries of a squabbling Congress, America’s greening could soon grind to a halt. The stimulus provided utilities with a carrot, now it is time to pull up their socks. Deregulation, in effect, competition, would move the onus from already-strapped tax-payers squarely onto cash-rich utilities, and without the opprobrium that something like cap-and-trade seems to provoke. As has happened in Europe, deregulation in the US will make utilities more efficient, responsive, and hungry. It will release pent-up market forces, incentivizing fleet-footed utilities to thrive and forcing the dead-beats to mend their ways. It will transform rate-payers into customers, who would demand to be treated as such now that they would have the option of taking their custom elsewhere. With such obvious benefits, is it not high time that the US shed its fear of deregulation and brings it out of the closet? Europe, and at home, Texas, have both proven that it works, and that too on a large scale.

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Sunil Sharan: Deregulation, the Forsaken Panacea for Climate Change

August 23, 2010

Congress has abandoned yet another climate bill. Gridlock in the august body looms large come November, dampening hopes of effective energy legislation in the foreseeable future. America is stuck. Yet deregulation, a concept all but renounced by the country a decade back in the wake of California’s energy crisis, holds the potential to unlock the gates to climatic heaven. Many American utilities have for long operated as virtual monopolies in their respective jurisdictions so much so that the service territory itself is quite often ingrained into their name. Georgia Power, Southern California Edison, Detroit Edison, Nevada Power, the list is seemingly endless. Aspiring utilities have traditionally found it prohibitive to enter the domain of incumbents. In such an uncompetitive environment, customers are relegated as “rate-payers,” with little choice of suppliers or services. Deregulation would herald competition and break down the bastions of utility protectionism. The European Union mandated liberalization (their term for deregulation) throughout the region four years ago. The fear of a behemoth like EDF of France coming into Italy and snatching a chunk of its customers made the Italian utility Enel roll out the largest grid modernization project in the world five years ago. It thereby transformed its one-trick energy delivery pipe into a multi-faceted platform for customer care. Countries like Germany and Spain have become global leaders in renewable energy. Competition has driven industry consolidation, with big fish such as EDF, Enel, E.ON, and Vattenfall snapping up smaller utilities and improving productivity through economies of scale. Choice now on tap, customers are finally able to dump dirty energy purveyors and switch to greener providers. No wonder Europe is far ahead of the rest of the world in deploying almost every type of clean energy. Currently only about a dozen states in the U.S. allow consumers a mostly-restricted form of choice of electricity providers, with Texas, the largest electricity market in the country, being the most free-wheeling. Deregulation there was phased in beginning in 2002 and is now implemented in over half the state. It is ascribed to have instigated large-scale deployments of smart-grid and wind-energy technologies. Companies like Green Mountain Energy that sell power generated purely from renewable sources have sprung up. Electricity prices in the state, after many years of hovering substantially above the national average, are trending downward, almost touching the mean this year, allaying the fear held by some that deregulation causes prices to rise unsustainably. Texas has become the bellwether for the rest of the country to open up electricity markets. What a contrast from how California went about deregulating itself in the late nineties. In fact, to even call its half-baked experiment as deregulation is a misnomer. The state allowed new entrants into electricity wholesaling while freezing consumer rates, setting the stage for wholesale prices to be manipulated by the likes of Enron when demand for electricity outstripped supply. For deregulation to succeed, both the retail and wholesale ends of electricity have to be opened up, just as Texas has done, so that demand and supply can track one another. Things went so awry for California that the entire nation stood spooked, effectively putting the idea of deregulation in cold storage. Some states still tinkered with the notion but Bush-era feds all but washed their hands off it. The Obama administration decided that clean energy in the country needed a jump start and proceeded to offer utilities a generous stimulus package. Deregulation would still remain off the agenda. Many utilities, already flush with cash, were now able to double dip into two set of pubic funds, the stimulus as well as “rate case” dollars, to enhance their operational infrastructure, without touching their own money. (A rate case transfers the cost of approved capital expenditure to rate-payers, typically as an ongoing monthly charge.) Most other industries have no such luxury; they have to leverage their cash flow for operational upgrades. With hopes fading for another round of clean energy stimulus, and other carbon-reduction schemes such as a capping of emissions or a federal standard for renewable energy generation subject to the vagaries of a squabbling Congress, America’s greening could soon grind to a halt. The stimulus provided utilities with a carrot, now it is time to pull up their socks. Deregulation, in effect, competition, would move the onus from already-strapped tax-payers squarely onto cash-rich utilities, and without the opprobrium that something like cap-and-trade seems to provoke. As has happened in Europe, deregulation in the US will make utilities more efficient, responsive, and hungry. It will release pent-up market forces, incentivizing fleet-footed utilities to thrive and forcing the dead-beats to mend their ways. It will transform rate-payers into customers, who would demand to be treated as such now that they would have the option of taking their custom elsewhere. With such obvious benefits, is it not high time that the US shed its fear of deregulation and brings it out of the closet? Europe, and at home, Texas, have both proven that it works, and that too on a large scale.

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Alternative Fuel Terralene Demonstration a Major Success and Company Appoints a Marketing Head

August 18, 2010

BELLINGHAM, WA–(Marketwire – August 18, 2010) –  Golden Spirit Enterprises Ltd. ( OTCBB : GSPT ) announces that a demonstration of the validity and effectiveness of Terralene’s patented fuel formulation was recently conducted. Representatives from the petroleum industry, a top university and various global investors were in attendance. The general consensus was that the vehicle engines ran better and smoother making less noise, had more power during acceleration than gasoline and the exhaust emissions were of a pleasant odor. A visual demonstration of gasoline and Terralene burning also confirmed that the carbon emissions were dramatically reduced while Terralene burned with less smoke for a longer period. The demonstration video can be viewed at www.terralenefuels.com .

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Jeffrey Rubin: Blame It On Sunspots

August 17, 2010

It’s a good thing we don’t care about carbon emissions. Otherwise we might be more than a little concerned when the Petermann Glacier in Greenland calves off a chunk of ice several times the size of the island of Manhattan. Or when record-breaking, scorching summer temperatures and prolonged drought have turned Russia’s parched boreal forest into a giant tinderbox, sending Moscow residents scurrying indoors to avoid the suffocating smoke and reducing the country’s wheat harvest by a third. Or when the worst monsoon rains in 80 years in Pakistan have caused unprecedented flooding and devastation in the country, leaving millions stranded. It might have been fun exposing overzealous claims about the imminent demise of the Himalayan glaciers, but it seems no one is laughing about global climate change now. And with good reason. According to a recently released study by NOAA (the National Oceanic and Atmospheric Administration), during the first six months of 2010, the combined ocean and land temperature was the hottest on record. This summer is continuing the record-setting trend. And just in case you thought this year might be an anomaly, the warming trend so far is consistent with what NOAA has found over the last decade across no less than 10 measures of global warming, running the gambit from land and sea temperatures to the decline in Arctic sea ice. Every year seems to furnish us with more and more graphic images of global climate change. And yet, other than the temporary reprieve we got during the world’s deepest post-war recession, there seems to be no let-up in the growth of global carbon emissions. Of course as long as emissions don’t cost anybody anything, why would we expect any halt in emissions growth? After all, the engine of global economic growth still runs on burning coal and oil. And we’re certainly no closer to putting a price on carbon emissions today than we were before the much-anticipated global environmental summit in Copenhagen last December. With most emerging market economies dreaming of emulating China’s carbon-spewing industrialization, don’t expect any multilateral breakthroughs on global carbon management anytime soon. Nor should we, given the huge disparities in energy consumption per capita between the developed and the developing worlds. But at the same time, we are no closer to seeing any unilateral steps to price carbon on the part of wealthy emitters like North America, for example. Carbon legislation is effectively dead-ended in Congress with the Waxman-Markey bill unable to pass in the Senate, while legislation isn’t even on the drawing board with the Canadian federal government. Like China, North America fears huge adverse economic consequences from pricing the carbon it emits into the atmosphere. As a result, carbon emissions continue to pose no cost to our economy. Unfortunately, it’s becoming harder and harder to say the same about climate change.

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Devon Swezey: Deutsche Bank’s Parker: Senate Clean Energy Policy Failure Driving Investor Exodus

August 13, 2010

The failure of the U.S. Senate to pass clean energy and climate legislation has caused investment giant Deutsche Bank to take its clean energy dollars elsewhere, according to Kevin Parker, Global Head of Asset Management for the firm. “They’re asleep at the wheel on climate change, asleep at the wheel on job growth, asleep at the wheel on this industrial revolution taking place in the energy industry,” said Parker. Deutsche Bank manages over $700 billion in funds with $6 to $7 billion invested in clean energy markets worldwide. These blunt comments from the global investment firm have cap and trade advocates renewing the argument that a price on carbon would have made the United States a world leader in clean energy technology. Yet according to Deutsche Bank’s own reports, cap and trade and carbon pricing would have done little to change the investment outlook in the United States relative to its competitors. In a report released last October, after the passage of the House’s Waxman-Markey climate and energy bill (HR 2454), Deutsche Bank ranked the United States as a “moderate-risk” nation for private investment in clean energy since it relied on “a more volatile market incentive approach” and “has suffered from a start-stop approach in some areas.” By contrast, countries like China, Germany and Japan were “low-risk” nations for investors because they each rely on “a comprehensive and integrated government plan supported by strong incentives.” Mr. Parker is correct that the Congress remains “asleep at the wheel” as international competition for clean energy markets heats up. The fact that the Senate got nothing done on climate and energy this year is outrageous, and continued policy uncertainty will ensure that the U.S. will keep lagging further and further behind economic competitors in the global clean energy race. But let’s be clear. The cap and trade legislation that Congress spent the better part of two years debating would have had at most a modest impact on America’s standing in global clean energy markets, and would have been wholly insufficient to keep the U.S. in the game with economic competitors in Asia and Europe. Is Carbon Pricing Really the Key? We issued precisely that warning last November when the Breakthrough Institute and ITIF published ” Rising Tigers, Sleeping Giant .” The comprehensive report documented that the United States already lagged China, Japan, and South Korea in the production of virtually all clean energy technologies, and was poised to be out-invested three to one over five years by the three Asian ‘Clean Tech Tigers,’ even if the House-passed cap and trade bill had become law. Deutsche Bank themselves clearly acknowledge that while carbon pricing may be important in the long-term, it is not what is helping governments around the world attract private investment and build domestic clean economies in the near-term. According to Deutsche Bank’s Parker and Global Head of Climate Change Investment Research Mark Fulton: “While emissions targets express an intention and carbon markets might deliver a price signal in the long-term, governments must strengthen underlying mandates and incentives immediately if capital is to be deployed to cover the gap, creating more investment and jobs.” Deutsche Bank’s conclusions are consistent with other analyses of the impacts of cap and trade legislation in the United States. According to the U.S. Environmental Protection Agency (EPA) , under the House’s Waxman-Markey bill: “allowance prices are not high enough to drive a significant amount of additional [deployment of] low- or zero-carbon energy (including nuclear, renewables, and CCS) in the shorter-term, excluding the technologies with specific financial incentives (e.g. CCS).” Similarly, the EPA concludes that the cap and trade system’s impacts on transportation markets would be negligible. With potential carbon prices the equivalent of just 10 or 20 cents per gallon of gasoline, “the increase in gasoline prices that results from the carbon price … is not sufficient to substantially change consumer behavior in their vehicle miles travelled or vehicle purchases …” What Really Matters What really matters to create a new clean energy economy and stimulate private investment in the near-term are policy regimes that employ direct and targeted public investments to cover the cost gap between higher-cost clean energy and fossil fuels. Indeed, China has surpassed the United States as the largest beneficiary of private clean energy investments without a price on carbon. Rather, China, along with Germany, Japan, and other “low-risk” nations, has implemented generous, technology-specific deployment incentives that reduce regulatory risks and are much more attractive to investors, and are backed by aggressive, long-term national targets for clean energy deployment. China has targeted procurement policies for clean energy, and a variable feed-in tariff for wind power. In Germany, Deutsche Bank credits the nation’s generous feed-in tariff policy, not the carbon markets of the European Emissions Trading Scheme (ETS), for Germany’s world-leading solar energy sector. These incentives have “demonstrated their ability deliver renewable energy at scale,” according to the bank. If the United States wants to avoid being permanently relegated to the backwaters of the global race for clean energy investment, it needs a new clean energy competitiveness strategy that, like those of its competitors, prioritizes large and sustained public investment in clean energy technology. That strategy should include robust and long-term investments in areas such as research and innovation, manufacturing, market creation, workforce training and education, and the development of new, globally competitive industry clusters. Time is short, and the next several years will see first-movers establish dominant positions across a range of clean energy sectors. Already the U.S. is failing to attract significant private-sector investment in clean energy markets, losing out on a key opportunity to grow American jobs, build new high-tech, export-oriented industries, and capitalize on the economic opportunity of a fast-growing clean energy sector. If Washington continues to ignore this growing economic imperative, the U.S. will remain behind in clean energy investment and will wind up importing the vast majority of the clean energy products needed to satisfy U.S. markets. Almost as dangerous, however, would be a continued reliance on cap and trade and the modest carbon prices it would establish as they key to building America’s clean energy industries. The message from clean energy investors like Deutsche Bank and the model provided by our global competitors are both quite clear: what the U.S. needs is not cap and trade but a comprehensive clean economy strategy. And it needs one now. Devon Swezey is Project Director and Jesse Jenkins is Director of Climate and Energy Policy at the Breakthrough Institute. Both are co-authors of ” Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate the Clean Energy Race by Out-Investing the United States ”

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Illinois Town Backs Out Of FutureGen: Mattoon Says Changes In ‘Clean’ Coal Plant A Deal Breaker

August 11, 2010

CHAMPAIGN, Ill. — An eastern Illinois town backed out of what was once a flagship energy project Wednesday after more than two years of political and financial ups and downs that saw the plans killed, revived and then radically altered. Officials in Mattoon told U.S. Sen. Dick Durbin in a letter that changes made to the $1.2 billion FutureGen project were a deal breaker. Durbin and the Department of Energy surprised the town last week with changes that included retrofitting an existing power plant in western Illinois, instead of building a new experimental plant in Mattoon, and piping the plant’s carbon dioxide to Mattoon for underground storage. Durbin, a longtime backer of the project, said FutureGen’s financiers in the Energy Department would quickly search for a new storage site. In the letter, local economic developer Angela Griffin wrote that most local officials and business leaders she consulted felt that Mattoon had signed on to become the heart of a project that could revolutionize energy production, and were disappointed with its new, more limited role as primarily a carbon dioxide storehouse. “If FutureGen 2.0 moves ahead with the revised structure … it must be without Coles County,” wrote Griffin, who leads the local Coles Together economic development group. Durbin said in a statement that he was disappointed but would ask the Energy Department to solicit proposals from other interested towns. Durbin spokesman Joe Shoemaker said nine or 10 towns have contacted Durbin’s office to express interest, though he declined to name them, and the department still plans to provide $1.1 billion in stimulus funds to the chosen site. The new site would have to be picked by early September in order to be reviewed by the Congressional Office of Management and Budget before the Sept. 30 deadline for any project counting on stimulus money. Shoemaker said he was confident of quick reviews. Assistant Energy Secretary James J. Markowsky said the geology of the local Mount Simon formation means much of central and east-central Illinois is suitable for storing carbon dioxide. “Mattoon was to be the host for this site, but many communities downstate have access to the same geology,” he said. A spokesman for the FutureGen Alliance, the coal companies and other private sector partners that have worked with the Energy Department on the project declined comment. Until last week, the FutureGen project called for a power plant to be built in Mattoon with carbon dioxide from its coal stored underground. The goal was to prove that coal could be burned to make electricity while the carbon dioxide that makes coal a pollution problem could be captured and safely stored. That version of the project promised 1,300 construction jobs and 150 high-skilled positions. The new plan would retrofit a plant in Meredosia in west-central Illinois and try a different kind of technology. Mattoon would have stored carbon dioxide piped from that plant and become home to a training center for people to learn how to do retrofitting work. The carbon storage facility would have brought 75 jobs, though no job estimates were provided for the center. Mattoon was chosen in December 2007, over nearby Tuscola and two sites in Texas. Since then, the eastern Illinois town of 18,000 watched as President George W. Bush’s administration pulled support over cost concerns that a federal auditor later said were based on faulty data, and then saw the project revived when President Barack Obama, who’s from Illinois, took office. Tuscola, about 25 miles north of Mattoon, might be interested but needs more information about the revised project, local economic developer Brian Moody said. “We’re obviously very skeptical just as to whether or not the commitment is there to get this project to happen,” he said. Rep. Tim Johnson, a Republican from Urbana whose district includes Mattoon, doubts FutureGen will be built. He said he would help Tuscola or other towns pursue the project but advised them to think hard before committing. “They’ve got to be very careful with anything that comes from the mouths of people at the Department of Energy,” he said.

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Ellen Brown: How Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

July 15, 2010

“You all are the house, you’re the bookie. [Your clients] are booking their bets with you. I don’t know why we need to dress it up. It’s a bet.” — Senator Claire McCaskill, Senate Subcommittee investigating Goldman Sachs ( Washington Post , April 27, 2010) Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public U.S. debt increased by nearly 50% from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates. One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets . They were persuaded by their Wall Street advisers to buy municipal swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks — to the point of pushing at least one county to the brink of bankruptcy (Jefferson County, Alabama). Another unintended consequence of the plunge in interest rates has been that “savers” have been forced to become “speculators” or gamblers. When interest rates on safe corporate bonds were around 8%, a couple could aim for saving half a million dollars in their working careers and count on reaping $40,000 yearly in investment income, a sum that, along with social security, could make for a comfortable retirement. But very low interest rates on bonds have forced these once-prudent savers into the riskier and less predictable stock market, and the collapse of the stock market has forced them into even more speculative ventures in the form of derivatives, a glorified form of gambling. Pension funds , which have binding pension contracts entered into when interest was at much higher levels, need an 8% investment return to meet their commitments. In today’s market, they cannot make that sort of return without taking on higher risk, which means taking major losses when the risks materialize. Derivatives are basically just bets. Like at a racetrack, you don’t need to own the thing you’re betting on in order to play. Derivative casinos have opened up on virtually anything that can go up or down or have a variable future outcome. You can bet on the price of tea in China, the success or failure of a movie, whether a country will default on its debt, or whether a particular piece of legislation will pass. The global market in derivative trades is now well over a quadrillion dollars — that’s a thousand trillion — and it is eating up resources that were at one time invested in productive enterprises. Why risk lending money to a corporation or buying its stock, when you can reap a better return betting on whether the stock will rise or fall? The shift from investing to gambling means that not only are investors making very little of their money available to companies to produce goods and services, but also that the parties on one side of every speculative trade now have an interest in seeing the object of the bet fail , whether a company, a movie, a politician, or a country. Worse, high-speed program traders can actually manipulate the market so that the thing bet on is more likely to fail. Not only has the market become a casino, but the casino is also rigged. High frequency traders — a field led by Goldman Sachs — use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market that can themselves cause the price of assets to shoot up or tumble down. By placing high-volume trades, the largest speculative traders can thus intentionally “fix” prices in any direction they want. “Prediction” Markets Casinos for betting on what something will do in the future have been elevated to the status of “prediction” markets, and they can cover a broad range of issues. MIT’s Technology Review launched a futures market for technological innovations, in order to bet on upcoming developments. The NewsFutures and TradeSports Exchanges enable people to wager on matters such as whether Tiger Woods will take another lover, or whether Bin Laden will be found in Afghanistan. A 2008 conference of sports leaders in Auckland, New Zealand, featured Mark Davies, head of a sport betting exchange called Betfair. Davies observed that these betting exchanges, while clearly gambling forums, are little different from the trading done by financial firms such as JPMorgan. He said: I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pour over balance sheets and income statements, they pour over form and team-sheets. The online news outlet Slate monitors various prediction markets to provide readers with up-to-date information on the potential outcomes of political races. Two of the markets covered are the Iowa Electronic Markets and Intrade . Slate claims that these political casinos are consistently better at forecasting winners than pre-election polls. Participants bet real money 24 hours a day on the outcomes of a range of issues, including political races. Newsfutures and Casualobserver are similar, smaller exchanges. Besides shifting the emphasis to gambling (“Why Vote When You Can Bet?” says Slate ‘s “Guide to All Political Markets”), prediction markets, like the stock market, can be rigged so that they actually affect outcomes. This became evident, for example, in 2008, when the John McCain campaign used the InTrade market to shift perception of his chances of winning. A supporter was able to single-handedly manipulate the price of McCain’s contract, causing it to move up in the market and prompting some mainstream media to report it as evidence that McCain was gaining in popularity. Betting on Terrorism The destructive potential of prediction markets became particularly apparent in one sponsored by the Pentagon, called the “policy analysis market” (PAM) or “terror futures market.” PAM was an attempt to use the predictive power of markets to forecast political events tied to the Middle East, including terrorist attacks. According to the New York Times , the PAM would have allowed trading of futures on political developments including terrorist attacks, coups d’état, and assassinations. The exchange was shut down a day after it launched, after commentators pointed out that the system made it far too easy to make money with terror attacks. At a July 28, 2003 press conference, Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) spoke out against the exchange. Wyden stated, “The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it’s grotesque,” while Dorgan called it “useless, offensive and unbelievably stupid.” “This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities,” they said in a letter to Admiral John Poindexter, the director of the Terrorism Information Awareness Office, which developed the idea. A week after the exchange closed, Poindexter offered his resignation. Carbon Credit Trading A massive new derivatives market that could be highly destructive economically is the trading platform called Carbon Credit Trading, which is on its way to dwarfing world oil trade. The program would allow trading in “carbon allowances” (permitting companies to emit greenhouse gases) and in “carbon offsets” (allowing companies to emit beyond their allowance if they invest in emission-reducing projects elsewhere). It would also allow trading in carbon derivatives ; for example, futures contracts to deliver a certain number of allowances at an agreed price and time. Robert Shapiro, former undersecretary of commerce in the Clinton administration and a cofounder of the U.S. Climate Task Force, has warned, “We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market.” Eoin O’Carroll cautioned in the Christian Science Monitor : Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy… Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy. The proposed form of cap and trade has not yet been passed in the U.S., but a new market in which traders can speculate on the future of allowances and offsets has already been launched. The largest players in the carbon credit trading market include firms such as Morgan Stanley, Barclays Capital, Fortis, Deutsche Bank, Rabobank, BNP Paribas, Sumitomo, Kommunalkredit, Credit Suisse, Merrill Lynch and Cantor Fitzgerald. Last year, the financial services industry had 130 lobbyists working on climate issues, compared to almost none in 2003. The lobbyists represented companies such as Goldman Sachs and JPMorgan Chase. Billionaire financier George Soros says cap-and-trade will be easy for speculators to rig. “The system can be gamed,” he said last July at a London School of Economics seminar. “That’s why financial types like me like it — because there are financial opportunities.” Time to Board Up the Casinos and Rethink Our Social Safety Net? Our forebears considered gambling to be immoral and made it a crime. As the Industrial Revolution and the ascendance of capital changed religious mores, gambling gradually gained acceptance, but even within that permissive paradigm, derivative trading was originally considered an illegal form of gambling. Perhaps it is time to reinstate the gambling laws, board up the derivatives casinos, and return the stock market to what it was designed to be: a means of funneling the capital of investors into productive businesses. Short of banning derivatives altogether, the derivatives business could be slowed up considerably by imposing a Tobin tax , a small tax on every financial trade. “Financial products” are virtually the only products left on the planet that are not currently subject to a sales tax; and at over a quadrillion dollars in trades annually, the market is huge. A larger issue is how to ensure adequate retirement income for the population without forcing people into gambling with their life savings to supplement their meager social security checks. It may be time to rethink not only our banking and financial structure but the entire social umbrella that our Founding Fathers called the Common Wealth. The genius of Social Security was its recognition of the basic economic truth that real “security” rests on the ability of a society to provide for and take care of those who, because of age, health or economic conditions, cannot take care of themselves. Deficit hawks cry that we cannot afford more spending; but according to Richard Cook, a former U.S. Treasury Department official, the government could print and spend several trillion new dollars into the money supply without causing price inflation. Writing in Global Research in April 2007, he noted that the U.S. Gross Domestic Product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services. Total available purchasing power was thus only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold. Where did consumers get the extra $3.77 trillion? They had to borrow it , and they borrowed it from banks that created it with accounting entries on their books. If the government had replaced this bank-created money with debt-free government-created money, the total money supply would have remained unchanged. That means a whopping $3.77 trillion in new government-issued money could have been fed into the economy in 2006 without inflating prices. Different proposals have been made concerning how this money should be distributed, but at least some of it could be used to provide adequate social security checks, relieving the pressure to gamble with our savings. The Federal Reserve has funneled $4.6 trillion to Wall Street in bailout money, most of it generated via “quantitative easing” (in effect, printing money); yet hyperinflation has not resulted. To the contrary, what we have today is Depression-style deflation . The M3 money supply shrank in the last year by 5.5 percent, and the rate at which it is shrinking is accelerating . The explanation for this anomaly is that the Fed’s $4.6 trillion added by quantitative easing fell far short of the estimated $10 trillion needed to “reflate” the money supply after the ” shadow lenders ” disappeared. When these investors discovered that the “triple-A” mortgage-backed securities they had been purchasing from Wall Street were actually very risky investments, they exited the market, credit dried up, and the money supply (which today consists almost entirely of credit or debt) collapsed. The only viable way to reflate a collapsed money supply is to put more money into it; and creating the national money supply is the sovereign right of governments, not of banks. If the government wants to remain sovereign, it needs to reassert that right. Niko Kyriakou contributed to this article.

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George Lakoff: Double Dividend: Make Money by Saving Nature

July 15, 2010

Saving nature is the central issue. Carbon fuels destroy nature. The Gulf Death Gusher is the most visible sign. But signs are everywhere. Overall global warming increases hurricanes and floods, destroys habitats for plants, fish, birds, and ground animals, spreads deserts, causes deadly waves, and destroys glaciers and our polar ice caps. The use of carbon fuels has been destroying nature. Our job now is to save it. Interestingly, there is a short, 39-page bill before the Senate that would allow us to save nature and get paid substantially for doing it. It is the CLEAR bill, first suggested by Peter Barnes, and introduced by Maria Cantwell (D-WA) and Susan Collins (R-ME). It is simple, it works, and it pays you! The principle behind it is this: We US citizens own the air over the US equally. Carbon-fuel sellers are dumping pollution in our air, not just poisoning the air, but destroying nature. At least they should pay for permits to dump, poison, and destroy, and should be forced year-by-year to stop. Who should the sellers pay for permits? All of us, the citizens who live here, should be paid handsomely. And there should be predictably fewer permits every year, till the practice ends or reaches tolerable levels. Here’s how cap-and-cash works. Carbon-fuel profiteers introduce polluting fuels at only 2,000 distribution points in the US. The EPA already monitors how much polluting fuel each seller distributes. The CLEAR Act requires sellers to compete at auction each year to buy pollution-permits to sell their poisonous fuel, with a minimum and maximum price per permit set each year. Every year, for 40 years, the number of permits is reduced, until the 80% of the carbon pollution has been eliminated. Who gets the permit money? You do. The money goes into a trust. Twenty-five percent goes to developing nonpolluting fuels and mitigating existing environmental disasters. Most of it — seventy-five percent — is distributed equally to all citizen-residents every month via electronic bank transfers. A family of four, the first year would get between $1,000 and $1,500, and the amount would go up each year. Why? The law of supply and demand. As there are fewer permits to sell fuel, and as the air gets cleaner, the price rises and you get more cash. We all get a double dividend: cleaner air while saving nature and a significant cash dividend for owning the air. The hundreds of billions of dollars going to citizens will be spent all over the country and will create jobs. Everyone wins except the polluting fuels companies — the BP’s of the world. The Criteria for Success Administratively Simple: It eliminates bureaucracy, and it brings credibility and transparency. It just requires computer programs. It can be publicly checked to see if it is working. There are no hidden deals or details. Market-driven without government: The trust will be outside of government. Market mechanisms will determine the value of the permits and, hence, the money paid to citizens. Gradual Transition: There would be no short-term market disruption. The transition would be gradual. Market-driven and convenient: Businesses that use carbon fuels will not have to monitor their pollution. They will have a market-based incentive to switch gradually to non-polluting fuels. Predictable: Business leaders will be able to plan for the future with no huge rush. Encourages Entrepreneurship: It will create incentives for innovation and new energy industries. Job-Creating: The cash going into new energy industries and being spent all over the country will create jobs. The Opposite of Taxation Anti-tax: The CLEAR bill puts money into the pockets of most citizens instead of taking money out. Saves money: The cost of polluting fuels will rise temporarily, while you get cash. Who gets more, you or the oil and coal companies that raise their prices? You will, unless you’re rich and can afford it! The richer you are, the more energy you use. If you are among the seventy percent of citizens in the lower and middle income brackets, you will get more in payments from the CLEAR bill than you will pay for increases in fuel prices. Why will carbon fuel prices eventually fall? The prices depend on demand. Two factors will reduce demand over time. First, the availability of non-carbon fuels. The CLEAR bill’s 25% will help develop non-carbon alternatives, which will reduce demand. Second, investment in not-needing-carbon-fuels through, say, insulation and energy-efficiency, will reduce demand cumulatively. A barrel of oil or ton of coal saved the first year through insulation or energy efficiency will also be saved year-after-year. This will cumulatively reduce demand for carbon fuels. Double job-creation: Eliminating the need, and hence the demand for carbon-polluting fuels will create jobs in two ways. First, new energy and energy-efficiency industries will need employees. Second, money saved on energy can be invested in, or spent on, enterprises that will create jobs. Both are market mechanisms. The jobs will mostly be in the private sector. Politically Achievable: Putting money in the pockets of people who will spend it will be politically popular, as will job creation. Who Loses? Any legislation that greatly reduces the use of carbon fuels — whether the CLEAR bill or the current cap-and-trade bills — will create “losers.” The carbon-polluting industries — the BP’s of the world — will lose, unless they invest their vast profits in non-polluting energy and in energy-efficiency: in industries that lower or eliminate the need for energy use. Those industries that are committed to the continued destruction of nature should lose , unless they change their commitment to saving nature. The pollution dumping industries (e.g., electric power companies) will no longer be able to save money by not cleaning up their pollution and dumping it in our air instead. Having to switch to nonpolluting energy or pay more for polluting energy will count as a “loss,” since they will make less short-term profit. In the long run, if they make the switch to nonpolluting energy and energy efficiency, those profits will be made up. But the short-term “losses” are what will count to investors. Right-wing politicians, supported by those industries, will also lose if they cannot deliver to their nature-destroying supporters a defeat of any nature-saving legislation. Those politicians will also lose because their anti-environmental ideology, which says that nature is to be indefinitely exploited for profit, will be defeated. The Lies Not surprisingly, those who stand to lose are spreading lies about carbon-cutting legislation. The Tax Lie: Suppose there was a direct tax on carbon. At the gas pump, the gas companies would list this as a tax and add it to the price of gas at the pump. Now suppose that nature-saving legislation results in a sort-term rise in gas prices because oil companies want to preserve their previously astronomical level of profits. In both cases, the price of gas would rise. So, the argument goes, nature-saving legislation has the same result as a tax, and therefore it is a tax. In the case of the CLEAR bill, the lie would be clear: Seventy percent of the population would be making more than enough extra money to offset the rise in prices. But what is not said, is that the prices at the pump would not rise if the oil companies made ordinary profits rather than excessive profits. The rise at the pump would, to a large extent, come from making sure that wealthy oil executives and investors insisting on outrageously high profits. Also not figured in is the cost of continuing to destroy nature indefinitely into the future: the costs of more oil spills; more mountain tops blown into streams; of more glacial sources of water as glaciers and snowcaps melt; of more and more hurricanes, floods, and fires; of the loss of arable land to the spread of deserts; of the loss of fish and forests — and most of all, the cost of the quality of life on earth. At the heart of the Tax Lie is the failure to figure in systemic costs, the real costs — both financial costs, life costs, and quality of life costs — and the failure to count greed. The Job Lie: As we have seen the CLEAR bill would create jobs, as would any legislation seriously reducing or ending the use of polluting fuels. A certain number of jobs would indeed be lost gradually in the nature-destroying industries as demand for polluting fuels declined, but those would more than be made up for as nature-saving fuels and nature-saving energy efficiencies more than made up for the jobs lost. The Simple Truths We need to save nature, not destroy it. We can start to do so while making money, stimulating the economy, and creating jobs. Tell everyone you know about the Clear Act .

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Greg Brown: The Smart Grid: The Future is Now

June 30, 2010

This year’s hurricane and tornado seasons threaten to bring power outages and remind us once again of the challenges facing our current electric grid system. Thousands of people could be without power and will look for solutions to prevent similar disruptions in the future. While the short-term remedy may require firing up a home generator, the long-term solution is a smart grid. At Motorola, we are currently partnering with U.S. electric utilities to provide the wireless communications infrastructure to create a smarter grid. Smart grid communication infrastructure is basically the Internet for electricity transmission and distribution systems, with information technologies embedded throughout the system such as digital meters, remote sensors and data communications devices. Smart grid technologies provide energy producers and consumers with real-time information and better control of the electric grid, improving energy reliability, reducing energy costs and minimizing greenhouse gas emissions responsible for climate change. We can improve energy delivery and reliability. Power outages cost Americans more than $150 billion a year. That’s about $500 per person. Currently, most power companies do not have communications systems that reach their entire grid infrastructure and often don’t know there has been a power outage until a customer calls to report it. Advanced smart grid communication technologies will give power companies greatly enhanced capabilities to remotely monitor and control energy distribution systems to determine where the outage has occurred, which customers have been affected and how to re-route energy around problems. More importantly, with more frequent monitoring and diagnostics to enable effective preventative maintenance, the utility will be able to prevent an outage from occurring in the first place. We can reduce consumer energy costs. In-home smart metering devices – a component of a smarter grid – can help consumers save energy and money. Smart meters and in-home displays provide energy data to consumers, allowing them to monitor their consumption patterns and better manage their electricity use. Studies show that simply giving people access to and control of this information can result in energy savings of 5-15 percent. With better information, consumers can visibly see the economic benefit of turning down their air conditioning on hot summer days or switching off the lights when they leave a room. We can help fight climate change. It’s clear that human activity is warming our planet, and we must act to reduce our contribution to the problem. A smart grid will not only save energy costs and reduce our carbon footprints by reducing energy consumption but also it will make it easier to integrate energy from renewable sources onto the grid, two critical elements to reducing climate change-causing emissions. According to a report released by the Boston Consulting Group and GeSi, a smart grid in the U.S. could reduce emissions by as much as 7.5 percent by 2020 – nearly half of the reductions proposed by the U.S. Congress. To achieve these benefits, we need the right policies to incent the transition to a smarter grid. In February 2009, the U.S. Congress earmarked $4.5 billion for smart grid development in the stimulus bill and more incentives are included in the comprehensive energy and climate bill introduced last month in the Senate. In the meantime, the Federal Energy Regulatory Commission can begin revising regulations created for a century old electric system to make way for a 21st century smart grid. In addition to the right policies, a secure wireless data system to transmit energy information will be essential to protect the electrical grid. At Motorola, we have a proven history of providing secure and dependable voice radio systems for the military, police and fire departments and utilities. We will continue to partner with utility companies to bring the same level of quality and reliability they’ve experienced with our voice radio systems to their wireless data systems for a smarter grid. We can create a more reliable, less costly and environmentally responsible electricity system. The technology is available, the benefits are clear, and it’s time to take action.

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Senate Vote on EPA Regulation Splits Democrats Before Cap-and-Trade Debate

June 10, 2010

By Simon Lomax June 10 (Bloomberg) — A failed Republican move to block a U.S. agency from regulating greenhouse gases under existing law may have drawn enough votes to damage Democratic hopes of a passing a bigger pollution-reduction plan this year. Six Senate Democrats joined the Republican effort to challenge the Environmental Protection Agency ’s planned regulations for carbon dioxide and other gases linked to climate-change. The motion to disapprove the EPA’s carbon regulations from Lisa Murkowski , an Alaska Republican, was defeated 47-53 in a procedural vote. EPA carbon rules are the Obama administration’s backup plan for limiting greenhouse gases if its preferred approach, cap- and-trade legislation that charges polluters a price for the carbon dioxide they released into the atmosphere, doesn’t pass Congress this year. “We need to pass a cap-and-trade bill,” Senator Dianne Feinstein , a California Democrat, said after the vote on Murkowski’s measure. “I think it can certainly get passed next year; it can’t this year.” Under cap-and-trade, the government issues a declining number of carbon dioxide allowances that power plants, factories and oil refineries buy and sell. Cap-and-trade legislation that narrowly passed the House last year stalled in the Senate. Senators John Kerry , a Massachusetts Democrat, and Joseph Lieberman , a Connecticut independent, released a revamped cap- and-trade bill last month and are lobbying with President Barack Obama ’s help to get the new carbon-pricing proposal included in energy legislation that may get a vote as soon as July. ‘Much Different’ Senator Richard Durbin of Illinois, the Democrats’ chief vote-counter, said after today’s vote “the Senate is likely to consider legislation much different than the House” cap-and- trade bill. The bill to be considered next month will “deal with energy and clean-energy jobs,” Durbin said. Senate Majority Leader Harry Reid told reporters after the vote he’ll wait for a meeting with Democrats next week before deciding what should be in next month’s energy legislation, although it won’t be branded as “cap-and-trade.” “We don’t use the word cap-and-trade; that’s something that’s been deleted from my dictionary,” Reid said. “Carbon pricing is something we’re talking about.” Reid said this week he is weighing whether to add the carbon caps in Kerry and Lieberman’s legislation to a bill approved by the Senate energy committee last year that ramps up electricity generation from renewable sources such as wind farms and sets new energy-efficiency standards. Six Democrats It usually takes 60 out of 100 votes to pass major legislation through the Senate. Democrats hold 59 seats in the chamber, meaning the support of at least one Republican is needed for most bills to pass. Today, all 41 Republicans voted against the EPA’s proposed carbon regulations. The six Democrats to side with them today were Evan Bayh of Indiana, Ben Nelson of Nebraska, Jay Rockefeller of West Virginia, Mary Landrieu of Louisiana and Mark Pryor and Blanche Lincoln of Arkansas. They joined Republicans in arguing that the EPA regulations, which would take effect next year, are impractical and damaging to the economy. The regulations are a “back-door national energy tax” that would deal “a devastating blow to an economy that’s already in rough shape,” said Senate Republican Leader Mitch McConnell of Kentucky. ‘A Big Gift’ Democrats who opposed the motion said it ignored climate- change science and would shield energy firms, especially oil companies, from environmental controls. Blocking the rules would be “a great big gift to Big Oil,” Reid said. The EPA’s authority to regulate greenhouse gases under existing law stems from a 2007 Supreme Court decision on the scope of the Clean Air Act. Rockefeller, who voted with the Republicans today, has introduced a bill to block the EPA from exercising its authority over greenhouse gas emissions from industrial sources such as power plants for two years. Lawmakers need the extra time to work out the best way to deal with climate-change because most “have no idea” how a cap-and-trade program works, he said. Lieberman said he and Kerry will continue to push for the revamped cap-and-trade bill to be included in Reid’s planned energy legislation so it can become law this year. The defeat of the Murkowski resolution today should “increase momentum to develop comprehensive energy and climate legislation this year,” he said. Support Seen From 61 Eileen Claussen , president of the Arlington, Virginia-based Pew Center on Global Climate Change, said there is still hope of getting climate-change legislation passed this year. During the debate, eight senators who voted to strip EPA of its authority over greenhouse gases said they supported the idea of cutting back the pollution that scientists have linked to climate change, Claussen said. That means 61 senators “through their votes or statements” showed support for cutting carbon pollution, she said. It may be possible to persuade some of the senators who voted against the EPA regulations today to support legislation that includes limits on greenhouse gases this year, Kevin Book , a managing director at Washington-based policy analysis firm ClearView Energy Partners LLC, said in a report today. Some senators who voted against the regulations, including “green-leaning Republicans” such as South Carolina’s Lindsey Graham , who was once a supporter of the Kerry-Lieberman bill, now have a chance “to negotiate even greater provisions on behalf of their constituents in return for offering the decisive votes” on a climate bill, Book said. Negotiations of that kind are unlikely with lawmakers starting to focus on November elections, Feinstein said. “I think it’s difficult to pass a big bill a few months before a big election,” she said. To contact the reporter on this story: Simon Lomax in Washington at slomax@bloomberg.net

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Australian Climate Law Delay Stalls Sales of CO2-Storing Gum-Tree Forests

May 20, 2010

By Ben Sharples May 21 (Bloomberg) — Carbon Conscious Ltd. , an Australian company that plants gum-trees to absorb greenhouse gas emissions, said demand from customers for forests has stalled after the nation shelved climate-change laws. “We were having quite a detailed conversation with a particular client, which has pretty much stopped since the government made the announcement,” Chief Executive Officer Peter Balsarini said in a telephone interview yesterday. “We’ve certainly stopped fielding interest in Australia.” BP Plc, Europe’s second-largest oil company, and Origin Energy Ltd. last year hired Carbon Conscious to plant as many as 40 million eucalypt trees on less-arable farmland. Australian Prime Minister Kevin Rudd delayed the climate change bill on April 27, and will assess actions taken by other nations at the end of 2012 before reintroducing it in parliament. Carbon Conscious, which has slumped 72 percent since the start of the year in Sydney trading, will plant about 6 million seedlings for BP and Origin in Western Australia this year, Balsarini said from Perth. Melbourne-based competitor CO2 Group Ltd. has dropped 48 percent. “It is unfortunate that the early movers and innovators in the low-carbon economy are now being burnt by the lack of political will,” said Seb Henbest , a Sydney-based analyst for Bloomberg New Energy Finance. “Climate change is not going to go away and so the introduction of a carbon price at some point in the future is inevitable.” Carbon-Storing Trees Carbon Conscious plants mallee eucalypt trees that absorb and store emissions in their leaves, twigs and roots. Planting the trees would generate permits tradable under the pollution reduction laws Australia has now delayed. About five trees are needed to absorb 1 metric ton of carbon, according to Balsarini. “We’re fortunate. We’ve got some clients and we’ve got plantings over this year and next year,” Balsarini said. “Those plantings come with 15-year management revenue streams.” Carbon Conscious will plant as many as 4 million trees in 2011, he said. Carbon Conscious plans to sell shares and convertible notes to raise about A$3.87 million ($3.2 million), the Perth-based company said yesterday. The funds will be used to acquire land and finance planting, Balsarini said. Inpex Corp. has hired CO2 Group for a pilot project to offset emissions from its proposed Ichthys liquefied natural gas venture in Australia’s Northern Territory. Woodside Petroleum Ltd. in June expanded a 50-year plantation management agreement with CO2 Group. Greens Party Rudd’s legislation to cut emissions by at least 5 percent was blocked in the Senate by the Greens party and the Liberal- National coalition last year, creating a possible trigger for an early election. The government’s climate plan would have taxed companies with high emissions like energy, steel and cement makers and offset the charges with free emissions permits and financial compensation. “It doesn’t make a lot of sense that to achieve a unilateral 5 percent cut in greenhouse emissions, the government is now waiting to assess commitments from other nations before moving ahead with its domestic carbon-trading scheme, which it has acknowledged is the best policy,” New Energy Finance ’s Henbest said. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

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Martin Luz: Fealty to Folly: Oil Is Dead! Long Live Oil!

May 14, 2010

Memo to oil apologists: When VHS supplanted BetaMax nobody shed a tear. When word processing software replaced typewriters , nobody shrieked about a socialist revolution in the steno pool. And when the jet engine replaced the propeller, there were no protests on the Mall in Washington about a vast supersonic conspiracy. Face it. Technology changes. And the petroleum-based economy is dead. It’s built on antiquated technology that’s killing us and our planet. Now quit your whinging, get over it, and move on. A Drop In the Gulf Since the dawn of the industrial age, human beings have pumped about 46 TRILLION gallons of oil from under the ground ( 1.1 trillion barrels ). Where did it all go? We’ve burned it. We turned it into fertilizers. We turned it into plastics. Among other things. But wait. Where did all those petrochemical “products” go after they were burned, and dispersed, and tossed into trash bins? All that petro-refuse sure as hell didn’t just find it’s way back down the oil well from whence it came. Nope. We’re wallowing in it… in the air, ground, and water. Is it really so hard to picture? Where else do you imagine 46 trillion gallons of oil could possibly go after we’re done with it? And what about the next 46 trillion gallons? And the next 46 trillion after that? In fact, in 2008, the chief of Saudi Arabia’s state run oil company ARAMCO scoffed at peak oil theorist and claimed that there was easily another 500 trillion gallons of conventional and unconventional oil yet to be pumped out, processed, used up and discarded. Oh… Well hooray then. But where will all that oil go? The great Pacific Garbage Patch – a toxic soup of plastic particles – is already estimated to cover an area somewhere between the size of Texas and the size of the entire Continental U.S. ( explanation here ; nauseating video here ). And recently another great garbage patch was discovered, stretching from Bermuda half way across the North Atlantic to the Azors ( icky pictures here ). At the mouth of the Mississippi River, in the Gulf of Mexico, there’s a hypoxic ” dead zone ” the size the state of New Jersey, caused in large part by a run off of petrochemical-based fertilizers. And the carbon toll on the atmosphere is well known… even if denialists still protest. What will planet Earth look like after we’ve processed and discarded 450 trillion more gallons of oil – ten times what we’ve already used and discarded ? Put it this way: the spill in the Gulf will look like a drop in the bucket. The oil economy is like a zombie from the movie Night of the Living Dead… an economic corpse that’s roaming the land and threatening to eat us alive. Fealty to Folly Oil has served its purpose. It was great while it lasted, and it got us to a point where we have the industrial and technological wherewithal to chart a new course. Thanks oil, we say a prayer for the ghosts of the dinosaurs whose flesh and bones we have burned. But we’re no longer primitives who need to animal fat to light our evening meditations, or chase away evil spirits. Hospitals no longer use leeches, or bloodletting, or even mercury thermometers for that matter. Audio cassettes long ago replaced vinyl, and were themselves replaced by CDs, which are now being replaced by MP3 files. Sure it sucked to have to pay good money to replace music I already owned. But some of it I didn’t replace, which turned out OK really. I replaced the timeless stuff that I really wanted, and the other stuff, truth be told, I don’t miss it. And if I do get a nostalgic hankering, for a buck I can download that one song I really miss, revel in its dated novelty, and then re-enter the 21st Century. Facts are facts, and the fact is we can’t afford the socialized environmental cost of having another 450 trillion gallons of oil pumped out of the ground, processed, used up and then strewn all about the place – the Earth isn’t that big. Look at the mess we’ve already made with just the 46 trillion gallons we’ve used so far. (And just because there’s enough wildlife left to fill up several time slots of cable programming on NatGeo, that in no way means that the planet is healthy. Not by a long shot.) Those who are doubling down on the oil economy are like addicts who swear that this last bender and this last bet at the roulette table will cure all that ails us. It’s sheer folly. But they’re too busy living in the past to see it. And yes, it will take Herculean effort, and lots of money to rejigger our economic infrastructure to function on something other than oil. (Let’s not even start on coal.) But what’s the option? Put on your Walkman headset and swing your Hoola-Hoop while you ask your Magic 8 Ball how to make all the problems with the oil economy magically disappear?

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Aron Cramer: Bankers You Can Believe In

May 8, 2010

With their brethren parading to Capitol Hill to explain themselves and their industry to skeptical lawmakers and an angry public, three bankers at this week’s CERES Conference in Boston may revive faith in a profession that is sorely in need of respect. I had the privilege of chairing a plenary discussion of innovative financial solutions that, with a little luck, may create a path to low-carbon prosperity. These days, seeing the word “innovation” paired with “financial products” is a good way to clear the room (or spur a call to the Feds). But the three very different bankers on my panel are, in fact, pioneering new ways to invest in forest preservation, invent disruptive technologies needed for a clean energy system, and create a price on carbon. Despite his elegant banker’s suit, Abyd Karmali is somewhat of an accidental financier. After two decades consulting for private firms and the United Nations, Karmali was recruited two years ago (interesting timing) to head Bank of America’s carbon markets division. His vision is to spread carbon pricing throughout BofA’s products. As he points out, carbon trading will only do so much if we don’t find ways to incorporate coverage of environmental improvements into all financial services. He proposes, for example, that banks use mortgages not only to help people pay off their houses, but also to encourage clean-energy investments that would otherwise require capital beyond the reach of most homeowners. If Karmali is aiming to green today’s economy, Macquarie Capital’s Bill Green is trying to shape tomorrow’s. His impatience with doom-and-gloom scenarios is exactly what you would expect from a Silicon Valley veteran who previously led investments in the solar power company Bright Source and Shai Agassi’s electric car system for the venture capital powerhouse VantagePoint. Green’s contrarian nature is best revealed by the kind words he had for Lehman Brothers, which he credited with providing financing for tax-equity deals that stoked clean-technology investments before the financial crisis hit in 2008. He sees this week’s investment by Google in two North Dakota wind farms as evidence that Lehman’s strategy was sound, and is poised to be revived. But the most theatrical member of this trio was Australian Dorjee Sun, hailed by Time magazine as a “Hero of the Earth” in 2009. Sun has built a business, Carbon Conservation, by arranging financing to avoid deforestation across Asia. His efforts are credited with saving a sizeable amount of forest, which he’s done by buttonholing forestry executives, smallholders in Borneo, and the president of Mongolia. Sun’s vision – and humor – makes a potent combination. These three clearly showed that innovation in the financial services sector is not always a dirty word. In fact, focused properly, it’s exactly what we need if we are going to marry healthy financial returns with a healthy planet. With due respect to Lloyd Blankfein, Goldman Sachs may not be doing “God’s work,” but these three bankers can plausibly make that claim.

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Pacific Road Agrees To Acquire A 10% Stake In Carbon Energy Limited (ASX:CNX)

March 28, 2010

Pacific Road Agrees To Acquire A 10% Stake In Carbon Energy Limited (ASX:CNX)

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Pacific Road Agrees To Acquire A 10% Stake In Carbon Energy Limited (ASX:CNX)

March 28, 2010

Pacific Road Agrees To Acquire A 10% Stake In Carbon Energy Limited (ASX:CNX)

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Sarkozy Caps Losing Week With Reversal on German Demand for IMF Greek Role

March 26, 2010

By Gregory Viscusi and Helene Fouquet March 26 (Bloomberg) — French President Nicolas Sarkozy capped a week of reversals with his acceptance of German demands on a contingency plan to aid Greece. Sarkozy yesterday bowed to Chancellor Angela Merkel ’s insistence that the International Monetary Fund finance part of a potential bailout for Greece. On March 7, the French leader said “there can be no doubt” that euro-area countries would “fulfill their commitments” to help Greek Prime Minister George Papandreou reduce Europe’s biggest budget deficit. The agreement with Merkel came after his party was pounded in March 21 regional elections, forcing him to bring political rivals into his government and abandon a proposed carbon tax. “Before, his allies always deferred to him because he was a winner, so he got what he wanted,” said Gerard Grunberg , director of the European Research Center at Paris’s Political Sciences Institute. “Now his aura’s broken. He’s a politician like any other.” Allowing the IMF to provide funds to Greece may also provide a platform for Dominique Strauss-Kahn , the Washington- based lender’s managing director and potential challenger in 2012 elections. Strauss-Kahn, 60, said Feb. 4 for the first time he’d consider cutting short his five-year term to run. Sarkozy said March 24 the election setback won’t slow his agenda. After withdrawing the carbon levy, he said he wanted to penalize imports from countries with looser environmental rules. He pledged to revamp the pension system and said he would risk a European crisis to defend French farm subsidies. Settling on the aid plan for Greece, which is struggling to cut Europe’s biggest budget deficit, suggests Sarkozy has his eye on the presidential ballot in two years, said Laurent Dubois , a professor at the Paris Political Studies Institute. ‘Risk a Crisis’ “He says he’s willing to risk a crisis to defend” farm aid, said Dubois. “Well, he can’t take on everyone. At the end of the day, he’s going to need her support.” Merkel’s position stemmed from German opposition to putting her taxpayers’ funds at risk to help Greece. Sarkozy dismissed suggestions that a run for re-election was a consideration in reaching the compromise with Merkel. “We had to reach a compromise to find a good and operational agreement,” Sarkozy told reporters at a briefing late yesterday. “We had to work hard to reach an agreement.” The summit came five days after his Union for a Popular Movement party lost in 21 of 22 mainland regions in local- council elections, leading UMP members to insist he alter some policies. Sarkozy Appointments UMP lawmakers felt his policy of “opening” — naming opposition Socialists to government posts, such as Foreign Minister Bernard Kouchner — alienated UMP supporters without winning any goodwill from Socialist voters, Grunberg said. Laying out his priorities in the statement two days ago, he didn’t mention two previous changes he’d sought: an overhaul of the criminal justice system and the elimination of a layer of regional government. Neither was popular with many members of the UMP. “Sarkozy is under fire even within his own party,” Frederic Dabi , a director at the Ifop polling institute, said in a telephone interview. An Ifop poll for Paris Match released March 23 showed Sarkozy is less popular than Prime Minister Francois Fillon . Respondents preferred Fillon to Sarkozy by 65 percent to 29 percent. Strauss-Kahn, a former Socialist finance minister, had a 21-point lead over Sarkozy and Socialist Party leader Martine Aubry led by seven. The survey of 960 respondents was conducted on March 18-19. Ifop gave no margin of error. Party Rivals To win back favor in his own party, Sarkozy brought in officials from rival UMP factions the day after the election defeat. The new budget minister, Francois Baroin , was a protégé of former President Jacques Chirac . Georges Tron, appointed a junior minister for the civil service, is an ally of former Prime Minister Dominique de Villepin , a bitter rival of Sarkozy. Villepin yesterday announced the creation of a new political party to challenge Sarkozy in the 2012 presidential election. Villepin, once a member of the UMP, said Sarkozy has monopolized power, and criticized the president for reducing taxes for the wealthy and for cutting government payrolls. To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net ; Helene Fouquet in Brussels at Hfouquet1@bloomberg.net .

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Climate-Change Fervor Cools as Skepticism Mounts, Companies Quit Coalition

February 22, 2010

By Kim Chipman Feb. 22 (Bloomberg) — U.S. Representative Bob Inglis went from climate-change skeptic to believer four years ago as opinion leaders from Al Gore to General Electric Co. chief Jeffrey Immelt called for laws to curb global warming. Today Inglis, a South Carolina Republican, is a convert who’s watching the public become more doubtful. “I have many people saying, ‘Now don’t you see the problem with the science?’” said Inglis, who dismissed global warming until 2006, when scientists showed him evidence in the melting ice of Antarctica. Three years after former Vice President Gore won a Nobel Prize for sounding the alarm on climate change and GE joined a coalition of companies pushing for a cap on greenhouse gases, public concern is flagging, along with U.S. and global efforts to mount government responses. Polls find more Americans questioning whether human activity is leading to climate change, or whether the trend is so dire as to justify reshaping U.S. energy use during an economic slump, as President Barack Obama has proposed. Record snowfalls in the U.S. also are fueling doubts. “The consensus of anybody who studies American opinion has to be that there’s less concern, rather than more, on global warming,” said Frank Newport , editor-in-chief of the Gallup Organization Inc., a Washington-based polling company. The latest blow to those urging action against global warming came last week, when Yvo de Boer said he would step down as United Nations climate chief, two months after 193 countries meeting in Copenhagen failed to reach a binding agreement on curbing greenhouse gases. ‘Sad Day’ The resignation may reduce the possibility that a worldwide market aimed at reducing carbon emissions is within reach, said Trevor Sikorski , an emissions analyst for Barclays Capital in London. “It’s a sad day for the carbon market, and we’ll be lucky to get somebody with Yvo’s dedication and hard work as a successor,” Sikorski said. UN carbon credits have fallen 13 percent on the European Climate Exchange in London since the start of the Copenhagen meeting, which was aiming to set limits for emissions after 2012. The NEX index tracking shares of 86 companies involved in clean energy has tumbled 12 percent since the talks. Also last week, ConocoPhillips , BP Plc and Caterpillar Inc. said they will quit the U.S. Climate Action Partnership, a group of companies created in 2007 to push for legislation to reduce carbon pollution. GE Chief Executive Officer Immelt, who helped spearhead formation of the coalition, says legislation is needed so companies know how to proceed with long-term investments. Challenge to Obama ConocoPhillips CEO Jim Mulva said proposals in Congress “unfairly penalized” domestic refineries. Houston-based ConocoPhillips, the third-largest U.S. oil company, was the first oil producer to join the group. London-based BP, Europe’s biggest oil company, and Peoria, Illinois-based Caterpillar, the world’s largest maker of bulldozers, said they’ll focus on their own approaches to global warming. Both were founding members of the coalition. The defections underscore the challenge Obama and Democratic lawmakers face in getting a climate bill passed, said Frank Maisano , an energy specialist for Bracewell & Giuliani, a Washington lobbying firm. “One reason people signed on to USCAP when it was trendy was the notion that the train was leaving the station,” Maisano said. “Now that movement on legislation has slowed to a crawl, many of these companies don’t see a benefit in being involved.” Obama came to office last year pledging to enact “cap- and-trade” legislation that would limit carbon-dioxide emissions and establish a market in the trading of pollution allowances. A House-passed measure has stalled in the Senate. Leaked E-mails “The push to move very rapidly on new climate-change laws looks like it has hit a stone wall,” said Walter Russell Mead , a senior fellow with the Council on Foreign Relations in New York. An NBC/Wall Street Journal poll in December showed 54 percent of those questioned believe that action should be taken to deal with climate change, down from 64 percent in 2007. Skepticism also may be on the rise in the U.K. A poll conducted for BBC News this month found 25 percent of people surveyed didn’t believe in global warming, a rise of 10 percentage points from November. Public doubt has been fed by climate scientists’ e-mails obtained from computers at the University of East Anglia in the U.K. in November, Representative Inglis said. Scientists referred in the messages to a “trick” used to smooth out data showing an anomaly in the trend toward higher global temperatures, and wrote about blocking articles by climate-change critics from a report by a UN panel. Science ‘Debunked’ “Now we see that that science has been pretty well debunked,” Senator James Inhofe , an Oklahoma Republican who has called man-made global warming a hoax, said on CNN in December. The UN panel, which shared the Nobel Peace Prize with Gore, has been faulted for exaggerating the pace at which Himalayan glaciers are melting and for using reports by environmental advocacy groups as a basis for some findings. Peabody Energy Corp. , the biggest U.S. coal company, said in a court challenge Feb. 12 that the Obama administration’s Environmental Protection Agency relied on flawed science by the UN panel in its decision last year to regulate carbon-dioxide emissions. The EPA “needs to step back and begin a thorough review of the real state of scientific understanding of greenhouse gases,” Beth Sutton , a spokeswoman for the St. Louis-based company, said in an e-mail. “The opposition is trying to blow up a few mistakes in the science,” said former Senator Tim Wirth , a Colorado Democrat who heads the UN Foundation, a Washington-based philanthropy backed by billionaire Ted Turner . “It’s a conspiracy that simply doesn’t exist. The basic science hasn’t changed.” Economy, Snow Uncertainty about the economy also has made Americans wary about shifting from fossil fuels, said Anthony Leiserowitz , director of the Yale Project on Climate Change in New Haven, Connecticut. “Americans are frustrated and angry and scared about the current economic situation, and that has pushed a lot of other issues, including climate change, off the table,” he said. A harsh winter in some regions has added to skepticism that the world is warming. “It’ll keep snowing in D.C. until Al Gore cries uncle,” Senator Jim DeMint , a South Carolina Republican, said in a Twitter message on Feb. 9, as the Washington area was blanketed in record snowfall. Advocates for climate-change legislation say a single snowy winter doesn’t disprove the long-term trend toward warming and may even bolster the argument that weather patterns are growing more extreme. “Climate change doesn’t mean just global warming, it means climate disruption,” Wirth said. To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net .

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Taiwan Demands China Steel Cut Emissions, Buy Carbon Credits to Expand

February 5, 2010

By Yu-huay Sun Feb. 5 (Bloomberg) — Taiwan is forcing some of its largest companies including China Steel Corp. to cut emissions in return for permission to expand on the island, where greenhouse-gas output per capita is almost three times the world average. The biggest polluters must either slash gas discharges, invest in emissions-reduction projects or buy carbon credits in global markets. Taiwan will set up an offshore company to help them get the credits, Stephen Shen , head of the Environmental Protection Administration , said in an interview in Taipei. Taiwan’s government is negotiating with companies while pushing them to compete with European and Japanese buyers in the $120 billion global carbon market. The policy is a stopgap until permanent emission limits are set under the Greenhouse Gas Reduction Act being debated in the legislature. “For heavy industries, such as electricity, steel and petrochemical, costs will rise,” said Peter Tzeng , an analyst at Polaris Securities Co. in Taipei. “Producers of alternative energy, including wind and solar, will benefit” because they may attract investment to offset emissions by heavy industry. Reducing companywide emissions by an amount equal to half of what a new plant would produce may become a benchmark in government approval of large industrial projects, Shen said. That policy may be applied to the NT$280 billion ($8.7 billion) plan to expand energy and chemical production in the Mailiao township by Formosa Plastics Group , parent of the island’s only publicly traded refiner, he said. The government’s proposed offshore company, most likely in Japan, will help Taiwanese companies accrue carbon credits certified by the United Nations in a “cost-effective way,” Shen said, without elaborating. Carbon Rollback The East Asian island remains outside UN-set carbon controls because it’s not a UN member, unlike European countries and Japan. They dominate carbon-market purchases, used to meet their targets under the 1997 UN-brokered Kyoto climate treaty. Taiwan’s President Ma Ying-jeou has pledged to cut carbon emissions to 2008 levels between 2016 and 2020 and to 2000 levels by 2025. Local companies, so far not bound by law to offset greenhouse-gas output, already may voluntarily buy credits in non-UN markets such as the Chicago Climate Futures Exchange or sponsor carbon-cutting projects such as wind farms. Taiwan Power Co. is requesting that the environmental agency retract its Sept. 2 demand that the island’s biggest electricity producer start estimating the amount of carbon credits it needs to buy over the next 15 years, Chief Engineer Tu Yueh-yuan said by phone on Feb. 3. The company accounts for about 30 percent of the island’s emissions. ‘Throwing Money Overseas’ Carbon credits may increase the cost of output by “tens of billions” of New Taiwan dollars, which the utility will have to pass on to customers, Tu said. “It’s like throwing money overseas,” she said. “How could we do something like that?” The government could potentially allow companies to acquire as much as half of their carbon credits overseas under the Greenhouse Gas Reduction Act, presently being debated in parliament, according to Shen. The legislation, which may become law next year, may impose a cap-and-trade program in Taiwan in five to six years. Voluntary reduction and emissions limits based on energy efficiency will precede that, according to Shen. Dragon Steel Corp., a unit of China Steel Corp., Taiwan’s largest mill, has pledged to cut emissions and may buy carbon credits as it doubles production capacity, Shen said. The expansion to 5 million metric tons a year may come on stream in 2013, said Chung Le-min , executive vice president of China Steel. The company has no estimate of additional costs, he said by telephone Feb. 4. Hi-Tech Solution The China Steel unit aims to meet the requirement by deploying hi-tech emissions-reduction technology, Chung said. “I’m confident we don’t need to buy carbon credits.” CPC Corp., Taiwan’s state-run oil refiner, will plant trees on the island to help reduce emissions as it expands capacity to produce petrochemicals, Lin Maw-wen , a vice president at the company, said. Taiwan, responsible for 1 percent of the world’s carbon output, emitted about 3 percent less last year, Shen said. Emissions more than doubled from 1990 to 2007. Taiwan Power has erected wind-power turbines since 2002, while Formosa Plastics has planted more than 1 million trees in Mailiao. The island’s carbon-dioxide emissions reached 13.2 tons per capita in 2006, compared with the world average of 4.5 tons, according to Bloomberg data. The majority of UN members recognize only the government in Beijing, which claims Taiwan as part of its territory. The island and China have been administered separately since a civil war in 1949. Taiwan has formal diplomatic ties with 23 nations , mostly in Latin America, the Pacific and Africa. To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net

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Al Norman: Wal-Mart Billionaire Wants $8 Million Subsidy

January 31, 2010

Missouri is the “show me the money” state — where using public funds to bail out billionaires is considered good business. An entrepreneur who married into Sam Walton’s extended family, and is listed high up on the Forbes Wealthiest Americans list, is asking Missouri taxpayers to help him build a bigger Wal-Mart. Enos Stanley Kroenke married into a fortune when he wed Ann Walton, the daughter of Sam Walton’s brother “Bud.” But Kroenke, already a successful businessman before his marriage, now apparently needs millions in public welfare to carry out his latest development plans. Owner of the Denver Nuggets basketball team, and hockey’s Colorado Avalanche, Kroene is part owner of the St. Louis Rams and the English soccer team Arsenal. His development firm, THF Realty (the acronym stands for “To Have Fun”) has asked for a Tax Increment Financing (TIF) deal to build a Wal-Mart supercenter in the tiny community of Bridgeton, Missouri. THF Realty owns 100 properties comprising more than 20 million square feet of leaseable area in 23 states. A concentration of THF properties exists in Missouri, Illinois, Pennsylvania and West Virginia. The company says its mission is to be the “best private developer in America.” But THF needs a little TIF from its public friends. Kroenke is the 117th richest American, with an estimated worth of $2.7 billion in 2009. According to the St. Louis Business Journal , in 1995, Kroenke bought a major stake in the Rams and relocated them from Los Angeles to St. Louis. Five years later, Kroenke blocked out former Broncos quarterback John Elway to purchase the Nuggets, the Avalanche, and the Pepsi Center arena. The 61-year-old Kroenke owns a piece of the Colorado Rapids soccer team, and the stadium they play in, plus the Colorado Mammoth lacrosse team. Six years ago Kroenke went live with the Altitude Sports & Entertainment network, a 24/7 TV network that broadcasts the Colorado teams that Kroenke owns. The use of state tax breaks by billionaires is emblematic of the ‘bail out’ mentality that still pervades the real estate industry in America. Kroenke’s Wal-Mart plan for Bridgeton, Missouri is not a form of economic development. There already are 19 Wal-Marts within 25 miles of Bridgeton, including a Wal-Mart that sits on the border of Bridgeton and St. Ann. Bridgeton is a city that has lost 15% of its population since 1990, and any revenue it gains from another Wal-Mart will come from its neighbor, St. Ann. The existing Wal-Mart on the St. Ann border will shut down if Kroenke builds his superstore, draining the city of at least $100,000 in sales taxes. When Bridgeton officials issued a bid for development of the former Value City property on St. Charles Rock Road, Kroenke responded. The proposed supercenter will be 159,000 square feet — only 40,000 square feet larger than the existing Wal-Mart store located just minutes away. THF says the supercenter will employ around 300 workers — but most of these workers are already employed at the “old” store. Building Wal-Marts is a family affair for Kroenke. Over the years, Kroenke and THF have been at the center of many controversial Wal-Mart developments in St. Peters, Columbia, High Ridge, Maplewood, and North St. Louis County, Missouri, as well as Glen Carbon, Illinois, Wheeling, West Virginia, and Buffalo, Minnesota. In January of 2010, Kroenke’s group presented Bridgeton with a plan requiring as much as $8 million in Tax Increment Financing to build a Wal-Mart. According to Kroenke, the Wal-Mart project will generate roughly $7 million in sales and property taxes. But this welfare deal is not without its detractors. Officials in neighboring St. Ann are not pleased with the project. The “old” Wal-Mart initially was entirely within Bridgeton — but when Wal-Mart expanded its store, the footprint stepped across the line into St. Ann. Bridgeton’s gain will be St. Ann’s loss. Tax Increment Financing has been used by municipal officials nationwide for years to try to lure developers away from neighboring communities. To discourage this form of retail pilfering, the Missouri state legislature in 2007 changed the power to grant a TIF to require cities to use a countywide approach to granting TIFs — rather than a town-level process only. The use of this financing “gift” to developers since the reform has dropped dramatically. Kroenke’s request for a subsidy is only the second in St. Louis county since the law became effective in January of 2008. But Bridgeton Mayor Conrad Bowers has been promoting Kroenke’s scheme for months. “The store is going be larger, and have many more products, and the sales will be higher,” the Mayor told the St. Louis Post Dispatch . The TIF has to pass muster with the Tax-Increment Financing Commission, which is a combination of county, city and other officials. “In my judgment,” the Mayor told the Dispatch , ” I think that it (the supercenter) will happen because I really believe it’s good for the area, it’s good for the county. It’s not like we’re stealing this from another area — the store is in Bridgeton.” The Mayor says this supercenter cannot happen without TIF money because of the demolition costs on the site — which the city failed to get from the former property owners. Now city officials want taxpayers to foot the bill for the billionaire Kroenke. The $8 million in sales and property taxes that will be given back to the billionaire developer in the form of site infrastructure costs, is money the taxpayers could have used to pay for the on-going police and fire protection that this new superstore will demand. “The point is,” Mayor Bowers told the Dispatch , “Wal-Mart is going to build a Supercenter and I’m pleased they want to be in Bridgeton and at a site that needs to be redeveloped. As far as I’m concerned it’s the correct use of a TIF.” Even if the TIF Commission says No to Kroenke, the Bridgeton City Council gets the final say. If the City Council can muster a two-thirds vote to override the TIF Commission, the billionaire gets his bail out. Over the years, Wal-Mart has swallowed hundreds of millions of dollars in federal, state, and local subsidies — a form of welfare not available to its smaller competitors and Main Street businesses. The use of such public funding has been criticized as a blunt tool for economic development, because in the end, the TIF investment produces little or no jobs — and low-paying jobs at that. St.Ann officials were rattled earlier this month when they learned that in addition to the potential Wal-Mart closing, their community was one of only 5 towns in the country that was losing its Macy’s store. The St. Ann Macy’s was located in the huge 1.8 million square foot Northwest Plaza — which is now in jeopardy of losing more tenants. Kroenke’s group has told Bridgeton officials that it is ready to move dirt immediately if the TIF is approved. This unnecessary superstore built with welfare funding could be open for shoppers by the fall of 2011. Given the foul mood the public is in regarding bail outs for the rich, it’s a wonder this proposal has any legs left. Al Norman is the founder of Sprawl-Busters. His website is http://www.sprawl-busters.com. He has been helping communities fight big box sprawl since 1993. He is the author of Slam Dunking Wal-Mart.

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Gary Hirshberg: Let’s Price Carbon Now, for Business’ Sake

January 18, 2010

Now that Congressional action on healthcare appears to be concluding, it’s time to attend to the other 500-pound gorilla in the Senate cloakroom: climate legislation. The good news is that when it comes to global warming, the only thing the U.S. has more of than culpability is opportunity. The most serious problem our species has ever created, climate change is not just coming, it is here. Its scale and impacts are not just increasing, they’re accelerating. Tipping points to irreparable damages are very close, and some may have been crossed already. With global warming now startlingly evident, fossil fuel interests are shifting from scientific to economic diversions – modeling the economic harm that will purportedly result from controlling greenhouse gases (GHGs). But we’ve seen these scare tactics before. Removing lead from gasoline was going to bankrupt the oil companies. Requiring seatbelts would cripple auto sales. Acid rain, smog, and mercury controls would cause blackouts. Such claims weren’t believable then, and they’re not believable now. Besides, Congress should be guided less by economic models and more by economic reality. The on-the-ground experience of companies already cutting GHG emissions illustrates the opportunity for our national economy. Stonyfield Farm is a good example. We started calculating our carbon footprint in the early 1990s. With little more than our mission and elbow grease, our employees raced up the learning curve. Contrary to conventional wisdom about “low-hanging fruit,” we found that our list of innovation opportunities grew rather than shrank. Even after over a decade of effort, recent accomplishments astonish: each cup of Stonyfield yogurt required 19% less energy than in 2007, saving more than $500,000 per year. Packaging innovations shed 600,000 pounds of plastic, saving $780,000. Transportation GHG emissions dropped 40% from 2006 to 2008, saving $2.5 million. Building a digester to treat our wastewater converted an environmental concern into a source of clean energy, saving another $500,000 over two years. Our Greener Cow project even discovered how to cut GHGs from cows 12% and boost Omega-3′s 29%. More natural feed produces fewer cow burps, healthier cows, healthier milk, and healthier consumers – a classic “win-win-win.” All of these efforts have created or saved jobs. Stonyfield’s experience isn’t unique. Companies across the U.S. are finding cost savings and competitive advantage through efficiency. Nike reduced GHGs from its operations and travel by 18% from 1998 to 2005, despite an increase in square footage. Sun Microsystems reduced its U.S. GHG emissions 23% between 2002 and 2007. Gap Inc. sought to reduce its stores’ energy use by 11% from 2003 to 2008, and cut it by 12% by 2007. Timberland has targeted a 50% reduction in absolute GHG emissions by 2010 from 2006 levels. Wal-Mart’s new stores are expected to cut energy use by 30-50% and save five million gallons of water per year. Some big companies, like Dow and DuPont, have saved billions of dollars through efficiency since the early 1990s. As good as these efforts are, they need to go broader and deeper throughout the entire economy if we are to keep the Earth’s climate in check. That won’t happen on its own, so Congress should hasten to impose a market price signal on U.S. heat-trapping emissions. If Congress can’t get its act together promptly, then the U.S. Environmental Protection Agency needs to move ahead with regulating GHGs under the federal Clean Air Act. It’s also a critical time for the global economy. Successful companies and economies “retool” during downturns to boost future productivity. A wave of innovation and jobs in energy technologies is emerging. The resulting energy transition will likely echo or exceed the tectonic decentralizations we’ve already seen in computing and telephony. The investments that will lead this charge are already being made, but many other nations are already way ahead of us when it comes to aggressive energy and emissions reductions. Washington’s best contribution would be to “just say no” to fossil fuel interests by putting an appropriate price on carbon – right now. Then it should get out of the way of businesses that are striving to help our nation meet the opportunities of the 21st century. Morphing our energy system from its historical fossil focus to a new emphasis on efficiency, innovation, renewables, and distributed generation will provide innumerable new revenue sources and businesses, save money (and keep it closer to home), create millions of new jobs, enhance our global competitiveness, boost national security, and improve public health. What on Earth are we waiting for? Let’s get on with it. Gary Hirshberg is CE-Yo of Stonyfield Farm, the world’s leading organic yogurt company. Ken Colburn, who directs Stonyfield’s environmental policy efforts, also contributed to this piece.

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Centrica Wind-Farm Funding Success Shows Improved Liquidity for U.K. Sites

January 5, 2010

By Kari Lundgren Jan. 5 (Bloomberg) — Centrica Plc’s deal to fund U.K. offshore wind farms through a stake sale and bank debt may become a blueprint for competitors in the country’s $160 billion push to develop sites in deeper and more remote waters. The Crown Estate, the authority which administers 55 percent of the coastline on behalf of the monarchy, is assessing bids from 18 companies in its third offshore wind licensing round and aims to quadruple planned capacity by adding farms in the North Sea, Irish Sea and English Channel. It anticipates announcing winners, who will need to find financing, this month. Centrica, the U.K.’s largest utility, sold 50 percent of three projects to Societe Generale’s TCW Group in October and was able to raise 340 million pounds ($550 million) in debt for the sites, freeing up cash. Denmark’s Dong Energy A/S traded stakes in U.K. wind projects last month, while Germany’s E.ON AG sold an asset in the Thames estuary in 2008. “The number of banks comfortable with financing offshore wind is fairly limited and the Centrica deal has expanded that base,” said Marcel Gerritsen , global head of renewable energy and infrastructure finance at Rabobank Nederland NV. “It creates additional liquidity in the offshore wind farm U.K. area, which is necessary given the pipeline of projects coming up.” Centrica’s refinancing freed up funds for investment in new areas, amid a revival in lending as the credit crisis abated. Utilities will need to tap sources such as infrastructure funds and attract new banks for financing, according to Sarwjit Sambhi , managing director of power generation at Centrica. London Array “There are still a lot of round two projects that need to be built,” Sambhi said. “Once we’ve done those, then it’s all about how you fund the build-out of round three, and that’s going to be more challenging.” E.ON in 2008 sold a 20 percent stake in London Array , planned as the world’s biggest offshore farm, to Abu Dhabi’s Masdar . Dong, partnered by Siemens Project Ventures, bought 50 percent of the Lincs offshore wind-farm from Centrica last month, while the Danish company sold a 25 percent stake in the Irish Sea Walney project to Scottish & Southern Energy Plc. “The amount of capital needed to build all those wind farms is extremely large and utilities will need to bring in third-party investors,” said Jean-Daniel Borgeaud , a managing director at TCW, a Los-Angeles-based investment company. “It’s a new trend. If you had asked me two years ago if we’d work with Centrica I would have said no because utilities have typically used their own balance sheets.” U.K. Target Five wind parks are under construction, including Scottish & Southern’s 504-megawatt Greater Gabbard project, Dong’s Gunfleet Sands I and II and Swedish Vattenfall AB’s 300-megawatt Thanet project. Another 10 have been approved. “People are looking at different ways of sharing the cost and the risk,” Dave Rogers, E.ON’s U.K. director of renewable energy , said in an interview. “These are very large investments and the time-scale in which they need to be committed is relatively short.” The U.K. is targeting 15 percent of energy from renewable sources in 2020, of which 70 percent will have to come from offshore projects, according to the Carbon Trust. The Crown Estate is seeking to add 25,000 megawatts in the third round, up from a combined 8,000 megawatts in the first rounds, and estimates potential market investment at 100 billion pounds. The U.K. has nine operating offshore farms with capacity of about 690 megawatts, enough for 400,000 homes, according to the British Wind Energy Association . Spreading Risk Declared bidders among 18 companies competing in the third round include Scottish & Southern, RWE AG , E.ON, Iberdrola SA ’s Scottish Power unit, Dong and Vattenfall as well as Norway’s Statoil ASA , Statkraft AS and Fred. Olsen Renewables Ltd. Centrica is also likely to make an offer, given the proximity of several of its fields to new sites, Credit Suisse Group AG analyst Mark Freshney said. Centrica spokesman Julian Mears declined to comment yesterday. “We will look into all kinds of financing when it comes up,” said Bjorn Drangsholt, head of Statkraft’s offshore wind power department. “There are a number of alternatives to be investigated.” The U.K. government supports offshore wind by handing out two so-called Renewable Obligations Certificates per megawatt- hour of output to generators, which can be sold on to suppliers needing them to meet clean energy targets. An average offshore wind turbine generates enough power in a year to supply 2,500 households. Debt Refinanced Across Europe, about a dozen offshore projects are likely to seek debt financing in the coming year, including the Blackstone Group LP -backed Meerwind project in Germany and C- Power NV’s Belgian Thornton Bank farm, according to Jerome Guillet, head of energy project finance at Dexia SA. Centrica refinanced debt on its Lynn and Inner Dowsing offshore farms and the land-based Glens of Foudland wind farm by tapping non-recourse financing, which secures loans with cash generated by projects rather than the balance sheet. Fourteen banks, including Mitsubishi UFJ, KfW IPEX-Bank GmbH, Dexia and Rabobank, were behind the Centrica loan. “It’s still difficult to get financing, but the market is slowly coming together,” said Alexander von Dobschuetz, head of structured finance at Munich-based bank Bayerische Landesbank. “The proposed structures and risk allocations are becoming more appropriate.” To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

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James Boyce: Businesses Urge Congress to Act after Copenhagen

December 22, 2009

The lead up to the recently-concluded talks in Copenhagen started literally years ago, with pre-meetings and conferences and those that are for addressing the issue of climate change and those who are intent on muddying the waters with the intent of increasing their profits at the expense of the planet fighting an increasingly public fight. After two weeks of speeches, protests, and stumping, significant progress has been made. We have seen the five biggest players (US, China, India, Brazil, and South Africa) come to a consensus about cutting carbon pollution . They have also agreed to a transparent framework for evaluating carbon-cutting benchmarks. Last week, I wrote about the need for developing countries to have a voice in these talks. Without a voice, the most vulnerable countries to climate change will be set up for disaster. Thankfully, their voices were heard. The talks concluded with a pledge of resources to help the poor and vulnerable countries deal with the oncoming effects of climate change. In sports, when progress is made and goals become within reach, it’s called “The Big Mo.” Momentum is swinging behind a UN binding resolution and achieving this means putting pressure on national governments to take action. Ironically to some perhaps, it is businesses that are standing up and putting the pressure on Congress to make clean energy and climate legislation a reality. A group of 750 (and counting) businesses have come together under the umbrella group American Business for Clean Energy (ABCE). Their purpose is simple and direct – to demand comprehensive action be taken by Congress to enact a Clean Energy Act. The group is advocating strongly that a seismic shift in our energy policy from carbon to clean will create jobs and increase profitability. “We are one of the many hundreds of mainstream companies actively sending a message to Congress that American businesses are eager for strong federal climate policy that will create good jobs and strengthen our economy,” said Tedd Saunders, chief sustainability officer at the Boston-based Saunders Hotel Group. It shouldn’t be overlooked that for a clean energy bill ever to make it out of Congress with enough teeth to make a difference it will need the backing of big business. This is why ABCE is an important step in the systemic change that is needed to get us off of our current carbon energy policy. Business has to make the innovations. Business has to create the jobs. Business has to show that it can be profitable by using clean energy practices. Business has to lead. ABCE membership is not hodgepodge of green startups looking to garner some attention from all the Copenhagen buzz. The energy company powering my computer right now is a member – National Grid. So it GAP, Winslow Management, and ROL Transport. Companies from every sector (large, small, and everywhere in between) are getting on board and leading. Who exactly are these companies leading is the next relevant question. Their consumers of course. If systemic change is going to happen it needs to be top down. While me bringing my own mug to Starbucks and using reusable shopping bags reduces consumption and eventually waste, the big difference is going to come when businesses apply the same logic of “reduce, reuse, recycle” into their processes. As more businesses join the ranks of ABCE the pressure will mount on Congress to take the momentum from Copenhagen and translate it into something binding. Listen to them, Congress. Pass a clean energy bill that forces those business who are not serious about reducing their carbon footprint to change. Pass a clean energy bill, because Americans need jobs. Pass a clean energy bill, because Americans know that climate change exists and want to do something about it. Pass a clean energy bill for energy security. Pass a clean energy bill as the foundation for a new, stable economy. All reason enough. Pass a Clean Energy Act. To follow the progress of ABCE on Facebook, please become a fan.

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Virgin Airways Branson Helps Lead Climate Charge After UN Envoys’ Failure

December 20, 2009

By Jeremy van Loon and Kim Chipman Dec. 21 (Bloomberg) — Billionaire Richard Branson wanted government legislation to reduce the carbon dioxide emitted into the air by his Virgin Atlantic Airways Ltd. aircraft. He didn’t get it so he suggests the industry go it alone. United Nations envoys from the U.S., China and another 191 countries failed to reach a binding accord to reduce greenhouse gas emissions in two-weeks of talks that ended Dec. 19 in Copenhagen. Even the arrival of U.S. President Barack Obama on Friday didn’t end the impasse. Branson and executives from General Electric Co., Duke Energy Corp. and Siemens AG say they want clarity next year from governments on emission regulations. Meantime, they plan to invest more to reduce output of carbon gases blamed for global warming. “The airline industry is one of the polluters,” Branson said in an interview in Copenhagen on Dec. 18. “We owe it to the public to get our house in order. If the governments won’t set targets then I would suggest that the airlines get together and do it themselves and set an example.” Copenhagen was supposed to be the culmination of two years of talks to set up an agreement to replace the Kyoto Protocol, which was signed in 1997 and set CO2 limits on industrialized economies that expire in 2012. Talks in the Danish capital got bogged down in disputes over aid to developing countries facing damage from climate change, pollution-reduction goals and how to verify individual countries’ pledges to cut harmful emissions. Less Polluting Even without a binding climate deal, companies plan to press ahead to make their businesses less polluting. Branson plans to use more biofuel made from inedible plants in Virgin’s fleet of 115 aircraft. He also wants Boeing Co. and Airbus SAS to build lighter, more efficient aircraft. GE Chief Executive Officer Jeffrey Immelt has pushed for a price for carbon and U.S. clean energy standards in order to increase sales of less-polluting equipment for nuclear power and coal-fired boilers. The company, whose equipment generates one- third of the world’s electricity, is considering expanding further into clean-energy industries. Lester Brown , president of the Washington-based Earth Policy Institute, says the private sector will move the world to a low-emissions energy economy and that global accords such as the one being sought in Copenhagen aren’t up to the task. “They are obsolete. They take too long to negotiate and ratify,” he said in an interview. “In this case, the game may be over by then.” Letter to Obama Microsoft Corp., Duke Energy Corp., Nike Inc. and Dow Chemical Co. last week sent a letter to President Barack Obama urging him to push for a treaty with “substantial” financing goals. “Such an agreement will provide the market certainty that will unleash the investments needed to create jobs and enhance U.S. competitiveness,” according to the Dec. 15 letter. The agreement in Copenhagen, which leaves it up to individual countries to reduce carbon emissions, will still help boost demand for Dow Chemical Co.’s solar power, battery and insulation products, said Russel Mills, global director energy and climate-change policy at Dow Europe. “It’s helpful,” Mills said in an interview Dec. 18 in Copenhagen after the accord was reached. “The key issue is we have started on a global process.” Hamlet The uncertainty of the UN meeting’s outcome was underscored by a Dec. 12 event at Kronborg Castle in Helsingor, just outside Copenhagen. The town is also known as Elsinore, the setting for William Shakespeare ’s “Hamlet.” The topic: ‘To be, or not to be? New Leadership for a Sustainable Economy.’ “There can be no effective response to the climate problem without business innovation, investment and low-carbon technology and processes,” former U.S. President Bill Clinton told the crowd via videoconference. Companies in Europe expect tougher emission targets and are preparing to buy emissions permits on the European carbon market, said Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch. Pending U.S. legislation is more important than a global treaty, he said. “People are going to focus on their regional domestic markets and the rules on emissions that evolve there,” he said in an interview on Dec. 18. Siemens AG , the manufacturer planning to supply turbines to the Sahara desert’s biggest solar project, expects its solar- equipment earnings to surge in the next few years. The German engineering company agreed on Oct. 15 to buy solar-thermal power company Solel Solar Systems Ltd. for about $418 million to expand its renewable-energy products. Enzyme Business Danisco A/S, the Nordic region’s largest maker of food ingredients, will press ahead with an expansion of its enzyme business, which helps convert plant material into biofuel that can be used in vehicles, said Chief Executive Tom Knudsen . “I am very encouraged about the momentum in North America,” he said in an interview on Dec. 10. “This is going to be big,” he added, referring to the size of the market for biofuels. Mindy Lubber , director of the Investor Network on Climate Risk , a network of 80 institutional investors with collective assets totaling $8 trillion, said businesses were encouraged that so many nations came together at Copenhagen and agreed there is a problem. Still, “most of the hard work still lies ahead,” she said. To contact the reporter on this story: Jeremy van Loon in Copenhagen via jvanloon@bloomberg.net ; Kim Chipman in Copenhagen at KChipman@bloomberg.net .

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CO2 Prices May Fall After Copenhagen Misses `Modest’ Goals, Barclays Says

December 20, 2009

By Mathew Carr Dec. 20 (Bloomberg) — European and United Nations carbon prices may fall this week because the Copenhagen climate deal didn’t set targets to boost demand for permits, a Barclays Capital analyst said in an interview. European Union carbon-dioxide allowances, with trading volume of $92 billion a year, will probably drop about 7 percent as markets open tomorrow in response to the accord, said Trevor Sikorski , emissions analyst for Barclays Plc’s investment bank. The agreed targets amount to a “bunch of negotiation ranges” that investors had already factored in, Sikorski said in a phone interview after returning to London from the Danish capital. “It seems to be below even our modest expectations.” U.S. President Barack Obama said the climate-change accord he reached with China and most of the 193 attending nations on Dec. 18 was an “unprecedented” first step to slow global warming. Environmental groups such as Friends of the Earth called it a failure because it’s not a binding treaty and the targets fall short of what the UN climate adviser said is needed to prevent catastrophic and irreversible climate change. Permits in the EU, which runs the world’s largest cap-and- trade system, closed at 13.58 euros ($19.44) on Dec. 18, down 6.8 percent last week as UN envoys bickered over targets and funding to fight climate change. Allowances for delivery in December 2010 have fallen 18 percent this year as the lack of progress on climate talks and recession reduced demand. The UN’s Certified Emission Reductions credits for delivery next year fell 7.6 percent last week to 11.83 euros on London’s European Climate Exchange. They are down 14 percent this year. EU allowances may fall to 13 euros this week, compared with the 15 euros that might have followed a binding treaty, carbon analysts led by Heiko Siemann at UniCredit SpA in Munich said in a Dec. 18 report. Hinged on U.S. The U.S. will probably cut its emissions by 14 percent to 17 percent from 2005 levels by 2020, subject to approval in the Senate, according to an information note circulated by European Union officials in Copenhagen along with the accord. The strength of the carbon market “hinges more on the U.S. than anyone else,” said Jos Delbeke , deputy director general for environment at the European Commission in Brussels, in a Dec. 18 interview hours after the accord was struck. “The impact on the carbon market is going to be marginal.” The EU said it will stick to its target of cutting emissions by 20 percent from 1990 levels, pulling back from an offer of 30 percent, because other countries didn’t follow suit. Prime Minister Fredrik Reinfeldt of Sweden, speaking for the 27-nation bloc, said EU leaders decided to stay at 20 percent. That will help drive EU prices lower, Sikorski said. Offset Credits The U.S. is considering a law that may boost demand for so- called offset credits from the UN starting around 2012. The credits, awarded to companies and investors from richer countries that pay for emission reductions in the developing world, can be used for compliance in the EU market. The two-week climate meeting, concluded a day behind schedule, failed to deliver most of improvements needed in the UN market, said Kim Carnahan , a UN emissions-trading researcher at the International Emissions Trading Association, a lobby group in Geneva. Its members include Goldman Sachs Group Inc. and Royal Dutch Shell Plc. Changes agreed for the UN’s Clean Development Mechanism were “not decisive action to which the market can immediately react,” Carnahan said. Easier Approval UN envoys put off action on proposals for so-called “standardized baselines,” which would have made it easier for projects that reduce emissions more than industry benchmarks to win credits, according to a text approved in Copenhagen. Projects are now approved on a case-by-case basis and must show they need credits to be feasible. That approval process has produced a backlog, with 66 percent of 5,641 of the proposed projects that the UN received since 2003 waiting as of Dec. 4, according to data compiled by Bloomberg. The proposal for industry baselines would have meant more credits, traders said. “I find it incredibly frustrating” that countries can spend days discussing potential technological solutions to climate change such as synthetic trees while they “punt critical issues like standardized baselines” to a technical working group for a year, Carnahan said. The UN carbon market has staffing shortages and needs more than six months to streamline approvals, Lex de Jonge , chairman of its regulatory board, said this month. “We are not going to come back on Jan. 1 and see a jump in the issuance,” Alessandro Vitelli , director of strategy and information at IDEAcarbon in London, said in an interview yesterday in Copenhagen. A appeals process, better communication between the CDM board and project developers, as well as smoother registration and issuance procedures may help the program boost productivity next year, he said. For Related News and Information: Emissions-trading stories EMIT U.K. power-market stories TNI UK PWRMARKET Today’s top energy, environment news ETOP , GREEN

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Obama-Backed Climate Accord Is Labeled a Failure by Environmental Groups

December 18, 2009

By Jim Efstathiou Jr. and Nicholas Johnston Dec. 19 (Bloomberg) — U.S. President Barack Obama called a climate change agreement with China and about 20 other nations an “unprecedented” move to slow global warming. Environmental groups called it a failure. The agreement is “a first step,” Obama said yesterday before departing Copenhagen, where he spent 14 hours in meetings and addressing 8,000 delegates from 193 nations. The accord still needs to be approved by all nations attending. Negotiators met in the Danish capital for two-weeks of United Nations talks on curbing global warming. Debate stumbled on aid to developing countries facing damage from climate change, pollution-reduction goals and how to verify individual country’s pledges to cut harmful emissions. Environmentalists said the agreement that includes the U.S. and China — the world’s two biggest emitters of greenhouse gases — falls well short of what’s needed to deal with global warming. “This is the United Nations and the nations here are not united on this secret backroom declaration,” Kate Horner, international director of the London-based environmental group Friends of the Earth said in statement. “Copenhagen has been an abject failure.” The proposal calls for voluntary steps to reduce greenhouse gases blamed for global warming and does not legally mandate the cuts. “It will not be legally binding, but what it will do is allow for each country to show to the world what they are doing,” Obama told reporters in Copenhagen. “There will be a sense on the part of each country that we’re in this together and we’ll know who is meeting and who’s not meeting the mutual obligations that have been set forth.” Pledges Rich countries will provide $100 billion a year by 2020 to help poor nations reduce their carbon emissions, according to the text. They will also pay out $30 billion from next year through 2012. “In terms of finance, it is vague, it is a big soup,” Pa Ousman Jarju , a Gambian delegate, said in an interview in Copenhagen. “It’s well below what is required.” The agreement was reached after President Barack Obama had last-minute talks with Chinese Premier Wen Jiabao , Indian Prime Minister Manmohan Singh , Brazilian President Luiz Inacio Lula da Silva and South African President, Jacob Zuma in Copenhagen today. “It’s going to be difficult to get developing countries to agree to this,” Brazilian envoy Sergio Serra said. The U.S. will cut CO2 emissions between 14 percent and 17 percent by 2020 from 2005 levels, while Japan will cut emissions 25 percent and Russia may reduce output as much as 25 percent, the agreement said. Nations should try to keep the global temperature increase before industrialization “below 2 degrees,” Celsius (3.6 degrees Fahrenheit), according to the agreement. Envoys from the U.S., Europe and China have backed the 2 degrees target. ‘Well Short’ “As President Obama said, its well short of what’s ultimately needed,” Elliot Diringer , vice president for international strategies at Arlington, Virginia-based Pew Center on Global Climate Change, said in a statement. “But it would provide a reasonable basis for negotiating a fair and effective climate treaty.” Without emissions curbs, temperatures would rise by 6 degrees Celsius, an increase that “would lead almost certainly to massive climatic change,” the International Energy Agency, an advisor to 28 oil-consuming nations, said in a report. A more-than-2-degree warming will bring more intense flooding and drought and a faster sea-level increase, according to the UN. “This declaration or outcome or whatever you want to call it, is not a legally binding document,” Indian Environment Minister Ramesh said in an interview. “It’s a political statement.” For 20 years, scientists working for the United Nations have provided guidance for global climate talks. The result is the Kyoto Protocol, a 1997 accord that limits greenhouse-gas emissions among 37 industrialized nations. Those targets are set to expire in 2012, leaving the world without binding goals if Copenhagen doesn’t renew them. “The objective of these negotiations of securing the future of the planet definitely wasn’t achieved,” Melinda Kimble , the U.S. chief negotiator for the Kyoto Protocol and senior vice president at the United Nations Foundation said in an interview in Copenhagen. “It’s a limited outcome.” To contact the reporters on this story: Nicholas Johnston in Copenhagen at njohnston6@bloomberg.net and Jim Efstathiou Jr . in Copenhagen at jefstathiou@bloomberg.net .

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Obama Heads to Denmark Under Pressure to Break Rich-Poor Climate Deadlock

December 17, 2009

By Kim Chipman Dec. 17 (Bloomberg) — President Barack Obama leaves for Copenhagen today under pressure to salvage negotiations on a climate-change agreement as the U.S., China and more than 190 countries deadlocked over the terms. Rich nations and emerging economies are fighting over how to proceed in the attempt to reduce the greenhouse-gas pollution blamed for global warming. The U.S. and China, the two biggest emitters, are holding opposing stances on verification of emissions cuts, a dispute that may hinder chances for an accord. “Coming back with an empty agreement, I think, would be far worse than coming back empty-handed,” Obama’s spokesman, Robert Gibbs , said today in Washington. “We hope the Chinese will stay and be part of finding a solution.” Obama, 48, will arrive at the United Nations-led negotiations in Denmark tomorrow morning hamstrung by his own legislative priorities. Focus on U.S. health care has left a proposed law to cap greenhouse gases on the back burner. As a result, the administration lacks a clear outline of what U.S. lawmakers would accept in any eventual treaty. “We have to have legislation,” said Frances Beinecke, head of the New York-based Natural Resources Defense Council. “He has to be mindful about not getting further out than he can take the country” without support from Congress. The U.S., China and the European Union are struggling to complete a deal by tomorrow, when the summit is scheduled to end. The differences include emissions targets for wealthy countries and measures to confirm whether nations are meeting promises on limiting emissions. The U.S. wants independent verification of emissions cuts, a step China has opposed. China’s Sovereignty Chinese Vice Foreign Minister He Yafei today signaled a possible path toward compromise, saying his government would consider action “that is not intrusive and that does not infringe on China’s sovereignty.” Bolivia’s lead negotiator, Angelica Navarro , was among the delegates looking to Obama for a breakthrough. “We have very high expectations for Obama’s visit,” Navarro said. “We hope he brings not only hope, but also concrete steps.” The talks are intended to produce a political agreement that would serve as a foundation for a legally binding treaty next year. Jairam Ramesh , India’s environment minister, and other delegates in Copenhagen were pessimistic about achieving anything more. “I don’t think even Mr. Obama can cut through the Gordian Knot here,” Ramesh said. “For developing countries it’s livelihood issues, for developed countries, lifestyle issues.” Almost 120 Leaders Obama will be among almost 120 prime ministers, presidents and vice presidents from nations accounting for 89 percent of the world’s gross domestic product. The U.S. president’s decision to attend has been closely watched by fellow leaders, lawmakers at home and environmentalists. “It’s certainly risky for Obama to come to Copenhagen, but it would probably be even riskier for him not to attend,” said Michael Levi , senior fellow for energy and environment at the Council on Foreign Relations. “Once the Chinese premier announced that he was coming, it became almost inevitable that Obama would need to come too. The last thing the U.S. needs is for China and Europe to do a deal without it.” The U.S. has come under criticism for Obama’s offer to cut emissions about 17 percent by 2020, a target that China and other nations said was too low. The goal is tied to legislation passed by the House of Representatives in June. The Senate, preoccupied by the debate over health care, hasn’t acted. The president’s lead climate negotiator, Todd Stern , says the administration is hopeful that a U.S. climate measure will be passed early next year that allows the U.S. to make deeper cuts. Offer on Aid A more welcomed U.S. proposal aimed at thawing the talks came today from Secretary of State Hillary Clinton , who announced that the U.S. is willing to contribute to a $100 billion aid package for developing countries to curb greenhouse gases from deforestation and cope with climate change. Dan Lashof , director of the Natural Resources Defense Council’s climate center in Washington, called the offer a “major step” that raised hopes of “additional breakthroughs throughout the day and tomorrow as world leaders arrive.” Clinton, who arrived in Denmark early today and met with leaders including Chinese Premier Wen Jiabao , said she recognized the discord that’s plagued the treaty talks. “We have now reached the critical juncture in these negotiations,” she said. “I understand that the talks have been difficult.” Still, she said, failure to meet U.S. conditions on monitoring reductions would be a “deal breaker.” Measuring Carbon Fred Krupp , head of the New York-based Environmental Defense Fund, said verification is essential to ensure that leaders today don’t sign off on a “squishy” deal. “We have to measure how many tons of carbon pollution countries are putting in the air and there has to be a common way of measuring and verifying that,” he said. Obama was preceded in Denmark by six members of his Cabinet and a group of Republican and Democratic lawmakers. Representative Edward Markey , chairman of the House Select Committee on Energy Independence and Global Warming, said Obama’s appearance in Copenhagen may galvanize the stuck negotiations. “Obama’s presence here will make it clear that the United States wants to be a world leader and hopefully, the Chinese will join us in playing that role,” the Massachusetts Democrat said. To contact the reporter on this story: Kim Chipman in Copenhagen at KChipman@bloomberg.net

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Tony Prophet: A Key Private Sector Lever to Slow Climate Change: the Sustainable Supply Chain

December 15, 2009

The world’s attention is focused on Copenhagen this week. Regardless of the outcome, businesses around the world have the opportunity to begin tipping the balance to mitigate climate change. We can and should take the initiative and make a difference. Every aspect of business offers opportunity to be more sustainable and efficient — using the least amount of scarce resources and having the smallest environmental impact. We all see the long term trends of increasing hydrocarbon costs and the challenges in handling and treating potentially toxic materials. Increasingly, there’s alignment between what’s good for the environment and what’s good for business. Today, well-run companies focus on sustainability, and their results are better because of it. A powerful way companies can drive change is through the supply chain — the global network of suppliers, manufacturers and partners it works with to make and distribute its products. Optimizing a supply chain around environmental sustainability creates an effect far beyond the corporate headquarters. My employer, HP, has a global supply chain that’s more than $60 billion — one of the world’s largest. With a footprint that large, even modest improvements can have substantial impact. But more importantly, corporations of any size can make a proportional difference by focusing on three key strategies: Efficiency, Transparency and Collaboration. Efficiency While there isn’t a generally agreed metric to measure the overall efficiency of a business, carbon footprint is becoming a proxy for the efficiency of an organization and its impact on the environment. Measuring and reducing carbon footprints will naturally lead businesses to increase their efficiency and eliminate waste. The carbon footprint associated with the materials, manufacturing and distribution services HP directly procures is about 5.3 million metric tons of CO2 per year. We’re focused on reducing it in a number of ways, starting with greater efficiency. For instance, adjusting shipping and distribution modes can offer real opportunities to lower CO2 emissions. The strategies don’t have to be complex. At HP, we typically ship our products by air or ocean to regional distribution centers, and then by truck or rail to their final destinations. More and more, we are converting shipments from air freight to ocean freight — reducing greenhouse gas emissions. Going by ocean produces only about 1/60th of the CO2 equivalent of air transport. We’ve also worked closely with the US Environmental Protection Agency to establish the SmartWay requirements for efficient truck transport. Today, 100 percent of our US truck carriers are EPA SmartWay certified. Supply operations impact the entire product life cycle from sourcing raw materials to recycling and reuse. Responsible mining practices are a key raw material lever – together, we need to do more here. In addition, a product’s “end of life” is also a key window to reduce environmental impact by reclaiming important input materials and life cycle energy. For that reason, HP has worked to recover and process about 1.7 billion pounds of electronic products since 1987— and we are on our way to accomplishing our goal to recover 2 billion pounds by the end of 2010. Operational efficiency benefits every stakeholder in the chain, all the way to the customer. If you’re not efficient you can’t be sustainable or in the long term, profitable. Transparency In order to bring about positive change, the private sector must also be transparent and open. More and more, customers insist on buying from companies that they trust to be environmentally responsible. Being held publicly accountable for progress toward goals — as well as your setbacks — is a key ingredient to success. That’s why HP has been reporting through the Carbon Disclosure Project since its inception and verifying carbon emissions from our facilities based on the Greenhouse Gas Protocol. In 2008, HP became the first major IT company to publish aggregate supply chain emissions, including those of our first-tier suppliers. Like many others in our industry, HP’s supply chain includes numerous 3rd party suppliers and partners. It’s hard to be held accountable when the elements of your supply chain are a closely guarded secret. That’s why HP took the unusual step in 2008 of disclosing our top 100 suppliers — we hope others in our industry follow that lead. Collaboration Like many things in business, the greatest leverage in our sustainability efforts is coming from collaboration. The multiplier effect of an entire ecosystem working towards a common goal is clearly more effective than any one company working alone. We are coming together, sharing innovations and developing standards. Efforts like the Electronics Industry Citizenship Coalition (EICC), which HP helped found in 2004, foster responsible management and operational practices in the areas of labor, ethics, environment, worker’s health and safety across the electronics supply chain. Ninety-eight percent of HP’s first-tier suppliers have agreed to adopt the EICC’s code of conduct, resulting in higher adoption rates of social and environmental policies worldwide. Further, the EICC has established the first industry-wide tool for tracking supply chain carbon emissions. Others are doing very promising work in this area, too. For example, we are working with Walmart and The Sustainability Consortium on a sustainability index for consumer products. This voluntary system – transparent and based on open standards – has the potential to stimulate competition and spark innovation across a wide range of consumer industries. Together, business leaders should work with standards organizations, governments and regulatory authorities to establish clear goals — and new ways of collaborating to minimize impacts to our environment. Companies across many industries are making a difference. We encourage others to join and extend the effort to slow the changes in our climate.

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China Sets First Target to Slow CO2 Emissions as U.S. Offers 17% Reduction

November 26, 2009

By Bloomberg News Nov. 26 (Bloomberg) — China, the world’s biggest polluter, set its first target aimed at slowing the growth of carbon dioxide emissions, less than two weeks before global leaders meet to negotiate a new climate change treaty. China’s announcement comes a day after the United States offered to cut emissions by about 17 percent in the coming decade. China will cut output of carbon per unit of gross domestic product by between 40 percent and 45 percent by 2020 compared with 2005 levels, according to a statement from the State Council, or cabinet, issued in Beijing today. Given the “magnitude of the climate change crisis, China needs stronger measures,” said Ailun Yang, a Beijing-based campaigner for Greenpeace China. Still, “this is a significant announcement at a very important point in time” and “another challenge to the industrialized world,” she said. The target gives the world’s fastest-growing major economy new negotiating points heading into the Copenhagen conference starting Dec. 7. Premier Wen Jiabao and U.S. President Barack Obama are among at least 66 global leaders who will seek to reach agreement on a framework for a final accord to replace the 1997 Kyoto Protocol, which expires in 2012. Negotiations leading up to the summit have been stymied as industrialized nations and developing countries disagreed on issues such as emissions-reduction targets and how much financial help rich nations should provide to poor ones. “The United States is the biggest developed country in the world, so it should shoulder its historic responsibilities and obligations suitable to its national development level,” Chinese Foreign Ministry Spokesman Qin Gang told reporters in Beijing today. Legislation Stalled China and India have said industrialized countries must be willing to cut their carbon output 40 percent from 1990 levels by 2020 if they expect poorer nations to agree to long-term reduction goals. The U.S. will be offering cuts “in the range of 17 percent” from 2005 levels by 2020, Carol Browner , Obama’s top adviser on energy and the environment, told reporters yesterday. That also marked the first time the U.S. has offered such a target. U.S. legislation backed by Obama to cut greenhouse gases and establish a market for the trading of pollution allowances passed the House in June and then stalled in the Senate. China’s targets do not mean emissions will fall, only that their growth may slow. China’s economy has more than quadrupled since 2000 to $4.3 trillion and if growth continues at that pace the country’s carbon pollution will also continue to grow. Unfair Targets President Hu Jintao in September first pledged to cut China’s so-called carbon intensity, or the amount of the pollutant emitted per unit of economic growth, by a “notable margin.” At the time, Hu didn’t announce specific targets. China has resisted calls for it to cut its carbon output, saying such measures are unfair for a developing country to undertake. Yu Qingtai, a climate-change negotiator with China’s Foreign Ministry, told reporters yesterday that rich countries such as the U.S., Japan and Germany are responsible for 80 percent of the carbon-dioxide pollution now in the atmosphere. Instead, China is pushing the development of alternative energy such as solar and wind, with a goal of generating 15 percent of all electricity from such sources by 2020. The world’s biggest photovoltaic solar plant, to be built by Tempe, Arizona-based First Solar Inc ., is set to break ground next year in Inner Mongolia. China is also working to increase energy efficiency. China also plans to increase its forest cover by 40 million hectares by 2020, which amounts to planting 60 billion trees, Yu Qingtai, a Chinese Foreign Ministry climate-change negotiator, told reporters on Nov. 25. To contact the reporter on this story: Ying Wang in Beijing at ywang30@bloomberg.net ; Baizhen Chua in Beijing at bchua14@bloomberg.net ; Michael Forsythe in Beijing at mforsythe@bloomberg.net .

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Bauxite Resources appoints Non-Executive Chairman Barry Carbon

November 16, 2009

Bauxite Resources appoints Non-Executive Chairman Barry Carbon

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Jonathan A. Schein: Airline Industry Posts Green Gains

November 2, 2009

It appears that addressing the airline industry’s approach to green causes a lot of blowback.

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UNFCCC To Meet World’s Carbon Buyers And Sellers In China

October 26, 2009

UNFCCC To Meet World’s Carbon Buyers And Sellers In China

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Agriculture Lobbyists Not Happy With Climate Change Legislation

October 5, 2009

The Hill reports that the agriculture lobby is troubled by aspects of the Senate climate change bill. The American Farm Bureau and the National Corn Growers Association reportedly are concerned that farmers will not qualify for carbon offset benefits laid out in the legislation — projects to remove carbon dioxide from the atmosphere. Carbon offsets could hugely benefit farmers who use farming methods to curb carbon emissions. According to the American Farm Bureau’s Web site: “America’s farmers and ranchers did not fare that well in the House-passed climate change bill and they fare even worse in the Senate bill,” said American Farm Bureau Federation President Bob Stallman. “There are few benefits and even greater costs to agriculture and the American public.” Farming groups are also concerned that the Environmental Protection Agency will be overseeing the carbon offset program — many in the industry, including the National Corn Growers Association, would prefer it if the Department of Agriculture was in charge. Senators Barbara Boxer and John Kerry introduced a draft of the climate change bill last month after the House narrowly passed its version of the bill in June. The Senate’s bill aims to reduce carbon dioxide emissions by 20 percent in 2020 — the House’s version would cut emissions by 17 percent in 2020, according to the Washington Examiner.

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Les Leopold: Favoring Bankers Over Boilermakers?

September 30, 2009

Despite Wall Street’s recklessness, we still seem more comfortable with the financial sector than with manufacturing. After all, manufacturing has a two hundred year history of occupational disease and environmental destruction. It produces poisons we don’t want, consumer goods we don’t need, and it uses more energy than we can afford to burn. For many, the industrial revolution looks like an unmitigated environmental disaster. So if manufacturing runs away to far off lands, few are likely to shed tears — unless we work in these industries. In contrast, financial products are relatively clean. Yes, its offices are too large and they use too much paper. And certainly the sector pays its executives far too much. But it’s a lot cleaner than a steel mill and leaves a much smaller carbon footprint. Also, venture capitalists are moving money into renewable energy, green chemistry and a wide variety of green manufacturing that might actually help us develop a more sustainable economy. A sizable portion of our financial leaders are conservationists. They donate to environmental groups to help preserve our watersheds and streams. They own large tracts of land near national parks and forests that help protect our land, water and wildlife. Many of the wealthiest Wall Street elites would claim to share our deepest concerns about global warming and sustainability. Industrial workers, however, can get really nasty when environmental regulations threaten their livelihoods. Although they like to hunt and fish, workers who see their jobs threatened seem more than ready to chop down virgin trees, knock off the tops of mountains, and pump CO2 all over the globe. Sure, we don’t like the fact that Wall Street’s fantasy finance casino crashed the economy, but even that has a positive environmental angle. The collapse has slowed down the world economy, slowed down production and transportation, and therefore has slowed down the output of carbon. And besides, the manufacturing sector accounts for fewer and fewer jobs each year, so why should we give a damn about it? Because no society can endure for long if it fails to create decent jobs for all its people. Right now, more than 29 million Americans are unemployed or forced into part-time work. They need jobs that are at harmony with nature. Creating that kind of work, I believe, will require a monumental commitment, just like the Manhattan Project, the Marshall Plan or the moon shot. But first we need to understand how we got into this fix. Over the past thirty years we’ve engaged in a gigantic experiment with three major components — the deregulation of financial markets, the globalization of production, and “tax reforms” which allowed wealth to accumulate in the top fraction of one percent. This was supposed to unleash entrepreneurial initiative and raise all boats. But it didn’t work according to plan. Industry began relocating all over the world. The financial sector grew rapidly, and an enormous pot of wealth accumulated in the hands of a few. Meanwhile average wages (after adjusting for inflation) declined by 18 percent while our industrial core was shipped overseas. The super-rich actually had so much capital that they ran out of real-world investments. That’s when their money flowed into the newly deregulated fantasy finance casino. Bubbles inflated — from the savings and loan fiasco to the dot.com crash to the housing hurricane. This grand experiment in deregulated capitalism failed miserably. We were moments away from the Great Depression II only one year ago. (For a full description see The Looting of America .) To stop a full scale depression we poured trillions into Wall Street, but little has changed as our financial powerhouses, pumped up with taxpayer largess, are doing all they can to stop regulations on fantasy derivatives and caps on outrageous salaries. Nothing is preventing Wall Street from doing what it does best: seek out and over-inflate financial bubbles, skimming billions of dollars in fees all along the way. (See One Year After Lehman: Another Crash Coming? ) In short we face both an economic and an environmental crisis. What do we do? Obviously, we have to learn to live within the constraints of our natural environment. But we also must fulfill the most fundamental employment needs of our social environment. That is why we should embark on a modern day moon shot to lead the world forward in renewable energy and other green technologies. This would require massive public investments in research and development, and in ensuring the adoption of the best technologies — not because the private system can’t, in principle, do those things, but because in reality it can’t do them as fast as they need to be done. We’re talking several hundred billion a year for at least twenty years. And if we funded it by taxing Wall Street and the super-rich we could tackle two problems at once: make real progress on global warming and prevent the financial sector from wrecking the economy again. I believe the fairest ways to secure funding is through windfall profits taxes on Wall Street profits, a small transaction tax on large and speculative financial transactions, and a very steep progressive income tax on the super-rich. (I’m an Eisenhower radical. In those days the marginal tax rate on millionaires was 90 percent.) This would move the money from the fantasy finance casino to the real economy and it could lead to a rejuvenated economy based on renewable energy and pollution prevention. Such a massive commitment also would require border adjustment taxes on carbon to make sure the new green industries don’t flee to nations with lower standards. It makes no sense to import windmills from countries whose steel plants put out three times the carbon as ours. It makes no sense to use up fossil fuels to ship green goods all over the globe, when those goods could be made much closer to their point of final use. I know it’s a very tall order to revamp Wall Street and to invent a green economy at the same time. But both the employment and environmental problems pose immanent threats. No free-market magic will make them disappear. It requires our human intervention. Let’s hope we have the wisdom and will to get going — now. Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It , Chelsea Green Publishing, June 2009.

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Kindles Are Friendlier to Environment Than Print Books: Chart of the Day

September 2, 2009

By Joseph Galante Sept. 2 (Bloomberg) — Amazon.com Inc. ’s Kindle and rival electronic reading devices will do more to curb pollution from the production of printed books than publishing industry efforts such as recycling, according to Cleantech Group LLC . The CHART OF THE DAY shows that by 2012 the carbon-emission benefits from using e-readers will outweigh by more than twofold the environmental damage caused by manufacturing, electricity and battery disposal associated with the devices. The e-reader savings eclipse attempts by the publishing industry to reduce its damage to the environment through cleaner manufacturing processes and more recycling programs, the San Francisco-based research and consulting firm said in a report. “E-readers will have a staggering impact on improving the sustainability and environmental impact on one of the world’s most polluting industries: the publishing of books, newspapers and magazines,” the report said. “The carbon emitted in the lifecycle of a Kindle is fully offset after the first year of use.” More than 14 million e-readers will be sold by 2012, up from 1 million now, Cleantech said, basing its statistics on its own analysis as well as on outside studies. A year after purchasing a Kindle, the annual net carbon savings are equal to the publishing and distribution of 22.5 printed books, the group said. To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

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Goldman, JPMorgan Face Carbon Market Curbs Under U.S. Senators’ Proposals

August 13, 2009

By Jim Efstathiou Jr. and Daniel Whitten Aug. 13 (Bloomberg) — Goldman Sachs Group Inc. and JPMorgan Chase & Co. would be barred from a planned U.S. carbon- emissions market or face trading restrictions under proposals by Democratic senators crafting climate change legislation. At least nine members of the majority party say speculation by Wall Street banks may cause excessive price swings in the cap-and-trade system of pollution allowances at the center of President Barack Obama ’s plan to curb global warming. The senators say they may limit participation to polluters needing permits, ban derivatives or impose stricter regulations than exist in today’s energy markets. “The volatility that has existed in the oil market is exactly what we don’t want to happen in carbon markets,” said Senator Maria Cantwell , a Democrat from Washington state who wants to exclude financial companies from the carbon market. “The banks contributed to that, and the banks continue to contribute to it.” Debate over the banks’ role may thwart Obama’s efforts to get the 60 votes needed in the 100-member Senate to approve climate legislation. There are 60 Democrats in the Senate, and Republicans largely oppose a similar House bill passed in June. Most senators favor letting financial companies trade carbon-dioxide permits, said Kevin Book , a Washington-based managing director for ClearView Energy Partners LLC, which does energy analysis. House Bill “If you take away the financial market component, you’ve stolen somewhere between four and six votes,” Book said in an interview. Senate Majority Leader Harry Reid , a Nevada Democrat, has said committees should finish work on their portions of the legislation by Sept. 28. House Democrats won passage of a climate bill by giving away 85 percent of the initial pollution allowances to energy producers and users. The House version would add controls over derivatives both in the new carbon market and in existing trading of energy commodities, such as limiting trading positions and increasing reporting requirements. The bill would let banks trade in carbon markets. The Commodity Futures Trading Commission is considering new restrictions on dealers in existing energy markets that may also apply to carbon trading. The commission’s general counsel maintains it can act to limit speculation without action by Congress. The Obama administration sent Congress draft legislation this week that would place new limits on derivatives trading. Markets ‘Will Die’ Goldman Sachs spokesman Michael Duvally said the company had no comment. The bank “will continue to act as a market maker in emissions trading,” including carbon dioxide, according to an environmental policy paper it issued. Markets will have inadequate liquidity without bank participation, Bill Winters , co-chief executive officer of JPMorgan’s investment bank, said at a July 23 press conference in New York. Carbon markets “will die, and the temperature on the planet will go up by a couple of degrees, more than it would have otherwise, and we’ll be really sorry about it,” Winters said. Lawmakers seeking restrictions on carbon markets say speculators contributed to a rise in energy prices last year, when crude oil futures reached a record $147.27 a barrel. “There will be no derivatives, there will be no credit swaps,” said Senator John Kerry , a Massachusetts Democrat, in a July 29 speech at the National Press Club in Washington. “There will be a tighter regulatory control on this so that it will be impossible to play any of those kinds of games.” Goldman Sachs Earnings Derivatives are financial contracts used to hedge against changes in the price of underlying assets such as stocks and commodities. Credit-default swaps are derivatives created primarily to protect lenders and bondholders from company defaults. Attitudes in Congress have been shaped by banks’ role in the financial crisis and the Treasury bailouts they received, said Senator Amy Klobuchar . “We always have skepticism of the investment banks and what happened on Wall Street, and that’s why we need to have strong oversight,” said Klobuchar, a Minnesota Democrat who favors tighter supervision of banks. Goldman Sachs, the bank that makes the most money from commodities, fixed-income and currency trading, said last month it earned a record $3.44 billion in the second quarter. It set aside $11.4 billion to pay salaries, bonuses and benefits in the first six months of the year, enough to pay each employee $386,429 for that period. The company, JPMorgan and other banks returned billions of dollars in U.S. aid in June. ‘Worst Possible Outcome’ Limiting the market would make it more difficult for utilities and other fossil-fuel users to find trading partners, said Abyd Karmali , the global head of carbon markets at Bank of America Merrill Lynch . “The worst possible outcome is a cap-and-trade bill which is cap-and-trade in name only,” Karmali said in a phone interview from London. “What those of us in the carbon market are hoping is that some of the excessive and burdensome market restrictions that are being proposed will fall away.” Cantwell, the Washington senator, would require all trading to be executed through exchanges rather than over the counter and would allow only polluters to trade emissions allowances. Over-the-counter trades accounted for 46 percent of the European Union’s emissions trading market in the three months through June, according to data by New Energy Finance , a London- based research group. ‘A Field Day’ Senator Byron Dorgan , a North Dakota Democrat, said he will oppose creating any carbon-trading market. “It won’t be very long before we have derivatives, we’ll have swaps, we’ll have synthetic swaps, you name it, we’ll have all of them and it’ll be a field day for speculation,” Dorgan said July 17 on the Senate floor. “There is a growing faction of senators demonizing the potential role Wall Street will have in pollution derivatives markets, and with good reason,” said Tyson Slocum , energy program director for Public Citizen, a Washington-based advocacy group. “The odds are that the Senate simply has too many hurdles to overcome to get this bill done this year.” To contact the reporters on this story: Jim Efstathiou Jr . in New York at jefstathiou@bloomberg.net ; Daniel Whitten in Washington at dwhitten2@bloomberg.net .

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