Friday, 27 June 2008

Landowners feel power of the green pound as renewables firms seek sites for turbines

Picture: Ian Rutherford

Published Date: 27 June 2008
By Jenny Haworth
POWER companies are targeting landowners with the promise of tens of thousands of pounds – and the chance to make millions more – in return for the right to build wind turbines on their land.
In the race to find new sites for wind farms, energy firms are writing to farmers and estate owners offering them at least £10,500 a year for each turbine built on their land.The developers are urging estate owners to sign deals giving them exclusive rights to build wind farms, with about £1,000 usually offered as an incentive.If planning permission is subsequently granted, farmers could pocket millions of pounds in rent payments.Scottish Power Renewables has been offering farmers £10,500 a year for each turbine for 25 years. This works out at £2.6 million for any landowner who takes ten turbines.One industry insider said: "It's competitive because there's only a limited amount of land that is suitable."He said all developers were trying to sign agreements with farmers before the available land ran out.Alasdair Laing, owner of Logie Estate in Morayshire, has been approached three times by separate companies and is considering signing an agreement with one of the firms."The income from these things is extremely attractive," he said."It will often be quite a difficult decision because there are controversial things about windmills, as well as good things. "I question some of the bases of some of the arguments for wind farms. There is still very much an ongoing debate on just how green they are. My personal jury is out."But in terms of bringing money into what are otherwise fragile economies it is good news."David Johnstone, the owner of Annadale Estate in Lockerbie, has signed an agreement with Renewable Energy Systems for four turbines to be built on his land.If planning permission is granted it will earn him tens of thousands of pounds a year.He said: "I think it's a good business opportunity. Wind turbines are one of those things that people love or loathe and there doesn't seem to be any middle ground."I'm very supportive of renewable energy. We are looking at putting in biomass heating on the estate as well as microrenewables and small-scale hydro."Simon McMillan, spokesman for Scottish Power Renewables, said: "It's common practice and we are working with landowners right across Scotland."He said to meet the government's renewable energy targets more wind farms would be needed, adding: "The only realistic way we are going to hit the targets is by continuing to develop onshore wind, which currently is the most economically proven form of renewables."What we are offering landowners is the going market rate for these projects."He said before the firm approaches a landowner it looks at criteria such as wind conditions at the site and its proximity to the national grid.A spokesman for the National Farmers' Union Scotland said: "We will support our members in their individual business decisions, whether that be in developing their land for renewables projects or whether that be setting up a farm shop within their steading. "Commercial wind farms do provide an opportunity for some of our members but the decision as to whether or not to proceed lies entirely with them."Scotland set for boom in wind farmsA HUGE rise in the number of wind farms in mainland Scotland is proposed in UK government plans to reduce dependency on oil and gas.Ministers say an extra 7,000 turbines may be needed by 2020 if more than a third of Britain's electricity is to be generated from renewables.Of these, 4,000 will be built on the UK mainland and 3,000 at sea. The official consultation document states: "Subject to planning permission, we would expect that a large proportion of onshore wind development will take place in Scotland."This threatens to put Westminster at loggerheads with Holyrood, which in April turned down an application for 181 turbines on Lewis.There are also fears that it could mean years of extra costs, with the subsidy paid to encourage "green" energy development already adding about £60 a year to bills.Dr Sue Ion, vice-president of the Royal Academy of Engineering, said the challenge of developing offshore power was "immense".

UK launches plan for 7,000 wind turbines

By Fiona Harvey and Jim Pickard
Published: June 26 2008 10:37 Plans to erect 7,000 new wind turbines will be unveiled by the government on Thursday but industry experts are concerned they have not been thought through.
The plans are the centrepiece of the government’s renewable energy consultation, setting out the means to meet the UK’s obligations under European Union proposals to generate 20 per cent of energy from renewable sources by 2020.
As the target includes transport and heating, the UK would have to generate about a third of electricity from renewables by 2020, a leap from the 5 per cent generated from renewables today. The government estimates £100bn investment, mostly from the private sector, will be required.
But some experts cast doubt on the government’s proposals. Sue Ion, vice president of the Royal Academy of Engineering, said the engineering problems had been “totally underestimated if accounted for at all”.
She asked: “How on earth can you present a plan which is as ambitious as the one laid out without any thought as to how you will tackle the project management, supply chain and deployment challenges?”
Mark Williamson, director of innovations at the government-funded Carbon Trust, said: “The key question is can we deliver this major dash for renewables in less than 12 years and at the lowest cost to the consumer?”
Local opposition is also likely to be a serious obstacle. The British Wind Energy Association said wind farms with nearly 10GW of capacity - four times the amount built so far - were awaiting planning decisions, most stalled by local objections.
The government’s drive to increase the energy generated by renewables will generate 160,000 new jobs, the prime minister will announce today.
But as ministers prepared to unveil a consultation document on renewables today, the Department for Business admitted many of these would be abroad.
The UK has little wind turbine manufacturing capacity, in contrast to countries such as China, Germany, India, the US and Denmark, so the orders for wind turbines will go overseas. The jobs created in the UK are likely to be in erecting and maintaining the turbines and manufacturing some components.
Last night the Department for Business said it could not estimate how many of the jobs created would be in the UK, but said: “We will try to make it as many as possible.”
DBERR said 27,000 of the new jobs were forecast to be in installing and maintaining microgeneration, such as solar panels, and farming and food processing jobs associated with biofuels.
The government will also leave open the possibility of meeting some of its EU targets by buying renewable energy abroad. Under the EU proposals, countries can buy credits from investing in renewable energy projects in other EU countries, where they may be cheaper.
Copyright The Financial Times Limited 2008

Rising bills will pay for low-carbon economy

· Industry secretary reveals cost of green revolution · Pledge to shield poorest people from fuel poverty
Terry Macalister
The Guardian,
Friday June 27, 2008

Renewable energy strategy could see soaring household bills
Household gas bills could rise by up to 37% and electricity costs by 13% as the government lines up consumers to pay for a green revolution that would move Britain from oil dependence to a low carbon economy.
A renewable energy strategy outlined by ministers yesterday signalled that energy bills could soar by hundreds of pounds, and could push over 2 million extra people into fuel poverty.
John Hutton, the industry secretary, said proceeding with business as usual was not an option in the face of climate change, and added that the price of change was "really quite modest". But he promised special measures to ensure the poorest sections of the community were not hit hardest: "We have got to provide help, if we can, to low-income families particularly those with children, to meet the rising cost of energy."
Surcharges on gas and electricity are expected to reach a peak in 2020 under the government plans, as consumers help pay for £100bn investment by the private sector in wind turbines and solar panels, in an attempt to meet EU targets of producing 15% of all UK energy from renewable sources. The first government estimates of the cost to the consumer are published at a time when British Gas customers could face price rises of a further 30-40% later this summer as a result of a steep increase in wholesale gas costs.
Energywatch, the consumer group, said that every 1% increase in power bills brought 40,000 people into fuel poverty, defined as those who spend more than 10% of their income on lighting and heating. The current number is 4.5 million.
"We are very worried about the impact of this [renewable strategy]," said Patricia Ockenden, a spokeswoman for energywatch. "Most of our work is already focused on the fuel poor and the existing cost of energy for the wider population."
Friends of the Earth supported the government's drive to use far more renewable power, but said loading the cost onto the consumer was misguided. "It is politically stupid and socially incompetent to proceed down this path. The government needs a quantum leap in energy efficiency to show there is no contradiction between more renewables and tackling fuel poverty," said campaigner Dave Timms.
Higher fuel costs would not be felt until after 2010 and the main increases would come from 2015 onwards, according to the government's renewable energy consultation paper. "In 2020, as a result of the new incentives, domestic consumer bills are expected to increase 10-13% in electricity and 18-37% for gas bills," it says.
The government said the cost of building new green infrastructure, and therefore the price to the consumer, had been based on an oil price of $70 per barrel. If the price was $150, this would knock 35-40% off the relative cost of renewables. The price of oil is currently in the mid-$130s.
Hutton said he was sure that the City was ready to help stump up the £100bn of new investment needed, saying it would be "bonkers" not to take money from sovereign wealth funds in nations such as Saudi Arabia, as Gordon Brown had called for on a trip to Jeddah last weekend.
The industry secretary said there was no point worrying about whether the green revolution should have been funded by now-spent North Sea revenues. He intended to look ahead rather than staring into the "rear-view mirror".
The prospect of erecting 4,000 new wind turbines across rural Britain provoked criticism. "Climate change is the overwhelming threat to the environment. But it would be madness to desecrate the countryside, one of the nation's most valued environmental assets, in tackling it," said Neil Sinden, of the Campaign to Protect Rural England.
The National Trust, Britain's biggest private landowner, warned that new planning rules should not be used to override local objections. "Securing public consent for such far-reaching changes to our lives and our landscapes will demand greater respect for the environment and communities," said the trust's Tony Burton.
Another strand of criticism resulted from weariness at further consultation. Ben Warren, a director in the renewables group at Ernst and Young said: "The time for talking is surely over. Some tough decisions need to be made."
The Conservative shadow secretary for business, Alan Duncan, said: "It's astonishing that what is billed as a 'strategy' is just another consultation - more delays after a decade of dithering. This hesitation over critical decisions has Gordon Brown's fingerprints all over it."

Plants climb to evade warming

By Clive Cookson
Published: June 27 2008 03:00Plants are climbing to higher ground to escape the effects of global warming. An extensive study in mountainous regions of France shows that forest plants are moving their range upwards at an average rate of 29 metres in altitude per decade.
There is already much evidence of plants and animals moving to higher latitudes as temperatures rise. The French study, published today in the journal Science, shows that animals move upwards too, when the terrain permits.
Jonathan Lenoir and colleagues at AgroParisTech compared the distribution of 171 plant species between 1905-1985 and 1986-2005 on six mountain ranges.
The researchers found wide variation in the rate at which plants are climbing upwards, leading to fears that global warming will disrupt ecological networks of interdependent species.
Copyright The Financial Times Limited 2008

Greenhouse gas plan irks airlines

By Nikki Tait in Brussels
Published: June 27 2008 01:01
A proposed EU deal, which could force airlines to start paying for greenhouse gas emissions in four years’ time, was on Thursday described by industry operators as “unacceptable”.
The provisional agreement is understood to have been reached among lawmakers in Brussels but will still require approval from member states and the European Parliament over the next few weeks.
It would cover airlines flying routes within the EU as well as those operating internationally which landed or took off within the bloc.
These operators would face a cap on emissions and have to buy some of their carbon permits through the emissions trading scheme.
According to one person close to the situation Thursday, the quota will be set at 97 per cent of average historic emission levels when airlines first join the scheme, although the percentage will reduce over time. Airlines will have to buy 15 per cent of the quota at auction.
Sources said the agreement also meant aviation would be included in the ETS from 2012, instead of 2011 for some flights as previously proposed.
The news brought a strong response from industry organsations. “Fifteen per cent auctioning in 2012 is unaffordable and unacceptable for our airlines given today’s high fuel prices and weakening demand,” said Sylviane Lust, director-general of the International Air Carrier Association, which represents leisure carriers like Air Berlin and First Choice.
The deal is now due to be put to top diplomats from EU member states – where it is believed to have a good chance of being accepted – and could reach a plenary vote in the European Parliament early next month.
The EU has been anxious to expand emissions trading to curb CO2 discharges. But any deal that includes non-European airlines is likely to run into strong opposition internationally.
Copyright The Financial Times Limited 2008

Scottish energy firms to bring more hydro power to the people

Severin Carrell, Scotland correspondent
The Guardian,
Friday June 27, 2008

Scotland is planning a renewable energy revolution that would trump the ambitious strategy announced yesterday in London by Gordon Brown - and without building any nuclear power stations.
Brown's UK-wide strategy sets out how the nation as a whole could reach a target of 30-35% of electricity being generated from renewables by 2020. But ministers in the devolved government in Edinburgh said Scotland will reach this target within three years, and by 2020 would be at 50%.
To help achieve this, more than 40 years since the last big hydroelectric dams flooded glens across the Highlands, Scottish ministers, power companies and land owners plan a new wave of hydro schemes, and claim it will provide a rich source of cheap, green power.
This summer, the government-sponsored Forum for Renewable Energy Development in Scotland is expected to call for scores of hydroelectricity schemes to be built, ranging from dams in northern glens to up to 100 projects harnessing power from rivers.
Next spring, the UK's main hydroelectricity company, Scottish and Southern Energy, will switch on one of the largest green power plants being built in the UK - a 200MW hydro station buried in mountains at Glendoe near Loch Ness. Serviced by 10 miles of underground tunnels and a large dam, Glendoe will produce enough electricity to supply every house in Glasgow.
Four companies have been surveying the Highlands to find sites for other large hydro schemes, said Tom Douglas, a leading consultant with the engineers Mott MacDonald, and have been advised that up to a dozen hydropower stations could be built.
Separately, Scottish and Southern said it had identified three new sites in the Highlands able to generate up to 200MW in total, and is drafting plans for another new dam after Glendoe.
The hydropower will be sorely needed. Alan Ervine, professor of water engineering at Glasgow University, said rejecting new nuclear stations left ministers with a significant "black hole" to fill. Unlike English ministers, an SNP administration would not replace Hunterston B and Torness power stations once they close.
In 2006, the pair generated 26% of the 54 gigawatts of electricity Scotland produced, but SNP ministers will need to replace that, as well as hitting their 50% "green" power target, by 2020.
At present 12% of Scotland's electricity is generated by the 70 or so existing hydroelectric dams.
Ervine believes this could nearly double, with dams capable of lasting for 100 years. "Hydro is a well-known technology," he said. "It's something we know how to do; we can power it up and do it effectively in Scotland, compared to the risk-taking which is involved with wind, wave and tidal turbines."
Despite the intention to expand, power from the growing number of large new onshore windfarms will soon outstrip hydro. On Tuesday, ministers authorised two large windfarms able to supply 117,000 homes.
But in many areas of the Highlands, such as Perthshire, hydro is being embraced by anti-windfarm campaigners who are angry at the march of onshore wind turbines across the countryside.
Richard Barclay, a farmer and landowner in Perthshire, is installing a 1.4MW mini-hydro station on his local river. Enough to supply about 1,000 houses in nearby Kinloch Rannoch, it is a "run of river" scheme where the power plant is buried, using river water diverted via a weir and underground pipes, returning it downstream.
"It will fit very well into our local environment," he said.
"Windfarms are much more controversial. Their visual impact is huge and the run of river scheme has no visual impact essentially because it's underground. I haven't met anybody who has a problem with mini-hydro."
But other tensions are emerging. Strict European Union water quality and environment regulations make it more difficult to build hydroelectric schemes because of the potential damage to fish stocks, river habitats and water sports. But Martin Marsden, head of water policy at the Scottish Environmental Protection Agency, which authorises hydro stations, said: "We recognise climate change is the biggest threat to the world, and we've no intention of undermining hydro."
Jason Ormiston, chief executive of the Scottish Renewables Forum, said it was "entirely false" for anti-wind campaigners to believe that hydropower can replace onshore wind. "We have to be able to develop good projects whatever the technology as quickly as possible. We need hydro, we need wind, we need biomass, we will hopefully have wave and tidal," he said.
Jim Mather, the Scottish energy minister, has described himself as "desperately enthusiastic" about hydro as part of a mix of energy sources. He said: "This is us as systems thinkers: to optimise the entire system called Scotland and not just maximise any one source of supply.
"We're interested in developing a diverse renewable mix and Scotland has won the lottery of life in terms of on-shore wind, offshore wind, wave, solar, biomass, clean coal technologies, hydro and carbon storage."

Virgin’s green fund gets first $199m

By Chris Hughes in London
Published: June 27 2008 00:04 Last updated: June 27 2008 00:04
Wolverhampton City Council and Calpers, the influential Californian pension fund, have emerged as some of the maiden investors in Virgin Group’s first green investment fund.
Sir Richard Branson, Virgin’s founder, pledged to invest $3bn in alternative energy projects over a decade in September 2006 and last year set up the Virgin Green Fund (VGF) as a way of making investments in renewable energy and resource efficiency.
VGF has raised $199m from Virgin and institutional investors in its first close, according to a filing with the US Securities & Exchange Commission. The fund-raising followed a global roadshow and a second round of investment, targeting a similar size of funds, is expected. Virgin has a minority stake in the VGF management company.
The presence of a UK local authority pension fund among VGF’s investors comes as British pension funds are allocating an increasing proportion of their assets to so-called alternative investments.
Calpers’ investment has been made through PCG Clean Energy & Technology Fund, a California-based private equity group. Other investors in the VGF fund include Macquarie Bank’s Clean Technology Fund.
VGF focuses on late-stage projects, making it more similar to a private equity firm than to venture capital. It is headed by Shai Weiss, who joined Virgin from NTL following the cable group’s merger with Virgin Mobile.
The fund used backing from Virgin to start taking stakes in companies even before it had completed its first capital-raising. It has seven investments.
VGF is close to finalising a deal worth more than $40m to buy DuraTherm, a Texas-based petroleum and metal recycling business, from its founding shareholders. The transaction would mark a rare leveraged buy-out for the clean technology sector.
The deal would be in partnership with Masdar Clean Tech Fund, which has $250m under management.
Masdar’s backers include Credit Suisse, the Swiss bank, Siemens, the German engineering group, and Abu Dhabi’s alternative energy fund. Kevin Trant, formerly a manager at Siemens, is to move to Dura­Therm as chief executive.
Copyright The Financial Times Limited 2008

Industry lukewarm on PM's green power plansBy Russell Hotten

Last Updated: 12:30am BST 27/06/2008
British industry has given a cautious response to the Prime Minister's alternative energy strategy, which he claimed will create thousands of new business opportunities and 160,000 jobs. Gordon Brown said it would cost companies about £100m over the next 12 years, as Britain moved to clean up the environment and generate more power from renewable energy sources such as wind and power. But the price would be worth it, he said. Measures announced yesterday are designed to help Britain meet European Union targets that the country should produce 15pc of its energy from renewable sources by 2020, compared with less than 4pc now. Mr Brown wants to encourage utility companies to build 7,000 wind turbines, turning the "North Sea and other coastal waters into the equivalent for wind power of what the Gulf of Arabia is for the oil industry," he said. He predicted "a reduction in energy bills for consumers" and "the creation of hundreds, indeed thousands, of new business opportunities.
More on utilities
"By 2020 we will have installed around 14 gigawatts - that is around 3,000 offshore wind turbines, meeting up to 50pc of our renewable electricity... The North Sea has now passed its peak of oil and gas supply - but it will now embark on a new transformation into the global centre of the offshore wind industry."
But the employers' organisation, the CBI, was less optimistic. John Cridland, the CBI's deputy director-general, said: "Some of the proposals do make good sense, such as the focus on energy efficiency, but we are concerned over whether the very high level of renewables the document envisages is feasible and cost effective.
"As today's document explains, the target is likely to cost the UK an additional £6bn a year, much of which will fall on businesses and households."
Martin Temple, chairman of the EEF manufacturers' organisation, criticised the lack of extra government money to soften the cost of a move to a low carbon economy.
"Given the extent to which other countries are ahead of the curve in developing low carbon forms of energy, it is disappointing that the Government has failed to back firm words with any significant extra funding, especially for emerging technologies," he said. "Business will be concerned by the increasing costs associated with the dash for renewables."

Brown launches "green revolution" energy plan

By Daniel Fineren Reuters
Published: June 26, 2008
LONDON: The government set out plans on Thursday for a tenfold increase in renewable energy within 12 years in a scheme welcomed for its ambition but criticised for lacking concrete policies to cut carbon emissions and reduce dependency on fossil fuels.
The government's proposals for meeting its 2020 target of getting 15 percent of energy from renewables foresees a third of electricity coming from renewables, 100 billion pounds of investment and bigger utility bills to help pay for it.
"This is a green revolution in the making... It is the most dramatic change in our energy policy since the advent of nuclear power," Prime Minister Gordon Brown said at the launch in the Tate Modern, a coal-fired power station turned art gallery. "I'm absolutely certain that this is the right course for this country."
The proposals include increasing support and removing planning obstacles for clean energy projects to get 4,000 more wind turbines erected onshore and 3,000 more at sea by 2020, while increasing help for renewable heat and microgeneration.
The government warned that the extra cost of turning Britain into low-carbon economy meant even higher energy costs for consumers, which could be partially offset by greater energy efficiency,

The country's biggest energy supplier Centrica said the plan would be costly for householders already facing rising fuel costs but argued that it was worthwhile.
"The investment needed -- 100 billion pounds on the government's own estimate which equates to around 1,600 pounds for every man, woman and child in the UK over the next decade -- is worthwhile when compared to the consequences of doing nothing," Gearoid Lane, managing director of British Gas New Energy said.
The strategy was widely but cautiously welcomed by industry observers and environmentalists encouraged by the government's broader approach but worried that another consultation was wasting time.
"While the government should be applauded for taking a more holistic view on all forms of renewable energy, another period of policy review and consultation cannot be so warmly welcomed," Ben Warren, a clean energy director at Ernst & Young said.
"The time for talking is surely over -- as we get ever nearer to 2020 some tough decisions need to be made."
Renewable Energy Association criticised the government for talking too much and doing too little, while engineering representatives warned it had underestimated the problems with building so many wind farms so quickly.
Britain gets only about 5 percent of its electricity from renewables, largely because planning and grid connection problems have stunted the growth of the industry, but turbine manufacturers are already struggling to meet rapidly growing global demand.
The government wants the nationwide expansion of renewable energy to be complimented by new nuclear power stations and "clean coal" power plants which could bury the harmful carbon emissions from them.
Environment campaign group Friends of the Earth said it was "good news that the government is now waking up to the huge untapped potential for clean energy" and that if it could back the plans with concrete policy changes coal-fired power stations should not be needed.
National Grid said the 2020 target could be achieved, if backed by the whole industry and supported by reforms set out in the Planning Bill -- which faces a vote in the Lords after getting through the Commons on Wednesday -- and a new offshore regulatory framework.
The government hopes some 160,000 jobs could be created in the renewables sector, with 100,000 more potential jobs for building and operating the new nuclear power stations that it wants private companies to build.
(Reporting by Daniel Fineren)

Brown unveils £100bn green vision

By Fiona Harvey, Environment Correspondent
Published: June 26 2008 23:23
The UK’s manufacturing sector could be revived through investment in low-carbon technologies, according to government plans unveiled on Thursday.
Gordon Brown, the prime minister, set out his vision of a “low-carbon manufacturing” sector encompassing renewable energy equipment, electric and hybrid cars, aircraft that produce less carbon than today, and “green” buildings.
Mr Brown said the government’s renewable energy strategy to build 7,000 wind turbines across the country, and expand other renewable energy, such as microgeneration, tidal and wave energy, would require £100bn of investment from the private sector and create 160,000 jobs in renewables, and more in other environmental industries. The expansion of nuclear power would create a further 100,000 jobs.
An overhaul of the manufacturing sector to focus on green technology was needed to ensure that “as many as possible” of these jobs were in the UK rather than overseas.
Mr Brown said: “Building a low-carbon economy is not just something to do with climate change. It is not just an energy security issue. It is not just part of economic policy. It is all of these things and more. It is nothing less than the basis for our future prosperity.”
The new focus marks a sharp change in the government’s industrial policy, from a laisser-faire attitude towards where in the world goods are manufactured, to regarding low-carbon technology as a strategic sector.
At present, little renew-able energy equipment is manufactured in the UK but some components of such products are. China, Denmark, Germany, India and the US are all centres of wind turbine production. Experts blame problems with the UK’s renewable energy subsidy system.
Andrew Lee, general manager of Sharp Solar which operates one of the few solar panel production plants in the UK, said the simplest way for the government to encourage more manufact-urers to come here was to reform subsidies.
The plant, employing more than 500 people, produces 220MW of solar panels a year. But only 2 per cent – or one week of production – are sold in the UK. The rest are exported.
Mr Lee told the Financial Times: “Our biggest weakness at the moment is that we can’t sell our product in the UK [because the subsidies are too low to encourage consumers to buy solar panels].”
Other experts cast doubt on whether the government could encourage big manufacturers to move here.
Steve Radley, chief economist at the EEF, the manufacturers’ organisation, said: “Large manufacturers have already located elsewhere and they are unlikely to move.”
And Jonathan Johns, head of renewables at Ernst & Young, said China would soon produce more wind turbines than the whole of Europe.
He added, however, that the UK could become a manufacturing centre for other renewable energies, such as new types of solar panels, fuel cells, combined heat and power, ground source heat pumps, biomass equipment, and the design of new technologies and engineering specialised components.
Mr Brown said the renew-able energy proposals would not result in higher bills for consumers and businesses in the short term but the government has estimated bills would rise after 2015.
John Hutton, secretary for business, said he foresaw no difficulty in raising the £100bn investment needed from the private sector. “Financial institutions are saying there is no shortage of potential investment. The issue is that there is competition for investment and investors will go to where the best returns can be made. That’s where we have to close the gap with [other countries].”
Copyright The Financial Times Limited 2008

Cost of tackling global climate change has doubled, warns Stern

Lord Stern believes £28bn may be need to tackle climate change.

The author of an influential British government report arguing the worldneeded to spend just 1% of its wealth tackling climate change has warnedthat the cost of averting disaster has now doubled.

Lord Stern of Brentford made headlines in 2006 with a report that saidcountries needed to spend 1% of their GDP to stop greenhouse gases rising todangerous levels. Failure to do this would lead to damage costing much more,the report warned - at least 5% and perhaps more than 20% of global GDP.

But speaking yesterday in London, Stern said evidence that climate changewas happening faster than had been previously thought meant that emissionsneeded to be reduced even more sharply.

This meant the concentration of greenhouse gases in the atmosphere wouldhave to be kept below 500 parts per million, said Stern. In 2006, he set afigure of 450-550ppm. "I now think the appropriate thing would be in themiddle of that range," he said. "To get below 500ppm ... would cost around2% of GDP."

In a recent report for the London School of Economics, Stern acknowledgedthat even 1% of GDP was "not a trivial amount". For the UK it is equivalentto £14bn a year. But he argue that it was a fraction of annual economicgrowth, and much less than the 8-14% that was spent, for example, on healthby industrialised countries.

His reassessment of the cost of battling climate change comes at a sensitivetime, the day before Gordon Brown makes a major speech setting out a £100bnstrategy for ensuring that 15% of all energy used in the UK will come fromrenewable sources by 2020. The government has come under pressure from theTories, whose statements on the environment include effectively banning newcoal power stations and opposing a third runway at Heathrow.

Ministers are already under political pressure to row back on environmentaltaxes, such as increases in fuel duty and vehicle excise duty. DowningStreet aides admit government policy is ahead of public opinion and that itsproposals are on the margins of what the electorate will tolerate at a timeof escalating oil prices and falling house prices. Brown will highlight thatas many as 160,000 green jobs will be created by his climate changemeasures.

Speaking yesterday at the launch of the Carbon Rating Agency, the world'sfirst ratings agency for carbon offsetting projects, Stern warned that the2% estimate required governments to act quickly. "All this depends on goodpolicy and well functioning [carbon] markets. There are many ways to messthis up, many ways of acting to make it more costly," he said.

The Stern review in October 2006 called for global emissions to be cut by aquarter by 2050 and to be stopped from rising above the equivalent of 550ppmof CO2, a measure that combines the effect of all the greenhouse gases. Thecurrent level is 430ppm, and is rising by 2ppm a year.

Yesterday, Stern, a former World Bank chief economist and head of the UKgovernment economic service, said he now believed the limit should be500ppm. This would reduce the risk from a 50% chance to a 3% chance that theglobal average temperature would rise by 5C above pre-industrial levels, hesaid, pointing out that the last time this happened, 35-55m years ago,alligators lived near the north pole. "These kind of temperature changestransform the word," he said.

His new comments follow a speech in April in which he said that the latestresearch showed climate change was more of a threat, and called for globalemissions to halve by 2050, including cuts of 80% in the UK and 90% in theUS.

The Department for Environment said the case for cutting global emissionswas still strong: "We cannot afford inaction on climate change. Even at theupper range of the estimates, the cost of avoiding dangerous climate changeis much lower than even the most conservative estimates of inaction."

Farming and global warming - The effects

FARMERS tend to be the ultimate cynics: should their political masters tellthem that they must pursue a certain direction, then the odds are that theywill move towards another point of the agriculture compass. That sense ofnous has more often than not been proved to be well founded.

The farming industry has been berated for some years regarding the problemslikely to be faced with the onset of global warming. There cannot be afarmer in the land who would disagree with the assertion that the spring of2008 has not been the most difficult season for at least 20 years.

Cows havenever been so late in being turned out while feed supplies were down to amargin of little more than a few days. They have reason to doubt theforecast of a warmer world.

However, the theme yesterday in Edinburgh at the first "summit" climatechange conference hosted by the International Dairy Federation – anorganisation based in Brussels – was basically that dairy farmers must wakeup soon to the negative effects of their sector in relation to globalwarming and the emission of greenhouse gases.

Jim Begg, a Scot who is the current president of the IDF, set the tone inmeasured terms. He said: "It will be far better for producers to take theinitiative. It's not just about what happens down on the farm in terms ofreducing emissions, but throughout the whole food chain. We have to worktogether – it can be done, but time is not on our side."

From the producer perspective, John Gilliland, a former president of theUlster Farmers' Union and the current chairman on the UK government's RuralClimate Change Forum, was the most effective speaker.

Gilliland has never been afraid of expressing his opinions, and he said: "The world is changing fast and we have to appreciate that we arenow having to feed an extra 70 million people each year. We also have toconsider that at least one billion people out there are experiencing realfood poverty as result of the massive rise in commodity prices in recentyears."

There are no simple answers to the problems of global warming, but Gillilandis convinced that governments, including the UK, need to step up researchfunding by at least a factor of three.

He concluded: "Agriculture gets much of the blame for global warming, andwith some good reason.

"But if we get the right funding, agriculture can be part of the solution inproviding the resources for the next green revolution – feeding the worldand reducing many of the environmental problems. But the politicians have towake up, not just to the problems, but the answers that farmers can provide.I think we can do it."

Brazil seizes cattle to protect rain forest

SÃO PAULO: In an unprecedented move against rogue cattle ranchers in theAmazon, the Brazilian government has seized livestock grazing thereillegally.

Officials carted off 3,100 head of cattle that they said were being raisedon an ecological reserve in the state of Pará, in an operation intended toserve as a warning to other ranchers grazing an estimated 60,000 head onillegally deforested land in Amazonia, the environment minister, CarlosMinc, said.

"No more being soft," Minc told reporters Tuesday in the capital, Brasília."Those that don't respect environmental legislation, your cattle are goingto become barbecue for Fome Zero," he said, referring to the government'sfood program for the poor.

Minc said the cattle would be auctioned in two weeks, with the proceedsgoing to Fome Zero, as well as to health programs for indigenous people andto finance cattle removal operations.

Though Minc announced the strategy Tuesday, the seizure took place June 7 byfederal police officers and agents from Ibama, the government environmentalagency. The cattle's owner had been fined 3 million reais, or $1.86 million,in 2005 for illegal deforestation and had ignored a court order to removethe livestock.

Fears have been growing over the future of the world's biggest rain forest.Though annual deforestation figures fell to a 16-year low of 11,222 squarekilometers, or 4,333 square miles, in 2007 - from a 9-year high of 27,379square kilometers in 2004 - government agencies reported this year thatdeforestation was on the rise again, and cattle farmers were blamed for muchof the increase.

A recent report by the environmental group Friends of the Earth said thatBrazil's growing dominance of the global beef market was in large partbecause of the expansion into the Amazon, where land is cheap.

Brazil surpassed Australia and the United States to become the world'sbiggest beef exporter in 2004, and has more than 200 million head of cattle.The report said a third of Brazil's fresh beef exports last year came fromthe Amazon, and three of every four head of cattle added to Brazil's herdsince 2002 were added in the region.

Minc said that thanks to operations like those announced Tuesday, rancherswith cattle in embargoed and protected areas like indigenous reservationsand forestry reserves were starting to move their herds for fear of havingtheir livestock confiscated. He also announced that Ibama had begun legalproceedings to seize an additional 10,000 cattle grazing on illegallydeforested land in Rondônia State.

Environmental advocates lauded the move but warned that it must be the firstof many if Brazil is to have any chance of seriously stemming deforestation.

"This can be a good way of at least showing the government is concernedabout the contribution of ranching to the problem of deforestation," saidPeter May, associate director of Friends of the Earth Brazil. "It's animportant strategy, but if they do it just once and then never do it againit will be seen as a media event."

Brewing storm over Labour's dream of wind power future

Today's long-awaited renewable energy strategy is already being blown awayby industry experts, reports Ambrose Evans-Pritchard

As the British Government today prepares to embrace green energy with avengeance, it is worth remembering that all the world's major powers aretoying with the same agenda.

Wind turbines are sprouting up all over the US

The US is all of a sudden the new Mecca for wind power. Turbines toweringover 400ft are sprouting up across Texas and the lower Prairies, and GE isbetting that power generated by wind could reach 15pc of all US electricitysupply in a decade. Roughly 30pc of America's corn crop this year will beused for bio-fuels. Fat subsidies help.

China is already the world's number-two maker of solar panels. The kit isnow routinely fitted on new houses. This month's National Energy Plan showsthe country is hellbent on cutting oil imports. The latest batch of 6mstudents will have to master the new green energy doctrine to get intouniversity.

Washington and Beijing are making cold geo-political calculations. Neitherwants to be pushed around by hostile petro-powers, or fall hostage to oil at$200 a barrel. Both are going nuclear, but uranium is scarce. Both havecoal, but the technology of carbon capture has not yet been cracked.

This is the global picture as Labour releases its long-awaited RenewableEnergy Strategy today, hopefully ending years of drift, muddle, and a stringof ostrich policy papers. It is very late in the day to play catch-up.

It aims to raise the green share of Britain's energy to 15pc by 2020, fromunder 2pc today. This much we knew already. Labour agreed to the target atan EU accord last year.

From what has been trailed, it boils down to a dash for wind. Fast-trackplanning authority will allow officials to rush through approval for atleast 3,500 wind turbines on hilltops and offshore sandbanks on 11 sitesalong the coasts. An estimated £100bn will be spent on wind subsidies in oneform or another.

The Severn tidal barrage will help, perhaps producing 5pc of the country'selectricity. Pity the salmon. The rest will come from coaxing us to fitsolar heaters in our homes, and forcing us to insulate.

There will be tax breaks for electric cars, the new hope. Specialists thinklithium-ion batteries run off the mains could slash fuel demand for motorengines by half. But this is a long way off.

Strip out the frills and theentire strategy comes down to wind. It means lifting wind generation from 4gigawatts to 25GW, a 525pc leap. The UK's current capacity is 76 GW from allsources.

"This target is not feasible," said Dr John Constable, director of theRenewable Energy
Foundation. "We are talking about a phenomenal amount ofenergy. There are not enough machines or boats available to build it all."

Siemens has sold out of turbines until 2012. The world has only one shipable to place the 200-ton turbines offshore.

"The Government is being insincere. They know they won't be around in 12years when this fails," added Dr Constable.

Wind enthusiasts say the debate in Britain is stuck in a time-warp,rehearsing the cost arguments of the late 1990s when oil was cheap. Thelatest 2.5 megawatt giants are vastly more efficient that the oldmini-mills. Drawing on aerospace technology, they have rotors that dwarf thewingspan of an Airbus A380 superjumbo.

They have cut costs to $0.08 a kilowatt hour in Texas, easily undercuttinggas at today's price.

This compares to $0.065 for nuclear and $0.05 for coal( without carbon capture), according to the US Electric Power ResearchInstitute.

Costs are higher in the UK. Offshore farms are yet more expensive. A reportby the Centre for
Policy Studies said the experience of Denmark shows thatwindmills add almost no net electricity because power plants have to be keptrunning for when the wind fails to blow.

The claims infuriate the British Wind Energy Association. "This isridiculous. If it were true, why would Denmark now be raising the averagewind share of its electricity from 20pc to 27pc in five years?" said theBWEA's director, Chris Tomlinson.

The BWEA said tracking systems are now so sophisticated that they canpredict wind supply on an hourly basis, greatly reducing the need for slack.While some back-up capacity is needed, the plants can run at much lowerlevels - cutting the need for fossil fuels.

"This renewable target is a huge opportunity to use our skills from NorthSea oil and gas and create a whole new industry," he said. The Governmentestimates that the green push will create 160,000 jobs.

Scandinavian, German and Spanish companies manufacture most of the kit forwind farms, although Denmark's Vestas makes blades in the Isle of Wight.Although Britain's Renewable Energy Systems has emerged as global player.

Scottish & Southern Energy, Centrica, E.on's Powergen, and Iberdrola'sScottish Power are all betting on UK wind, despite complaints of rampantcost inflation. Shell has pulled out of the London Array project - supposedto produce a quarter of London's electricity - to pursue richer pickings inthe US.

Matthew Farrow, the CBI's energy chief, said Labour's dash for wind ismisguided and far too expensive. "This renewables target is just adistraction. We have left it dangerously late to renew our nuclear powerstations. As a nation, we really are up against a very serious deadlinehere," he said.

Mr Farrow said the Government had been "half-hearted" about clean coal. Butthat would require No 11 Downing Street to bite the bullet on heftysubsidies for carbon capture and storage. It doesn't have the money. TheBudget deficit is already in breach of EU rules.

Wulf Bernotat, head of E.on, said Labour seems to have been swept way by a"romantic" belief in the magic of green power, neglecting to deal with thecentral threat, which is that over half of the UK's power plants will soonbe obsolete.

"The UK is in a very bad situation. You cannot replace 60pc of the country'sgenerating capacity by betting on renewables. It will be decades before wereach that point, and until then Britain is going to need coal-fired units.I hope some realism comes through in energy policy," he said.

The risk for Britain is that it gets so enthused - as a late convert - bynew forms of eco-friendly energy that it forgets to deal with the meat andpotatoes of daily power supply. You can get too much of a good thing.

Oil-Dependent Japan Tries Turning Rice Into Fuel

NIIGATA, Japan -- For decades, Yasuji Tsukada has meticulously tended histerraced rice paddies to grow top-quality rice for Japan's demandingconsumers.

Now the 60-year-old farmer faces a new challenge: Grow a new type of ricebut spend as little money and labor as possible and ignore its taste andappearance.

Mr. Tsukada is among the 360 farmers in this renowned rice-growing region incentral Japan who are on the forefront of an effort to develop a new type ofbiofuel. A group of Japanese farmer cooperatives, with some governmentfunding, started a project last year to turn rice into ethanol, a fuel thatcan be mixed with gasoline to power automobiles. The cooperatives have askedfarmers such as Mr. Tsukada to start growing cheap, high-yielding rice to beprocessed at what could be the world's first rice-ethanol plant, to openearly next year. The group hopes the experimental factory -- half of whosecost is to be paid for by the government -- will help it determine if riceethanol is technically and financially feasible.

On the northern island of Hokkaido, Oenon Holdings Inc., analcoholic-beverage maker that started out as a sake brewery, is buildinganother rice-ethanol plant, also with government assistance. The technologyneeded to turn rice into ethanol -- also know as grain alcohol -- is verysimilar to that used to make sake. An Oenon spokesman said the company wantsto see over the next five years whether the project will be profitable.

For now, the cost of growing rice is too high to make rice ethanolcommercially profitable for farmers, unless the government increasessubsidies.

Oil accounts for 44% of Japan's total energy needs, and nearly all of itsoil is imported. With oil prices rising, the country is eager to diversifyits sources of energy.

While the country imports most of its raw materials and food, it isself-sufficient in rice production, and even has a surplus. A change in theJapanese diet has significantly reduced rice consumption over the pastdecades, but government subsidies and farmers' persistence have kept ricefarming popular. Warehouses are brimming with rice and the countryside isdotted with rice paddies left fallow or converted temporarily to other cropsto prevent overproduction.
"We have the land, people and technology to make this happen in Japan," saysShigenori Morita, a professor of agriculture at the University of Tokyo. Heestimates Japan could make up to one million kiloliters (264 milliongallons) of rice-based ethanol annually -- the equivalent of 1.7% of itsgasoline consumption -- by planting crops in idled rice fields. The initialproduction will be tiny; the new ethanol plant in Niigata will make just1,000 kiloliters of ethanol a year. The output will be mixed with gasolineand sold at local farmer cooperatives' pumps.

Backers of the experiment say large-scale Japanese rice-for-fuel productionwon't push up prices, as has been seen elsewhere in the diversion of cornand sugarcane for ethanol production.

As global biofuel output increases -- rising annually by the equivalent ofroughly 300,000 barrels per day of oil -- researchers are looking to developbiofuels that use nonfood crops, such as switchgrass and jatropha, to avoidfurther driving up food prices. But because Japanese rice is expensive -- aresult of high production costs and government price controls -- little isexported, and the market is largely self-contained.

Prof. Morita says biofuel rice would contribute to the environment and foodsafety in Japan by adding greenery to the rural landscape and helping keeppaddies in good condition for possible future reconversion to food-ricegrowth.

But the same things that shape the Japanese rice market -- notably highcosts and inefficiencies -- could pose problems for large-scale rice-ethanolproduction. Most farms are small, family-run operations with just a fewhectares of land. (A hectare is 2.47 acres.) And many rice paddies aredivided into small lots or laid out in terraces on the sides of mountains,making automation difficult.

Mr. Tsukada had already stopped growing rice for consumption on about threehectares of his 30-hectare farm to qualify for government subsidies. Hetried to grow soybeans but the land is too wet and the quality and size ofthe crops have been less than satisfactory. So when the local farmerscooperative suggested planting rice for ethanol last year, Mr. Tsukada, whoworks his land with his wife and son, was happy to give it a try.

After a fairly successful fall harvest, Mr. Tsukada has allocated more landto the special rice. He planted the seedlings last month. "They've told usover and over again to switch to soybeans and start growing vegetables,"says Mr. Tsukada. "But I'm a rice farmer and I'd rather stick with rice if Ican."

Mr. Tsukada has started growing Hokuriku 193 rice, a high-yielding breedthat was developed as animal feed. Its stalks grow tall and thick and itsoutput could be as much as 70% higher than the average Japanese rice plant.The biofuel factory in Niigata will use the rice grains to produce alcoholand will power its production machinery using rice husks.

Mr. Tsukada sold his fuel crop at 20 yen per kilogram last year, comparedwith 230 yen for high-grade food rice. This pays just a small portion of hisproduction cost. For now, temporary incentives and subsidies cover some ofthe balance, but he thinks he will still come out behind.
"I'd be happy to keep growing biofuel rice," says Mr. Tsukada. "I only wishthey will give us a better price."

Write to Yuka Hayashi at

7,000 New Wind Turbines

Plans to erect 7,000 new wind turbines will be unveiled by the governmenttoday, but industry experts are concerned they have not been thoughtthrough. Sue Ion, vice-president of the Royal Academy of Engineering, saidthe engineering problems had been "totally underestimated, if accounted forat all". The government's drive to increase the energy generated byrenewables will generate 160,000 new jobs, Gordon Brown, prime minister willannounce today. But the Department for Business admitted yesterday that manyof these would be abroad.

Published: June 26 2008 03:00
Fiona Harvey and Jim Pickard
Copyright The Financial Times Limited 2008