Monday, 28 July 2008

Beijing covered in a cloud of pollution as athletes arrive for Olympic Games

The Associated Press
Published: July 28, 2008

BEIJING: The Chinese capital was shrouded in a thick, gray haze of pollution less than two weeks before the opening ceremony of the Beijing Olympic Games. One expert warned that drastic measures enacted to cut vehicle and factory emissions in the city were no guarantee skies would be clear during competitions.
The pollution that covered the city Sunday was among the worst seen in Beijing in the past month, despite traffic restrictions enacted a week ago that removed half of the city's vehicles from roadways.
Visibility was a half mile (less than 1 kilometer) in some places. During the opening ceremony of the Athletes' Village, the housing complex was invisible from the nearby main Olympic Green.
"No, it doesn't really look so good, but as I said, yesterday was better," said Gunilla Lindberg, an International Olympic Committee vice president from Sweden who is staying in the Athletes' Village. "The day I arrived, Tuesday, was awful."
The city's notoriously polluted air is one of the biggest question marks hanging over the games, which begin on Aug. 8. On Sunday, temperatures of about 90 degrees Fahrenheit (32 degrees Celsius), with 70 percent humidity and low winds, created a soupy mix of harmful chemicals, particulate matter and water vapor.

The Beijing Municipal Environmental Protection Bureau said the air was "unhealthy for sensitive groups."
The Chinese leadership consider the Beijing Olympics a matter of national prestige, and efforts to clean up the environment were part of its meticulous preparations for an event it hopes will dazzle the world.
Athletes have been trickling into Beijing were expected to begin arriving in large numbers this week — though some were headed to South Korea, Japan and other places to avoid Beijing's air for as long as possible. Some Olympic delegations, including the U.S. Olympic Committee, are making protective masks available to their athletes.
Du Shaozhong, deputy director of the Beijing Municipal Environmental Protection Bureau, blamed the thick haze on a combination of fog and light winds that were unable to blow away the pollution.
"Our job is to decrease the pollution as much as possible, but sometimes it is very common to have fog in Beijing at this time," Du said.
"The air quality in August will be good," he said.
Du was supported by Dr. Patrick Schamasch, an orthopedic surgeon who is the IOC's medical and scientific director. Schamasch said the IOC was monitoring Beijing's air. He said particulate matter on Sunday "was a little bit higher than what's expected but nothing dramatic."
Schamasch said conditions were "not worse" than in other cities that hosted the games, mentioning Los Angeles, Atlanta and Athens.
Beijing's drastic pollution controls include pulling half the city's 3.3 million vehicles off the roads, closing factories in the capital and a half-dozen surrounding provinces, and halting most construction.

Web Alerts for Asthma

By SHELLY BANJOJuly 27, 2008

Summer can be the worst season for asthma and allergy sufferers, especially when trying to enjoy a beach vacation or mountain hike.
But a few Web sites aim to monitor and forecast air quality and alert you on particular days to avoid spending too much time outside. The results are based on a standardized indicator called the Air Quality Index (AQI) that measures major air pollutants such as ground-level ozone, carbon monoxide, sulfur dioxide and nitrogen dioxide.
The index ranges from 0 to 500 -- the higher the AQI value, the greater the health concern. According to the U.S. Environmental Protection Agency, an AQI value over 300 represents hazardous air quality.
The EPA's Airnow.gov allows users to see a national and international forecast on how clean or polluted the air is, associated health effects and special advisories.
At Azma.com, operated by medical-data company Surveillance Data, asthma sufferers can enter their Zip Code to see a forecast for the allergy and air-quality levels for up to four days. You can also sign up for asthma alerts by email on the days that your asthma index level is above low.
For pollen and mold counts view Azma.com's sister Web site Pollen.com, which provides similar Zip Code based data, or the American Academy of Allergy Asthma & Immunology's National Allergy Bureau's daily count at aaaai.org/nab.
Write to Shelly Banjo at shelly.banjo@wsj.com

Reform UK's distorted power market, MPs say

· Shake-up needed as prices likely to carry on rising · More must be done to alleviate fuel poverty
Mark Milner, industrial editor
The Guardian,
Monday July 28 2008

Britain's energy markets need a radical shake-up to tackle inefficiencies as homes and businesses brace themselves to pay significantly more for power in the future, MPs warn today.
Consumers could be forced to pay more for their power than those in other countries, and if the discrepancies are not tackled it could hit the competitiveness of British manufacturing, the business and enterprise committee says in a report.
As well as measures to increase the markets' efficiency, the committee is demanding that government and energy companies change their approach to fuel poverty in the face of high and rising gas and electricity prices.
It states: "Gas and electricity bills for domestic consumers [will] rise significantly in the near future, over and above the increases already announced this year, with serious consequences for millions of households, especially the fuel-poor."
As part of a wide-ranging report into the UK's energy markets, the committee argues for more gas storage capacity to be built and more UK pressure for the liberalisation of continental European markets.
The committee began its inquiry in the wake of the rise in domestic energy prices earlier this year, and is publishing its findings as more increases are set to kick in.
EDF Energy said on Friday it would increase its gas prices by 22% and electricity by 17%, with other major suppliers likely to follow suit in the coming weeks.
In its report, the committee acknowledged that no one had produced any evidence suggesting collusion between energy suppliers in either the wholesale or retail markets. But it noted that in a retail market dominated by six big companies - British Gas, Scottish and Southern Energy, Scottish Power, EDF Energy, E.ON and npower - "it is easy for those players to make informed judgments about the behaviour of their competitors" and that "this alone can distort competition".
Committee chairman Peter Luff said: "Just because we have found no evidence of collusion does not mean we have given the 'big six' energy companies a clean bill of health - far from it.
"It is clear there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed."
The committee said that while domestic measures could not keep prices down when they were high elsewhere, it noted: "We have concerns that the UK's energy markets are not functioning as efficiently as they should, and that UK prices may be higher than those of [other] countries."
The committee said a fundamental policy rethink on fuel poverty was required. Programmes were not sufficiently directed at those in most need, and efforts by the government and industry needed to be focused on improving the housing stock of the fuel poor as the most effective way of reducing bills and carbon emissions.
"It is very disappointing that ... the government has reduced the budget for Warm Front [energy efficiency grants] at a time when the need for it is greatest."
The fuel poverty charity National Energy Action described the report as a "breath of fresh air ... Its recommendations are bold but realistic."
The committee also expressed concern at the higher bills faced by businesses and said: "Industrial consumers now face prices above European levels. If these price differentials are sustained, they will affect the competitiveness of the UK economy, and put many thousands of jobs in manufacturing at risk."
The manufacturers' organisation EEF said: "Under our much-vaunted liberalised market, industrial consumers are now paying significantly more for their energy than their competitors in Europe. Government must act robustly on the committee's recommendations." The report calls on Ofgem to look at both the forward gas market and the supply of electricity to small and medium-sized companies.

Fuel subsidies overseas take a toll on U.S.

By Keith Bradsher
Published: July 28, 2008

JAKARTA, Indonesia: To understand why fuel prices in the United States have soared over the last year, it helps to talk to the captain of a battered wooden freighter here.
He pays just $2.30 a gallon for diesel, the same price Indonesian motorists pay for regular gasoline. His vessel burns diesel by the barrel, so when the government prepared for a limited price increase this spring, he took to the streets to protest.
"If the government increases the price of fuel any more, my business will collapse totally," said the boat captain, Sinar, who like many Indonesians uses only one name.
From Mexico to India to China, governments fearful of inflation and street protests are heavily subsidizing energy prices, particularly for diesel fuel. But the subsidies — estimated at $40 billion this year in China alone — are also removing much of the incentive to conserve fuel.
The oil company BP, known for thorough statistical analysis of energy markets, estimates that countries with subsidies accounted for 96 percent of the world's increase in oil use last year — growth that has helped drive prices to record levels.

In most countries that do not subsidize fuel, high prices have caused oil demand to stagnate or fall, as economic theory says they should. But in countries with subsidies, demand is still rising steeply, threatening to outstrip the growth in global supplies.
President George W. Bush warned about the effects of subsidies on July 15. "I am discouraged by the fact that some nations subsidize the purchases of product, like gasoline, which, therefore, means that demand may not be causing the market to adjust as rapidly as we'd like," he said.
Indeed, the biggest question hanging over global oil markets these days may be how much longer countries can keep paying the high cost of subsidizing their consumers. If enough countries start passing the true cost of oil through to their citizens, many economists believe, demand growth will slow, bringing the oil market into better balance and lowering prices.
China raised gasoline and diesel prices on June 21, though still keeping them below world levels. World oil prices plunged more than $4 a barrel within minutes on the expectation that Chinese demand would slow.
In Indonesia, the government spends six times as much on energy subsidies as it does on agricultural investments, even as rice prices have skyrocketed this year.
Many countries, like India, have raised oil prices considerably in recent months, only to watch world prices climb even further, pushing up the cost of subsidies once again. China's estimated $40 billion in subsidies this year is up from $22 billion last year, mainly for this reason, although consumption has also risen, with Chinese buying 18 percent more cars in the first half of this year than in the period a year earlier.
Political pressures and inflation concerns continue to prevent many countries — particularly in Asia, where inflation has become an acute problem — from ending subsidies and letting domestic prices bounce up and down.
"You talk about subsidies, you're not only talking about the economy, you're talking about politics," said Purnomo Yusgiantoro, Indonesia's minister of energy and mineral resources. He ruled out any further price increases this year beyond one in May that raised the price of diesel and regular gasoline to $2.30 a gallon.
Nobuo Tanaka, executive director of the International Energy Agency, said that subsidies were clearly a big factor contributing to the mismatch in supply and demand that has helped push up world oil prices. "We think the price mechanism is not working enough to make consumers more efficient," he said.
Indonesia spends more on fuel subsidies, $20 billion this year, than any country except China. Some economists estimate that fuel use in Indonesia would fall by as much as a fifth if the government were to eliminate subsidies entirely.
Malaysia's government incited public anger on June 4 when it raised gasoline prices by 40 percent. The prime minister, Abdullah Ahmad Badawi, announced the following week that he would retire, although he has since said that he will not do so until 2010.
Before adjusting the prices, Malaysia was spending 7.5 percent of its entire economic output on fuel subsidies, a greater share than any other nation. Indonesia follows with 4 percent.
Coming elections in Indonesia and India make further subsidy reductions less likely in both countries. And big oil exporters like Saudi Arabia have so much revenue right now that they can easily afford to subsidize fast-growing domestic demand.

Chinese fuel policy is the hardest to predict: the country's leaders are struggling to reduce inflation and are not expected to take any action on fuel until after the Olympics, at the earliest. But they are also campaigning for greater energy efficiency and less reliance on fuel imports.
Many in Asia bridle at being told to reduce oil use, particularly by the United States, a country of sport-utility vehicles and big houses.
"What about the energy consumption in the United States? Isn't it one of the highest in the world?" said Irvan Saefurrohman, a student activist in Jakarta who organized a fuel-price demonstration in May that turned violent as protesters threw rocks at police and set cars on fire.
Making matters worse, Asia's own oil production has barely risen over the last decade.
Indonesia, with extensive oil fields that made it a top target for Japanese conquest during World War II, became a net oil importer in 2004. Output from its aging fields has fallen almost 40 percent since 1995, and the country plans to withdraw from OPEC at the end of this year.
So Asian nations increasingly compete with the West to import oil from the Mideast and Africa.
In Asia, subsidies have been particularly prevalent for diesel, although many countries subsidize gasoline as well. The subsidies have been an important reason diesel prices have climbed almost twice as quickly as gasoline prices have over the last year in the United States.
Many governments see diesel as more important because truckers and ship captains need it to distribute goods; if diesel prices rise, consumer prices often follow.
Diesel is essentially the same fuel as heating oil, so high diesel prices mean high prices for heating oil. Spiraling prices already have some in the Northeast United States worried about how families will afford to heat their homes this winter.
To be sure, subsidies are not the only cause of high crude oil prices. Strong global economic growth, particularly in Asia, is requiring a lot of energy. Political tensions between the United States and Iran and market psychology have played a role.
Additional factors have contributed to strong demand for diesel in particular. European automakers have been shifting toward the production of more cars with diesel engines, which typically get more miles to the gallon than gasoline-powered cars — although the cost advantage of burning diesel is disappearing with higher prices.
When Vietnam reduced fuel subsidies on July 21, it raised domestic gasoline prices by 31 percent, to $4.22 a gallon for 92-octane fuel. But Vietnam increased diesel prices by only 14.3 percent, to $3.54 a gallon.
The fast-growing demand in China is skewed toward diesel as well.
Automakers are on track to sell only half as many gas-powered cars in China this year as in the United States. But in China they already sell at least 50 percent more medium- and heavy-duty trucks, the workhorses of a manufacturing economy. Virtually all of those run on diesel.
The cheapest fuel per gallon in many Asian countries is not diesel but kerosene, commonly used for cooking by the very poor. In India, for example, the government subsidizes kerosene so heavily that it sells for just 97 cents a gallon, compared with $5 a gallon in the United States.
While the subsidies encourage greater consumption, eliminating them is not easy. "If you reduce the subsidy for kerosene, people are likely to forage in the forests for fuel, and environmentally that is very bad," said Ifzal Ali, the chief economist of the Asian Development Bank.
Kerosene is similar to jet fuel, so strong Asian demand has helped push up costs for airlines.
Some spending on subsidies is simply wasted: Yusgiantoro, the Indonesian official, said that fishing boats take drums of subsidized diesel out to sea for resale to foreign fishing vessels. But a lot of subsidies are delaying what could otherwise be a slowing of economic activity.
Sinar, the freighter captain, said that his vessel hauls cement to outlying islands with limited cement production of their own. Higher diesel costs would make it much costlier to move the cement, which would force builders to accept the prices of their local cement producers and probably cause a construction slowdown.
The nearly 30 percent increase in prices for low-octane gasoline, which Indonesia put in place in May, has already prompted some less affluent families to drive less. Subrata, a 34-year-old who sells gasoline in glass bottles to local motorcyclists in Karawang, Indonesia, said that the increase had halved his sales — and that plenty of motorists were upset.
If the price rises further, he said, "people will not buy it and it will be a heavy blow for the lower classes."

Energy firms ‘conspire to raise prices’

4.5 million families struggling to pay fuel bills, says select committee
Robin Pagnamenta

Energy companies stand accused today of overcharging customers, leaving millions of households struggling to pay gas and electricity bills.
A report claims that the six biggest energy companies conspire to keep charges artificially high and gives a warning of widespread hardship this winter unless the Government acts.
It also accuses the industry regulator of failing to protect the interests of customers and calls for an immediate overhaul of the way gas is traded, amid concern that speculators are making huge profits at the expense of hard-up consumers.
The damning report by MPs, published today, urges ministers to redouble efforts to alleviate the plight of families plunged into fuel poverty before the winter. The number of families who struggle to pay heating bills has risen to 4.5 million from just over two million in the past five years.

The report comes just two days after the French company EDF announced price increases of up to 22 per cent for its five million customers. Other energy companies are about to follow.
MPs on the Commons Business and Enterprise Committee stop short of accusing companies of rigging prices. But Peter Luff, who chairs the committee, said: “Just because we have found no evidence of collusion does not mean we have given the ‘Big Six’ energy companies a clean bill of health - far from it.
“It is clear that there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed.”
British Gas, npower, Scottish Power, E.ON and SSE, as well as EDF, - are accused of operating in a cosy world of minimal price competition. This created an environment where it was “easy for those players to make informed judgments about the behaviour of their competitors. This alone can distort competition without any actual collusion occurring.”
Business was also put at a serious disadvantage to its international competitors. “Industrial consumers now face prices above European levels,” it said. “If these price differentials are sustained, they will put many thousands of jobs in manufacturing at risk.”
Specific concerns included Britain’s acute shortage of gas storage - only 13 days’ worth compared with 99 days in Germany and 122 days in France.
Mr Luff said this represented a “pathetically inadequate level of gas storage” that left Britain’s energy market inherently unstable.
He pointed out that the shortage was contributing to the volatility in wholesale gas prices, in particular because the depletion of the North Sea meant that Britain was increasingly dependent on imported gas, which required temporary storage.
About 40 per cent of the gas used in Britain will be imported this year, up from 27 per cent in 2007. That proportion is expected to rise to 75 per cent by 2015.
The report said that the Government had failed to respond quickly enough to the “increasing and entirely predictable gas import dependency”. More storage capacity was an issue of “national importance and should be a high priority in domestic energy policy”.
It also noted that continuing consolidation in the industry threatened to choke off competition further and, in particular, gave warning that the imminent £11 billion takeover of British Energy by EDF threatened to create an overly dominant player, which would add to the upward pressure on pricing.
“I’m not against the sale of British Energy per se but you just can’t sacrifice further competition like that without the creation of robust safeguards,” Mr Luff told The Times. He called for both Ofgem and the Competition Commission to look “very carefully indeed” at the proposed deal.
The report cited the lack of price transparency and liquidity in the forward market for gas as a key area of concern. “We recommend that Ofgem investigates urgently why gas producers seem unwilling to trade in the forward market,” it said.

Energy crisis sees Pelosi run a tight ship

By Stephanie Kirchgaessner
Published: July 28 2008 03:02

Energy and the price of a gallon of petrol will no doubt be at the forefront of Nancy Pelosi’s mind this week when – as is her routine – she travels in from her regular hair appointment in Georgetown to Capitol Hill in a convoy of two SUVs.
The Speaker of the House of Representatives has a tough task at hand before Congress begins its August recess: ensuring that Democratic legislators do not return home empty-handed, without any proof that they are taking action to tackle record petrol prices.

One Democratic proposal that would have required the government to sell 70m barrels of light sweet crude oil from the Strategic Petroleum Reserve failed to pass the House last week.
In the meantime, Republicans appear to be gaining traction in their call to expand offshore drilling – putting pressure on Ms Pelosi to keep her caucus unified, including conservative Democrats who might be tempted to side with the Republicans on that issue.
Steering the Democrats’ response to the energy crisis without alienating environmentalists or the struggling middle class could prove to be one of the biggest tests Ms Pelosi will face this year. Her record suggests that the speaker will respond to the challenge with astute political manoeuvring, showing once again that, though she is labelled a “San Francisco liberal”, the roots of her political education lie in the rough and tumble world of Baltimore, where her father was mayor.
Outside Washington, Hillary Clinton’s historic run for the White House conveyed the sense that the New York senator and former first lady was the most powerful woman in the capital, perhaps even the world. Inside the beltway, it is no secret that crown belongs to Ms Pelosi.
In the 20 months since she became the first female speaker of the House, a position that puts her second in the line of succession to become president, the congresswoman from San Francisco has proven herself to be a pragmatic and iron-fisted leader of the traditionally fractious Democratic caucus.
Under her leadership, Democrats have backed the majority position 91 per cent of the time, the highest so-called “unity score” Democrats have achieved in 51 years.
She achieved that, says one senior Republican lobbyist, by taking cues from the former Republican speaker Newt Gingrich: centralising power in her office and, when necessary, side-stepping powerful committee chairmen by creating ad hoc committees to tackle sensitive issues such as global warming.
When earlier this year President George W. Bush sought to put Ms Pelosi “in a box” by forcing a vote on the Colombia Free Trade agreement, the lobbyist says, she shut him down by scrapping the so-called fast-track procedure that allowed trade deals a swift passage through the House for 30 years, in order to save Democrats from having to take sides on a controversial issue in an election year.
She has proved herself to be more pragmatic on economic issues, where she forged deals with the administration on a broad stimulus package and housing legislation.
When the prolonged battle for the Democratic presidential nomination threatened to weaken her party’s chances of winning the White House, Ms Pelosi, along with Harry Reid, the Senate leader, declared that the race would have to end in June.
Though she did not offer Barack Obama, her party’s presumptive nominee, an outright endorsement, the move closed Mrs Clinton’s window of opportunity to clinch the nomination.
If she gets her way, Ms Pelosi’s job could become even more challenging. Although the public appears to have as much disdain for Congress as it does for Mr Bush, perhaps even more, Democrats could win between five and 10 seats this year.
This would increase the potential for clashes between the liberal wing of the Democratic party and the so-called “Blue Dogs”, moderate and conservative Democrats from the south whose views on issues ranging from gun control to abortion rights often diverge from those of the party’s base.
“A drawback [to winning more seats] is now they will have a bigger tent to have to satisfy and settle, and it becomes more of a challenge keeping everyone happy,” says David Wasserman, House editor for the Cook Political Report.
Copyright The Financial Times Limited 2008

ITM the alternative pick (alternative fuel cars)

Talking of oil, other companies are looking to benefit from the search for alternative fuel sources. Investors in ITM Power will learn a bit more today about some interesting plans the company announced this month. It launched its bi-fuel petrol and hydrogen car and home refuelling system, but was in a close period until now, so provided little more information. Its technology reduces the costs for hydrogen-powered cars, and it has also developed a home refuelling system to answer questions by sceptics of how to keep the wagon topped up. The stock has taken a bit of a hammering this year as the lack of news flow sent its shares plummeting to all-time lows. The news this month should prove good for the company, but as broker Panmure Gordon pointed out, any shareholder has to be in it for the long term; the days of the major car companies producing hydrogen cars – and hence its chance to properly commercialise its technology - could well be some time away.

Texas to Tel Aviv (alternative energy)

By Thomas L. Friedman
Published: July 27, 2008

What would happen if you cross-bred J.R. Ewing of "Dallas" and Carl Pope, the head of the Sierra Club? You'd get T. Boone Pickens.
What would happen if you cross-bred Henry Ford and Yitzhak Rabin? You'd get Shai Agassi. And what would happen if you put together T. Boone Pickens, the green billionaire Texas oilman now obsessed with wind power, and Shai Agassi, the Jewish Henry Ford now obsessed with making Israel the world's leader in electric cars?
You'd have the start of an energy revolution.
The only good thing to come from soaring oil prices is that they have spurred innovator/investors, successful in other fields, to move into clean energy with a mad-as-hell, can-do ambition to replace oil with renewable power. Two of the most interesting of these new clean electron wildcatters are Boone and Shai.
Agassi, age 40, is an Israeli software whiz kid who rose to the senior ranks of the German software giant SAP. He gave it all up in 2007 to help make Israel a model of how an entire country can get off gasoline and onto electric cars. He figured no country has a bigger interest in diminishing the value of Middle Eastern oil than Israel.

On a visit to Israel in May, I took a spin in a parking lot on the Tel Aviv beachfront in Agassi's prototype electric car, while his sister watched out for the cops because it is not yet licensed for Israeli roads.
Agassi's plan, backed by Israel's government, is to create a complete electric car "system" that will work much like a mobile-phone service "system," only customers sign up for so many monthly miles, instead of minutes. Every subscriber will get a car, a battery and access to a national network of recharging outlets all across Israel - as well as garages that will swap your dead battery for a fresh one whenever needed.
His company, Better Place, and its impressive team would run the smart grid that charges the cars and is also contracting for enough new solar energy from Israeli companies - 2 gigawatts over 10 years - to power the whole fleet. "Israel will have the world's first virtual oilfield in the Negev Desert," said Agassi. His first 500 electric cars, built by Renault, will hit Israel's roads next year.
Agassi is a passionate salesman for his vision. He could sell camels to Saudi Arabia. "Today in Europe, you pay $600 a month for gasoline," he explained to me. "We have an electric car that will cost you $600 a month" - with all the electric fuel you need and when you don't want the car any longer, just give it back. No extra charges and no CO2 emissions.
His goal, said Agassi, is to make his electric car "so cheap, so trivial, that you won't even think of buying a gasoline car." Once that happens, he added, your oil addiction will be over forever.
You'll be "off heroin," he says, and "addicted to milk."
T. Boone Pickens is 80. He's already made billions in oil. He was involved in some ugly mischief in funding the "Swift-boating" of John Kerry. But now he's opting for a different legacy: breaking America's oil habit by pushing for a massive buildup of wind power in the United States and converting our abundant natural gas supplies - now being used to make electricity - into transportation fuel to replace foreign oil in our cars, buses and trucks.
Pickens is motivated by American nationalism. Because of all the money we are shipping abroad to pay for our oil addiction, he says, "we are on the verge of losing our superpower status." His vision is summed up on his Web site: "We import 70 percent of our oil at a cost of $700 billion a year ... I have been an oil man all my life, but this is one emergency we can't drill our way out of. If we create a renewable energy network, we can break our addiction to foreign oil."
Pickens made clear to me over breakfast last week that he was tired of waiting for Washington to produce a serious energy plan. So his company, Mesa Power, is now building the world's largest wind farm in the Texas Panhandle, where he's spent $2 billion buying land and 700 wind turbines from General Electric - the largest single turbine order ever. The United States could secure 20 percent of its electricity needs from wind alone.
But Pickens knows he's unique. Unless, he says, "Congress adopts clear, predictable policies" - with long-term tax incentives and infrastructure - so thousands of investors can jump into clean power, we'll never get the scale we need to break our addiction. For a year, Senate Republicans have been blocking such incentives for wind and solar energy.
If only we had a Congress and president who, instead of chasing crazy schemes like offshore drilling and releasing oil from our strategic reserve, just sat down with Boone and Shai and asked one question: "What laws do we need to enact to foster 1,000 more like you?" Then just do it, and get out of the way.

A blot of turbines

The rush for more green energy via wind farms risks sacrificing our most beautiful landscapes

Michael Berkeley
The Guardian,
Monday July 28 2008

Those of us who support the government's determination to lower CO2 emissions, yet care passionately about preserving our most beautiful landscapes, are in a serious quandary. Labour has turned to offshore wind farms as the most productive way of harvesting nature's own supply of energy. Sadly, we are not capable of realising anything like the goal of 7,000 offshore turbines in the near future. So pressure is being applied to nod through 4,000 onshore. Objectors to complex applications running to hundreds of pages are given a meagre 21 days to register dissent. At this rate we may sacrifice areas of rare beauty thanks to governmental panic and a landscape protection policy that predates 400ft turbines.
Take the countryside where I live and work, the Welsh Marches near Knighton - the town that straddles Offa's Dyke - whose hills have been immortalised in lines by AE Houseman and Francis Kilvert. Ten years ago, an application to Powys and Herefordshire for 14 turbines right on the border was turned down by both councils because the visual damage to an important landscape could not be justified. Local feeling was intense and pretty well unanimous. Since then the landscape has not changed, so how could the decision?
With the greater sense of urgency that climate change has fostered - not to mention the incomprehensibly vast subsidies available - the same farmer (Sir Simon Gourlay - an ex-NFU president) has put together a new application to Herefordshire for four turbines. Since he admits that this is "not an ideal site", they will need to be 105m high (dwarfing Nelson's Column at 55m). These massive industrial towers, counterbalanced by thousands of tons of concrete and complemented by a sub-station and overhead cabling, would reach further into the sky than any building in Wales.
Writing in Country Living in 1991, Gourlay eloquently described the views from his farm as "a spectacular landscape". By the time he wrote his first environmental submission in 1994 this landscape had become "uninteresting, dull" and even "barren".
We need a better and more objective way of defining areas that demand to be protected as part of our national heritage, not only because they themselves are ravishingly beautiful, peaceful and full of protected wildlife, but because they are overlooked by important and priceless countryside - in this case, the Black Mountains, the Brecon Beacons, Clee Hill, the Wrekin, Radnor Forest, the Malverns and, critically, the internationally important ancient monument, Offa's Dyke. Explaining his intention to speed up the planning process, John Hutton, the business and energy minister, said that it is essential that the voice of local people be heard, particularly in environmentally sensitive areas. But with its latest renewable "push", the government is clearly at odds with itself in trying to uphold democracy while simultaneously garnering more turbines, regardless of local opposition.
Objecting to the application, novelist Ian McEwan wrote: "To industrialise an area of great and fragile beauty for a near negligible gain is entirely against the spirit of any environmental policy rooted in common sense and practical solutions. On a small and crowded island like ours, we count ourselves lucky that there remain still places of such tranquillity and loveliness as Reeves Hill. We owe it to our children's children to preserve such treasures and at the same time take rational steps to limit our greenhouse gas emissions."
Several communities in the British Isles are fighting similarly, but without access to writers or the national media. For all of us, the Reeves Hill case is pivotal.
· Michael Berkeley's latest composition Slow Dawn is at the Proms on August 10. Contact the campaign at www.shcg.co.uk

Subsidies help Germany stay top of world's solar power league

By Hugh Williamson in Berlin
Published: July 28 2008 03:00

Germany has reinforced its status as the world leader in solar power generation, after less stringent cuts in renewable energy subsidies than had been anticipated.
Although not the world's sunniest country, Germany is among the global leaders when it comes to the number of solar panels adorning household roofs.
Germans have cashed in on generous government incentives to boost the country's reliance on the sun's energy.
Yet the industry needs to adapt to growing international competition to secure long-term growth, experts argue.
In what is seen as a victory for Germany's growing legion of solar cell makers and suppliers, proposed cuts in subsidies of up to 30 per cent have been watered down to only 9-10 per cent a year until 2011.
The cuts replace annual reductions of about 5 per cent at present, under plans endorsed by the parliamentary upper house this month, after lower house approval.
Germany boasts more than 50 per cent of the world's installed solar power capacity, thanks to the subsidies, known as feed-in tariffs that give households with solar panels a fixed income for 20 years from electricity sold to the national grid.
The resulting industry, with about 60,000 employees, has a turnover that could rise to €13bn (£10.2bn, $20.4bn) a year by 2010, compared with about €7bn in 2007, according to industry estimates.
The country is the third largest producer of solar cells, with a 20 per cent market share, compared with China with 28 per cent.
Experts predict that in the long term solar energy may provide up to 30 per cent of Germany's power needs for electricity and hot water, compared with less than 1 per cent today.
This is seen as vital, both to reduce greenhouse gas emissions, and for energy security after oil price increases and the decision to phase out nuclear power.
Spiralling energy costs globally have spurred German demand for solar equipment used to heat household water.
Many regional authorities have backed this sector - which is separate from the industry built around the feed-in subsidies - and Marburg in central Germany this month became the first city to require households to install such equipment as part of house construction or renovation. They face €1,000 fines if they refuse.
Yet companies that have profited richly from Germany's solar boom will in future have to adapt more quickly to continued pressure for subsidy cuts and lower prices, according to Michael Schmela, editor of Photon International, a solar industry magazine.
"Germany will remain the world leader in installed capacity for some time, but companies based here will increasingly produce in cheap locations, such as Asia, to cut costs," he says.
Other countries, especially Spain and the US, are rapidly expanding solar power generation, leading to a shift in focus in this increasingly global industry.
According to a report this month by IMU, a Berlin-based think-tank, Germany's share of the world's newly installed capacity will fall to 28 per cent in 2010, from 58 per cent in 2006. The US is set to double its share to 18 per cent over the same period.
Mr Schmela argues that the feed-in subsidies should be cut more rapidly, to force companies to reduce costs in producing panels and the necessary solar cell production machinery.
The German government - and ultimately the country's taxpayers - may face a total bill for feed-in tariffs of up to €100bn, he calculates. This official backing for solar power is highly expensive compared with other environmental initiatives, he says.
Carsten K├Ârnig, head of BSW-Solar, the sector's business association, says companies are getting ready for lower subsidies but need a smooth transition.
Cuts that were "too abrupt could severely damage the industry's development," he says.
The industry is also under pressure over trade union complaints of low pay and tough working conditions in solar cell factories.
Many companies, from the US and elsewhere, have set up solar plants in eastern Germany, the country's weakest economic region, with pay as low as €7-8 per hour, notes the IMU report.
Copyright The Financial Times Limited 2008

MPs seek windfall tax on energy profits

By George Parker, Ed Crooks and Vanessa Houlder
Published: July 28 2008 00:04

There is a “compelling rationale” for a windfall tax on the profits of energy companies, MPs argue in a report on Monday.
They also claim businesses and households are paying excessive fuel bills because of failures in the British energy market.

Unless the energy market functions more efficiently, British companies will suffer falling competitiveness and there will be “serious consequences for millions of households, especially the fuel poor”, the report says.
The Commons business and enterprise committee calls on Ofgem, the regulator, to toughen its approach and – if necessary – to refer key parts of the energy market to a Competition Commission inquiry.
The MPs also lend their weight to calls for a windfall tax on energy companies, which were estimated by Ofgem to have benefited by £9bn from the free allocation of permits under phase two of the EU’s emissions trading scheme.
Political pressure for a windfall tax was reinforced on Friday when EDF, one of the “big six” suppliers raised its prices for the second time this year, by 17 per cent for electricity and 22 per cent for gas.
The other suppliers are expected to follow suit over the next few weeks.
Study findings
● Ofgem failed to investigate wholesale gas market, where producers were unwilling to trade in the forward market
● Government failed to invest in storage facilities to tackle dependency on gas imports
● Lack of liquidity in the wholesale electricity market, penalising new retailers
● Possible abuse of the market for SME electricity supply by the “Big Six” companies
Although the report disputes the £9bn Ofgem figure, it says “there is a compelling rationale for at least a one-off top-slicing of these gains to help fund action to reduce the energy bills of vulnerable families in the long term”.
Trade unions demanded a windfall tax during this weekend’s Labour Party policy forum, although Alistair Darling, chancellor, backed away from a windfall tax in this year’s Budget.
Mr Darling’s aides said the idea was still “an option” for this autumn’s pre-Budget report, although it was not receiving a great deal of official time. Gordon Brown has also promised action to address fuel poverty.
John Hutton, business secretary, unveiled an accord in April in which the “Big Six” power suppliers would commit an extra £225m over the next three years to help those in fuel poverty, de-fined as anyone who spends more than 10 per cent of their income on fuel bills. Poverty campaigners de-scribed the deal as “failing the most vulnerable”.
However, energy suppliers have argued that windfall taxes and other attacks on their profitability will damage the industry.
Duncan Sedgwick, Chief Executive of the Energy Retail Association, said on Sunday: “As the Committee acknowledges, if we are serious about keeping the lights on for future generations then companies need to be given the freedom and opportunity to innovate and invest for our long-term needs.”
Meanwhile, a windfall tax has been attacked as “economically illiterate” by an eminent economist who says it is the worst possible option for tackling fuel poverty.
Dieter Helm, a professor at Oxford University, said the prospect of a windfall tax undermines “a host of investment decisions” and would inflict further damage on Britain’s reputation for stability.
Copyright The Financial Times Limited 2008

Coking-Coal Firms Offer a Way To Play China's New Price Caps

By YVONNE LEEJuly 28, 2008

HONG KONG -- Despite a near doubling in global spot-coal prices in the first half, listed coal producers in China -- the world's biggest coal consumer -- have been market laggards as a result of price caps imposed by the state to regulate supply.
The Hong Kong shares of China Shenhua Energy, the country's largest integrated coal producer by output, have slumped 38% so far this year, while industry No. 2 China Coal Energy lost 43% amid concerns of the price-control risks.
Analysts say these stocks may be susceptible to further near-term losses following measures the government announced Thursday to cool red-hot domestic thermal-coal prices by artificially capping spot prices at major ports.
The new steps affect producers of thermal coal, used mainly for electricity production. However, producers of coking coal -- the key ingredient for metals processing -- aren't affected.
Shares of Hong Kong-listed coking-coal maker Hidili Industry International Development have outperformed both its thermal-coal peers and the Hang Seng Index, which is down 18% this year.
Sichuan-based Hidili, which listed last September, is down 10% in 2008. But many analysts say now is a good time to accumulate the stock, thanks to expectations coking-coal prices will continue to rise and to attractive valuations.
Four analysts that cover the company have an average price target for the stock of 18.69 Hong Kong dollars (US$2.40), or 74% above its Friday close of HK$10.76.
"We are bullish on China's coking-coal sector because of the current tight-market-supply situation," says UOB KayHian analyst Karen Li. "We believe HK$11 or below is a good entry point to gain exposure to this booming industry."
Hidili, which raised US$525.4 million from its initial public offering, supplies coal to steelmakers in southern and western China, including Panzhihua Iron & Steel Group and Liuzhou Iron & Steel Group. Analysts say Hidili is attractive because of rising coking-coal prices, which have almost doubled in the first half on strong demand both in domestic and global markets.
Xu Hui, Hidili's company secretary, says its coking-coal prices in the first half jumped 90% from the previous year and reached 1,500 to 1,600 yuan (US$220 to US$235) a metric ton at the end of June. He didn't give any forecast for prices in the second half.
Liu Jianzhong, deputy general manager of Shanxi Coking Coal Group, China's biggest coking-coal producer by output, told state media earlier this month that he expects coking-coal prices in the second half to rise 200 to 300 yuan a metric ton.
Coal prices will also likely be supported by the government's effort to crack down on smaller mines in hopes of reducing the number of deaths from accidents.
The government plans to shut more than 4,000 small coal mines and reduce their numbers to below 10,000 by 2010, from about 16,000 currently, the Xinhua News Agency reported this month. Of the total, 90% of the coking-coal mines are considered small ones, with much lower safety standards than larger, more established operations, Xinhua said.
Goldman Sachs says Hidili's share weakness, and its differentiation from thermal-coal producers, provide a good opportunity for investors to buy into the stock.
"The key advantage of coking coal verses thermal coal is a better demand profile and lower risk of government price control," Goldman analyst Song Shen wrote in late June. "We believe Hidili shares have been weak given the higher risk premium due to government price controls on thermal coal."
Analysts say the Chinese government won't likely intervene in the coking-coal industry, given the nature of the domestic metals market.
"The setting of power tariffs is regulated by the government in order to curb the country's rising inflation," says Nomura analyst Donovan Huang. "As China's steel prices are largely market-driven, coking-coal producers have lower government price-control risks."
Beijing last month imposed temporary price ceilings on thermal coal to protect the profitability of power producers using it. China's thermal-coal mines can't sell at prices higher than those reached June 19.
Aside from the booming market for coking coal, Hidili's shares are also attractive because of the company's acquisition plans, analysts say. Hidili intends to raise its reserves by acquiring mines in western Guizhou province.
The company said it aims to boost coal output to eight million metric tons by 2011, more than twice this year's target of 3.2 million tons. In 2007, it produced 2.27 million tons.
Given those projections, analysts are generally upbeat on Hidili's earnings for the next two years. Goldman Sachs said it expects the company's net profit to more than double this year, followed by a 75% increase in 2009, due by higher sales volume and prices.
In 2007, Hidili's net profit jumped more than sixfold to 570.3 million yuan from a year earlier.
Hidili's valuations are lower than those of peers. According to Thomson Reuters, the stock is trading at about 16.11 times projected 2008 earnings, compared with 18.95 times for Shenhua Energy and 17.08 times for China Coal.
Nonetheless, concerns that growth in China's steel industry could slow amid rising prices for raw materials might hurt Hidili's near-term share performance, analysts say.
"If steel-production growth slows down sharply, we could see coking-coal prices coming down," Goldman Sachs says.
Citigroup projects Chinese steel production at 640 million tons next year, up 16% from its 2008 forecast of 553 million tons. The nation accounts for slightly more than one-third of the world's demand for steel.
Mr. Xu, Hidili's company secretary, says he expects China's steel production will grow strongly until 2010 as "we have confidence Beijing will maintain sound economic growth over next two years."
Write to Yvonne Lee at yvonne.lee@wsj.com

Nuclear dismemberment

Published: July 27 2008 18:15

Ministers like to fulminate about the UK’s “buy now, pay later” culture. But when it comes to the sale of the state’s own assets, the government seems quite happy to take an IOU. Shareholders in British Energy, the nuclear power group 35 per cent-controlled by the government, look likely this week to be offered a share of the company’s future profits in a plan that should clear the way for it to be carved up between France’s EDF and Centrica of the UK.
As a way of breaking a stalemate over price, solutions such as these can be pragmatic. Contingency terms function like a call option, allowing the buyer to commit some money up front and then wait and see what the outcome is. They also usually create incentives for managers to stay on and work hard after the acquisition.

But the usage in this case seems odd. “Earn-outs” are normally seen in creative and knowledge-intensive industries such as technology and pharmaceuticals, where there may be genuine differences of opinion over the value of the intellectual capital the seller is bringing to the table. Here, there are hard (albeit ageing) assets in the form of eight nuclear plants, sites for a lot more, and a tangible trading history. The only unknowable is the degree to which nuclear power will be used in the future, but this government – and its putative Conservative successor – has assured British Energy there are no plans to reverse a commitment to supporting new building on its sites.
If a structure emerges as reported, it will reflect a cash-strapped Treasury’s determination to keep buyers onside – at a time when it is openly pondering one-off windfall taxes for energy companies. Meanwhile, minority shareholders should be wary. As long as an earn-out lets a value discrepancy stand between buyer and seller, both sides are forestalling the inevitable. As with the consumer credit bubble, somebody will win eventually and somebody will lose.
Copyright The Financial Times Limited 2008

Hungry miners reap rich harvest from potash

Carl Mortished, World Business Editor


It is being called the Saudi Arabia of fertiliser, farmers are yelling about cartels and a massive land grab is under way to exploit the riches of the world's latest commodity shortage. The mineral in high demand is potash, the main source of potassium, an essential ingredient in fertiliser, and the global spotlight has settled on Saskatchewan.
A third of the world's potash is found in the Canadian province, where temperatures can plunge to an un-Arabian -40C in winter and where the mineral is extracted by mining it from salt deposits in ancient seabeds.
Last week, Rio Tinto, the mining giant, declared that it wanted 10 per cent of the world market in potash. Rio is looking elsewhere, at developing Potasio Rio Colorado, a large potash deposit in Argentina, the only significant resource in Latin America. It is targeting the plantations of Brazil. This comes two months after BHP Billiton, Rio's great rival, launched a C$284 million (£141 million) bid for Anglo Potash to gain full ownership of a Canadian potash joint venture.
The miners' enthusiasm comes from soaring potash prices in a world hungry for food and desperate for the means to grow more food as quickly as possible. The price of potash has jumped fivefold in three years - and farmers are getting anxious. Indeed, in the emerging markets of Asia, where landholdings are small and agriculture is dominated by peasant producers, the cost of fertiliser is becoming a political issue. In India, where the Government subsidises fertiliser, the budget of 310 billion rupees (£4billion) is expected to triple to 950 billion rupees.

Potash Corporation, the Canadian company that dominates the global market, signalled recently that it had shipped cargoes to Asian markets at spot prices of $1,000 per tonne. Last week Potash Corp revealed quarterly earnings of $900 million (£451 million), up 60 per cent on last year
At a recent fertiliser conference in Vienna, U.S. Awarthi, managing director of the Indian Fertiliser Co-operative, one of the world's leading buyers, accused producers of combining against consumers to create cartels of suppliers. “There is a control of phosphate suppliers and control of potash which are creating havoc with agriculture,” he said. “We are appealing to the United Nations to put some fear of God in these cartels.”
The world consumes about 60million tonnes of potash and since the late 1970s demand for potash has been fairly stable. According to Barry Bain, a director of Fertecon, the fertiliser consultancy, a small group of suppliers in Canada, Russia and Germany has been able to manage supply. “It's an oligopoly,” he said. “Three marketing organisations represent about 70 per cent of sales of potash.”
These comprise Canpotex, the marketing organisation for the Canadian triumvirate of Potash Corporation, Mosaic and Agrium; BPC, representing the Belarussian and Russian producers Uralkali and Belaruskali; and K+S Kali, the German producer.
Rio considers that the present spot price is not sustainable and will subside, but it is expecting prices to remain high, above $700 per tonne. The additional production it is building in Argentina will be mopped up quickly. “We are optimistic that demand will take up the new supply,” Kevin Fox, Rio's general manager in Argentina, said.
“This is a supply-and-demand story,” Mr Bain said. “When crop prices are high and a farmer can see he will lose yield if he doesn't add fertiliser, he is prepared to absorb the extra cost. There is a net gain in yield from adding potash to crops.”
Grain prices, which had been soaring, have subsided, but they remain high and demand for more food in the world is still strong. That suggests that the potash sheikhs of Saskatchewan, deep in the sometimes frozen hinterlands of Canada, will continue to reap a good harvest.

Egypt to squeeze growth out of desert

By Heba Saleh in Cairo
Published: July 27 2008 22:57

For about six weeks from mid-May every year, grapes from the Shorouk farm in the Egyptian desert fill a gap on the shelves of European supermarkets waiting for southern European growers to begin sending grapes their way.
Shorouk is one of many modern farms in the re-claimed lands of the West Delta desert region driving a boom in Egyptian agricultural exports that reached $1.5bn (€955m, £750m) in 2007, up some 55 per cent over the previous year.
Egypt's grapes find space on European shelves

Behind the boom is the country’s cheap labour, proximity to Europe and its ability to grow high-value crops such as grapes, citrus fruit, vegetables and ornamental plants.
But for the desert farmers of Egypt the main challenge remains how to maximise the return on their water usage.
“The game here is how to get the maximum yield with the best quality . . . using the minimum amount of water,” Adel El Ghandour, one of the Shorouk farm’s owners, says.
At the moment the 500,000 cultivated acres in the West Delta are watered from an aquifer that is quickly becoming depleted.
A World Bank-funded project to supply piped water from the Nile is under way. But before it can be implemented Egypt had to obtain the agreement of the other nine Nile basin states.
Egypt’s share of the river is fixed by international agreements and Egyptian authorities are increasingly aware of the importance of using water judiciously if the needs of their expanding population are to continue to be met.
In the West Delta the farmers use modern methods such as drip irrigation which delivers exactly the right amount of water to each plant. Very little is lost.
But it is a very different picture in the ancient lands of the Delta and the Nile Valley.
Here the soil is fertile and the farmers use the age-old method of flood irrigation. It means water is used to cover the entire surface of the land to be irrigated. Almost half of it is wasted.
Experts say it is ironic that an acre in the old lands uses three times as much water as one in the reclaimed desert farms.
Another problem is the choice of crops. Rice and sugar cane, for instance, consume enormous amounts of water, but they are grown extensively.
There is consensus that agriculture in the old lands can be made more water-efficient but that conditions there cannot replicate those in the reclaimed desert farms.
Land holdings in the old areas are tiny and the farmers do not have the ability to keep abreast of international markets such as those of the West Delta.
In addition, small farmers are often too poor to make the necessary investments in modern irrigation systems.
Laws passed after the 1952 revolution broke up the big feudal estates into small holdings which were further divided up as the land was passed down through generations of children and grandchildren.
But the Egyptian government says it plans to embark on a project to overhaul irrigation in some 5m acres in the Delta in order to reduce lost water.
“I think with the prices of crops today and with the level of income from agricultural products where it is, this project is very feasible,” Rachid Mohamed Rachid, the minister of trade and industry, says.
“If we can economise on water usage this can give us the chance to increase our agricultural land by 2m-3m acres through desert reclamation.” Food security remains an important plank of the Egyptian government’s policy.
Crops that do not provide the maximum return on water are still grown because it is not certain they can be bought on the world market.
Egypt grows half the wheat it consumes, but it is still the world’s largest importer of the cereal.
With the recent increases in food prices internationally, many countries have slapped export bans on strategic crops such as wheat and rice to ensure that there are affordable supplies for local populations.
There is now a ban on the export of Egyptian rice.
“Food security is coming back as a main issue of concern of many countries because the ability to flow goods across borders is not guaranteed,” Mr Rachid says.
Copyright The Financial Times Limited 2008