Monday, 1 September 2008

Green arrow symbol does not always point to recycling

A green symbol featured on hundreds of supermarket products is "very misleading", consumer watchdogs say, as it does not mean the wrapping can be recycled as shoppers assume.

By Jessica Salter Last Updated: 1:07AM BST 01 Sep 2008

The intertwined arrows of the Green Dot appear on a range of products from soap and detergent dispensers to toothpaste tubes and crisp packets.
It is widely believed to signify that the product can be recycled and may encourage environmentally-friendly shoppers to buy it.
However the sign is not a recycling symbol and has no meaning in the UK.
Lucy Yates, the National Consumer Council's policy advocate, said: "It should be removed from all packaging in the UK because it's very misleading."
The Green Dot trademark is used by more than 130,000 companies encompassing 460 billion packages, including well-known brands in the UK such as Cussons washing up liquid and Aquafresh toothpaste from GlaxoSmithKline.
It does have a specific meaning in 23 EU countries, where it indicates that the manufacturers have paid their fees for a waste recycling programme. In these countries, any item with a green dot is placed in a dedicated bin and the materials are collected, sorted and recycled where possible by agencies funded from the fees.
It has been reported that the Green Dot has contributed toward recycling rates in Germany reaching 70 per cent of all waste.
But the UK does not use the Green Dot recycling system, and products are only allowed to display the symbol on packaging if it is also exported to countries where the symbol is mandatory.
Valpak, the company that regulates the use of the trademark in the UK, states on its website: "The UK Green Dot is not a recycling symbol."
In a letter sent to Andrew George, a Liberal Democrat MP who has raised the issue of the Green Dot in Parliament, Valpak's Chief Executive, Steve Gough, said: "The Green Dot does not identify packages for recycling - this is a widely held misconception."
Companies distributing products in the UK can use the symbol if they pay £235 for a Green Dot trademark licence.
Valpak says the licence fee merely covers operating costs.
The consumer giant Proctor and Gamble is among the companies legally allowed to use the symbol in Britain because it also distributes in the Republic of Ireland, which does use the Green Dot system.
Last year Ben Bradshaw, the health minister, said in a written answer to Mr George that Valpak was responsible for "ensuring the integrity of the mark is protected and that it is not used in a misleading fashion or in derogation of its meaning in any way".
Peter Ainsworth, Shadow Secretary of State for the Environment, said: "It is essential that we all have clear and honest information to help us do the right thing. Confusion is the enemy of action and it is action that we need above all."
A spokesman for the Department for the Environment, Food and Rural Affairs said: "The UK is not a participant in the Green Dot system and it is not a matter for Defra to comment on whether other EU Member States decide to use the label.
"Clear guidance on environmental labelling schemes can be found on the Defra website."

Former cricketer on sticky wicket over biofuel

By Alistair DawberMonday, 1 September 2008

Phil Edmonds, right, the former England spin bowler turned miner, is said to be annoyed about the press his businesses get for operating in countries such as the Democratic Republic of Congo and Zimbabwe, because other, bigger, companies operate in the same region and don't get so much stick.
He should probably get used to it as his latest venture is no less controversial. Today MrEdmonds is set to list Bioenergy Africa on the Alternative Investment Market (Aim), which will operate biofuel projects in Mozambique and has raised £8.6m from the IPO. The topic of biofuels can get people's hackles up, as they argue that the land used to generate ethanol could be better used to grow crops for food, keeping the cost of feeding people lower.
Bioenergy Africa counters by saying that the land in Mozambique had already been set aside for such a project and that by 2013, it plans to employ 7,000 local people. What is more, the groupundertakes feedingprogrammes that cater for as many as 1.5million in southern Africa.
All that is genuinely very commendable, and at the same time,because there is great demand for biofuel, Bioenergy Africa islikely to be a commercial success. MrEdmonds, however, probably cannot complain too much that he gets a few googlies from critics when he mines for platinum in Zimbabwe, and uses land that could grow food in Mozambique for the production of fuel.

Australia, frontier of a global rush to commercialize water

By Rob Taylor Reuters
Published: August 31, 2008

CANBERRA: On the cracked gray clay of an ancient lake bed on the edge of Australia's outback, Guy Kingwill is at the frontier of a global rush to commercialize water.
Despite a long-running drought, Kingwill, who runs the vast Tandou farm, 142 kilometers, or 88 miles, southeast of the mining town of Broken Hill, has just sold his property's critical water on a national market rather than pump it into irrigated cereal crops.
"The return on the water is higher," Kingwill told Reuters. "Where we are, it's broad-acre cropping. But the market now is driving significantly more per megaliter from horticulture than you can get a profit margin out of wheat and barley," he says.
Around the world, speculators are increasingly looking to water as a new profit engine as supplies dwindle, caught between booming populations demanding more access and climate warming threatening its very availability.
Australia, the most parched inhabited continent, has for 25 years had an internationally unique water market to better share supplies among farmers and reverse years of allocating more water than the country's rivers and dams could spare.

That market last year traded $1.1 billion in permanent and seasonal water rights, according to Mark Siebentritt, the operations manager for the Australian water broker Waterfind, who says business last year grew by 20 percent.
But Kingwill, whose corporate farm is listed on the Australian Stock Exchange, says that prices are being pushed up by a metaphorical gold rush, luring bankers and speculators both at home and internationally to a new and waterlogged Elysian field.
With drought gripping some areas for a decade, prices for one megaliter of seasonal water - enough for an Olympic-size pool - are peaking at 600 Australian dollars, or $517, while permanent water entitlements are less volatile but still pricey at up to 2,500 dollars a megaliter. "You've got from the biggest financial institutions down to Auntie Jane buying 10 megaliters of water," Kingwill says "It's now an asset, just like a block of land, and people are buying on a daily basis."
While Australia has the most mature water market, it is stunningly complex, with about 10,000 rules and the regulation of four states spreading over the huge food bowl in the Murray-Darling river basin in the southeast.
The country's consumer protection agency, the Australian Competition and Consumer Commission has been asked by the center-left Labor national government to develop new and uniform rules for how water should be priced and traded.
State governments agreed in 1993 to establish a free market underpinned by a national register of water entitlements. Development has so far been hobbled by political rivalries and water overallocation problems in some regions.
"What we want to do is to see water trading freed up so it can trade not only across regions, but also across state borders," said the commission chairman, Graeme Samuel.
But some farmers are wary of intervention by the powerful national regulator, fearing it will further push up prices when drought is already evaporating supplies and even major cities are enforcing tough water-saving measures, like no car washing.
In July, Water Minister Penny Wong extended the time for farmers to have a say in the coming changes, with the commission to report back in December and again in June 2009.
"By making it so investors can come in, there is concern the small guy on the block is not getting a fair shake," Kingwill said. "But then again, some argue that the more investors come in, they drive the value up. The arguments go on forever."
Siebentritt of Waterfind says his business has been tracking water trade for 20 years and has developed an electronic platform that automatically matches registered buyers and sellers, advising which areas are legally entitled to trade.
Kingwill's Tandou farm, which has more land under water-saving subsurface drip irrigation than any other farm in Australia, is a client, with a sizable ability to store water.
But Siebentritt does not see water making the transition anytime soon to a pure investment rather than a public right overseen by government and used 70 percent for agriculture.
"There's some speculation, but people investing in water now are doing it as a way of investing in agriculture," he says.
"What drives the price is the value of the produce that can be grown with the application of that water, so really the price of commodities on international markets - whether it be food or rice or cotton - is having an impact on the value of water," Siebentritt says.
Wendy Craik, in charge of managing water for the food bowl through the Murray-Darling Basin Commission, said there had been an "explosion" on the water market in recent years, with about 30 percent of all available water traded.
"We're seeing corporate groups getting together and purchasing water, and then having an arrangement with farmers where they provide the water to produce a crop," Craik says.

Tajikistan hopes water will power its growth

By David L. Stern
Published: August 31, 2008

NUREK, Tajikistan: The inscription just above a tunnel at the foot of the colossal Nurek hydropower dam in south central Tajikistan is succinct: "Water Is Life." The frigid, frothing Vakhsh River rushing under it adds a visual punctuation mark.
In Tajikistan, the source of more than 40 percent of Central Asia's water, this is no mere platitude. The mountainous state lacks the industry and natural riches that bless other former Soviet Central Asian republics. Water is one of the few resources the country possesses in great abundance.
For this reason, President Emomali Rakhmon has pinned Tajikistan's economic hopes - and perhaps even its continued political existence - on developing its hydropower potential. Three projects are either under construction or being considered, including Rogun, a gargantuan structure farther up the Vakhsh River that, as it is now envisioned, will surpass Nurek in height by more than 30 meters, or 100 feet. Tajik officials say that they have hopes of building more than 20 hydroelectric plants and dams.
But a number of sizable hurdles must first be surmounted before the plans for a great hydropower future can be realized. Tajikistan is in an earthquake zone and the dams must be built to withstand major seismic shocks. Officials are expected to conduct environmental impact studies to determine whether any flora or fauna will be threatened.
The Tajik government is also heavily in debt and must find shiploads of foreign investment to build the dams. On Wednesday, China agreed to build a $300 million hydroelectric power plant, the Nurobad-2, with a capacity of 160 to 220 megawatts. But Tajik officials say that Rogun alone will cost up to $3.2 billion.

Further afield, the region's complicated water politics, where upstream and downstream countries have diametrically opposed needs and aims, threatens to boil over.
Here, water irrigates endless fields of cotton, one of the main sources of income in this primarily agricultural land. Nurek - the world's highest dam at nearly 300 meters and a prestige project of the Soviet Union - is the difference between light and darkness, heat or no heat, for the majority of Tajikistan's seven million inhabitants, supplying nearly all the country's energy needs. It also provides cheap electricity to power the Talco aluminum plant, the republic's largest industrial enterprise.
Though for the moment it seems to be managing, Tajikistan threatens to become a failed state, say Western observers and diplomats, speaking on condition of anonymity because of the delicacy of the issue. The country still has not fully recovered from a devastating civil war a decade ago. State coffers are virtually empty, while the government is viewed as unable to meet basic needs.
The situation was laid bare last winter when prolonged subzero temperatures overloaded the Soviet-era electrical grid, plunging the entire country into cold and darkness. For Western officials working in Tajikistan, the emergency was a disturbing revelation of the government's dysfunction.
"The crisis was not caused by the winter weather," said an official of an American nongovernmental organization who spoke on condition of anonymity because he was not authorized to speak to the news media. "The crisis was triggered by the winter weather, but caused by chronic mismanagement."
All Tajikistan's power troubles will be remedied by the dam projects, the Rakhmon government hopes. They will not only provide for all of Tajikistan's energy needs but also allow the country to export power to neighboring states.
"It's a good idea - hydropower is one of the few resources that Tajikistan can exploit," said John Morgan, an official with Usaid, the American assistance program, and a power specialist. "Power lines could go to Afghanistan and Pakistan, which are both energy-starved countries, and to the rest of Central Asia as well."
Rogun, for example, will generate about 13 billion kilowatt hours a year, more than 80 percent of the country's average consumption, officials at the construction site say. In the short term, Sangtuda-1, a hydropower plant that began operating last winter, will take on some of the country's electrical heavy lifting, though its introduction failed to resolve the electricity crisis.
But outside investors are leery. While individual investors who are more accepting of risk may materialize, international donor organizations and banks have become more circumspect with Tajikistan.
Besides the dysfunction and corruption revealed by the winter crisis, the International Monetary Fund recently announced that Tajikistan had misreported its finances six times during the last decade, an IMF record. Rakhmon has asked Tajiks to voluntarily forfeit a month's wages, or about $10 million, to finance the initial building stage.
Water issues must also be resolved. Central Asia's disagreements over how to allocate water resources resemble the Middle East's in their complexity and potential for conflict. Downstream countries, most prominently Uzbekistan, have steadfastly opposed Tajikistan's hydroelectric plans. The two countries are engaged in an undeclared cold war, western diplomatic observers say.
The Uzbeks, who need to provide for their expansive and inefficiently irrigated cotton fields, say that the dams will disturb the water cycle, withholding water in the summer when it is needed and releasing it in the winter for electricity.
Tajik authorities say that the opposite will be true and that the dams will in fact better regulate water distribution: water will be held in the winter and released in the summer.
Other analysts say that the Uzbeks, who supply electricity to Tajikistan, fear they will lose leverage over their neighbors.
"The thing is, the more dams, the more control the Tajiks will have over the water, and that's what the Uzbeks are afraid of," said a Western diplomat in the capital, Dushanbe.

Delhi residents oppose waste-burning power plant

The Associated Press
Published: September 1, 2008

NEW DELHI: India's capital has a lot of garbage and far too little power.
This is a city where many neighborhoods go without power for hours every day and where enormous piles of garbage mix with summer temperatures that can soar to 113 degrees Fahrenheit (45 degrees Celsius), creating a stew of putrid smells and swarming flies.
So a decision by the New Delhi government to build a 2 billion rupee (US$45.5 million) power plant that would burn thousands of tons of garbage every day and produce some of that much-needed electricity seemed like the ideal solution to both problems.
Except, critics say, there is little chance anything will come from this plant but noxious fumes and wasted money.
"It's just a knee-jerk response to not being able to handle municipal waste. And we're a power-hungry country," said Kushalpal Singh Yadav, a coordinator with the independent Center for Science and Environment, one of India's most respected environmental groups. "I'm very, very skeptical that this kind of technology will ever work."

While garbage-to-energy plants have worked elsewhere around the world, they have failed repeatedly in India, where residents sell most of their waste to recyclers. That leaves household garbage largely made up of moist food waste and un-recyclable — and often dangerous — products like used batteries.
At best, such garbage is poorly suited to the hot fires needed to produce electricity, critics say. At worst, it's dangerous.
"It creates a cocktail of toxins which have in the past led to health problems ranging from cancer to skin rashes to stillbirths," said Gopal Krishna, an environmental health expert working with several residents' groups that oppose the project.
Yadav noted that New Delhi had a failed plant that used similar technology in the late 1980s, and another plant in southern Andhra Pradesh state is also stalled.
Then there are the problems most obvious to the low-income and middle-class neighborhoods that surround the area where the plant is slated to be erected.
"The smell of the garbage is already overwhelming," said Arif Khan, a resident of the Gaffar Manzil neighborhood, which shares a boundary wall with the site and is already home to a garbage recycling facility. "When 2,000 tons of garbage arrives in trucks here every day, I don't know how we'll manage."
From the balconies of the small homes that crowd the periphery of the proposed plant site, the view is a sea of rotting garbage. The stench and swarms of flies make it hard to even open your mouth.
So why build the plant, which is expected to start working in early 2010?
India's economy has grown at an average of 8.8 percent for the last five years, according to government data, and more power is desperately needed, both by its growing middle class and industry.
During peak hours, demand outstrips supply by as much as 25 percent in some parts of the country, causing frequent outages and forcing shutdowns at factories and business establishments.
The country, which depends mostly on coal-fired generating stations, needs hundreds of new power plants over the next five years to end the massive electricity shortages that threaten to derail the quick clip at which its economy is growing, Prime Minister Manmohan Singh said last year.
"If we expect our economy to keep growing at 9 percent to 10 percent annually, we need a commensurate growth in power supply," Singh said at a government meeting.
By 2012, India will need to generate at least 200,000 megawatts of power to eliminate shortages, Singh said. Currently, the country has a total capacity of 130,000 megawatts.
India's power production is mostly run by cash-strapped state governments. Although the power sector was opened to private investment more than a decade ago, few companies have built new plants because of regulatory bottlenecks.
The New Delhi government, for its part, insists the garbage-to-power project will work — and that environmental and health assessments make clear the project is safe.
"We had done an impact assessment survey before the project, and we have taken due precautions that it doesn't impact the ecology or environment of the neighborhoods," said Deep Chand Mathur, a spokesman for the Municipal Corporation of Delhi, which is one of the government departments behind the project.
"The site itself was identified after a lot of studies," he said.
Of the plant's proximity to homes, Mathur said the city is very short of suitable land.
Residents, though, say the city simply ignores them.
Last week, hundreds of residents staged a rally to protest the plant, but are still stonewalled by officials. Khan said that after dozens of letters and appeals the protesters were waiting for a meeting to be scheduled with officials senior enough to make a difference.
"No one from the government has so far met us to hear our complaints," he said.

Massive floating generators, or 'eco-rigs', to provide power and food to Japan

Leo Lewis, Asia Business Correspondent

Battered by soaring energy costs and aghast at dwindling fish stocks, Japanese scientists think they have found the answer: filling the seas with giant “eco-rigs” as powerful as nuclear power stations.
The project, which could result in village-sized platforms peppering the Japanese coastline within a decade, reflects a growing panic in the country over how it will meet its future resource needs.
The floating eco-rig generators which measure 1.2 miles by 0.5 miles (2km by 800m) are intended to harness the energy of the Sun and wind. They are each expected to produce about 300 megawatt hours of power.
Some energy would be lost moving the electricity back onshore, but when three units are strapped together, scientists at Kyushu University say, the effect will be the same as a standard nuclear power station.

The eco-rigs' gift to the environment does not stop there: some of the power that the solar cells and wind turbines produce will be hived off to fuel colossal underwater banks of light-emitting diodes (LEDs).
The lamps are intended to convert the platforms into nurseries for specially selected seaweed that absorbs carbon dioxide and feeds fish and plankton. Deep-sea water that is rich in minerals will enhance the seaweed growth. The wind turbines will power pumps that will then draw the water to the surface.The rigs will be unmanned and comprise several hexagonal platforms.
Strapped between them will be large nets designed to support the weight of wind turbines and about 200,000 hexagonal photovoltaic generators — super-efficient solar panels that are about the size of a double bed. The LEDs will shine down from the panels.
As a country with virtually no fossil fuels, price rises in oil and gas have chilled the corporate sector and the Japanese Government.
Japan's faith in nuclear power has also taken a beating. An earthquake caused its largest nuclear plant to shut down in 2007 and engineers and seismic experts cautioned that the country's high susceptibility to quakes placed the industry at risk.
The Kyushu team says the plans are about three years away from becoming reality. It began tests on a scale version of the eco-rig last month, and full-scale official evaluation is expected to begin soon.

Reopening of waste plant in Beijing angers residents

The Associated Press
Published: August 31, 2008

BEIJING: Scores of people protested in Beijing against a garbage disposal plant that they said had been releasing noxious fumes, and two demonstrators were hurt in a scuffle with security officials, a rights group said Sunday.
The Information Center for Human Rights and Democracy, based in Hong Kong, said the protesters Saturday had called for the resignation of the top environment official in the Chaoyang district of Beijing , where the Gao'antun garbage incineration plant is located.
The rights group said about 500 people had been involved in the protest, but the number could not immediately be confirmed. The information office of the Beijing Public Security Bureau said Sunday that it had no information about the incident.
The demonstration was held near the plant, and a tussle between protesters and the authorities resulted in the injuries to two protesters, the group said.
The rights group also said that one of the organizers of the protest was missing Saturday night and presumably had been taken away by security officials.

An employee of a restaurant near the road junction where the demonstration was held said "many people" had taken part in a protest, some of them wearing face masks.
The employee, who gave only her surname, Zhang, said she was not clear about the reason for the gathering.
The group said the protest had been organized by residents of two apartment complexes in the district. Telephone numbers of the complexes were not immediately available.
A man from a team set up by the Chaoyang district government to look into the issue said about 100 people had participated in the protest. He refused to give his name or provide more details, saying he was not authorized to speak to the media.
According to the rights group, thousands of residents living near the garbage disposal plant have suffered from rank and poisonous air released by the plant.
It said the plant had closed during the Olympic Games, which were held in Beijing in August, but resumed operations after the Games ended.
The statement said respiratory and other health problems had surfaced among some residents near the plant.
Separately, a petitioner from the Hubei Province in central China was detained and sent to a labor camp for 15 months after accepting a phone interview by a foreign journalist during the Olympics, another rights group said Sunday.
On Aug. 28, Wang Guilan was sent for re-education through labor for "disturbing the public order," and was believed to be held at a detention center in Enshi, a city in Hubei, said the Chinese Human Rights Defenders, which is based overseas.
A man who answered the phone at the Enshi detention center refused to check whether Wang was being held there, referring all further queries to the Enshi Public Security Bureau, where telephones rang unanswered.
China's re-education system, in place since 1957, allows the police to sidestep a criminal trial or a formal charge and send people directly to prison for as long as four years to perform penal labor.
Critics say the system is misused to detain political or religious activists, and violates suspects' rights.

All eyes on China’s clean-up effort

By Ruth Sullivan
Published: August 31 2008 19:42

Early signs that China, one of the world’s worst polluters, is beginning to tackle its environmental impact is seen in some quarters as a big investment opportunity.
Restrictions imposed by the state environmental protection agency, the recent beefing up of the agency to ministry level, and the move by the central bank and banking watchdog to ban banks from lending to heavy polluting industries, are among the signals Asia and emerging market specialist Lloyd George Management has noted.

“China is in the next stage of development and is going to have to spend serious money cleaning up the air, water and soil which has suffered in the last 25 years of hell-for-leather growth,” says Robert Lloyd George, founder and chief executive of the eponymous asset manager, which was set up in Hong Kong in 1991. “I think we will see billions of dollars spent on the greening of China over the next decade and this provides an investment opportunity,” he adds.
He believes it is the next big investment theme in Asia and maintains Lloyd George is the first fund management company to identify it in the region.
With an eye to such opportunities, the asset manager, which has 95 per cent of its $11bn (£6bn, €7.4bn) assets invested in Asia, rolled out the LG Asian Green Fund in June, with seed capital of $36m.
Mr Lloyd George, a great grandson of David Lloyd George, the first world war prime minister, is confident the fund will reach $100m by the end of the year.
The Dublin-based Ucits III fund, which is run from Hong Kong, invests in companies in the Asia-Pacific region, focusing on alternative energy producers that play a role in reducing oil dependency in the region. These include wind turbine manufacturers in India, desalination plants in Korea and solar equipment makers in China.
The asset manager, a signatory to the UN Principles for Responsible Investment, has been keeping an eye on government announcements on renewable energy. It says China’s central government has committed itself to a target of increasing its renewable energy to 10 per cent of total energy consumption by 2010, increasing to 15 per cent by 2020.
Mr Lloyd George believes Asia will become a dominant manufacturing hub for energy efficient products such as hybrid cars from Japan and LED (light emitting diodes) lighting production from Korean companies over the next 5-10 years.
He also expects investment opportunities to emerge as growing environmental awareness among Asian customers starts to drive companies to address issues such as carbon footprint, product traceability and supply chain audits.
The fund has caught the attention of European pension funds, particularly in France and Germany where investors are “more switched on to green issues”, and institutional investors in the UK and US, he says.
He is hoping it will follow the performance of its sister fund, the Asian Natural Resources Fund – an investment theme Lloyd George identified in the region five years ago – which has seen more than 26 per cent annual net returns since launch in 2003.
On the domestic front, Mr Lloyd George is in the early stages of setting up a joint venture fund management business to attract China’s local investors who he describes as “shell-shocked” after the stock market (Shanghai Composite) plunged more than 60 per cent from its record peak last October. Since setting up the original company he has seen a strong flow of US money into China and Asia; now he is expecting some of the flow to move from east to west.
Being well-known in China and having three local founding partners with regional expertise helps in setting up a joint venture, he says. “That makes us different. We’re not a western fund management company, most of my partners and colleagues are Chinese, giving us an Asian angle.”
Despite the advantage, the process of gaining relevant permissions from Chinese authorities has moved at “glacial speed”, he adds.
It is not an easy time to invest in Asian emerging markets where inflation – above 6 per cent – is the new concern and markets are volatile, says Mr Lloyd George. Many question marks remain over China, where most companies are still state owned and corporate governance is weak.
Despite this, the firm’s partners on the ground are keen to invest more in the country. Mr Lloyd George says he sometimes feels the lone cautious voice among them but is optimistic that “markets will pick up by the end of year”.
He is even more upbeat that green investment is a “good long-term theme” for the region.
Copyright The Financial Times Limited 2008

China Light and Power upbeat on UK deal in spite of Beijing move

By Tom Mitchell and Robin Kwong in Hong Kong
Published: September 1 2008 03:00

China Light and Power, Hong Kong's largest energy company, hopes shortly to finalise a provisional natural gas contract with the UK's BG Group worth billions of dollars in spite of a government agreement that appeared to redirect the lucrative supply arrangement to two Chinese state-controlled oil and gas companies.
In a bilateral memorandum of understanding announced last week by the Hong Kong and Chinese governments, Beijing said it would support the 20-year renewal of existing supply arrangements from China National Offshore Oil Corporation's gas fields in the South China Sea.
The two governments also agreed to study the feasibility of supplying Hong Kong from China's second West-East Gas Pipeline, which is being built by PetroChina. Unlike PetroChina's domestic business, any sale of its gas to Hong Kong would not be subject to government price controls.
The surprise agreement appeared to trump a provisional supply arrangement signed in June, under which BG Group agreed to provide CLP with one million tons of LNG a year from 2013 to 2033. CLP did not reveal how much it would pay BG Group under the two companies' 20-year "heads of agreement", but such long-term gas contracts are typically worth billions of US dollars.
However, CLP told the Financial Times: "Even with the gas supplies cited in the MoU, significant quantities of LNG will still be needed to meet our full requirements for natural gas . . . We will continue working to finalise the sales and purchase agreement [with BG Group] in 2008."
BG Group declined to comment.
CLP has long argued that it needs new gas supplies because reserves at Yacheng, a CNOOC-controlled field in the South China Sea, are running low. To import new supplies from BG Group, CLP has proposed building an LNG receiving terminal in Hong Kong. The project, which is bitterly opposed by environmental groups, has yet to receive final government approvals.
Speaking after last week's MoU, senior Hong Kong government officials suggested that CLP would no longer need to build a receiving terminal in Hong Kong. Hong Kong's agreement with the Chinese government instead proposes the construction of an LNG receiving terminal across the border, in nearby Shenzhen.
But the Hong Kong government did say that any new supply agreements between CLP and Chinese energy companies would have to be "worked out on commercial principles between the relevant enterprises on both sides".
"The MoU introduces a new possible location for a LNG receiving terminal," CLP's spokesperson added. "We will study this alternative and consider the feasibility of using it to supply [our] power station by 2013."
CLP's Hong Kong-traded shares fell sharply in response to the bilateral MoU, dropping 3.57 per cent on Friday to HK$63.50, because of fears that the company would be forced to cancel its plans to build an LNG terminal in the territory.
Copyright The Financial Times Limited 2008

Deforestation rises sharply as farmers push into Amazon

Tom Phillips in Rio de Janeiro
The Guardian,
Monday September 1 2008

Concerns over the destruction of the Brazilian rainforest resurfaced at the weekend after it emerged that deforestation jumped by 64% over the last 12 months, according to official government data.
Brazil's National Institute for Space Research this week said that around 3,145 square miles - an area half the size of Wales - were razed between August 2007 and August 2008.
With commodity prices hitting recent highs and loggers and soy farmers pushing ever further into the Amazon jungle, satellite images captured by a real-time monitoring system, known in Brazil as Deter, showed that deforestation was once again on the rise after three years on the wane.
The figures launched the controversy over how best to preserve the Amazon rainforest onto the front pages of Brazilian newspapers, and triggered a war of words between environmental campaigners and members of the government who claim that their struggle to protect the rainforest is not being given sufficient recognition.
"This is not about luck, it is about work, work, work," Brazil's environment minister, Carlos Minc, told reporters. News that total deforestation rose over the entire year came quickly after the announcement of monthly figures showing that month-on-month deforestation had in fact fallen. Government figures show that between May and June this year deforestation fell by 25%.
Despite the good news in recent months about the deforestation of the world's largest tropical forest slowing, Minc admitted his country still faced huge challenges in order to stamp out illegal logging and described the levels of destruction as "alarming".
"We can't celebrate [the monthly drops] because deforestation is [still] very large. We have to invest everything into sustainable development," Minc told the Folha de Sao Paulo newspaper.
Critics claimed that the annual statistics gave a more accurate picture of the destruction been wrought on the Brazilian jungle.
Environmental campaigners fear that Brazil's push to expand its economy and develop the Amazon region is posing increasing threats to Brazil's natural resources. They accuse the government of retreating from its promises to defend the Amazon rainforest, which has been decimated since the 1970s by a mixture of logging, cattle ranching and soy farming.
"The president [Luiz InĂ¡cio Lula da Silva] said there would be no steps backwards," the former environment minister Marina Silva said in an interview published yesterday in the O Globo newspaper. "But suddenly there is a conjuncture of things that go against everything that was being done."

Rate of Amazon deforestation increases

The Associated Press
Published: August 31, 2008

RIO DE JANEIRO, Brazil: The rate of Amazon deforestation increased 69 percent in the past 12 months - the first such increase in three years - as rising demand for soy and cattle pushed farmers and ranchers to fell trees, officials said Saturday.
About 8,147 square kilometers, or 3,145 square miles, of forest were destroyed between August 2007 and August 2008 - a 69 percent increase over the 4,820 square kilometers felled in the previous 12 months, according to the National Institute for Space Research, which monitors destruction of the Amazon.
"We're not content," Environment Minister Carlos Minc said.
"Deforestation has to fall more and the conditions for sustainable development have to improve."
Brazil's government has increased cash payments to fight illegal Amazon logging this year, and it eliminated government bank loans to farmers who illegally clear forest to plant crops.

The country lost 2.7 percent of its Amazon rain forest in 2007, or 11,000 square kilometers. Environmental officials fear even more land will be cleared this year, but they have not forecast how much.
Minc says monthly deforestation rates have slowed since May, but environmental groups say seasonal shifts in tree cutting make the annual number a more accurate gauge.
Most deforestation happens in March and April, the start of the dry season, and routinely tapers off in May, June and July: Last month, 323 square kilometers of trees were felled, 61 percent less than the area cleared in June.
Environmentalists argue that the deforestation report was not designed to give accurate monthly figures, but to alert and direct the government to deforestation hot spots in time to save the land.
The Amazon region covers about 4.1 million square kilometers of Brazil, nearly 60 percent of the country. About 20 percent of that land has already been deforested.

Can engineering the earth save it from catastrophe?

By Steve Connor, Science EditorMonday, 1 September 2008

Fears that the world is not doing enough to cut carbon dioxide emissions are forcing scientists to "think the unthinkable" by taking seriously the idea that humans may have to alter the global climate artificially with mega-engineering projects.
The Royal Society will launch a study later this year aimed at reviewing the possibility of saving the planet by "geoengineering" the climate on the grandest scales imaginable.
Geoengineering encompasses schemes such as fertilising the oceans with iron filings to draw down CO2 from the atmosphere, creating more reflective clouds, or even pumping vast quantities of sulphate particles into the air to simulate volcanic eruptions that cut out sunlight and lower global temperatures.
Until recently geoengineering has been a technology that dare not speak its name. However, a growing disillusionment with the ability of governments to reduce CO2 emissions has forced scientists to come up with a possible last-ditch technological fix to avert global catastrophe.
"Global emissions of greenhouse gases continue to rise, so there is inevitably interest in technologies that may be able to provide a 'fix'," said Lord Rees of Ludlow, the president of the Royal Society.
"It's not clear which of these geoengineering technologies might work, still less what environmental and social impacts they might have, or whether it could ever be prudent or politically acceptable to adopt any of them ... None of these technologies will provide a 'get out of jail free card' and they must not divert attention away from international efforts to reduce emissions of greenhouse gases."
The Philosophical Transactions of the Royal Society, published today, devotes an entire issue to examining ways of altering the climate or interfering with the carbon cycle in a way that could offset the rise in greenhouse gases and the consequent increase in temperatures.
Professor Ken Caldeira of Stanford University said it was important to plan now for the possibility of having to use geoengineering. "Every year CO2 emissions continue to climb," he said. "Reducing CO2 emissions requires individual sacrifice in the here and now for the public good of the distant future. If we start soon, we can phase in climate engineering slowly and cautiously, and back off if something bad happens. The least risky thing to do is to start testing soon."
Professor Stephen Schneider, a climate scientist at Stanford who has resisted geoengineering in the past, said: "We are being placed in the precarious position of choosing the lesser of two evils. Potentially dangerous, uncontrolled climate change due to greenhouse gases emissions; or technological fixes involving large-scale geoengineering projects."
Geoengineering projects
*High Reflection
The eruption of Mt Pinatubo in 1991 pumped enough sunlight-reflecting sulphates into the upper atmosphere to cool the Earth by 0.5C for up to two years. It may be possible to inject sulphates into the stratosphere from aircraft, right, but this would not deal with ocean acidification caused by rising CO2 and might cause acid rain.
*Low Reflection
A variation would be to pump water vapour into the air to stimulate cloud formation over the sea, thus raising Earth's albedo (proportion of light reflected). Seawater could be atomised to produce tiny water droplets that would form low-level maritime clouds.
*Fertilising the sea
The limiting factor for growing phytoplankton – tiny marine plants – is the lack of iron salts. Adding iron to "dead" areas of the sea leads to blooms which absorb CO2. But whether the plants will sink, taking the carbon out of circulation, or be eaten, returning it eventually to the atmosphere is not clear.
*Mixing layers
Giant tubes could be built to carry surface water rich in dissolved CO2 to lower depths where it will be locked under the temperature gradient that keeps deep water layers from surfacing. Critics fear it could instead bring carbon locked in the deep ocean to the surface.

Global warming's toasty water connection to Gustav

The Associated Press
Published: September 1, 2008

WASHINGTON: Global warming has probably made Hurricane Gustav a bit stronger and wetter, some top scientists said, but the specific connection between climate change and stronger hurricanes remains an issue of debate.
The Atlantic is seeing an increase in storms rated among the strongest. In the past four years, Hurricanes Gustav and Katrina, and six other storms have reached Category 4 or higher with sustained winds of at least 131 mph (211 kph), according to research at Georgia Tech.
Six scientists contacted by The Associated Press on Sunday said this shows some effect of global warming, but they differ on the size of the effect.
"We are just seeing a lot more Categories 4 and 5 globally than we have ever seen," said Judith Curry, chairman of Earth and atmospheric sciences at Georgia Tech. "The years 2004, 2005 and 2007 are quite high. We're just seeing more and more."
Measurements of the energy pumped into the air from the warm waters — essentially fuel for hurricanes — has increased dramatically since the mid 1990s, mostly in the strongest of hurricanes, according to a soon-to-be published paper in the journal Geochemistry, Geophysics, Geosystems by Kevin Trenberth, climate analysis chief at National Center for Atmospheric Research in Boulder, Colorado.

But the same scientists also caution it is impossible to blame global warming for any single weather event and that some form of Gustav (and other hurricanes) would have likely still formed and turned deadly without man-made climate change.
Yet the fingerprint of global warming on the strongest storms is becoming clearer with new research, scientists said. And that includes Gustav, which reached Category 4 status Saturday before weakening.
"The strongest storms are expected to be stronger," said Gabriel Vecchi, a research oceanographer for a National Oceanic and Atmospheric Administration lab in Princeton, New Jersey. "And since Gustav is a very strong storm, you'd expect Gustav to have had an effect from human-induced global warming."
But how much of an effect is where it gets tricky. Vecchi said he can't tell how much, which makes him uncomfortable as a scientist. Trenberth calculated, in an earlier journal article, that major storms like Katrina and Gustav probably have increased their rainfall by about 6 to 8 percent because of global warming.
Warmer water makes the surface air warmer, which means it could contain more moisture. That means more hot moist air rises up the hurricane, serving as both fuel for the storm and extra rainfall coming back down, said Peter Webster, professor of atmospheric sciences at Georgia Tech.
For the past several years, scientists have traded papers and jibes about the effect global warming has already had — if any — on hurricanes. Some scientists, such as Christopher Landsea at the National Hurricane Center, have faulted the quality of storm numbers and the length of time used for historical study used by Curry, Webster and others to connect to hurricanes to global warming.
"Yes, climate change is impacting hurricanes," Landsea said. But the effect on storm intensity now is "very small," something that can't be noticed in a storm so big, he said.
Hugh Willoughby, a former government hurricane research director and now professor of meteorology at Florida International University in Miami, is not quite as convinced. However, he said a consensus seems to be forming on a global warming effect on just the strongest of hurricanes. But he said he thought Webster and others are exaggerating the effects.
Hurricane activity cycles — where about every 25 years a lot of storms form followed by another quarter-century of fewer hurricanes — plays a bigger role than global warming, Willoughby said.
"We have a real effect due to climate change," Willoughby said. "But the dominant effect in my mind is just bad luck."
Plus, Willoughby said Gustav probably has little or no climate change effect to it because it looks just like similar storms from decades and even centuries ago.
Curry thinks it's more than cyclical. The number of strongest storms now is far more than it was in the 1940s and 1950s, the last flurry of hurricane activity, she said.
And it's only getting worse, Curry said. From 1975 to 1990, about 17 percent of all hurricanes around the world were Category 4 and 5. From 1990 to 2004, that jumped to 35 percent. And from 2003 through last year it was up to 41 percent — not including this year's Gustav.

Scientists issue warning that technology to beat global warming may backfire

From The Times
August 31, 2008
Mark Henderson

Engineering solutions to modify the Earth's environment and climate may be necessary if humanity is to adapt to global warming, a group of influential scientists will say today.
Technological fixes such as encouraging cloud formation and increasing the amount of carbon dioxide absorbed by the oceans have the potential to limit climate change, according to papers published in a special issue of the journal Philosophical Transactions of the Royal Society.
The experts, however, also give warning that there is no guarantee that such ingenious schemes will work, and that so-called geo-engineering needs to be assessed properly to ensure that it does not cause more problems than it solves.
Professor James Lovelock, the environmental scientist who developed the Gaia hypothesis of the Earth as a self-regulating organism, likened geo-engineering to 19th-century medicine — a tool that might sometimes work, but was generally too primitive to stave off disaster.

“Whether or not we use ... geo-engineering, the planet is likely, massively and cruelly, to cull us, in the same merciless way we have eliminated so many species by changing their environment into one where survival is difficult,” he said.
“Before we start geo-engineering, we have to raise the following question: are we sufficiently talented to take on what might become the onerous permanent task of keeping the Earth in homeostasis [balance]?”
He raised the example of introducing aerosols into the stratosphere to induce a cooling effect. While this might have positive effects, it would not address ocean acidification, a separate problem caused by rising carbon emissions, which would then require another engineering solution. “We have to consider seriously that as with 19th-century medicine, the best option is often kind words and painkillers but otherwise do nothing and let Nature take its course,” Professor Lovelock said.

Counters face up to green beans

By Robert Bruce
Published: September 1 2008 03:00

The outsider's perception of accountants would be that they are far from being the greenest of professions when it comes to taking action on climate change.
Once upon a time that perception would have been true. But it is changing.
The reason is simple: figures. Good intentions on environmental matters might pass them by but if accountants have figures to measure, then they can see how they affect an organisation's overall strategy.
Roger Adams, executive director, policy, at the Association of Chartered Certified Accountants, (ACCA), is a veteran in this field.
"It has gone from an empty page to a crowded landscape in 15 years", he says. "Then, finance directors looking at annual reporting would not have thought about environmental or social factors except for issues such as the Exxon Valdez oil spill disaster. Apart from a rarity like that, you would have seen very little."
That has now changed and, if anything, finance directors are swamped by initiatives, programmes and frameworks.
"There are so many initiatives," says Jan Babiak, global climate change and sustainability services leader at Ernst & Young. "The problem is that there are so many standards and different people want different things from financial reporting."
Mr Adams says: "If I were a finance director, I would wonder what really applies to me at the moment."
Mark Bromley, head of business performance at EDF Energy, says: "We set up our sustainable future project in 2006 using corporate social responsibility (CSR) as a driver of business performance.
"We pledged to cut carbon intensity from our generation activities by 60 per cent by 2020 and were looking at radically transforming the culture of the business. We wanted to find a good methodology for reporting."
He became involved in the work of The Prince of Wales Accounting for Sustainability Project and - before the project's report was published last December - started taking elements of it, in particular the connected reporting framework, which it devised and advocated, into their financial reporting systems.
"The connected reporting framework was fully aligned with our thinking," he says, "and we used the framework as a dynamic management reporting tool."
The aim of the framework is to ensure that sustainability measures are not isolated in a CSR report, but are connected to the mainstream of financial reporting and have a consequent knock-on effect on corporate strategy.
"The reporting of sustainability issues is not embedded in many businesses," says Mr Bromley. "Now we can see if we are delivering."
Louella Eastman, group CSR director at insurance group Aviva, was a member of the steering committee of the Accounting for Sustainability project and pioneered the use of the connected reporting framework within the group.
"Last year, we decided to use the environmental indices in the report and we had to partner with finance as we didn't normally collect the information. The learnings were profoundly more interesting than I expected."
The connection of the two disciplines produced strategic change.
"It became a discussion about cost," she says, "and, for example, we moved our cleaners on to a day-shift from evenings and told the security staff to switch the lights off." It was a simple action but it brought about serious financial change.
"We have 30,000 employees in the UK," she says, "and the change translates into significant savings."
The change came from connecting the CSR information and personnel with the finance function. "It was astonishing. It made the information more useful and gave us insights," she says.
"We didn't have all the data required and it was helpful in challenging the business. Carbon moved on to senior executives' objectives."
All this practical action has cheered Paul Druckman, one of the leaders of the Accounting for Sustainability project and now chairman of its successor body, the Accounting for Sustainability Forum.
"An awful lot of time, energy and thought has gone into something which is meaningful and is along the lines of what we recommended," he says. "An unexpected result of the exercise has been the level of connection between finance departments and CSR, both in terms of understanding what they are doing and arriving at the final numbers."
Another company that adopted parts of the connected reporting framework was BT. "It was the first time we had aligned the non-financial and financial data," says Chris Tuppen, chief sustainability officer. "It gives us more profile, for example, with CO 2 emissions and total energy costs, landfill taxes, and giving us a net cost for dealing with our waste."
"We have acceptance from other companies that this is a valid way forward," says Mr Druckman, "and we are with them through 2008 to help them, and help them help each other, to put it into practice."
Janice Lingwood, client director at corporate communication consultancy Addison, points to the example of pharmaceutical group AstraZeneca. "It got rid of its sustainability section in the annual report and put the important sections into the main figures," she says.
"Instead of being a bolt-on, it has become embedded properly. If you show how sustainability links with strategy, it becomes more fundamental to understanding the business."
But that trend needs to be connected with a gathering together of objectives. And that probably needs regulation, either governmental, or from existing standard-setters such as the International Accounting Standards Board, (IASB).
"We need clear targets and strategies," says Helenne Doody, sustainability specialist at the management accountancy body, CIMA. "Reporting can help drive change, but the big problem is the lack of consistency in reporting as there is no formal guidance. The government should provide it. There are so many carbon calculators. We need an international standard."
"Accountants tend to follow regulation," says Richard Spencer, manager, corporate responsibility, at the Institute of Chartered Accountants in England & Wales. "Society's demands are changing. The consensus is that we will have mandatory reporting. Most people accept that. So we need a reporting model that is valuable and useful."
David Philips, corporate reporting leader at PwC, says: "Connected reporting is the way we are going, but it probably needs the impetus of regulation."
At present, it is a question of accountants increasingly managing the information and allowing organisations to see the true strategic effects of sustainability figures.
"You have to manage a business across all its stakeholder groups and meet their requirements," says Mr Bromley. "It is not a sudden cultural change. But it brings together very different people.
"It has to be embedded. Clear communication is vital. And you have to have encouraging managers." Robert Bruce was on the board and steering committee of The Prince's Accounting for Sustainability Project.
Copyright The Financial Times Limited 2008

Carbon plan threat to Poland's energy prices

By Adam Easton in Warsaw and Fiona Harvey in London
Published: September 1 2008 03:00

Poland faces crippling energy price rises which will threaten growth and employment unless the European Union rethinks its carbon trading system, officials in Warsaw are warning.
In January the Commission put forward a plan to cut greenhouse gas emissions by 20 per cent, improve energy efficiency by 20 per cent and produce 20 per cent of the energy used by the 27-member bloc from renewable sources by 2020.
One of the tools to achieve emissions cuts is the EU Emissions Trading Scheme (ETS), under which limits are placed on the amount of carbon dioxide certain heavy industries may emit.
At present power companies receive their allowances to emit CO2 for free. But a new directive proposes that from 2013 power utilities will be forced to buy all their carbon permits in open pan-European auctions.
The directive is due to be debated in the European Parliament in September and poorer new EU member states with energy-intensive and coal-dependent economies are worried that the scheme will hurt their expanding economies.
The European Commission says the package must be passed to ensure fair treatment across the EU.
Poland has been one of the most vocal critics. It produces 92.5 per cent of its electricity from coal-fired power plants. For every megawatt hour of electricity produced in Poland, 0.94 tonnes of CO2 are emitted into the atmosphere. In Sweden, by contrast, where hydroelectricity and other renewables make up a large proportion of power generation, just 0.02 tonnes of CO2 are emitted per mwh.
The European Commission estimates that auctioning permits will raise electricity prices by 22 per cent on average. Krzysztof Zmijewski, an adviser to the Polish government on energy and the former head of the Polish power grid system, said Poland would end up paying much more than countries like Sweden.
"The first result, which is very easy to calculate, will be a dramatic rise in electricity prices of between 100-300 per cent. That's because we are based on coal and we will have to [buy more] CO2 allowances than any other country," he said.
But while the Commission acknowledged that Polish power prices would rise, officials said it would stand firm in support of full auctioning of permits to the electricity generation sector, as the ETS was only a minor factor in raising prices, and safeguards had been built in to help cushion the effects.
"Our research shows that only 15 per cent of any electricity price rise in Poland would be owing to the ETS," said Barbara Helfferich, spokeswoman for Stavros Dimas, the environment commissioner. The price of coal was a bigger factor.
She added this estimate was based on oil at $60 a barrel: higher oil prices would mean even less of the rise was owing to the ETS.
Poland will also receive €1bn ($1.48bn, £800m) a year from the proceeds of the permit auctions in richer member states, and the Polish government will receive an estimated €3bn a year in revenue from auctioning permits. This money could be used to cushion the effect of higher prices to consumers, if the government so decides.
The Commission said electricity companies across Europe had already benefited from passing on to consumers the theoretical cost of buying permits, even though they received the permits for free from 2005-08, and only a small percentage will be auctioned from 2008-12. In theory, this should mean the price of buying permits has already been factored into electricity prices, and future rises owing to the cost of permits should be muted.
The Commission said auctioning permits to the electricity sector from 2013 was necessary to prevent generators from continuing to benefit in this way. Electricity generation must, by its nature, be carried out close to the point of use, so generators are more insulated from international competition than other industries.
Jerzy Buzek, a former Polish prime minister and MEP who sits on the European Parliament's energy committee, said a fairer system would be to group states with similar energy mixes together, so carbondependent countries such as Poland, Estonia, Bulgaria and Greece could phase in the auctioning system over a number of years.
Mr Zmijewski also warned rising energy costs could force energy-intensive industries such as steel and non-ferrous metals, glass and cement plants, to relocate outside the EU to less strict environmental regulations.
"As a result of this price rise we will have so-called 'carbon leakage', which is in fact industrial activity leakage, mostly outside of the European Union area. For Poland it could mean the loss of 500,000 jobs. Such a big rise in unemployment could result in a new wave of emigration to countries in Western Europe," he said.
Copyright The Financial Times Limited 2008

Climate changing in favour of SRI

By Owen Walker
Published: August 31 2008 19:42

The traditional view of an investment approach that takes account of environmental, social and governance issues has been one of compromise: conscience- burdened investors having to forgo returns for the warm inner feeling that their investments were not being used to manufacture weapons.
But things have changed: investors no longer worry about settling for lower returns in order to satisfy their scruples.

Fund management style has evolved so that investors – in particular pension funds – are moving away from blocking out companies involved in certain industries and are looking to engage with them instead.
The largest growth area for this kind of investing has been climate change funds. The increasing acceptance that the environment is under threat from human activity has also meant more general socially responsible investment funds have attracted greater interest.
Lord Stern’s 2006 report for the UK government into the economics of climate change predicted the value of low-carbon energy markets would be $500bn (£271bn, €340bn) by 2050, so it is no wonder many funds are seeing the green light.
Emma Howard Boyd, head of SRI and governance at Jupiter, says the company’s green fund managers believe they are “currently seeing the most interesting juncture in 20 years in terms of green investing”, despite economic volatility. She says this is due to attractive valuations and a huge uplift in activity and interest.
According to Ms Howard Boyd there are three key drivers for this: governments taking more action, consumers demanding sustainable products and businesses looking to exploit this opportunity. She says this triumvirate is positively engaged, resulting in a virtuous circle.
William Page, chair of State Street Global Advisor’s socially responsible investment team, has been keeping his eye on international agreements on climate change quotas such as the Bali roadmap. He believes they could directly affect investments.
“Potential legislation may include incentives for the development of environmentally sustainable products and services across the economy. Not only is there a need to respond to and combat the effects of climate change, there is also a need to adapt,” he says. “We believe demand will increase for services that, for example, enable better agricultural yields and more efficient management of natural resources. Legislation will soon require carbon dioxide emissions to carry a defined price. With CO2 recognised as an internalised cost to doing business, companies with greater CO2 emissions will be penalised.”
The recognised need to tackle climate change has led to the launch of funds focused on investing in green technology. Craig Mackenzie, director of the Carbon Benchmarking Project at Edinburgh University and an ESG consultant for Hymans Robertson, describes the buzz being generated around two such funds – from BlackRock and Pictet Asset Management – as being similar to the dotcom boom.
“Lots of pension funds are really interested,” he says. “One attraction for those funds is there is no muddying the waters with ethics. There is no ethical judgment involved.”
Pension funds looking to invest ethically have often found themselves in a legal minefield. The ruling in the Cowan v Scargill case of 1985 has been widely seen as setting a precedent that pen sion funds should invest solely for the purpose of getting the best returns for members rather than taking an ethical stance.
This view was challenged by a report on behalf of the United Nations in 2005 by lawyers Freshfield Bruckhaus Deringer, which suggested that failing to take ESG issues into account might constitute a breach of fiduciary duties. However, this has not been tested in court and Cowan v Scargill continues to act as a powerful deterrent.
But investors can get around this by using positive engagement rather than negative screening, according to Tim Currell, head of sustainable investment and corporate governance at Hewitt,. “Where SRI would usually exclude tobacco stocks because it would seem immoral, an ESG approach would take a view on the litigation risk when assessing whether or not to invest,” he says.
Mr Currell believes green investment is now less about trying to change the world, and more about seeing how the encompassing green agenda will affect investments.
“Climate change is the biggest issue of the moment,” he says, “only a fool would think about investing without considering the impact.”
Owen Walker is assistant editor at Pensions Management. This is an extract from Pensions Management’s SRI survey, found in September’s issue.
Copyright The Financial Times Limited 2008

Clean energy slips but remains solid

By Steve Johnson
Published: August 31 2008 19:42

Investors have moderated their support for clean energy funds so far this year, but inflows into one of last year’s hottest sectors remain positive, despite the gloom surrounding broader equity markets.
Net inflows into European renewable energy funds totalled €379m (£305m, $559m) in the first half of 2008, according to figures from Lipper Feri, well down on the €7.1bn witnessed in calendar year 2007, but still solid during a half year when investors have withdrawn €75.6bn from equity funds in general.

Last year witnessed a swathe of launches of clean energy funds from houses such as Pictet, Schroders, F&C, Climate Change Capital, Impax, ING and RMF Investment Management. Fund buying helped push valuations of renewable energy stocks to, in some cases, eye-watering levels, with the WilderHill New Energy Index jumping 59 per cent during 2007.
Jonathan Johns, head of the UK renewable energy team at Ernst & Young, argued that the sector was now maturing with trailing price/earnings ratios for solar companies having fallen from “boom levels” over 300 in 2007 to a “more sustainable” level in the mid-70s, and ratios for biogas and biomass companies down from 33 to the low 20s.
Much of this adjustment has been driven by rising earnings, with the WilderHill index down a relatively modest 12.4 per cent in the first half of 2008.
However, Mr Johns argued the sector faced challenges. Initial public offerings have slowed this year. Dong Energy of Denmark and Russia’s Nitol Solar are among those to have pulled floats while the first quarter of 2008 saw only one IPO outside the Asia-Pacific region, according to E&Y data.
“There is a shortage of renewable energy stocks for funds to invest in. These funds are coming onto the market faster than floats are taking place,” he said.
Second, Mr Johns feared governments would start to look at reducing the subsidy over and above the price of fossil fuels that they pay for renewable energy.
“Increases in oil and gas prices have allowed governments to think about re-examining and possibly reducing various support mechanisms offered to renewables, especially where those governments are concerned with rising energy prices on fuel poor,” he argued.
Third, the credit crunch is having an impact, Mr Johns believed. Although lenders are interested in the sector, they are conducting more stringent due diligence and have pushed their margins 20-30 basis points higher.
Copyright The Financial Times Limited 2008

Clean technology stays hot as new investment pours in

By JENNIFER BOLLENSeptember 1, 2008

Despite the economic downturn, investment in so-called clean technology keeps on growing.
The clean-technology sector received a record level of investment from venture-capital and private-equity firms this year, according to data published by researcher New Energy Finance.
Clean technologies are technologies that go some way to reducing environmental harm, and range from wind farms to devices that help companies monitor their energy usage.
Total global clean-technology investments of $8.4 billion in the first half represented a 17% rise from the $7.2 billion invested in the sector in the year-earlier period.
Deal sizes have grown, too. Investment bank Jefferies & Co. said that in the second quarter, nine companies raised more than $1 billion from private-equity funds. Ethanol producer Osage Bioenergy LLC, a U.S.-based producer of barley-derived ethanol, raised the most, with $300 million.
The rising activity in clean technology came as regulation to tackle climate change has increased, said Adam Black, head of sustainability at private-equity firm Doughty Hanson.
"A lot of the things that are currently seen as nice add-ons will become core to the investment rationale," said Mr. Black.
In terms of investment in clean-tech businesses, Stephan Gueorguiev, an associate at venture-capital firm Advent Ventures, said water-treatment, recycling and power-consumption technology will prove attractive over the next few years.
Private-equity deals in the alternative-energy sector alone have reached $343.8 million so far this year, compared with $227 million for all of last year, according to research provider Thomson Reuters.
Tom Murley, head of renewable energy at HgCapital, said: "It is also of the few growth areas amid a broader economic slowdown. With high energy prices, a consensus about climate change and increasing demand for energy, clean tech and renewables are areas that will continue to grow."
Wind- and solar-energy businesses have attracted the most interest from private-equity firms, Mr. Murley said, as have biofuels. But he said interest in the latter had waned because of rising corn prices and the food-versus-fuel debate.
Sebastian Waldburg, managing partner of SI Capital, said solar technology will boom over the next 10 years. The sector would be partly driven by cost reductions and feed-in tariffs, which ensure electricity providers pay for renewable energy at a higher price than the market rate to compensate for generation costs, he added.
• From Financial News at