Sunday, 2 November 2008

Gulf States to invest in Britain's renewable energy in 'green deal'

By Jane MerrickSunday, 2 November 2008

Gordon Brown is to announce a "Gulf green deal", with oil-rich nations investing in renewable energy in the UK.
The Prime Minister arrived in Saudi Arabia last night as part of a four-day mission to secure billions of pounds from the Gulf States for an expanded IMF bailout fund for nations caught up in the economic chaos. He will call on leaders to maintain oil production to keep prices low and help countries to survive the recession.
The "Gulf green deal", to be unveiled by Energy Secretary Ed Miliband during the visit, will see Qatar and Abu Dhabi invest in renewable energy projects in the UK. Mr Brown said yesterday: "The Saudis and other countries in the Gulf States are very important. They are the countries with great revenues and oil wealth. Everybody has got a part to play in solving the world downturn. I think the oil-rich states will want to play their part."
Two weeks ago Abu Dhabi's Masdar Initiative announced it would invest in the London Array offshore wind farm, buying 40 per cent of E.ON's half share, giving it a 20 per cent stake.
Mr Miliband said: "The Gulf's oil and gas will continue to be a vital source of power for the UK, but with the impending threat of climate change, we need to find cleaner and greener ways of running our economies and heating our homes."

Gulf petrodollars help UK go green

Brown calls for Saudis to give more cash to IMF
Gaby Hinsliff, political editor
The Observer,
Sunday November 2 2008

The fight against climate change will get an unexpected boost today from oil-rich Gulf states which will pledge to invest some of their petrodollar profits in British green energy projects.
The surging oil price over the past year has left parts of the Middle East awash with cash as the rest of the world is squeezed by the credit crunch, making Arab royals some of the few active investors worldwide. The Gulf states have enjoyed a $1.4 trillion windfall from higher oil prices since 2003.
Ed Miliband, the Climate Change Secretary, arrived in Saudi Arabia yesterday with Gordon Brown at the start of a tour of the region. He said some of that cash would now 'help our firms reap the rewards from going low carbon and providing green energy to thousands of families' under a so-called 'green Gulf deal' to be announced today.
Brown, who is accompanied by a high-level trade delegation seeking Gulf investment, including the CEOs of BP and Shell, was due to hold talks yesterday with the Saudi government on plans to boost the International Monetary Fund's capacity to help distressed economies during the current crisis. Britain wants the Gulf states to release more funds to the IMF, with Saudi Arabia likely to play a key role in talks later this month in Washington.
As the government attempted to deal with the financial crisis in the UK, it emerged yesterday that Jim Murphy, the Scottish Secretary, has discussed a rival bid for the troubled HBOS bank, which could provide an alternative to the planned merger with Lloyds TSB. Ministers have been challenged over whether the new 'superbank' is still the right option following the bail-out of British banks.
Murphy, who has met Jim Spowart, founder of Intelligent Finance, which is part of HBOS, said yesterday that if there was 'a second serious bid then [the Treasury] would be happy to talk to them.' Spowart, who has previously accused ministers of trying to railroad the merger through, said he had been told by merchant bankers that an unnamed financial services organisation was interested and thought he should 'alert the government' to the possibility.
The potential bid risks causing confusion hours after Peter Mandelson announced on Friday that he would rubber-stamp the merger with Lloyds despite a report from the Office of Fair Trading warning that bank customers could get a worse deal as a result. The OFT concluded the merger would remove an aggressive competitor from the market and increased risks that banks across the sector would offer less competitive deals on personal bank accounts: 'The value for money of personal current account propositions is expected to worsen, not only for the merged entity but for the industry as a whole.'
The merger also risked 'substantial lessening of competition' for mortgages, with the new merged bank controlling 20-30 per cent of the market. In Scotland, it also predicted a lessening of competition and therefore potentially worse deals for small and medium-sized businesses seeking loans and services such as overdrafts.
However, Mandelson, the new Business Secretary, ruled the merger was in the public interest because it would protect the stability of the financial system.

Hot prospects for a company with a conscience

Simon Caulkin, management editor
The Observer,
Sunday November 2 2008

John Clough smiles wryly at the news that the number of fuel-poor has just increased by a third to 3.5 million. As chief executive of Eaga, a green services company whose job is to help people out of fuel poverty, he can't ignore the prospect of a few hundred thousand more homes to insulate and heat. As the son of a Northumberland miner who can remember huddling around a coal fire to keep warm, he shivers at the thought.
Newcastle-based Eaga - originally the Energy Action Grants Agency - is a company for which the time ought to have come; and the same might go for the forthright, charismatic Clough, its driving force. The inspired offspring of the public sector, Eaga is now a publicly quoted company co-owned by employees, 'selling' low carbon and social inclusion - 'public-sector values delivered in a very effective way', as Clough puts it.
The company could be a poster-child for post-crunch capitalism, the embodiment of Peter Drucker's definition of the socially responsible business, turning 'a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth'.
For this, thank a series of bold, entrepreneurial and fortuitous decisions. Eaga came into being in 1990 to manage a £25m contract to insulate and draught-proof poorly built homes under the government's Heating and Energy Efficiency Scheme. Clough was employee number 1, of five. The luck (or genius) was for Whitehall to establish the organisation as a company limited by guarantee, rather than as an agency, which allowed for a relatively easy transition to the employee-owned business - modelled on John Lewis - which it became in 2000, with 150 on the payroll.
From then on, things speeded up. As Clough intuited, the partnership ethos was a good match for the daily job of improving the homes and living conditions of the less well-off. A clean sweep of the government's Warm Front residential energy efficiency contracts in 2005 was the cue for Eaga to stop just managing programmes and start delivering services itself. Since then, it has built its own insulation and heating companies - what it proudly calls its 'national blue-collar delivery capability' - both organically and through acquisition.
By 2007, though, the company's ambitions were running ahead of its means. Clough and his colleagues could see other and much bigger issues looming.The move to a low-carbon, inclusive society, he predicts, will throw up a whole range of environmental issues to solve: not just energy efficiency, but access to technology and, in the future, water as well. 'In a 50-year time frame, the needs - and opportunities - are enormous.'
As early proof, Eaga has picked up a £200m contract to deliver Scottish Power's commitments to reduce overall carbon emissions, and will earn £500m from the BBC to carry out the digital switchover. Building on its work on fuel poverty, it has developed a one-stop benefits advisory service which has enabled a third of enquirers to claim, on average, an extra £1,500 a year. It is now busily expanding into the social housing sector.
To get into these markets, Eaga needed to take a risk on the balance sheet. The partnership trustees had been signalling for more than a year that this kind of expansion would be impossible without access to the capital markets, says Clough. So after some heart-searching - and scrutiny of eight different options - Eaga went public in June 2007 in an IPO that valued the company at about £450m and handed each partner a payout of around £100,000. With the Eaga Partnership Trust holding 37 per cent of the shares, and individual partners a further 11 or 12 per cent, the co-ownership ethos is secured, believes Clough, while others can invest in it too.
In fact, even in today's chilly financial climate, the tighter constraint on Eaga's growth may not be capital but people. 'In the established parts of the company, the level of engagement that co-ownership gives is palpable,' Clough says; and maintaining and strengthening it is primordial. Eaga pays a lot of attention to recruitment and induction, and works hard to convince those acquired (there are now 4,500 partners in all) of the virtues of an open, respect-driven management style. And if it can't? 'Rome fell because it ran out of Romans,' notes Clough. 'The hardest thing is to part with effective people who make the numbers but don't share the ethos. But it's stick or twist and if they stick, these are the values we ask them to live by.'
As everyone acknowledges, that takes work - including on outside shareholders, who at the moment don't much care about partnership, just whether Eaga meets its numbers. If the credit crunch teaches anything, however, it's that the numbers are only as reliable as the manner in which they are made. Here, too, Eaga may be able to teach the city slickers a thing or two.

Green power sell-off scheme slated as 'not radical enough'

Nick Mathiason
The Observer,
Sunday November 2 2008

Government plans to let communities sell renewable energy to the grid have been criticised for being insufficiently radical by an unlikely alliance of giant retailers, housebuilding groups and country landowners ahead of a Lords' vote this week.
Last week, new Energy and Climate Change Secretary Ed Miliband published an amendment to his Energy Bill, which stated that renewable projects of under two megawatts would be eligible for so-called feed-in tariffs, allowing owners to sell power and so reduce the cost of schemes.
But Friends of the Earth and bodies such as the Country Land and Business Association argue that to make renewable energy schemes take off, a ceiling of 10 megawatts needs to be adopted.
Furthermore, there is concern that the government has failed to set a time-table for bringing in the measure. An alternative amendment could be tabled, supported by such groups as The British Retail Consortium and the Home Builders Federation.
While the government is struggling to meet the EU target that 15 per cent of UK energy should come from renewables by 2020, power firms are concerned that allowing individuals and communities the chance to profit from energy creation will mean companies make less money.

Third runway at Heathrow would wreck climate target

The Sunday Times
November 2, 2008

Marie Woolf, Whitehall Editor

Gordon Brown has been warned by senior ministers that approving a third runway at Heathrow could wreck the government’s green credentials and undermine efforts to combat climate change.
Weeks before a formal announcement on expanding the airport is due, the prime minister is facing a revolt from the cabinet and senior MPs.
They fear building the runway could harm the party’s electoral prospects and damage Britain’s chances of hitting its target of cutting greenhouse gas emissions by 80% by 2050.
Among the critics is Harriet Harman, Labour’s deputy leader, who has been told that residents angry at the increased noise and congestion could eject a clutch of the party’s MPs in west London at the next election.

Hilary Benn, the environment secretary, has expressed concerns that Britain may not meet European Union air quality targets because of extra traffic at an expanded Heathrow.
Britain is three years behind European requirements for cutting emissions and may have to sacrifice pollution standards across London to allow at least an extra 60,000 flights a year at Heathrow. Benn, who lives under the Heathrow flight path in west London, has warned that the government may have to ask Brussels for a special deal to exempt the capital from official limits on exposure to pollutants.
David Miliband, the foreign secretary, who championed tough climate change measures when he was environment secretary, is also understood to be worried about the effect on greenhouse gas emissions of an expanded Heathrow airport.
Joan Ruddock, the climate change minister and London MP, is said to share concerns that the targets may be in jeopardy.
Other local MPs opposed to the scheme include Ann Keen, the health minister, and Andrew Slaughter.
The prime minister is due to meet a group of Labour MPs in Downing Street in the next fortnight to discuss fears that the expansion is so unpopular it could cost the seats of members nearest the airport.
At least 100 MPs from all parties, including 38 on the Labour benches, have signed a parliamentary motion opposing the third runway.
Among those who have made representations to Brown is Martin Salter, an MP who is vice-chairman of the Labour party with responsibility for the environment.
He has told the prime minister that allowing the runway could harm Labour’s green credentials.
Salter said: “It is clear Gordon is in listening mode from the interest he has shown in hearing all points of view.”
The prime minister’s spokesman said Brown had made up his mind in principle that the expansion should go ahead.
“The government has taken a political decision that it is right to go for a third runway at Heathrow but now it is going to be a planning judicial decision subject to very stringent environmental concerns,” said the spokesman.
“We have taken the decision in principle. It is now a planning decision.”
David Cameron, the Conservative party leader, has announced that a Tory government would tear up plans for a third runway.
Boris Johnson, the mayor of London, wants to build a hub airport in the Thames estuary.

VT set to join US-led group in building up to 14 nuclear plants in the UAE

By Mark LeftlySunday, 2 November 2008

VT, the FTSE250 support services group, is this week expected to be named as a member of the US-led consortium to manage the United Arab Emirates' civilian nuclear programme.
CH2M Hill, which is helping to oversee the construction of the London 2012 Olympics venue, was awarded the 10-year contract last month. A UAE source said the construction programme could involve six to 14 nuclear plants.
The source added that Colorado-based CH2M Hill has approached VT to provide "design support" for the proposed facility. "We think that a US/UK solution is a real winner," he said. It is anticipated that VT will be announced as a consortium partner to coincide with a visit by the Prime Minister Gordon Brown to the UAE this week.
FTSE100 engineering group Amec and the UK Atomic Energy Authority are understood to have been among the parties that failed to land the main contract. A VT spokesman declined to comment.

Centrica gets its nuclear fix

November 2, 2008
A deal with France’s EDF should close the chink in the UK energy group’s armour
Dominic O’Connell and Danny Fortson

It’s not only banks that are asking investors for billions of pounds these days. Last week Centrica, the energy company behind British Gas, tapped its shareholders for £2.2 billion in what will be one of the biggest rights issues outside financial services this year.
Unlike the banks, Centrica doesn’t need the money to save itself from destruction. In a harking-back to precredit crunch times, Centrica wants the cash to invest in a new business. City institutions are relieved. “They [Centrica’s large shareholders] have all said thank goodness you are here to talk about that and not another recapitalisation,” said Sam Laidlaw, Centrica’s chief executive.
The new business in question, nuclear power, should finally tackle the problem that has dogged Centrica for years - the mismatch between the size of its retail arm (it sells energy to 20m customers) and its relatively puny power-generating capacity. The disparity between the businesses has made the company vulnerable to swings in energy prices, forcing it into an uncomfortable squeeze between the demands of its power suppliers and its customers.
Laidlaw vowed to fix the problem when he took the top job two years ago, and the opportunity has finally presented itself. Centrica plans to buy a one-quarter stake in British Energy (BE), Britain’s only generator of electricity from nuclear power stations.

It will purchase the stake from Electricit√© de France (EDF), the giant French utility group that last month agreed to buy BE for a little over £12 billion. EDF will form a new holding company in the UK and Centrica will pay £3.1 billion for 25% of it. The plan was revealed by The Sunday Times in May after Centrica’s own efforts to buy BE came to naught.
The British group will also take a quarter share of the new nuclear power stations EDF plans to build here. The French group intends to construct two twin-reactor plants, one at Hinkley Point and one at Size-well. Centrica will have an option to participate in their development “from the ground floor”, said Laidlaw.
Centrica will not get guaranteed access to the power produced by the BE stations but its exposure to power generation through the shareholding – and the profits the new company will generate – will give it what Laidlaw terms “a structural hedge”.
Neil Woodford, fund manager at Invesco Perpetual, which owns 4.5% of Centrica, said he was delighted by the Centrica plan. “It’s not immediately earnings enhancing but should lead to a rerating of the company because it removes that imbalance between retail and power generation. It increases the value of the business,” he said.
Laidlaw’s target is to have Centrica generating about half its power and gas in-house. Two years ago it was only about 25%, mainly from Centrica’s own UK gasfields. Since then the company has bought more gas, taking it to 35% as it races against the rapid dwindling of the reserves in its huge Morecambe gas fields in the Irish Sea.
“Nuclear will take our structural hedge from 35% to 45%. Ideally we would like to get ourselves to a little over 50%. The rights issue, together with any asset sales if we choose to do them, should allow us to buy more gas assets to get us past the 50% mark,” he said.
Some analysts have raised questions about how safe it is to rely on power from existing BE stations. They are old and have been prone to unexpected shutdowns.
“We’ve been cautious in our forecast outputs,” said Laidlaw. “The fleet is old and it is one-of-a-kind technology, but it has been safely and prudently managed.”
BE’s creaking fleet of nuclear reactors is not the company’s only worry. The credit crunch has finally found its way to the utility sector. Laidlaw was forced to postpone a separate £1.5 billion fundraising effort this month. Centrica had hoped to first raise debt and then attract either private-equity or infrastructure investors to help fund its £3 billion programme to build a portfolio of offshore wind farms. “We’ll come back to that in the first quarter of next year,” he said.
Ministers have shown little sympathy for the difficulty that the financial crisis has caused for utilities. Gordon Brown has called for energy companies to pass on the plummeting price of oil to consumers in the form of lower energy bills. Gas and power prices are closely linked to oil. Wholesale gas contracts, however, are bought on a forward basis and thus tend to lag six to nine months behind the movement in the oil price, Laidlaw said.
That is bad news for customers hoping for some relief this winter. “As soon as sustainable wholesale gas prices come down we’ll follow them down. But the reality is, and we have explained this to the government, wholesale gas prices for the first quarter [of 2009] are 77p per therm, compared to 48p this time last year. Hopefully in six to nine months’ time wholesale gas prices will come down and that will give us the opportunity to move on retail prices, but it’s too early to call.”
Getting a slice of BE’s output will help to shield Centrica from the swings in the wholesale gas market, but it does not address a more fundamental issue. Centrica looks increasingly isolated in an industry that has come to be dominated by a handful of acquisition-minded continental giants like EDF, Iberdrola and RWE.
Every one of Centrica’s UK rivals, bar Scottish & Southern, has been gobbled up in recent years. Laidlaw has spent the past two years building up defences: establishing a high-margin services business, increasing its presence in North America and Belgium, and now the BE deal.
Will it be enough for Centrica to keep its independence?
“I think so,” said Laidlaw. “We’re changing the model. It’s a very different model than all other utilities because it’s deregulated. It’s higher risk but it has been, and I think will continue to be, higher return.”

Chemical released by trees can help cool planet, scientists find

Scientists discover cloud-thickening chemicals in trees that could offer a new weapon in the fight against global warming
David Adam, environment correspondent,
Friday October 31 2008 16.46 GMT

Trees could be more important to the Earth's climate than previously thought, according to a new study that reveals forests help to block out the sun.
Scientists in the UK and Germany have discovered that trees release a chemical that thickens clouds above them, which reflects more sunlight and so cools the Earth. The research suggests that chopping down forests could accelerate global warming more than was thought, and that protecting existing trees could be one of the best ways to tackle the problem.
Dominick Spracklen, of the Institute for Climate and Atmospheric Science at Leeds University, said: "We think this could have quite a significant effect. You can think of forests as climate air conditioners."
The scientists looked at chemicals called terpenes that are released from boreal forests across northern regions such as Canada, Scandinavia and Russia. The chemicals give pine forests their distinctive smell, but their function has puzzled experts for years. Some believe the trees release them to communicate, while others say they could offer protection from air pollution.
The team found the terpenes react in the air to form tiny particles called aerosols. The particles help turn water vapour in the atmosphere into clouds.
Spracklen said the team's computer models showed that the pine particles doubled the thickness of clouds some 1,000m above the forests, and would reflect an extra 5% sunlight back into space.
He said: "It might not sound a lot, but that is quite a strong cooling effect. The climate is such a finely balanced system that we think this effect is large enough to reduce temperatures over quite large areas. It gives us another reason to preserve forests."
The research, which will be published in a special edition of the Royal Society journal Philosophical Transactions A, is the first to quantify the cooling effect of the released chemicals. The scientists say the findings "must be included in climate models in order to make realistic predictions".
Because trees release more terpenes in warmer weather, the discovery suggests that forests could act as a negative feedback on climate, to dampen future temperature rise. The team looked at forests of mainly pine and spruce trees, but Spracklen said other trees also produce terpenes so the cooling effect should be found in other regions, including tropical rainforests.

Supermajors need a service ethos

By Raju Patel
Published: October 31 2008 15:22

The five largest, non state-owned energy companies worldwide (ExxonMobil, BP, Royal Dutch Shell, Chevron and Total) are termed supermajors and hold about 3 per cent of global hydrocarbon reserves. They were created from the late 1990s to hedge against oil price volatility, achieve economies of scale and reinvest cash reserves. While the supermajors got bigger, so did the challenges they face, with implications for their survival.
The good news is that scale is an advantage when exploring for hydrocarbon resources in the most inhospitable and inaccessible parts of the world, in developing technology, in undertaking mega-projects.
The bad news is that “diseconomies” were inherited with consolidation. These include issues of corporate governance, and trying to manage merged behemoths; the reduced accuracy of information flow; slower decision-making; greater responsibility for the safety of staff, contractors and for the environment; and increased emphasis on performance management.
The supermajors are now going to have to up their game to avoid being relegated to lower-value service providers – or eventually face extinction.
Technology in action
Subsalt imaging to aid reservoir characterisation in sand prone areas
Expandable sand screens to prevent sand clogging up production casing
Standardisation of engineering projects - design once, use many times, as opposed to reinventing the wheel
Operations, Health & Safety - reducing downtime of critical equipment by preserving operational integrity
Drilling to record-breaking depths under high-pressure, high-temperature conditions
Non-seismic geophysical exploration using gravity, magnetic and electrical methods
“Winning” is often defined as gaining access to and exploring the largest hydrocarbon basins, replacing the produced reserves, successfully developing mega-projects, optimising production, and managing reservoir decline. In addition, decommissioning mature fields, health, safety and the environment have become more important. “Winning” is also defined as being able to strike partnerships with host governments, national oil companies (NOCs), other international oil companies (IOCs), and contractors.
The supermajors are positioning themselves to win by renewing their strategies for corporate governance, organisation, technology, projects, engineering and contracting.
ExxonMobil, for example, is known for its centralised management, while some supermajors give greater autonomy to business units. Both models can work, but the decentralised approach will need robust delegation and accountabilities, otherwise there is a risk the corporate centre, business units and the functions will end up tripping over each other.
BP’s chief executive Tony Hayward has embarked upon an aggressive simplification programme. Shell’s corporate mantra over the last few years has been ESSA – eliminate, simplify, standardise, automate.
As part of the simplification drive, every division, function and business unit will need to become a focused contributor to the business. Functions in particular, such as technology, procurement/supply chain, finance, human resources and legal must be organised and managed to world-class standards.
Technology is critically important, but the supermajors do not have exclusive influence over it. The value they add is in screening it in the marketplace, R&D and testing.
Having outsourced some core skills and competencies, the supermajors have become “super contractors” and “super project managers”, bringing together partners, managing and integrating huge programmes and disciplines. In effect, they are managing budgets, risk, delivery, health and safety, quality, timescales and pushing technical limits.
Whether or not they are relegated to becoming low-margin service contractors, they will still need to foster a service mindset. This means becoming agile, responsive and competitive in order to be selected as partners of choice by NOCs and host governments.
The oil-producer cartel Opec and the NOCs are growing sophisticated. They, too, are hiring the best technology and brains in the industry. The supermajors will be obliged to offer propositions that are a lot more compelling when compared to near competitors – pure service companies such as Schlumberger or Halliburton.
When all is said and done, one question remains: are the supermajors just too sluggish to leverage their scale profitably?
Raju Patel is chief executive of Fulcrium, a specialist performance management consultancy
Copyright The Financial Times Limited 2008

Areva Gets Part Of $2.5B Yucca Mountain Contract In US

PARIS (Dow Jones)--French nuclear group Areva SA (CEI.FR) said Friday it has been awarded part of a $2.5 billion, five-year contract from the U.S. Department of Energy to manage a used nuclear fuel repository project at Yucca Mountain in Nevada.
The contract was granted to USA Repository Services, a subsidiary of URS Corp. (URS), and includes Areva and Shaw Group Inc. (SGR), Areva said in a statement.
The contract could be renewed for five additional years, the company added. Areva will work on the design of the surface facility and the license application for the Nuclear Regulatory Commission.
Company Web site:
By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73;

EU governments give automakers breathing room on emissions

By James Kanter
Published: October 31, 2008

BRUSSELS: European governments agreed Friday to delay a deadline for carmakers to comply with rules on emissions, ending months of gridlock but setting the stage for further negotiations with lawmakers over the final shape of the legislation.
Carmakers will have to start complying with the new emissions target in 2012 for 60 percent to 65 percent of their vehicles, according to a report from a meeting of European Union government officials seen by the International Herald Tribune.
The auto industry would then have until 2015 before their entire fleets would have to meet the target, the report said. A previous plan envisioned conformance by 2012.
The concession came after fierce lobbying from the carmakers, whose representatives at talks here Wednesday called for a loosening of regulatory requirements and for €40 billion, or $51 billion, in low-interest loans to develop cleaner technologies. The European auto industry argues that it is vulnerable both to a looming economic slowdown and increased environmental burdens.
That message appeared to have been accepted, as reflected by the agreement Friday. The accord is a less stringent approach than the one suggested by the environment committee of the European Parliament in a vote in September.
Today in Business with Reuters

The committee had favored sticking to proposals mandating that the average new car from an entire fleet should meet the target by 2012, a move that won widespread praise from environmental campaigners.
The target, first proposed by the European Commission, would require average fleets of new cars to emit no more than 130 grams of carbon dioxide per kilometer with a further 10-gram reduction coming from more efficient tires and other improvements.
That compares with a current European average of 158 grams of CO2 per kilometer. The overall target of 120 grams would be the first legally binding carbon dioxide emission standard for new cars in Europe.
But the proposal unleashed a fierce battle, bringing powerful lobbying into play from industry and government in some of the biggest economies in Europe.
German automakers said they would not be able to meet the target for 2012 without significant concessions. French producers already make lightweight and efficient cars, but they were skeptical about setting a long-term target that they feared could be too ambitious and would require them to take additional, expensive technological steps.
Even so, diplomats overcame many of those differences this past week, including discord over long-term targets.
According to the report, diplomats agreed to fix the long-term target for reducing CO2 from cars at close to 95 grams, but with the caveat that agreement would be open to review ahead of 2013, to examine whether the long-term target was technically possible.
EU diplomats also agreed to ease penalties on automakers for breaking the rules.
Instead of paying a maximum of €95 for each excess gram of carbon dioxide by 2015, car manufacturers would pay €80. For manufacturers within 3 grams of the target, that penalty would be €25 and for those within 6 grams it would be €40.
Beginning in 2016, the penalty would rise to €95, but that would be reduced to €25 for manufacturers within 3 grams of the target.
That penalty would be reduced further, to €20, for any cars with emissions lower than 130 grams.

Car emissions rule put back

By Joshua Chaffin
Published: November 1 2008 02:00

Carmakers would have until 2015 to come into full compliance with new rules to curb carbon emissions under a plan endorsed by European Union member states yesterday.
The decision marked a victory for Europe's automobile industry, which had been arguing against an earlier draft from the parliament that called for car companies to meet the new restrictions by 2012.
Joshua Chaffin, Brussels
Copyright The Financial Times Limited 2008

Judge Blocks N.Y. Green Taxi Rule

Associated Press

NEW YORK -- A federal judge blocked the city Friday from requiring all new taxicabs to be fuel-efficient hybrids, saying the regulations were pre-empted by federal law.
The preliminary ruling, released a day before a Saturday deadline, was a setback for Mayor Michael Bloomberg's ambitious goal to make all yellow cabs green by 2012.
Mr. Bloomberg said he was "very disappointed" and blasted the ruling for relying on "archaic Washington regulations" that kept New York and other cities "from choosing to create cleaner air." He said the city was exploring options to appeal.
Last month, the Metropolitan Taxicab Board of Trade, a trade association claiming to represent a quarter of the city's cabs, sued to block enforcement of the rules. The plaintiffs argued that only the federal government, not the city's Taxicab & Limousine Commission, has the authority to regulate emissions and fuel efficiency standards. In addition, they claimed that hybrids aren't safe enough for use as cabs, which take a beating on city streets.
Trade association president Ron Sherman praised the decision.
"Millions of people who ride taxicabs and the thousands of drivers, owners and other participants in the New York City taxi industry can breathe a sigh of relief today," he said.
The new rules would have gone into effect Nov. 1 and required any new cab coming into service to achieve a fuel efficiency standard of 25 miles a gallon. The following year, that would have increased to 30 miles a gallon.
The standard yellow cab, the Ford Crown Victoria, gets about 14 miles a gallon while some hybrid models, which run on a combination of gasoline and electricity, achieve as much as 36.
The city doesn't own its yellow cabs, but sells licenses to drivers and operators, who must purchase vehicles that meet the taxicab commission's specifications.
There are more than 13,000 taxicabs in New York City, and nearly 1,500 are hybrids.
The majority of those were purchased voluntarily by medallion owners, but several hundred were mandated through the sale of medallions that were specifically earmarked for alternative fuel vehicles.
Without ruling on the merits of the case, U.S. District Judge Paul A. Crotty temporarily blocked enforcement because he said the plaintiffs would suffer irreparable financial harm if they were forced to comply with the rules by the deadline.
But he said he was inclined to agree with the plaintiffs that only the federal government has the authority to enforce fuel efficiency standards. He didn't rule on the safety issues, saying that would have to wait until the case was argued in full.
Copyright © 2008 Associated Press

Centrica asks shareholders for £2bn to buy British Energy stake

Mark Milner, industrial editor
The Guardian,
Saturday November 1 2008

Centrica, the parent company of Britain's biggest energy supplier British Gas, said yesterday it was asking shareholders for £2.2bn to help fund its purchase of a 25% stake in British Energy.
Centrica said it would raise the bulk of the expected £3.1bn purchase price through a three-for-eight rights issue priced at 160p a share.
The company said the issue was pitched at a 39.9% discount to the theoretical ex-rights price based on Thursday's market price of 306.25p.
The issue has been fully underwritten by a consortium of banks including Goldman Sachs, Credit Suisse, and UBS. Centrica said the balance of the purchase price for the British Energy stake would be raised through additional debt and, possibly, asset sales.
Centrica considered a bid for British Energy before opting to partner EdF, which made an agreed £12bn bid for Britain's nuclear power generator in September. Centrica will acquire 25% of BE once the takeover has been completed.
Centrica wants to increase its generating capacity as a way of reducing its exposure to short term movements in wholesale gas prices.
EdF has already said it plans to build four new nuclear reactors in Britain, with Centrica taking its share in the nuclear new build programme.
Chairman Roger Carr said: "Following this rights issue Centrica will be well capitalised to fund the potential acquisition of a 25% interest in British Energy."
Carr said the company continued to trade in line with expectations. In its interim management statement Centrica said full-year earnings would benefit from a one-off deferred tax credit.
The company said that customer churn rates at British Gas had risen in the wake of the price increase in July. "Churn has now fallen to levels experienced before the price increase and in recent weeks the level of account sales has been ahead of customer withdrawal notifications."
The company said British Gas Residential now had 15.6 million customer accounts and expected second half operation margins within the business to be "ahead of those achieved in the first half of the year".
British Gas and other big energy suppliers are under pressure to reduce prices following the slump in the oil price.