From east to west, a chain collapses

Millions to lose their jobs as world's largest importer of waste hit by collapse in demand for packaging
Tania Branigan in Dongxiaokou
The Guardian, Friday 9 January 2009

A worker sorts out plastic waste Photograph: Dapei Xin/EPA
The scrap trader was immovable, despite Wu Wenxiu's pleas. She would pay one yuan - roughly 10p - for a kilogram of plastic. Around the corner in Shi Yuhai's yard, the offer was no better. Wu shrugged his shoulders and began to heave bags from his tricycle on to the scales. "One kuai [yuan] here, one kuai there - everywhere's the same these days. This industry has broken down," he grumbled.
Wu is one of 160,000 collectors in Beijing who make a living from the detritus of urban life - plastic sheeting, office printouts, bottles, radiators and scraps of cardboard. Recycling has become a global industry and China is the largest importer of the world's waste materials, taking in as much as a third of Britain's recyclables for example. Then came the slump, decimating the Chinese recycling industry and leaving Britain, the US and others grappling with growing volumes of recycled waste and nowhere to send it.
"It's a canary in the coalmine: it's the front and back end of industry," said Adam Minter, who runs the Shanghai Scrap blog and specialises in the metal trade. "Until about eight weeks ago, for example, the entire [US] west coast paper market was sent to China and most of it was sent south. It was processed and made into packaging for products that then shipped back to the US ... But when US consumer demand dropped off, that broke the cycle."
Across the scrap trade, prices have halved or worse in a matter of months. Each link in the chain is disintegrating, from factories to scrapyards to collectors such as Wu, 56, a former farmer who now plans to return to Hubei province.
Official media reported that four-fifths of China's recycling units had closed and that millions will eventually be left without employment.
Dongxiaokou, on the outskirts of Beijing, is a village composed of scrap: blocks of crushed metal are stacked in a tower, heaps of plastic bottles glint in the sunshine and piles of newspapers and rags fill yards. But the merchants all have the same story - they have lost tens of thousands of pounds in a few months, wiping out years of hard work.
Shi puffed on a cigarette as he counted out notes for Wu. "I've been in this business for 15 years and it's been bad before, but never this severe. Everyone's lost a huge amount of money and some can't sell their stock," he said. "Usually we sell to factories and they recycle them into plastic chips. But the price of chips has dropped so it's had a knock-on effect on us."
This area deals in domestic waste rather than imports, but Shi said every part of the industry had been affected.
Beijing dealers have taken a particularly hard hit. They stockpiled large quantities of recyclables because prices were soaring, but as the market began to soften, the Olympic security clampdown prevented trucks from entering the capital. The merchants could only watch as the value of their holdings plummeted.
"In a good year we can earn about 50,000 yuan but this year we lost 200,000," said Gong Rongchuan, 45, whose yard lies across the rutted alley from Shi's. "We came here more than 10 years ago and at the beginning we collected ourselves. Then we managed to start the business. We were too poor to get loans but we managed to borrow 100,000-200,000 from friends and relatives and we work from morning to night every day. But we haven't paid them all back because of our losses."
Minter says the predicament is typical of the trade. "People would borrow money from relatives and buy a container of scrap and then throw all that money back in and reinvest it. Great if it goes up - but the moment it starts slipping, especially if it's slipping 20-30%, you're finished," he said. Gong said: "Once we have sold all this stock we'll leave. My son's sorting it because we can't afford workers any more. We haven't figured out what to do next. We have seven people in the family and only 2.5-3 mu [less than half an acre] of farmland. It's too many people and too little land, so even if we go home there's not much we can do. We have both old and young to support."
The effects can be felt across China. Most of Gong's customers were plastics recyclers in Wen'an, Hebei, where by one estimate 93% of income depends on the trade. Some are already bankrupt. Wen'an Dongdu Jiacheng Recycling Resources is clinging on. But Miss Han, a materials buyer, said all but three of the 26 production line workers had been sent home for the new year holiday more than a month early.
There is no longer demand for plastic granules from nearby companies such as Hongkai Plastic Products, which made items such as bicycle handlebars. Its owner, Mr Zheng, has sent 20 workers home. "My factory was hit by the economic crisis - it's been closed for two months already," he said. "We usually sell our products to a dealer and most of his business is exports. He didn't give us any more orders."
At a factory down the road, the response to queries was more brusque. "We've already gone bust," said a man, and hung up.

US recycling: 'I don't even think we have an industry'

Collapse in demand for packaging in China hits US processors and exporters of recyclable material
Dan Glaister in Los Angeles
guardian.co.uk, Friday 9 January 2009 00.05 GMT

Steve Young sits back in his chair and glances up from his figures. "I don't even think we have an industry. That's how bad it is."
Young, president of Allan Company, a Los Angeles processor and exporter of recyclable materials, nods towards the window. "Across the street we would process 600 customers on a weekday, 1,000 at the weekend," he says. "The whole spectrum – the homeowner who has stockpiled aluminium cans, the bar down the street that has a load of beer bottles, the liquor store with used cardboard. Now it's probably half that number."
Young is on the frontline of a crash in commodity prices that has seen the global market for recycled paper, cardboard, plastic, metals and glass all but disappear. In three weeks in October, the price of paper went from $200 to $20 a ton, corrugated cardboard dropped from $250 a ton in August to $100 in December. It is the worst he has seen since founding the company in 1963.
The scene at one of his company's yards across the street tells the story. Skips half filled with scrap metal line the entrance, while a trickle of customers in pick-up trucks, station wagons and saloon cars unload their pickings. These are the little people who make a living on the back of the recycling industry, plundering other people's rubbish to remove beer bottles, tin cans, newspapers, anything that might carry a price at a recycling plant. But in recent weeks the clink of late-night scavengers removing bottles from bins before the morning collection has disappeared.
"Normally this would be crowded with people," says Rich Hubbard, vice-president of operations at Allan Company. But with the decline in prices, it does not pay. "It's $20 a tonne," he says of cardboard. "So you can get maybe $12 of cardboard in a truck. Add on four or five hours of your time, money for gas, it doesn't add up. I don't know what the guys who normally do this are doing for work now. They're hustlers, they must be doing something, but they're not picking up cardboard."
The US industry is suffering from a decline in demand from its principal market, China. The US exported 11m tonnes of scrap paper to China last year with a value of $11.5bn. California is the principal point of departure for recyclables as they head to Asia's paper mills. The Chinese typically use the paper from the US to make packaging material for the exports they send, typically, back to the US.
Everything seemed fine with China, says Nan Drake of Gold Coast Recycling in Ventura county, an hour north of Los Angeles, until after the Olympics. "The Chinese just kept going," she says. "The boom during the Olympics just covered things up. There was no gradual decline, it just went boom."
Gold Coast, which processes 1,600 tonnes of recyclables a day for seven cities in the area, has already laid off some of its pickers - employees, who sort through recycled waste by hand as it travels along a conveyor belt. Others have been less fortunate.
"The people who are going broke in this time are not going to come back," says Drake. "They're the little guys, they're not coming back."In the long term Drake hopes the crisis will spur a home-grown solution, with US mills taking the place of foreign markets. But she is concerned that once recycling ceases to be profitable, it will not be practised with the alacrity that has seen California save half of its solid waste from landfill. "We don't want to create a panic and say this is the end of recycling," says Drake, "but we need to continue to educate people."
Wes Muir of Waste Management, one of the US's biggest collection and recycling companies, believes recycling will weather a temporary dip in the commodities markets. "There's a strong commitment to recycling," he says. "People think it needs to be done and predicated on the belief that garbage is not a waste, it is a resource that reduces the need for the extraction of raw materials. We don't see a backpedalling … it's ingrained into the culture."
One short-term solution available to the larger companies is to store the materials in the hope that the market will rebound, a strategy pursued, albeit reluctantly, by Young. "We're only storing what we can't sell," he says. "Nobody wants to pay that bill."

There's gold in waste management

By Quentin Webb Reuters
Published: January 8, 2009

LONDON: The planned sale of a big Dutch waste-management company will test how much appetite remains for the unglamorous but dependable sector, which enjoyed its own miniboom during the credit bubble.
Essent Waste, a unit of the Dutch utility Essent, is likely to draw interest from private equity firms, infrastructure funds and bigger rivals, bankers and analysts said.
But tough debt markets and a fall-off in energy and commodity prices are likely to limit the sale value.
"Essent Waste could be a bit of a barometer for the whole infrastructure market - to see where funding's moved to after the turmoil of last autumn, where multiples have fallen to, and who's interested," said Mark Wilson, a partner at Catalyst Corporate Finance, a British merger adviser.
The sale could interest all of the big players in British waste management, Wilson said, including Shanks, Veolia Environnement, Suez Environnement and Biffa, which was bought last year by a consortium led by Montagu Private Equity and Global Infrastructure Partners.

Although the process of selling Essent Waste has not formally begun, prospective bidders received detailed due diligence before Christmas.
Essent Waste could bring more than €1 billion, or $1.36 billion, or more than 6.7 times its earnings before interest, tax, depreciation and amortization.
The utility, which is also separately selling its commercial production and delivery business, declined to comment.
Essent Waste processes about 3 million tons of waste a year, burning some for electricity, composting other waste and managing landfills.
Waste management's appeal lies in the fact that unlike water and power companies, regulators generally do not cap the returns made by the businesses that collect, bury, burn or recycle European rubbish.
And although they are not immune to a weakening economy - since commercial waste volumes tend to drop in tough times - waste companies also benefit from tougher environmental laws, said Richard Rae, an analyst at RBS.
"Waste is becoming more and more valuable because of the regulation that surrounds it, forcing more and more waste to be recycled," he said.
When debt was cheap, all this helped companies sell for "absolutely huge" prices, Rae said, often 10 to 12 times earnings before interest, tax, depreciation and amortization, or Ebitda.
In 2007, there were 132 deals in Europe's wider water and waste management sector, for a total of more than $33 billion, according to Thomson Reuters data.
But Rae said a multiple of six to eight times Ebitda "sounds quite plausible in today's credit-constrained market." That implies a value for Essent Waste of about €900 million to €1.2 billion.
Wilson at Catalyst said some deals in Britain were being struck at just four times Ebitda, with companies hit by a drop in the value of the materials they recycle.
Despite this, and tougher debt markets, private equity funds are still likely to take an interest, bankers and analysts say.
In particular, CVC and Kohlberg Kravis Roberts are big players in the sector, having together already bought and combined two big Dutch waste-management companies, AVR and Van Gansewinkel.
KKR declined to comment, while a spokeswoman for CVC was not immediately available to comment.
Still others have been able to realize profitable exits over the last couple of years - including Terra Firma, which sold the waste disposal division of Waste Recycling Group, a British company, to the Spanish company FCC for an enterprise value of £1.4 billion, or $2.09 billion, in 2006.
Credit Suisse and ING are advising Essent on the sale.

We own RBS, so are we now greenwashing ourselves?

The Royal Bank of Scotland, now majority-owned by the taxpayer, trumpet their green energy investments while keeping quiet about oil and gas. Does this mean we are now greenwashing ourselves?

Fred Pearce
guardian.co.uk, Thursday 8 January 2009 11.14 GMT

Several people have contacted me about the Royal Bank of Scotland (RBS), owners of NatWest and the self-styled world's largest financier of renewable energy. This is quite a turnaround for a bank that - until a year or so ago - was equally pleased to call itself "the oil and gas bank". And from what I can see, this latter description remains much nearer the reality.
This is a special problem now. RBS was one of the banks that, back in November 2008 at the height of the credit crunch, was reportedly "hours from collapse" when it was bailed out by the government, which bought a 58% stake. So it seems that British taxpayers, through the good agencies of the Treasury, are now greenwashing ourselves.
Last year, before the bail-out, RBS put piles of leaflets in thousands of its branches declaring that "we are the largest financier of renewable energy in the world", and that it was "financing the transition to a low-carbon economy" by "only lending to projects that conform to the highest international environmental standards." Big claims.
RBS is indeed putting money into renewables. It had a bit of a splurge in 2006, the basis of its "largest financier" claim. And in October 2008, just before it was hit by the crunch, it announced that it was helping the Scottish company Burntisland Fabrications diversify from making oil production platforms for the North Sea to making the substructures for offshore wind turbines instead.
But such projects remain sidelines. RBS is still built on oil, and right now it is stumping up more cash for coal than renewables. Beside the wind power punt at Burntisland, consider what else it did in October last year:
• It led a consortium lending $500m to a US power generator called Great Plains Energy, which despite recent plans for wind turbines, powers the midwest by burning coal that emitted 26.5m tonnes of carbon dioxide in 2006.
• It announced a long-term tie-up with OilCorp, a Malaysian oil monolith, to exploit offshore oil and gas in the Middle East. A deal that could, according to OilCorp, eventually be worth "billions of dollars".
• And through its subsidiary bank ABN-Amro, it put up loans for sucking tar sands from beneath Alberta, Canada – one of the most unenvironmentally friendly energy projects in the world today.
You won't read about any of this in any of its green leaflets. Nor that its oil and gas team, which works out of offices above Liverpool Street station in London, is busy underwriting oil companies that are opening up new sources in central Asia, beneath the Arctic, in the Russian far east and off the shores of west Africa.
Nor indeed about RBS bankrolling E.On's planned coal-fired power station at Kingsnorth in Kent, which would be Britain's first new coal-powered station for more than 20 years.
Two recent studies by NGOs including Platform, People and Planet and Friends of the Earth Scotland have concluded that RBS, one of the world's largest energy investors, is still putting four times as much into fossil fuels as renewables. "RBS's business activities are contributing to climate change more than any other British bank," they said.
Just before Christmas, students in Manchester gave RBS their 2008 Greenwash Award. Spot on, guys. But now RBS is owned by us.
The British government says it wants to cut national carbon dioxide emissions by 80% by 2050, as part of a global cut of at least 50%. Much of the money that RBS, on behalf of British taxpayers, is pumping into the oil and coal industries round the world is going to build projects that will still be functioning – will still be causing carbon dioxide emissions - in 2050 and beyond. Shouldn't we be calling a halt? Now.
• How many more green scams, cons and generous slices of wishful thinking are out there? Please email your examples of greenwash to greenwash@guardian.co.uk or add your comments below

International Energy Agency 'blocking global switch to renewables'

International Energy Agency accused of consistently underestimating potential of wind, solar and sea power while promoting oil, coal and nuclear as 'irreplaceable' technologies
David Adam, environment correspondent
guardian.co.uk, Friday 9 January 2009 00.00 GMT

The international body that advises most major governments across the world on energy policy is obstructing a global switch to renewable power because of its ties to the oil, gas and nuclear sectors, a group of politicians and scientists claims today.
The experts, from the Energy Watch group, say the International Energy Agency (IEA) publishes misleading data on renewables, and that it has consistently underestimated the amount of electricity generated by wind power in its advice to governments. They say the IEA shows "ignorance and contempt" towards wind energy, while promoting oil, coal and nuclear as "irreplaceable" technologies.
In a report to be published today, the Energy Watch experts say wind-power capacity has rocketed since the early 90s and that if current trends continue, wind and solar power-generation combined are on track to match conventional generation by 2025.
Rudolf Rechsteiner, a member of the Swiss parliament who sits on its energy and environment committee, and wrote today's report, said the IEA suffered from "institutional blindness" on renewable energy. He said: "They are delaying the change to a renewable world. They continue touting nuclear and carbon-capture-and-storage, classical central solutions, instead of a more neutral approach, which would favour new solutions."
Today's report compares past predictions about the growth of wind power, made by the IEA and others, with the capacity of wind turbines actually installed.
It says: "By comparing historic forecasts on wind power with reality, we find that all official forecasts were much too low."
In 1998, the IEA predicted that global wind electricity generation would total 47.4GW by 2020. This figure was reached in December 2004, the report says. In 2002, the IEA revised its estimate to 104GW wind by 2020 – a capacity that had been exceeded by last summer.
In 2007, net additions of wind power across the world were more than four-fold the average IEA estimate from its 1995-2004 predictions, the report says. "The IEA numbers were neither empirically nor theoretically based," it says.
The IEA's most recent forecast, in its 2008 World Energy Outlook, predicts a fivefold increase in wind energy from 2006-2015, but then assumes a rapid slowdown in deployment over the following decade. The Energy Watch report calls this a "virtual stagnation" and says "no arguments are given why the wind sector should suffer such a crisis by 2015 and after".
The report concludes: "The IEA outlook remains attached to oil, gas, coal and nuclear, and renewables seem to have no chance to reverse this trend. This organisation… has been deploying misleading data on renewables for many years [and is still doing so]."
It adds: "One has to ask if the ignorance and contempt of IEA toward wind power and renewables in general is done within a structure of intent."
Mr Rechsteiner, who says he has investments in a handful of wind turbines, said the IEA routinely drew senior staff from the fossil-fuel industry. "The oil business is very skilful in keeping its energy access exclusive," he says.
The IEA describes itself as an "intergovernmental organisation which acts as energy policy advisor to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens". It refused to comment on today's report. The Energy Watch group is run by the Ludwig Bölkow Foundation in Germany.
John Hemming, the Liberal Democrat MP for Birmingham Yardley and a member of the Energy Watch group, said: "The IEA has been complacent, and part of the conventional wisdom that the solution is more oil and gas. The British government relies on the IEA. In the land of the blind, the one-eyed man is king — but the IEA's one eye has a cataract."
Today's report says the number of wind turbines installed over the last decade has grown by 30% annually, and total windpower capacity is more than 90GW – the equivalent of 90 conventional coal or nuclear power stations. It adds that the boom in wind energy is "so far barely touched by any sign of recession or financial crisis".
If current trends continue, the report claims wind capacity could reach 7,500GW by 2025 – making half of all new power projects wind or solar. Conventional power stations could be phased out completely by 2037, it claims.
Werner Zittel of the Energy Watch group, said: "It is time to realise that the many detractors of wind energy have got it wrong. We have seen more than 10 years of unprecedented growth in this sector… This is not about morals or environment but the commercial reality that wind, coupled with hydro, solar, biomass and geothermal energy is not only a rapid and cost-effective alternative, but one that could deliver all our energy requirements within the first half of the century."

Obama Team, Exxon Mobil Chief Trade Jabs on Energy

By STEPHEN POWER and IAN TALLEY

WASHINGTON -- President-elect Barack Obama's pledge to double alternative-energy production over the next three years drew a skeptical response Thursday from the chief executive of Exxon Mobil Corp., Rex Tillerson, who told reporters during an appearance in Washington that rapid increases in alternative energy would be "very challenging."
"Let's be realistic about time frames, let's don't fool ourselves," Mr. Tillerson said. "If you include biofuels, which are already at [federal] mandate levels … doubling that would require you to have available cellulosic conversion technology, which does not exist today. In terms of wind, there simply is not the manufacturing capacity today to build wind turbines…they're already backordered."
Despite billions of dollars in federal spending on various clean-energy technologies in recent decades, the U.S. energy portfolio has not dramatically changed since the administration of Richard Nixon. In 2006, fossil fuels accounted for 85% of the nation's energy supply compared with 93% in 1973, according to a report last year by the Government Accountability Office.
In his speech on economic recovery at George Mason University Thursday, Mr. Obama didn't spell out how he would go about doubling alternative-energy production, but described his goal as part of a broader strategy to "put Americans to work in new jobs that pay well and can't be outsourced -- jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain."
In response to written questions from The Wall Street Journal, an Obama transition aide said the president-elect would seek to double the amount of wind, solar, and geothermal generating capacity in the U.S. through a combination of mandates and subsidies.
"The United States currently produces roughly 24,000 MW [megawatts] of wind, solar, and geothermal power. Before the financial crisis brought the renewable industry to a halt, the wind industry publicly announced the expectation to install at least 7500 MW in 2008," the Obama transition aide said in an email. "By providing significant loan guarantees and ultimately later down the road a national [renewable portfolio standard], we are confident we will get the wind industry back on track. In addition to the 20,000+ MW of wind, we are confident that with the same combination of support and renewable standards, the geothermal and solar industries can install 4,000 MW of new power."
Mr. Obama has called for legislation that would cap and gradually reduce U.S. greenhouse gas emissions, and for a federal mandate that would require that the U.S. by 2025 get at least 25% of its electricity from renewable sources like the wind, the sun and geothermal energy (which together currently account for around 1% of U.S. electricity supply).
Turning that vision into a reality, many energy industry officials say, will require building more transmission lines, to convey wind power from remote areas in the central U.S. where it is prevalent to more densely-populated areas where the electricity is most needed. The construction and siting of such lines are often opposed at the local level. More recently, the global economic downturn has depressed investment in many forms of renewable energy.
Mr. Tillerson, whose company once funded a think tank that argued carbon-dioxide emissions were helpful to human life, has drawn criticism at times from environmentalists and activist shareholders who say Exxon Mobil is not adequately investing in alternatives to fossil fuel. While the company today acknowledges that burning fossil fuels is a significant source of greenhouse-gas emissions and increases the risks of climate change, Mr. Tillerson has also said the company expects oil and natural gas to remain the dominant fuels for decades, and that it must continue to generate needed energy while taking steps to reduce the company's "environmental footprint."
In response to Mr. Tillerson's comments, the Obama transition aide noted that the global wind turbine manufacturing industry has been growing, and said the new administration would take steps to bring a greater fraction of wind technology development and manufacturing to the United States.
"In order to achieve meaningful energy security and confront climate change we must begin to trade aspiration for achievement," the aide said. "This will require an ambitious partnership between government, industry and the American public. We invite Mr. Tillerson to join this effort."
Write to Stephen Power at stephen.power@wsj.com and Ian Talley at ian.talley@dowjones.com

Ed Miliband plays down impact on UK of Russia-Ukraine gas dispute

Hopes of big cuts in household energy bills fade as traders drive up UK prices by exporting gas
Terry Macalister and Andrew Sparrow
guardian.co.uk, Thursday 8 January 2009 10.28 GMT

Hopes of big cuts in household energy bills faded yesterday as traders drove up UK prices by exporting gas to fill a growing shortage across Europe.
Despite freezing temperatures and rising demand in Britain, traders switched from importing to exporting gas through an interconnector pipeline to continental Europe as a growing row between Russia and Ukraine left many countries short of supplies.
British wholesale prices have leapt in recent days due to the crisis, leading to warnings that UK householders could be denied long-awaited cuts in fuel prices. The price of gas hit 73p a therm – up 26% in three days.
Government sources warned UK energy companies not to use the Ukraine crisis as an excuse to delay passing on the benefits of otherwise lower world energy prices. One senior Whitehall figure said: "We would expect the energy companies to be responsible and not use this dispute as an excuse to hold off on the price reductions they have talked about which customers are expecting in the spring."
British Gas and others indicated late last year they would cut domestic gas bills early this year amid growing anger from consumers, but made clear this would only happen if there was a sustained fall in the price of wholesale power.
Hopes of that fall in domestic gas bills are now dwindling, said energy consultants Inenco, who count Marks & Spencer and John Lewis among their customers.
"We are not experiencing supply shortfalls in the UK but the markets are already responding [with higher prices]. With future dependence on imported gas, Britain needs to make energy security a key priority or risk being held to ransom," said Ian Parrett of Inenco.
In an interview on BBC Radio 4's Today programme this morning, Ed Miliband, the energy secretary, said it was important for the crisis between Russia and the Ukraine to be resolved "as quickly as possible", but he played down the impact it was having on British consumers.
"The point I would make is that a small proportion of gas is going through the interconnector to continental Europe because prices have gone up, but in terms of the companies that have ownership in Britain, they have legal obligations that will have to be met, and are being met, to supply UK customers," he said.
"So I don't think people should be alarmed about this dispute for whether they are going to be able to use their gas in the months ahead."
But the crisis will reignite concerns that the UK has left itself open to exploitation by foreign companies who came in and bought up major UK utilities, leaving British Gas as one of the few locally owned entities. EDF of France and E.ON and RWE of Germany are among the continental groups that dominate the sector.
There was particular concern that the huge foreign-owned utilities that dominate power supply in the UK are putting their continental customers ahead of UK energy users, although they denied this.
These companies – some of which have part-government ownership – have used a free market to buy British assets in a way that is considered unlikely to occur on mainland Europe. They are also able to use the more liberalised gas market to fill up their storage facilities during the summer and autumn.
"Even in winter, if they can get hold of UK gas via the interconnector they will use that instead of dipping into their storage facilities. By contrast, UK players can't access gas from the European market as there is no liquid market to buy from ... Also there is no third party access to European gas storage facilities, again in contrast to the UK," said one frustrated British gas trader.
E.ON, which has nearly 3 million gas customers in Britain and is a part-owner of the interconnector pipeline, confirmed that the fixed link had turned from being a net importer to net exporter of gas, because of shortages throughout parts of continental Europe.
The company admitted its gas traders might themselves be exporting gas from the UK but this was not at the expense of the UK consumer or unexpected. "It's a fairly normal time in the UK ... Southern Germany has got a problem and is being largely supplied by northern Germany, but it's certainly possible our traders [are exporting from Britain]. They are always looking for opportunities. But it is only if the situation goes completely pear-shaped that France and Germany will come looking for Norwegian gas in Britain," said a spokesman for E.ON UK.
The National Grid, which operates the gas and electricity transmission network in Britain, confirmed that 10m cubic metres of gas a day were moving though the interconnector between the UK and Belgium. But he said that this was more than made up for by imports from the continent via the BBL pipeline and Norwegian energy arriving through the Langeled link.
Mounting concerns about Britain's energy security came after Russia finally halted all shipments to Ukraine, accusing its neighbour of holding up all transit gas bound for continental Europe.
The European commission described the behaviour of Russia and Ukraine as "completely unacceptable", while the problems rekindled a long-running debate in the UK about the vulnerability of the country now that North Sea gas and oil supplies are running out fast.
John Cridland, the deputy director-general of the CBI, said that the disruption underlined the importance of the British government taking urgent action on a wider UK energy agenda.
"Ministers now need to agree an early deadline for publishing national planning statements for nuclear power, gas storage and offshore wind and tidal power as a matter of urgency so the UK can move towards achieving much greater energy security and reducing our dependence on imported gas," he said.
And David Porter, the chief executive of the Association of Electricity Producers, said it underlined the need for new coal-fired stations to keep the lights on. "New coal-fired stations can be built much sooner than new nuclear and they can help us to avoid power shortages as our ageing power stations close in the next few years," he said.
In his interview this morning, Miliband said that Britain only got 2% of its gas from Russia. "We have got a diverse range of sources where our gas comes from, which is the most important thing this dispute teaches us for all countries," he said.
Miliband said that, although the majority of Britain's gas still came from the North Sea, Britain also had long-term supply contracts with countries such as Norway (which now supplies about 20% of Britain's gas), and some storage capacity.
He acknowledged that more storage capacity would be needed in the future. But he said there were 18 different projects due to be built between now and 2020. "I feel confident that we are making the right decisions," he said.

EU says deal struck with Russia over gas supply

• Moscow accepts European monitors on Kiev pipeline• Freezing Balkans face catastrophe if pact fails
Ian Traynor in Prague
The Guardian, Friday 9 January 2009

European leaders announced a breakthrough deal with Moscow last night that could see Siberian gas flowing to the households and heating systems of Europe. But hundreds of thousands of families across the Balkans and central Europe faced a freezing weekend without heating amid uncertainty over whether the deal settling the dispute between Russia and Ukraine would stick.
With large stretches of eastern and southern Europe blanketed in snow in some of the coldest weather in a decade, an air of panic gripped parts of Bulgaria, Macedonia, Serbia, and Bosnia, all almost entirely dependent on Russian gas for central heating. The gas has been cut off since Wednesday.
Dozens of companies and factories were closed across the region, while some schools, clinics and hospitals also had to shut or improvise heating systems.
In Sarajevo, Skopje and Sofia, all Balkan capitals, tens of thousands of households were without central heating yesterday.
Demand for coal and wood soared and use of electric heaters brought surges in power systems, which threatened to break down under the strain.
The Russian gas monopoly, Gazprom, has refused to pump any gas through Ukraine's pipeline system to customers in Europe, claiming that Ukraine is siphoning off the gas for its own use after refusing to pay Gazprom's gas price. The emergency seems certain to worsen in the days ahead. Even if deliveries resume, it could take at least two days for gas to feed through to users.
Hido Biscevic, a diplomat who heads the Regional Co-operation Council grouping Balkan countries, warned of a "looming humanitarian catastrophe" in the region.
But the Czech prime minister, Mirek Topolánek, in the second week of his EU presidency, claimed a breakthrough in the dispute late last night after Europe's first attempt to engineer a settlement seemed to have failed.
At a meeting in Brussels between senior EU officials and the chiefs of the two parties to the dispute, Gazprom and its Ukrainian rival Naftogaz, the Russians initially rejected the terms for a new independent monitoring mission on the pipelines through Ukraine, aimed at guaranteeing the flow of Russian gas to Europe.
After talking to Vladimir Putin, the Russian prime minister, and Angela Merkel, the German chancellor, however, Topolánek said the Russians accepted the monitors.
"This deployment should lead to Russian supplies of gas [to Europe] being restored," said a statement from the Czech Republic. "Tomorrow is an important day," said Alexandr Vondra, the Czech deputy prime minister.
Andris Piebalgs, the European energy commissioner, said that up to 12 EU monitors would be sent to Kiev today, ready to be deployed on the pipelines to try to establish the facts about gas transmission in the midst of a fierce propaganda war between Moscow and Kiev.
"We do not intend to supply gas which is simply disappearing in Ukraine's gas transportation system," Alexander Medvedev, Gazprom's deputy chief executive, told the Reuters news agency.
Putin delivered a blistering attack on Kiev, describing the Ukrainian leadership as criminals. "Ukraine's political leadership is incapable of resolving its problems. What we see in Ukraine is the criminalisation of power," he said. "The leadership of Ukraine is not capable of organising the country's normal economic functions according to economic principles. Its power structures are corrupt."
Eighteen out of 27 EU countries are affected by the gas crisis.
While European officials blame both Russia and Ukraine for the crisis, and indirectly accuse both sides of lying, the blame game and the longer-term settlement of the dispute have quickly become sidelined by the urgent need to get the gas flowing again.
Europe imports a quarter of its gas from Russia, 80% of that via Ukraine. But while Germany is by far the biggest buyer of Russian gas, the post-communist countries of eastern Europe are much more reliant on Russian supplies and lack alternative sources of heating.
With Gazprom insisting on more than doubling the price of its gas to Ukraine, Russia cut gas supplies to the country on New Year's Eve and then stopped all gas through the pipelines to Europe on Wednesday.
European energy ministers are to hold an emergency meeting in Brussels on Monday to discuss the fuel crisis.
In Sofia, the Bulgarian capital, protesters denounced both Russia and Ukraine as "gas terrorists". Hungary said it was sending supplies of gas across its southern border to help Serbia. Poland did likewise to aid Slovakia.
US officials in Brussels said that if the fuel crisis continued, Nato might need to come to the aid of its newer members in eastern Europe.

UN Climate Conference: The countdown to Copenhagen

In 331 days' time, 15,000 officials from 200 countries will gather in the Danish capital with 1 goal: to find a solution to global warming. Michael McCarthy, Environment Editor, presents the first in a series of dispatches on the crucial summit
Friday, 9 January 2009

Alamy
The UN Climate Conference will try to work out a way for the world to act together to preserve the thin envelope of atmosphere, soil and sea which surrounds our planet and enables us to live, in the face of rising temperatures which threaten to destroy its habitability

Three hundred and thirty-one days, plus a final frantic fortnight: not very long, really, to put together the most complex and vital agreement the world has ever seen. But that's all the time there is: in 331 days from now, on 7 December, the UN Climate Conference will open in Copenhagen and the world community will try to agree a solution to the gravest threat it has ever faced: global warming.
Between 10,000 and 15,000 officials, advisers, diplomats, campaigners and media personnel from nearly 200 countries, almost certainly joined by limousine-loads of heads of state and government from America's President Barack Obama down are expected to meet in the Danish capital in one of the most significant gatherings in history.
If that sounds like exaggeration, we need only glance at some historical comparisons. The Copenhagen meeting will have a far broader reach and potential impact on the world than the Congress of Vienna, say, the 1814-1815 assembly which attempted to reorder Europe after the Napoleonic wars, or the Paris peace conference of 1919, which tried to construct a new global order after the First World War, or the 1945 meetings at Yalta and Potsdam which tried to do the same after the Second World War. For they were all dealing with national boundaries, politics and political structures, phenomena which of course are vital in human terms, but ephemeral and changeable. Copenhagen will be dealing with something fundamental to life on earth: the stability of the biosphere.
Known officially in UN-speak as COP 15 – the 15th meeting of the parties of the UN's Framework Convention on Climate Change – the meeting in Denmark will try to work out a way for the world to act together to preserve the thin envelope of atmosphere, soil and sea which surrounds our planet and enables us to live, in the face of rising temperatures which threaten to destroy its habitability.
All the world's major governments, including the once-sceptical administration of the US President George Bush, now formally accept that temperature rises have already begun, are likely if unchecked to prove disastrous for human civilisation, and are being caused by emissions of greenhouse gases such as carbon dioxide from our power plants, factories and motor vehicles.
But if all the major governments now accept it, getting them to agree on how to tackle it still seems a very long way off indeed. The essential problem, to use the jargon, is burden-sharing. We know the world has to cut its CO2 emissions drastically, and soon. But which countries are to cut them, by how much?
The Chinese, for example, with their scarcely believable economy growing at 10 per cent a year, have now overtaken the Americans as the biggest carbon emitters; but historically, America has emitted far more; and on a per capita basis, US emissions still dwarf those of China. So the Chinese have felt (so far) that they have a moral right for their economy to grow unchecked, and their carbon emissions to grow with it; but many Americans have felt (so far) that they see no reason to act unilaterally to cut their own CO2 if the Chinese are not willing to do the same.
Differences like those stubbornly percolate the whole negotiating process and make achieving a universal agreement mind-bogglingly hard. "This is the most complicated deal the world has ever tried to put together," says Tom Burke, visiting professor at Imperial College and an adviser on climate change to the Foreign Office. "In effect, you're asking nearly 200 countries to align their energy policies – to create a common world energy policy. If you look at how hard it has been for the member states of the European Union to align their energy policies, you get an idea of the difficulty of attempting it with the whole world."
Yet it has to be done, and the penalty for failure could not be higher. It is just 20 years since the world woke up to the danger of rising carbon emissions destabilising the atmosphere. Two decades ago it seemed a fairly distant threat, prefigured principally in supercomputer climate prediction programmes; something that was likely to happen a comfortably long distance away, such as at the end of the 21st century.
Three things have altered since then. First, the changing climate is now visible, not just in computer predictions, but all around us: spring in southern Britain, for example, is arriving about three weeks earlier than it did 40 years ago. At this time last year a red admiral butterfly, an archetypal creature of the summer, was photographed perching on a snowdrop, a flower of the winter – a previously unheard-of occurrence.
Second, it has become clear in the past five years that the earth is responding to the increasing CO2 loading of the atmosphere much more rapidly than scientists initially thought. There are numerous examples but to instance just one, the summer sea ice of the Arctic Ocean is melting far more quickly than anyone imagined.
Third, it has become apparent, even more recently, that global emissions of CO2 are shooting up at a rate that far exceeds anything the UN's Intergovernmental Panel on Climate Change (IPCC) thought possible when it sketched out future emissions scenarios in a special report in 2000. Even though we have had 20 years to think about emissions cuts, and 11 years of the Kyoto protocol, the treaty which actually prescribed the first cuts for the industrialised countries, emissions are soaring as never before.
Some leading climate scientists are now openly voicing concerns that this makes it increasingly unlikely we can meet the aim of keeping global temperature rise to about 2C above the pre-industrial level, which is generally regarded as the most that may be endured by human society without mortal danger. (We are now at about 0.75 degrees C above pre-industrial, and another 0.6 of a degree is thought to be inevitable because of the CO2 which has already been emitted).
Certainly, if we are to have any chance at all at holding the increase to two degrees, there is wide agreement that global emissions have to peak very soon – probably by 2015 or 2016 – and then rapidly decrease, to 80 per cent below present levels by 2050. The later the peak, the greater (and therefore more difficult) the subsequent decrease would have to be.
That's the pathway the world has to follow. Copenhagen offers the chance to set out along it. But even if the deal in December is not as ambitious as scientists and environmentalists insist is necessary – and at the moment, that seems pretty likely – it is vital that there is actually an accord. Disagreement would be a catastrophe.
Three conditions, according to Britain's Energy and Climate Change Secretary, Ed Miliband, have to be fulfilled for Copenhagen to be regarded as a success. First, the wealthy industrialised countries have to agree tough new targets for cutting their C02. Second, the developing countries led by China, even if they do not take on the same sort of numerical targets, have to move away from "business as usual". And third, the rich nations have to agree a way of financing the developing countries, especially the poorer ones, in the measures they take to adapt to the climate change that is coming anyway. Otherwise they won't sign up to anything.
Securing such a deal will be a matter of political will: a global political consensus will have to be hammered out. It is becoming clear that, over the next 11 months, the world could well do with a high-level political fixer, jetting unceasingly from capital to capital, to pull such a consensus together, in the manner in which the Argentine diplomat, Raul Estrada, managed to pull the original Kyoto agreement together in the Japanese city in December 1997. It could be Britain's Ed Miliband, according to Tom Burke. "There has to be someone who can put the time in, and go round various capitals and talk to the key people at a very high level, and not just environment ministers," he says. "Ed Miliband could play that role. He's known to be close to Gordon Brown, and Britain is reasonably respected for its record on climate change. It doesn't have to be him. But there probably needs to be someone."
However, Mr Miliband, and the British Government, may face a problem of reduced credibility in climate change terms as a result of two policy decisions likely to be taken in the next few weeks. One, which Mr Miliband will take personally, is whether or not to agree to a new coal-fired power station at Kingsnorth in Kent. If he gives it the go-ahead, without strict controls over its emissions, environmentalists will accuse him of sanctioning a new generation of power plants run on the most carbon-intensive fuel. The other is whether or not to allow Heathrow airport to build a third runway, and thus expand British aviation, whose CO2 emissions are growing faster than those of any other sector.
If both these projects go ahead – as seems perfectly possible – there is no doubt that the UK's position as a potential Copenhagen broker will be weakened. "If countries like Britain, who, for better or worse, are the global leaders, go to Copenhagen with new coal-fired power stations and expanding airports at home, it's very difficult to see how we will be taken seriously by other countries which have even more serious energy security problems and concerns about economic growth," said Robin Oakley, the head of climate change at Greenpeace UK. "That leadership can't just be shown by grandstanding at the meeting. It has to be shown by what we do in our domestic policy."
In the absence of Mr Miliband or any other leading politician emerging as the Copenhagen fixer, the key player in the process is likely to be Barack Obama. The President-elect has already opened a chasm, in terms of climate change policy, between himself and the outgoing George Bush, who, in 2001, withdrew the US from Kyoto and began years of climate policy obstructionism.
Mr Bush wanted no truck with emissions cuts of any sort; Mr Obama has pledged he will get US emissions down to 80 per cent of 1990 levels by 2050 (a target identical with Britain's) and "engage vigorously" with the international negotiating process over the next few months. Hints have been dropped that he may convene meetings of key world leaders to speed the negotiations along. It seems highly likely that he will go to Copenhagen himself – which means every other world leader will want to be present.
Whether or not they can do the deal the world needs is another matter. Yet there is no doubt the world needs it. It may seem reasonable to think, in the coldest winter for years, that global warming has gone away, yet nothing could be further from the truth.

Time to look at the benefits of growing and using more wood

In the search for policies that will meet the aims of providing jobs and meeting the UK's climate change targets, two major areas stand out as excellent ways of generating jobs quickly, writes Chris Goodall from Carbon Commentary, part of the Guardian Environment Network
Thursday 8 January 2009 16.12 GMT

Government officials are searching for policies that will meet the twin aims of providing jobs and meeting the UK's climate change targets. It is proving a difficult task. The easiest ways of reducing fossil fuel use will probably not create many new jobs in the UK. All large wind turbines are built abroad and although the construction work on a nuclear power station will generate a few thousand jobs, most of the key components will need to come from Europe and Japan. So where are the opportunities? I think two major areas stand out as excellent ways of generating jobs quickly without also dragging in expensive imports or sharply raising prices.
One opportunity is well understood. The UK's houses are the worst insulated in northern Europe and the scope for improvement is clear. The other idea is newer. I think that massively increasing the availability and use of wood for fuel can generate large numbers of jobs both in forestry and in business such as horticulture that can productively use the cheap heat from small wood-burning power stations.
HousingInitially government seems to have hoped that the clear need for improved heat retention means that the insulation industry could be used as a way of generating large numbers of jobs as an army of installers laid thick wads of cladding in UK lofts. But once the Department of Energy and Climate Change had worked out the numbers, it looked as though the potential for extra employment was limited.
I think that the department was far too pessimistic when it looked at the opportunity. Although it is true that almost all UK houses now have loft insulation, remarkably few have a thick enough layer. Most commentators say that increasing the thickness to at least 25cm (10 inches) will save more in central heating bills than it costs. My estimate is that at least 15 million homes could profitably increase their loft insulation to this level. A large-scale programme of installation would reduce UK gas consumption and provide tens of thousands of jobs for several years.
However, lofts should not be the biggest focus of the green new deal. They are responsible for less than 10% of the heating losses of a typical house. Far more heat leaves through walls, windows, and floors. Surprisingly, almost as much energy is lost through doors as through the roof. Losses from draughts are also far more important than the loft. A sustained national programme to improve the heat retention characteristics of our housing would be hugely beneficial. It would reduce fuel bills, cut the UK's use of insecure supplies of Russian gas, and provide the prospect of employment for hundreds of thousands of people in manufacturing and installation industries. We should be installing cavity wall insulation in millions of homes, replacing leaky single-glazed windows, carefully repairing draughty floors and walls, and hanging properly insulated well-fitting doors. All simple and straightforward measures that can be taken using British-made goods and newly trained people. More complicated schemes such as re-cladding blocks of flats make even more sense financially, but will require us to import some skills and products from Europe. For the average house, a saving of 30% of the heating bill is easily achievable.
How would we finance this programme? We can copy the successful features of the German eco-renovation policies which are now systematically reducing energy use in several hundred thousand homes each year. Through soft loans, grants for achieving energy reduction targets, and other measures, householders and landlords have been incentivised to take measures that sometimes cut domestic heat need by 80% or more. The German government claims that the cost per tonne of carbon saved is impressively low and trumpets that household emissions of greenhouse gases have fallen by a third since 1990. This finding chimes with what we already know: house insulation makes financial sense and people just need the right incentives and advice. The Energy and Climate Change people should look again at the scope of generating jobs and reducing emissions.
WoodlandThe UK is one of the least forested countries in the temperate world. Only about 11% of the land area is covered by trees. Simply planting more trees would have value: they will soak up CO2, reduce the risk of catastrophic flooding in times of intense storms, and possibly help reduce summer peak temperatures. Of course people would be employed planting and looking after the trees. But the even more important objective is to reduce fossil fuel use by replacing coal and gas. In other northern countries, wood fuel provides a substantial fraction of total heat needs through district heating systems that burn the wood in central plants and then distribute hot water to local homes. This replaces the need to use gas or oil. Increasingly, these wood-fuelled heating plants are also generating electricity as well using turbines. The UK could aim to install thousands of small-scale wood-burning (or, more likely, wood gasification) plants dotted around forested areas.
There's little competition from other users for wood in many areas of the country. Even in woodlands close to major cities, such as the Chilterns, prime wood is increasingly left unused. Beautiful wooded areas won't stay that way if we don't manage them properly. Creating a market for wood by encouraging the growth of small-scale local electricity generators is an excellent way of incentivising proper care of our woodlands.
How much difference could a major reforestation plan make? Moving the UK from 11 to 12% forest cover would add 250,000 hectares of woodland. Fast-growing species might produce a yearly yield of up to 10 tonnes per hectare, with enough energy to replace over 5% of our electricity need for ever, as well as huge amounts of useful heat. The reduction in UK emissions is potentially worth tens of millions of tonnes a year. But is it a feasible target to increase woodlands by 250,000 hectares? Think of it this way: China has reforested 4 million hectares every year for the last two decades. So of course it is possible and, moreover, much of the employment would be in areas of low incomes and poor job prospects. Planting and nurturing young trees is a skilled job, and these skills have atrophied in the UK in recent years. But given the right incentives, traditional farmers could hire and train the people needed to plant large areas of fast-growing coppices.
The best use for the heat from wood-using power plants would be in homes and other buildings such as offices and schools. But we should also use spare heat for a new generation of horticultural greenhouses. The fall in the value of the pound has made imported fruit and vegetables expensive. We could grow much more food in the UK using cheap heat and some electricity from small wood power stations for glasshouses. The great advantage of this is that horticulture is highly labour intensive and so it can revive areas of limited prosperity such as Cornwall. Replacing Dutch and Spanish fruit and vegetables with home-produced products in greenhouses heated by local wood could transform the economic prospects of parts of the UK. The percentage of the Dutch labour force working in agriculture is almost three times the level here and widely available cheap heat could pull the UK back up towards the Dutch employment level.
Is such a plan financially possible? I think that at current prices for advanced small-scale electricity plants wood is probably just about economic as a source of heat and electricity. As with other low-carbon technologies, we need to reduce further the cost of the plant and equipment. This will happen as more small wood power stations are installed and manufacturing costs are reduced. With some sensible government support, a plan to reforest 1 or 2% of the UK clearly makes economic sense, not least because of its potential employment impact and for its effect on carbon reduction.
• This article was shared by our content partner Carbon Commentary, part of the Guardian Environment Network

Billions face food shortages, study warns

• Climate change may ruin farming in tropics by 2100• Record temperatures to become normal in Europe
Ian Sample, science correspondent
The Guardian, Friday 9 January 2009

Half of the world's population could face severe food shortages by the end of the century as rising temperatures take their toll on farmers' crops, scientists have warned.
Harvests of staple food crops such as rice and maize could fall by between 20% and 40% as a result of higher temperatures during the growing season in the tropics and subtropics. Warmer temperatures in the region are also expected to increase the risk of drought, cutting crop losses further, according to a new study.
The worst of the food shortages are expected to hit the poor, densely inhabited regions of the equatorial belt, where demand for food is already soaring because of a rapid growth in population.
A study in the US journal Science found there was a 90% chance that by the end of the century, the coolest temperatures in the tropics during the crop growing season would exceed the hottest temperatures recorded between 1900 and 2006.
More temperate regions such as Europe could expect to see previous record temperatures become the norm by 2100.
"The stress on global food production from temperatures alone is going to be huge, and that doesn't take into account water supplies stressed by the higher temperatures," said David Battisti, at the University of Washington, who led the study.
Battisti and Rosamond Naylor, at Stanford University in California, combined climate models from the Intergovernmental Panel on Climate Change (IPCC) and historical examples of the impact of heatwaves on agriculture, and found severe food shortages were likely to become more common.
Among the periods they examined was the record heatwave across western Europe in 2003, which killed an estimated 52,000 people and also cut yields of wheat and fodder by a third. In 1972, a prolonged hot summer in south-east Ukraine and south-west Russia saw temperatures rise by between 2C and 4C above the norm, driving down wheat and coarse grain yields for the whole of the USSR by 13%. The disruption affected the global cereal market for two years.
Naylor, who is director of food security and the environment at Stanford, said the study emphasised the need for countries to invest in adapting to a changing climate. To develop new crops to withstand higher temperatures could take decades, she added.
"When we looked at our historical examples there were ways to address the problem within a given year," Naylor said. "People could always turn somewhere else to find food. But in the future there's not going to be any place to turn unless we rethink our food supplies."
The tropics and subtropics, which stretch from the southern US to northern Argentina and southern Brazil, from northern India and southern China to southern Australia, and cover all of Africa, are currently home to 3 billion people. Future temperature rises are expected to have a greater impact in the tropics because the crops grown there are less resilient to changes in climate.
According to the study, many local populations now live on less than £1.30 a day and depend on agriculture. The need for food is due to become more urgent as populations are expected to nearly double by the end of the century.
"When all the signs point in the same direction, and in this case it's a bad direction, you pretty much know what's going to happen," Battisti said. "You're talking about hundreds of millions of additional people looking for food because they won't be able to find it where they find it now.
"You can let it happen and painfully adapt, or you can plan for it. You could also mitigate [climate change] and not let it happen in the first place, but we're not doing a very good job of that."
Naylor added: "We have to be rethinking agriculture systems as a whole, not only thinking about new varieties [of crops], but also recognising that many people will just move out of agriculture, and even move from the lands where they live now."
In many countries, a combination of poor farming practices and deforestation, exacerbated by climate change, may steadily degrade soil fertility, leaving vast areas unsuitable for crops or grazing. In 2007, scientists warned that poor soil fertility meant a global food crisis was likely in the next half-century.

Exxon CEO Advocates Emissions Tax

By RUSSELL GOLD and IAN TALLEY

The chief executive of Exxon Mobil Corp. for the first time called on Congress to enact a tax on greenhouse-gas emissions in order to fight global warming.
In a speech in Washington, Rex Tillerson said that a tax was a "more direct, a more transparent and a more effective approach" to curtailing greenhouse gases than other plans popular in Congress and with the incoming Obama administration.
"My greatest concern is that policy makers will attempt to mandate or ordain solutions that are doomed to fail," Mr. Tillerson said.
The policy he is advocating is often called a carbon tax because it would be imposed on emissions of carbon dioxide, the most common man-made greenhouse gas. By backing it, Mr. Tillerson has become an unlikely member of a club that includes former Vice President Al Gore, consumer advocate Ralph Nader and President-elect Barack Obama's designated head of the National Economic Council, Larry Summers.
Carbon taxes have been politically unpopular. "Calling for a carbon tax could be a ploy because few observers believe such a tax is politically feasible in our Congress," says Daniel J. Weiss, a fellow at the Center for American Progress, a left-of-center think tank in Washington.
The leadership of the Democratic-led Congress and other major oil companies prefer using a cap-and-trade approach. Under this system, the government would establish economy-wide emission limits as well as limits for individual companies. There would be a market for firms to buy and sell pollution allowances based on whether they were above or below their caps.
ConocoPhillips and the U.S. divisions of BP PLC and Royal Dutch Shell PLC have all supported a cap-and-trade solution.
Mr. Tillerson said a cap-and-trade system would be costly, bureaucratic and create a "Wall Street of emissions brokers."
The speech signals an evolution in the thinking of Mr. Tillerson, who became chief executive and chairman of Texas-based Exxon, the world's largest Western oil company, in 2006. Mr. Tillerson now calls the issue complex and challenging to understand, but -- in contrast to Exxon's previous party line -- he doesn't question whether fossil fuel use has contributed to rising global temperatures.
In 2007, when he gave his last big speech on climate change, he said he didn't support any particular policy for curbing carbon-dioxide emissions.
Observers say Mr. Tillerson's endorsement of a carbon tax could have widespread ramifications. "When the biggest company in the world says this is OK, that is giving permission for a whole lot of people who have resisted carbon policy on the grounds it is bad for business to soften their resistance," says Michael Webber, associate director of the University of Texas Center for International Energy and Environmental Policy.
Write to Russell Gold at russell.gold@wsj.com and Ian Talley at ian.talley@dowjones.com

Helius Energy: generating power from biomass

Monday, January 05, 2009

John Seed, chief executive, Helius Energy plc

Helius Energy was established to develop, install and operate biomass fired renewable electricity generation plants to address the need created by the increasing importance that has been given to climate change internationally. Helius’ projects are designed to mitigate climate change by helping to cut greenhouse gas emissions quickly. Biomass is sometimes overlooked as a renewable fuel, lacking the perceived novelty value of anaerobic digestion and being a more established technology than other forms of bioenergy. However the market for biomass, whether from recycled wood, processing co-products (such as distillers grains), agricultural wastes or energy crops is growing rapidly.Biomass is a low carbon energy source. Biomass fuels absorb carbon dioxide from the atmosphere as they grow, and this is then released when they are processed to create power. Therefore they are sometimes referred to as being carbon neutral. However, while the growing and processing of biomass fuel generates some carbon, the overall amounts of CO2 produced by the whole cycle are much less than for generating energy from fossil fuels such as coal.In the last year, plans for the development of more than 1,500 megawatts of electricity generation from biomass have been announced in the UK, around the capacity of a typical nuclear power station. Add to this the increasing quantities of biomass being co-fired in large coal plants and there is a huge, and growing, market for solid biomass fuels in industrial sized operations.However, already a number of project developers are finding that there are practical issues which must be overcome in order to realise their ambitions, and the market is beginning to recognise differences between speculative announcements and serious project proposals from dedicated biomass energy specialists like Helius Energy.Since Helius Energy was admitted to AIM some two years ago, the company has delivered on the milestones set at its admission and laid a solid foundation for growth. During a very busy last 12 months Helius was able to secure Governmental planning approval (under Section 36 of the Electricity Act) for its first 65MWe project at Stallingborough in North East Lincolnshire, while it raised £2m for short term working capital and successfully negotiating long term feedstock and construction contracts for the plant. This was followed by the successful sale of Stallingborough to RWE, for £30m. Furthermore, the deal provides Helius with sufficient cash resources to continue to develop, and ultimately own and operate, a portfolio of bio-mass power plants which it plans to run on environmentally sustainable bio-mass feed-stocks.Since closing that deal the management, led by CEO John Seed, has agreed terms to secure an 18 acre site at Bristol Avonmouth for a new 100MWe power plant, the next in its intended pipeline of projects. Avonmouth fits with Helius Energy’s strategy to develop plants that are close to quayside sites, with good logistics and suitable connections to the electricity network.Biomass fuel feedstocks will comprise wood fuel in the form of virgin and recycled wood, energy crops and other biomass material such as residues from processing cereals and oilseeds that qualify as renewable fuels under the provisions of the Renewables Obligation 2006.These achievements build on the company’s plans in Scotland for a scheme to transform distillery by-products into renewable electricity, usable heat and organic soil conditioners. These modular biomass power stations are capable of utilising wet biomass, located alongside existing industries which produce suitable co-products. Helius and The Combination of Rothes Distillers Limited (CoRD) plan to develop a GreenSwitchTM small scale biomass Combined Heat and Power (CHP) generation plant. This will generate 7.2 megawatts of electricity, to be used within the site and exported to the national grid. This represents enough electricity to power 9,000 homes.The GreenSwitchTM project will use a combination of co-products, draff and pot ale from distillery operations, as well as wood chip from sustainable sources, to generate electricity, as well as heat for the Rothes site. In addition any surplus power will be exported to the national grid. Use of Helius Energy’s novel GreenFields™ technology also allows the production of valuable inputs such as organic soil conditioner or animal feed. The CHP plant will replace CoRD’s current dependence on fossil fuels, saving an estimated 46,642 tonnes CO2 a year compared with an equivalent level of generating capacity from a coal fired station. The company is looking to encourage take up of heat from their plant through a community heating scheme.Helius Energy’s contribution to reducing the carbon footprint of other agricultural and industrial processes using novel and integrated technologies such as GreenFields™ and GreenSwitch™, in Scotland was recognised last month at the Scottish Green Energy Awards, where Helius were awarded the Best Environmental Initiative award.

Economic slowdown: threats and opportunities for the wind industry

Tuesday, December 30, 2008

Alina Bakhareva, Frost & Sullivan

No industry is immune to a world financial and economic meltdown, although there are some that are better positioned to withstand it and emerge fitter to embark on new frontiers. The wind energy industry seems to be one of the lucky few.Financial factors set the rules in the short termInevitably, the industry landscape at every segment of the value chain is set to change with new players moving into top positions and many wind assets changing hands. Several key, inter-related financial factors will influence decision-making, in the short and medium term:• Level of financial leverage, schedule of debt maturity, availability of re-finance options• Available cash• Credit rating and interest rates available to various playersThe need for financial resources varies greatly across the wind value chain. Equipment manufacturers may have favourable post payment terms with the component and raw materials suppliers and in some cases, pre-payment for their wind turbine shipments. This reduces their need for external finance to expand their production capacities, M&A activities, etc.Players engaged in wind farm construction are in greater need for funds as it could take up to three years until their assets start generating power and cash flows. Typically, wind farms are financed with 30% of equity and 70% of external finance, leaving players at the upper value chain segment most exposed to feel the financial market squeeze.Independent investors and project developers with high levels of leverage and low cash levels may be first to fall prey to the tightening market conditions as they will find it increasingly difficult or expensive to turn to debt markets for re-financing or new debt. A few examples include:• Novera Energy, a mid-tier renewable project developer based in the UK, may sell some of its projects or stakes in its projects to the Utilities. However, as of October 2008 the company, mainly producing electricity from landfill gas, was still positive about its wind development programme aimed at increasing its wind power capacity from 15 MW to over 250 MW by the end of 2011.• Theolia, a French renewable energy developer, announced on October 18th a sale of its 55.5 MW wind farm in Germany to enhance internal cash generation for financing future growth.• Babcock and Brown Wind Partners, an Australian listed wind developer whose assets span six countries, has agreed to sell off its assets in Portugal as part of a large-scale disposal programme.While some players have to consider selling rather than buying, there is another category that seems to be able to benefit from the existing markets. Cash-rich Utilities may choose not to approach banks or debt markets as they can fund projects off their balance sheets. If they prefer to turn to debt markets, often the interest rates they are able to obtain are lower than those offered to other companies. At cheap credit times, Utilities could pay as little as 0.15 percentage points more than government bonds for their money. As of October, 2008 that spread rose to 3.5 percentage points.While some Utilities are revisiting their development strategies, others are busy increasing their foothold in wind markets. Those include:• RWE Innogy is actively expanding its business in Poland. Following its September acquisition of the rights to develop some 300 MW of wind parks, it has gained access to a further 150 MW as of mid-November.• ENEL is planning to construct a 90MW wind farm in the region of Sardinia, Italy.• EDP Renovaveis entered the Romanian wind energy market through the acquisition of 85% of two Romanian wind developers, which own several wind projects.So, tightening financial markets seem to accelerate the trend of the changing structure of wind asset ownership where the Utilities share is rapidly expanding. Private investors, especially German, used to own over 50% of the wind assets back in 2002. Their share plunged to about 30% in 2006. Going forward Utilities and IPPs (Independent Power Producers) will see their market share expanding further.Long-term industry positioningRenewable energy, including wind power as the most mature technology, will continue to grow and could well become one of the growth engines to drive the economy out of the recession by generating new jobs in all value chain segments: equipment manufacturing, construction and installation and post commissioning services.As of November 2008, EU has reiterated its ambition to source 20% of its electricity from renewable energy sources by 2020. The 2nd Strategic Energy Review, calling to make the best use of the EU’s indigenous energy resources, named renewable energy “the EU’s greatest potential source of indigenous energy”.Also, EU leaders at the October 15th meeting, agreed that the Union should not weaken on its 2020 targets for renewable energy deployment despite some of the Members, mostly from Eastern Europe, expressing concerns in light of the current economic conditions.As far as another big green energy development hub is concerned, the US is waiting for the President elect to walk into the White House and to start putting his ambitious New Energy for America plan into action.With all the limitations the implementation of the plan could face, it signifies a political will to change America’s energy landscape. And where there is a will, there is a way. The plan calls for 10% of electricity to come from renewable energy sources by 2012 and 25% by 2025. Also, the Federal Production Tax Credit (PTC), one of the few federal support mechanisms in the US, is envisioned to be extended by five years. If implemented, this will become a major change from the present situation when the PTC is extended for a year every year. Five year extensions will provide much aspired long term stability to all sectors of green energy, including wind.Other countries, especially emerging economies in Asia and the Middle East have seen their energy consumption soaring in recent years. Rapidly developing power gaps even threatened to set back economic growth rates in some of the countries. The threat made governments, especially in the Middle East, turn to renewable energy and take it onboard when planning the future of the national power industries.Thus, government support, one of the most important drivers for the industry, stays strong during the cloudy economic conditions and this will reinforce confidence among market participants and investors.Does the economic slowdown have positive sides?First of all, equipment prices will inevitably follow the raw material prices that sharply decreased in September-November 2008. For example, wind towers accounting for up to 20-23% of the total wind turbine cost, the second most expensive element after blades, are predominantly made of steel. Steel prices after reaching an all time historic maximum in June-September 2008 crushed down to December 2007 levels in less than 3 months.Another factor contributing to a fall in prices is an increased level of competition along the value chain. The new reality will foster a fiercer competition between the suppliers, creating a growth opportunity for those who are capable of reducing their costs and prices faster.Secondly, delivery and construction times will see a huge improvement which, in turn, will make the project lifecycle shorter, allowing for faster commissioning and a shorter wait until the project delivers its first revenues.Lastly, the asset valuations that jumped out of control recently, will return to sensible levels. Those interested in growing their wind portfolios will have a chance to acquire existing and new projects at a reasonable price.Do winds blow outside the EU and the US?For the first decade, the wind energy industry history was written by a handful of European countries joined by the US. More countries are joining in as wind turbines take root around the world. A 2007 success story is China which has jumped out of nowhere into 5th place reaching close to 6 GW of installed capacity. India keeps its position close to the top, with a total installed capacity close to 8GW in 2007.Other countries experiencing significant growth, range from Canada to New Zealand, Brazil, Egypt and Australia. Despite tightening credit market conditions there is a lot of wind energy activity around the world. Some of the recent news includes:• September 2008, Tunisia. Gamesa’s MADE signed a Euro 200 million agreement with STEG –Tunisian Gas and Electricity company for supply of 91 of Gamesa’s wind turbines for a wind park which promises to become Tunisia’s largest.• October, 2008, Ethiopia. The Ethiopian Electric Power Corporation (EEPCo) signed a Euro 210 million contract with Vergnet Group for the construction of a 120MW wind power park.• November, 2008. Chile Mainstream Renewable Power entered into a joint venture with Andes Energy to develop 400 MW of wind farms in the country. 200 MW is expected to be built by 2010.• November, 2008. Canada. Finavera Renewables signed a deal with GE Wind for supply of wind turbines for its wind projects in British Columbia.ConclusionAlthough, wind energy industry growth rates will slow down, it does not mean the industry will stall. While unfortunate for certain industry players, the economic slowdown will turn out to be a growth opportunity for others. Cash-rich companies and those with a higher credit rating will be able to extend their wind portfolios at reasonable prices.Cheaper equipment available at shorter lead times for new installations, as well as wider availability of specialised construction services and fiercer competition along every segment of the value chain will force total project costs down. Once the economic outlook brightens, lower project costs are likely to make the investments into wind power more attractive for a wider range of countries and type of investors.During the next few years the industry will have the chance to take a breath, rectify remaining technical and operational drawbacks, train more technical personnel and enter a new market phase well equipped for a new wave of growth.

The future for renewable energy

Tuesday, December 30, 2008

Philip Wolfe, Director General of the Renewable Energy Association

Renewable energy will be a highly dynamic part of the cleantech spectrum for several decades to come. The drivers for the sector are aligned and strengthening all the time. And remember these go beyond just climate change. Energy security too is a key plank of policy, especially in countries like the UK and the US whose domestic oil and gas supplies are a dwindling part of the energy mix.Even economics is now becoming a stronger driver, with wind power achieving parity in many cases and other technologies moving promisingly down the cost curve. Another benefit of renewables in this respect is that the cost, even when higher initially, is predictable for many years after the stations have been installed, whereas the costs of fossil, and even nuclear, energy are becoming hard to predict.It all sounds like a ‘no-brainer’ doesn’t it? So why has growth been slower than expected? Will this change in the foreseeable future? And will the sector be immune to the global recession?Are the market stimulants aligned with the political drivers?Although the economic impetus has strengthened recently with volatility in the oil market, the environmental and security drivers have been recognised for some years. Indeed the concept we now call ‘peak oil’ was first advanced in the 1950’s. However there are few countries where these have translated into strong markets for renewable energy – and this has always been dependent on effective policy intervention. The reasons are self-evident. Climate change mitigation and energy security are not in themselves stimulants in free markets, as their associated price signals are relatively weak. Indeed renewable energy systems are typically more expensive to install, with the financial benefits of the lower fuel and running costs taking some time to come through.In order to achieve a level playing field, these factors need to be monetised through carbon pricing or taxes, incentives for renewables or a combination of both. Germany, Spain, Japan, several States of the US and those other governments that have recognised this, have achieved significant market growth and an early mover advantage for their industry. The wider European Union is now expected to follow thanks to an ambitious sustainable energy package of policies recently negotiated. The Renewable Energy Directive part of this package will give all EU states a target for the penetration of renewables into the total energy mix by 2020. The average will be 20% of overall energy – electricity plus heat plus transport. The UK (as a late adopter) will have a target of 15% - a ten-fold increase on the 2005 level. This requires a huge acceleration in the rate of deployment even from the higher levels achieved since the introduction of the Renewables Obligation.So, although the UK’s target sounds modest compared to other countries, it represents one of the highest growth rates in Europe. The government has acknowledged that existing policies would achieve a level of just 5% - one third of what we need. It has therefore engaged on an intensive programme to develop a Renewable Energy Strategy to bridge the gap.How will these targets be reflected in national policy?The Renewable Energy Strategy is expected to lead to a broad raft of further policies in the sector. These will be focussed around two primary approaches:1. Increased penetration of renewables in the merchant energy sector2. New incentives for decentralised renewables and energy efficiencyI’ll summarise these separately.Renewables in bulk energy supplyExisting policies for renewables have been concentrated in this part of the market and comprise obligations on energy suppliers to source a growing percentage of their electricity and transport fuels from renewable sources.The Renewable (electricity) Obligation (RO), which started in 2002, now delivers about 5% of UK electricity – under 2% of total energy – from renewables, mainly landfill gas, hydro, energy from waste and wind. It had aimed to deliver 15% of electricity supplies from renewables by 2015, and continue at that level to 2027. This will now be extended to at least 2037 and will need to deliver a much higher percentage. Electricity is expected to make a higher contribution to the 15% overall target, so the 2020 penetration of renewable in the electricity sector will need to be over 30%. Policies also need to overcome the delays caused by grid connections and planning consent, which have held performance to date behind national targets.The Renewable Transport Fuels Obligation was introduced in 2008 and designed to similarly achieve a percentage of biofuels in diesel and petrol. This too has had problems and is underachieving. The European directive includes a sub-target to obtain a 10% contribution from the transport sector by 2020.Decentralised energyThe potential contribution of renewables on the ‘demand side’, i.e. by energy users, has traditionally been overlooked and is a major new focus area.In the construction sector, for example, the government has set new objectives that new buildings should be ‘zero carbon’ by 2016 (or 2019 for non-residential). This can only be achieved by high insulation standards and renewable energy.Additionally there is massive potential for improving the energy performance of existing buildings, businesses, government facilities and communities.In both these areas there is substantial potential for the introduction of renewable heating technologies, a historically under-exploited sector, which represents ‘low hanging fruit’ as a fast and low cost way of delivering low carbon energy.The entire decentralised energy sector should receive a substantial boost from 2010, when renewable energy tariffs are due to be introduced. These will pay system owners a defined payment for every kilowatt hour of energy produced. This mechanism should prove attractive for energy users, while the RO will continue to support energy producers.The tariffs were included in the Energy Act, passed in November, and also provide for payments for renewable heat and biogas.What will be the high growth areas?The scale of the growth required and the broader range of sectors to be addressed provide significant investment potential across several industries.Bulk generation technologies, such as wind power, are already attracting attention, and particular focus in the UK centres on the potential for offshore wind. Waste-to-energy technologies also offer substantial growth especially as landfill avoidance is becoming another strong driver. Successful implementation of the Renewable Energy Directive should create a strong market for renewable transport fuels and a driver for the development of biofuels from non-traditional sources – often called ‘second generation biofuels’.The potential growth in decentralised applications may well be even higher, as they have received no support in the past. Solar electric generation from photovoltaics, for example, has seen sustained global growth, while continuing cost reductions should lead to competitive costs in the foreseeable future.While renewable heat technologies are already well developed, a new policy focus in this area will open up expanding market opportunities for solar thermal systems, heat pumps and biomass boilers. Combined heat and power generators such as biomass and biogas-driven CHP systems will be very attractive as the construction market moves towards zero carbon buildings.There will also be exciting niche opportunities, for example in micro-hydro applications and in anaerobic digestion and technologies that can take advantage of the biogas tariffs.Finally there will be emerging opportunities for related systems technologies, such as smart metering and load management.So is the renewables industry immune from the financial mayhem?A naïve question – of course it isn’t.Having said that, the sector clearly has strong underlying drivers and should be a major beneficiary of any ‘Green New Deal’ policies for cleantech investment as a strategy for ending the recession.The ability to raise the required capital for expansion is likely to be a constraint on renewable energy companies, with the fear that good, growing companies may become over-extended.Comparatively, however, this will be a good sector for investment, and the leading companies are already seen to be outperforming the general stock market indices.

Government moves to promote the UK renewable energy industry

Tuesday, December 30, 2008

Mike O’Brien, Minister of State for Energy and Climate Change

The creation of a new Department [the Department for Energy and Climate Change] demonstrates the strength of the Government’s commitment to meeting our twin challenges of climate change and security of supply.Wind power has an enormous potential help us meet those challenges and can help to cut the UK’s carbon emissions, generate thousands of new jobs and help us meet our 2020 renewables target.I fully recognise the scale of the challenge, particularly in the current economic climate. We are working to create the right conditions to speed up the deployment of renewable energy.The credit crunch will put pressure on finance but investment in renewable energy is a project for the long term. The Government has a strong commitment to renewable and the Chancellor has already said we need to do what we can to bring forward energy projects to stimulate the economy.[Recently] I saw the real benefits of long term investment in renewable – I had the privilege of visiting the Lynn and Inner Dowsing wind farms off the Lincolnshire coast.The combined capacity of Lynn and Inner Dowsing – 194 megawatts of clean, green energy – will provide enough power for the equivalent of 130,000 homes. As a result, Britain has overtaken Denmark as number one in the world for installed offshore wind capacity. I am sure it is the first of many achievements to come. As the Prime Minister said [recently], we’ve also broken through the 3 gigawatt barrier for generation of wind energy on and offshore. The offshore wind sector is certainly challenging, but it is growing rapidly. We currently have over 1500 megawatts of offshore wind either operating or under construction in the UK – and this time next year we should be celebrating passing the one gigawatt mark for offshore wind generation… and the four gigawatt mark for total wind power. I want to see the UK harnessing the enormous potential of our wind resources. [We are currently making plans for] up to a further 25 gigawatts of offshore wind, in addition to the 8 gigawatts already planned. We are currently undertaking a Strategic Environmental Assessment to ascertain the feasibility of up to 33 gigawatts of offshore wind. We want to issue the Environmental Report in January. A three-month formal consultation will follow and we anticipate announcing a Government Decision in the spring.With more than ninety UK and international companies registering their interest with the Crown Estate for Round Three, the expansion of offshore wind remains very much on course. The Queen has gone green and the Crown Estate are leading the way in tackling environmental issues. Of course there will be problems and set backs. Business, like politics is often a bumpy ride. Some projects will slow or stop, others will accelerate and go ahead. This is an industry ready for take-off. It has the capacity to deliver real change and massive investment. The Government will work with you, clearing the planning obstacles with our new Planning Bill in parliament and creating the right base for energy law in our Energy Bill. So, the pace of deployment is definitely speeding up. But we know that there is still more to do if we are to meet our challenging targets. We need to create the regulatory certainty to achieve this. The Government has committed to a package of reforms to speed up renewables deployment.I recognise that delivering the necessary growth in renewable electricity will require significant levels of new investment. The credibility and certainty provided by Government policy on renewables provides a stable, long-term climate for investment - and I can assure you we are committed to maintaining this. That is why the Secretary of State [recently] confirmed that complementing the Renewables Obligation for large-scale projects, guaranteed prices for small-scale electricity generation, feed-in tariffs, have the potential to play an important role, as they do in other countries. We therefore plan to bring an amendment to the Energy Bill to make this happen. But we also need investment in our grid infrastructure to reinforce and expand the existing grid network - both onshore and offshore. We are also working jointly with Ofgem to develop a new regulatory regime for offshore electricity transmission so that significant amounts of renewable offshore generation can be connected to the onshore grid. We recognise the importance of compatibility between the onshore and offshore regimes, so we have decided that the onshore regime should be extended offshore, except where the specific circumstances of offshore generation mean that changes should be made. I am also aware that supply chain issues are becoming increasingly important. This is particularly the case for wind turbines due to the growth in demand which has lead to developers having to accept long lead times for delivery. The UK will require a ten-fold increase in renewable energy by 2020. We have the skills and capabilities to be at the forefront of opportunities opened up by the move towards a low carbon economy. With the right support in place, we can grow our renewables industry to become a world-leader in green technologies. Despite the credit crunch, the UK is still a good place to invest in green energy. It is reassuring to see that many key projects are still planning to go ahead. For example, [the recent] announcement that Masdar will invest in the 1000 megawatt London Array offshore wind farm, which will provide around 1% of the UK’s electricity when built. And in the Energy Bill, we are intending to ‘band’ the Renewables Obligation (RO) to provide greater support for emerging technologies such as offshore wind and wave and tidal. Our proposals would increase the number of Renewables Obligations Certificates (ROCs) for offshore wind to 1.5, recognising the special challenges involved in developing offshore projects.The regulatory reforms outlined above will help in providing a long-term pipeline for projects and certainty on market size, enabling you to invest in the short-term as well. They will go a long way to helping to overcome the barriers to renewables deployment. Together, they will speed up renewables deployment in the UK and provide confidence to investors. And we are committed to delivering them quickly.Wind is hugely important to help realise our renewables goals. Of course it’s not just about wind. Other renewable technologies such as biomass and wave and tidal stream will also play their part. And we are currently considering all the proposals submitted for a Severn Tidal power project, which could contribute up to 5% of our electricity generation in the future.I know that the planning system is another key barrier to renewables deployment in the UK. And that is why we have proposed radical reforms in the Planning Bill to speed up and streamline the planning system in England and Wales. As part of these reforms, we are proposing the establishment of an independent Infrastructure Planning Commission (IPC) in England and Wales to take decisions on nationally significant infrastructure projects for energy - including large scale renewables of over 50 megawatts.This has been a great year for wind deployment in the UK with landmark projects moving ahead and milestones broken.I want to be absolutely clear today that wind will make a crucial contribution to meeting our 2010 target for 10% renewable electricity. And wind will be crucial to meeting our share of the 2020 EU target. It is no secret that we have set ourselves challenging, ambitious targets. But we fully intend to meet them.___________________________This is an edited version of a speech given to the British Wind Energy Association annual conference on October 22 2008