Wednesday, 18 March 2009

Hungary forges closer energy ties with Russia

By Judy Dempsey
Published: March 17, 2009

BERLIN: Hungary, already considered one of Russia’s closest allies in Central Europe, has signed two major energy deals that will make it even more dependent on Moscow for its natural gas, analysts said Tuesday.
The deals run counter to claims by the Hungarian prime minister, Ferenc Gyurcsany, that he is a firm supporter of a European Union-sponsored gas pipeline project. The project, called Nabucco, is considered a competitor to a Russian-backed project, called South Stream, in which Moscow has both economic and political interests.
One of the deals, signed in Moscow last week in the presence of Mr. Gyurcsany and Prime Minister Vladimir Putin of Russia, calls for the Hungarian government and the state-owned Hungarian Development Bank to finance the South Stream pipeline project on Hungarian territory.
South Stream is a joint venture between Gazprom, the Russian state-controlled energy giant, and the Italian energy company Eni. It will run under the Black Sea and link Russia directly to Bulgaria, bypassing Ukraine, through which more 80 percent of Russian gas is sent to customers in Europe.
Little progress has been made on the pipeline, which is not thought likely to be ready until at least 2015.

Estimates of the cost of South Stream vary. Mr. Putin said last week the sum would be around €10 billion, or $13 billion. The Russian president, Dmitri Medvedev, who has questioned whether the project should go ahead, told investors last month that it might cost as much as €20 billion.
South Stream’s northern branch would run from Bulgaria to Serbia, Hungary and Austria.
The 3,000 kilometer, or 1,865 mile, Nabucco pipeline is to be completed in 2013 an estimated cost of €8 billion. It is supposed to bring natural gas to Europe from Azerbaijan and eventually Iran.
Doubts have grown about the feasibility of Nabucco because of uncertainty over both the source of the natural gas and the level of public financing available amid the recession sweeping Europe. Hungary received a €25 billion rescue package from the International Monetary Fund and the E.U. in October.
Mr. Gyurcsany agreed nearly two years ago to support Gazprom’s plans to build South Stream, saying that he saw no conflict of interest in supporting both the E.U. and Russian pipeline projects.
For Russia, South Stream would reduce dependence on Ukraine, with which Moscow has continuing political conflicts. It would also lock countries in Central and Southern Europe into long-term Russian energy contracts that would prevent them from diversifying their sources.
‘‘This is all about weakening its dependence on Ukraine,’’ said Peter Kaderjak, director of the Regional Center for Energy Policy Research in Budapest. ‘‘But it is also about Russia extending its economic, if not political, influence here in Hungary.’’
The other deal involves Gazprom and MOL, Hungary’s oil and natural gas company, establishing a new gas storage site in Hungary. The new company will be owned equally by Gazprom Export and MOL and will have a capacity of 1.3 billion cubic meters, or 46 billion cubic feet, of natural gas.
MOL said Tuesday that the deal would increase Hungary’s energy security as Ukraine became increasingly unreliable as a transit country for sending Russian gas to its customers in Eastern and Western Europe.
MOL recently sold its gas storage facility to the German company E.ON Ruhrgas and, according to analysts, now seeks to re-enter this sector to meet all its domestic needs in times of shortages and also supply natural gas to its neighbors.
Russia has its own interest in teaming up with MOL. In a bid to weaken its dependence on Ukraine, Russia wants to build storage facilities in Europe, besides new pipelines that will bypass Ukraine.
Gazprom is building big storage units in Germany, Austria, and Hungary, and it plans to acquire a site in Slovakia.

Shell dumps wind, solar and hydro power in favour of biofuels

Tim Webb, Tuesday 17 March 2009 19.04 GMT

Shell will no longer invest in renewable technologies such as wind, solar and hydro power because they are not economic, the Anglo-Dutch oil company said today. It plans to invest more in biofuels which environmental groups blame for driving up food prices and deforestation.
Executives at its annual strategy presentation said Shell, already the world's largest buyer and blender of crop-based biofuels, would also invest an unspecified amount in developing a new generat­ion of biofuels which do not use food-based crops and are less harmful to the environment.
The company said it would concentrate on developing other cleaner ways of using fossil fuels, such as carbon capture and sequestration (CCS) technology. It hoped to use CCS to reduce emissions from Shell's controversial and energy-intensive oil sands projects in northern Canada.
The company said that many alternative technologies did not offer attractive investment opportunities. Linda Cook, Shell's executive director of gas and power, said: "If there aren't investment opportunities which compete with other projects we won't put money into it. We are businessmen and women. If there were renewables [which made money] we would put money into it."
Shell said biofuels fitted its core business of providing fuels, logistics, trading and branding. Cook added: "It's now looking like bio­fuels is one which is closest to what we do in Shell. Wind and solar are interesting [but] we may continue to struggle with other investment opportunities in the portfolio even with big subsidies in many markets. We do not expect material investment [in wind and solar] going forward."
The company also confirmed that it would increase its dividend payments this year by about 5% to $10bn.
Friends of the Earth (FoE) criticised Shell for freezing investment in renewables such as wind in favour of biofuels. "Shell is backing the wrong horse when it comes to renewable energy – biofuels often lead to more emissions than the petrol and diesel they replace," the campaign group said.
Until recently, Shell's investment in wind power featured prominently in its corporate advertisements. FoE said the company's move heralded a slightly more honest approach. "Shell is at least being a bit more honest about the fact they are a fossil fuel company. It has seen the limitations of the greenwash it was putting out a few years ago."
Shell has about 550 megawatts of wind farm capacity around the world, enough to power a city the size of Sheffield when the wind blows. Last year, it pulled out of the 1,000MW London Array project, the joint venture to build what would be the world's largest offshore wind farm, in the Thames Estuary. Former project partner E.ON has yet to decide to continue with the £3bn investment needed.
Outgoing chief executive Jeroen van der Veer admitted that the company had suffered some "technology baths" in the past when it backed unprofitable technologies. "We don't do it [renewables] all."
The company has predicted that by 2025, 80% of energy will come from fossil fuels and 20% from alternative energy sources. Yet it is spending just over 1% of its budget on alternative technologies. Over the past five years, only $1.7bn of the $150bn it has invested has gone towards alternative energies.
Cook pointed out that at one stage the company only invested 1% of its budget on liquefied natural gas, which is now a big part of its business. "You have to start somewhere," she said.Van der Veer also admitted that Shell's overall R&D budget would "fall a bit" as the company focused on the most promising technologies and in the wake of the oil price slump.
The company said it would raise debt levels to maintain dividend payments and its spending programme. Van der Veer insisted that energy demand in the long term was strong and oil prices would recover. "The problem is you don't know when the long term starts."

Time to gamble on a post-carbon world

An economy that promotes quality over quantity will restore the confidence we need to live within our ecological means

Adam Corner, Tuesday 17 March 2009 16.29 GMT

What is stopping us taking the risk?
Think of the last time you backed away from a gamble. What was it that stopped you placing the bet – a lack of money or a lack of confidence?
Climate change represents an unprecedented challenge on so many levels. But beyond the climate science and the political manoeuvring, humanity needs to collectively prepare itself for the single biggest psychological challenge it has ever faced: the transition to a post-carbon society. And that's where the psychological analogy with a poker game comes in.
Some suggest that a lack of liquidity spells disaster for the ambitious emissions cuts that are so desperately needed, while others see the ideal opportunity to take a gamble and radically reshuffle the global economy and labour market. But although the speculative dishonesty and dishonest speculation that triggered the current global recession has had an undeniable impact on spending power, recessions hit our confidence as hard as they hit our wallets. The boom-and-bust economy is bad for our mental health.
That we engage in tactics of diversion, avoidance, and denial has been documented extensively on these pages. But as if our natural tendency to stick our heads in the sand wasn't bad enough, the global recession further undermines our confidence. And when we lack self-confidence, facing up to the immense challenge that climate change represents is made all the more difficult.
One of the trickiest aspects of getting to grips with climate change is acknowledging that some of our beliefs about the world – say, for example, that private car ownership should be encouraged because it enhances personal freedom – might have to be reconsidered. Geoffrey Cohen, a psychologist at Yale university, has demonstrated that when people feel threatened or lack confidence they are less receptive to evidence that challenges their existing beliefs. In a study involving opinions about capital punishment, people reacted defensively when their beliefs were challenged, and new evidence failed to alter their existing opinions. But when the participants in the study were made to feel good about themselves – when their self-confidence was enhanced – they were more willing to take on board new evidence and reconsider their beliefs.
Climate change challenges us all to think differently and question our assumptions. The last thing we need is financial uncertainty to unsteady our nerves. But the doctrine of continual economic growth requires great risks to be taken in the hope that great gains will be achieved. Can we get to grips with climate change within an economic system that demands we live life on the edge?
Herman Daly,a former economist at the World Bank, has proposed a radically different system – a steady state economy. Rejecting the assumption that a market-based economy must continually grow, a steady state economy starts from the position that any economy will be constrained by the finite limits of the earth's ecosystems. Noting that the earth is in a naturally steady state (that is, its natural systems are not expanding) Daly suggests that a steady state economy should allow qualitative development but not quantitative growth. According to Daly: "Growth is more of the same stuff; development is the same amount of better stuff".
While the quality of life of millions of people in the developing world is fundamentally contingent on increasing their financial wealth, the developed nations have stormed past the point at which there is any correlation between additional wealth and happiness. Certainly, this masks gross inequalities in per capita income but as a nation we have more money than we need. Should we keep on getting richer? Or should development take priority over growth?
Daly proposes that a steady state economy means a global redistribution of wealth and a fundamental revaluation of what constitutes 'value'. But as well as its incredible potential for social transformation, a steady state economy removes the instability of a system of perpetual growth. It both requires and ensures that we live within our psychological and ecological means.
Tackling climate change requires us to rise to the ultimate challenge – and we need a steady state economy and a steady state of mind for the post-carbon revolution that's ahead.
Dr Adam Corner is at Cardiff university's school of psychology

Piracy fear over global warming, says minister Bill Rammell

The Times
March 18, 2009
Richard Lloyd Parry

Tokyo Global warming will increase the risk of war, conflict and terrorism and represents perhaps the greatest challenge to global stability, a British minister warned yesterday.
Speaking at a conference here, Bill Rammell, a Foreign Office minister, predicted a tenfold increase in piracy as populations suffering the effects of climate change seized scarce resources from the high seas, and the radicalisation of impoverished people, leading to terror attacks. “It’s not difficult to imagine how the ‘have-nots’ could be radicalised,” he said.

Insurers Must Disclose Climate-Change Exposure

Insurance companies must start disclosing how climate change is likely to affect their businesses, state insurance regulators decided Tuesday.
The National Association of Insurance Commissioners voted to require insurers to submit annual "climate-risk" reports, an unusually aggressive stance on the environmental issue from industry regulators.
The officials acted after concluding that climate change threatens insurers in two ways. It increases the risk of extreme weather events such as floods and wildfires, which would boost claims. And it is prompting governments to cap industrial carbon emissions that contribute to global warming -- a move threatens the profits of companies such as coal-fired utilities in which insurers commonly invest.
Climate change "will have a huge impact on the insurance industry," particularly on property and casualty insurers, said Joel Ario, Pennsylvania's insurance commissioner and the head of the association's global-warming task force.
Insurance commissioners also foresee climate change offering savvy insurers new ways to make money. One example: auto insurance with premiums based on the number of miles a person drives. Such policies would prod consumers to drive less, curbing their vehicles' carbon emissions.
The commissioners' decision shows how the politics of climate change are shifting. In the past, a handful of insurers have expressed concern that the phenomenon threatens their portfolios. Most of those companies have been based in Europe, which already has imposed carbon-emission limits. But momentum is moving in the U.S. toward some sort of emission constraint, as the Obama administration and Democratic lawmakers have said they intend to impose such a cap.
The insurance commissioners' decision came only after delicate negotiations over how tough to make the environmental requirements. Environmental activists wanted insurers to have to disclose specific information about how their businesses might be threatened by climate change, said Andrew Logan, director of the insurance program at Ceres, a Boston-based environmental group involved in the talks. The activists believe such disclosures will help them press their case in Washington for a tough federal cap on carbon emissions.
Many insurers resisted. In the end, the regulators stipulated that insurers need not provide information that is "quantitative," that is "forward-looking," or that insurers "in good faith believe is commercially sensitive or proprietary."
What information insurers choose to disclose will become public next year. Insurance companies with annual premiums totaling more than $500 million must submit their first annual climate-risk disclosure reports by May 1, 2010.
Some carriers aren't happy with the regulators' decision. David Kodama, director of policy analysis for the Property Casualty Insurers Association of America, which represents more than 1,000 insurance companies, said his group is concerned that insurers that provide climate-risk information could face lawsuits alleging that their information isn't detailed enough.
Write to Jeffrey Ball at

Consuming nations should pay for carbon dioxide emissions, not manufacturing countries, says China

Tough stance on responsibility for emissions could be crucial obstacle to US agreement on climate change in December

Jonathan Watts, Asia environment correspondent, Tuesday 17 March 2009 16.59 GMT

China wants consumer countries to take responsibility for the carbon emissions generated in the manufacture of goods, not the producer countries that export them, according to its top climate change negotiator.
The tough bargaining position set out by Li Gao, whose country is now the biggest emitter of carbon dioxide in the world, looks set to be a major hurdle for the Obama administration and other developed nations as they seek to find common ground ahead of a crucial UN climate change meeting in Copenhagen in December.
Since taking power, President Barack Obama has signalled his readiness to enter into an international agreement on reducing emissions, to be negotiated in Copenhagen. This is in contrast with his predecessor George Bush who dropped out of the Kyoto protocol because it did not set binding targets for big developing nations China.
A deal between the two countries is widely seen as critical in reaching an international agreement. China overtook the United States as the biggest emitter in 2006 and its dependence on coal-fired power looks likely to ensure that it will remain in this position for decades to come. Li, who was in Washington for a preliminary meeting of the major emitting nations, set out China's position that western consumers were largely to blame.
"As one of the developing countries, we are at the low end of the production line for the global economy. We produce products and these products are consumed by other countries... This share of emissions should be taken by the consumers, not the producers," said Li, who serves in China's powerful National Development and Reform Commission. He added that between 15% and 25% of all the country's global warming emissions resulted from manufacturing exports.
His counterparts from Japan and the European Union said the position was unacceptable. "I think the issue here is we take full responsibility and we ... regulate all the emissions that come from our territory," said Artur Runge-Metzger, who heads the climate change strategy and international negotiations unit at the European Commission.
Softer ground may be found between these two positions. British lawmaker and former environment minister Elliot Morley believes importers and exporters share responsibility because while emissions have been outsourced from the west, China has benefited from extra jobs.
Several recent academic papers have noted how European nations have outsourced emissions and other forms of pollution to developing nations instead of tackling emissions at home. According to Oslo's Centre for International Climate and Environmental Research, a third of all Chinese emissions are linked to exports, with 9 per cent caused by exports to the US, and 6 per cent from producing goods for Europe.
Karl Hallding, of the Stockholm Environment Institute (SEI), said a shift to a consumption-based system was worth considering. "This has been debated among economists. The argument makes sense. It would be better if emissions were owned by consumers. It would provide incentives for us to put the money into reducing emission in producing countries."
The SEI has determined that Britain's calculated emissions would have risen by 20 per cent relative the 1990 if imports and international transport were factored in to the total. In contrast, under Kyoto protocol accounting methods, the UK government says emissions have fallen by 18 per cent over the same period.
While the US-China talks are still in an early stage, the difference of opinion indicates the ground that the Obama team will need to make up. Their efforts to forge a compromise have been further complicated by US lawmakers considering the imposition of carbon tariffs on countries that do not set binding caps on their emissions. Li said such a trade barrier would be a "disaster".
China argues that wealthy nations should contribute more because they have a greater historical responsibility for the carbon that has entered the atmosphere over the past two centuries.
But State Department spokesman Robert Wood remained upbeat about the dialogue between the US and the visiting delegations. "There's a willingness, particularly on the Chinese side, to really engage on the subject of climate change, and we welcome that."

Without commercial carbon capture, it's 'game over', E.ON boss tells government

Chief executive Paul Golby says technology will only be developed with state funding
Mark Milner, industrial editor, Tuesday 17 March 2009 17.41 GMT

Leading energy industry executives today called on the government to ensure the development of carbon capture and storage becomes commercially viable.
Paul Golby, chief executive of E.ON UK said the commercial development of the technology, which stops the carbon dioxide produced through burning fossil fuels being released into the atmosphere, was vital if the world was to meet the growing demand for energy and still tackle climate change.
"For me it is clear there will be worldwide coal-fuelled growth in energy supply and that CCS is the most important technology in the fight against climate change.CCS is by no means the only low-carbon technology we are investing in, but it's the most important. Without it, it really is game over."
E.ON is seeking permission to build a new coal-fired power station at Kingsnorth in Kent, a project which has attracted furious opposition from climate change campaigners.
Golby told the Adam Smith Institute's future of utilities conference in London today that a mechanism would be needed for investors to recoup the costs of developing and operating carbon capture on a commercial scale. "Without it no one will be able to build it," he said.
He said if the government did provide a "level playing field" then E.ON would expect, and accept, that it would have to fit the technology to Kingsnorth. "If they fund it, we will fit it."
The government is holding a competition to encourage the development of carbon capture on a commercial basis.
Also at the conference, Scottish Power's chief executive, Nick Horler, said the UK had a huge opportunity to carve out a leading position in the world market for carbon capture.
"We cannot afford to lose this lead. The economic benefits of getting CCS right could be huge for UK plc."
He warned that the government would have to act. "Without clear signals from government, the rates of return on new coal will remain uncertain, resulting in power generators being more likely to invest in generation plant with a more predictable cost and performance base, such as gas or nuclear.
"We are currently in the grip of a deployment catch 22. We cannot be confident in the product until we have seen it work at commercial scale but the levels of investment and technical risk required to do this are too great for a commercial organisation to bear alone – particularly given other competing priorities for increasingly scarce and expensive capital."
Responding to Golby's comments about Kingsnorth, the head of Greenpeace's climate and energy campaign, Robin Oakley, said: "E.ON has finally admitted that the plans for a new coal plant at Kingsnorth that it submitted to the government fall well short of what is needed and what is possible.
"The ball is now in Ed Miliband's court. He should use an upcoming consultation on coal policy to call E.ON's bluff by ruling out new unabated coal plants across the board from day one."

Stimulus money puts clean coal projects on a faster track

By Matthew L. Wald
Published: March 17, 2009

EDWARDSPORT, Indiana: Near the middle of a dusty construction site here is a patch of land, about the size of two U.S. football fields, notable because it is empty.
Duke Energy has high hopes for this two-acre, or 0.8-hectare, plot: If all goes right, and there is a happy convergence of technology, money and federal energy policy, the construction project could become the first environment-friendly coal-fired power plant in the United States.
The company is studying a method for capturing the carbon dioxide produced by using coal and storing the gas underground, preventing it from entering the atmosphere. Machines to separate carbon dioxide from other elements in the coal may someday stand on the empty land.
For years, scientists have been experimenting with ways to ‘‘clean’’ coal, a carbon-heavy fuel that countries around the world increasingly rely on. But the technology for carbon capture and storage has been tried on only a small scale. Governments have not required companies to do what Duke is proposing here, in part because costs were so uncertain.
The allocation of $3.4 billion in the federal stimulus bill for carbon capture and sequestration, as carbon storage is often called, however, has allowed Duke Energy and other companies to consider mounting full-scale projects.

The federal money is the latest sign of a growing interest worldwide in clean coal technologies, which backers believe could prove one of the most significant ways to tackle global warming.
The Duke effort ‘‘may be the first commercial carbon sequestration site in the United States,’’ said John Thompson, a coal expert at the Clean Air Task Force, an environmental group.
If Duke is successful, the plant could be capturing about 18 percent of its carbon dioxide emissions within four or five years and an additional 40 percent a few years after that. Carbon dioxide is the main heat-trapping gas linked to global warming.
Duke had already received some money under the Energy Policy Act of 2005 to build a $2.35 billion coal-burning power plant, the largest new construction project in Indiana.
The new plant will differ from conventional coal plants in significant ways, cooking the coal into a fuel gas rather than burning it as a powder, and then thoroughly cleaning the gas and burning it in a jet engine, similar to that used to burn natural gas. Emissions of conventional pollutants, like sulfur, soot and smog-forming nitrogen, will be extremely low.
Two other such ‘‘gasification’’ plants already operate, in Florida and Indiana. Duke’s first addition would be to use a machine to strip the carbon dioxide out of the fuel gas.
Duke is conducting a $17 million study of that idea and has asked permission from its regulators to study a second step, to capture an additional 40 percent or so of the carbon dioxide produced at a later stage. The carbon would then be stored in a deep well on the site or sent by pipeline to an old oil field, where it would stimulate oil production. Part of the test is meant to demonstrate that carbon dioxide can safely stay put underground.
Other companies around the country also are exploring carbon capture and storage projects. According to a recent report by Emerging Energy Research, a consulting firm, Illinois has passed legislation that could require its utilities to buy electricity from plants that sequester their carbon. Six other states are considering legislation to help pay for carbon capture or ease the way for carbon storage.
There are several competing technologies for approaching the problem — more than the money in the stimulus bill can pay for. And experts say that before new methods can be commercialized, projects need three to five years of planning and construction, followed by 8 to 10 years of actual pumping of carbon dioxide into the ground.
‘‘We need to get off the dime with this and build some full scale projects to demonstrate this technology at scale,’’ said Edward S. Rubin, a professor of environmental engineering at Carnegie Mellon University in Pittsburgh, ‘‘but the price tag per project is $800 million to $1 billion.’’
The Edwardsport venture might prove a little cheaper. The first step, capturing the carbon dioxide created when coal is turned into a fuel gas, would add 5 to 15 percent to the initial $2.35 billion cost, according to W. Michael Womack, vice president of Duke Energy in charge of the project.
In the second stage, one of the components of the fuel gas, carbon monoxide, is mixed with water to make hydrogen, for fuel, and carbon dioxide, for sequestration. The cost of that is ‘‘a little fuzzier,’’ he said, and probably higher than the cost for the first step.
Until the beginning of last year, the Energy Department had backed a more ambitious effort, the FutureGen gasification plant in Mattoon, Illinois, that would have sequestered 90 percent of its carbon dioxide, compared with a maximum of less than 60 percent at Edwardsport. Companies from the United States, Britain, China and Australia were to contribute.
But in January 2008, the administration of President George W. Bush decided that the price for FutureGen had grown too high and withdrew financing, proposing instead to finance add-ons like the ones contemplated at Edwardsport. Last week, a report by the federal Government Accountability Office found that because of a math error, the Energy Department had greatly overestimated the FutureGen cost increase.
At Peabody Energy, one of the FutureGen partners, Fred Palmer, a spokesman, said that the $1 billion in the stimulus bill that seemed to be directed toward a project like FutureGen was not enough to finish that project but that the partners could seek another appropriation in a couple of years.
An independent expert, Sarah Forbes, head of the carbon capture and storage project at the World Resources Institute, an environmental group, said that FutureGen had a tremendous strength, demonstrating the integration of capture and of storage at a large scale. But the project was so big, she said, that it could squeeze out others.
Proponents of smaller projects hope that there is enough money left in the stimulus bill for them. For example, Babcock & Wilcox has a different approach for capturing carbon: Remove all the nitrogen from the air going into the boiler, so the output is nearly pure carbon dioxide.
A project that captured 92 percent of its carbon dioxide would cost nearly $1 billion, and the company is hoping the government will pay half, said Donald C. Langley, vice president and chief technology officer of Babcock & Wilcox.
Later this year, American Electric Power will begin capturing carbon dioxide from 2 percent of the smokestack gases at its Mountaineer plant in West Virginia, by using ammonia and injecting the gas into a $4.2 million well nearly two miles, or three kilometers, deep.
If the ammonia works well, and if the carbon dioxide flows underground as expected, the company will try using the method to treat about 20 percent of the plant’s smoke and seeking government help to do it. The approach is important because it is intended for old plants.
Some environmentalists oppose carbon capture from coal under any circumstances. Greenpeace argues that the energy required to capture the carbon, pressurize it and pump it underground is too large and the risks of underground storage too high. The effort, the group says, would divert money from more promising alternatives. Others argue that making coal safe to burn would simply encourage damaging mining, like mountaintop removal.
But energy experts predict that countries around the world are certain to keep using coal, so someone had better find a safer way.
‘‘With a big lump of money, the No. 1 priority is moving out with urgency,’’ said Ernest J. Moniz, a professor at the Massachusetts Institute of Technology and a former under secretary of energy. ‘‘If we want sequestration to have a serious market share in managing the climate problem by 2040, we have to start yesterday,’’ he said.

Energy Chief Says U.S. Is Open to Carbon Tariff

MARCH 18, 2009

WASHINGTON -- Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a "weapon" to protect U.S. manufacturing, just a day after one of China's top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports.

Mr. Chu, speaking before a House science panel, said establishing a carbon tariff would help "level the playing field" if other countries haven't imposed greenhouse-gas-reduction mandates similar to the one President Barack Obama plans to implement over the next couple of years. It is the first time the Obama administration has made public its view on the issue.
"If other countries don't impose a cost on carbon, then we will be at a disadvantage...[and] we would look at considering perhaps duties that would offset that cost," Mr. Chu said.
Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, told Dow Jones Newswires Monday that a carbon tariff would be a "disaster," would prompt a trade war and wouldn't be legal under World Trade Organization agreements
"It does not abide by the rule of [the] WTO and, secondly, it's not fair," Mr. Gao said, adding that his delegation would relate China's concerns to U.S. officials.
Mr. Chu's comments came amid other signs of concern among U.S. trading partners about protectionist rhetoric and legislation from Washington. On Monday, Mexico announced it would put tariffs on $2.4 billion of U.S. goods in retaliation for a measure to limit the access of Mexican truckers to U.S. roads. "Buy American" provisions tied to the recent stimulus package have prompted concerns from some U.S. trading partners, and trade issues are expected to be prominent on the agenda at meetings next month among leaders of the Group of 20 leading nations.
European Union Trade Commissioner Catherine Ashton said in an interview in Washington Tuesday that she hopes the Obama administration will give strong backing to relaunching talks on the WTO's stalled Doha round at the G-20 meeting. Ms. Ashton said U.S. support for completing a new global trade deal would boost confidence in world markets.
The carbon tax issue is important to energy-intensive U.S. industries -- including paper, cement, fertilizer, steel and glass manufacturers -- that worry that costs imposed by climate-change laws will put them at a disadvantage to rivals in nations that aren't bound by similar requirements.
European Union officials are considering a similar tariff, prompting some developing nations to caution that trade restrictions run the risk of retaliatory action.
China is seeking to require importers of its carbon-intensive goods to bear the emission costs, concerned that targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation.
The U.S. does agree with China that an international agreement should be based on a principle of "common but differentiated responsibilities" that allows a less-stringent and longer-term flexibility for developed countries. Obama administration officials also agree that developed countries need to help to finance the technology transfer for low carbon energy and efficiency measures.
Write to Ian Talley at and Tom Barkley at