Carbon reduction trumps human rights.
Speaker Nancy Pelosi took her climate crusade to China last week, urging that "we must work together" to address what she called this urgent challenge. Her junket won't change many Chinese minds but it does speak volumes about her party's changing priorities.
Back when Mrs. Pelosi was a rising liberal star her signature issue was human rights in China. In 1991, she famously unfurled a pro-democracy banner in Tiananmen Square. During the Clinton Administration, she argued against normalizing trade relations with China unless linked to human-rights progress. Yet throughout last week's China tour Mrs. Pelosi said nothing of note about human rights -- despite the 20th anniversary of the Tiananmen massacre this week.
Mrs. Pelosi told us in a brief interview in Hong Kong that she had raised human rights "privately" with Chinese leaders. She explained that her previous human rights lobbying had been in a "personal capacity" as a mere Congresswoman, but now that she is Speaker she "speaks for Congress" and has to take a softer approach. That argument would be more credible had Mrs. Pelosi not regularly excoriated Republican Presidents for not doing more about Tibet and the other billion or so Chinese who lack basic political freedoms.
The reality is that her former convictions have fallen to the new liberal imperative of saving the world from carbon: "Workers rights, human rights, people's rights are part of environmental justice," she declared, in language that the leaders of a "People's Republic" can appreciate. With China now the world's No. 1 CO2 emitter, Democrats are desperate to sign up China for the follow-up to the Kyoto Protocol lest the exercise again be pointless.
A student at a Beijing university returned fire, asking Mrs. Pelosi what could be done that might convince American voters and Congress to cut back on emissions. "We have so much room for improvement," Mrs. Pelosi replied, according to the Associated Press. "Every aspect of our lives must be subjected to an inventory . . . of how we are taking responsibility."
At least she's honest about what her climate project would really mean state-side. Most Democrats have a kind of global-warming split personality: On the one hand, New York will be underwater unless we create millions of new green jobs by imposing a cap-and-trade tax. Yet they also ridicule anyone who points out that their carbon limits will result in huge new taxes and costs for people who use electricity, drive cars, buy groceries -- which is say, everyone.
Speaking earlier in Shanghai, the Speaker elaborated: "I think that from what I've heard so far from the Chinese side of this -- and I think we're all in this together -- that the economic aspects of it are very, very important to the Chinese as well." The Speaker was talking about "green investment," though what Beijing actually wants is for developed nations to hobble their own economies with a cap-and-tax regime that would send jobs and billions of dollars a year in transfer payments to China the way Kyoto has. So the Chinese economy would be more efficient, while the West would be less competitive.
Whatever Chinese leaders do collectively on climate change, they must be relieved that Mrs. Pelosi no longer wants to press very hard for individual rights.
Monday, 1 June 2009
Mutual funds take their stand on climate change
By Kristin Gribben
Published: May 31 2009 15:43
Climate change is moving up the agenda of mutual funds, with an increasing number voting in favour of resolutions that ask companies to assess the impact climate change is having on their business.
“The business case for these resolutions is becoming undeniable,” says Robert Berridge, manager of investor programmes at the environmental group Ceres and author of a new report on the subject. “Climate change is now in a financial box, not just a social, environmental box.”
The business case for climate change preparation is being strengthened by what is seen as imminent regulation of greenhouse gases under the Obama administration. The US Environmental Protection Agency put a proposal up for public comment in April that considers carbon dioxide dangerous to public health and would regulate it under the Clean Air Act. The move was in stark contrast to the agency’s inaction on this specific issue under President George W. Bush.
A total of 61 mainstream mutual funds voted for climate change-related shareholder proposals an average of 23.6 per cent of the time during the 2008 proxy season – up from 13.6 per cent the previous year, according to the Ceres study. That does not include socially responsible investing funds, which voted for these types of resolutions 100 per cent of the time.
RiskMetrics Group, the largest and most influential proxy advisory firm, has issued more recommendations to its investor clients advising them to vote for climate-related resolutions in 2008 and 2009 than in years past, according to Mr Berridge. He cites that fact as another reason funds are beginning to shift their support.
The Wells Fargo Advantage Funds amended its proxy voting guidelines on social and environmental resolutions last year. The new policy has the fund voting more in step with RiskMetrics. The amendments “reflect both our ongoing commitment to social and environmental issues and our confidence in the capabilities of our proxy voting administrator, [RiskMetrics Group]”, a company spokesman says. Of the 11 environmental and social proposals Wells Fargo Advantage Equity Index voted for since 2004, nine of the votes were in 2008, according to ProxyDemocracy.org.
As more funds vote in support of climate resolutions, the proponents of these proposals see mutual funds as the key to getting majority support for their cause.
At Ultra Petroleum Corporation, The Nathan Cummings Foundation has filed a resolution calling for the independent directors of the board to prepare a report on the company’s plans to address climate change for the past four years.
In 2006, 2007 and 2008, the proposal received 22 per cent, 31 per cent and 37 per cent support respectively. A big part of the rise in support has been because of mutual funds.
Last year, Wells Fargo, Van Kampen, Schwab, Parnassus, Morgan Stanley and Fifth Third all voted for the proposal at Ultra Petroleum, according to ProxyDemocracy.org. The year before, Morgan Stanley voted against the proposal. The company did not return calls for comment.
“It would make sense that mutual fund companies have changed their support,” says Laura Shaffer, director of shareholder activities at Nathan Cummings. Ultra Petroleum, she says, is a laggard in environmental disclosure compared with other companies in oil and gas industry.
As shareholder activists see funds’ attitude begin to shift, they are experimenting with ways to get backing from funds. Ms Shaffer says Nathan Cummings tried dialogue with one of its managers to get them to vote for their climate proposals. The dialogue has been unsuccessful so far, but she says they plan to reach out to other funds in the hope that they can persuade them.
Meanwhile, proponents of four shareholder proposals up for a vote at ExxonMobil’s annual meeting on May 27 launched a website (www.ExxonMutualFundShares.org) that allows mutual fund shareholders to send messages to their fund representatives asking them to vote for the resolutions.
Three of the resolutions were climate change-related and one was a binding proposal asking Exxon to separate the roles of chairman and chief executive, partly because of the company’s lack of leadership on preparing for a low-carbon world, according to the filer of the resolution, Robert Monks.
About a week before the annual meeting nearly 500 messages had been sent to mutual funds from their shareholders urging them to support the resolutions at Exxon.
Mr Monks says the group of shareholders that launched the website will see how its success bears out and determine whether it is an effective means of engaging mutual funds in the future.
Kristin Gribben is associate editor of Agenda, a Financial Times service
Copyright The Financial Times Limited 2009
Published: May 31 2009 15:43
Climate change is moving up the agenda of mutual funds, with an increasing number voting in favour of resolutions that ask companies to assess the impact climate change is having on their business.
“The business case for these resolutions is becoming undeniable,” says Robert Berridge, manager of investor programmes at the environmental group Ceres and author of a new report on the subject. “Climate change is now in a financial box, not just a social, environmental box.”
The business case for climate change preparation is being strengthened by what is seen as imminent regulation of greenhouse gases under the Obama administration. The US Environmental Protection Agency put a proposal up for public comment in April that considers carbon dioxide dangerous to public health and would regulate it under the Clean Air Act. The move was in stark contrast to the agency’s inaction on this specific issue under President George W. Bush.
A total of 61 mainstream mutual funds voted for climate change-related shareholder proposals an average of 23.6 per cent of the time during the 2008 proxy season – up from 13.6 per cent the previous year, according to the Ceres study. That does not include socially responsible investing funds, which voted for these types of resolutions 100 per cent of the time.
RiskMetrics Group, the largest and most influential proxy advisory firm, has issued more recommendations to its investor clients advising them to vote for climate-related resolutions in 2008 and 2009 than in years past, according to Mr Berridge. He cites that fact as another reason funds are beginning to shift their support.
The Wells Fargo Advantage Funds amended its proxy voting guidelines on social and environmental resolutions last year. The new policy has the fund voting more in step with RiskMetrics. The amendments “reflect both our ongoing commitment to social and environmental issues and our confidence in the capabilities of our proxy voting administrator, [RiskMetrics Group]”, a company spokesman says. Of the 11 environmental and social proposals Wells Fargo Advantage Equity Index voted for since 2004, nine of the votes were in 2008, according to ProxyDemocracy.org.
As more funds vote in support of climate resolutions, the proponents of these proposals see mutual funds as the key to getting majority support for their cause.
At Ultra Petroleum Corporation, The Nathan Cummings Foundation has filed a resolution calling for the independent directors of the board to prepare a report on the company’s plans to address climate change for the past four years.
In 2006, 2007 and 2008, the proposal received 22 per cent, 31 per cent and 37 per cent support respectively. A big part of the rise in support has been because of mutual funds.
Last year, Wells Fargo, Van Kampen, Schwab, Parnassus, Morgan Stanley and Fifth Third all voted for the proposal at Ultra Petroleum, according to ProxyDemocracy.org. The year before, Morgan Stanley voted against the proposal. The company did not return calls for comment.
“It would make sense that mutual fund companies have changed their support,” says Laura Shaffer, director of shareholder activities at Nathan Cummings. Ultra Petroleum, she says, is a laggard in environmental disclosure compared with other companies in oil and gas industry.
As shareholder activists see funds’ attitude begin to shift, they are experimenting with ways to get backing from funds. Ms Shaffer says Nathan Cummings tried dialogue with one of its managers to get them to vote for their climate proposals. The dialogue has been unsuccessful so far, but she says they plan to reach out to other funds in the hope that they can persuade them.
Meanwhile, proponents of four shareholder proposals up for a vote at ExxonMobil’s annual meeting on May 27 launched a website (www.ExxonMutualFundShares.org) that allows mutual fund shareholders to send messages to their fund representatives asking them to vote for the resolutions.
Three of the resolutions were climate change-related and one was a binding proposal asking Exxon to separate the roles of chairman and chief executive, partly because of the company’s lack of leadership on preparing for a low-carbon world, according to the filer of the resolution, Robert Monks.
About a week before the annual meeting nearly 500 messages had been sent to mutual funds from their shareholders urging them to support the resolutions at Exxon.
Mr Monks says the group of shareholders that launched the website will see how its success bears out and determine whether it is an effective means of engaging mutual funds in the future.
Kristin Gribben is associate editor of Agenda, a Financial Times service
Copyright The Financial Times Limited 2009
Shipping hurdle for UK emissions targets
By Fiona Harvey, Environment Correspondent
Published: June 1 2009 00:06
Government claims that the UK’s carbon dioxide output has dropped by more than a 10th since 1990 might not be true if greenhouse gas emissions from shipping are included, an influential group of MPs will say on Monday.
The environmental audit committee, in a report on shipping emissions, said it was not possible to gauge the full extent of emissions from shipping as they were not counted towards the UK’s targets under the Kyoto protocol and were not covered by the European Union’s emissions trading scheme.
But the committee said shipping was a big source of greenhouse gases and should be monitored. Emissions from shipping are thought to have doubled since 1990, though accurate figures are not available.
Tim Yeo, chairman of the committee, called for shipping to be included in international talks on a successor to the Kyoto treaty, the main provisions of which expire in 2012.
He said: “We deplore the prevarication that has prevented global agreement on how to reduce emissions from international shipping. The shipping industry accepts the seriousness of climate change but has taken little or no action to cut its own emissions in absolute terms. Meanwhile, the government has failed to give this issue the attention it deserves.”
The committee said the government should replace its current system of estimating shipping emissions based on sales of maritime fuel bunkers in the UK, which it claimed ministers admitted was likely to underestimate the true figures.
The MPs also urged the government to begin tackling emissions from shipping before any international agreement by including shipping in the UK’s “carbon budgets”. Under last year's Climate Change Act, the government must monitor and put policies in place to cut the country’s emissions.
They said ships could be charged for excess greenhouse gas emissions by imposing a system of port dues that would vary according to the environmental performance of ships.
In the report, the committee also called for a review of ways of reducing emissions from ships, for instance by more efficient design and by ensuring that ships had shorter waiting times to dock at harbours.
They held out the promise of the UK becoming a “global leader in the creation of technologies that can be retrofitted to existing ships”, for instance through low-carbon propulsion systems, given the current lack of alternatives to oil-driven engines.
Copyright The Financial Times Limited 2009
Published: June 1 2009 00:06
Government claims that the UK’s carbon dioxide output has dropped by more than a 10th since 1990 might not be true if greenhouse gas emissions from shipping are included, an influential group of MPs will say on Monday.
The environmental audit committee, in a report on shipping emissions, said it was not possible to gauge the full extent of emissions from shipping as they were not counted towards the UK’s targets under the Kyoto protocol and were not covered by the European Union’s emissions trading scheme.
But the committee said shipping was a big source of greenhouse gases and should be monitored. Emissions from shipping are thought to have doubled since 1990, though accurate figures are not available.
Tim Yeo, chairman of the committee, called for shipping to be included in international talks on a successor to the Kyoto treaty, the main provisions of which expire in 2012.
He said: “We deplore the prevarication that has prevented global agreement on how to reduce emissions from international shipping. The shipping industry accepts the seriousness of climate change but has taken little or no action to cut its own emissions in absolute terms. Meanwhile, the government has failed to give this issue the attention it deserves.”
The committee said the government should replace its current system of estimating shipping emissions based on sales of maritime fuel bunkers in the UK, which it claimed ministers admitted was likely to underestimate the true figures.
The MPs also urged the government to begin tackling emissions from shipping before any international agreement by including shipping in the UK’s “carbon budgets”. Under last year's Climate Change Act, the government must monitor and put policies in place to cut the country’s emissions.
They said ships could be charged for excess greenhouse gas emissions by imposing a system of port dues that would vary according to the environmental performance of ships.
In the report, the committee also called for a review of ways of reducing emissions from ships, for instance by more efficient design and by ensuring that ships had shorter waiting times to dock at harbours.
They held out the promise of the UK becoming a “global leader in the creation of technologies that can be retrofitted to existing ships”, for instance through low-carbon propulsion systems, given the current lack of alternatives to oil-driven engines.
Copyright The Financial Times Limited 2009
Ed Miliband wants to bring power to the people
The Times
June 1, 2009
Robin Pagnamenta
Just don’t push me off the edge,” Ed Miliband grins as he gazes out across Whitehall, posing for a photograph on the rooftop of his government department. Indeed, the Secretary for Energy and Climate Change seems remarkably relaxed. With Westminster in meltdown, with MPs looking over their shoulders, dread-ing the sound of their phone, visibly twitching at the mention of the word “expenses”, here is a minister seemingly able to look forward, not back, to concentrate on the job in hand, not on the scandal du jour.
Which is surely a “good thing”, given that the job in hand is particularly difficult — and particularly important. Britain’s energy future looks uncertain and Mr Miliband is in charge of both keeping the lights on and delivering the Government’s ambitious green agenda.
There is, for example, a yawning supply gap opening up, as a quarter of the UK’s ageing power plants are forced to close by 2015. Supplies of North Sea gas are dwindling, too, leaving Britain ever more reliant on imports of the fuel from Norway, Algeria and Qatar.
And there is the challenge of cutting UK emissions of carbon dioxide by more than a third by 2020, something that Mr Miliband wants to achieve by replacing Britain’s fleet of dirty, fossil-fuel-fired power stations, which generate 76 per cent of the country’s electricity, with low-carbon power — new nuclear reactors, “clean coal” plants and wind turbines, in sufficient numbers and with all the infrastructure needed to support them. Many industry experts raise their eyebrows at such an ambition, but Mr Miliband insists that it is possible.
“There will always be the defeatists,” he says, now downstairs and perched on a black sofa in his rather spartan ministerial office. “People said to me when I started this job that I would never be able to square the demands and interests of those who care about climate change and those who care about energy \ . . . but I think that we can forge a new consensus around energy policy. There is a set of shared interests between the green movement and the industry.” Perhaps so, but meeting these multiple goals to such a tight deadline will be vastly expensive. Ernst & Young estimates that the industry will need to fork out £233.5 billion by 2025 to pay for the changes, stoking fears that millions of families will be forced into fuel poverty as a consequence.
Will consumers tolerate this? Mr Miliband says that they have no choice. “There is no question that there are upward pressures on prices, but people would be misled to believe there is a low-cost, high-carbon future. There isn’t. If we don’t make the transition to low carbon now, all the evidence is that the costs will be higher later on.”
Mr Miliband, 39, was appointed to run the newly formed Department for Energy and Climate Change nine months ago. An MP for barely four years, winning his Doncaster North seat in the 2005 general election, before that he had been a key adviser to Gordon Brown at the Treasury, building on his background studying economics at Oxford and the London School of Economics. When he became the Cabinet Office Minister in 2007, he and his elder brother David, the Foreign Secretary, became the first brothers to serve together in a Cabinet since the 1930s.
Energy is his focus now and he says that a nationwide rollout of so-called smart meters in all 26 million UK households is an “absolutely crucial” first step to cutting the vast amounts of energy wasted in the UK. “The surest route to energy security is energy efficiency,” he says. “[Smart meters] will save more money than they will cost, so this is the closest thing there is to a win-win.” Despite recent financing problems arising from the credit crunch, Mr Miliband also has high hopes for offshore wind energy and argues that fresh incentives unveiled in the Budget will help to shore up flagging investment in the industry.
Nuclear power clearly has a big role to play, too, even if Mr Miliband hardly sounds like the industry’s most enthusiastic advocate. “I’m in favour of it,” he smiles, before adding: “I wasn’t exactly brought up in a pro-nuclear household.”
So has he always been in favour of nuclear power? He dodges the question. “I understand the concerns that some people have, because people associate it [with] weapons . . . but I think it’s wrong to say we don’t go ahead with new power stations.”
There is no disguising, however, the Energy Secretary’s passion for another, newer technology: Carbon Capture and Storage (CCS). CCS, in which coal plants are fitted with equipment to strip out and store emissions, may remain unproven at a commercial scale, but with 50,000 coal-fired power stations churning out emissions around the world, advocates have described it as a pivotal technology that must be mastered if the world is serious about tackling climate change.
In April, Mr Miliband unveiled a new policy to construct up to four new coal-fired power stations in the UK fitted with demonstration CCS equipment. “I have to say to you, we have to make this work,” he says. “It’s a moral and industrial imperative. Without CCS, we are going to find it very hard to get the kind of action we need on climate change.” To emphasise his point, Mr Miliband describes a recent trip to Guangdong province in China, where the governor told him that 40 gigawatts of new coal-fired power stations were planned. That is equivalent to about half of Britain’s entire installed generating capacity.
Under the terms of the UK scheme, power companies would have to apply CCS to a portion of a typical coal plant and would have to fit it to their entire output by 2025. Yet Mr Miliband’s policy on CCS has been criticised for being sketchy on detail, especially over whether or not plants would be allowed to continue operating if the technology does not work. It is a criticism that he rejects, although he acknowledges more work needs to be done.
While all these different initiatives will be needed, Mr Miliband admits that some fundamental, broader changes may be necessary, including a more muscular role for government in the UK energy market. “I think that dynamic markets are at the centre of our energy policy, but . . . the market on its own is not going to ensure that we make the transition to low carbon.”
This summer, for the first time since the 1980s, he plans to set out a vision of the future, with clear guiding principles for how Britain’s energy mix will look in 2030, 2040 and beyond. “It’s not a blueprint but a pathway. I feel that there is a yearning for this to happen among energy companies.”
Mr Miliband, who is also leading Britain’s efforts to secure a global deal on climate change at a United Nations meeting in Copenhagen later this year, is reluctant to give away more, but it sounds as if he has a few more things up his sleeve.
“One thing I have learnt in this job is that people respect you for boldness,” he says. “Given the scale of the problem, people want boldness.” He is unlikely to disappoint them.
June 1, 2009
Robin Pagnamenta
Just don’t push me off the edge,” Ed Miliband grins as he gazes out across Whitehall, posing for a photograph on the rooftop of his government department. Indeed, the Secretary for Energy and Climate Change seems remarkably relaxed. With Westminster in meltdown, with MPs looking over their shoulders, dread-ing the sound of their phone, visibly twitching at the mention of the word “expenses”, here is a minister seemingly able to look forward, not back, to concentrate on the job in hand, not on the scandal du jour.
Which is surely a “good thing”, given that the job in hand is particularly difficult — and particularly important. Britain’s energy future looks uncertain and Mr Miliband is in charge of both keeping the lights on and delivering the Government’s ambitious green agenda.
There is, for example, a yawning supply gap opening up, as a quarter of the UK’s ageing power plants are forced to close by 2015. Supplies of North Sea gas are dwindling, too, leaving Britain ever more reliant on imports of the fuel from Norway, Algeria and Qatar.
And there is the challenge of cutting UK emissions of carbon dioxide by more than a third by 2020, something that Mr Miliband wants to achieve by replacing Britain’s fleet of dirty, fossil-fuel-fired power stations, which generate 76 per cent of the country’s electricity, with low-carbon power — new nuclear reactors, “clean coal” plants and wind turbines, in sufficient numbers and with all the infrastructure needed to support them. Many industry experts raise their eyebrows at such an ambition, but Mr Miliband insists that it is possible.
“There will always be the defeatists,” he says, now downstairs and perched on a black sofa in his rather spartan ministerial office. “People said to me when I started this job that I would never be able to square the demands and interests of those who care about climate change and those who care about energy \ . . . but I think that we can forge a new consensus around energy policy. There is a set of shared interests between the green movement and the industry.” Perhaps so, but meeting these multiple goals to such a tight deadline will be vastly expensive. Ernst & Young estimates that the industry will need to fork out £233.5 billion by 2025 to pay for the changes, stoking fears that millions of families will be forced into fuel poverty as a consequence.
Will consumers tolerate this? Mr Miliband says that they have no choice. “There is no question that there are upward pressures on prices, but people would be misled to believe there is a low-cost, high-carbon future. There isn’t. If we don’t make the transition to low carbon now, all the evidence is that the costs will be higher later on.”
Mr Miliband, 39, was appointed to run the newly formed Department for Energy and Climate Change nine months ago. An MP for barely four years, winning his Doncaster North seat in the 2005 general election, before that he had been a key adviser to Gordon Brown at the Treasury, building on his background studying economics at Oxford and the London School of Economics. When he became the Cabinet Office Minister in 2007, he and his elder brother David, the Foreign Secretary, became the first brothers to serve together in a Cabinet since the 1930s.
Energy is his focus now and he says that a nationwide rollout of so-called smart meters in all 26 million UK households is an “absolutely crucial” first step to cutting the vast amounts of energy wasted in the UK. “The surest route to energy security is energy efficiency,” he says. “[Smart meters] will save more money than they will cost, so this is the closest thing there is to a win-win.” Despite recent financing problems arising from the credit crunch, Mr Miliband also has high hopes for offshore wind energy and argues that fresh incentives unveiled in the Budget will help to shore up flagging investment in the industry.
Nuclear power clearly has a big role to play, too, even if Mr Miliband hardly sounds like the industry’s most enthusiastic advocate. “I’m in favour of it,” he smiles, before adding: “I wasn’t exactly brought up in a pro-nuclear household.”
So has he always been in favour of nuclear power? He dodges the question. “I understand the concerns that some people have, because people associate it [with] weapons . . . but I think it’s wrong to say we don’t go ahead with new power stations.”
There is no disguising, however, the Energy Secretary’s passion for another, newer technology: Carbon Capture and Storage (CCS). CCS, in which coal plants are fitted with equipment to strip out and store emissions, may remain unproven at a commercial scale, but with 50,000 coal-fired power stations churning out emissions around the world, advocates have described it as a pivotal technology that must be mastered if the world is serious about tackling climate change.
In April, Mr Miliband unveiled a new policy to construct up to four new coal-fired power stations in the UK fitted with demonstration CCS equipment. “I have to say to you, we have to make this work,” he says. “It’s a moral and industrial imperative. Without CCS, we are going to find it very hard to get the kind of action we need on climate change.” To emphasise his point, Mr Miliband describes a recent trip to Guangdong province in China, where the governor told him that 40 gigawatts of new coal-fired power stations were planned. That is equivalent to about half of Britain’s entire installed generating capacity.
Under the terms of the UK scheme, power companies would have to apply CCS to a portion of a typical coal plant and would have to fit it to their entire output by 2025. Yet Mr Miliband’s policy on CCS has been criticised for being sketchy on detail, especially over whether or not plants would be allowed to continue operating if the technology does not work. It is a criticism that he rejects, although he acknowledges more work needs to be done.
While all these different initiatives will be needed, Mr Miliband admits that some fundamental, broader changes may be necessary, including a more muscular role for government in the UK energy market. “I think that dynamic markets are at the centre of our energy policy, but . . . the market on its own is not going to ensure that we make the transition to low carbon.”
This summer, for the first time since the 1980s, he plans to set out a vision of the future, with clear guiding principles for how Britain’s energy mix will look in 2030, 2040 and beyond. “It’s not a blueprint but a pathway. I feel that there is a yearning for this to happen among energy companies.”
Mr Miliband, who is also leading Britain’s efforts to secure a global deal on climate change at a United Nations meeting in Copenhagen later this year, is reluctant to give away more, but it sounds as if he has a few more things up his sleeve.
“One thing I have learnt in this job is that people respect you for boldness,” he says. “Given the scale of the problem, people want boldness.” He is unlikely to disappoint them.
Government to set clear targets for UK energy mix
The Times
June 1, 2009
Robin Pagnamenta, Energy and Environment Editor
Britain is set to turn its back on a wholly liberalised energy market and will return to a more interventionist, state-directed model, according to Ed Miliband, the Energy Secretary.
In an interview with The Times, Mr Miliband said that a more assertive role for government was the only way that Britain could achieve its present target of slashing its carbon emissions by 34 per cent by 2020 and 80 per cent by 2050.
“The market on its own is not going to ensure that we make the transition to low carbon,” he said. “It's not necessarily going to ensure the right diversity in our energy mix.”
Mr Miliband, who is pushing for a big rise in electricity generated from low-carbon sources, said that this summer the Government would set out a clear framework for Britain's future energy mix — specifying future targets for total power generation from nuclear, gas, “clean coal” and renewables for the first time since the 1980s. The so-called Summer Strategy, dubbed the “2030 Masterplan” by senior industry executives, will also provide a long-term framework for the development of the National Grid, which is facing a big overhaul in order to support a huge increase in offshore wind power in the UK, as well as a fleet of new nuclear reactors.
Mr Miliband insisted that “dynamic markets” and private investment would remain central to future UK energy policy, but said: “The days of an energy policy of ‘let's leave it to the market and the market will take care of it' are over.”
He said that this return to a more state-directed model of energy policy represented the biggest turning point since Nigel Lawson called for the free market to govern the mix of fuels in the 1980s. He said that Mr Lawson's approach had been forged when Britain still had access to plentiful supplies of North Sea gas and when there was no consensus over the threat of climate change.
Since liberalisation of the industry in the early 1990s, the Government has refused to issue targets for the desired portion of electricity to be generated from a single fuel type.
But that has led to uncertainty over the long-term direction of UK energy policy and encouraged many energy companies to make short-term decisions on energy investments.
“There is an old view, a Lawsonian view that government shouldn't take a view on the energy mix. But government does need to give people a sense of its vision for the energy mix and for the grid.”
Mr Miliband said he believed that a more directive approach from government would be greeted positively by the energy industry.
About 76 per cent of Britain's electricity is generated from fossil fuels — chiefly coal and gas — but the Government is trying to replace much of this with a huge increase in more expensive, low-carbon power sources.
A spokesman for Centrica, owner of British Gas and one of the Big Six energy companies, said: “It is important that the right framework is put in place in order to make it economic to deliver the investments which will bring about the low-carbon energy industry that we are all looking for.”
June 1, 2009
Robin Pagnamenta, Energy and Environment Editor
Britain is set to turn its back on a wholly liberalised energy market and will return to a more interventionist, state-directed model, according to Ed Miliband, the Energy Secretary.
In an interview with The Times, Mr Miliband said that a more assertive role for government was the only way that Britain could achieve its present target of slashing its carbon emissions by 34 per cent by 2020 and 80 per cent by 2050.
“The market on its own is not going to ensure that we make the transition to low carbon,” he said. “It's not necessarily going to ensure the right diversity in our energy mix.”
Mr Miliband, who is pushing for a big rise in electricity generated from low-carbon sources, said that this summer the Government would set out a clear framework for Britain's future energy mix — specifying future targets for total power generation from nuclear, gas, “clean coal” and renewables for the first time since the 1980s. The so-called Summer Strategy, dubbed the “2030 Masterplan” by senior industry executives, will also provide a long-term framework for the development of the National Grid, which is facing a big overhaul in order to support a huge increase in offshore wind power in the UK, as well as a fleet of new nuclear reactors.
Mr Miliband insisted that “dynamic markets” and private investment would remain central to future UK energy policy, but said: “The days of an energy policy of ‘let's leave it to the market and the market will take care of it' are over.”
He said that this return to a more state-directed model of energy policy represented the biggest turning point since Nigel Lawson called for the free market to govern the mix of fuels in the 1980s. He said that Mr Lawson's approach had been forged when Britain still had access to plentiful supplies of North Sea gas and when there was no consensus over the threat of climate change.
Since liberalisation of the industry in the early 1990s, the Government has refused to issue targets for the desired portion of electricity to be generated from a single fuel type.
But that has led to uncertainty over the long-term direction of UK energy policy and encouraged many energy companies to make short-term decisions on energy investments.
“There is an old view, a Lawsonian view that government shouldn't take a view on the energy mix. But government does need to give people a sense of its vision for the energy mix and for the grid.”
Mr Miliband said he believed that a more directive approach from government would be greeted positively by the energy industry.
About 76 per cent of Britain's electricity is generated from fossil fuels — chiefly coal and gas — but the Government is trying to replace much of this with a huge increase in more expensive, low-carbon power sources.
A spokesman for Centrica, owner of British Gas and one of the Big Six energy companies, said: “It is important that the right framework is put in place in order to make it economic to deliver the investments which will bring about the low-carbon energy industry that we are all looking for.”
Consumer link to rainforest destruction
By Fiona Harvey and Jenny Wiggins in London and Jonathan Wheatley in São Paulo
Published: May 31 2009 23:25
The destruction of the Amazon rainforest to make way for cattle ranches has been directly linked for the first time to patterns of consumption of beef and leather in the developed world, according to campaigners.
Cattle ranching is the single most important cause of the tearing down of rainforest in Brazil. The lucrative business caters to the changing tastes of wealthier consumers in emerging economies such as China and India, as well as to long-established markets, including Europe and the US.
The industry generates more than $7bn (€4.9bn, £4.3bn) a year for Brazil in exports, a figure the government wants to double.
A report published on Monday by Greenpeace, the environmental group, establishes a link between the cattle ranches encroaching on the Amazon and products – mainly beef, leather and cosmetics – sold in supermarkets and by luxury brands.
Some companies named in the report as possible recipients of products from deforested lands have told the Financial Times they would review their sourcing policies as a result.
The concerns raised also reflect a growing desire among consumers for “traceability” of the products they buy, heightened by recent food scares.
Unilever said it would launch a “traceability audit” to ensure none of its products came from deforested areas, although it already had a code of conduct for suppliers,
Waitrose, a supermarket chain, said it would examine Greenpeace’s evidence and “conduct a thorough investigation” if necessary.
Tesco said its beef products came from areas 3,000km from the Amazon.
Kraft Foods said it only bought beef from Brazil for local meat products sold in Italy, and its global purchases accounted for less than 0.2 per cent of total beef production from Brazil.
Prada , the luxury goods group, denied taking leather from Brazil. It said: “Brazilian leather is of too low quality for us. Our experts could tell the difference.”
Greenpeace is asking companies with links to Brazil to put policies in place to ensure none of the products they sell could have come from deforested land.
Marks and Spencer , the retailer, said it had procedures to ensure its beef came only from specified farms, with animals tagged and carcases labelled at every stage.
Other supermarkets contacted by the FT said their suppliers had signed contracts guaranteeing that cattle did not come from the Amazon.
However, Greenpeace contends that many such contracts are mere “box-ticking exercises” and the retailers do not have adequate procedures to ensure the conditions are met.
Much of the export trade in cattle in Brazil is handled by a small number of companies. Three contacted by the FT did not respond to requests for comment. A fourth, Bertin, a beef and hide processor, said: “We are working towards more sustainable methods and this is the tendency for the entire industry.”
The International Finance Corporation, which has provided financing to Bertin, said: “There has been progress but some challenges remain.”
People familiar with the situation said serious problems persisted. One industry executive, who asked not to be identified, said: “The big problem is controlling the behaviour of the ranchers. A lot of producers don’t even have title over their land.”
John Carter, a Texas-born rancher in Mato Grosso state, south of the Amazon, said: “There’s just no doubt that beef production has migrated to the Amazon.”
Copyright The Financial Times Limited 2009
Published: May 31 2009 23:25
The destruction of the Amazon rainforest to make way for cattle ranches has been directly linked for the first time to patterns of consumption of beef and leather in the developed world, according to campaigners.
Cattle ranching is the single most important cause of the tearing down of rainforest in Brazil. The lucrative business caters to the changing tastes of wealthier consumers in emerging economies such as China and India, as well as to long-established markets, including Europe and the US.
The industry generates more than $7bn (€4.9bn, £4.3bn) a year for Brazil in exports, a figure the government wants to double.
A report published on Monday by Greenpeace, the environmental group, establishes a link between the cattle ranches encroaching on the Amazon and products – mainly beef, leather and cosmetics – sold in supermarkets and by luxury brands.
Some companies named in the report as possible recipients of products from deforested lands have told the Financial Times they would review their sourcing policies as a result.
The concerns raised also reflect a growing desire among consumers for “traceability” of the products they buy, heightened by recent food scares.
Unilever said it would launch a “traceability audit” to ensure none of its products came from deforested areas, although it already had a code of conduct for suppliers,
Waitrose, a supermarket chain, said it would examine Greenpeace’s evidence and “conduct a thorough investigation” if necessary.
Tesco said its beef products came from areas 3,000km from the Amazon.
Kraft Foods said it only bought beef from Brazil for local meat products sold in Italy, and its global purchases accounted for less than 0.2 per cent of total beef production from Brazil.
Prada , the luxury goods group, denied taking leather from Brazil. It said: “Brazilian leather is of too low quality for us. Our experts could tell the difference.”
Greenpeace is asking companies with links to Brazil to put policies in place to ensure none of the products they sell could have come from deforested land.
Marks and Spencer , the retailer, said it had procedures to ensure its beef came only from specified farms, with animals tagged and carcases labelled at every stage.
Other supermarkets contacted by the FT said their suppliers had signed contracts guaranteeing that cattle did not come from the Amazon.
However, Greenpeace contends that many such contracts are mere “box-ticking exercises” and the retailers do not have adequate procedures to ensure the conditions are met.
Much of the export trade in cattle in Brazil is handled by a small number of companies. Three contacted by the FT did not respond to requests for comment. A fourth, Bertin, a beef and hide processor, said: “We are working towards more sustainable methods and this is the tendency for the entire industry.”
The International Finance Corporation, which has provided financing to Bertin, said: “There has been progress but some challenges remain.”
People familiar with the situation said serious problems persisted. One industry executive, who asked not to be identified, said: “The big problem is controlling the behaviour of the ranchers. A lot of producers don’t even have title over their land.”
John Carter, a Texas-born rancher in Mato Grosso state, south of the Amazon, said: “There’s just no doubt that beef production has migrated to the Amazon.”
Copyright The Financial Times Limited 2009
British supermarkets accused over destruction of Amazon rainforest
David Adam in Maraba
guardian.co.uk, Sunday 31 May 2009 22.15 BST
British supermarkets are driving rapid destruction of the Amazon rainforest by using meat from farms responsible for illegal deforestation, according to a three-year investigation of the global trade in Brazilian cattle products.
The report names Tesco, Sainsbury's, Asda, Morrisons and Marks and Spencer among dozens of high-profile companies it says profit from products supplied by Brazilian farms on illegally deforested land. Much of the trade is in processed beef, used for pies, canned meat and frozen ready meals. The supermarkets insist it is not from the Amazon.
The Greenpeace investigation also tracked the global trade in other Brazilian goods made from cattle. It names Nike, Adidas, Timberland and Clarks Shoes among companies it says use leather linked to Amazon destruction.
Greenpeace wants companies to refuse to buy products sourced from farms that have carried out illegal deforestation. It wants consumers to pressure supermarkets and high-street brands identified in the report to clean-up supply chains.
Sarah Shoraka, Greenpeace forests campaigner, said: "Shoes, handbags and ready meals aren't normally associated with rainforest destruction and climate change, but we've found a smoking gun. UK companies are driving the destruction of the Amazon by buying beef and leather products from unscrupulous suppliers in Brazil. These products are ending up on our shelves." She added : "The cattle industry is the single biggest cause of deforestation in the world and is a disaster for the fight against climate change. Global brands must take a stand."
Officials from around the world gather in Bonn for talks on a new treaty on global warming, which is expected to include urgent efforts to protect forests. Clearing tropical forests for agriculture is estimated to produce 17% of the world's greenhouse gas emissions – more than the entire global transport system. Many of the companies named in the Greenpeace report promote their efforts to cut greenhouse gas emissions.
The Greenpeace report compiles government records, company documents and trade data from Brazil, China, Europe, Vietnam and the USA, to piece together the global movement of meat, leather and cosmetics ingredients made from Brazilian cattle.
Campaigners used satellite images, surveillance flights and undercover visits to assess deforestation on dozens of ranches across the Amazonian states of Para and Mato Grosso.
Cattle farming is now the biggest threat to the remaining Amazon rainforest, a fifth of which has been lost since 1970. Big ranches are blamed for 80% of all deforestation in the region; the number of cattle in the Amazon grew from 21m in 1995 to 56m in 2006.
The report, Slaughtering the Amazon, describes how ranches responsible for illegal deforestation sell cattle to slaughterhouses controlled by a handful of Brazilian companies. These ship beef or hides to facilities in the south of Brazil and process them for export. They are often processed again in the importing country.
Greenpeace says records show that cattle from hundreds of farms across the Amazon are mixed and processed in this way, making it currently impossible to trace the origins of products. "In effect, criminal or 'dirty' supplies of cattle are 'laundered' through the supply chain."
The investigation focused on three Brazilian companies, Bertin, JBS and Marfrig, which operate slaughterhouses and together control a third of Brazilian beef exports. Greenpeace says satellite images and trade records show that all three companies – part-owned by the Brazilian government– source cattle from farms that have carried out illegal deforestation in the Amazon. It says exports from the south of the country near São Paolo are "polluted" with products from animals raised on deforested land.
Britain is the second largest importer of processed Brazilian beef after the US, taking 50,000 tonnes last year.
Greenpeace says Marfrig facilities export processed beef to Green Isle Foods, an Irish subsidiary of Northern Foods. Product labels show Northern Foods supplies convenience foods that contain the Marfrig meat to Sainsbury's, Asda and Morrisons, the report says. It says Tesco and Marks and Spencer sell tinned Brazilian beef supplied separately by JBS.
Tesco and Marks and Spencer denied the meat came from the Amazon. Marks and Spencer said: "We do not accept and have never used any beef from the Amazon region. We have been working with our Brazilian beef supplier for over 20 years and through the traceability measures we have in place we can ensure that all the product supplied to us by them is from the exact location we specify."
Sainsbury's said it used "a small amount of Brazilian beef in our frozen and canned range". Morrisons said its suppliers provided documents to prove beef was not linked to Amazon deforestation. Asda said it was confident its beef did not come from the Amazon. It said: "If that isn't the case we'd take that very seriously indeed."
A Tesco spokesman said: "Our canned beef is sourced from São Paolo, which is about 3,000 km away from the Amazon. I have also been informed that the cows cannot travel more than 300km."
The report says: "While the blue chip companies behind reputable global brands appear to believe that Amazon sources are excluded from their products, Greenpeace investigations expose for the first time how their blind consumption of raw materials fuels deforestation and climate change."
Northern Foods said: "The only Brazilian beef we buy for our Green Isle business is cooked beef from a single site in São Paulo state, not in or near the Amazon basin, and not sourcing materials from sites in or near the Amazon basin. The supplier we use, Marfrig, provides certificates to verify the farm source for this plant."
Marfrig said it only bought cattle from farms not included on a Brazilian government prohibited list. "We have not been informed of any such violations by Greenpeace so cannot comment."
Nike and Adidas said they would be discussing the issue with Greenpeace. Timberland said it used Bertin leather, but did not track the origin of all raw materials. Clarks Shoes said its UK operation was phasing out Bertin leather and seeking ways to guarantee source. Bertin said it would investigate and act on any evidence of "supplier irregularity".
guardian.co.uk, Sunday 31 May 2009 22.15 BST
British supermarkets are driving rapid destruction of the Amazon rainforest by using meat from farms responsible for illegal deforestation, according to a three-year investigation of the global trade in Brazilian cattle products.
The report names Tesco, Sainsbury's, Asda, Morrisons and Marks and Spencer among dozens of high-profile companies it says profit from products supplied by Brazilian farms on illegally deforested land. Much of the trade is in processed beef, used for pies, canned meat and frozen ready meals. The supermarkets insist it is not from the Amazon.
The Greenpeace investigation also tracked the global trade in other Brazilian goods made from cattle. It names Nike, Adidas, Timberland and Clarks Shoes among companies it says use leather linked to Amazon destruction.
Greenpeace wants companies to refuse to buy products sourced from farms that have carried out illegal deforestation. It wants consumers to pressure supermarkets and high-street brands identified in the report to clean-up supply chains.
Sarah Shoraka, Greenpeace forests campaigner, said: "Shoes, handbags and ready meals aren't normally associated with rainforest destruction and climate change, but we've found a smoking gun. UK companies are driving the destruction of the Amazon by buying beef and leather products from unscrupulous suppliers in Brazil. These products are ending up on our shelves." She added : "The cattle industry is the single biggest cause of deforestation in the world and is a disaster for the fight against climate change. Global brands must take a stand."
Officials from around the world gather in Bonn for talks on a new treaty on global warming, which is expected to include urgent efforts to protect forests. Clearing tropical forests for agriculture is estimated to produce 17% of the world's greenhouse gas emissions – more than the entire global transport system. Many of the companies named in the Greenpeace report promote their efforts to cut greenhouse gas emissions.
The Greenpeace report compiles government records, company documents and trade data from Brazil, China, Europe, Vietnam and the USA, to piece together the global movement of meat, leather and cosmetics ingredients made from Brazilian cattle.
Campaigners used satellite images, surveillance flights and undercover visits to assess deforestation on dozens of ranches across the Amazonian states of Para and Mato Grosso.
Cattle farming is now the biggest threat to the remaining Amazon rainforest, a fifth of which has been lost since 1970. Big ranches are blamed for 80% of all deforestation in the region; the number of cattle in the Amazon grew from 21m in 1995 to 56m in 2006.
The report, Slaughtering the Amazon, describes how ranches responsible for illegal deforestation sell cattle to slaughterhouses controlled by a handful of Brazilian companies. These ship beef or hides to facilities in the south of Brazil and process them for export. They are often processed again in the importing country.
Greenpeace says records show that cattle from hundreds of farms across the Amazon are mixed and processed in this way, making it currently impossible to trace the origins of products. "In effect, criminal or 'dirty' supplies of cattle are 'laundered' through the supply chain."
The investigation focused on three Brazilian companies, Bertin, JBS and Marfrig, which operate slaughterhouses and together control a third of Brazilian beef exports. Greenpeace says satellite images and trade records show that all three companies – part-owned by the Brazilian government– source cattle from farms that have carried out illegal deforestation in the Amazon. It says exports from the south of the country near São Paolo are "polluted" with products from animals raised on deforested land.
Britain is the second largest importer of processed Brazilian beef after the US, taking 50,000 tonnes last year.
Greenpeace says Marfrig facilities export processed beef to Green Isle Foods, an Irish subsidiary of Northern Foods. Product labels show Northern Foods supplies convenience foods that contain the Marfrig meat to Sainsbury's, Asda and Morrisons, the report says. It says Tesco and Marks and Spencer sell tinned Brazilian beef supplied separately by JBS.
Tesco and Marks and Spencer denied the meat came from the Amazon. Marks and Spencer said: "We do not accept and have never used any beef from the Amazon region. We have been working with our Brazilian beef supplier for over 20 years and through the traceability measures we have in place we can ensure that all the product supplied to us by them is from the exact location we specify."
Sainsbury's said it used "a small amount of Brazilian beef in our frozen and canned range". Morrisons said its suppliers provided documents to prove beef was not linked to Amazon deforestation. Asda said it was confident its beef did not come from the Amazon. It said: "If that isn't the case we'd take that very seriously indeed."
A Tesco spokesman said: "Our canned beef is sourced from São Paolo, which is about 3,000 km away from the Amazon. I have also been informed that the cows cannot travel more than 300km."
The report says: "While the blue chip companies behind reputable global brands appear to believe that Amazon sources are excluded from their products, Greenpeace investigations expose for the first time how their blind consumption of raw materials fuels deforestation and climate change."
Northern Foods said: "The only Brazilian beef we buy for our Green Isle business is cooked beef from a single site in São Paulo state, not in or near the Amazon basin, and not sourcing materials from sites in or near the Amazon basin. The supplier we use, Marfrig, provides certificates to verify the farm source for this plant."
Marfrig said it only bought cattle from farms not included on a Brazilian government prohibited list. "We have not been informed of any such violations by Greenpeace so cannot comment."
Nike and Adidas said they would be discussing the issue with Greenpeace. Timberland said it used Bertin leather, but did not track the origin of all raw materials. Clarks Shoes said its UK operation was phasing out Bertin leather and seeking ways to guarantee source. Bertin said it would investigate and act on any evidence of "supplier irregularity".
Biomass Power Generates Traction
By RUSSELL GOLD
While solar power is taking root in the sunny Southwest and wind power is growing in the blustery band from the Dakotas to Texas, other places are turning to trees and grass as their best bet for producing renewable energy, leading to a new building boom in "biomass" power plants.
Electric utilities may soon face new rules requiring them to generate 20% of their power from renewable sources by 2020, according to terms in a bill to combat climate change being considered by the House of Representatives. While the cost of generating solar and wind power is declining, making them increasingly attractive options, not all places have enough wind or sunshine to make power generation practical.
The potential for government quotas is a major reason why electric utilities in the Southeast and parts of the Midwest are now beginning to build industrial-scale plants that burn wood and other plant material -- or "biomass." The utilities also stand to get significant federal tax credits for producing renewable energy.
Atlanta-based Southern Co. said it will build a $135 million biomass power plant. Progress Energy Inc. recently agreed to buy power from a separate $135 million biomass power plant in Hartsville, S.C.
Oglethorpe Power Corp., a power cooperative based in the Atlanta suburbs, said in early May that it had bought land to build at least two 100-megawatt biomass power plants, costing $400 million each. "In Georgia, trees are plentiful," says Greg Jones, an Oglethorpe spokesman, "but wind is not abundant."
U.S. energy forecasters predict that by 2030, biomass will generate 4.5% of the kilowatts consumed in the U.S., versus 2.5% for wind, with solar coming in behind both -- though all three will trail the more established power sources of hydroelectric, nuclear, coal and natural gas.
Proposed policy that would put a price on greenhouse-gas emissions and provide tax credits and loan guarantees for renewable energy is boosting the prospects for plant-based fuels. Another big reason for biomass's growing popularity: it's dependable. When the wind doesn't blow, electricity utilities need to fire up backup plants. But like coal, biomass can be continuously fed into a furnace to provide a steady flow of juice.
While greenhouse gas is released when biomass is burned, the process is considered nearly carbon neutral because the plants only emit the carbon they absorbed while they were growing. The plants would release the same amount of greenhouse gas if they died naturally and decomposed. The burning of coal, by contrast, releases carbon that otherwise never would have been sent into the atmosphere.
Using nonfood crops to make cellulosic ethanol to fuel vehicles has been the most common path laid out by Congress, but it may be more efficient to use those crops to make electricity. An acre of crops can generate enough electricity for a battery-powered SUV to travel 15,000 miles, nearly twice the distance that would be covered if the crops were turned into cellulosic ethanol, noted Elliott Campbell, an assistant professor of engineering at the University of California, Merced, in a recent article in Science magazine.
Many of the new biomass power plants are using wood scraps left over from the region's timber industry, but some companies are considering planting crops such as energy-rich grasses designed to be burned in power plants. While the practice of burning biomass to generate power has been used in Scandinavia for decades, growing crops specifically designed for biofuel is a new development.
That's the plan FirstEnergy Corp., Akron, Ohio, is pursuing in eastern Ohio. The company said in April it would spend $200 million retrofitting two units of a coal plant to run on briquettes made of crops grown specifically to burn in combustion boilers to make electricity.
The use of carbon-neutral fuel is important for utilities, because they may soon have to pay for some greenhouse-gas emissions under the climate bill moving through Congress.
Write to Russell Gold at russell.gold@wsj.com
While solar power is taking root in the sunny Southwest and wind power is growing in the blustery band from the Dakotas to Texas, other places are turning to trees and grass as their best bet for producing renewable energy, leading to a new building boom in "biomass" power plants.
Electric utilities may soon face new rules requiring them to generate 20% of their power from renewable sources by 2020, according to terms in a bill to combat climate change being considered by the House of Representatives. While the cost of generating solar and wind power is declining, making them increasingly attractive options, not all places have enough wind or sunshine to make power generation practical.
The potential for government quotas is a major reason why electric utilities in the Southeast and parts of the Midwest are now beginning to build industrial-scale plants that burn wood and other plant material -- or "biomass." The utilities also stand to get significant federal tax credits for producing renewable energy.
Atlanta-based Southern Co. said it will build a $135 million biomass power plant. Progress Energy Inc. recently agreed to buy power from a separate $135 million biomass power plant in Hartsville, S.C.
Oglethorpe Power Corp., a power cooperative based in the Atlanta suburbs, said in early May that it had bought land to build at least two 100-megawatt biomass power plants, costing $400 million each. "In Georgia, trees are plentiful," says Greg Jones, an Oglethorpe spokesman, "but wind is not abundant."
U.S. energy forecasters predict that by 2030, biomass will generate 4.5% of the kilowatts consumed in the U.S., versus 2.5% for wind, with solar coming in behind both -- though all three will trail the more established power sources of hydroelectric, nuclear, coal and natural gas.
Proposed policy that would put a price on greenhouse-gas emissions and provide tax credits and loan guarantees for renewable energy is boosting the prospects for plant-based fuels. Another big reason for biomass's growing popularity: it's dependable. When the wind doesn't blow, electricity utilities need to fire up backup plants. But like coal, biomass can be continuously fed into a furnace to provide a steady flow of juice.
While greenhouse gas is released when biomass is burned, the process is considered nearly carbon neutral because the plants only emit the carbon they absorbed while they were growing. The plants would release the same amount of greenhouse gas if they died naturally and decomposed. The burning of coal, by contrast, releases carbon that otherwise never would have been sent into the atmosphere.
Using nonfood crops to make cellulosic ethanol to fuel vehicles has been the most common path laid out by Congress, but it may be more efficient to use those crops to make electricity. An acre of crops can generate enough electricity for a battery-powered SUV to travel 15,000 miles, nearly twice the distance that would be covered if the crops were turned into cellulosic ethanol, noted Elliott Campbell, an assistant professor of engineering at the University of California, Merced, in a recent article in Science magazine.
Many of the new biomass power plants are using wood scraps left over from the region's timber industry, but some companies are considering planting crops such as energy-rich grasses designed to be burned in power plants. While the practice of burning biomass to generate power has been used in Scandinavia for decades, growing crops specifically designed for biofuel is a new development.
That's the plan FirstEnergy Corp., Akron, Ohio, is pursuing in eastern Ohio. The company said in April it would spend $200 million retrofitting two units of a coal plant to run on briquettes made of crops grown specifically to burn in combustion boilers to make electricity.
The use of carbon-neutral fuel is important for utilities, because they may soon have to pay for some greenhouse-gas emissions under the climate bill moving through Congress.
Write to Russell Gold at russell.gold@wsj.com
Carried along by the winds of fortune
Published Date: 01 June 2009
By ERIKKA ASKELAND BUSINESS CORRESPONDENT
WILLI Heller hates to lose – although he admits he loses 50 per cent of the time. Luckily, the mild- mannered Canadian can still get by doing what he does, which is building wind farms.
Heller's company, Falck Renewables, has developed five onshore wind farms in Scotland and a further 12 are in the pipeline in the UK. Behind energy giants ScottishPower and Scottish & Southern Energy, the firm is the third-largest developer of wind farms in Scotland.The biggest part of his job is getting planning permission. Heller says the UK is the most expensive place in the world to get the green light to start building – as much as £750,000 for a medium-sized farm and that is even before you build a single turbine. And he should know, Falck Renewables – a division of Italian energy business Gruppo Falck – also develops wind farms in Spain, Italy, France, Turkey, Poland and India. The trick is not to go for the tough ones. "We are not foolish enough to get planning permission where we will run into problems – rare birds, or next door to some people or an archaeological site. It costs too much money to go through the development process when you are swimming upstream," says Heller."We don't win 100 per cent. Right now the success rate is probably a little less than 50/50. It is just a fact of business."Although it is one of the biggest wind farm developers in Scotland, Falck isn't a household name. This is due in part to its business model, which involves selling part of the wind farm to the communities in which it develops them. In the UK, Falck works in partnership with Energy4All, a not-for-profit co-operative development group based in Barrow-in-Furness. With Falck and fellow developer RDC Scotland, community-owned co-operatives control parts of wind farms at Boyndie in Banffshire, Ben Aketil on Skye, Kilbraur, in Sutherland, and Fort Augustus in the Great Glen.Local ownership seems to help ease some of the bitterness caused by the development of wind farms. According to Heller, the co-op on Skye raised £700,000 quickly and easily. This was despite local opposition to another wind farm nearby planned by engineering group Amec."They are very keen on it," says Heller. "There is a wind farm next door to us that has been very problematic. It started a year before we did and they haven't even built it yet. It is kind of strange because the locals feel more involved with ours and at the same time don't like the wind farm right next door to us."He says local ownership is an answer to "nimbyism" (not in my back yard) only to a certain extent. But Heller seems relaxed about working with those who oppose him."Nimbyism isn't that rife in Scotland. Every project everywhere in the world is going to a have number of people that don't want it there. And if it is really intrusive, you won't get planning permission. After you build a wind farm, support usually goes up because people there think 'it is not as bad as I thought it would be'. It is consistently about three to one in favour."Part of the attraction is the rewards it brings to communities, not just in a green-loving, environmentally friendly way, but in hard cash. "The communities invest some money, we will guarantee a minimum rate of return about 6.5 per cent. "What we have done is created a financial product that in a normal wind year will give a 10 per cent return on investment. So it has been very, very popular. We have 2,500 people across our four projects in Scotland who have invested along with us." The approach is both effective for the community and for Falck as it defers further the costs of this capital-intensive investment. "To have the local community interested in the wind farm is a lot better than to say we have popped a lot of windmills in the community and we hope you like them," says Heller. He estimates it costs about £1.2 million to £1.3m to produce a megawatt of energy. Which is why support of banks is "critical". Heller says most of Falck's projects require the banks to lend about 70 per cent of the costs. Thankfully, wind farms are usually lucrative enough that banks are still lending – albeit it takes more of them to club together for bigger-scale projects. "Now we have to do a club deal, which is hugely more work for us. You have to arrange for each bank to take a piece of it. We get more or less what we wanted with twice the amount of work to get there," says Heller. Although Falck Renewables is headquartered in London, last year the group tripled the size of its office in Inverness to become the operations centre for its wind operations worldwide. While only about five are employed directly by the group, a further 25 to 30 work with Falck in Inverness as contractors. "The engineering resources in Scotland are quite exceptional. Recruiting people in Inverness has never been a problem," Heller says. "Not only is it a nice place to be, there are well-trained, well-educated engineering capabilities. "I think it is a holdover from the old oilfield days. There are lots of people there who want to stay there and there are lots of people who left who would like to come back."Recently reports from the government's Department of Energy and Climate Change found that the UK was falling far short of its renewables targets. It estimated the UK would only be producing 5 per cent of its energy by renewables by 2020 compared with a 15 per cent target agreed with the European Commission. Scotland, however, is racing ahead thanks to the SNP's pro- active approach. Ministers have approved 23 major energy projects since the SNP took office in May 2007.The Scottish Government wants to have 31 per cent of electricity coming from renewable sources by 2011, rising to 50 per cent by 2020. Experts say there are enough renewable energy projects built or with planning permission to beat that already."The best wind resource in the world is northern Scotland, but there is a very big capacity problem moving the power north to south," says Heller. This is not a problem facing Scotland alone. It is estimated the UK grid will require a £28 billion investment to distribute renewable energy. Heller says: "The system was never designed for large-scale developments where the wind is. You used to build the transmission system around coal plants. You used to plunk those down in the centre of the UK. Wind farms on the coast in high wind areas is not where the grid is built."
BACKGROUND
WILLIAM Heller, 52, set up Falck Renewables in 2002 thanks – in part at least – to the collapse of Enron.Heller was working for Edison International, the largest electric utility in California. In 2000, he moved to London when he was made president of Edison Europe. From there he started up its renewables division. In 2001, energy giant Enron collapsed, throwing several American utility companies into chaos. Edison decided to sell off parts to raise cash. One of those was Heller's renewables business. But rather than dismantle it, he bought the company.Backing the deal in 2002 was Gruppo Falck, a Milan-based group whose history as a steel maker led it to become an energy provider."The Falcks are old friends of mine going way back to my consulting days," says Heller, who worked at consulting firm Mckinsey."They had just reorganised their company and had decided to go into sustainable and green. I said, how would you like to back a wind business?"
By ERIKKA ASKELAND BUSINESS CORRESPONDENT
WILLI Heller hates to lose – although he admits he loses 50 per cent of the time. Luckily, the mild- mannered Canadian can still get by doing what he does, which is building wind farms.
Heller's company, Falck Renewables, has developed five onshore wind farms in Scotland and a further 12 are in the pipeline in the UK. Behind energy giants ScottishPower and Scottish & Southern Energy, the firm is the third-largest developer of wind farms in Scotland.The biggest part of his job is getting planning permission. Heller says the UK is the most expensive place in the world to get the green light to start building – as much as £750,000 for a medium-sized farm and that is even before you build a single turbine. And he should know, Falck Renewables – a division of Italian energy business Gruppo Falck – also develops wind farms in Spain, Italy, France, Turkey, Poland and India. The trick is not to go for the tough ones. "We are not foolish enough to get planning permission where we will run into problems – rare birds, or next door to some people or an archaeological site. It costs too much money to go through the development process when you are swimming upstream," says Heller."We don't win 100 per cent. Right now the success rate is probably a little less than 50/50. It is just a fact of business."Although it is one of the biggest wind farm developers in Scotland, Falck isn't a household name. This is due in part to its business model, which involves selling part of the wind farm to the communities in which it develops them. In the UK, Falck works in partnership with Energy4All, a not-for-profit co-operative development group based in Barrow-in-Furness. With Falck and fellow developer RDC Scotland, community-owned co-operatives control parts of wind farms at Boyndie in Banffshire, Ben Aketil on Skye, Kilbraur, in Sutherland, and Fort Augustus in the Great Glen.Local ownership seems to help ease some of the bitterness caused by the development of wind farms. According to Heller, the co-op on Skye raised £700,000 quickly and easily. This was despite local opposition to another wind farm nearby planned by engineering group Amec."They are very keen on it," says Heller. "There is a wind farm next door to us that has been very problematic. It started a year before we did and they haven't even built it yet. It is kind of strange because the locals feel more involved with ours and at the same time don't like the wind farm right next door to us."He says local ownership is an answer to "nimbyism" (not in my back yard) only to a certain extent. But Heller seems relaxed about working with those who oppose him."Nimbyism isn't that rife in Scotland. Every project everywhere in the world is going to a have number of people that don't want it there. And if it is really intrusive, you won't get planning permission. After you build a wind farm, support usually goes up because people there think 'it is not as bad as I thought it would be'. It is consistently about three to one in favour."Part of the attraction is the rewards it brings to communities, not just in a green-loving, environmentally friendly way, but in hard cash. "The communities invest some money, we will guarantee a minimum rate of return about 6.5 per cent. "What we have done is created a financial product that in a normal wind year will give a 10 per cent return on investment. So it has been very, very popular. We have 2,500 people across our four projects in Scotland who have invested along with us." The approach is both effective for the community and for Falck as it defers further the costs of this capital-intensive investment. "To have the local community interested in the wind farm is a lot better than to say we have popped a lot of windmills in the community and we hope you like them," says Heller. He estimates it costs about £1.2 million to £1.3m to produce a megawatt of energy. Which is why support of banks is "critical". Heller says most of Falck's projects require the banks to lend about 70 per cent of the costs. Thankfully, wind farms are usually lucrative enough that banks are still lending – albeit it takes more of them to club together for bigger-scale projects. "Now we have to do a club deal, which is hugely more work for us. You have to arrange for each bank to take a piece of it. We get more or less what we wanted with twice the amount of work to get there," says Heller. Although Falck Renewables is headquartered in London, last year the group tripled the size of its office in Inverness to become the operations centre for its wind operations worldwide. While only about five are employed directly by the group, a further 25 to 30 work with Falck in Inverness as contractors. "The engineering resources in Scotland are quite exceptional. Recruiting people in Inverness has never been a problem," Heller says. "Not only is it a nice place to be, there are well-trained, well-educated engineering capabilities. "I think it is a holdover from the old oilfield days. There are lots of people there who want to stay there and there are lots of people who left who would like to come back."Recently reports from the government's Department of Energy and Climate Change found that the UK was falling far short of its renewables targets. It estimated the UK would only be producing 5 per cent of its energy by renewables by 2020 compared with a 15 per cent target agreed with the European Commission. Scotland, however, is racing ahead thanks to the SNP's pro- active approach. Ministers have approved 23 major energy projects since the SNP took office in May 2007.The Scottish Government wants to have 31 per cent of electricity coming from renewable sources by 2011, rising to 50 per cent by 2020. Experts say there are enough renewable energy projects built or with planning permission to beat that already."The best wind resource in the world is northern Scotland, but there is a very big capacity problem moving the power north to south," says Heller. This is not a problem facing Scotland alone. It is estimated the UK grid will require a £28 billion investment to distribute renewable energy. Heller says: "The system was never designed for large-scale developments where the wind is. You used to build the transmission system around coal plants. You used to plunk those down in the centre of the UK. Wind farms on the coast in high wind areas is not where the grid is built."
BACKGROUND
WILLIAM Heller, 52, set up Falck Renewables in 2002 thanks – in part at least – to the collapse of Enron.Heller was working for Edison International, the largest electric utility in California. In 2000, he moved to London when he was made president of Edison Europe. From there he started up its renewables division. In 2001, energy giant Enron collapsed, throwing several American utility companies into chaos. Edison decided to sell off parts to raise cash. One of those was Heller's renewables business. But rather than dismantle it, he bought the company.Backing the deal in 2002 was Gruppo Falck, a Milan-based group whose history as a steel maker led it to become an energy provider."The Falcks are old friends of mine going way back to my consulting days," says Heller, who worked at consulting firm Mckinsey."They had just reorganised their company and had decided to go into sustainable and green. I said, how would you like to back a wind business?"
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