Tuesday, 7 July 2009

Biodiesel Demand May Rise on Import Tax Cut -Official

MUMBAI -- The Indian government's decision to cut the import tax on biodiesel in the federal budget will help bring down prices and increase consumption, a senior industry official said Monday.
In the federal budget, Finance Minister Pranab Mukherjee proposed to reduce the basic customs duty on biodiesel to 2.5% from 7.5%.
Biodiesel units are likely to import more and increase their supplies to the market as a result, Sandeep Chaturvedi, president of Biodiesel Association of India, told Dow Jones Newswires.
Mr. Mukherjee also proposed to exempt blended fuels such as petrol or diesel mixed with ethanol or biodiesel from excise tax, a type of tax levied on goods produced within the country.
Until now, only biofuels were exempt from excise tax and not blended fuels.
Write to Dilipp Nag at dilipp.nag@dowjones.com

Wood Pellets Catch Fire as Renewable Energy Source


Some of the fastest growing sources of renewable energy in the world are the wind, the sun -- and the lowly wood pellet.
European utilities are snapping up the small combustible pellets to burn alongside coal in existing power plants. As a global marketplace emerges to feed their growing appetite for pellets, the Southeastern U.S. is becoming a major exporter, with pellet factories sprouting in Florida, Alabama and Arkansas.
Wood pellets -- cylinders of dried shredded wood that resemble large vitamins -- are the least expensive way to meet European renewable-energy mandates, utility executives and industry consultants say.
Made from fast-growing trees or sawdust, pellets are a pricier fuel than coal, but burning them is a less-expensive way to generate electricity than using windmills or solar panels. Burning pellets releases the carbon that the trees would emit anyway when they die and decompose, so the process is widely regarded as largely carbon neutral. In contrast, carbon is locked away in coal and is only released once the coal is dug out of the earth and burned.
The wood-pellet market is booming because the European Union has rules requiring member countries to generate 20% of their electricity from renewable sources by 2020. Europe imported €66.2 million (about $92.6 million) of pellets and other wood-based fuels in the first three months of 2009, up 62% from the same period a year earlier, according to the EU's statistical arm.

Government mandates are essential to the increasing use of pellets in power generation, and the growing global pellet trade, experts say.
"You are looking at a totally artificial market," said Christian Rakos, chief executive of Propellets, an Austria-based trade group of pellet producers. "No power plant would consider using pellets for one minute if they didn't have to do it."
Still, Europe's eagerness for more pellets has turned the U.S. into an energy exporter. Until recently, there were only about 40 pellet factories in the U.S., which produced about 900,000 tons a year, mostly for heating homes.
But in May 2008, Green Circle Bio Energy Inc. opened a pellet plant in Cottondale, Fla., that produces 500,000 tons of pellets a year; it ships them by rail to the coast and then on to Rotterdam, Netherlands. The company, owned by Swedish concern JCE Group AB, wants to build another big plant in the U.S., said Olaf Roed, chief executive of Green Circle.
Another 500,000-ton facility in Selma, Ala., owned by Dixie Pellet LLC, also opened last year. And Phoenix Renewable Energy LLC plans to break ground next month on a 250,000-ton-a-year pellet plant in Camden, Ark., along with a 20-megawatt power plant run off tree scraps that will feed heat to the pellet plant. The $100 million facility's output for five years has been contracted to go to Europe, and Phoenix is working on another five facilities.
Pellets can either be made out of sawdust left over from lumber production or from soft-wood trees such as pine. These aren't growing in wild forests, but in industrial plantations where they can be harvested easily and often.
Photo Journal
Jason Henry for The Wall Street Journal
Green Circle employees race to repair one of the pellet mill's dies that give the pellets their compacted cylindrical shape at the plant in Cottondale, Fla., July 1.
At Green Circle's Florida facility, bark is stripped off the tree and burned to generate steam used in making the pellets. The tree itself is cut up in a wood chipper, dried and hammered into a powder, which is formed into pellets under very high pressure.
It is easy for these pellet plants to find raw material. The pulp and paper industry is declining, and the housing slump has sapped the need for hardwood. Forest owners are ecstatic that pellet plants are stepping in.
"We are irrationally exuberant," said Lee Laechelt, executive vice president of the Alabama Forest Owners Association.
Australia, New Zealand, Argentina and Vietnam are also shipping pellets to Europe, as are Canada and South Africa, said Helmer Schukken, CEO of GF Energy BV, a Rotterdam-based trader.
Wood pellets are becoming the newest global commodity, with prices posted on an Amsterdam energy exchange, Mr. Schukken said. "It is becoming like trading coal."
That will make it easier for England's Drax Group PLC, which is installing equipment at its giant 4,000-megawatt coal-fired power plant in North Yorkshire to use pellets in place of coal for up to 10% of the fuel. Pellet makers say Drax is lining up contracts in the U.S. Other big buyers include Dutch power company Essent NV, which is being acquired by Germany's RWE AG, and French GDF Suez SA's Electrabel unit.
Of course, U.S. utilities may soon be as interested as their European counterparts in burning pellets instead of coal. California, which has a goal of producing 33% of its electricity from renewable sources by 2020, is looking at using wood products in coal plants.
If a federal renewable energy standard is approved, "we won't be shipping pellets overseas," said Phoenix Renewable Energy's development director, Steve Walker. "We'll be shipping them domestically."
Write to Russell Gold at russell.gold@wsj.com

So Much for 'Energy Independence'


Whenever you read about ethanol, remember these numbers: 98 and 190.
They offer an essential insight into U.S. energy politics and the debate over cap-and-trade legislation that recently passed the House. Here is what the numbers mean: The U.S. gets about 98 times as much energy from natural gas and oil as it does from ethanol and biofuels. And measured on a per-unit-of-energy basis, Congress lavishes ethanol and biofuels with subsidies that are 190 times as large as those given to oil and gas.
Those numbers come from an April 2008 report by the Energy Information Administration: "Federal Financial Interventions and Subsidies in Energy Markets 2007." Table ES6 lists domestic energy sources that get subsidies. In 2007, the U.S. consumed nearly 55.8 quadrillion British Thermal Units (BTUs), or about 9.6 billion barrels of oil equivalent, in natural gas and oil. That's about 98 times as much energy as the U.S. consumed in ethanol and biofuels, which totaled 98 million barrels of oil equivalent.
Meanwhile, ethanol and biofuels are getting subsidies of $5.72 per million BTU. That's 190 times as much as natural gas and petroleum liquids, which get subsidies of $0.03 per million BTU.
The report also shows that the ethanol and biofuels industry are more heavily subsidized -- in total dollar terms -- than the oil and gas industry. In 2007, the ethanol and biofuels industries got $3.25 billion in subsidies. The oil and gas industry got $1.92 billion.
Despite these subsidies, the ethanol lobby is queuing up for more favors. And they are doing so at the very same time that the Obama administration and Congress are pushing to eliminate the relatively modest subsidies for domestic oil and gas producers. Democrats want to cut drilling subsidies while simultaneously trumpeting their desire for "energy independence."
The cap-and-trade bill passed by the House aims to "create energy jobs" and "achieve energy independence." Meanwhile, Democrats are calling to eliminate drilling subsidies that have encouraged advances in technology that have opened up vast new U.S. energy sources. These advances have made it profitable to extract natural gas from the Barnett Shale deposit in Texas and the Marcellus in Pennsylvania -- deposits once thought too expensive to tap.
President Barack Obama's 2010 budget calls for the elimination of two tax breaks: the expensing of "intangible drilling costs" (such as wages, fuel and pipe), which allows energy companies to deduct the bulk of their expenses for drilling new wells; and the allowance for percentage depletion, which allows well owners to deduct a portion of the value of the production from their wells. Those breaks provide the bulk of the $1.92 billion in oil and gas subsidies.
In May, Mr. Obama called the tax breaks for the oil and gas industry "unjustifiable loopholes" that do "little to incentivize production or reduce energy prices."
That's flat not true. The deduction for intangible drilling costs encourages energy companies to plow huge amounts of capital into more drilling. And that drilling has resulted in unprecedented increases in natural gas production and potential.
An April Department of Energy report estimated that the newly available shale resources total 649 trillion cubic feet of gas. That's the energy equivalent of 118.3 billion barrels of oil, or slightly more than the proven oil reserves of Iraq.
Eliminating the tax breaks for drilling will make natural gas more expensive. Tudor, Pickering, Holt & Co., a Houston-based investment-banking firm, estimates that eliminating the intangible drilling cost provision could increase U.S. natural gas prices by 50 cents per thousand cubic feet. Why? Because without the tax break, fewer wells will be drilled and less gas will be produced. The U.S. consumes about 23 trillion cubic feet of gas per year. Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.
Amid all this, Growth Energy, an ethanol industry front-group, is pushing the Environmental Protection Agency to adopt a proposal that would increase the amount of ethanol blended into gasoline from the current maximum of 10% to as much as 15%.
That increase would be a gift to corn ethanol producers who have never been able to make a go of it despite decades of federal subsidies and mandates. Growth Energy is also pushing the change even though only about seven million of the 250 million motor vehicles now on U.S. roads are designed to run on fuel containing more than 10% ethanol.
There is plenty of evidence to suggest that gasoline with 10% ethanol is already doing real harm. In January, Toyota announced that it was recalling 214,570 Lexus vehicles. The reason: The company found that "ethanol fuels with a low moisture content will corrode the internal surface of the fuel rails." (The rails carry fuel to the engine injectors.) Furthermore, there have been numerous media reports that ethanol-blended gasoline is fouling engines in lawn mowers, weed whackers and boats.
Lawyers in Florida have already sued a group of oil companies for damage allegedly done to boat fuel tanks and engines from ethanol fuel. They are claiming that consumers should be warned about the risk of using the fuel in their boats.
There is also corn ethanol's effect on food prices. Over the past two years at least a dozen studies have linked subsidies that have increased the production of corn ethanol with higher food prices.
Mr. Obama has been pro-ethanol and anti-oil for years. But he and his allies on Capitol Hill should understand that removing drilling incentives will mean less drilling, which will mean less domestic production and more imports of both oil and natural gas.
That's hardly a recipe for "energy independence."
Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'" (PublicAffairs, 2008).

Electric cars forced to make noise

Electric car manufacturers may be forced to add noise emitting devices to vehicles in a bid to stop accidents involving pedestrians, according to a new Japanese government review.

By Danielle Demetriou in Tokyo Published: 11:32AM BST 06 Jul 2009

The silent hum of hybrid petrol-electric vehicles, which recently became number one best-selling cars in Japan, has been deemed dangerous to pedestrians, in particular the visually impaired.
When switched from fuel to battery mode, the vehicles make a barely perceptible noise, prompting campaigners to urge the installation of noise devices to prevent accidents.

A new government panel of scholars, consumers, police, vision-impaired groups and automobile industry leaders has been formed in Japan to discuss whether the eco-friendly cars should be installed with compulsory noise-making devices.
"We have received opinions from automobile users and vision-impaired people that they feel hybrid vehicles are dangerous," said a transport ministry official.
"Blind people depend on sounds when they walk, but there are no engine sounds from hybrid vehicles when running at low speed" and on the electric motor, he added.
A report will be drawn up by the panel by the end of the year and their proposals discussed at the Transport Ministry's committee on automobile safety before it is drafted into legislation.
High oil prices and growing concern about global warming emissions have fuelled the soaring popularity of environmentally-friendly hybrid vehicles, particularly among Japanese car owners.
Toyota's latest recession-defying Prius last month became the best-selling car in Japan's domestic market, selling 22,292 vehicles, more than 6,000 more than the same month last year, according to the Japan Automobile Dealers Association.
Despite their growing popularity, it is not the first time that safety issues surrounding the fuel-efficient noiseless cars has been raised by campaigners.
The United States government is currently examining a new bill aiming to establish a minimum level of sound for vehicles that do not use internal-combustion engines to prevent accidents.
Similar steps are also being considered by the European Commission in a bid to alert pedestrians to the presence of the near- silent cars.

European Hot Air

The economic reality of climate-change policy is sinking in at last.
From today's Wall Street Journal Europe.

Climate change is set to figure prominently in this week's Group of Eight summit in Italy, but take any pronouncements about greenhouse-gas emissions targets with a grain of salt. While leaders may still think it's good politics to sing from the green hymnal, other realities are finally starting to sink in, especially in Old Europe. To wit: Restrictions on greenhouse-gas emissions involve huge costs for uncertain gains and are just what economies in recession don't need.
Concerns about high costs and lost jobs have already threatened carbon-emissions control plans in Australia and New Zealand, and to make sure cap-and-trade would pass in the U.S. House of Representatives, supporters had to push through the legislation before anyone could read it. The fraying of the anti-carbon consensus in Western Europe is especially striking. Polls consistently show that voters in most Western European countries support attempts to ameliorate climate change, at least in the abstract. The EU implemented a cap-and-trade Emissions Trading Scheme in 2005.
But that enthusiasm may be reaching its limit. Governments in industry-heavy countries are now less willing to sacrifice jobs for cooler temperatures. Germany's generally environmentalist Chancellor Angela Merkel insisted on exemptions for her country's industry from December's EU climate package, which pledged to reduce carbon emissions by 20% below 1990 levels by 2020. Germany also plans to build several dozen coal-fired power plants in the next few years.
Italy insisted on a clause in the December climate deal that requires the EU to renegotiate its climate policy after the United Nations summit in Copenhagen later this year. That amounts to a veto since China and India aren't expected to sign up for aggressive emissions targets; any renegotiated EU deal is likely to contain even more loopholes and exemptions to keep from denting European competitiveness.
Just as telling, Europe has been at best half-hearted in meeting its emissions-reduction targets under the 1997 Kyoto Protocol. To the extent Europe appears on track to meet its targets, it's largely because warmer weather and higher market prices for energy have driven consumption down.
Credit a deteriorating economy for this about-face. Businesses and unions finally are starting to speak out against intrusive and expensive emissions regulations. In December, Phillipe Varin, chief executive of Corus, Europe's second-largest steel producer, told the London Independent that the cost of carbon credits and new technologies needed to reduce emissions would destroy European steel production, forcing manufacturing overseas.
Jaroslaw Grzesik, deputy head of energy at Poland's Solidarity trade union said last month that the union estimated the EU's climate policy would cost 800,000 European jobs. Before the December negotiations, the London-based think tank Open Europe estimated the EU climate package would cost governments, businesses and householders in the EU-25 more than €73 billion ($102 billion) a year until 2020. No wonder leaders decided to water it down.
Meanwhile, the supposed economic benefits of climate-change amelioration are evaporating. In Germany, government subsidies for installing solar panels -- and, it was presumed, thereby creating domestic manufacturing jobs -- backfired when it turned out that it was cheaper to make solar panels in China. A recent paper by Gabriel Calzada Álvarez, an economics professor at Universidad Rey Juan Carlos, said that since Spain starting investing in "green jobs" policies in 2000, the country has lost 110,500 jobs in other parts of the economy. That amounts to 2.2 jobs lost for every new "green job" created.
This has politicians worried. They might have been willing to sacrifice a few jobs when they signed Kyoto in 1997. But economic times were flush then. Now a global slowdown is forcing a rethink on whether emissions control is worth the cost. With the scientific debate about the causes, effects and solutions of climate change growing more vigorous, that's a question worth asking.
Despite all the backtracking in practice, climate rhetoric is still alive and well. Sweden, which assumed the EU presidency last week, promises more action on emissions control. Gordon Brown, Nicolas Sarkozy and other leaders continue to talk a good game. Mr. Brown has even proposed a $100 billion-a-year fund to help countries like China and India clean up their emissions acts. Good luck getting that passed in the current fiscal and economic environment.
In other words, Western European leaders are the latest to discover that climate-change talk is cheap, but carbon-emissions regulation is expensive. That might be bad news for green activists, but it's very good news for Europeans worried about their jobs and their economy.
Printed in The Wall Street Journal, page A13

UK retailers criticised over plastic bags

Bag for life manufacturer says major stores do not prioritise reducing plastic bag use and the UK lags behind other countries

Rebecca Smithers, Consumer affairs correspondent
guardian.co.uk, Monday 6 July 2009 16.42 BST

The world's largest manufacturer of "bags for life" has criticised UK retailers for not doing more to restrict the use of plastic carrier bags and warned that the UK is lagging behind other countries after failing to agree a national policy involving an outright ban.
Supreme Creations, based in India, makes millions of cotton and jute bags every year for retailers such as Tesco, Sainsbury's, Boots, the Co-operative, Debenham's, the Energy Saving Trust, Oxfam and Topshop, as well as celebrity handbag designer Anya Hindmarch who designed the sought after "I'm not a plastic bag" bag for Sainsbury's.
Last night after receiving an environmental award from the Prince of Wales's Business in the Community charity, the founder of the company said the "crucial environmental issue" appeared not to be a priority for British retailers and urged them to do more to catch up with international competitors.
Dr R Sri Ram, who founded Supreme Creations 12 years ago, said: "The UK lags way behind many other countries in the world on reducing plastic bag usage. Supreme Creations has really seen this issue drop off retailers' agendas recently, perhaps due to economic difficulties.
"However, it is the responsibility of retailers to work with consumers to come up with innovative alternatives to help people switch from environmentally damaging plastic bags."
Unlike Ireland, India, South Africa, most of Europe and parts of the USA, the UK has not banned or imposed a tax on single-use bags. But some retailers have been more pioneering than others with Tesco, the Co-op and Boots each producing their own reusable bags.
The Department for Environment, Food and Rural Affairs will shortly announce the progress made towards meeting a national target of 50% reduction in plastic bag usage.
Its figures show that while 45% of shoppers say they have bought a bag for life, only 12% use one regularly.
A Defra spokesperson said: "Shoppers in the UK each get through 13,000 carrier bags in their lifetime. We can't continue this – it is a huge waste and a visible symbol of our throwaway society.
"Retailers and the public have already made great steps in the right direction as they have reduced the amount of bags given out by 26% since 2006, but we do need to do more. In support of this the government launched the 'Get a bag habit' campaign earlier this year aiming to help everyone to reuse their bags."
In April 2007, Modbury in Devon became the first European town to ban plastic bags as a result of a ground-breaking campaign led by Devon camerawoman Rebecca Hoskings. Supermarkets, meanwhile, have relied on voluntary action by consumers, but despite numerous bags for life offers, free plastic bags are generally still available on demand.
According to a BBC study, 58% of the public would like a ban on plastic bags, while a recent report from the Institute of Grocery Distribution showed that nine in 10 consumers feel it is their duty to contribute to a better society and environment, while 89% say all products should use recycled packaging.
Last week, the Welsh assembly asked for public views on its plans to ban free plastic bags in the country. The proposal, which is based on a highly successful move in Ireland, will involve putting a 15p charge on shopping bags to encourage people to reuse them and so reduce unnecessary waste.
Ireland introduced a charge of 15 cents in 2002 and has since seen a 90% reduction in single use carrier bags.
Tesco, the UK's biggest supermarket chain, said it had reduced its plastic bag usage by awarding customers reward points. "We believe encouraging customers to reuse bags and rewarding them for doing so is more effective and sustainable than the alternative approach sometimes advocated of taxing bags or charging for them.
"We believe that climate change will only be tackled successfully if people are encouraged to change their behaviour willingly."

All plastic welcome as new factory set to revolutionise Scots recycling

Published Date: 07 July 2009
By Jenny Haworth

SCOTS could be able to throw all types of plastic from yoghurt pots to food trays into the recycling bin within a year under plans revealed to The Scotsman.
Currently most councils only collect plastic milk bottles. However, this is set to change because a factory that will be able to recycle a wide variety of plastics is to be built in Scotland for the first time.It is hoped the new plant will create a local market for plastic rubbish, which will in turn encourage councils to start collecting it rather than sending it to landfill.All 12,500 tonnes of plastic currently collected for recycling in Scotland is dealt with overseas, mainly in Asia, or elsewhere in the UK. However, experts say waste plastic will become a valuable resource, and Scotland must make sure it can benefit, at the same time as meeting ambitious recycling targets.It is hoped it will help end confusion among consumers who often struggle to know which types of plastic can be recycled. Wrap Scotland has invited bids for £5 million funding towards a mixed plastics reprocessing factory, and anticipates the winning applicant will build the facility within about a year.A spokesman said it should pave the way for a fourfold increase the amount of plastic recycled in Scotland. An estimated 200,000 tonnes of plastic is thrown away across the country each year – enough to fill Hampden Park.Wrap Scotland hopes 40,000 tonnes will be recycled when the new factory is built.Iain Gulland, director of Wrap Scotland, said: "I think this will be the start of a revolution in plastics reprocessing here in Scotland."He said it made sense to deal with the materials as close as possible to where they are produced, instead of shipping them to Asia. In the past there has been criticism of the carbon emissions produced by transporting materials for recycling overseas.He added: "Householders want to be able to recycle their yoghurt pots and margarine tubs in the same way as other packaging materials such as glass, plastic bottles and cans. It can be confusing, and adding more plastics to recycling collections will make it easier for everyone."Plastic can be recycled into many types of product, from fleeces to scaffolding boards, but Mr Gulland said the ideal scenario would be for packaging to be turned back into packaging. Wrap Scotland can fund up to 30 per cent of the final cost of the new recycling facility, meaning the finished plant is likely to cost about £15m to £20m.A spokesman said there was a possibility two smaller plants could be built instead of one larger one, because it may only be capable of reprocessing a smaller variety of plastics.However, he added that the ideal scenario would be that all plastics could be dealt with – including materials that are tougher to reprocess such as clingfilm and carrier bags.The spokesman said it was hoped that once the plant was established, local authorities would start collecting all the different types of plastics because they would be confident there was demand for them. The funding for the new recycling plant has been provided through the Scottish Government's Zero Waste Fund.Giving your old plastic items new life is possible01: PET: Drinks bottles, salad trays – these can be turned into drinks bottles, polyester fleeces, flooring.02: HDPE: Milk bottles, shampoo and detergent bottles – can be turned into more milk bottles, shampoo and detergent bottles, or into bins, fencing, street or garden furniture.03: PVC: Window and door frames, cling films, piping – can be turned into flooring, more window frames or plastic hoses.04: LDPE: Carrier bags, bin liners, packaging films – can be turned into more bin liners or plastic sheeting.05: PP: Margarine tubs, ready meal trays, carpets and upholstery – can be turned into buckets and pallets. 06: PS: Yoghurt pots, take-away containers, plastic cutlery, CD cases, protective packaging – can be turned into coat hangers, toys, plant pots and garden furniture.07: Other: Car parts, electronic equipment, water cooler bottles – these can be turned into other car parts or plastic lumber.