Friday, 15 January 2010

Clean Energy Sources: Sun, Wind and Subsidies

As Governments Increase Spending and Support for Renewable Power, Even Fans Wonder If Aid Could Be More Efficient

In frigid water four miles off England's east coast, a floating crane is installing the last of 48 wind turbines. The 40-story-tall pinwheels are driven by two plentiful resources: ocean breezes and public funds.
Government subsidies are turning renewable energy into big business. Although fossil fuels remain by far the dominant energy source and generate big profits, in some markets government price supports are making renewable power a less-risky corporate bet than conventional fuels.

Renewable energy is becoming big business and one of the biggest bets these days is offshore wind farms. WSJ's environment columnist Jeff Ball reports.
Wind farms "have a better return on investment than coal plants," says Anders Eldrup, chief executive of Dong Energy, a company based in Denmark that is shutting down coal-fired power plants and building wind farms, including this one in the U.K., called Gunfleet Sands. But that is true only in places with hefty subsidies, he says. "Without that, they wouldn't work."
Critics say subsidies of any kind waste taxpayer dollars. But even fans of renewable energy worry this public largesse is costing too much. They say renewable energy deserves subsidies to help it mature to the point where it can compete against fossil fuel. But they are concerned that society, in its haste to roll out wind turbines, solar panels and other forms of clean power, is spending billions of dollars without spurring as much renewable energy as it could. The recession has worsened the waste, they say, as governments increase subsidies to meet renewable-energy targets and create "green" jobs.
Some renewable-energy subsidies have been "enormously wasteful," says Michael Liebreich, chief executive of Bloomberg New Energy Finance, a London-based research firm. "As you get more and more renewable energy, the state is setting energy prices," he says. "That worries me enormously."
Common government practice today, especially in Europe, is to guarantee renewable-energy providers that they can sell their power for more than the normal electricity rate -- often several times more. To trim costs, some governments are experimenting with parsing out subsidies, auction-style, to whichever renewable-energy firms are willing to accept the least aid.

Virtually all energy is subsidized. Fossil fuels, which provide about 80% of total global energy, have enjoyed favorable tax breaks and other incentives for decades. The International Energy Agency estimates that fossil-fuel subsidies in developing countries -- government money to reduce the price of energy -- totaled $310 billion in 2007, the most recent year for which the IEA has statistics. Last fall, the Group of 20 leading economies called for phasing out fossil-fuel subsidies world-wide.
Yet for every unit of energy renewable energy produces, it is often subsidized more heavily than fossil fuel. Government spending and price supports accounted for about one-third of the roughly $145 billion invested world-wide in clean energy in 2009, New Energy Finance estimates. Though renewable energy gets fewer subsidy dollars than the IEA says fossil fuels receive, the price supports are covering a larger portion of renewable energy firms' costs.
Many in the renewable-energy industry say it is high time they got that extra help. The industry needs the "economies of scale that make this a viable and effective source of electricity," says Robert Beisner, vice president for the U.S. unit of SolarWorld, a solar-panel maker. It is planning to expand its U.S. factories to feed global demand driven by incentives.
The company is based in Germany, which has more solar panels in use than any other country despite often-overcast skies. That is because Germany offered a sweet deal: a "feed-in tariff." It guarantees renewable-energy producers an above-market price for their power and that they can sell the power into the electrical grid at that price for 20 years.
Many countries have adopted feed-in tariffs; some are as much as five times the wholesale price of power. The governments typically reduce the rate by a few percentage points yearly. But the cost of renewable energy is falling far more quickly than that; the lifetime cost of producing some types of solar power fell 50% during 2009; most other renewable technologies fell 10%, New Energy Finance says. Moreover, once a renewable-energy producer has locked in a rate for a particular project, it gets that rate for the full life of the subsidy.
The upshot, analysts say: A feed-in tariff can guarantee a renewable-energy producer rising profits that can top 20%, far more than most conventional energy projects.
In Germany, renewable energy from projects that qualified for feed-in tariffs between 2004 and 2008 will cost consumers [euro ]122.3 billion (about $175 billion) between 2008 and 2030 -- 46% more than the same amount conventional energy would cost, New Energy Finance predicts. In Spain, renewable energy from projects started under the country's feed-in tariff between 2006 and late 2008 will cost [euro ]53 billion over the Spanish tariff's 25-year life, the firm projects, a 75% premium over the likely cost of the same amount of conventional power.
The U.S. is a potentially massive renewable-energy market. It has windy plains, sunny deserts and areas rich in other renewable resources, such as wood. But it has lower rates of renewable-energy production than much of Europe, largely because the U.S. has smaller subsidies.
Now, as part of the Obama administration's stimulus plan, renewable-energy producers are eligible for cash grants totaling 30% of the cost of projects they start this year -- however high those costs go.
Before the stimulus, the government subsidized renewable-energy producers with tax credits. But financial institutions typically partnered with small renewable-energy firms and took a cut of the government money, reducing the amount left to fund projects.
So the temporary cash grant is more efficient, says Jason Grumet, president of the Bipartisan Policy Center, a Washington think tank. Still, he says, even the grant program is "probably providing a much greater subsidy than particular projects require."
The Obama administration says renewable-energy companies face a strong market pressure to minimize their costs: They have to compete with falling natural-gas prices. "What we're seeing is the market price keeping the capital cost of these projects down," says Matthew Rogers, the Energy Department official overseeing energy spending under the stimulus plan.
Some governments are experimenting with trimming subsidies by auctioning them to the lowest bidder. California and China have dabbled with this approach. But those auctions remain the exception rather than the rule. More often, renewable-energy subsidies are rising. A case in point is the London Array, a U.K. project that, if built, would be the biggest single offshore wind farm in the world.
It would sit off the coast of London, in the Thames Estuary, the same water body where Dong Energy is finishing the Gunfleet Sands wind farm. As the recession set in, companies involved in the project, including Dong, told the U.K. government they needed more aid. Early last year, the government agreed to increase the subsidy developers will get for all new offshore wind farms in the U.K.
Dong plans to start offshore construction on the project next year. Says the company's Mr. Eldrup: "The government listened to us."
Write Jeffrey Ball at Discuss this topic, and see a video about offshore wind farms, at

Car giants giving false hope of emission-free future, report says

Ben Webster, Environment Editor

Car companies are raising false hopes of emission-free motoring in order to continue profiting from large, fuel-hungry vehicles, according to a study.
Cars powered by hydrogen fuel cells are not expected to be available widely until after 2050 because of the high cost of the platinum in their catalysts. Battery-powered vehicles will also remain a niche product because of their limited battery life.
The University of Oxford study, edited by Sir David King, the Government’s former chief scientific adviser, found that the most effective way of reducing overall emissions from motoring would be a “drastic downscaling of both size and weight” of conventional petrol and diesel cars.
It urges the Government to impose higher taxes on drivers of large, inefficient vehicles and to reinvest the proceeds in better public transport and measures to encourage walking and cycling. The authors accuse car manufacturers of exaggerating the potential for switching to hydrogen or battery-powered vehicles in the next decade.

Last September seven manufacturers — Daimler, Ford, General Motors, Honda, Hyundai, Kia, Renault-Nissan and Toyota — published a joint statement saying that they “strongly anticipate that from 2015 onwards a quite significant number of electric vehicles with fuel cell could be commercialised. This number is aimed at a few hundred thousand units.”
However, there are only a few hundred fuel cell vehicles on the roads today and car companies have given them to celebrities, such as the actress Jamie Lee Curtis, who drives a Honda fuel cell, in order to maximise the publicity that they receive.
Oliver Inderwildi, research fellow at Oxford’s Smith School of Enterprise and Environment and the report’s lead author, called existing fuel cell cars were a marketing gimmick.
“Car companies need to be more honest about the choices we are facing. Their argument is that people can continue to drive 4X4s because in a couple of years they will be able to switch to a fuel cell 4X4,” he said “We think that won’t happen and that we must instead reduce fuel consumption by going for lighter and smaller cars.”
He said that a fuel-cell car needed about 50 grams of platinum, which would cost about £2,500. The price of the metal would be driven up by an increase in fuel-cell production.
Mr Inderwildi dismissed claims by some manufacturers, including General Motors, that they could cut the amount of platinum in a fuel cell to 30g or less.
“We are convinced that that’s another marketing move rather than something ready for mass production,” he said.
The report also found that fuel cells were subject to corrosion, giving them a much shorter life than conventional engines. The authors point out that emissions savings depend on whether the electricity or hydrogen came from renewable sources. At present, most is produced from burning fossil fuels.
The report says: “We conclude that road transport will continue to rely on the internal combustion engine. Electric vehicles will remain a small percentage of the overall fleet composition up to the medium to long-term. Widespread use of hydrogen transport is unlikely, except perhaps in the long term after 2050.”
The report predicts that the number of cars will double to two billion globally by 2030, largely because of growing demand from China and India.
A spokesman for the Society of Motor Manufacturers and Traders said that the Oxford study was too pessimistic.
He said: “We believe there will be mass market electric vehicles by 2020 and mass market fuel cell vehicles by 2025 to 2030, assuming technology progresses at the expected rate.”

British coastal cities threatened by rising sea 'must transform themselves'

Hull and Portsmouth could be dramatically remodelled, suggests report, Friday 15 January 2010
Hull could be transformed into a Venice-like waterworld and Portsmouth into a south coast version of Amalfi, engineers and architects have claimed in a study of options for developing Britain's coastal cities in the face of rising sea levels.
The Institution of Civil Engineers and the Royal Institute of British Architects yesterday warned the future of cities including London, Bristol and Liverpool was at risk from seas which the Environment Agency predict could rise by as much as 1.9m by 2095 in the event of a dramatic melting of the Greenland ice sheet.
The report, Facing up to Rising Sea Levels. Retreat? Defence? Attack?, suggests swaths of Hull and Portsmouth's city centres could be allowed to flood over the next 100 years and large parts of the populations moved out.
In a model that explores managed retreat from the coast in some areas, Hull's historic city centre would be limited to an island reached by bridges and Venetian-style water taxis, while in Portsmouth large parts of Portsea island would be given back to the sea while new "hillside living" developments would be built on densely packed hillside terraces, akin to the towns of Italy's Amalfi coast. "The scenarios we have created are extreme, but it is an extreme threat we are facing," said Ruth Reed, Riba president. "Approximately 10 million people live in flood-risk areas in England and Wales, with 2.6m properties directly at risk of flooding."
Other options include building out into rising waters using piers and platforms to create new habitable space – a strategy known as "attack". In Hull this could involve floating disused oil rigs up the Humber and reusing them for offices, homes and university buildings, while in Portsmouth two-storey piers could be built with the lower tier used for traffic and the top tier used for pedestrian space.
Architect David West, one of the report's author's, admitted the proposals were "blue sky thinking" and uncosted, but said they had the potential to relieve pressure for housing on inland sites. "I think the concept of arriving at Hull as if you were arriving at Venice airport and taking a boat into the city is really exciting."
The proposals were met with scepticism in Portsmouth. "A retreating coastline in this area would have a significant detrimental impact on the internationally designated harbours," said Bret Davies, a coastal strategy manager at Portsmouth city council.
The Environment Agency's coastal policy adviser, Nick Hardiman, warned that extending into the sea was likely to be too expensive and structures were not likely to be sustainable.In the next financial year the Environment Agency will spend £570m on building and maintaining flood defences.

Banks attacked for failures to meet Equator Principles on environment

Campaign groups say funding is still going to projects that damage planet

Nick Mathiason, Thursday 14 January 2010 18.05 GMT
The world's biggest banks are continuing to lend money to some of the most environmentally damaging energy and infrastructure projects despite a supposed groundbreaking protocol they agreed to seven years ago that was meant to prevent such abuses.
The claim is in a letter sent to 60 banks, including Barclays and Royal Bank of Scotland, by 86 campaign groups from 27 countries pouring scorn on the Equator Principles, signed to great fanfare in 2003. It comes as banks are come under the spotlight for funding huge hydrocarbon energy projects that fuel climate change.
"We find ourselves continuing to campaign against the very same projects that we expected the principles to prevent or significantly improve," the letter states. "Supersized dams blocking life-supporting rivers, driving thousands of people from their submerged villages and lands; huge mining projects scarring entire mountains and polluting rivers and seas with their waste; oil and gas pipelines carrying their toxic load straight through devastated forests and threatening marine sanctuaries; coal power plants belching out millions of tons of greenhouse gases into our already fatigued atmosphere; enormous paper mills with insatiable appetites that devour the last wilderness areas, etc. Much to our disappointment, the principles allow for all of these disgraces to proceed, only now in an 'Equator compliant' mode."
Banks are to meet campaign groups in Zurich next month to discuss possible reform that would limit the funding of energy projects that exacerbate climate change and make funding decisions more transparent. Among the projects causing concern is the Kashagan oil field in Kazakhstan, which is estimated to hold 13bn barrels of oil, making it the largest new find worldwide in more than a decade.
Bank insiders reject criticism of the principles arguing they provide a common standard to guide project finance decisions to which more than 60 institutions have signed up. Further reform of the principles would be a matter for individual bank groups which could destroy the existing consensus, the source added.
But campaigners state: "We are disappointed with the lack of transparency, accountability, effectiveness and true compliance with the principles and lack of progress in their development."

Oilrigs should be used for homes in areas at risk of flooding, report says

Ben Webster, Environment Editor

Decommissioned North Sea oil platforms should be towed to the waterfronts of coastal cities at risk of flooding and converted into homes, shops and universities protected from rising sea levels, a study recommends.
Britain should not retreat from the waves but embrace them, adapting to climate change and consequent flooding by building new communities, either on stilts or floating platforms.
A team of senior architects, engineers and civil servants, appointed by the Royal Institute of British Architects and Institution of Civil Engineers, considered the options for responding to a 6ft 6in (2m) rise in sea levels by the end of the century.
UK Climate Projections, published last year by the Government, predicted that sea levels would rise by up to 76cm by 2095 but said that there was small risk of a more rapid melting of the Greenland ice sheet, resulting in a 1.9m rise by the end of the century. About ten million people already live in areas at risk of flooding in England and Wales and the Government spends £570 million a year on coastal defences.

The study, entitled Facing up to Rising Sea Levels, focused on two cities, Kingston-upon-Hull and Portsmouth, where much of the urban area is up to 3m above the high-tide mark. Hull is particularly vulnerable, with a flood in 2007 damaging 8,000 homes, 100 businesses and 91 of the city’s 99 schools.
The study proposed lining Hull’s waterfront with dozens of rigs from depleted North Sea oil and gasfields. Some of the rigs would be devoted to housing while others would become parks or entertainment complexes.
The rigs would be linked by walkways and every third one would have a bridge to the mainland. Energy for the homes and businesses would be generated by tidal-flow turbines suspended under the rigs.
The authors said that this approach would expose much of the existing city to the rising waters because the rigs would occupy areas that could otherwise have been used for concrete flood defences. However, they believe that the economies of coastal cities would be more likely to thrive if they accepted the loss of some areas and focused on building new communities.
“The extreme threat of flooding demands extreme measures be taken. We cannot defend everywhere. Letting water in can be seen in a positive light — not a defeatist policy,” it said.
In Portsmouth, the study recommended building a network of two-tiered piers into the Solent. Traffic would flow along the lower tier and homes and pedestrian areas would be built on top. The piers would act as groynes, reducing the rate of erosion of the coastline. In the existing city, homes would be redesigned with the living space upstairs.
David West, an architect and one of the authors, said: “The typical British approach of patching things up is just not a successful way of responding to rising sea levels. We need to speculate and look ahead 50 to 100 years, not in four-year political cycles. It’s about living with the sea, living with changes and doing something positive.”
Nick Hardiman, the Environment Agency’s coastal policy adviser, said that the study fitted with the agency’s policy of holding or advancing the coastline in some areas but allowing it to be eroded in others. “We need to be prepared for the extreme scenario of a 1.9m rise in the sea level by the end of the century.”

Next few weeks vital for Copenhagen accord, says US climate change envoy

• Obama administration to work closely on formal details• US will not give full ownership of accord to UN

Suzanne Goldenberg, US environment correspondent, Thursday 14 January 2010 19.24 GMT

The next few weeks will be critical in deciding whether the Copenhagen accord succeeds in halting global warming, America's top climate change envoy said today.
"We have an accord that is lumbering down the runway, and we need it to get enough speed so it can take off," Todd Stern, the state department climate change envoy, told an investor meeting at the United Nations in his first public remarks after the Copenhagen summit. "We need to get this up and running."
He said the next year would be critical in fleshing out the details of an accord that - because of the chaos and acrimony surrounding the talks - was only 12 paragraphs long. The first test arrives on 31 January when industrialised countries and the major developing nations make their formal commitments to act on carbon emissions.
Stern said the Obama administration would be working with other countries to try and agree on the institutional structures that will turn the goals of the accord into reality. These include the establishment of a $100bn a year climate fund, action to protect the world's forests, and monitoring of countries' action plans.
He said the accord - though weak - remained the best path to an international treaty that would have the full weight of international law. But, like his deputy Jonathan Pershing, Stern indicated the US would not yield full ownership of the negotiation process to the United Nations.
"Our goal is very simply to design a regime that is going to have the capability to actually help us solve the problem," he said. "One of the frustrations in dealing on the international level is that a lot of focus can be paid to debating whether a particular idea is consistent or not consistent with such-and-such an article of a previous agreement. A lot of attention can be paid to proposals or positions that are not very well tethered to reality. We all need to be focused on setting up a structure, and setting up a regime that can solve this problem."
The frustration of the US and other developed nations with the UN process became clear well ahead of Copenhagen. In the weeks ahead of the summit, the Danes, together with a group of about 30 countries began trying to negotiate a more limited agreement - outside the scope of the UN.
That effort - exposed in the first days of the summit by the Danish text leaked to the Guardian - ultimately backfired, Stern admitted. "That led to a huge uproar, and accusations against the Danish presidency that they had been conducting a secret effort without consulting others," he said. "This had the intent and certainly the effect of undermining the credibility of Denmark."
However, Stern also indicated that the Obama administration had come to power a year ago with doubts about yielding the primary control of climate change negotiations to the UN. "We came in with quite a strong view that we needed to set up a stronger group of countries as well as operating in the larger multilateral arena," he said. "For that reason we took the set of countries that President Bush had initiated, rechristened it and gave it a different mission."
In Stern's view, the summit had already been compromised by a lack of real progress of negotiations conducted within the formal UN structure. "The reality is that the formal negotiating process simply had not made significant progress on the key issues", including setting emissions targets, mobilising a climate fund, technology transfer, and transparency, he said.
He echoed Pershing, , who yesterday suggested the summit had been perilously close to failure in its final hours. "We came within a hair's breadth of collapse," Stern said.

Investors urge governments to take immediate action on climate change

First major gathering of business leaders since Copenhagen warn of lost opportunity to create low-carbon economy
Suzanne Goldenberg, US environment correspondent, Thursday 14 January 2010 18.17 GMT
Over 450 investors controlling $13tn of assets yesterday urged world governments to pre-empt an international climate change treaty and take immediate action on global warming, or risk losing the opportunity to establish a clean and sustainable low-carbon economy.
At a conference at the United Nations in New York, the first gathering of business leaders since the disappointment of last month's Copenhagen climate summit said governments — even in the absence of a treaty — must adopt policies that give a clear sense of direction towards a new clean energy economy. Copenhagen made only "incremental" progress, the investors said in a statement and governments worldwide needed to act now to reset their domestic agendas, with policies to limit greenhouse gas emissions and to lay the foundations of a carbon market.
"Given that Copenhagen was a missed opportunity to create one fully functional international carbon market, it is more important than ever that individual governments implement regional and domestic policy change to stimulate the creation of a low carbon economy," said Peter Dunsombe, chairman of the IIGCC, a network of European investors. "Leaders from both developed and developing countries need to act now to compensate for the lack of progress."
The Obama administration, like other governments of industrialised countries, has acknowledged the private sector will provide the majority of funding for the transition from fossil fuels to renewable, low-carbon energy sources.
"Investors remain committed to taking action," the group of 450 investors from Europe, America and Australia said. "But for us to deploy capital at the scale needed to truly catalyse a low-carbon economy, policy makers must act swiftly." Before the Copenhagen conference, the economist Lord Stern, and the head of the UN Environment Programme Achim Steiner, told the Guardian that a failure would be "very damaging" to investor confidence.
The cautious assessment on the outcome of the Copenhagen climate change summit was echoed by the Obama administration's top climate change envoy, Todd Stern. He told the conference, which was organised by the Ceres green investment network, thathis year would be crucial in determining whether the world was truly on course towards reaching a fully fledged treaty to deal with climate change.
He said America and other countries would be working hard to flesh out a 12-paragraph accord brokered by Obama and the leaders of China, India, Brazil, and South Africa, especially on sharing of clean energy technology, and the mobilising of a global fund to help poor countries adapt to climate change. "We have an accord that is lumbering down the runway, and we need to get it enough speed so that it can take off," Stern said.
The investors said it was critical that governments – including the US – adopt rigorous targets for reducing greenhouse gas emissions over the next decade as well as for the distant date of 2050. In addition to renewable energy, they also called for policies to speed the development of green building practices, cleaner cars and public transit systems.
"What we need most is government action both in the US and throughout the world," said Anne Stausboll, the chief executive of the California Public Employees Retirement System (Calpers) America's largest public pension fund. Calpers has $1bn of its $205bn assets in green investment, and was ready to do more, but Stausboll — like others — said that Congress first needed to put in place a climate change law.

How to profit from the cold snap

Ian Cowie consults investment experts on the best companies to benefit from frozen Britain.

Published: 7:18AM GMT 14 Jan 2010
Extreme weather has inconvenienced millions of people in recent weeks, but some investors argue it's an ill wind that blows no good.
They predict there will be winners as well as losers when the financial effects of this winter are weighed up.

City cynics claim the smart money has been piling into companies that will benefit from a cold snap ever since last month's international conference on global warming.
But others say there is further to go. For example, gas and electricity providers' share prices were largely left behind by last year's stock market rally.
These firms are paying much higher dividends than more fashionable sectors which could prove more vulnerable to setbacks in 2010. Whatever happens to the economy and discretionary consumer spending, people are likely to want to continue heating their homes and cooking their food.
While it would be wrong to overstate the long-term impact on profits of a few weeks' freezing conditions, Your Money asked a selection of financial advisers to pick stocks that might benefit from a re-rating prompted by bad weather.
Keith Bowman of Hargreaves Lansdown wealth managers said: "National Grid is situated at the heart of Britain's electricity and gas network and is one of the biggest energy companies in the world.
"The company also owns and operates the high-pressure gas transmission system in Britain, with this distribution business delivering gas to 11 million homes and businesses.
"It also distributes electricity to nearly five million customers in Massachusetts, New Hampshire, New York and Rhode Island. In addition to its transmission and distribution business, the company also operates a number of related businesses including liquefied natural gas (LNG) importation and storage, metering, interconnectors and land remediation."
National Grid was trading around 647p this week, compared to a 52-week high of 682p, and yielding 5.6pc net of basic rate tax with the dividend covered 1.4 times by earnings.
Mr Bowman also favours BP. He said: "British Petroleum is a major global oil and energy provider. The group is currently the UK's second biggest company by market capitalisation – HSBC is number one – with a stock market value of over £115 bn. BP employs over 90,000 people globally, conducting exploration and production operations in over 25 countries worldwide.
"The group's third-quarter results last October saw the company comfortably exceeding analysts' forecasts. While the global economic downturn continued to impact, an improved operational performance combined with additional cost savings helped to cushion the fall.
"Furthermore, a perceived recovery in the global economy, aided by the current cold snap impacting on much of the northern hemisphere, has recently seen energy prices rising, a fact that should assist the group going forward."
BP was trading near its annual high of about 633p this week, yielding 5.4pc net, with dividends covered two times by earnings.
Peter Day, a partner at stockbrokers Killik & Co, said: "While the recent cold snap is bad news for companies such as retailers where they may see reduced footfall, this is not necessarily the case for all. Specifically, we would highlight the utility companies, which have lagged the market rebound over the course of the last nine months.
"As uncertainties resurface in the economy, investors should look towards the certainty of the utility sector where investors can benefit from a defensive earnings stream and attractive dividend yields. We believe that interest rates are going to remain lower for longer than many forecasters predict and this high level of dividend income may become increasingly attractive.
"Centrica secures and supplies gas and electricity to residential and business customers throughout the UK. These activities account for 90pc of group profits, but it also has operations in North America and Continental Europe.
"In the UK, the company, operating as British Gas, is the biggest retail energy supplier, with a 44pc share in gas and 22pc share in electricity. There are some concerns surrounding the health of the competition in the UK retail business, potentially leaving Centrica well placed to take market share and improve profit margins over time.
"The group has also made strong progress with its other strategic priorities – improved customer service and cost cutting.
"Despite the increased level of acquisition activity, the balance sheet remains robust, with net debt of £2.5bn. As a result, the group has firepower for further acquisitions and the flexibility to pay an attractive yield. We believe the current level provides an excellent long-term opportunity to buy a well-managed company with a strong brand, high market share and scope to add shareholder value."
Centrica was trading around 279p this week, yielding 4.4pc, with dividends covered 1.4 times by earnings.
Even as fears recede that swine flu would cause massive casualties, winter and its associated illnesses may prompt a reassessment of the defensive attractions of pharmaceutical stocks.
Mr Day said: "GlaxoSmithKline is a global pharmaceutical and consumer health-care company with a broad-based drug portfolio in central nervous system, respiratory, vaccines, oncology and anti-viral markets.
''The group is less exposed to patent expiries than most of the peer group, with only 25pc of its sales vulnerable to generic competition between now and 2012. Its cost-reduction programme has already delivered £1 bn of cumulative annualised savings and the group is still targeting £1.7 bn of savings by 2011.
''The company is financially strong and management has postponed the share buyback programme to focus on acquisition opportunities provided by the market downturn.
"However, the group has dismissed the prospect of a large-scale merger and will instead focus on smaller deals, with the emphasis likely to be placed on vaccines, over-the-counter medicines, consumer health care and expansion in emerging markets."
GlaxoSmithKline was trading around 1290p this week, yielding 4.7pc, with the dividend covered 1.9 times by earnings.
George Godber from Matterley Asset Management – part of Charles Stanley – picked some smaller companies. He said: "Nationwide Accident Repair Services have a network of accident and repair centres across the UK, we know both the RAC and AA have reported in the past two weeks that they have seen some of their busiest call times ever.
"National Accident Repair Services has net cash on the balance sheet and trades on a relatively lowly eight times earnings per share, with 5.4pc dividend yield.
"Alternatively, there is Domino's Pizza. During last year's heavy snow fall we saw its like-for-like sales jump. As a nation, it seems when the weather is bad we would prefer to stay inside and order the food in. Domino's trades on 21 times earnings, with a 2pc dividend yield.
"Finally, another winner from bad weather could be Providence Resources. Unfortunately in the UK and in Ireland we have hugely underinvested in our gas-storage capabilities. We are actually in breach of European Union directives that state we should be storing three months' of supply. On average we store just 14 days' usage in the UK compared with over 80 days' in France and Germany.
"For many years, Britain seemed to have an endless supply from the North Sea, but this has now come to an end. The prospects of a higher and more volatile gas price should lead the Government to readdress this balance. One of the companies best positioned for this is Providence Resources which owns the depleted gas fields off southern Ireland, at Kinsale Head, that could be linked to both Ireland and the UK."
Charlotte Black, of Brewin Dolphin's investment banking division, also favoured candidates outside the FTSE 100 blue chips. She said: "Telecom Plus is a supplier of utilities that is well placed to benefit from increased energy consumption that will come through during this cold period.
"Around 70pc of energy consumption typically occurs in the second half of Telecom Plus's financial year which, coupled with strong increases in customer numbers and high energy demand, should provide a favourable backdrop for the run up to the March year end.
"Alternatively, the performance of BBA Aviation's de-icing operations at US airports has the potential to mean the difference between hitting forecasts or falling short. With the US east coast also experiencing extremely low prevailing temperatures pre and post-New Year, this should have boosted December year-end results and provided positive momentum into 2010.
John Haynes, head of research at Rensburg Sheppards, said basing selection on the current weather patterns is not where he would start when considering shares to invest in. But, among less obvious candidates, it may be worth considering general insurance companies such as Aviva and RSA.
"Both have UK and European exposure. Although claim expenses are likely to rise, since both road accidents will increase as will home insurance claims as burst pipes cause damage as the thaw sets in, the consequences should be that premium rates firm as the uninsured realise the error of their ways."
Other options to diminish risk by diversification are to buy exchange traded funds (ETFs) or exchange traded commodities (ETCs) from a stockbroker or wealth manager.
These are the ways to play the weather favoured by Justin Urquhart Stewart, of Seven Investment Management. He said: "Economic dislocation from the freeze will ripple across the economy, but the utilities has to be a great place to start – not just in the UK but across the continent; follow the snow line.
"The iShares DJ STOXX 600 Utilities (SX6PEX GY) is the most obvious one, giving exposure to a broad array of European utilities, including power generation. You might also consider iShares DJ STOXX 600 Oil and Gas (SXEPEX GY). Both are listed in Germany, but db x-trackers has similar London-listed, swap-based ETFs.
"If you think there will be fuel shortages you could try ETFS Heating Oil (HEAT LN) or ETFS Leveraged Heating Oil (LHEO LN) and also ETFS Short Heating Oil (SHEA LN) if you are bearish.
"I am told that if the temperature in Eastern and Central Europe persists at a very low level some of the winter wheat crop will be damaged – an adventurous investor could sell short the ETFS Wheat (WEAT LN)."
However, a substantial disadvantage of ETFs in the high-yielding utilities sector is that while dividends are added to the value of the fund, they are not distributed as income. While commodities themselves pay no income, storage costs contribute to the total expense ratio of ETCs; although these costs are usually only about 0.5pc per annum.

Qatar to use biofuels? What about the country's energy consumption?

Qatar announce the future use of biofuels on its airline, but its domestic carbon emissions are shockingly free and easy
Fred Pearce, Thursday 14 January 2010 07.00 GMT
Qatar made the news twice this week. First, the Manchester United squad flew out to the Gulf state for a few days to get in some training without the hassle of snow – hoping to revive their fortunes after a draw with Birmingham City . Second, it announced a "major environmental initiative" aimed at curbing the carbon emissions of its national airline through the use of biofuel.
They won't actually be cutting emissions any time soon, of course. Those are soaring, because, bucking the global recession, the airline expects to carry 11% more passengers in the current year.
But the airline is doing an analysis to see if it might one day start burning biofuels. Perhaps the biofuels will be grown on the huge chunk of farmland the state controversially wants to buy in Kenya.
Qataris have the highest carbon footprint on the planet. The country's per-capita emissions from burning fossil fuels are way ahead of any other nation, and almost three times those of everybody's poster bad boy, the US. This is all the more extraordinary since Qatar's electricity is mostly generated from burning natural gas, which has half the emissions of coal.
Those emissions have also risen almost fourfold since 1990. But, thanks to the vagaries of the Kyoto Protocol, the country is not penalised for this. Qatar is by some measures the second richest country in the world, but for the purposes of climate law, it is classified as a developing nation. And so it has no emissions targets.
How come Qatar's emissions are so high? The main reason is its soaring use of energy. By the end of next year Qatar will have six times the electricity-generating capacity it had as recently as 1995. One outlet for all this power is industry, based round its huge natural gas reserves. Just this week, the national gas company announced a deal with ExxonMobil for a new $6bn (£3.69bn) petrochemicals plant.
A lot of Qatar's gas is exported as liquefied natural gas – the country is the world's largest producer of the stuff. It's a fairly clean fuel at our end, but takes a lot of energy to liquefy in Qatar. So to that extent Qatar is taking a hit to allow Europe and North America to cut their emissions – handy for helping us meet the Kyoto Protocol, but not much good for the planet.
The Qatari government recently used this argument to downplay its emissions. In its recent Human Development Report, it called them "relatively modest".
But that is not the real story. Those Qatari emissions are so extraordinarily high for another reason. Qataris just don't seem to care.
Sure, there is the biofuels initiative from the state airline. Sure, a year ago Qatar held a conference to discuss how to cut its emissions without damaging the economy.
But if its rulers were serious about cutting emissions they might charge for their energy supplies. Yes, you read that right. Qatari households get their electricity free. So why would they cut down on how much they burn?
Oh, and they get their water free as well. And in Qatar, even more than most places in the Middle East, water is liquid electricity. Almost every drop coming out of the taps is produced from desalinating seawater. This is extremely expensive in energy – and therefore expensive in carbon emissions.
But because the water is free, Qataris waste it like, well, water. Despite being a desert state with virtually no rainfall, the country has among the highest per-capita water uses in the world. Use averages around 400 litres per head per day. According to Hassan Al-Mohannadi, a geographer at the University of Qatar, people in "big, often palatial houses" consume up to 35,000 litres per day.
Even here, they have a way of blaming foreigners. According to Hassan Al-Mohannadi, one reason water use is so high is that "the large number of foreign domestic servants, who come from water-rich countries, are not educated in water conservation".
Water consumption continues to rise, so Qatar is building more desalination plants. If Qatar was serious about cutting its carbon footprint it would do something about water demand. At the least, it might charge for the stuff.
Will Qatar's emissions carry on up? Looks Likely. Electricity demand is currently rising by about 7% a year. That is not as fast as the national economy, which is growing by 11% annually – the fastest boom on the planet.
But stopping this out-of-control carbon-emitting juggernaut will take more than an Airbus full of biofuels.