Reuters , Friday July 4 2008
By Pete Harrison
PARIS, July 4 (Reuters) - The European Union geared up on Friday for deep cuts in greenhouse gases as eight ex-communist states sought help in overhauling their infrastructure for a low-carbon future.
France, which took over the EU's rotating presidency this week, has made climate change its top priority and hosted a meeting on the outskirts of Paris to identify the main areas of disagreement.
Environment ministers said the main concerns were how to protect industry from rivals in other countries with less strict environmental standards, as well as a growing rift between east and western Europe over the mechanism for curbing emissions.
The EU plans to cut carbon dioxide emissions by a fifth by 2020 compared to 1990 levels.
The goal would be raised to 30 percent in the event of an international climate accord, which many of the ministers now see as probable with both U.S. presidential candidates focused on climate change.
"We will now prepare ourselves for the 30 percent in the EU," Swedish Environment Minister Andreas Carlgren told reporters.
His French counterpart Jean-Louis Borloo agreed, saying: "All the countries want more, faster and stronger."
But eastern European states said curbs on carbon dioxide would push up power prices and stunt economic growth, with Poland and seven eastern states led by Hungary joining forces in a call for help.
SOLIDARITY
Warsaw says EU plans to make power generators buy all their permits to produce carbon dioxide at auction from 2013 would increase electricity prices by up to 70 percent, which would be politically unsustainable.
Poland's environment minister, Maciej Nowicki, told Reuters Warsaw wanted auctioning of permits for the power sector to emit carbon dioxide phased in from a starting level of 20 percent in 2013, increasing by 10 percent a year.
He said he had presented a joint position with Hungary, Slovakia, Romania, Bulgaria, Latvia, Lithuania and Estonia to take account of the specific problems of fast-growing former communist economies with carbon-intensive energy sectors.
But European Environment Commissioner Stavros Dimas said Poland had overstated the costs.
"We do not agree with their calculations," he told Reuters. "There could be a 10-15 percent increase, and this is over a period of time."
Nowicki said increased costs of heating Polish homes might force people into burning cheap, highly polluting coal.
"Then we would have smog, problems with air pollution and even more CO2," he said.
Hungarian environment official Tibor Farago called on richer EU states to show solidarity and help eastern countries deal with the high initial costs of reducing their dependence on coal ahead of global climate talks in Poznan, Poland in December.
"Neither Hungary nor any other new member state wishes to slow down the process, with full agreement that this package should be agreed as early as possible, even before December," he told Reuters.
Dimas was optimistic the rift would not slow an accord.
"Prospects are very good for an agreement by the end of the year," he said. (Editing by Dale Hudson)
Saturday, 5 July 2008
Gordon Brown: West must not give up on aid and climate change
Larry Elliott, economics editor
The Guardian,
Saturday July 5, 2008
Prime Minister Gordon Brown delivering his speech at the Unison conference. Photograph: Owen Humphreys/PA
Gordon Brown today warned Britain's G8 partners against a retreat into isolationism, and insisted that the looming threat to the global economy instead required a speeding up of the fight to tackle climate change and poverty.
Amid fears the credit crunch will cause the G8 to backpedal on pledges to cut carbon emissions and increase aid to poor countries by $50bn a year, the prime minister used an interview with the Guardian ahead of the G8 summit to stress the need for united action in the west to reduce dependency on fossil fuels and boost food production in developing countries.
"The world is suffering a triple challenge: of higher fuel prices, higher food prices and a credit crunch. My message to the G8 will be that instead of sidelining climate change and the development agenda, the present economic crisis means that instead of relaxing our efforts we have got to accelerate them.
"This agenda is not just the key to the environment and reducing poverty, but the key to our economic future as well," Brown said.
After a year that has seen growth slow sharply in many G8 countries, including Britain, and oil prices double to $145 a barrel, he said the summit would be judged on whether it rolled back protectionism, supported projects for cleaner energy, and came up with blueprints for reducing global oil and food prices.
On the eve of his first G8 summit as prime minister, he said he would consider it to be a success if the G8 showed unity, gave strong backing to a new global free-trade deal, and pushed ahead on climate change and development.
The prime minister said that the state of the global economy meant the summit would have echoes of those in the 1970s. "But in the 70s, many of the problems we faced were national, not global. The problems we have today are global and they require global solutions."
On climate change, the prime minister said he was hoping the G8 would make progress towards a new climate change deal in Copenhagen next year, agree to "turn the World Bank into an energy bank as well as a development bank", and show a "clear understanding of the importance of renewables to our energy and environmental future".
Britain believes that a stalling of progress on Africa in 2008 will make it impossible for the UN to hit its millennium development goals, set for 2015, but Brown said that fighting poverty was also in the best interests of the west. "Unless we help poor countries to become more prosperous through education, health and economic development, we will be piling up the problems of global inequality."
The UK is pressing the G8 to boost the number of health workers in poor countries, bankroll the expansion of education, and invest in higher farm production. "I'll be telling people that the worst possible thing would be to drop the development agenda because it holds the key to the economic challenge. If we don't produce enough agriculture, we are going to have food shortages, and Africa needs help to develop its agriculture. We can't solve the problems of food and fuel shortages unless developing countries are involved."
Christian Aid supported Brown's call for higher food production in developing countries, but said free trade had proved disastrous for many struggling nations.
Oliver Pearce, author of a report released today by the development charity, said: "Food security will be high on the agenda when the G8 meets. Rich countries must accept that nothing less than a new, pro-poor agricultural revolution is needed if future shortages are to be avoided.
"Agricultural polices imposed on poor countries in the past few decades have had a ruinous effect. In return for trade and aid, they have been forced to remove protective tariffs from agricultural produce, reduce subsidies, and lift price controls."
Development charities blame the increase in land given over to biofuels for the food crisis, but the prime minister was noncommittal on the issue. "I feel there are good and bad biofuels," he said, in advance of the imminent publication of the government's Gallagher report into their impact.
But he said Britain had the potential to become the world leader in wind energy, with the UK able to export the technology that will be required to hit the government's target of 15% of energy coming from renewables by 2020.
The Guardian,
Saturday July 5, 2008
Prime Minister Gordon Brown delivering his speech at the Unison conference. Photograph: Owen Humphreys/PA
Gordon Brown today warned Britain's G8 partners against a retreat into isolationism, and insisted that the looming threat to the global economy instead required a speeding up of the fight to tackle climate change and poverty.
Amid fears the credit crunch will cause the G8 to backpedal on pledges to cut carbon emissions and increase aid to poor countries by $50bn a year, the prime minister used an interview with the Guardian ahead of the G8 summit to stress the need for united action in the west to reduce dependency on fossil fuels and boost food production in developing countries.
"The world is suffering a triple challenge: of higher fuel prices, higher food prices and a credit crunch. My message to the G8 will be that instead of sidelining climate change and the development agenda, the present economic crisis means that instead of relaxing our efforts we have got to accelerate them.
"This agenda is not just the key to the environment and reducing poverty, but the key to our economic future as well," Brown said.
After a year that has seen growth slow sharply in many G8 countries, including Britain, and oil prices double to $145 a barrel, he said the summit would be judged on whether it rolled back protectionism, supported projects for cleaner energy, and came up with blueprints for reducing global oil and food prices.
On the eve of his first G8 summit as prime minister, he said he would consider it to be a success if the G8 showed unity, gave strong backing to a new global free-trade deal, and pushed ahead on climate change and development.
The prime minister said that the state of the global economy meant the summit would have echoes of those in the 1970s. "But in the 70s, many of the problems we faced were national, not global. The problems we have today are global and they require global solutions."
On climate change, the prime minister said he was hoping the G8 would make progress towards a new climate change deal in Copenhagen next year, agree to "turn the World Bank into an energy bank as well as a development bank", and show a "clear understanding of the importance of renewables to our energy and environmental future".
Britain believes that a stalling of progress on Africa in 2008 will make it impossible for the UN to hit its millennium development goals, set for 2015, but Brown said that fighting poverty was also in the best interests of the west. "Unless we help poor countries to become more prosperous through education, health and economic development, we will be piling up the problems of global inequality."
The UK is pressing the G8 to boost the number of health workers in poor countries, bankroll the expansion of education, and invest in higher farm production. "I'll be telling people that the worst possible thing would be to drop the development agenda because it holds the key to the economic challenge. If we don't produce enough agriculture, we are going to have food shortages, and Africa needs help to develop its agriculture. We can't solve the problems of food and fuel shortages unless developing countries are involved."
Christian Aid supported Brown's call for higher food production in developing countries, but said free trade had proved disastrous for many struggling nations.
Oliver Pearce, author of a report released today by the development charity, said: "Food security will be high on the agenda when the G8 meets. Rich countries must accept that nothing less than a new, pro-poor agricultural revolution is needed if future shortages are to be avoided.
"Agricultural polices imposed on poor countries in the past few decades have had a ruinous effect. In return for trade and aid, they have been forced to remove protective tariffs from agricultural produce, reduce subsidies, and lift price controls."
Development charities blame the increase in land given over to biofuels for the food crisis, but the prime minister was noncommittal on the issue. "I feel there are good and bad biofuels," he said, in advance of the imminent publication of the government's Gallagher report into their impact.
But he said Britain had the potential to become the world leader in wind energy, with the UK able to export the technology that will be required to hit the government's target of 15% of energy coming from renewables by 2020.
Australia's quality of life at risk without urgent action on climate change: report
Barbara McMahon Sydney
guardian.co.uk,
Friday July 4, 2008
Australia's environmental jewels such as the Great Barrier Reef are at risk from climate change. Photographer: Queensland Tourism/AP
Australia was urged today to "think big" on climate change and to adopt without delay a broad-based greenhouse gas emissions trading scheme in as many industries as possible, including the energy and transport sectors.
Professor Ross Garnaut, the Australian government's chief climate change adviser, said that climate change was already having a huge impact in one of the hottest and driest countries in the world.
The veteran economist acknowledged that any proposal to put tough limits on greenhouse gas emissions would have a major impact on Australia's economy. He suggested tax cuts and welfare payments should be offered to help compensate families and businesses.
At the launch in Canberra of his long-awaited report, ordered by the Australian prime minister, Kevin Rudd, to help shape policy, he warned Australia could not afford to avoid taking hard decisions.
Without strong and early action, he commented, Australia's "prosperity and enjoyment of life" would be affected. He said that if no action were taken, climate change would cut 4.8% of gross domestic product, more than AS$400bn (£194bn), by the end of the century. He also warned that some of Australia's most celebrated tourist destinations, environmental jewels such as the Great Barrier Reef and the wetlands of Kakadu in the Northern Territory, might be lost.
"We will delude ourselves should we choose to take small actions that create an appearance of action, but which do not solve the problem," he said. "Such an approach would risk the integrity of our market economy and political processes to no good effect."
The 600-page report recommends the full auctioning of emissions permits and the return of all revenue to households and businesses. Garnaut stressed that the emissions scheme should not raise revenues for government. The report proposes that half of the proceeds from the sale of all permits is returned to households, around 30% to hard-hit businesses and the remaining 20% allocated to renewable energy projects.The report also said it would be in Australia's interest to find out as soon as possible whether there can be a low-emissions future for coal, and to support rapid deployment of commercially promising "carbon capture and storage" technologies. This follows from Australia's role as the world's largest exporter of coal and the central role of coal in the growth of emissions from its regional neighbours in developing countries in Asia.
Rudd won a decisive election victory in November 2007 on a green agenda, promising an emissions trading scheme that would be up and running by 2010, but the prospect of putting emissions limits on transport and electricity is already unnerving the Australian public which is struggling with the rising cost of living.
Australia's opposition Liberal party, which had initially supported the plan, has also said the 2010 timetable is unworkable and wants to delay the scheme for a further two years.
The energy, coal and agricultural industries have been lobbying hard to protect their interests and were accused this week of running "scare campaigns" warning that electricity prices would rise sharply, and businesses will become less competitive against foreign rivals, and that some companies will go to the wall.
The report concedes that the emissions trading system could cause price fluctuations in its early stages and concedes a compromise may be required in the shape of fixed price permits for the first two years of the scheme. It said "emissions intensive" industries should be compensated if their off-shore rivals were free to pollute, with compensations to be determined by a carbon-bank regulator.
The prime minister has already indicated the government will not be bound by all the recommendations in the report. "There is no dispute about the science - that it is happening," he said. "The practical question becomes one of, first of all, what are the economic costs of not acting as opposed to the economic costs of acting." He said acting was the "right and responsible way to go".
Garnaut said his recommendations on specific emissions targets and carbon prices would be contained in a supplementary report that he was working on with the federal treasury department which would be released at the end of next month. "When we have that, we can talk in more detail about the structural impact on the Australian economy," he said.
Australia's influential Green party said Garnaut's report did not go far enough. "Garnaut's warning that delay is not an option is completely disingenuous in the context of his recommendation of a slow start to the scheme, capping the price of carbon before 2012 and not seeking to go beyond Australia's pitiful commitment to Kyoto's first phase," Senator Christine Milne said.
"If we are to have a real chance of avoiding catastrophic, runaway climate change, we will need rapid, transformative policies to build a new post-carbon economy, not ad hoc, incremental change that prioritises increasing our wealth over protecting our future."
guardian.co.uk,
Friday July 4, 2008
Australia's environmental jewels such as the Great Barrier Reef are at risk from climate change. Photographer: Queensland Tourism/AP
Australia was urged today to "think big" on climate change and to adopt without delay a broad-based greenhouse gas emissions trading scheme in as many industries as possible, including the energy and transport sectors.
Professor Ross Garnaut, the Australian government's chief climate change adviser, said that climate change was already having a huge impact in one of the hottest and driest countries in the world.
The veteran economist acknowledged that any proposal to put tough limits on greenhouse gas emissions would have a major impact on Australia's economy. He suggested tax cuts and welfare payments should be offered to help compensate families and businesses.
At the launch in Canberra of his long-awaited report, ordered by the Australian prime minister, Kevin Rudd, to help shape policy, he warned Australia could not afford to avoid taking hard decisions.
Without strong and early action, he commented, Australia's "prosperity and enjoyment of life" would be affected. He said that if no action were taken, climate change would cut 4.8% of gross domestic product, more than AS$400bn (£194bn), by the end of the century. He also warned that some of Australia's most celebrated tourist destinations, environmental jewels such as the Great Barrier Reef and the wetlands of Kakadu in the Northern Territory, might be lost.
"We will delude ourselves should we choose to take small actions that create an appearance of action, but which do not solve the problem," he said. "Such an approach would risk the integrity of our market economy and political processes to no good effect."
The 600-page report recommends the full auctioning of emissions permits and the return of all revenue to households and businesses. Garnaut stressed that the emissions scheme should not raise revenues for government. The report proposes that half of the proceeds from the sale of all permits is returned to households, around 30% to hard-hit businesses and the remaining 20% allocated to renewable energy projects.The report also said it would be in Australia's interest to find out as soon as possible whether there can be a low-emissions future for coal, and to support rapid deployment of commercially promising "carbon capture and storage" technologies. This follows from Australia's role as the world's largest exporter of coal and the central role of coal in the growth of emissions from its regional neighbours in developing countries in Asia.
Rudd won a decisive election victory in November 2007 on a green agenda, promising an emissions trading scheme that would be up and running by 2010, but the prospect of putting emissions limits on transport and electricity is already unnerving the Australian public which is struggling with the rising cost of living.
Australia's opposition Liberal party, which had initially supported the plan, has also said the 2010 timetable is unworkable and wants to delay the scheme for a further two years.
The energy, coal and agricultural industries have been lobbying hard to protect their interests and were accused this week of running "scare campaigns" warning that electricity prices would rise sharply, and businesses will become less competitive against foreign rivals, and that some companies will go to the wall.
The report concedes that the emissions trading system could cause price fluctuations in its early stages and concedes a compromise may be required in the shape of fixed price permits for the first two years of the scheme. It said "emissions intensive" industries should be compensated if their off-shore rivals were free to pollute, with compensations to be determined by a carbon-bank regulator.
The prime minister has already indicated the government will not be bound by all the recommendations in the report. "There is no dispute about the science - that it is happening," he said. "The practical question becomes one of, first of all, what are the economic costs of not acting as opposed to the economic costs of acting." He said acting was the "right and responsible way to go".
Garnaut said his recommendations on specific emissions targets and carbon prices would be contained in a supplementary report that he was working on with the federal treasury department which would be released at the end of next month. "When we have that, we can talk in more detail about the structural impact on the Australian economy," he said.
Australia's influential Green party said Garnaut's report did not go far enough. "Garnaut's warning that delay is not an option is completely disingenuous in the context of his recommendation of a slow start to the scheme, capping the price of carbon before 2012 and not seeking to go beyond Australia's pitiful commitment to Kyoto's first phase," Senator Christine Milne said.
"If we are to have a real chance of avoiding catastrophic, runaway climate change, we will need rapid, transformative policies to build a new post-carbon economy, not ad hoc, incremental change that prioritises increasing our wealth over protecting our future."
Canberra unveils carbon trading scheme
CANBERRA, July 4 –
Australia’s leading climate guru on Friday laid out a draft carbon trading scheme to rein in rising emissions in the world’s top per-capita greenhouse gas polluter.
Economist Ross Garnaut, appointed by the government to design what will be the world’s most extensive emissions regime from 2010, said Australia was critically at risk from climate change and urged deep cuts in emissions from the world’s top coal exporter.
But Prime Minister Kevin Rudd, who won a huge election victory last November on a green agenda, is under pressure to soften the impact of inevitable energy and fuel price rises from an emissions cap-and-trade scheme.
“We cannot drop the ball,” Mr Garnaut said in a speech. “Our location makes us already a hot and dry country. Increases in temperature and lower rainfall have a much bigger impact here than on other wealthy countries.”
Mr Garnaut, dubbed “Australia’s Nicholas Stern”, referring to the British author of a widely read report on fighting climate change, urged Mr Rudd to go further than his current goal to cut greenhouse gas emissions by 60 per cent by 2050.
Mr Garnaut urged the inclusion of energy and transport in the scheme, but said big corporates whose foreign rivals are free to pollute should be mollified with compensation.
Voters, though, are already fretting over higher petrol prices, along with rising food and mortgage costs, piling pressure on Mr Rudd to get the scheme right and limit the impact on ordinary Australians.
Polls show rising living costs are already eating into government popularity.
Some rival green and conservative analysts have even begun thinking what on election night last year seemed impossible; that emissions and climate policy could bring so much economic upheaval that Mr Rudd’s dominant Labor lasts only one three-year term. Mr Garnaut gave no hard numbers on what his preferred regime could cost, promising those by August. But a “middle-of-the-road” climate policy could gouge 4.8 per cent from gross domestic product, or US$384bn, by end of the century, he said.
“An effective market-based system will be as broadly based as possible, with any exclusions driven by practical necessity and not by short-term political considerations,” the report said. Power generators say they will have to raise prices, while farmers and coal-miners warn of lost overseas competitiveness.
Under Mr Garnaut’s proposals, businesses that pump out less greenhouse gas than their allowable limit would receive credits and be able to sell permits bought at competitive auction to pollute to firms exceeding their carbon emissions quota.
The government is already working on a number of options for the 2010 trading scheme.
“Professor Garnaut’s views will be taken into account,” Penny Wong, climate change minister, said.
“The Australian government believes that every nation must do its fair share to tackle climate change and we are working to help shape a long-term global solution,” she said.
Mr Garnaut’s scheme would cover more sectors of the economy compared with the European Union’s emissions trading system, currently the largest of its type and worth $50bn last year.
The EU scheme, which covers about half of EU emissions, was criticised for overallocating emission permits, which experts said should have been auctioned.
To overcome what Brussels sees as that design flaw, the Commission earlier this year said it will set EU-wide emissions limits for all sectors covered by the trading scheme, and most permits will be auctioned off instead of handed out for free.
The report conceded a competitive emissions-trade system could cause big price gyrations in the early stages and accepted there was a good argument for relying initially on some fixed-price permits and a two-year trial period.
Compensation directed to disadvantaged exporters, to keep them in Australia, should be limited to as much as 30 per cent of the cost of purchasing emission permits, the report said, prompting a testy response from Green groups.
“There is a danger that if we move to a corporate welfare scheme, it’s just going to prolong the use of coal. Coal is not the solution, coal is the problem,” Steve Shallhorn, Greenpeace CEO, told Reuters.
Australia relies on coal to generate about 77 per cent of the country’s electricity.
Mr Garnaut stressed the emission scheme should not become a government revenue-raiser, suggesting 50 per cent of the likely A$15-20bn ($14-19bn) raised from permit auctions should be returned to households and 30 per cent to hard-hit businesses. The other 20 per cent would go to renewable energy.
© Reuters Limited
Australia’s leading climate guru on Friday laid out a draft carbon trading scheme to rein in rising emissions in the world’s top per-capita greenhouse gas polluter.
Economist Ross Garnaut, appointed by the government to design what will be the world’s most extensive emissions regime from 2010, said Australia was critically at risk from climate change and urged deep cuts in emissions from the world’s top coal exporter.
But Prime Minister Kevin Rudd, who won a huge election victory last November on a green agenda, is under pressure to soften the impact of inevitable energy and fuel price rises from an emissions cap-and-trade scheme.
“We cannot drop the ball,” Mr Garnaut said in a speech. “Our location makes us already a hot and dry country. Increases in temperature and lower rainfall have a much bigger impact here than on other wealthy countries.”
Mr Garnaut, dubbed “Australia’s Nicholas Stern”, referring to the British author of a widely read report on fighting climate change, urged Mr Rudd to go further than his current goal to cut greenhouse gas emissions by 60 per cent by 2050.
Mr Garnaut urged the inclusion of energy and transport in the scheme, but said big corporates whose foreign rivals are free to pollute should be mollified with compensation.
Voters, though, are already fretting over higher petrol prices, along with rising food and mortgage costs, piling pressure on Mr Rudd to get the scheme right and limit the impact on ordinary Australians.
Polls show rising living costs are already eating into government popularity.
Some rival green and conservative analysts have even begun thinking what on election night last year seemed impossible; that emissions and climate policy could bring so much economic upheaval that Mr Rudd’s dominant Labor lasts only one three-year term. Mr Garnaut gave no hard numbers on what his preferred regime could cost, promising those by August. But a “middle-of-the-road” climate policy could gouge 4.8 per cent from gross domestic product, or US$384bn, by end of the century, he said.
“An effective market-based system will be as broadly based as possible, with any exclusions driven by practical necessity and not by short-term political considerations,” the report said. Power generators say they will have to raise prices, while farmers and coal-miners warn of lost overseas competitiveness.
Under Mr Garnaut’s proposals, businesses that pump out less greenhouse gas than their allowable limit would receive credits and be able to sell permits bought at competitive auction to pollute to firms exceeding their carbon emissions quota.
The government is already working on a number of options for the 2010 trading scheme.
“Professor Garnaut’s views will be taken into account,” Penny Wong, climate change minister, said.
“The Australian government believes that every nation must do its fair share to tackle climate change and we are working to help shape a long-term global solution,” she said.
Mr Garnaut’s scheme would cover more sectors of the economy compared with the European Union’s emissions trading system, currently the largest of its type and worth $50bn last year.
The EU scheme, which covers about half of EU emissions, was criticised for overallocating emission permits, which experts said should have been auctioned.
To overcome what Brussels sees as that design flaw, the Commission earlier this year said it will set EU-wide emissions limits for all sectors covered by the trading scheme, and most permits will be auctioned off instead of handed out for free.
The report conceded a competitive emissions-trade system could cause big price gyrations in the early stages and accepted there was a good argument for relying initially on some fixed-price permits and a two-year trial period.
Compensation directed to disadvantaged exporters, to keep them in Australia, should be limited to as much as 30 per cent of the cost of purchasing emission permits, the report said, prompting a testy response from Green groups.
“There is a danger that if we move to a corporate welfare scheme, it’s just going to prolong the use of coal. Coal is not the solution, coal is the problem,” Steve Shallhorn, Greenpeace CEO, told Reuters.
Australia relies on coal to generate about 77 per cent of the country’s electricity.
Mr Garnaut stressed the emission scheme should not become a government revenue-raiser, suggesting 50 per cent of the likely A$15-20bn ($14-19bn) raised from permit auctions should be returned to households and 30 per cent to hard-hit businesses. The other 20 per cent would go to renewable energy.
© Reuters Limited
Friday, 4 July 2008
The appetite for biofuel starves the poor
The evidence is mounting. The biofuels bonanza is forcing millions in the developing world into poverty and hunger
Benjamin Senauer
guardian.co.uk,
Thursday July 3, 2008
The evidence linking biofuel production to rising food prices can't be ignored. Between the start of 2002 and early 2008, basic global food commodity prices rose by 220%. The global production of biofuels - ethanol and bodiesel - rose from less than 8m gallons in 2004 to an estimated 18m gallons in 2008. The most rapid increase has been in the production of ethanol derived from corn in the US: rising from about 3.5m gallons in 2004 to an estimated 9m in 2008. This year ethanol production is forecast to consume 30% or more of 2008's entire US corn crop.
Because of the surging price of agricultural commodities, Josette Sheeran, the executive director of the World Food Program, has warned that a "tsunami of hunger" is sweeping through the poorer countries of the world. Robert Zoellick, the president of the World Bank, has said that as many as 100 million people in the world have been forced into poverty and hunger because of the dramatic increase in food prices. These are people who live on the equivalent of less than $1 a day and whose households spend 70% or more of their meagre budgets on basic food staples. A debate is raging over the role biofuels, especially corn-based ethanol, have played in increasing food prices, and hence in the rising number of people going hungry.
Ed Schafer, the US Secretary of Agriculture, has said that biofuels account for only a few percent of the rise in the price of food, an estimate that would seem unbelievably low. One of the most reliable independent estimates comes from the International Food Policy Research Institute (IFPRI). IFPRI maintains the most sophisticated model of global agricultural commodity supply and utilization, referred to by the acronym Impact. Based on that model, IFPRI estimates that 30% of the increase in the prices of the major grains is due to biofuels. And now we learn that the World Bank's own unpublished forecasts suggest that biofuels have forced global food prices up by 75%.
The increasing US output of ethanol, by raising the price of corn, pulls land from the production of other crops and leads to substitutions elsewhere, so more wheat and other grains may be used to feed livestock. Moreover, for many countries food price inflation is so high that it has become a serious political problem. There have been food riots and protests in over 15 developing countries. A number of major food-producing countries have restricted their agricultural exports in an attempt to hold down the increase in domestic prices. India and Vietnam, usually major rice exporters, have cut off exports, thus reducing the global supply and pushing rice prices through the roof on world markets.
Grains are the staple food of most people in the developing world, although which particular cereal depends on the region. We can combine IFPRI's estimate that biofuels account for 30% of the rise in grain prices and the World Bank president's figure of 100 million more hungry people due to higher food prices. This combination suggests that biofuels are responsible for 30 million more people going hungry in the world. The IFPRI model also allows us to estimate the number of malnourished children less than age five under various conditions. Based on the model there are some 2.4 million more malnourished pre-schoolers in the developing countries in 2008 due to the impact of biofuels. Current research, that I and colleagues are working on, suggests that 390,000 additional children under the age of five will die because of this increase in malnutrition due to biofuels. If current biofuel development trends continue, child deaths will rise to 475,000, almost one-half million by 2010. If the leaked World Bank figures are more accurate, then that figure could be even higher.
Oxfam has called for a moratorium on biofuel mandates, and an end to subsidies - under the latest US farm bill the ethanol subsidy is 45 cents per gallon. Even the International Monetary Fund calls for a re-examination of these subsidies. The biofuel policies of the presumptive candidates for the US presidency have received little attention so far. However, both Barack Obama and John McCain need to re-examine their positions in light of the devastating impact biofuels are having on global hunger.
Benjamin Senauer is a professor of applied economics at the University of Minnesota. These are the personal views of the author and do not necessarily reflect the position of the University of Minnesota.
Benjamin Senauer
guardian.co.uk,
Thursday July 3, 2008
The evidence linking biofuel production to rising food prices can't be ignored. Between the start of 2002 and early 2008, basic global food commodity prices rose by 220%. The global production of biofuels - ethanol and bodiesel - rose from less than 8m gallons in 2004 to an estimated 18m gallons in 2008. The most rapid increase has been in the production of ethanol derived from corn in the US: rising from about 3.5m gallons in 2004 to an estimated 9m in 2008. This year ethanol production is forecast to consume 30% or more of 2008's entire US corn crop.
Because of the surging price of agricultural commodities, Josette Sheeran, the executive director of the World Food Program, has warned that a "tsunami of hunger" is sweeping through the poorer countries of the world. Robert Zoellick, the president of the World Bank, has said that as many as 100 million people in the world have been forced into poverty and hunger because of the dramatic increase in food prices. These are people who live on the equivalent of less than $1 a day and whose households spend 70% or more of their meagre budgets on basic food staples. A debate is raging over the role biofuels, especially corn-based ethanol, have played in increasing food prices, and hence in the rising number of people going hungry.
Ed Schafer, the US Secretary of Agriculture, has said that biofuels account for only a few percent of the rise in the price of food, an estimate that would seem unbelievably low. One of the most reliable independent estimates comes from the International Food Policy Research Institute (IFPRI). IFPRI maintains the most sophisticated model of global agricultural commodity supply and utilization, referred to by the acronym Impact. Based on that model, IFPRI estimates that 30% of the increase in the prices of the major grains is due to biofuels. And now we learn that the World Bank's own unpublished forecasts suggest that biofuels have forced global food prices up by 75%.
The increasing US output of ethanol, by raising the price of corn, pulls land from the production of other crops and leads to substitutions elsewhere, so more wheat and other grains may be used to feed livestock. Moreover, for many countries food price inflation is so high that it has become a serious political problem. There have been food riots and protests in over 15 developing countries. A number of major food-producing countries have restricted their agricultural exports in an attempt to hold down the increase in domestic prices. India and Vietnam, usually major rice exporters, have cut off exports, thus reducing the global supply and pushing rice prices through the roof on world markets.
Grains are the staple food of most people in the developing world, although which particular cereal depends on the region. We can combine IFPRI's estimate that biofuels account for 30% of the rise in grain prices and the World Bank president's figure of 100 million more hungry people due to higher food prices. This combination suggests that biofuels are responsible for 30 million more people going hungry in the world. The IFPRI model also allows us to estimate the number of malnourished children less than age five under various conditions. Based on the model there are some 2.4 million more malnourished pre-schoolers in the developing countries in 2008 due to the impact of biofuels. Current research, that I and colleagues are working on, suggests that 390,000 additional children under the age of five will die because of this increase in malnutrition due to biofuels. If current biofuel development trends continue, child deaths will rise to 475,000, almost one-half million by 2010. If the leaked World Bank figures are more accurate, then that figure could be even higher.
Oxfam has called for a moratorium on biofuel mandates, and an end to subsidies - under the latest US farm bill the ethanol subsidy is 45 cents per gallon. Even the International Monetary Fund calls for a re-examination of these subsidies. The biofuel policies of the presumptive candidates for the US presidency have received little attention so far. However, both Barack Obama and John McCain need to re-examine their positions in light of the devastating impact biofuels are having on global hunger.
Benjamin Senauer is a professor of applied economics at the University of Minnesota. These are the personal views of the author and do not necessarily reflect the position of the University of Minnesota.
Food price rises force biofuel U-turn
By Colin Brown Friday, 4 July 2008
Soaring world food prices look set to force Gordon Brown into a U-turn over the use of crops such as corn, rapeseed, palm and soya to produce fuel as an alternative to petrol and diesel.
Biofuels were seen as the eco-friendly answer to global warming and rising fuel prices but a report to be published on Monday will force the Prime Minister to rethink his support for using crops to keep Britain's cars and lorries running.
A second report will also force Downing Street to revise its policies on food and the environment – opening Mr Brown to the charge from environmental groups of going soft on the Government's green agenda.
The Prime Minister has been warned in a report by Professor Ed Gallagher, head of the Renewable Fuels Agency, that the rush for biofuels has made a "significant" contribution to the soaring cost of food on the global markets. Corn ethanol and biodiesel derived from vegetable oil were widely seen as important ways of creating fuel and combating carbon emissions which contribute to global warming.
The Gallagher review threatens to knock out an important plank in Mr Brown's environmental strategy. He introduced targets in April in Britain requiring all petrol and diesel to contain 2.5 per cent of biofuels with the intention of doubling it to 5 per cent by 2010. The EU is contemplating a 10 per cent target by 2020. Professor Gallagher's report will say the production of fuels from "biomass" – non-food crops – may be sustainable but it challenges the targets for producing fuel from other crops normally used for food.
Greenpeace said biofuels initially "looked good on paper" but the Gallagher review would conclude that the risks are too great to impose higher targets.
The campaign group called for a moratorium on targets, subsidies and tax breaks for biofuels consumption until it was clear that they could be produced from sustainable sources. Oxfam said: "It is clear that any additional pressure on limited land resources has the potential to drive further agriculture clearance of forests or other habitats and to drive up food prices."
The vast majority of the European biodiesel was made from rapeseed oil, said Oxfam. "As we divert more and more rapeseed crop into fuel, European industry is buying increasing supplies of edible oils from overseas including palm oil.
A second report by the Cabinet Office strategy unit is intended to launch a debate over how Britain uses its land more effectively to produce more food.
In a further blow to the Prime Minister's "green" strategy, ministers are preparing to respond to the pressure from motorists – led by haulage owners who staged a noisy protest around Westminster this week – by bringing forward the announcement by the Chancellor Alistair Darling that the 2p rise in fuel duty in October will be scrapped.
Soaring world food prices look set to force Gordon Brown into a U-turn over the use of crops such as corn, rapeseed, palm and soya to produce fuel as an alternative to petrol and diesel.
Biofuels were seen as the eco-friendly answer to global warming and rising fuel prices but a report to be published on Monday will force the Prime Minister to rethink his support for using crops to keep Britain's cars and lorries running.
A second report will also force Downing Street to revise its policies on food and the environment – opening Mr Brown to the charge from environmental groups of going soft on the Government's green agenda.
The Prime Minister has been warned in a report by Professor Ed Gallagher, head of the Renewable Fuels Agency, that the rush for biofuels has made a "significant" contribution to the soaring cost of food on the global markets. Corn ethanol and biodiesel derived from vegetable oil were widely seen as important ways of creating fuel and combating carbon emissions which contribute to global warming.
The Gallagher review threatens to knock out an important plank in Mr Brown's environmental strategy. He introduced targets in April in Britain requiring all petrol and diesel to contain 2.5 per cent of biofuels with the intention of doubling it to 5 per cent by 2010. The EU is contemplating a 10 per cent target by 2020. Professor Gallagher's report will say the production of fuels from "biomass" – non-food crops – may be sustainable but it challenges the targets for producing fuel from other crops normally used for food.
Greenpeace said biofuels initially "looked good on paper" but the Gallagher review would conclude that the risks are too great to impose higher targets.
The campaign group called for a moratorium on targets, subsidies and tax breaks for biofuels consumption until it was clear that they could be produced from sustainable sources. Oxfam said: "It is clear that any additional pressure on limited land resources has the potential to drive further agriculture clearance of forests or other habitats and to drive up food prices."
The vast majority of the European biodiesel was made from rapeseed oil, said Oxfam. "As we divert more and more rapeseed crop into fuel, European industry is buying increasing supplies of edible oils from overseas including palm oil.
A second report by the Cabinet Office strategy unit is intended to launch a debate over how Britain uses its land more effectively to produce more food.
In a further blow to the Prime Minister's "green" strategy, ministers are preparing to respond to the pressure from motorists – led by haulage owners who staged a noisy protest around Westminster this week – by bringing forward the announcement by the Chancellor Alistair Darling that the 2p rise in fuel duty in October will be scrapped.
Secret report: biofuel caused food crisis
Internal World Bank study delivers blow to plant energy drive
Aditya Chakrabortty
The Guardian,
Friday July 4, 2008
A handful of corn before it is processed. Photograph: Charlie Neibergall/AP
Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.
The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.
The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.
Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.
"It would put the World Bank in a political hot-spot with the White House," said one yesterday.
The news comes at a critical point in the world's negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.
It will also put pressure on the British government, which is due to release its own report on the impact of biofuels, the Gallagher Report. The Guardian has previously reported that the British study will state that plant fuels have played a "significant" part in pushing up food prices to record levels. Although it was expected last week, the report has still not been released.
"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam. "It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."
Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".
President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases."
Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.
Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.
"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.
It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.
Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels. But the report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.
The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.
Supporters of biofuels argue that they are a greener alternative to relying on oil and other fossil fuels, but even that claim has been disputed by some experts, who argue that it does not apply to US production of ethanol from plants.
"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."
Aditya Chakrabortty
The Guardian,
Friday July 4, 2008
A handful of corn before it is processed. Photograph: Charlie Neibergall/AP
Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.
The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.
The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.
Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.
"It would put the World Bank in a political hot-spot with the White House," said one yesterday.
The news comes at a critical point in the world's negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.
It will also put pressure on the British government, which is due to release its own report on the impact of biofuels, the Gallagher Report. The Guardian has previously reported that the British study will state that plant fuels have played a "significant" part in pushing up food prices to record levels. Although it was expected last week, the report has still not been released.
"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam. "It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."
Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".
President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases."
Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.
Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.
"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.
It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.
Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels. But the report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.
The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.
Supporters of biofuels argue that they are a greener alternative to relying on oil and other fossil fuels, but even that claim has been disputed by some experts, who argue that it does not apply to US production of ethanol from plants.
"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."
Scotland must put more of its energy into renewables
Creating generation at home will help to cut fuel bills, says Sarah Boyack.
LAST week saw the launch of the UK Government's Renewable Energy Strategy – with the aim of 15 per cent of our electricity coming from renewables by 2020. In our first eight years in the Scottish Parliament, we managed to achieve our target of 20 per cent early. It was a major achievement. There is a wide degree of consensus that we should now be pushing for 50 per cent of our electricity from renewables by 2020. However, Scotland is falling behind the rest of the UK in our slow progress on microgeneration for households. It's an exciting agenda – with the potential to deliver secure, local green energy. With domestic fuel prices continuing to rise, we need to help people make their houses more energy-efficient and to produce their own heat and electricity. We also need to reduce our CO2 emissions to tackle climate change, so there is a win-win here if we act.There are success stories in Scotland. I've visited several projects in Edinburgh where the city council, local housing associations and householders have installed microgeneration devices. People are now experiencing lower bills – all year round. People get excited by installing renewables – but we also need to tackle homes and buildings that are badly insulated. There has been progress. But I'd like to go even further and require every new house to benefit from renewables.It's important, though, that we don't just focus on new housing. 80 per cent of the buildings that will be standing in 2050 have already been built. The Community Household Renewables Initiative has been very successful in testing the technologies and giving householders grants to install them, but research shows it is not until we have tax breaks that we will see a mass market created.That's why I'm continuing to campaign for the Scottish Government to support my Members Bill proposing that people putting in insulation or installing microgeneration are given a one-off rebate on their council tax. We're still waiting for the new SNP Government to deliver on cutting the red tape for individual householders who want to get on and install microgeneration. It took a year for draft guidelines to appear, but they only give the green light to mini wind and heat pumps when houses are 100 metres apart, and the rules on solar panels are out of step with the most efficient products on the market. Ministers have been lobbied by environmental campaigners and the renewables industry. In a recent debate, the Planning Minister recently told me that he was thinking of changing his approach. But we need to get a move on. • Sarah Boyack is a former Scottish Environment Minister and MSP for Edinburgh Central
France to build second new-generation nuclear reactor
The Associated Press
Published: July 3, 2008
LE CREUSOT, France: France will build a second new-generation nuclear reactor, President Nicolas Sarkozy said Thursday, pledging a "new industrial revolution" in an era in which fossil fuels have grown too expensive.
France — the country most reliant on nuclear power — has been constructing its first European Pressurized Reactor, or EPR, on the Normandy coast, and it is expected to go into service in 2012.
EPR reactors are meant eventually to replace the aging reactors around the world whose designs date from decades ago. The Normandy site is one of only two EPRs in the world currently under construction; the other is in Finland.
A decision about where to build a second French EPR will be made in 2009, Sarkozy said, adding that construction would start in 2011.
"The era of inexpensive oil is over," Sarkozy said. "Nuclear power is more than ever an industry of the future, and an essential form of energy."
"France will experience a new industrial revolution," Sarkozy said. He spoke while visiting metal workers at the Industeel plant in Le Creusot in the Burgundy region, which he said would produce most of the components needed for the reactor. Industeel is a subsidiary of steelmaker ArcelorMittal Group.
During Sarkozy's visit, Anne Lauvergeon, CEO of French nuclear company Areva, and Aditya Mittal, CFO of ArcelorMittal, signed a memorandum of understanding to increase production at Industeel for the nuclear market.
Already, 77 percent of France's electricity comes from nuclear power, Sarkozy said.
"We, the French, can become exporters of electricity, though we have no oil and no more natural gas," Sarkozy said. "This is a historic chance for development."
France's Green Party and environmental groups oppose the building of EPRs, saying they are dangerous and costly and do not address root causes of global warming and shrinking world resources.
France Nature Environment called it a "catastrophic sign" for France's presidency of the European Union, which began this week and runs through the end of this year. The group lamented that Sarkozy made the announcement the same day that EU environment ministers were meeting outside Paris.
"The fight against climate disruption is unfortunately serving as a commercial argument for promoting false remedies such as nuclear energy," the group's spokesman Arnaud Gossement said in a statement.
Published: July 3, 2008
LE CREUSOT, France: France will build a second new-generation nuclear reactor, President Nicolas Sarkozy said Thursday, pledging a "new industrial revolution" in an era in which fossil fuels have grown too expensive.
France — the country most reliant on nuclear power — has been constructing its first European Pressurized Reactor, or EPR, on the Normandy coast, and it is expected to go into service in 2012.
EPR reactors are meant eventually to replace the aging reactors around the world whose designs date from decades ago. The Normandy site is one of only two EPRs in the world currently under construction; the other is in Finland.
A decision about where to build a second French EPR will be made in 2009, Sarkozy said, adding that construction would start in 2011.
"The era of inexpensive oil is over," Sarkozy said. "Nuclear power is more than ever an industry of the future, and an essential form of energy."
"France will experience a new industrial revolution," Sarkozy said. He spoke while visiting metal workers at the Industeel plant in Le Creusot in the Burgundy region, which he said would produce most of the components needed for the reactor. Industeel is a subsidiary of steelmaker ArcelorMittal Group.
During Sarkozy's visit, Anne Lauvergeon, CEO of French nuclear company Areva, and Aditya Mittal, CFO of ArcelorMittal, signed a memorandum of understanding to increase production at Industeel for the nuclear market.
Already, 77 percent of France's electricity comes from nuclear power, Sarkozy said.
"We, the French, can become exporters of electricity, though we have no oil and no more natural gas," Sarkozy said. "This is a historic chance for development."
France's Green Party and environmental groups oppose the building of EPRs, saying they are dangerous and costly and do not address root causes of global warming and shrinking world resources.
France Nature Environment called it a "catastrophic sign" for France's presidency of the European Union, which began this week and runs through the end of this year. The group lamented that Sarkozy made the announcement the same day that EU environment ministers were meeting outside Paris.
"The fight against climate disruption is unfortunately serving as a commercial argument for promoting false remedies such as nuclear energy," the group's spokesman Arnaud Gossement said in a statement.
Daimler sees car demand growing despite oil price
By CHRISTOPH RAUWALDTHE WALL STREET JOURNAL EUROPEJuly 4, 2008
Daimler AG Chief Executive Dieter Zetsche said global demand for cars is expected to rise further in coming years though the price for oil will remain high.
"There is good reason to assume that the 'second century of the automobile' has only just begun....The number of automobiles world-wide is currently growing five times faster than the world population," Mr. Zetsche said Thursday at a conference in Magdeburg, Germany.
"While it has taken more than 100 years to put 800 million vehicles on the roads, it will take less than 30 years to at least double that figure....In fact, by the year 2050, the number may almost triple," Mr. Zetsche said, adding that "emerging markets are growing dynamically and so is the demand for self-determined mobility."
However, Mr. Zetsche said he sees "pressure to reconcile the growing demand for mobility with an effective reduction of emissions" in times of skyrocketing fuel prices. "Oil is limited...there's no real expectation of it ever being cheap again," he said.
Mr. Zetsche said the biggest current risks to oil supply are related to politics, security and the cost of new oil projects, "not to mention that financial speculators appear to be turning oil futures into the 'dot-com' stocks of the new millennium." He said he expects excess or new oil reserves to be quickly absorbed by fast-growing countries such as India and China.
Environmental issues, such as reducing emissions of carbon dioxide, are a big concern for car makers, he said.
"The issue is not just CO2 but other emissions as well...and at Daimler, we're not going to wait for new legislation...we're working to comply ahead of time. Daimler is leaving no stone unturned in meeting the challenge of reducing CO2 and other emissions," Mr. Zetsche said. "Ultimately, we'll be driving zero-emission vehicles."
In the next two years, Daimler is investing almost €14 billion ($22 billion) in research and development.
Mr. Zetsche said Daimler will start production of "the next-generation of fuel-cell drive systems" in a low-volume Mercedes-Benz B-Class series in 2010.
Write to Christoph Rauwald at christoph.rauwald@dowjones.com
Daimler AG Chief Executive Dieter Zetsche said global demand for cars is expected to rise further in coming years though the price for oil will remain high.
"There is good reason to assume that the 'second century of the automobile' has only just begun....The number of automobiles world-wide is currently growing five times faster than the world population," Mr. Zetsche said Thursday at a conference in Magdeburg, Germany.
"While it has taken more than 100 years to put 800 million vehicles on the roads, it will take less than 30 years to at least double that figure....In fact, by the year 2050, the number may almost triple," Mr. Zetsche said, adding that "emerging markets are growing dynamically and so is the demand for self-determined mobility."
However, Mr. Zetsche said he sees "pressure to reconcile the growing demand for mobility with an effective reduction of emissions" in times of skyrocketing fuel prices. "Oil is limited...there's no real expectation of it ever being cheap again," he said.
Mr. Zetsche said the biggest current risks to oil supply are related to politics, security and the cost of new oil projects, "not to mention that financial speculators appear to be turning oil futures into the 'dot-com' stocks of the new millennium." He said he expects excess or new oil reserves to be quickly absorbed by fast-growing countries such as India and China.
Environmental issues, such as reducing emissions of carbon dioxide, are a big concern for car makers, he said.
"The issue is not just CO2 but other emissions as well...and at Daimler, we're not going to wait for new legislation...we're working to comply ahead of time. Daimler is leaving no stone unturned in meeting the challenge of reducing CO2 and other emissions," Mr. Zetsche said. "Ultimately, we'll be driving zero-emission vehicles."
In the next two years, Daimler is investing almost €14 billion ($22 billion) in research and development.
Mr. Zetsche said Daimler will start production of "the next-generation of fuel-cell drive systems" in a low-volume Mercedes-Benz B-Class series in 2010.
Write to Christoph Rauwald at christoph.rauwald@dowjones.com
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