Beijing weighs added pollution plans for Olympics
By Jim Yardley
Published: July 29, 2008

Ducks swim past reflection of National Olympic Stadium, also known as Bird's Nest, in a man-made lake at Olympic Green on Monday. (Jason Lee / Reuters)

BEIJING: Less than two weeks before the Olympics, Beijing's skies are so murky and polluted that the authorities are considering emergency measures during the Games beyond the traffic restrictions and factory shutdowns that, so far, have failed to clear the air, state media reported on Monday.
For the past five days, Beijing has been a soupy caldron of humid, gray skies. Local pollution ratings have exceeded the national standard for acceptable air since last Thursday, despite a temporary air pollution control plan that began on July 20.
Under that plan, officials have used odd-even license plate restrictions — limiting motorists to driving on alternate days, depending on whether the last number on their license plate is odd or even — to reduce daily traffic by two million vehicles, or more than half the city's total. Production at some factories has also been curtailed in Beijing and outlying areas.
But on Monday, China's official English-language newspaper, China Daily, ran a front-page story under a boldfaced headline: "Emergency green plan for Games." The article warned that officials might force far more vehicles off city streets — possibly 90 percent of the city's total — and temporarily close more factories.
No timetable was announced, but a senior city engineer told China Daily that officials would inform the public as early as possible about the details of the plan. The Olympics' opening ceremony is on Friday of next week, Aug. 8.

Pollution has been a pressing concern for the Games. Local organizers have promised to hold a Green Olympics, despite air that often ranks among the most polluted in the world. Some Olympic teams, including that of the United States, are providing optional breathing masks for their athletes to protect them from respiratory problems.
Before Monday, Beijing officials had taken a determinedly upbeat approach to the pollution situation. At various news conferences, Beijing officials said pollution levels in July had fallen 20 percent compared with the same period a year ago. They blamed the problems on recent weeks of unusually heavy rains that left behind a humid summer haze. Even though emissions have fallen, pollution was still being trapped in the haze because of a lack of dispersing winds, they said.
"We are very confident about the effectiveness," Du Shaozhong, a deputy director of Beijing's environmental bureau, said of the traffic and industrial restrictions during a news conference on Sunday at the new Olympic media center. "We are going to ensure a good air quality during the Games."
Statistics suggest that the city's daily air pollution index has improved somewhat compared with 2007. Beijing measures four primary air pollutants through its "Blue Sky" air quality monitoring program. A system of monitoring stations calculates a daily air quality rating on a scale of 1 to 500, with 500 being the worst. The accuracy of the system has been questioned, but Beijing officials have steadfastly defended it.
Under the system, any rating under 101 is considered acceptable. The recent run of bad days began last Thursday with a rating of 113. Friday brought a 109; Saturday a 118; and Sunday a 113. Monday's rating has not yet been announced.
Even so, these numbers are better than those in the same month last year when the ratings reached as high as 151 in late July. But such statistical improvements hardly fulfill the expectations that the July pollution control plan would sweep away foul air and render Beijing a city of clear blue skies, at least for the Olympics.
When officials opened the Olympic Village over the weekend, visibility was sharply limited by clotted skies. At a news conference on Friday, a Chinese reporter asked if there were any recommendations to help Olympic visitors discern the difference between polluted skies and cloudy ones.
Zhu Tong, a professor at Peking University who is serving as an air quality adviser to the Beijing Olympics, said unfavorable weather conditions, especially a lack of wind, have prevented the usual patterns for dispersing foul air.
"Usually, stagnant air only stays for three or four days," Zhu said in a telephone interview. "But it has been here for more than a week, which means more pollution is accumulating."
He said officials were discussing more contingency measures, though no decisions had yet been made.
"The air quality is worse than we expected," he said. He said officials were continuing to examine how to reduce emissions by making the traffic flow more efficient. He also expressed optimism that the current weather pattern would break by Tuesday.

"We believe that once this weather moves out, we have a low chance to see it again," he said.
Another Chinese newspaper, Science and Technology Daily, reported on Monday that a broader emergency plan for Beijing and surrounding areas had been submitted for final review to the State Environmental Protection Administration and could be announced this week.

The street in Leeds that leads the way to greener living

A competition is showing the way to cut fuel bills by a third and carbon by a fifth
Martin Wainwright
The Guardian,
Tuesday July 29 2008

Bethany Lewis is a nippy defender for Farsley Vixens under-11 football XI, but for the past six months her sharp eyes have been fixed on a mantelpiece digital monitor at her home in Leeds.
Its flickering numbers show the cost of the household's power, minute by minute, and if it climbs up beyond a couple of pence an hour, Bethany wants to know why.
Her vigilance, matched in 63 other homes on eight streets around Britain with the word green in their name, underlies a dramatic claim that simple good housekeeping could save Britain £4.6bn in domestic fuel bills.
"When I come in from school, I check the numbers," the nine-year-old says. "If they've gone up, I go to the telly to see if it's been left on, so that the video's on standby. If it has, I'll unplug it."
Thousands of similar small acts have put the Lewises' street, Green Lane in the suburb of Cookridge, into the lead in the national Green Streets competition. Halfway through the contest, which began in January, the gently sloping double row of 1960s terraces, semis and bungalows has cut costs by 29.32%.
Its seven rivals haven't done quite as well - Manchester is bottom with only 8.56%. But the Institute for Public Policy Research (IPPR) thinktank, which is monitoring the exercise for British Gas, calculates the £4.6bn - and a 20% fall in carbon emissions - from the eight streets' average score.
Energy use is moving rapidly up the political agenda as prices rise and put pressure on household budgets. Only last week one of Britain's biggest suppliers, EDF Energy, announced that it was raising gas prices by 22% and electricity by 17%. Its five major rivals are expected to follow with similar increases in price.
Creative choices
"We need creative approaches to energy efficiency like this, if the UK is to reach its CO2 reduction targets," says Matthew Lockwood, senior fellow in the IPPR's climate team. Bethany's mother Janine, an insurance team leader, agrees - but adds that it isn't rocket science.
"We've had a new energy-efficient boiler fitted as part of the competition," she says, "but what's struck us is that it's our behaviour which really makes the difference. Just the simplest things, like drawing the curtains later at night in the summer and keeping the lights off. Not putting the children's school uniform in the washing machine every day. Not leaving things on standby."
"And swapping our electric lawnmower for a manual one," adds her husband Ian, a copytaker with the Press Association. "It's just as good and it gives me a bit of a workout."
The Lewises have saved 27% on power bills so far - a handsome figure but one that is dwarfed by the Neysari family at the top of the hill. You won't miss their house, say Ian and Janine, because it's got great solar panels on the roof. Gleaming in the July sun, they have reduced the last six months' costs by half.
"We're heading for saving £500 on gas alone this year, half our previous bill," says Rebecca Neysari, an accountant currently at home with her hands full with three-year-old Cyrus and one-year-old Kiyana. The contest, which has equipped all 64 entrants with energy-efficient technology, has also fitted the house with a new water tank and boiler and individual room valves on all central heating radiators.
Friendly competition
Child power rules here, too. "Cyrus is always telling me to turn things off," says Neysari, wading through a roomful of mostly clockwork or push-and-pull toys. Group support plays an important part too; there's friendly competition between the eight households, but much more in the way of swapping tips.
"We meet regularly to see how everyone's doing," she says, adding that the one gizmo nobody in Green Lane likes is the one-cup kettle donated by British Gas. Halfway up the lane, immersed in her garden's ranks of plump peapods and swelling onions, Shirley Carter denounces it with vim.
"Hated it, I'm afraid," she admits. "I didn't consider it was properly boiled water, just not good enough for a proper cup of tea. I persevered for a while but we've gone back to the old kettle. But I always put lids on pans now, which we didn't used to do."
She and Neysari share Bethany's fascination with the digital monitor, the smallest but most significant of all the extras fitted to the contestants' houses, from Greenway Road in Cardiff to Edinburgh's Colinton Mains Green. "It shoots up when you've got something power-hungry on," Carter says. "Off you go, to find out what it is and do something about it."
Her list of tips includes solar-powered lights in the garden - for vegetable-watering at dusk, which was previously, expensively lit by electric lamps round the Carters' ornamental pond - and a security floodlight over their conservatory. Like Neysari, who now only uses her top oven for the children's meals, Shirley is also debating the "cooking Scrooge" gambit: turning the oven off five to 10 minutes before the end of the recommended cooking period, because it maintains sufficient heat.
Halfway through the competition, the IPPR is publishing three draft recommendations. In keeping with the Bethany/Cyrus approach, the suggested reforms are simple.
The first, says Lockwood, is extending the competition, central to the Green Streets project, by offering £4m annually from the Treasury as prizes for similar inter-town energy-saving contests. Secondly, IPPR suggests recruiting a national force of energy advisers similar to the British Gas experts who have been attached to Green Streets.
"It would be impossible to replicate this competition's ratio of one adviser for eight households," says Lockwood, "but if we had one for every 20 streets, that would be 10,000 advisers."
IPPR puts the cost at £500m annually, against the £4.6bn saving on national energy costs, which currently total about £23bn.
The final reform would repeat on a national scale the £30,000 British Gas has given to the eight streets to pay for new equipment such as the Lewises' boiler and the Neysaris' solar panels. Green mini-mortgages are suggested to fund, for example, a £524 package for cavity wall and loft insulation. A three-year loan at a 7% rate of interest would be offset by £395 annual savings in fuel bills, the thinktank says.
And the whole exercise is not a return to the shivering, primitive past, according to the Leeds energy adviser, Alan Pickard. "One of the most striking things has been how cosy everyone feels because of their new insulation," he says. "You don't have to suffer by saving energy."
How to shrink your footprint
Do
· Turn off all appliances on standby
· Use natural light as much as possible, fitting blinds for privacy
· Turn off oven five minutes before recommended cooking time
· Put lids on all pans
· Wash clothes at lower temperature, less often but with a full load
· Use dishwasher, not sink, but only full loads (stack carefully to avoid chips)
· Take fewer baths
· Use thermostats to the full and ideally lower by at least one degree celsius
· Fit valves on all radiators
· Lower hot-water temperature in summer
· Wash hair early in the evening and allow to dry naturally
Don't
· Overfill kettles
· Use a tumble dryer
· Use a hairdryer
· Let freezer frost up
· Draw curtains early and switch on lights
· Use powered equipment in small gardens
Fit
· An energy-efficient boiler
· Cavity wall, loft and underfloor insulation
· Solar panels
· Double glazing
· Draught-proofing
· Pipe-lagging
· Electronic timing

Campaigners seek an end to production of CO2-intensive 'unconventional fuels'

· Ethical investment groups try to halt tar sand projects· Oil firms to spend $125bn to exploit new sources
Terry Macalister
The Guardian,
Tuesday July 29 2008

Shell, BP and other oil companies at the centre of the tar sands revolution in Canada are facing a backlash from the Co-operative and other members of the ethical investment community determined to bring a halt to these operations for environmental reasons.
A joint report from Co-operative Investments and the wildlife charity WWF released today will be followed up in September by a meeting of the UK Social Investment Forum (UKSIF) to press for an end to this carbon-intensive activity.
The tar sands business, by which crude oil is produced through highly carbon and water-intensive extraction and treatment procedures, risks tipping the world into an irreversible process of global warming, critics claim.
The Co-op and WWF are calling for a global halt to new licensing for tar sands and similar oil operations known as "unconventional fuels".
They want the UK and other countries to prohibit the sale and distribution of any oil products with higher emissions than traditional petrol.
The move comes as Shell and other industry leaders have pledged to spend more than $125bn (£63bn) by 2015 to develop these new sources of petrol at a time of very high crude prices and fears of supply shortages.
The oil companies say the world needs these reserves, which are expensive to produce but are located in a politically stable area, unlike the traditional reserves of the Middle East or Russia. But critics say the environmental price is disastrous.
Paul Monaghan, head of social goals and sustainability at the Co-op group, said: "The current rush to invest in unconventional fossil fuels is wholly inappropriate and, due to their carbon intensity, these projects risk dangerous levels of climate change."
The new report, Unconventional Oil: Scraping the Bottom of the Barrel, will be used as the basis for discussion with the Co-op's 6.5 million customers and for garnering support from more than 200 other members of the UKSIF.
James Leaton, senior policy officer at WWF-UK, said: "Unconventional fuel sources may seem attractive in the short term but ultimately the environmental and economic costs are unthinkable.
"Companies and investors claim to recognise the need to tackle climate change and support international efforts such as Kyoto [climate change protocol]. In oil sands we have an activity that is going against this imperative and undermining Canada's Kyoto commitments, so it is time for investors to challenge this strategy."
Shell said: "The global demand for energy is growing. This will mean greater demand for oil and gas, too. Supplies of accessible, conventional oil and gas cannot keep up with the demand growth. As a result, society has little choice but to add other sources of energy including 'unconventional' fuels like oil sands."
BP said fossil fuels were still going to be needed well into the future even if there were tough restrictions on carbon dioxide emissions.
"Reserves of oil sands represent a significant untapped resource from a politically stable country. The Husky joint venture [BP is planning] will use a process known as steam-assisted gravity drainage, not mining, which produces oil in-situ with a significant reduction of both water use and overall environmental footprint," it said in a statement.
BP added that it was a "keen" supporter of mandatory market mechanisms such as cap-and-trade programmes on greenhouse gases: "We support national and international trading programmes and have factored the future costs of carbon in our analysis of the project's value."
Backstory
There are estimated to be 1.1tn barrels of extractable unconventional oils in North America - Canadian tar sands and US oil shales - according to the Co-op and WWF report. In Canada alone it is hoped to produce 5m barrels a day, which would make the country one of the world's largest oil producers. The extremely energy intensive process means that if all of the reserves were exploited in the next century it would result in emissions of 980 giga-tonnes of CO2. This equates to an estimated rise in CO2 emissions of 49 and 65 parts per million when the world is already at 430ppm - 450 is considered to be a tipping point, the two organisations argue.

Scheme sets quotas for carbon dioxide production

By Fiona Harvey, Environment Correspondent
Published: July 29 2008 03:00

Companies covered by the European Union's emissions trading scheme may only produce a certain quota of carbon dioxide each year, writes Fiona Harvey .
They are given permits, each representing a tonne of the gas. Companies that need to emit more than their quota can buy spare permits from cleaner businesses.
The permits were issued free in the first phase, from 2005 to 2007, but from this year governments can auction a proportion.
Electricity companies gained hundreds of millions of pounds a year from the first phase of the scheme by passing on to customers the theoretical cost of buying the permits.
Copyright The Financial Times Limited 2008

Emission permit auctions to net £2bn

By Fiona Harvey, Environment Correspondent
Published: July 29 2008 03:42

Auctioning off the right to emit carbon dioxide is likely to net the government nearly €2.5bn (£2bn, $3.9bn) over the next four years, under plans to be announced on Tuesday.
The terms on which the emissions permits will be sold for the first time this year will be set out by the Department for Environment, Food and Rural Affairs and the Treasury.

The power sector will be most affected, as electricity generators will have to buy almost a third of their permits to produce carbon, instead of receiving them all free of charge as they have done since 2005, when the European Union’s emissions trading scheme started.
Other sectors in the scheme, such as steelmakers and cement-makers, will continue to receive all of their permits for nothing, at least until 2013.
However, the government has yet to set the date for the first annual auction to begin.
Phil Woolas, environment minister, said: “Auctioning [permits] marks an important step forwards in developing a system where market forces create financial incentives for major carbon emitters to reduce their emissions. This will help stimulate the development of green technology and British business can begin to realise the benefits of being leaders of the low carbon revolution.”
Scheme sets quotas for carbon dioxide production
Companies covered by the European Union’s emissions trading scheme may only produce a certain quota of carbon dioxide each year.
They are given permits, each representing a tonne of the gas, to do so. Companies that need to emit more than their quota can buy spare permits from cleaner businesses.
The permits were issued free in the first phase, from 2005 to 2007, but from this year governments can auction a proportion.
Electricity companies gained hundreds of millions of pounds a year from the first phase of the scheme by passing on to customers the theoretical cost of buying the permits, although they received them free. They will be the only sector forced to buy any permits at auction in the 2008-12 phase of the scheme, but this should not raise power prices as the cost of permits has already been included.
Paying for permits should not prompt power producers to raise their prices, however, as the cost of buying permits has already been factored into electricity prices since 2005.
Some 85m permits – about 7 per cent of the total number of permits allocated to UK companies in the current phase of the scheme – will be auctioned by 2012. But the government plans to “front-load” the auctions so that more are sold this year and next year than in 2011-12.
Monday’s price for this year’s permits stood at about €25, with permits for 2012 selling in the forward market at nearly €30.
At these prices, the permit auctions would yield the government between €2.1bn and €2.4bn in total by 2012.
The next phase of the scheme, from 2013, is likely to swell the government coffers by much more. Paul Klemperer, professor of economics at Oxford university, estimates that the government would gain about £2bn a year from auctioning permits if the power sector were forced to buy all its permits, as the European Commission proposes.
Under the government’s plans for the first permit auction, bidders will be given two months’ notice of the auction date. The auction will run for a few days at most, and bidders will submit their bids, detailing how many permits they want to buy and at what price, electronically. The auctions, which will be open to banks and brokers as well as companies covered by the trading scheme, will be administered by the UK Debt Management Office.
Once all the bids are in, the government will calculate a single settlement price for all the permits available. This will be done by taking the lowest price at which all the permits can be sold to the bidders.
Copyright The Financial Times Limited 2008

Beijing covered in a cloud of pollution as athletes arrive for Olympic Games

The Associated Press
Published: July 28, 2008

BEIJING: The Chinese capital was shrouded in a thick, gray haze of pollution less than two weeks before the opening ceremony of the Beijing Olympic Games. One expert warned that drastic measures enacted to cut vehicle and factory emissions in the city were no guarantee skies would be clear during competitions.
The pollution that covered the city Sunday was among the worst seen in Beijing in the past month, despite traffic restrictions enacted a week ago that removed half of the city's vehicles from roadways.
Visibility was a half mile (less than 1 kilometer) in some places. During the opening ceremony of the Athletes' Village, the housing complex was invisible from the nearby main Olympic Green.
"No, it doesn't really look so good, but as I said, yesterday was better," said Gunilla Lindberg, an International Olympic Committee vice president from Sweden who is staying in the Athletes' Village. "The day I arrived, Tuesday, was awful."
The city's notoriously polluted air is one of the biggest question marks hanging over the games, which begin on Aug. 8. On Sunday, temperatures of about 90 degrees Fahrenheit (32 degrees Celsius), with 70 percent humidity and low winds, created a soupy mix of harmful chemicals, particulate matter and water vapor.

The Beijing Municipal Environmental Protection Bureau said the air was "unhealthy for sensitive groups."
The Chinese leadership consider the Beijing Olympics a matter of national prestige, and efforts to clean up the environment were part of its meticulous preparations for an event it hopes will dazzle the world.
Athletes have been trickling into Beijing were expected to begin arriving in large numbers this week — though some were headed to South Korea, Japan and other places to avoid Beijing's air for as long as possible. Some Olympic delegations, including the U.S. Olympic Committee, are making protective masks available to their athletes.
Du Shaozhong, deputy director of the Beijing Municipal Environmental Protection Bureau, blamed the thick haze on a combination of fog and light winds that were unable to blow away the pollution.
"Our job is to decrease the pollution as much as possible, but sometimes it is very common to have fog in Beijing at this time," Du said.
"The air quality in August will be good," he said.
Du was supported by Dr. Patrick Schamasch, an orthopedic surgeon who is the IOC's medical and scientific director. Schamasch said the IOC was monitoring Beijing's air. He said particulate matter on Sunday "was a little bit higher than what's expected but nothing dramatic."
Schamasch said conditions were "not worse" than in other cities that hosted the games, mentioning Los Angeles, Atlanta and Athens.
Beijing's drastic pollution controls include pulling half the city's 3.3 million vehicles off the roads, closing factories in the capital and a half-dozen surrounding provinces, and halting most construction.

Web Alerts for Asthma

By SHELLY BANJOJuly 27, 2008

Summer can be the worst season for asthma and allergy sufferers, especially when trying to enjoy a beach vacation or mountain hike.
But a few Web sites aim to monitor and forecast air quality and alert you on particular days to avoid spending too much time outside. The results are based on a standardized indicator called the Air Quality Index (AQI) that measures major air pollutants such as ground-level ozone, carbon monoxide, sulfur dioxide and nitrogen dioxide.
The index ranges from 0 to 500 -- the higher the AQI value, the greater the health concern. According to the U.S. Environmental Protection Agency, an AQI value over 300 represents hazardous air quality.
The EPA's Airnow.gov allows users to see a national and international forecast on how clean or polluted the air is, associated health effects and special advisories.
At Azma.com, operated by medical-data company Surveillance Data, asthma sufferers can enter their Zip Code to see a forecast for the allergy and air-quality levels for up to four days. You can also sign up for asthma alerts by email on the days that your asthma index level is above low.
For pollen and mold counts view Azma.com's sister Web site Pollen.com, which provides similar Zip Code based data, or the American Academy of Allergy Asthma & Immunology's National Allergy Bureau's daily count at aaaai.org/nab.
Write to Shelly Banjo at shelly.banjo@wsj.com

Reform UK's distorted power market, MPs say

· Shake-up needed as prices likely to carry on rising · More must be done to alleviate fuel poverty
Mark Milner, industrial editor
The Guardian,
Monday July 28 2008

Britain's energy markets need a radical shake-up to tackle inefficiencies as homes and businesses brace themselves to pay significantly more for power in the future, MPs warn today.
Consumers could be forced to pay more for their power than those in other countries, and if the discrepancies are not tackled it could hit the competitiveness of British manufacturing, the business and enterprise committee says in a report.
As well as measures to increase the markets' efficiency, the committee is demanding that government and energy companies change their approach to fuel poverty in the face of high and rising gas and electricity prices.
It states: "Gas and electricity bills for domestic consumers [will] rise significantly in the near future, over and above the increases already announced this year, with serious consequences for millions of households, especially the fuel-poor."
As part of a wide-ranging report into the UK's energy markets, the committee argues for more gas storage capacity to be built and more UK pressure for the liberalisation of continental European markets.
The committee began its inquiry in the wake of the rise in domestic energy prices earlier this year, and is publishing its findings as more increases are set to kick in.
EDF Energy said on Friday it would increase its gas prices by 22% and electricity by 17%, with other major suppliers likely to follow suit in the coming weeks.
In its report, the committee acknowledged that no one had produced any evidence suggesting collusion between energy suppliers in either the wholesale or retail markets. But it noted that in a retail market dominated by six big companies - British Gas, Scottish and Southern Energy, Scottish Power, EDF Energy, E.ON and npower - "it is easy for those players to make informed judgments about the behaviour of their competitors" and that "this alone can distort competition".
Committee chairman Peter Luff said: "Just because we have found no evidence of collusion does not mean we have given the 'big six' energy companies a clean bill of health - far from it.
"It is clear there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed."
The committee said that while domestic measures could not keep prices down when they were high elsewhere, it noted: "We have concerns that the UK's energy markets are not functioning as efficiently as they should, and that UK prices may be higher than those of [other] countries."
The committee said a fundamental policy rethink on fuel poverty was required. Programmes were not sufficiently directed at those in most need, and efforts by the government and industry needed to be focused on improving the housing stock of the fuel poor as the most effective way of reducing bills and carbon emissions.
"It is very disappointing that ... the government has reduced the budget for Warm Front [energy efficiency grants] at a time when the need for it is greatest."
The fuel poverty charity National Energy Action described the report as a "breath of fresh air ... Its recommendations are bold but realistic."
The committee also expressed concern at the higher bills faced by businesses and said: "Industrial consumers now face prices above European levels. If these price differentials are sustained, they will affect the competitiveness of the UK economy, and put many thousands of jobs in manufacturing at risk."
The manufacturers' organisation EEF said: "Under our much-vaunted liberalised market, industrial consumers are now paying significantly more for their energy than their competitors in Europe. Government must act robustly on the committee's recommendations." The report calls on Ofgem to look at both the forward gas market and the supply of electricity to small and medium-sized companies.

Fuel subsidies overseas take a toll on U.S.

By Keith Bradsher
Published: July 28, 2008

JAKARTA, Indonesia: To understand why fuel prices in the United States have soared over the last year, it helps to talk to the captain of a battered wooden freighter here.
He pays just $2.30 a gallon for diesel, the same price Indonesian motorists pay for regular gasoline. His vessel burns diesel by the barrel, so when the government prepared for a limited price increase this spring, he took to the streets to protest.
"If the government increases the price of fuel any more, my business will collapse totally," said the boat captain, Sinar, who like many Indonesians uses only one name.
From Mexico to India to China, governments fearful of inflation and street protests are heavily subsidizing energy prices, particularly for diesel fuel. But the subsidies — estimated at $40 billion this year in China alone — are also removing much of the incentive to conserve fuel.
The oil company BP, known for thorough statistical analysis of energy markets, estimates that countries with subsidies accounted for 96 percent of the world's increase in oil use last year — growth that has helped drive prices to record levels.

In most countries that do not subsidize fuel, high prices have caused oil demand to stagnate or fall, as economic theory says they should. But in countries with subsidies, demand is still rising steeply, threatening to outstrip the growth in global supplies.
President George W. Bush warned about the effects of subsidies on July 15. "I am discouraged by the fact that some nations subsidize the purchases of product, like gasoline, which, therefore, means that demand may not be causing the market to adjust as rapidly as we'd like," he said.
Indeed, the biggest question hanging over global oil markets these days may be how much longer countries can keep paying the high cost of subsidizing their consumers. If enough countries start passing the true cost of oil through to their citizens, many economists believe, demand growth will slow, bringing the oil market into better balance and lowering prices.
China raised gasoline and diesel prices on June 21, though still keeping them below world levels. World oil prices plunged more than $4 a barrel within minutes on the expectation that Chinese demand would slow.
In Indonesia, the government spends six times as much on energy subsidies as it does on agricultural investments, even as rice prices have skyrocketed this year.
Many countries, like India, have raised oil prices considerably in recent months, only to watch world prices climb even further, pushing up the cost of subsidies once again. China's estimated $40 billion in subsidies this year is up from $22 billion last year, mainly for this reason, although consumption has also risen, with Chinese buying 18 percent more cars in the first half of this year than in the period a year earlier.
Political pressures and inflation concerns continue to prevent many countries — particularly in Asia, where inflation has become an acute problem — from ending subsidies and letting domestic prices bounce up and down.
"You talk about subsidies, you're not only talking about the economy, you're talking about politics," said Purnomo Yusgiantoro, Indonesia's minister of energy and mineral resources. He ruled out any further price increases this year beyond one in May that raised the price of diesel and regular gasoline to $2.30 a gallon.
Nobuo Tanaka, executive director of the International Energy Agency, said that subsidies were clearly a big factor contributing to the mismatch in supply and demand that has helped push up world oil prices. "We think the price mechanism is not working enough to make consumers more efficient," he said.
Indonesia spends more on fuel subsidies, $20 billion this year, than any country except China. Some economists estimate that fuel use in Indonesia would fall by as much as a fifth if the government were to eliminate subsidies entirely.
Malaysia's government incited public anger on June 4 when it raised gasoline prices by 40 percent. The prime minister, Abdullah Ahmad Badawi, announced the following week that he would retire, although he has since said that he will not do so until 2010.
Before adjusting the prices, Malaysia was spending 7.5 percent of its entire economic output on fuel subsidies, a greater share than any other nation. Indonesia follows with 4 percent.
Coming elections in Indonesia and India make further subsidy reductions less likely in both countries. And big oil exporters like Saudi Arabia have so much revenue right now that they can easily afford to subsidize fast-growing domestic demand.

Chinese fuel policy is the hardest to predict: the country's leaders are struggling to reduce inflation and are not expected to take any action on fuel until after the Olympics, at the earliest. But they are also campaigning for greater energy efficiency and less reliance on fuel imports.
Many in Asia bridle at being told to reduce oil use, particularly by the United States, a country of sport-utility vehicles and big houses.
"What about the energy consumption in the United States? Isn't it one of the highest in the world?" said Irvan Saefurrohman, a student activist in Jakarta who organized a fuel-price demonstration in May that turned violent as protesters threw rocks at police and set cars on fire.
Making matters worse, Asia's own oil production has barely risen over the last decade.
Indonesia, with extensive oil fields that made it a top target for Japanese conquest during World War II, became a net oil importer in 2004. Output from its aging fields has fallen almost 40 percent since 1995, and the country plans to withdraw from OPEC at the end of this year.
So Asian nations increasingly compete with the West to import oil from the Mideast and Africa.
In Asia, subsidies have been particularly prevalent for diesel, although many countries subsidize gasoline as well. The subsidies have been an important reason diesel prices have climbed almost twice as quickly as gasoline prices have over the last year in the United States.
Many governments see diesel as more important because truckers and ship captains need it to distribute goods; if diesel prices rise, consumer prices often follow.
Diesel is essentially the same fuel as heating oil, so high diesel prices mean high prices for heating oil. Spiraling prices already have some in the Northeast United States worried about how families will afford to heat their homes this winter.
To be sure, subsidies are not the only cause of high crude oil prices. Strong global economic growth, particularly in Asia, is requiring a lot of energy. Political tensions between the United States and Iran and market psychology have played a role.
Additional factors have contributed to strong demand for diesel in particular. European automakers have been shifting toward the production of more cars with diesel engines, which typically get more miles to the gallon than gasoline-powered cars — although the cost advantage of burning diesel is disappearing with higher prices.
When Vietnam reduced fuel subsidies on July 21, it raised domestic gasoline prices by 31 percent, to $4.22 a gallon for 92-octane fuel. But Vietnam increased diesel prices by only 14.3 percent, to $3.54 a gallon.
The fast-growing demand in China is skewed toward diesel as well.
Automakers are on track to sell only half as many gas-powered cars in China this year as in the United States. But in China they already sell at least 50 percent more medium- and heavy-duty trucks, the workhorses of a manufacturing economy. Virtually all of those run on diesel.
The cheapest fuel per gallon in many Asian countries is not diesel but kerosene, commonly used for cooking by the very poor. In India, for example, the government subsidizes kerosene so heavily that it sells for just 97 cents a gallon, compared with $5 a gallon in the United States.
While the subsidies encourage greater consumption, eliminating them is not easy. "If you reduce the subsidy for kerosene, people are likely to forage in the forests for fuel, and environmentally that is very bad," said Ifzal Ali, the chief economist of the Asian Development Bank.
Kerosene is similar to jet fuel, so strong Asian demand has helped push up costs for airlines.
Some spending on subsidies is simply wasted: Yusgiantoro, the Indonesian official, said that fishing boats take drums of subsidized diesel out to sea for resale to foreign fishing vessels. But a lot of subsidies are delaying what could otherwise be a slowing of economic activity.
Sinar, the freighter captain, said that his vessel hauls cement to outlying islands with limited cement production of their own. Higher diesel costs would make it much costlier to move the cement, which would force builders to accept the prices of their local cement producers and probably cause a construction slowdown.
The nearly 30 percent increase in prices for low-octane gasoline, which Indonesia put in place in May, has already prompted some less affluent families to drive less. Subrata, a 34-year-old who sells gasoline in glass bottles to local motorcyclists in Karawang, Indonesia, said that the increase had halved his sales — and that plenty of motorists were upset.
If the price rises further, he said, "people will not buy it and it will be a heavy blow for the lower classes."

Energy firms ‘conspire to raise prices’

4.5 million families struggling to pay fuel bills, says select committee
Robin Pagnamenta

Energy companies stand accused today of overcharging customers, leaving millions of households struggling to pay gas and electricity bills.
A report claims that the six biggest energy companies conspire to keep charges artificially high and gives a warning of widespread hardship this winter unless the Government acts.
It also accuses the industry regulator of failing to protect the interests of customers and calls for an immediate overhaul of the way gas is traded, amid concern that speculators are making huge profits at the expense of hard-up consumers.
The damning report by MPs, published today, urges ministers to redouble efforts to alleviate the plight of families plunged into fuel poverty before the winter. The number of families who struggle to pay heating bills has risen to 4.5 million from just over two million in the past five years.

The report comes just two days after the French company EDF announced price increases of up to 22 per cent for its five million customers. Other energy companies are about to follow.
MPs on the Commons Business and Enterprise Committee stop short of accusing companies of rigging prices. But Peter Luff, who chairs the committee, said: “Just because we have found no evidence of collusion does not mean we have given the ‘Big Six’ energy companies a clean bill of health - far from it.
“It is clear that there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed.”
British Gas, npower, Scottish Power, E.ON and SSE, as well as EDF, - are accused of operating in a cosy world of minimal price competition. This created an environment where it was “easy for those players to make informed judgments about the behaviour of their competitors. This alone can distort competition without any actual collusion occurring.”
Business was also put at a serious disadvantage to its international competitors. “Industrial consumers now face prices above European levels,” it said. “If these price differentials are sustained, they will put many thousands of jobs in manufacturing at risk.”
Specific concerns included Britain’s acute shortage of gas storage - only 13 days’ worth compared with 99 days in Germany and 122 days in France.
Mr Luff said this represented a “pathetically inadequate level of gas storage” that left Britain’s energy market inherently unstable.
He pointed out that the shortage was contributing to the volatility in wholesale gas prices, in particular because the depletion of the North Sea meant that Britain was increasingly dependent on imported gas, which required temporary storage.
About 40 per cent of the gas used in Britain will be imported this year, up from 27 per cent in 2007. That proportion is expected to rise to 75 per cent by 2015.
The report said that the Government had failed to respond quickly enough to the “increasing and entirely predictable gas import dependency”. More storage capacity was an issue of “national importance and should be a high priority in domestic energy policy”.
It also noted that continuing consolidation in the industry threatened to choke off competition further and, in particular, gave warning that the imminent £11 billion takeover of British Energy by EDF threatened to create an overly dominant player, which would add to the upward pressure on pricing.
“I’m not against the sale of British Energy per se but you just can’t sacrifice further competition like that without the creation of robust safeguards,” Mr Luff told The Times. He called for both Ofgem and the Competition Commission to look “very carefully indeed” at the proposed deal.
The report cited the lack of price transparency and liquidity in the forward market for gas as a key area of concern. “We recommend that Ofgem investigates urgently why gas producers seem unwilling to trade in the forward market,” it said.