London, 18 February:
The EU is on course to slightly exceed its target of sourcing 20% of its energy from renewables by 2020, according to the European Wind Energy Association (EWEA).
However, a leading renewable energy consultant has suggested that EWEA has been somewhat “quick on the buzzer” and that, while policies may be in place, delivery is less certain.
Brussels-based EWEA has carried out an analysis of all 27 member states’ national renewable energy forecasts documents, submitted to the European Commission.
Twenty-one countries say they are set to meet or exceed their targets, led by Spain, which claims to be on course to reach 22.7% renewables by 2020, three percentage points above its targets (click here for a table).
Six do not expect to meet their targets through domestic action alone, with Italy at the bottom of the league – although none of these six expect to be more than one percentage point adrift.
“Europe has witnessed a sea-change since the 2009 Renewable Energy Directive was agreed as in 2008 many countries were stating that their target would be difficult to meet – now the majority are forecasting that they will meet or exceed their national target,” said Justin Wilkes, Policy Director of EWEA.
Arnaud Bouillé, a London-based director in consultancy Ernst & Young’s energy and environmental infrastructure business, welcomed the development of renewable energy policy shown by the submissions.
“From a policy perspective, its fantastic to see … a large amount of policy leadership. But if you go through the submissions, it’s not as clear cut as it seems.
“There are issues around delivery, and whether the market will be able to react to [the] incentives. It’s yet to be seen,” he said.
Specifically, he noted that offshore wind is expected to make “a significant contribution. Targets are very ambitious and are unlikely to be met.”
Nonetheless, Germany expects to exceed its 18% target by 0.7 percentage points, while Estonia, Greece, Ireland, Poland, Slovakia and Sweden all expect to over-comply.
The six who expect to miss their targets are Belgium, Italy, Luxembourg and Malta, together with Bulgaria and Denmark. However, these last two say they plan to introduce additional policies to meet their goals.
Italy, meanwhile, foresees importing renewable energy from neighbouring non-EU countries (Albania, Croatia, Serbia and Tunisia), EWEA says.
Friday, 19 February 2010
Moore Capital seen as key to TEP/Leaf merger
17 February, 2010
The merger of Trading Emissions Plc (TEP) and Leaf Clean Energy was hanging in the balance Wednesday, with management believed to be wooing a key investor in the run-up to Friday’s extraordinary general meeting (EGM).
Last week, two major TEP shareholders announced that they were opposed to the merger – Moore Capital, with 16% of TEP, and Scottish Widows Investment Partnership (SWIP), holding 9.3%.
TEP shareholders representing 75% of those shares that are voted need to support the merger for it to go through. However, despite this apparent blocking minority, the EGM is going ahead – leading to speculation that the terms of the deal could be changed to persuade at least one of the opposing shareholders to support it.
“I haven’t been contacted by management since last week,” Johnny Russell, investment director at SWIP, told Carbon Finance. “If I was key to the deal, the terms would have been presented to me ... What’s interesting is the fact that the EGM is going ahead.”
Moore Capital could not be contacted for comment, and the managements of clean energy private equity investor Leaf Clean Energy and carbon fund manager TEP declined to comment, beyond reiterating their view that the merger has “strategic and financial logic” for the two companies. In December, the boards of the two London-listed companies announced plans to seek an all-share merger, on a “formula asset value basis”. On 13 January, when the scheme document was posted, this valued TEP at 148.9p ($2.34) per share – a considerable premium to TEP’s 94.5p share price – and Leaf Clean Energy at 100.2p.
However, TEP shares subsequently dropped to 82.5p on 9 February. Meanwhile, Leaf shares, which had traded at 96.5p almost all of last year, had fallen as low as 57.5p by late January.
Both shares rallied, somewhat, on news last week of SWIP and Moore Capital’s opposition, to 91p and 62.5p, respectively.
“The major thing throwing this for a six is that Leaf’s share price had gone from £1 to 57p,” said Gus Hochschild, an analyst at Mirabaud Securities. “What they had been offering TEP has sunk by 40p. The pricing of the merger is out of kilter.”
“The advantage always accrued more to Leaf shareholders,” said Andrew Shepherd-Barron, at brokers KBC Peel Hunt. “There are some synergies, but not enough to get the juices flowing.”
SWIP’s concerns, said Russell, were that the relatively transparent assets held by TEP – cash and carbon credits – would be diluted by the “longer-duration, harder-to-value” private equity renewable energy investments made by Leaf.
“If TEP is independent, I can invest at 85p today and get 150p over the three years” to the end of the Kyoto Protocol period, he said. “That’s a very attractive return.”
Meanwhile, Adam Forsyth, an analyst at the Matrix Group, said that “you could argue that the merger is locking in a low value of the carbon price,” given that TEP’s net asset value would rise if carbon prices rallied.
Moore Capital, meanwhile, had supported the merger when it was first proposed by management but, in a statement reported by Bloomberg last week, said: “It is Moore Capital’s current intention not to vote in favour of the merger.”
The use of the word “current” has led to speculation that Moore is seeking more favourable terms. As Carbon Finance went to press on Wednesday afternoon, TEP and Leaf Clean Energy were due to announce the terms of the merger via the London Stock Exchange.
“One of the things we have speculated on is that the managements could offer a distribution of some of the cash in both TEP and Leaf, without damaging their business plans,” said Forsyth. Mirabaud puts the unrestricted cash balances of the two firms at £182.2 million.
Alternatively, management could alter the exchange ratio at which TEP and Leaf shares would be converted into shares in the merged company, more in TEP’s favour.
“The Leaf and TEP boards have some flexibility, but to make it work, they need to offer more to TEP shareholders,” added Forsyth. “The question is, if they do, would they get the support of Leaf shareholders?”
The merger of Trading Emissions Plc (TEP) and Leaf Clean Energy was hanging in the balance Wednesday, with management believed to be wooing a key investor in the run-up to Friday’s extraordinary general meeting (EGM).
Last week, two major TEP shareholders announced that they were opposed to the merger – Moore Capital, with 16% of TEP, and Scottish Widows Investment Partnership (SWIP), holding 9.3%.
TEP shareholders representing 75% of those shares that are voted need to support the merger for it to go through. However, despite this apparent blocking minority, the EGM is going ahead – leading to speculation that the terms of the deal could be changed to persuade at least one of the opposing shareholders to support it.
“I haven’t been contacted by management since last week,” Johnny Russell, investment director at SWIP, told Carbon Finance. “If I was key to the deal, the terms would have been presented to me ... What’s interesting is the fact that the EGM is going ahead.”
Moore Capital could not be contacted for comment, and the managements of clean energy private equity investor Leaf Clean Energy and carbon fund manager TEP declined to comment, beyond reiterating their view that the merger has “strategic and financial logic” for the two companies. In December, the boards of the two London-listed companies announced plans to seek an all-share merger, on a “formula asset value basis”. On 13 January, when the scheme document was posted, this valued TEP at 148.9p ($2.34) per share – a considerable premium to TEP’s 94.5p share price – and Leaf Clean Energy at 100.2p.
However, TEP shares subsequently dropped to 82.5p on 9 February. Meanwhile, Leaf shares, which had traded at 96.5p almost all of last year, had fallen as low as 57.5p by late January.
Both shares rallied, somewhat, on news last week of SWIP and Moore Capital’s opposition, to 91p and 62.5p, respectively.
“The major thing throwing this for a six is that Leaf’s share price had gone from £1 to 57p,” said Gus Hochschild, an analyst at Mirabaud Securities. “What they had been offering TEP has sunk by 40p. The pricing of the merger is out of kilter.”
“The advantage always accrued more to Leaf shareholders,” said Andrew Shepherd-Barron, at brokers KBC Peel Hunt. “There are some synergies, but not enough to get the juices flowing.”
SWIP’s concerns, said Russell, were that the relatively transparent assets held by TEP – cash and carbon credits – would be diluted by the “longer-duration, harder-to-value” private equity renewable energy investments made by Leaf.
“If TEP is independent, I can invest at 85p today and get 150p over the three years” to the end of the Kyoto Protocol period, he said. “That’s a very attractive return.”
Meanwhile, Adam Forsyth, an analyst at the Matrix Group, said that “you could argue that the merger is locking in a low value of the carbon price,” given that TEP’s net asset value would rise if carbon prices rallied.
Moore Capital, meanwhile, had supported the merger when it was first proposed by management but, in a statement reported by Bloomberg last week, said: “It is Moore Capital’s current intention not to vote in favour of the merger.”
The use of the word “current” has led to speculation that Moore is seeking more favourable terms. As Carbon Finance went to press on Wednesday afternoon, TEP and Leaf Clean Energy were due to announce the terms of the merger via the London Stock Exchange.
“One of the things we have speculated on is that the managements could offer a distribution of some of the cash in both TEP and Leaf, without damaging their business plans,” said Forsyth. Mirabaud puts the unrestricted cash balances of the two firms at £182.2 million.
Alternatively, management could alter the exchange ratio at which TEP and Leaf shares would be converted into shares in the merged company, more in TEP’s favour.
“The Leaf and TEP boards have some flexibility, but to make it work, they need to offer more to TEP shareholders,” added Forsyth. “The question is, if they do, would they get the support of Leaf shareholders?”
Fortis eyeing new investors for $1.2 billion China green fund
London, 18 February:
Fortis Investments is considering broadening access to its China environmental mandate, into which around $1.2 billion has been raised since its launch in December.
The vehicle was set up at the request of one of Fortis’ clients – understood to be Japan’s Nomura – which has raised the money from retail investors.
One third of the assets are invested directly into environmental technology companies listed on the mainland, with the remainder via their offshore listings, in Hong Kong or New York, for example.
Speaking at a press briefing today, François Perrin, Fortis Investments’ Frankfurt-based head of Asian sustainability strategies, said “there’s very strong demand from clients” for sustainable investments in the region.
“It’s relatively obvious that we’ll continue to propose that type of investment to our clients,” he said when asked whether other institutional investors will be able to participate in the vehicle, which is structured as a fund-of-funds.
He added, however, that “questions of capacity” would be likely to limit the size of the fund: “It’s not a question of the capacity of environmental names [that is, the market capitalisation of appropriate stocks] but more a question of capacity of access,” noting that overseas investors are limited in how much of the Renminbi – China’s currency – they can convert to use to buy Mainland-listed stocks.
Perrin declined to comment on the name of the client, or of the country from which the funds had been raised.
The Fortis fund is by a long way the largest environmental investment fund dedicated to investing in Chinese stocks.
Fortis Investments is considering broadening access to its China environmental mandate, into which around $1.2 billion has been raised since its launch in December.
The vehicle was set up at the request of one of Fortis’ clients – understood to be Japan’s Nomura – which has raised the money from retail investors.
One third of the assets are invested directly into environmental technology companies listed on the mainland, with the remainder via their offshore listings, in Hong Kong or New York, for example.
Speaking at a press briefing today, François Perrin, Fortis Investments’ Frankfurt-based head of Asian sustainability strategies, said “there’s very strong demand from clients” for sustainable investments in the region.
“It’s relatively obvious that we’ll continue to propose that type of investment to our clients,” he said when asked whether other institutional investors will be able to participate in the vehicle, which is structured as a fund-of-funds.
He added, however, that “questions of capacity” would be likely to limit the size of the fund: “It’s not a question of the capacity of environmental names [that is, the market capitalisation of appropriate stocks] but more a question of capacity of access,” noting that overseas investors are limited in how much of the Renminbi – China’s currency – they can convert to use to buy Mainland-listed stocks.
Perrin declined to comment on the name of the client, or of the country from which the funds had been raised.
The Fortis fund is by a long way the largest environmental investment fund dedicated to investing in Chinese stocks.
Foreign developers shut out of China’s offshore wind boom
Kunming, 18 February: China has opened the door to domestic wind power companies to begin developing the country’s offshore resources – but has effectively shut it on international operators – with the release of regulations governing approval and ownership of offshore wind projects.
China has repeatedly dashed past its targets in installing onshore wind power capacity, and is expected to have the second-most installed capacity in the world by 2011. But its offshore resources, with estimated potential of between 100 and 200 GW (assuming 10-20% coastline utilisation), have yet to be exploited.
Planning for the first round of concession bidding began in early February, with national targets likely sometime this year.
But Liming Qiao, policy director at the Global Wind Energy Council, said the offshore regulation, announced last week, will prevent overseas firms from being involved: “The regulation rules out foreign developers in the offshore business. This is a bit shocking, as we all know that for the onshore development the government didn’t explicitly exclude international developers.”
In effect, however, there has been relatively little international participation in the onshore wind sector due to policy barriers such as low tariff levels and a regulation requiring majority Chinese ownership to qualify for revenue from the Clean Development Mechanism (CDM), the UN-administered system for rewarding projects that reduce greenhouse gas emissions with carbon credits. Consequently, the majority of China’s 25 GW of installed onshore capacity has been developed by the ‘big five’ state-owned utilities.
The new offshore regulation does not overtly prohibit foreign involvement in project development. But it does require foreign companies to enter into a Chinese-controlled joint venture and it limits equity ownership to less than 50%. “In reality, most of the international developers cannot, or are not willing to, do a joint venture with [a] Chinese partner,” Qiao said.
The Chinese press, quoting a National Energy Administration official, reported that the requirement was put in place to prevent sensitive oceanic and ocean current data leaking to the outside world.
International equipment providers, however, will see new opportunities along China’s coastline. With proven products already installed in Europe, wind turbine manufacturers such as Vestas and Siemens will have a technical head start in the new market.
Meanwhile, Chinese turbine companies, who have taken over the top three spots in domestic market share from internationals over the past two years, may not be far behind. Sinovel has a small number of 3 MW turbines off the coast near Shanghai, and market-leading Goldwind plans to start volume production of a 5MW offshore machine in the second half of this year.
Development of the offshore sector will likely take off quickly, as power grid deficiencies, which have resulted in more than 20% of installed onshore capacity remaining thus far unconnected, will not be a factor along China’s industrial east coast. The big five utilities are already in talks with provincial authorities to secure prime locations, and Qiao said that since the offshore sector is effectively new, CDM registration at the UN, where a number of onshore projects have been controversially rejected in recent months, should not be an issue.
International investors have been keen on the booming but inaccessible Chinese wind sector for some time, and jumped on the chance to take a position in the industry via China Longyuan’s Hong Kong initial public offering last December.
China has repeatedly dashed past its targets in installing onshore wind power capacity, and is expected to have the second-most installed capacity in the world by 2011. But its offshore resources, with estimated potential of between 100 and 200 GW (assuming 10-20% coastline utilisation), have yet to be exploited.
Planning for the first round of concession bidding began in early February, with national targets likely sometime this year.
But Liming Qiao, policy director at the Global Wind Energy Council, said the offshore regulation, announced last week, will prevent overseas firms from being involved: “The regulation rules out foreign developers in the offshore business. This is a bit shocking, as we all know that for the onshore development the government didn’t explicitly exclude international developers.”
In effect, however, there has been relatively little international participation in the onshore wind sector due to policy barriers such as low tariff levels and a regulation requiring majority Chinese ownership to qualify for revenue from the Clean Development Mechanism (CDM), the UN-administered system for rewarding projects that reduce greenhouse gas emissions with carbon credits. Consequently, the majority of China’s 25 GW of installed onshore capacity has been developed by the ‘big five’ state-owned utilities.
The new offshore regulation does not overtly prohibit foreign involvement in project development. But it does require foreign companies to enter into a Chinese-controlled joint venture and it limits equity ownership to less than 50%. “In reality, most of the international developers cannot, or are not willing to, do a joint venture with [a] Chinese partner,” Qiao said.
The Chinese press, quoting a National Energy Administration official, reported that the requirement was put in place to prevent sensitive oceanic and ocean current data leaking to the outside world.
International equipment providers, however, will see new opportunities along China’s coastline. With proven products already installed in Europe, wind turbine manufacturers such as Vestas and Siemens will have a technical head start in the new market.
Meanwhile, Chinese turbine companies, who have taken over the top three spots in domestic market share from internationals over the past two years, may not be far behind. Sinovel has a small number of 3 MW turbines off the coast near Shanghai, and market-leading Goldwind plans to start volume production of a 5MW offshore machine in the second half of this year.
Development of the offshore sector will likely take off quickly, as power grid deficiencies, which have resulted in more than 20% of installed onshore capacity remaining thus far unconnected, will not be a factor along China’s industrial east coast. The big five utilities are already in talks with provincial authorities to secure prime locations, and Qiao said that since the offshore sector is effectively new, CDM registration at the UN, where a number of onshore projects have been controversially rejected in recent months, should not be an issue.
International investors have been keen on the booming but inaccessible Chinese wind sector for some time, and jumped on the chance to take a position in the industry via China Longyuan’s Hong Kong initial public offering last December.
UN climate chief quits to join consultancy group
London, 18 February:
UN climate chief Yvo de Boer is to leave his post in July, two months ahead of his contract expiring, to join KPMG as an advisor on climate and sustainability.
It also comes two months after de Boer told a meeting of business leaders “I’d love to be your salesman”, at the international talks in Copenhagen.
He has been executive secretary of the UN Framework Convention on Climate Change (UNFCCC) – the body overseeing international negotiations on climate change – since September 2006, having previously been deputy director general of the Dutch environment ministry.
When asked on 26 January if a new executive secretary would be appointed this year, a UNFCCC spokeswoman told Environmental Finance: “Yvo’s contract is through September of this year and, as far as I know, there is every expectation it will be continued.”
Accountants KPMG said de Boer will be advising business, governments and other organisations on sustainability issues. A KPMG spokesman said he would be based in Amsterdam and the role was not full time as “he will also work with universities and academia”.
Though now an international business, KPMG has its roots in Dutch accounting firm Klynveld Kraayenhof & Co. The consultancy has 350 people working in sustainability across at least 20 countries.
De Boer’s departure comes two months after a disappointing conclusion to the climate talks in Copenhagen. Two years previously, countries had set a goal of establishing a binding post-2012 treaty to reduce greenhouse gas emissions in the Danish capital – an objective that they failed to achieve. However, some have argued that the meeting signalled a new era of cooperation between major emitters.
“Copenhagen did not provide us with a clear agreement in legal terms, but the political commitment and sense of direction toward a low-emissions world are overwhelming. This calls for new partnerships with the business sector and I now have the chance to help make this happen,” de Boer said.
He may have hinted at his next move during the Copenhagen talks, telling business executives at the World Business Council for Sustainable Development meeting on 11 December, in the context of their involvement in the talks, “I’d love to go out and be your salesman, but I need to know what I’m selling.”
Greenpeace hailed his leadership of the UNFCCC. In a statement, the environmental group said: “Yvo de Boer injected much-needed dynamism and straight-talking into the role of executive secretary to the UN Climate Convention. He has been a passionate and sometimes emotional advocate for a global deal to avert climate chaos, and has set the bar for what leading the UNFCCC is about.”
UK’s Energy and Climate Change Secretary Ed Miliband said: “Yvo de Boer's patient work helped produce the Copenhagen Accord which contains commitments covering 80% of global emissions, something never previously achieved.”
He added: “We must quickly find a suitable successor, who can oversee the negotiations and reform the UNFCCC to ensure it is up to the massive task of dealing with what are some of the most complex negotiations ever.”
UN climate chief Yvo de Boer is to leave his post in July, two months ahead of his contract expiring, to join KPMG as an advisor on climate and sustainability.
It also comes two months after de Boer told a meeting of business leaders “I’d love to be your salesman”, at the international talks in Copenhagen.
He has been executive secretary of the UN Framework Convention on Climate Change (UNFCCC) – the body overseeing international negotiations on climate change – since September 2006, having previously been deputy director general of the Dutch environment ministry.
When asked on 26 January if a new executive secretary would be appointed this year, a UNFCCC spokeswoman told Environmental Finance: “Yvo’s contract is through September of this year and, as far as I know, there is every expectation it will be continued.”
Accountants KPMG said de Boer will be advising business, governments and other organisations on sustainability issues. A KPMG spokesman said he would be based in Amsterdam and the role was not full time as “he will also work with universities and academia”.
Though now an international business, KPMG has its roots in Dutch accounting firm Klynveld Kraayenhof & Co. The consultancy has 350 people working in sustainability across at least 20 countries.
De Boer’s departure comes two months after a disappointing conclusion to the climate talks in Copenhagen. Two years previously, countries had set a goal of establishing a binding post-2012 treaty to reduce greenhouse gas emissions in the Danish capital – an objective that they failed to achieve. However, some have argued that the meeting signalled a new era of cooperation between major emitters.
“Copenhagen did not provide us with a clear agreement in legal terms, but the political commitment and sense of direction toward a low-emissions world are overwhelming. This calls for new partnerships with the business sector and I now have the chance to help make this happen,” de Boer said.
He may have hinted at his next move during the Copenhagen talks, telling business executives at the World Business Council for Sustainable Development meeting on 11 December, in the context of their involvement in the talks, “I’d love to go out and be your salesman, but I need to know what I’m selling.”
Greenpeace hailed his leadership of the UNFCCC. In a statement, the environmental group said: “Yvo de Boer injected much-needed dynamism and straight-talking into the role of executive secretary to the UN Climate Convention. He has been a passionate and sometimes emotional advocate for a global deal to avert climate chaos, and has set the bar for what leading the UNFCCC is about.”
UK’s Energy and Climate Change Secretary Ed Miliband said: “Yvo de Boer's patient work helped produce the Copenhagen Accord which contains commitments covering 80% of global emissions, something never previously achieved.”
He added: “We must quickly find a suitable successor, who can oversee the negotiations and reform the UNFCCC to ensure it is up to the massive task of dealing with what are some of the most complex negotiations ever.”
Thursday, 18 February 2010
Defections Shake Up Climate Coalition
By STEPHEN POWER And BEN CASSELMAN
Three big companies quit an influential lobbying group that had focused on shaping climate-change legislation, in the latest sign that support for an ambitious bill is melting away.
BP PLC and two other major firms quit a lobbying group focused on shaping global-warming policy.
Several companies are quitting an influential lobbying group focusing in on legislation, despite the administratin's push to use the budget to pass greenhouse gas legistlation. WSJ's Grainne McCarthy reports in the News Hub.
Oil giants BP PLC and ConocoPhillips and heavy-equipment maker Caterpillar Inc. said Tuesday they won't renew their membership in the three-year-old U.S. Climate Action Partnership, a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases.
The move comes as debate over climate change intensifies and concerns mount about the cost of capping greenhouse-gas emissions.
On a range of issues, from climate change to health care, skepticism is growing in Washington that Congress will pass any major legislation in a contentious election year in which Republicans are expected to gain seats. For companies, the shifting winds have reduced pressure to find common ground, leading them to pursue their own, sometimes conflicting interests.
Last week, the head of the Pharmaceutical Research and Manufacturers of America, Billy Tauzin, said he would step down as president of the industry's main lobby in Washington, amid criticism from some in the industry over the alliance he made last year with the White House to support health-care legislation.
The administration had worked hard to persuade industry groups to climb aboard its major legislative initiatives—a tack many business interests saw as sensible following the Democrats' big gains in the 2008 elections. But "unlikely bedfellows make for breakups," said Kevin Book, managing director of Clearview Energy Partners, a consulting firm.
Spokesmen for ConocoPhillips and BP said the companies still support legislation to reduce greenhouse-gas emissions, but believe they can accomplish more working outside USCAP's umbrella. Caterpillar said it plans to focus on commercializing green technologies.
ConocoPhillips's senior vice president for government affairs, Red Cavaney, said the USCAP was focused on getting a climate-change bill passed, whereas Conoco is increasingly concerned with what the details of such a bill would be.
"USCAP was starting to do more and more on trying to get a bill out without trying to work as much on the substance of it," Mr. Cavaney said.
A spokesman for USCAP said it intends to continue its work. More than 20 other large companies, including oil company Royal Dutch Shell PLC and industrial heavyweights General Electric Co. and Honeywell International Inc., remain in the coalition with environmental groups such as the Environmental Defense Fund and Natural Resources Defense Council. The USCAP said it expects to add new members in coming months.
"We think there's momentum to get [a climate bill] done," USCAP spokesman Tad Segal said. "President [Barack] Obama's State of the Union address made it clear the administration is behind us."
But experts said the companies' decision to withdraw from USCAP is a sign the politics of climate change is shifting in Washington. When Mr. Obama took office, Congress appeared to have momentum for a climate bill that would push the economy toward lower-carbon alternatives. But as the economy soured, support waned.
The Obama administration says it will curb greenhouse-gas emissions using the Clean Air Act if Congress doesn't act, and the Environmental Protection Agency has been pushing ahead with rule making.
When USCAP was founded in 2007, leaders of big U.S. companies had grown concerned that Democrats in Congress were preparing to put strict limits on industrial emissions of heat-trapping gases linked to climate change. Many executives decided it was better to be part of the debate in a united front.
"The saying in Washington is that if you're not at the table, you're on the menu," said Whitney Stanco, an energy policy analyst for Concept Capital, a Washington research firm.
The big-tent approach boosted USCAP's influence. In January 2009, the group released its recommendations for legislation. Many were incorporated into legislation, adopted by the House, that would require companies to reduce carbon emissions or buy pollution credits from firms that did.
But not all of USCAP's members supported the bill. Caterpillar objected in part because it would impose tariffs on goods from countries that didn't match U.S. efforts to combat climate change. BP and Conoco opposed it on the grounds that it didn't treat energy producers equally.
As long as climate legislation appeared imminent, companies were willing to paper over their differences and continue to work together. But by late last year, momentum had stalled in the Senate as Washington turned its attention to health care, the economy and the midterm elections. Few experts expect a bill to pass this year.
USCAP isn't the only group to be roiled by the issue. Last year, several members of the U.S. Chamber of Commerce quit the group over its stance against the climate bill.
Write to Stephen Power at stephen.power@wsj.com and Ben Casselman at ben.casselman@wsj.com
Three big companies quit an influential lobbying group that had focused on shaping climate-change legislation, in the latest sign that support for an ambitious bill is melting away.
BP PLC and two other major firms quit a lobbying group focused on shaping global-warming policy.
Several companies are quitting an influential lobbying group focusing in on legislation, despite the administratin's push to use the budget to pass greenhouse gas legistlation. WSJ's Grainne McCarthy reports in the News Hub.
Oil giants BP PLC and ConocoPhillips and heavy-equipment maker Caterpillar Inc. said Tuesday they won't renew their membership in the three-year-old U.S. Climate Action Partnership, a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases.
The move comes as debate over climate change intensifies and concerns mount about the cost of capping greenhouse-gas emissions.
On a range of issues, from climate change to health care, skepticism is growing in Washington that Congress will pass any major legislation in a contentious election year in which Republicans are expected to gain seats. For companies, the shifting winds have reduced pressure to find common ground, leading them to pursue their own, sometimes conflicting interests.
Last week, the head of the Pharmaceutical Research and Manufacturers of America, Billy Tauzin, said he would step down as president of the industry's main lobby in Washington, amid criticism from some in the industry over the alliance he made last year with the White House to support health-care legislation.
The administration had worked hard to persuade industry groups to climb aboard its major legislative initiatives—a tack many business interests saw as sensible following the Democrats' big gains in the 2008 elections. But "unlikely bedfellows make for breakups," said Kevin Book, managing director of Clearview Energy Partners, a consulting firm.
Spokesmen for ConocoPhillips and BP said the companies still support legislation to reduce greenhouse-gas emissions, but believe they can accomplish more working outside USCAP's umbrella. Caterpillar said it plans to focus on commercializing green technologies.
ConocoPhillips's senior vice president for government affairs, Red Cavaney, said the USCAP was focused on getting a climate-change bill passed, whereas Conoco is increasingly concerned with what the details of such a bill would be.
"USCAP was starting to do more and more on trying to get a bill out without trying to work as much on the substance of it," Mr. Cavaney said.
A spokesman for USCAP said it intends to continue its work. More than 20 other large companies, including oil company Royal Dutch Shell PLC and industrial heavyweights General Electric Co. and Honeywell International Inc., remain in the coalition with environmental groups such as the Environmental Defense Fund and Natural Resources Defense Council. The USCAP said it expects to add new members in coming months.
"We think there's momentum to get [a climate bill] done," USCAP spokesman Tad Segal said. "President [Barack] Obama's State of the Union address made it clear the administration is behind us."
But experts said the companies' decision to withdraw from USCAP is a sign the politics of climate change is shifting in Washington. When Mr. Obama took office, Congress appeared to have momentum for a climate bill that would push the economy toward lower-carbon alternatives. But as the economy soured, support waned.
The Obama administration says it will curb greenhouse-gas emissions using the Clean Air Act if Congress doesn't act, and the Environmental Protection Agency has been pushing ahead with rule making.
When USCAP was founded in 2007, leaders of big U.S. companies had grown concerned that Democrats in Congress were preparing to put strict limits on industrial emissions of heat-trapping gases linked to climate change. Many executives decided it was better to be part of the debate in a united front.
"The saying in Washington is that if you're not at the table, you're on the menu," said Whitney Stanco, an energy policy analyst for Concept Capital, a Washington research firm.
The big-tent approach boosted USCAP's influence. In January 2009, the group released its recommendations for legislation. Many were incorporated into legislation, adopted by the House, that would require companies to reduce carbon emissions or buy pollution credits from firms that did.
But not all of USCAP's members supported the bill. Caterpillar objected in part because it would impose tariffs on goods from countries that didn't match U.S. efforts to combat climate change. BP and Conoco opposed it on the grounds that it didn't treat energy producers equally.
As long as climate legislation appeared imminent, companies were willing to paper over their differences and continue to work together. But by late last year, momentum had stalled in the Senate as Washington turned its attention to health care, the economy and the midterm elections. Few experts expect a bill to pass this year.
USCAP isn't the only group to be roiled by the issue. Last year, several members of the U.S. Chamber of Commerce quit the group over its stance against the climate bill.
Write to Stephen Power at stephen.power@wsj.com and Ben Casselman at ben.casselman@wsj.com
Small Reactors Generate Big Hopes
By REBECCA SMITH
A new type of nuclear reactor—smaller than a rail car and one tenth the cost of a big plant—is emerging as a contender to reshape the nation's resurgent nuclear power industry.
Three big utilities, Tennessee Valley Authority, First Energy Corp. and Oglethorpe Power Corp., on Wednesday signed an agreement with McDermott International Inc.'s Babcock & Wilcox subsidiary, committing to get the new reactor approved for commercial use in the U.S.
Although none have agreed to buy a reactor, the utilities' commitment should help build momentum behind the technology and hasten its adoption across the industry. It's a crucial first step toward getting the reactor design certified by the Nuclear Regulatory Commission. Early support from the three utilities, and four others that are mulling the agreement, increases the odds that customers will come forward in the future.
The news comes just as President Barack Obama announced more than $8 billion in loan guarantees this week that would pave the way for the first nuclear power plant in the U.S. in almost 30 years. He has proposed accelerating nuclear development by tripling the amount of federal loan guarantees for reactor construction to $54 billion.
The smaller Babcock & Wilcox reactor can generate only 125 to 140 megawatts of power, about a tenth as much as a big one. But the utilities are betting that these smaller, simpler reactors can be manufactured quickly and installed at potentially dozens of existing nuclear sites or replace coal-fired plants that may become obsolete with looming emissions restrictions.
"We see significant benefits from the new, modular technology," said Donald Moul, vice president of nuclear support for First Energy, an Ohio-based utility company.
He said First Energy, which operates four reactors at three sites in Ohio and Pennsylvania, has made no decision to build any new reactor and noted there's "a lot of heavy lifting to do to get this reactor certified" by the NRC for U.S. use.
Indeed, the smaller reactors still could incite major opposition. They face the same unresolved issues of where to put the waste and public fear of contamination, in the event of an accident. They could also raise alarms about creating possible terrorism targets in populated areas.
Still, the sudden interest in small reactors illustrates a growing unease with the route that nuclear power has taken for half a century. What many regard as the first commercial reactor built in the U.S., in 1957 at Shippingport, Pa., was only about 60 megawatts in size. By the time construction petered out three decades later, reactors had grown progressively bigger, ending up at about 1,000 megawatts of capacity.
Now, after a two-decade lull in construction, the U.S. is gearing up for a robust revival of nuclear power. Expanding the nuclear sector, which currently produces 20% of the nation's electricity, is considered essential to slashing carbon emissions.
Companies such as NRG Energy Inc., Duke Energy Corp. and Southern Co. are planning large reactors that cost up to $10 billion apiece and can generate enough electricity to power a city the size of Tulsa, Okla.
But there is growing investor worry that reactors may have grown so big that they could sink the utilities that buy them. An increasingly global supply chain for big reactors also worries investors.
"We think the probability that things will go wrong with these large projects is greater than the probability that things will go right," said Jim Hempstead, senior vice president at Moody's Investors Service. He warns that nuclear-aspiring utilities with "bet the farm" projects face possible credit downgrades.
The large price tag has begun to spook some utility executives. John Rowe, the chief executive of Exelon Corp., which operates the nation's largest fleet of nuclear plants, had hoped to build a new reactor in Texas. But, having failed to get federal loan guarantees, he recently said he's having second thoughts.
Instead, his company is expanding the capacity of its existing nuclear plants and is looking at Babcock & Wilcox's design. Amir Shakarami, Exelon's senior vice president, said mPower provides "an alternative that is practical and scalable," offering a way to add zero-emission power in small amounts and avoid the rate shocks that accompanied big reactors in the past.
Already, the high cost of large reactors is generating friction among partners. CPS Energy and NRG Energy Inc. sued each other recently when CPS, a city-owned utility in San Antonio got cold feet about investing in a new nuclear plant that could push up power costs for its customers. On Wednesday, the two agreed to a settlement in which CPS will reduce its stake in the project to 7.6% from 50% in exchange for a $90 million payment from NRG and dropping its lawsuit.
The two agreed Wednesday to a settlement in which NRG will pay CPS $1 billion to reduce its ownership interest in the project so it can proceed.
For utilities, a small reactor has several advantages, starting with cost. Small reactors are expected to cost about $5,000 per kilowatt of capacity, or $750 million or so for one of Babcock & Wilcox's units. Large reactors cost $5 billion to $10 billion for reactors that would range from 1,100 to 1,700 megawatts of generating capacity.
While large reactors are built on site, a process that can take five years, the mPower reactors would be manufactured in Babcock & Wilcox's factories in Indiana, Ohio or Virginia and transported by rail or barge. That could cut construction times in half, experts believe.
Because they could be water-cooled or air-cooled, mPower reactors wouldn't have to be located near large sources of water, another problem for big reactors that require millions of gallons of water each day. That could open up parts of the arid West for nuclear development.
The first units likely would be built adjacent to existing nuclear plants, many of which were originally permitted to have two to four units but usually have only one or two.
Down the road, utilities could replace existing coal-fired power plants with small reactors in order to take advantage of sites already served by transmission lines and, in some cases, needed for grid support. Like any other power plants, these small reactors could be easily hooked up to the power grid.
One of the biggest attractions, however, is that utilities could start with a few reactors and add more as needed. By contrast, with big reactors, utilities have what is called "single-shaft risk," where billions of dollars are tied up in a single plant.
Another advantage: mPower reactors will store all of their waste on each site for the estimated 60-year life of each reactor.
Nuclear development moves at a glacial pace. The next wave of large reactors won't begin coming on line until 2016 or 2017, at the earliest. The first certification request for a small reactor design is expected to be Babcock & Wilcox's request in 2012. The first units could come on line after 2018.
However, some experts believe that if the industry embraces small reactors, nuclear power in the U.S. could become pervasive because more utilities would be able to afford them.
"There's a higher likelihood that there are more sites that could support designs for small reactors than large ones," said David Matthews, head of new reactor licensing at the Nuclear Regulatory Commission.
That twist has some observers worried. "Nuclear power requires high-level security and expertise to operate safely," said Edwin Lyman, senior staff scientist for the Union of Concerned Scientists. "It seems like something that should be concentrated rather than distributed" or dispersed.
Experts believe small reactors should be as safe, or safer, than large ones. One reason is that they are simpler and have fewer moving parts that can fail. Small reactors also contain a smaller nuclear reaction and generate less heat. That means that it's easier to shut them down, if there is a malfunction.
"With a large reactor, the response to a malfunction tends to be quick, whereas in smaller ones, they respond more slowly" which means they're somewhat easier to control, said Michael Mayfield, director of the advanced reactor program at the Nuclear Regulatory Commission. Once on site, each reactor would be housed in a two-story containment structure that would be buried beneath the ground for added security. They would run round the clock, stopping to refuel every five years instead of 18 to 24 months, like existing reactors.
For communities looking for job creation, the smaller reactors promise fewer jobs than a large plant, which offers 700 to 1,000 permanent jobs. Small plants would have to satisfy the same security and safety standards as large plants but likely would require a somewhat smaller work force because they would run much longer between refueling outages.
Some critics are convinced that nuclear power will never be cost effective, no matter what the size. Amory Lovins, founder of the environmental think tank, the Rocky Mountain Institute, said it's a "fantasy" to imagine that small reactors will be any better than big ones. He notes that nuclear energy is inherently expensive because of the special precautions that must be taken in the handling of nuclear fuel and nuclear waste, which are radioactive, not to mention the tight security at nuclear plants. Also, there still is no permanent federal site for nuclear waste.
The electricity industry was burned once before by nuclear power, and many utilities remain skittish.
Forty out of 48 utilities that issued debt for nuclear projects during the past construction cycle—20 to 30 years ago—suffered credit hits in the aftermath of the Three Mile Island accident in 1979, most with downgrades of four notches, said Moody's Investors Service.
Now some of these same companies are looking at the nuclear option again. Energy Northwest is a wholesale utility in Richland, Wash. It's the successor to the Washington Public Power Supply System, which acquired the unfortunate nickname of "Whoops," after it canceled construction of two partly built reactors in the 1980s.
At the time, the utility thought demand would grow briskly. Instead, the economy slowed and so did demand. Nuclear plant costs for the five units it planned to build swelled to nearly $24 billion in 1982 from $5 billion in the 1970s That set the stage for WPPSS's $2 billion bond default, at the time the largest in U.S. history.
Today, Energy Northwest is talking to NuScale Power Inc. in Corvallis, Ore., about a reactor design which measures 15 feet by 60 feet. Each unit would be capable of turning out 45 megawatts of electricity.
Jack Baker, Energy Northwest's head of business development, says he was initially skeptical about small reactors because of the "lack of economies of scale." But he says he now thinks small reactors "could have a cost advantage" because their simpler design means faster construction and "you don't need as much concrete, steel, pumps and valves."
"They have made a convert of me," he says.
Babcock & Wilcox's roots go back to 1867 and it has been making equipment for utilities since the advent of electrification, even furnishing boilers to Thomas Edison's Pearl Street generating stations that brought street lighting to New York City in 1882.
Based in Lynchburg, Va., the company has been building small reactors for ships since the 1950s. In addition to reactors for U.S. Navy submarines and aircraft carriers, it built a reactor for the USS NS Savannah, a commercial vessel which is now a floating museum in Baltimore harbor. It also built eight big reactors, in the past construction cycle, including one for the ill-fated Three Mile Island plant.
When a U.S. nuclear revival looked imminent, the company debated what role it could play.
"Instead of asking, 'How big a reactor could we make?,' this time, we asked, 'What's the largest thing we could build at our existing plants and ship by rail?' " said Christofer Mowry, president of Modular Nuclear Energy LLC, Babcock's recently created small-reactor division. "That's what drove the design."
As interest in small reactors grows, other makers of big reactors are dusting off old designs.
Westinghouse, a unit of Toshiba Corp., is taking another look at its 335-megawatt reactor called Iris. Mario Carelli, Westinghouse chief scientist, said his firm is considering marketing Iris to nations with small grids, "where a big reactor won't fit." He figures that's 80% of the world's grids.
Many obstacles remain. The NRC still is reviewing certification requests for five big reactors and won't be able to consider certifications of small reactors until its work load lightens. But Mr. Matthews of the NRC says he expects the commission will review as many as four small-reactor designs in the next two or three years.
Meantime, interest in small reactors is likely to grow.
"If we can't figure out how to build large plants economically, then small ones may be the way to go," said Ronaldo Szilard, director of nuclear science and engineering at the Idaho National Lab, part of the Department of Energy.
Write to Rebecca Smith at rebecca.smith@wsj.com
A new type of nuclear reactor—smaller than a rail car and one tenth the cost of a big plant—is emerging as a contender to reshape the nation's resurgent nuclear power industry.
Three big utilities, Tennessee Valley Authority, First Energy Corp. and Oglethorpe Power Corp., on Wednesday signed an agreement with McDermott International Inc.'s Babcock & Wilcox subsidiary, committing to get the new reactor approved for commercial use in the U.S.
Although none have agreed to buy a reactor, the utilities' commitment should help build momentum behind the technology and hasten its adoption across the industry. It's a crucial first step toward getting the reactor design certified by the Nuclear Regulatory Commission. Early support from the three utilities, and four others that are mulling the agreement, increases the odds that customers will come forward in the future.
The news comes just as President Barack Obama announced more than $8 billion in loan guarantees this week that would pave the way for the first nuclear power plant in the U.S. in almost 30 years. He has proposed accelerating nuclear development by tripling the amount of federal loan guarantees for reactor construction to $54 billion.
The smaller Babcock & Wilcox reactor can generate only 125 to 140 megawatts of power, about a tenth as much as a big one. But the utilities are betting that these smaller, simpler reactors can be manufactured quickly and installed at potentially dozens of existing nuclear sites or replace coal-fired plants that may become obsolete with looming emissions restrictions.
"We see significant benefits from the new, modular technology," said Donald Moul, vice president of nuclear support for First Energy, an Ohio-based utility company.
He said First Energy, which operates four reactors at three sites in Ohio and Pennsylvania, has made no decision to build any new reactor and noted there's "a lot of heavy lifting to do to get this reactor certified" by the NRC for U.S. use.
Indeed, the smaller reactors still could incite major opposition. They face the same unresolved issues of where to put the waste and public fear of contamination, in the event of an accident. They could also raise alarms about creating possible terrorism targets in populated areas.
Still, the sudden interest in small reactors illustrates a growing unease with the route that nuclear power has taken for half a century. What many regard as the first commercial reactor built in the U.S., in 1957 at Shippingport, Pa., was only about 60 megawatts in size. By the time construction petered out three decades later, reactors had grown progressively bigger, ending up at about 1,000 megawatts of capacity.
Now, after a two-decade lull in construction, the U.S. is gearing up for a robust revival of nuclear power. Expanding the nuclear sector, which currently produces 20% of the nation's electricity, is considered essential to slashing carbon emissions.
Companies such as NRG Energy Inc., Duke Energy Corp. and Southern Co. are planning large reactors that cost up to $10 billion apiece and can generate enough electricity to power a city the size of Tulsa, Okla.
But there is growing investor worry that reactors may have grown so big that they could sink the utilities that buy them. An increasingly global supply chain for big reactors also worries investors.
"We think the probability that things will go wrong with these large projects is greater than the probability that things will go right," said Jim Hempstead, senior vice president at Moody's Investors Service. He warns that nuclear-aspiring utilities with "bet the farm" projects face possible credit downgrades.
The large price tag has begun to spook some utility executives. John Rowe, the chief executive of Exelon Corp., which operates the nation's largest fleet of nuclear plants, had hoped to build a new reactor in Texas. But, having failed to get federal loan guarantees, he recently said he's having second thoughts.
Instead, his company is expanding the capacity of its existing nuclear plants and is looking at Babcock & Wilcox's design. Amir Shakarami, Exelon's senior vice president, said mPower provides "an alternative that is practical and scalable," offering a way to add zero-emission power in small amounts and avoid the rate shocks that accompanied big reactors in the past.
Already, the high cost of large reactors is generating friction among partners. CPS Energy and NRG Energy Inc. sued each other recently when CPS, a city-owned utility in San Antonio got cold feet about investing in a new nuclear plant that could push up power costs for its customers. On Wednesday, the two agreed to a settlement in which CPS will reduce its stake in the project to 7.6% from 50% in exchange for a $90 million payment from NRG and dropping its lawsuit.
The two agreed Wednesday to a settlement in which NRG will pay CPS $1 billion to reduce its ownership interest in the project so it can proceed.
For utilities, a small reactor has several advantages, starting with cost. Small reactors are expected to cost about $5,000 per kilowatt of capacity, or $750 million or so for one of Babcock & Wilcox's units. Large reactors cost $5 billion to $10 billion for reactors that would range from 1,100 to 1,700 megawatts of generating capacity.
While large reactors are built on site, a process that can take five years, the mPower reactors would be manufactured in Babcock & Wilcox's factories in Indiana, Ohio or Virginia and transported by rail or barge. That could cut construction times in half, experts believe.
Because they could be water-cooled or air-cooled, mPower reactors wouldn't have to be located near large sources of water, another problem for big reactors that require millions of gallons of water each day. That could open up parts of the arid West for nuclear development.
The first units likely would be built adjacent to existing nuclear plants, many of which were originally permitted to have two to four units but usually have only one or two.
Down the road, utilities could replace existing coal-fired power plants with small reactors in order to take advantage of sites already served by transmission lines and, in some cases, needed for grid support. Like any other power plants, these small reactors could be easily hooked up to the power grid.
One of the biggest attractions, however, is that utilities could start with a few reactors and add more as needed. By contrast, with big reactors, utilities have what is called "single-shaft risk," where billions of dollars are tied up in a single plant.
Another advantage: mPower reactors will store all of their waste on each site for the estimated 60-year life of each reactor.
Nuclear development moves at a glacial pace. The next wave of large reactors won't begin coming on line until 2016 or 2017, at the earliest. The first certification request for a small reactor design is expected to be Babcock & Wilcox's request in 2012. The first units could come on line after 2018.
However, some experts believe that if the industry embraces small reactors, nuclear power in the U.S. could become pervasive because more utilities would be able to afford them.
"There's a higher likelihood that there are more sites that could support designs for small reactors than large ones," said David Matthews, head of new reactor licensing at the Nuclear Regulatory Commission.
That twist has some observers worried. "Nuclear power requires high-level security and expertise to operate safely," said Edwin Lyman, senior staff scientist for the Union of Concerned Scientists. "It seems like something that should be concentrated rather than distributed" or dispersed.
Experts believe small reactors should be as safe, or safer, than large ones. One reason is that they are simpler and have fewer moving parts that can fail. Small reactors also contain a smaller nuclear reaction and generate less heat. That means that it's easier to shut them down, if there is a malfunction.
"With a large reactor, the response to a malfunction tends to be quick, whereas in smaller ones, they respond more slowly" which means they're somewhat easier to control, said Michael Mayfield, director of the advanced reactor program at the Nuclear Regulatory Commission. Once on site, each reactor would be housed in a two-story containment structure that would be buried beneath the ground for added security. They would run round the clock, stopping to refuel every five years instead of 18 to 24 months, like existing reactors.
For communities looking for job creation, the smaller reactors promise fewer jobs than a large plant, which offers 700 to 1,000 permanent jobs. Small plants would have to satisfy the same security and safety standards as large plants but likely would require a somewhat smaller work force because they would run much longer between refueling outages.
Some critics are convinced that nuclear power will never be cost effective, no matter what the size. Amory Lovins, founder of the environmental think tank, the Rocky Mountain Institute, said it's a "fantasy" to imagine that small reactors will be any better than big ones. He notes that nuclear energy is inherently expensive because of the special precautions that must be taken in the handling of nuclear fuel and nuclear waste, which are radioactive, not to mention the tight security at nuclear plants. Also, there still is no permanent federal site for nuclear waste.
The electricity industry was burned once before by nuclear power, and many utilities remain skittish.
Forty out of 48 utilities that issued debt for nuclear projects during the past construction cycle—20 to 30 years ago—suffered credit hits in the aftermath of the Three Mile Island accident in 1979, most with downgrades of four notches, said Moody's Investors Service.
Now some of these same companies are looking at the nuclear option again. Energy Northwest is a wholesale utility in Richland, Wash. It's the successor to the Washington Public Power Supply System, which acquired the unfortunate nickname of "Whoops," after it canceled construction of two partly built reactors in the 1980s.
At the time, the utility thought demand would grow briskly. Instead, the economy slowed and so did demand. Nuclear plant costs for the five units it planned to build swelled to nearly $24 billion in 1982 from $5 billion in the 1970s That set the stage for WPPSS's $2 billion bond default, at the time the largest in U.S. history.
Today, Energy Northwest is talking to NuScale Power Inc. in Corvallis, Ore., about a reactor design which measures 15 feet by 60 feet. Each unit would be capable of turning out 45 megawatts of electricity.
Jack Baker, Energy Northwest's head of business development, says he was initially skeptical about small reactors because of the "lack of economies of scale." But he says he now thinks small reactors "could have a cost advantage" because their simpler design means faster construction and "you don't need as much concrete, steel, pumps and valves."
"They have made a convert of me," he says.
Babcock & Wilcox's roots go back to 1867 and it has been making equipment for utilities since the advent of electrification, even furnishing boilers to Thomas Edison's Pearl Street generating stations that brought street lighting to New York City in 1882.
Based in Lynchburg, Va., the company has been building small reactors for ships since the 1950s. In addition to reactors for U.S. Navy submarines and aircraft carriers, it built a reactor for the USS NS Savannah, a commercial vessel which is now a floating museum in Baltimore harbor. It also built eight big reactors, in the past construction cycle, including one for the ill-fated Three Mile Island plant.
When a U.S. nuclear revival looked imminent, the company debated what role it could play.
"Instead of asking, 'How big a reactor could we make?,' this time, we asked, 'What's the largest thing we could build at our existing plants and ship by rail?' " said Christofer Mowry, president of Modular Nuclear Energy LLC, Babcock's recently created small-reactor division. "That's what drove the design."
As interest in small reactors grows, other makers of big reactors are dusting off old designs.
Westinghouse, a unit of Toshiba Corp., is taking another look at its 335-megawatt reactor called Iris. Mario Carelli, Westinghouse chief scientist, said his firm is considering marketing Iris to nations with small grids, "where a big reactor won't fit." He figures that's 80% of the world's grids.
Many obstacles remain. The NRC still is reviewing certification requests for five big reactors and won't be able to consider certifications of small reactors until its work load lightens. But Mr. Matthews of the NRC says he expects the commission will review as many as four small-reactor designs in the next two or three years.
Meantime, interest in small reactors is likely to grow.
"If we can't figure out how to build large plants economically, then small ones may be the way to go," said Ronaldo Szilard, director of nuclear science and engineering at the Idaho National Lab, part of the Department of Energy.
Write to Rebecca Smith at rebecca.smith@wsj.com
Deforestation: The hidden cause of global warming
In the next 24 hours, deforestation will release as much CO2 into the atmosphere as 8 million people flying from London to New York. Stopping the loggers is the fastest and cheapest solution to climate change. So why are global leaders turning a blind eye to this crisis?
By Daniel Howden
The accelerating destruction of the rainforests that form a precious cooling band around the Earth's equator, is now being recognised as one of the main causes of climate change. Carbon emissions from deforestation far outstrip damage caused by planes and automobiles and factories.
The rampant slashing and burning of tropical forests is second only to the energy sector as a source of greenhouses gases according to report published today by the Oxford-based Global Canopy Programme, an alliance of leading rainforest scientists.
Figures from the GCP, summarising the latest findings from the United Nations, and building on estimates contained in the Stern Report, show deforestation accounts for up to 25 per cent of global emissions of heat-trapping gases, while transport and industry account for 14 per cent each; and aviation makes up only 3 per cent of the total.
"Tropical forests are the elephant in the living room of climate change," said Andrew Mitchell, the head of the GCP.
Scientists say one days' deforestation is equivalent to the carbon footprint of eight million people flying to New York. Reducing those catastrophic emissions can be achieved most quickly and most cheaply by halting the destruction in Brazil, Indonesia, the Congo and elsewhere.
No new technology is needed, says the GCP, just the political will and a system of enforcement and incentives that makes the trees worth more to governments and individuals standing than felled. "The focus on technological fixes for the emissions of rich nations while giving no incentive to poorer nations to stop burning the standing forest means we are putting the cart before the horse," said Mr Mitchell.
Most people think of forests only in terms of the CO2 they absorb. The rainforests of the Amazon, the Congo basin and Indonesia are thought of as the lungs of the planet. But the destruction of those forests will in the next four years alone, in the words of Sir Nicholas Stern, pump more CO2 into the atmosphere than every flight in the history of aviation to at least 2025.
Indonesia became the third-largest emitter of greenhouse gases in the world last week. Following close behind is Brazil. Neither nation has heavy industry on a comparable scale with the EU, India or Russia and yet they comfortably outstrip all other countries, except the United States and China.
What both countries do have in common is tropical forest that is being cut and burned with staggering swiftness. Smoke stacks visible from space climb into the sky above both countries, while satellite images capture similar destruction from the Congo basin, across the Democratic Republic of Congo, the Central African Republic and the Republic of Congo.
According to the latest audited figures from 2003, two billion tons of CO2 enters the atmosphere every year from deforestation. That destruction amounts to 50 million acres - or an area the size of England, Wales and Scotland felled annually.
The remaining standing forest is calculated to contain 1,000 billion tons of carbon, or double what is already in the atmosphere.
As the GCP's report concludes: "If we lose forests, we lose the fight against climate change."
Standing forest was not included in the original Kyoto protocols and stands outside the carbon markets that the report from the International Panel on Climate Change (IPCC) pointed to this month as the best hope for halting catastrophic warming.
The landmark Stern Report last year, and the influential McKinsey Report in January agreed that forests offer the "single largest opportunity for cost-effective and immediate reductions of carbon emissions".
International demand has driven intensive agriculture, logging and ranching that has proved an inexorable force for deforestation; conservation has been no match for commerce. The leading rainforest scientists are now calling for the immediate inclusion of standing forests in internationally regulated carbon markets that could provide cash incentives to halt this disastrous process.
Forestry experts and policy makers have been meeting in Bonn, Germany, this week to try to put deforestation on top of the agenda for the UN climate summit in Bali, Indonesia, this year. Papua New Guinea, among the world's poorest nations, last year declared it would have no choice but to continue deforestation unless it was given financial incentives to do otherwise.
Richer nations already recognise the value of uncultivated land. The EU offers €200 (£135) per hectare subsidies for "environmental services" to its farmers to leave their land unused.
And yet there is no agreement on placing a value on the vastly more valuable land in developing countries. More than 50 per cent of the life on Earth is in tropical forests, which cover less than 7 per cent of the planet's surface.
They generate the bulk of rainfall worldwide and act as a thermostat for the Earth. Forests are also home to 1.6 billion of the world's poorest people who rely on them for subsistence. However, forest experts say governments continue to pursue science fiction solutions to the coming climate catastrophe, preferring bio-fuel subsidies, carbon capture schemes and next-generation power stations.
Putting a price on the carbon these vital forests contain is the only way to slow their destruction. Hylton Philipson, a trustee of Rainforest Concern, explained: "In a world where we are witnessing a mounting clash between food security, energy security and environmental security - while there's money to be made from food and energy and no income to be derived from the standing forest, it's obvious that the forest will take the hit."
By Daniel Howden
The accelerating destruction of the rainforests that form a precious cooling band around the Earth's equator, is now being recognised as one of the main causes of climate change. Carbon emissions from deforestation far outstrip damage caused by planes and automobiles and factories.
The rampant slashing and burning of tropical forests is second only to the energy sector as a source of greenhouses gases according to report published today by the Oxford-based Global Canopy Programme, an alliance of leading rainforest scientists.
Figures from the GCP, summarising the latest findings from the United Nations, and building on estimates contained in the Stern Report, show deforestation accounts for up to 25 per cent of global emissions of heat-trapping gases, while transport and industry account for 14 per cent each; and aviation makes up only 3 per cent of the total.
"Tropical forests are the elephant in the living room of climate change," said Andrew Mitchell, the head of the GCP.
Scientists say one days' deforestation is equivalent to the carbon footprint of eight million people flying to New York. Reducing those catastrophic emissions can be achieved most quickly and most cheaply by halting the destruction in Brazil, Indonesia, the Congo and elsewhere.
No new technology is needed, says the GCP, just the political will and a system of enforcement and incentives that makes the trees worth more to governments and individuals standing than felled. "The focus on technological fixes for the emissions of rich nations while giving no incentive to poorer nations to stop burning the standing forest means we are putting the cart before the horse," said Mr Mitchell.
Most people think of forests only in terms of the CO2 they absorb. The rainforests of the Amazon, the Congo basin and Indonesia are thought of as the lungs of the planet. But the destruction of those forests will in the next four years alone, in the words of Sir Nicholas Stern, pump more CO2 into the atmosphere than every flight in the history of aviation to at least 2025.
Indonesia became the third-largest emitter of greenhouse gases in the world last week. Following close behind is Brazil. Neither nation has heavy industry on a comparable scale with the EU, India or Russia and yet they comfortably outstrip all other countries, except the United States and China.
What both countries do have in common is tropical forest that is being cut and burned with staggering swiftness. Smoke stacks visible from space climb into the sky above both countries, while satellite images capture similar destruction from the Congo basin, across the Democratic Republic of Congo, the Central African Republic and the Republic of Congo.
According to the latest audited figures from 2003, two billion tons of CO2 enters the atmosphere every year from deforestation. That destruction amounts to 50 million acres - or an area the size of England, Wales and Scotland felled annually.
The remaining standing forest is calculated to contain 1,000 billion tons of carbon, or double what is already in the atmosphere.
As the GCP's report concludes: "If we lose forests, we lose the fight against climate change."
Standing forest was not included in the original Kyoto protocols and stands outside the carbon markets that the report from the International Panel on Climate Change (IPCC) pointed to this month as the best hope for halting catastrophic warming.
The landmark Stern Report last year, and the influential McKinsey Report in January agreed that forests offer the "single largest opportunity for cost-effective and immediate reductions of carbon emissions".
International demand has driven intensive agriculture, logging and ranching that has proved an inexorable force for deforestation; conservation has been no match for commerce. The leading rainforest scientists are now calling for the immediate inclusion of standing forests in internationally regulated carbon markets that could provide cash incentives to halt this disastrous process.
Forestry experts and policy makers have been meeting in Bonn, Germany, this week to try to put deforestation on top of the agenda for the UN climate summit in Bali, Indonesia, this year. Papua New Guinea, among the world's poorest nations, last year declared it would have no choice but to continue deforestation unless it was given financial incentives to do otherwise.
Richer nations already recognise the value of uncultivated land. The EU offers €200 (£135) per hectare subsidies for "environmental services" to its farmers to leave their land unused.
And yet there is no agreement on placing a value on the vastly more valuable land in developing countries. More than 50 per cent of the life on Earth is in tropical forests, which cover less than 7 per cent of the planet's surface.
They generate the bulk of rainfall worldwide and act as a thermostat for the Earth. Forests are also home to 1.6 billion of the world's poorest people who rely on them for subsistence. However, forest experts say governments continue to pursue science fiction solutions to the coming climate catastrophe, preferring bio-fuel subsidies, carbon capture schemes and next-generation power stations.
Putting a price on the carbon these vital forests contain is the only way to slow their destruction. Hylton Philipson, a trustee of Rainforest Concern, explained: "In a world where we are witnessing a mounting clash between food security, energy security and environmental security - while there's money to be made from food and energy and no income to be derived from the standing forest, it's obvious that the forest will take the hit."
Midlands car industry in line for 'low carbon' funding boost
By Sarah Arnott
Friday, 12 February 2010
The government is investing £19.5m to help establish the Midlands car industry as a world leader in next-generation, low-carbon automotive technology. The money from the Advantage West Midlands regional development agency will fund research into 15 areas, including battery technology, aerodynamics and power electronics.
Private-sector companies, including Jaguar Land Rover, its parent company Tata Motors, and the high-end motoring engineers Zytek and Ricardo, will also put £10m into the programme, which will be carried out in partnership with Warwick and Coventry universities.
The Midlands is the fifth "low- carbon economic area" and the second focussing on the automotive sector. The strategy envisions 1.2 million "green" jobs by 2020, and a low-carbon industrial base capable of supplying both domestic and international needs.
The key is to build up Britain's low-carbon supply chain, according to Lord Mandelson, the Business Secretary.
"We have a strong research and development capability in this country, so innovation and technology development is not our problem," he said at the Midlands scheme's launch yesterday. "What we need to do is to commercialise the innovation, and manufacture on the back of these technologies."
The growth of low-carbon industry is crucial to Britain's future economic success. "The real success would be a UK supply chain able to support not just the growing low-carbon industry in this country, but able to supply the same in Europe and internationally," Lord Mandelson said.
The energy industry is the other sector that will be vital to Britain's transition to a low-carbon economy. But despite the Government's stringent targets for renewable electricity, a commitment to new nuclear power stations, and support for research into wave and tidal generation, sceptics claim regulatory uncertainty will prevent the private sector from making the necessary massive investments in time.
Lord Mandelson acknowledged that business confidence in the green agenda was shaken by the perceived lack of progress at the UN climate change summit in Copenhagen in December. "Copenhagen was not the fiasco it was presented to be, but it has shaken some business confidence," he said. "These kinds of investment decision get thrown off course by policy uncertainty, and that is what we have to resolve."
Friday, 12 February 2010
The government is investing £19.5m to help establish the Midlands car industry as a world leader in next-generation, low-carbon automotive technology. The money from the Advantage West Midlands regional development agency will fund research into 15 areas, including battery technology, aerodynamics and power electronics.
Private-sector companies, including Jaguar Land Rover, its parent company Tata Motors, and the high-end motoring engineers Zytek and Ricardo, will also put £10m into the programme, which will be carried out in partnership with Warwick and Coventry universities.
The Midlands is the fifth "low- carbon economic area" and the second focussing on the automotive sector. The strategy envisions 1.2 million "green" jobs by 2020, and a low-carbon industrial base capable of supplying both domestic and international needs.
The key is to build up Britain's low-carbon supply chain, according to Lord Mandelson, the Business Secretary.
"We have a strong research and development capability in this country, so innovation and technology development is not our problem," he said at the Midlands scheme's launch yesterday. "What we need to do is to commercialise the innovation, and manufacture on the back of these technologies."
The growth of low-carbon industry is crucial to Britain's future economic success. "The real success would be a UK supply chain able to support not just the growing low-carbon industry in this country, but able to supply the same in Europe and internationally," Lord Mandelson said.
The energy industry is the other sector that will be vital to Britain's transition to a low-carbon economy. But despite the Government's stringent targets for renewable electricity, a commitment to new nuclear power stations, and support for research into wave and tidal generation, sceptics claim regulatory uncertainty will prevent the private sector from making the necessary massive investments in time.
Lord Mandelson acknowledged that business confidence in the green agenda was shaken by the perceived lack of progress at the UN climate change summit in Copenhagen in December. "Copenhagen was not the fiasco it was presented to be, but it has shaken some business confidence," he said. "These kinds of investment decision get thrown off course by policy uncertainty, and that is what we have to resolve."
Scientists develop new plastic made from sugar that can be composted
Food packaging made from sugar has been developed by British scientists.
By Louise Gray, Environment CorrespondentPublished: 7:00AM GMT 18 Feb 2010
It could soon be composted at home along with organic waste.
Researchers at Imperial College London have managed to transforms sugars found in fast growing trees and grasses into a large molecule, known as a polymer, that can be used to make plastic.
Although there are already plastics on the market made from natural materials like corn, these do not biodegrade quickly.
The new discovery would not only cut down on the use of oil, that is usually used to make plastic, but potentially enable people to compost plastic at home.
Plastics made from oil can take hundreds of years to decompose but the new material would break down in a matter of months.
Charlotte Williams, of the Engineering and Physical Sciences Research Council who is helping to develop the new material, said plastics made from sugar could be on the shelves within five years.
“The development of the material is very promising and I’m optimistic that the technology could be in use within two to five years,” she said.
Around seven per cent of worldwide oil and gas resources are consumed in plastics manufacture, with worldwide production exceeding 150 million tons per year. Almost 99 per cent of plastics are formed from fossil fuels.
Dr Williams said the British research had worked out how to extract a polymer from glucose found in trees and grasses. Since these plants are not needed for food and require much less land to make the amount of plastic needed, it would be much less controversial than growing crops for fuel in cars.
The process is much less energy intensive than current methods of producing plastic. The new material is also better for the environment because it degrades quickly.
At the moment the research is concentrating on how to make plastics from sugar for the mass market but results are "very promising". It will then be necessary to develop the product commercially and go through all the necessary regulations.
By Louise Gray, Environment CorrespondentPublished: 7:00AM GMT 18 Feb 2010
It could soon be composted at home along with organic waste.
Researchers at Imperial College London have managed to transforms sugars found in fast growing trees and grasses into a large molecule, known as a polymer, that can be used to make plastic.
Although there are already plastics on the market made from natural materials like corn, these do not biodegrade quickly.
The new discovery would not only cut down on the use of oil, that is usually used to make plastic, but potentially enable people to compost plastic at home.
Plastics made from oil can take hundreds of years to decompose but the new material would break down in a matter of months.
Charlotte Williams, of the Engineering and Physical Sciences Research Council who is helping to develop the new material, said plastics made from sugar could be on the shelves within five years.
“The development of the material is very promising and I’m optimistic that the technology could be in use within two to five years,” she said.
Around seven per cent of worldwide oil and gas resources are consumed in plastics manufacture, with worldwide production exceeding 150 million tons per year. Almost 99 per cent of plastics are formed from fossil fuels.
Dr Williams said the British research had worked out how to extract a polymer from glucose found in trees and grasses. Since these plants are not needed for food and require much less land to make the amount of plastic needed, it would be much less controversial than growing crops for fuel in cars.
The process is much less energy intensive than current methods of producing plastic. The new material is also better for the environment because it degrades quickly.
At the moment the research is concentrating on how to make plastics from sugar for the mass market but results are "very promising". It will then be necessary to develop the product commercially and go through all the necessary regulations.
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