Hillary Clinton offers admission to ease obstacles towards reaching agreement at climate change summit in Copenhagen
Suzanne Goldenberg, US environment correspondent
guardian.co.uk, Monday 27 April 2009 18.20 BST
The Obama administration issued a mea culpa today on America's role in causing climate change, in a move to get the major economies working together on a global warming treaty.
The admission by Hillary Clinton at a two-day meeting of the world's biggest polluters was intended to ease some of the obstacles towards a deal at UN talks in Copenhagen in December. She placed the gathering of officials from 17 countries, the European Union and the United Nations on a par with the G20 meeting on the economic crisis earlier this month.
As the secretary of state opened the meeting, the Greenpeace US executive director, Phil Radford, was arrested in his first day in the job. He and six other climbers unfurled a banner from a construction crane near the state department with a message for the environment ministers: "Stop Global Warming. Rescue the Planet." Radford called for the industrialised world to commit to deeper cuts in emissions and provide assistance to developing countries.
Clinton addressed the complaints of developing countries such as India and China that America and the EU, by demanding binding emissions cuts, want to saddle them with the burden of climate change; they argue they did not cause the problem and must prioritise growth. She said the US recognised industrialised countries bore a responsibility: "Some countries like mine are responsible for past emissions." She wanted China and India to grow their economies: "We want people to have a higher standard of living."
Obama had broken with eight years of denial under George Bush, Clinton said. "The United States is fully engaged and ready to lead and determined to make up for lost time both at home and abroad … the US is no longer absent without leave."
She saw climate change as the gravest problem facing the international community: "The facts on the ground are outstripping the worst case scenario models."
Diplomats see the gathering of Australia, Brazil, Canada, China, the European commission, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, Britain, the United States, Denmark and the UN as an important station on the road to Copenhagen.
The two-day meeting – one of three such before December – is not expected to produce definitive agreements. But diplomats hope to get a clearer idea of how countries are prepared to act. There is also hope of establishing negotiations on financial aid and technological assistance to developing countries which will bear the brunt of global warming.
In almost 100 days in office, Obama has worked to persuade the world he wants to play a leadership role on climate change. Clinton emphasised that progress, noting directives by Obama, and US rulings designating CO2 as a pollutant.
Tuesday, 28 April 2009
Arctic CO2 levels growing at an 'unprecedented rate', say scientists
Figures from a measuring station in northern Norway show that CO2 levels are increasing by 2-3 parts per million every year
John Vidal in Ny Alesund, Svalbard
guardian.co.uk, Monday 27 April 2009 16.56 BST
The concentration of carbon dioxide in the atmosphere has reached a record high, according to the latest figures released by an internationally regarded measuring station in the Arctic.
The measurements suggest that the main greenhouse gas is continuing to increase in the atmosphere at an alarming rate despite the downturn in dip in the rate of increase of the global economy.
Levels of the gas at the Zeppelin research station on Svalbard, northern Norway, last week peaked at over 397 parts per million (ppm), an increase of more than 2.5ppm on 2008. They have since begun to reduce and today stand at 393.7ppm. Prior to the industrial revolution, CO2 levels were around 280ppm.
CO2 levels recorded in Svalbard tend to be higher than the global average, but scientists said the CO2 level they had measured was unprecedented even for that location. "These are the highest figures collected in 50m years," said Johan Strom, professor of atmospheric physics at the government-funded Norwegian Polar Institute, which collected the data.
"It is not the level of CO2 that is the problem, because the earth will adapt. What is very worrying is the speed of change. Levels [here] are now increasing 2-3ppm a year.
"The rate of increase is much faster than only 10-20 years ago. You can almost see the changes taking place. Never before have CO2 levels increased so fast," he said.
The global annual mean growth rate for 2007 was 2.14ppm – the fourth year in the past six to see an annual rise greater than 2ppm. From 1970 to 2000, the concentration rose by about 1.5ppm each year, but since 2000 it has risen to an average 2.1ppm.
"There can be week-to-week or day-to-day variability," said Thomas Conway, research chemist at US National Oceanic and Atmospheric Administration's (NOAA) Earth Systems research lab in Boulder, Colorado. But he said a 2.5ppm annual increase was "on the high end".
"This is part of an overall pattern of CO2 increasing in the atmosphere. Unless the burning of fossil fuels decreases, then the CO2 will not decrease. And if the rate of fossil fuel burning increases, so will the rate of CO2 increases," he added.
"These are quite large numbers. It sounds like this is an Arctic phenomenon," said Dr Vicky Pope, head of climate change advice at the Met Office Hadley Centre in Exeter. "It fits with the general increase in emissions. You would expect the concentrations of CO2 to grow."
Last week, NOAA released preliminary figures for its annual greenhouse gas index, which incorporates data from 60 sites around the world – including Zeppelin. Total global CO2 concentration topped 386ppm. In 2008 the global average increased by 2.1ppm, slightly less than the 2.2ppm increase in 2007. NOAA's primary CO2 measurement station is Mauna Loa Observatory in Hawaii.
CO2 levels are typically higher in the Arctic than the global average because there is more landmass and human activity in the northern hemisphere. As a result, human emissions from factories and transport tend to lead to higher CO2 levels here.
The figures will concern policy-makers ahead of global talks on a successor to the Kyoto Protocol in December. Climate scientists advise that the world must prevent CO2 levels from rising higher than around 450ppm CO2 equivalent (a measure of global warming potential that incorporates other gasses such as methane and is higher than the measured CO2 levels) to avoid a 2C increase on preindustrial global average temperature.
The Zeppelin research station is situated on a mountain top approximately 1100km from the North Pole. The closest town, Ny Alesund, is the northernmost human settlement in the world, mainly inhabited by research scientists. Although the research station is far from major sources of human pollution, atmospheric circulation brings air from Europe and North America into the Arctic region.
"There is less human influence here and most of the pollution comes straight here at this time of the year. From now on levels will reduce until the end of August when they will pick back up," said Strom.
"It is clearly the effect of human activity. Even if we stopped emitting now, we would have to live with this ... we will have to live with it for thousands of years, but that does not mean we should do nothing."
The figures come as Al Gore hosts a conference in Tromso, northern Norway, on melting arctic ice. Last week he told the US senate committee on energy and commerce that the arctic is now melting at an "unprecedented" rate.
"The most recent 11 summers have all experienced melting greater than the average 35 year time series," he said.
He is expected to warn ministers in polar regions that the arctic ice cap may totally disappear in as little as five years if nothing is done to curb greenhouse emissions.
Earlier this month, US scientists reported that annually forming sea in the Arctic region covered roughly the same area as in previous years, but had significantly thinned.
John Vidal in Ny Alesund, Svalbard
guardian.co.uk, Monday 27 April 2009 16.56 BST
The concentration of carbon dioxide in the atmosphere has reached a record high, according to the latest figures released by an internationally regarded measuring station in the Arctic.
The measurements suggest that the main greenhouse gas is continuing to increase in the atmosphere at an alarming rate despite the downturn in dip in the rate of increase of the global economy.
Levels of the gas at the Zeppelin research station on Svalbard, northern Norway, last week peaked at over 397 parts per million (ppm), an increase of more than 2.5ppm on 2008. They have since begun to reduce and today stand at 393.7ppm. Prior to the industrial revolution, CO2 levels were around 280ppm.
CO2 levels recorded in Svalbard tend to be higher than the global average, but scientists said the CO2 level they had measured was unprecedented even for that location. "These are the highest figures collected in 50m years," said Johan Strom, professor of atmospheric physics at the government-funded Norwegian Polar Institute, which collected the data.
"It is not the level of CO2 that is the problem, because the earth will adapt. What is very worrying is the speed of change. Levels [here] are now increasing 2-3ppm a year.
"The rate of increase is much faster than only 10-20 years ago. You can almost see the changes taking place. Never before have CO2 levels increased so fast," he said.
The global annual mean growth rate for 2007 was 2.14ppm – the fourth year in the past six to see an annual rise greater than 2ppm. From 1970 to 2000, the concentration rose by about 1.5ppm each year, but since 2000 it has risen to an average 2.1ppm.
"There can be week-to-week or day-to-day variability," said Thomas Conway, research chemist at US National Oceanic and Atmospheric Administration's (NOAA) Earth Systems research lab in Boulder, Colorado. But he said a 2.5ppm annual increase was "on the high end".
"This is part of an overall pattern of CO2 increasing in the atmosphere. Unless the burning of fossil fuels decreases, then the CO2 will not decrease. And if the rate of fossil fuel burning increases, so will the rate of CO2 increases," he added.
"These are quite large numbers. It sounds like this is an Arctic phenomenon," said Dr Vicky Pope, head of climate change advice at the Met Office Hadley Centre in Exeter. "It fits with the general increase in emissions. You would expect the concentrations of CO2 to grow."
Last week, NOAA released preliminary figures for its annual greenhouse gas index, which incorporates data from 60 sites around the world – including Zeppelin. Total global CO2 concentration topped 386ppm. In 2008 the global average increased by 2.1ppm, slightly less than the 2.2ppm increase in 2007. NOAA's primary CO2 measurement station is Mauna Loa Observatory in Hawaii.
CO2 levels are typically higher in the Arctic than the global average because there is more landmass and human activity in the northern hemisphere. As a result, human emissions from factories and transport tend to lead to higher CO2 levels here.
The figures will concern policy-makers ahead of global talks on a successor to the Kyoto Protocol in December. Climate scientists advise that the world must prevent CO2 levels from rising higher than around 450ppm CO2 equivalent (a measure of global warming potential that incorporates other gasses such as methane and is higher than the measured CO2 levels) to avoid a 2C increase on preindustrial global average temperature.
The Zeppelin research station is situated on a mountain top approximately 1100km from the North Pole. The closest town, Ny Alesund, is the northernmost human settlement in the world, mainly inhabited by research scientists. Although the research station is far from major sources of human pollution, atmospheric circulation brings air from Europe and North America into the Arctic region.
"There is less human influence here and most of the pollution comes straight here at this time of the year. From now on levels will reduce until the end of August when they will pick back up," said Strom.
"It is clearly the effect of human activity. Even if we stopped emitting now, we would have to live with this ... we will have to live with it for thousands of years, but that does not mean we should do nothing."
The figures come as Al Gore hosts a conference in Tromso, northern Norway, on melting arctic ice. Last week he told the US senate committee on energy and commerce that the arctic is now melting at an "unprecedented" rate.
"The most recent 11 summers have all experienced melting greater than the average 35 year time series," he said.
He is expected to warn ministers in polar regions that the arctic ice cap may totally disappear in as little as five years if nothing is done to curb greenhouse emissions.
Earlier this month, US scientists reported that annually forming sea in the Arctic region covered roughly the same area as in previous years, but had significantly thinned.
Climate Change to Hurt Southeast Asia
By PATRICK BARTA and LEIGH MURRAY
BANGKOK -- Economic damage from climate change will hit Southeast Asia harder than other regions and seriously jeopardize production of rice, the world's most important food crop, according to a report by the Asian Development Bank.
AFP
A Filipino farmer in North Cotabato province inspects his rice farm after it was damaged by floods and pests, a recipe for a failed harvest. The ADB says climate change could seriously jeopardize rice production in Southeast Asia.
The report, released Monday in Bangkok, found that the total cost of lost agricultural production and other negative impacts from climate change would be equivalent to as much as 6.7% of gross domestic product in major Southeast Asian countries by the end of this century, more than double the 2.6% loss estimated for the world as a whole.
It also found that rice yields would decline by as much as 34% in Indonesia and 75% in the Philippines, while Thailand and Vietnam, among the world's biggest exporters of the food, would also experience declines.
Southeast Asia "will have to do something" to offset those losses, including making new investments to maintain agricultural production, says Juzhong Zhuang, an economist at the ADB.
The vulnerability of Southeast Asia stems largely from its geography, which includes the vast archipelago of Indonesia and other low-lying nations such as Thailand and Vietnam with long coastlines. Some 80% of the region's population and much of its economic activity are within 100 kilometers of the coast, the ADB said. Southeast Asia's economy also relies heavily on agriculture and forestry, both of which may be affected significantly by changing weather patterns.
Economists and scientists are still debating how emissions will affect climate in Asia, though generally they agree that weather patterns should become more volatile. The ADB, for its part, said it believes Thailand, Vietnam and Indonesia will experience drier weather over the next several decades, with that pattern possibly reversing later in the century.
Annual mean temperatures in those countries and the Philippines could rise by as much as 4.8 degrees Celsius by 2100 compared with 1990 levels, while sea levels could increase by 70 centimeters.
Those changes, especially the higher temperatures and a rising incidence of storms, could combine to cut rice yields and otherwise damage crops, the ADB said.
In debates on global climate change, Southeast Asia has traditionally received less scrutiny than other areas because it remains a relatively small contributor to greenhouse-gas emissions, accounting for about 12% of the world's total. But the region's role as a key supplier of rice and other agricultural commodities means any negative impact on farming could have big ripple effects, driving food prices higher.
Indeed, the ADB report is only the latest in a series of papers arguing that climate changes related to emissions will reduce world food production. The Food and Agriculture Organization of the United Nations has warned of increased risk of crop failures from floods and other weather changes, as well as the emergence of new pests and diseases that only flourish at specific temperatures and humidity.
Some agricultural experts believe Southeast Asia still has room to expand production of rice and other crops, especially in parts of Cambodia and Laos that have traditionally had low yields, but could be lifted by more investment in irrigation and better seed varieties. Rice prices have fallen dramatically this year after spiking in 2008, in part because some countries, including Indonesia, already have boosted production.
But many economists believe those gains will be hard to sustain in the long run without billions of dollars in new spending on farming infrastructure, and many fear a new surge in food prices could occur once the world economy recovers from its current recession and consumer demand accelerates.
Smith Dharmasaroja, a Thai meteorologist and climate-change expert, said rice farmers might be able to mitigate some damage from weather changes by improving water storage to capture more rain during wet seasons. But there will still "definitely" be a decrease in rice production as summers become hotter, he said.
Write to Patrick Barta at patrick.barta@wsj.com and Leigh Murray at leigh.murray@dowjones.com
BANGKOK -- Economic damage from climate change will hit Southeast Asia harder than other regions and seriously jeopardize production of rice, the world's most important food crop, according to a report by the Asian Development Bank.
AFP
A Filipino farmer in North Cotabato province inspects his rice farm after it was damaged by floods and pests, a recipe for a failed harvest. The ADB says climate change could seriously jeopardize rice production in Southeast Asia.
The report, released Monday in Bangkok, found that the total cost of lost agricultural production and other negative impacts from climate change would be equivalent to as much as 6.7% of gross domestic product in major Southeast Asian countries by the end of this century, more than double the 2.6% loss estimated for the world as a whole.
It also found that rice yields would decline by as much as 34% in Indonesia and 75% in the Philippines, while Thailand and Vietnam, among the world's biggest exporters of the food, would also experience declines.
Southeast Asia "will have to do something" to offset those losses, including making new investments to maintain agricultural production, says Juzhong Zhuang, an economist at the ADB.
The vulnerability of Southeast Asia stems largely from its geography, which includes the vast archipelago of Indonesia and other low-lying nations such as Thailand and Vietnam with long coastlines. Some 80% of the region's population and much of its economic activity are within 100 kilometers of the coast, the ADB said. Southeast Asia's economy also relies heavily on agriculture and forestry, both of which may be affected significantly by changing weather patterns.
Economists and scientists are still debating how emissions will affect climate in Asia, though generally they agree that weather patterns should become more volatile. The ADB, for its part, said it believes Thailand, Vietnam and Indonesia will experience drier weather over the next several decades, with that pattern possibly reversing later in the century.
Annual mean temperatures in those countries and the Philippines could rise by as much as 4.8 degrees Celsius by 2100 compared with 1990 levels, while sea levels could increase by 70 centimeters.
Those changes, especially the higher temperatures and a rising incidence of storms, could combine to cut rice yields and otherwise damage crops, the ADB said.
In debates on global climate change, Southeast Asia has traditionally received less scrutiny than other areas because it remains a relatively small contributor to greenhouse-gas emissions, accounting for about 12% of the world's total. But the region's role as a key supplier of rice and other agricultural commodities means any negative impact on farming could have big ripple effects, driving food prices higher.
Indeed, the ADB report is only the latest in a series of papers arguing that climate changes related to emissions will reduce world food production. The Food and Agriculture Organization of the United Nations has warned of increased risk of crop failures from floods and other weather changes, as well as the emergence of new pests and diseases that only flourish at specific temperatures and humidity.
Some agricultural experts believe Southeast Asia still has room to expand production of rice and other crops, especially in parts of Cambodia and Laos that have traditionally had low yields, but could be lifted by more investment in irrigation and better seed varieties. Rice prices have fallen dramatically this year after spiking in 2008, in part because some countries, including Indonesia, already have boosted production.
But many economists believe those gains will be hard to sustain in the long run without billions of dollars in new spending on farming infrastructure, and many fear a new surge in food prices could occur once the world economy recovers from its current recession and consumer demand accelerates.
Smith Dharmasaroja, a Thai meteorologist and climate-change expert, said rice farmers might be able to mitigate some damage from weather changes by improving water storage to capture more rain during wet seasons. But there will still "definitely" be a decrease in rice production as summers become hotter, he said.
Write to Patrick Barta at patrick.barta@wsj.com and Leigh Murray at leigh.murray@dowjones.com
Monday, 27 April 2009
Coal: Capturing the future
The Guardian, Monday 27 April 2009
Climate change needs the same kind of mass support that fired the Make Poverty History campaign, the energy secretary Ed Miliband said yesterday. He is right to try to provoke a sense of obligation in this generation to future generations, but although we can all play our part in reducing demand, only government can deliver the incentives and the structure for clean energy supplies.
Coal, globally available and flexible, will be a key energy source for the foreseeable future. Mr Miliband was merely accepting reality last week when he confirmed that it would continue to be part of the UK's energy mix. His victory came in devising a way to jump-start the commercial availability of clean coal technology by demanding that all new power stations are fitted with either pre- or post-combustion carbon capture and storage, and persuading the cabinet to adopt it. Mr Miliband has triumphed over the old non-interventionist energy policy which merely required all new coal-fired power stations to be ready for carbon capture technology, without taking steps towards its development. The new policy is also an acknowledgment of the weakness of relying on the market. The European emissions trading scheme, with its twin-track approach of capped emissions and tradable permits, was intended to price carbon. Instead, the last year has demonstrated that in hard times it cannot reliably deliver a price high enough to incentivise technological innovation. Right now, the market in emission permits looks about as viable as the market in sub-prime mortgages.
So Mr Miliband has pulled off a bold change of political direction, one that makes it more likely that Britain will meet its ambitious carbon reduction targets. If - and it is a big if - the science is viable and exportable, it might even help save the planet. With thoughtful proposals in the past few months from both the Lib Dems and the Conservatives, it appears that climate change is surviving the recession as a political issue, and might even survive a change of government. Which raises the question of whether, in this relatively benign political climate, Mr Miliband was bold enough.
Deep greenies will complain that the requirement for only a quarter of emissions to be captured in the first phase is too timid. They point out that a Kingsnorth of the future could still be pumping out up to 275m tonnes of polluting gases - half of all UK emissions. They protest that there is too much wriggle room, and that Mr Miliband will long since have left - if not the political stage then his Department of Energy and Climate Change - by the time the pilots are assessed, when it will be all too easy to abandon them as commercially unviable. It is also the case that by past dithering, the government has probably lost the chance of leading developments in clean coal technology. And it has procrastinated on domestic energy efficiency, the quickest and best-value route to cutting emissions by reducing demand. At least Alistair Darling's budget introduced a package of measures that will help the attempt to catch up.
Yet, given that he had to meet the challenge of technology that is still unproven on such a scale, Mr Miliband is to be congratulated for what he has achieved rather than berated for what he has not. Some big questions remain to be answered - sorting out, for example, who is going to pick up the still-uncertain bill for the pilot projects - but the government at last shows signs of taking a lead in the uphill task of persuading us all to take climate change seriously. For Mr Miliband's announcement was a success both in that it will make things happen, but also because it will contribute to an environment that encourages a wider sense of responsibility for climate change. Mr Miliband is making a reality of a department that puts energy and climate change into the same red box, and the shape of a real climate change policy is beginning to emerge.
Climate change needs the same kind of mass support that fired the Make Poverty History campaign, the energy secretary Ed Miliband said yesterday. He is right to try to provoke a sense of obligation in this generation to future generations, but although we can all play our part in reducing demand, only government can deliver the incentives and the structure for clean energy supplies.
Coal, globally available and flexible, will be a key energy source for the foreseeable future. Mr Miliband was merely accepting reality last week when he confirmed that it would continue to be part of the UK's energy mix. His victory came in devising a way to jump-start the commercial availability of clean coal technology by demanding that all new power stations are fitted with either pre- or post-combustion carbon capture and storage, and persuading the cabinet to adopt it. Mr Miliband has triumphed over the old non-interventionist energy policy which merely required all new coal-fired power stations to be ready for carbon capture technology, without taking steps towards its development. The new policy is also an acknowledgment of the weakness of relying on the market. The European emissions trading scheme, with its twin-track approach of capped emissions and tradable permits, was intended to price carbon. Instead, the last year has demonstrated that in hard times it cannot reliably deliver a price high enough to incentivise technological innovation. Right now, the market in emission permits looks about as viable as the market in sub-prime mortgages.
So Mr Miliband has pulled off a bold change of political direction, one that makes it more likely that Britain will meet its ambitious carbon reduction targets. If - and it is a big if - the science is viable and exportable, it might even help save the planet. With thoughtful proposals in the past few months from both the Lib Dems and the Conservatives, it appears that climate change is surviving the recession as a political issue, and might even survive a change of government. Which raises the question of whether, in this relatively benign political climate, Mr Miliband was bold enough.
Deep greenies will complain that the requirement for only a quarter of emissions to be captured in the first phase is too timid. They point out that a Kingsnorth of the future could still be pumping out up to 275m tonnes of polluting gases - half of all UK emissions. They protest that there is too much wriggle room, and that Mr Miliband will long since have left - if not the political stage then his Department of Energy and Climate Change - by the time the pilots are assessed, when it will be all too easy to abandon them as commercially unviable. It is also the case that by past dithering, the government has probably lost the chance of leading developments in clean coal technology. And it has procrastinated on domestic energy efficiency, the quickest and best-value route to cutting emissions by reducing demand. At least Alistair Darling's budget introduced a package of measures that will help the attempt to catch up.
Yet, given that he had to meet the challenge of technology that is still unproven on such a scale, Mr Miliband is to be congratulated for what he has achieved rather than berated for what he has not. Some big questions remain to be answered - sorting out, for example, who is going to pick up the still-uncertain bill for the pilot projects - but the government at last shows signs of taking a lead in the uphill task of persuading us all to take climate change seriously. For Mr Miliband's announcement was a success both in that it will make things happen, but also because it will contribute to an environment that encourages a wider sense of responsibility for climate change. Mr Miliband is making a reality of a department that puts energy and climate change into the same red box, and the shape of a real climate change policy is beginning to emerge.
Lord Mandelson has set up rival 'energy and climate change unit'
Department for Business, Enterprise and Regulatory Reform has launched a section to "help create the conditions for UK business success through key energy and climate change policies".
Tim Webb
guardian.co.uk, Sunday 26 April 2009 16.28 BST
Lord Mandelson has set up an "energy and climate change unit" to lobby Ed Miliband's new energy and climate change department on behalf of business. Energy insiders said the move was further evidence of the peer encroaching on Ed Miliband's brief in a bid to water down green policies which may damage business.
According to Mandelson's Department for Business, Enterprise and Regulatory Reform (BERR) website, the unit's aim is to "help create the conditions for UK business success through key energy and climate change policies by working closely with and influencing the Department of Energy and Climate Change (DECC), other Whitehall departments...minimising competitiveness impacts".
DECC was set up in October to bring the energy brief under one department. Previously responsibility for energy policy was shared by the old BERR department, representing energy companies' interests, and the Department of Environment, frequently briefing against each other. When it was set up, environmental groups and energy companies hailed the move, hoping that the new department would signal more joined-up government thinking and decisiveness over its energy policy.
But commenting on Berr's new energy and climate change unit, one of the UK's top six energy suppliers said: "The establishment of an energy department should have made life much simpler. But because of who the business minister [Mandelson] is, Berr is still involved at lots of different levels in the decision-making. It's hard to say that if you're an outsider this is anything more than a mess."
Some civil servants working for DECC are also said to be uneasy about the new department's role and influence within government. A memo from Moira Wallace, DECC's permanent secretary, read out to staff recently said that DECC role was as a "campaigning department". This description "went down like a lead balloon", according to one civil servant present, because of fears this was a tacit admission that DECC did not have the influence to deliver policies, only to campaign for them.
Earlier this year MPs criticised DECC's slow reply to correspondence, and Miliband admitted that some of his staff were not "adequately prepared". Last week however, Miliband won plaudits for pushing through tough environmental restrictions on new coal plants.
A BERR spokeswoman said it was not unusual for the department to set up teams which covered issues like energy or transport which affect businesses. Berr said in a statement: "DECC is now lead on energy and climate change. All departments have a responsibility for climate change and BERR continues to retain close links with companies both as providers and users or energy, and to help business make the most of our move towards a low carbon future."
Tim Webb
guardian.co.uk, Sunday 26 April 2009 16.28 BST
Lord Mandelson has set up an "energy and climate change unit" to lobby Ed Miliband's new energy and climate change department on behalf of business. Energy insiders said the move was further evidence of the peer encroaching on Ed Miliband's brief in a bid to water down green policies which may damage business.
According to Mandelson's Department for Business, Enterprise and Regulatory Reform (BERR) website, the unit's aim is to "help create the conditions for UK business success through key energy and climate change policies by working closely with and influencing the Department of Energy and Climate Change (DECC), other Whitehall departments...minimising competitiveness impacts".
DECC was set up in October to bring the energy brief under one department. Previously responsibility for energy policy was shared by the old BERR department, representing energy companies' interests, and the Department of Environment, frequently briefing against each other. When it was set up, environmental groups and energy companies hailed the move, hoping that the new department would signal more joined-up government thinking and decisiveness over its energy policy.
But commenting on Berr's new energy and climate change unit, one of the UK's top six energy suppliers said: "The establishment of an energy department should have made life much simpler. But because of who the business minister [Mandelson] is, Berr is still involved at lots of different levels in the decision-making. It's hard to say that if you're an outsider this is anything more than a mess."
Some civil servants working for DECC are also said to be uneasy about the new department's role and influence within government. A memo from Moira Wallace, DECC's permanent secretary, read out to staff recently said that DECC role was as a "campaigning department". This description "went down like a lead balloon", according to one civil servant present, because of fears this was a tacit admission that DECC did not have the influence to deliver policies, only to campaign for them.
Earlier this year MPs criticised DECC's slow reply to correspondence, and Miliband admitted that some of his staff were not "adequately prepared". Last week however, Miliband won plaudits for pushing through tough environmental restrictions on new coal plants.
A BERR spokeswoman said it was not unusual for the department to set up teams which covered issues like energy or transport which affect businesses. Berr said in a statement: "DECC is now lead on energy and climate change. All departments have a responsibility for climate change and BERR continues to retain close links with companies both as providers and users or energy, and to help business make the most of our move towards a low carbon future."
Oyster proves to be a pearl in wave energy
Published Date: 27 April 2009
By PETER RANSCOMBE
BUSINESS REPORTER
WAVE energy company Aquamarine today hailed the "birth of an industry" after announcing that its Oyster device pumped electricity into the national grid for the first time.
Edinburgh-based Aquamarine – half of which is owned by Scottish & Southern Energy (SSE) – said that on-shore tests carried out near Newcastle had proved that the Oyster wave energy device can deliver electricity on a commercial scale.A full-scale test rig at the New and Renewable Energy Centre (Narec) produced more than 150 kilowatts of electricity from one of its pumping cylinders.Aquamarine said the test proved that a full-scale device would be able to produce more than the previously predicted 350kW of power.Testing at Narec will continue until the end of the month before a full-scale machine is installed at the European Marine Energy Centre in Orkney during the summer.Aquamarine expects to make Oyster available commercially by 2014, with the devices designed to work in arrays generating 100 megawatts of power. The company already has an agreement with Airtricity, the renewable energy division of SSE, to develop sites capable of hosting 1,000MW of marine energy by 2020 suitable for deployment of Oyster.Commenting on today's announcement, Martin McAdam, Aquamarine's chief executive, said: "Oyster is revolutionary in its field and what we are seeing is total proof that it can deliver commercially-viable electricity."The successful production of power is a testament to all involved in the renewable energy industry. Making this happen involved an array of companies and partners including Frazer Nash who designed the rig, Howco which built it, Pelamis which hired out one of its hydraulic power packs and Narec, which hosted the test."If the UK or Scotland wants a marine industry, we have proven that the companies and people are there to deliver it. This is the birth of an industry."Earlier this month, Aquamarine revealed plans to scrap the development of Neptune, its tidal power device, in favour of pumping money into Oyster.Aquamarine was founded in 2005 by marine energy developer Allan Thomson and Professor Trevor Whittaker, head of the wave power research group at Queen's University Belfast, and merged with SSE's Renewable Technology Ventures subsidiary in October 2007.McAdam had previously described Oyster as "a big, dumb machine", adding that the device's strength was in its simplicity, with little in the way of technology to break under the water. He said that Oyster was "very unsophisticated" in terms of what goes into the water, with a big floating hinge, two hydraulic water pistons and four valves – leaving little to be damaged.
Wind, sea, coal and nuclear power. Yes please
The Times
April 27, 2009
As climate change ministers gather in Washington today we must try every energy option to shift to a low-carbon world
Ed Miliband
To crash an SUV into a Toyota Prius is the ultimate environmental faux pas - and in a memorable episode of The West Wing, the President's adviser, Josh Lyman does just that. He organises a low-carbon summit to atone, but finishes demoralised. His summit participants all find reasons to attack each other instead of uniting around low carbon.
Too often, the energy debate in the UK feels the same. There is a temptation for people to justify opposition to each form of low-carbon power, but the truth is that on grounds of energy security and climate change, we cannot afford this luxury.
Everything we know suggests that there can be no comfort any more in a high-carbon energy policy. If we pursue this course, we risk finding ourselves unable to meet our climate change commitments and facing a more difficult and painful transition to low carbon in a world where prices have been pushed up, by both global demand and agreements to put a price on carbon. And as if that wasn't enough, we would also miss the huge low-carbon industrial opportunity for Britain.
So as well as improving energy efficiency, we need to pursue the trinity of low-carbon technologies: renewables, nuclear and clean fossil fuels. On renewables, we are already the country with the largest offshore wind generation in the world. More capacity is being built. But if we are to win the prize of low-carbon diversity, we need to look at other technologies too: tidal power, solar and wind power on land as well as at sea.
Of course, wind turbines will change the look of parts of our countryside. People are right that wind farms need to go through the proper planning process. But the truth is that the biggest threat to our countryside is not the wind turbine, it is climate change. Biodiversity, our coastline, our land - all are under threat from dangerous climate change.
That is why we need to examine our attitudes to onshore wind. Many local communities are taking a lead, and they should have a stake in local projects. That is why we are introducing a guaranteed price for people to feed locally produced renewable electricity back into the grid.
We also need to take on the arguments that people make about renewable power. To all those who scoff at the idea of wind making a difference, my reply is that last year enough power for all the electricity for two million homes came from wind power.
Similarly on nuclear. It's safe to say that I did not grow up in a household that was enthusiastic about nuclear power. Few people were in the 1970s and 1980s. Energy companies, not taxpayers, should pay the costs of clean-up - and that's now in legislation. But with safeguards on cost and safety in place, I believe, like many others seeing the threat of climate change and the need for a solid base of low-carbon power, that we should support new nuclear energy.
In Scotland, the Nationalists still repeat “no thanks”, refusing to contemplate nuclear and insisting on a one-club energy policy. They are putting roadblocks up to low carbon, even as Scottish voters appear to support new nuclear power.
From some people, however, even those keen on both renewable and nuclear power, the low-carbon power that receives the most scorn is, in fact, the one I believe to be the most important still to be developed: clean coal.
Consider this: the rich world must act first, but that won't stop dangerous climate change unless we help the poorest countries to act too, not to abandon growth but to move from high-carbon growth to low-carbon growth. In China and India, for example, coal provides two thirds of their power, and as their economies grow their coal use grows too. The problem of coal, the most polluting fuel on the planet, is a global one that needs a solution.
Even in the UK, a future without coal would most likely not mean more renewables, nor more nuclear, it would mean more power stations burning imported gas. Energy security comes from diversity, and coal provides an important part of that diversity.
That is why the most important technology the world can develop is the technology to capture carbon emissions and store them permanently deep underground.
Last week I had a surprising exchange on the radio with the leader of the Green Party. Most economists think that government should support R&D, where the market fails. The Greens took the opposite view and said we should leave clean coal to the energy companies alone.
Large, risky, projects, able to help save the planet and seed a whole new potential industry in Britain creating up to 50,000 jobs, cannot be left to the market alone - and that's why we are now going to support up to four big demonstration projects, each one ten times bigger than the largest currently running in the world. There will be a cost to this, but it is far better to prepare now for the low-carbon future, rather than being left behind in a high-cost, high-carbon alternative.
The Government has a role to play too in making sure that while the new technology is developing, the old technologies don't get locked in. That's why I proposed new rules to ensure that no new coal-fired power station can be built without capturing a proportion of its carbon from day one, and 100 per cent of it when the technology is ready.
Back in the fictional West Wing, summit completed, penance done, Josh Lyman took the view that low-carbon technologies “are the future... and they always will be”. Always for the future, never now.
The biggest barrier to preventing climate change is no longer denial, but defeatism: the technologies are at our disposal or within our grasp. In Washington today, President Obama is hosting negotiators from the major economies, preparing for the global summit on climate change in Copenhagen in December. With international co-operation and political will, we can make the shift to low carbon, protect our energy security and make the world safe from dangerous climate change.
Ed Miliband is the Energy and Climate Change Secretary
April 27, 2009
As climate change ministers gather in Washington today we must try every energy option to shift to a low-carbon world
Ed Miliband
To crash an SUV into a Toyota Prius is the ultimate environmental faux pas - and in a memorable episode of The West Wing, the President's adviser, Josh Lyman does just that. He organises a low-carbon summit to atone, but finishes demoralised. His summit participants all find reasons to attack each other instead of uniting around low carbon.
Too often, the energy debate in the UK feels the same. There is a temptation for people to justify opposition to each form of low-carbon power, but the truth is that on grounds of energy security and climate change, we cannot afford this luxury.
Everything we know suggests that there can be no comfort any more in a high-carbon energy policy. If we pursue this course, we risk finding ourselves unable to meet our climate change commitments and facing a more difficult and painful transition to low carbon in a world where prices have been pushed up, by both global demand and agreements to put a price on carbon. And as if that wasn't enough, we would also miss the huge low-carbon industrial opportunity for Britain.
So as well as improving energy efficiency, we need to pursue the trinity of low-carbon technologies: renewables, nuclear and clean fossil fuels. On renewables, we are already the country with the largest offshore wind generation in the world. More capacity is being built. But if we are to win the prize of low-carbon diversity, we need to look at other technologies too: tidal power, solar and wind power on land as well as at sea.
Of course, wind turbines will change the look of parts of our countryside. People are right that wind farms need to go through the proper planning process. But the truth is that the biggest threat to our countryside is not the wind turbine, it is climate change. Biodiversity, our coastline, our land - all are under threat from dangerous climate change.
That is why we need to examine our attitudes to onshore wind. Many local communities are taking a lead, and they should have a stake in local projects. That is why we are introducing a guaranteed price for people to feed locally produced renewable electricity back into the grid.
We also need to take on the arguments that people make about renewable power. To all those who scoff at the idea of wind making a difference, my reply is that last year enough power for all the electricity for two million homes came from wind power.
Similarly on nuclear. It's safe to say that I did not grow up in a household that was enthusiastic about nuclear power. Few people were in the 1970s and 1980s. Energy companies, not taxpayers, should pay the costs of clean-up - and that's now in legislation. But with safeguards on cost and safety in place, I believe, like many others seeing the threat of climate change and the need for a solid base of low-carbon power, that we should support new nuclear energy.
In Scotland, the Nationalists still repeat “no thanks”, refusing to contemplate nuclear and insisting on a one-club energy policy. They are putting roadblocks up to low carbon, even as Scottish voters appear to support new nuclear power.
From some people, however, even those keen on both renewable and nuclear power, the low-carbon power that receives the most scorn is, in fact, the one I believe to be the most important still to be developed: clean coal.
Consider this: the rich world must act first, but that won't stop dangerous climate change unless we help the poorest countries to act too, not to abandon growth but to move from high-carbon growth to low-carbon growth. In China and India, for example, coal provides two thirds of their power, and as their economies grow their coal use grows too. The problem of coal, the most polluting fuel on the planet, is a global one that needs a solution.
Even in the UK, a future without coal would most likely not mean more renewables, nor more nuclear, it would mean more power stations burning imported gas. Energy security comes from diversity, and coal provides an important part of that diversity.
That is why the most important technology the world can develop is the technology to capture carbon emissions and store them permanently deep underground.
Last week I had a surprising exchange on the radio with the leader of the Green Party. Most economists think that government should support R&D, where the market fails. The Greens took the opposite view and said we should leave clean coal to the energy companies alone.
Large, risky, projects, able to help save the planet and seed a whole new potential industry in Britain creating up to 50,000 jobs, cannot be left to the market alone - and that's why we are now going to support up to four big demonstration projects, each one ten times bigger than the largest currently running in the world. There will be a cost to this, but it is far better to prepare now for the low-carbon future, rather than being left behind in a high-cost, high-carbon alternative.
The Government has a role to play too in making sure that while the new technology is developing, the old technologies don't get locked in. That's why I proposed new rules to ensure that no new coal-fired power station can be built without capturing a proportion of its carbon from day one, and 100 per cent of it when the technology is ready.
Back in the fictional West Wing, summit completed, penance done, Josh Lyman took the view that low-carbon technologies “are the future... and they always will be”. Always for the future, never now.
The biggest barrier to preventing climate change is no longer denial, but defeatism: the technologies are at our disposal or within our grasp. In Washington today, President Obama is hosting negotiators from the major economies, preparing for the global summit on climate change in Copenhagen in December. With international co-operation and political will, we can make the shift to low carbon, protect our energy security and make the world safe from dangerous climate change.
Ed Miliband is the Energy and Climate Change Secretary
Cash earmarked for tidal power schemes
By Philip Stafford
Published: April 27 2009 03:00
Small businesses in Wales may be concerned about the expense of crossing the Severn Bridge, but entrepreneurs could be more interested in what flows underneath it.
Earlier this month, the Welsh Assembly, together with the Department of Energy and Climate Change, earmarked a £500,000 fund to help new environmental technology companies to develop ways of generating electricity from tidal power of the river, which has the world's second-biggest tidal range at 45ft (14m).
The Welsh Development Agency estimates that about 5 per cent of the UK's electricity could be generated from a scheme and welcomed comments from Alistair Darling, the Chancellor, this week that promised to develop green technology.
Yet the idea to harness its power is not a new one, and is seen as one of the UK's more promising areas as the government looks to meet renewable energy targets. Last week saw the end of the Department of Energy and Climate Change's first public consultation over a proposed 10-mile hydroelectric barrage between Cardiff and Weston-super-Mare in England.
Environmentalists have raised concerns about the effect on fish stocks and on the mud flats, which are protected by European environmental laws. Government ministers have also indicated that it could cost up to £22bn and may require taxpayers money. Nevertheless, smaller barrage and lagoon schemes have also been put on a shortlist of five potential schemes.
Even so, it is likely to be many years before a scheme comes to fruition. In the meantime, south Wales has become another home to advanced manufacturing technology to lessen its dependence on heavy industry, and has largely avoided the large-scale cutbacks seen in other industries.
Among the companies benefiting from the focus on green technology are Aim-listed Enfis, the LED lighting group.
With legislation around the world phasing out incandescent lighting, Enfis last year saw revenues soar more than 430 per cent to £1.6m, and this month it completed a share placing to raise £2m to fund future growth.
Copyright The Financial Times Limited 2009
Published: April 27 2009 03:00
Small businesses in Wales may be concerned about the expense of crossing the Severn Bridge, but entrepreneurs could be more interested in what flows underneath it.
Earlier this month, the Welsh Assembly, together with the Department of Energy and Climate Change, earmarked a £500,000 fund to help new environmental technology companies to develop ways of generating electricity from tidal power of the river, which has the world's second-biggest tidal range at 45ft (14m).
The Welsh Development Agency estimates that about 5 per cent of the UK's electricity could be generated from a scheme and welcomed comments from Alistair Darling, the Chancellor, this week that promised to develop green technology.
Yet the idea to harness its power is not a new one, and is seen as one of the UK's more promising areas as the government looks to meet renewable energy targets. Last week saw the end of the Department of Energy and Climate Change's first public consultation over a proposed 10-mile hydroelectric barrage between Cardiff and Weston-super-Mare in England.
Environmentalists have raised concerns about the effect on fish stocks and on the mud flats, which are protected by European environmental laws. Government ministers have also indicated that it could cost up to £22bn and may require taxpayers money. Nevertheless, smaller barrage and lagoon schemes have also been put on a shortlist of five potential schemes.
Even so, it is likely to be many years before a scheme comes to fruition. In the meantime, south Wales has become another home to advanced manufacturing technology to lessen its dependence on heavy industry, and has largely avoided the large-scale cutbacks seen in other industries.
Among the companies benefiting from the focus on green technology are Aim-listed Enfis, the LED lighting group.
With legislation around the world phasing out incandescent lighting, Enfis last year saw revenues soar more than 430 per cent to £1.6m, and this month it completed a share placing to raise £2m to fund future growth.
Copyright The Financial Times Limited 2009
Entrepreneurs eye Severn barrage scheme
By Philip Stafford
Published: April 26 2009 23:40
Wales’ small businesses may be currently concerned about the cost of crossing the Severn Bridge, but entrepreneurs could be more interested in what flows underneath it.
Earlier this month, the Welsh Assembly, together with the Department of Energy and Climate Change, earmarked a £500,000 fund to help new environmental technology companies to develop ways of generating electricity from the river, which has the world’s second-biggest tidal range at 45ft (14m).
The Welsh Development Agency estimates that about 5 per cent of the UK’s electricity could be generated from a tidal power scheme and welcomed comments from Alistair Darling, the Chancellor, that promised to develop green technology.
Yet the idea to harness its power is not a new one, and is seen as one of the UK’s more promising areas as the government looks to meet renewable energy targets. Last week saw the end of the Department of Energy and Climate Change’s first public consultation over a proposed 10-mile hydroelectric barrage between Cardiff and Weston-super-Mare in England.
Environmentalists have raised concerns about the effect on fish stocks and on the mud flats, which are protected by European environmental laws. Government ministers have also indicated that it could cost up to £22bn and may require taxpayers money. Nevertheless, smaller barrage and lagoon schemes have also been put on a shortlist of five potential schemes.
Even so, it is likely to be many years before a scheme comes to fruition. In the meantime, south Wales has become another home to advanced manufacturing technology to lessen its dependence on heavy industry, and has largely avoided the large-scale cutbacks seen in other industries.
Among the companies benefiting from the focus on green technology are Aim-listed Enfis, the LED lighting group.
With legislation around the world phasing out incandescent lighting, Enfis last year saw revenues soar more than 430 per cent to £1.6m, and this month it completed a share placing to raise £2m to fund future growth.
Copyright The Financial Times Limited 2009
Published: April 26 2009 23:40
Wales’ small businesses may be currently concerned about the cost of crossing the Severn Bridge, but entrepreneurs could be more interested in what flows underneath it.
Earlier this month, the Welsh Assembly, together with the Department of Energy and Climate Change, earmarked a £500,000 fund to help new environmental technology companies to develop ways of generating electricity from the river, which has the world’s second-biggest tidal range at 45ft (14m).
The Welsh Development Agency estimates that about 5 per cent of the UK’s electricity could be generated from a tidal power scheme and welcomed comments from Alistair Darling, the Chancellor, that promised to develop green technology.
Yet the idea to harness its power is not a new one, and is seen as one of the UK’s more promising areas as the government looks to meet renewable energy targets. Last week saw the end of the Department of Energy and Climate Change’s first public consultation over a proposed 10-mile hydroelectric barrage between Cardiff and Weston-super-Mare in England.
Environmentalists have raised concerns about the effect on fish stocks and on the mud flats, which are protected by European environmental laws. Government ministers have also indicated that it could cost up to £22bn and may require taxpayers money. Nevertheless, smaller barrage and lagoon schemes have also been put on a shortlist of five potential schemes.
Even so, it is likely to be many years before a scheme comes to fruition. In the meantime, south Wales has become another home to advanced manufacturing technology to lessen its dependence on heavy industry, and has largely avoided the large-scale cutbacks seen in other industries.
Among the companies benefiting from the focus on green technology are Aim-listed Enfis, the LED lighting group.
With legislation around the world phasing out incandescent lighting, Enfis last year saw revenues soar more than 430 per cent to £1.6m, and this month it completed a share placing to raise £2m to fund future growth.
Copyright The Financial Times Limited 2009
Ethanol Standards Take Bite From Corn
By IAN BERRY
CHICAGO -- California's decision to adopt new-vehicle fuel standards to reduce greenhouse-gas emissions will have little short-term impact on corn-ethanol demand, but in the long term it is seen hurting the biofuel.
The state's Air Resources Board approved the measure by a 9-1 vote Thursday. The regulation will require a lower "carbon intensity" in fuels starting in 2011.
It also includes land-use changes due to ethanol production in assessments of ethanol's carbon intensity, a facet of the rule fiercely opposed by the ethanol industry.
The change would mean that emissions stemming from crop production, including the destruction of forestland or pasture to make way for crops, would be added to ethanol's carbon footprint. Ethanol industry officials argued that other fuels don't face the same standard.
For instance, the industry has pointed out it doesn't calculate emissions from military action related to protecting crude-oil supplies.
The decision is widely seen as a psychologically bearish influence on the Chicago Board of Trade corn market. Ethanol usage accounts for roughly a third of the U.S. corn crop, and ethanol demand helped push CBOT corn futures to record highs in 2008, although ethanol supporters say it was only a minor factor.
Nearby-month May corn closed at $3.77 per bushel Friday, compared with highs last year of around $8.
The decision is a long-term roadblock that indicates "less of a bright future for corn-based ethanol," said Michael Swanson, agricultural economist with Wells Fargo.
"We went from having endless ethanol growth to having: 'hmm, what kind of future do we have there anyway?'" Mr. Swanson said.
Fortis Bank said in a Friday research note that corn traders are concerned about the rule's effect on demand, "but there is likely to be a fierce debate over the details in the meantime." Mr. Swanson said it's probably "several court cases and wranglings from being final."
California's View
The chairwoman of California's Air Resources Board, Mary Nichols, to soothe the ethanol industry, said in a letter to retired U.S. Gen. Wesley Clark, who is heading an ethanol industry group, that the new standard "supports the market for corn ethanol in California over the next decade at least."
Gen. Clark's group, Growth Energy, says that the proposal unfairly singles out corn ethanol, and he criticized the rule as unfair.
Some corn traders noted that the rule isn't supposed to go into effect until 2011. It also will be implemented incrementally, with a goal of cutting the carbon content of the fuels sold in California by 10% by 2020.
"I think the impact today, next week, next month is minimal," said Vic Lespinasse, analyst for grainanalyst.com. "It could have an impact down the road."
Still, the decision is a reminder that "corn ethanol is a passing phase" in a transition to the next generation of biofuels, Mr. Lespinasse said. Farmers will be producing less corn for ethanol in 20 years than they do now, he said.
Other States Coming?
Some traders also said that California is seen as a trend-setter for environmental policy, and that several other states have similar proposals in the pipeline.
The ethanol market has broader economic concerns, analysts said. Chad Henderson, analyst for Prime Ag Consultants, said that corn traders see ethanol demand as more politically motivated than economically driven.
He said he isn't anti-ethanol or pro-ethanol, "but at some point down the road, you would think ethanol needs to stand on its own two feet economically."
Mr. Swanson said that main problems facing ethanol are weak demand and improved fuel efficiency, which could cause a cut in ethanol demand even as it increases market share. He said there is little bullish news emerging from the ethanol market for corn traders.
"There are a lot of people in the ethanol industry who are hoping for a strong corn crop and a gloomy price finish so they can lock up a lot of good supply for next year," Mr. Swanson said. "Why wouldn't they? Corn buyers usually like cheaper prices."
Traders point out that over the shorter term, many expect the Obama administration to increase the minimum blend rate for ethanol in gasoline up to as high as 15% from the current level of 10%.
Write to Ian Berry at ian.berry@dowjones.com
CHICAGO -- California's decision to adopt new-vehicle fuel standards to reduce greenhouse-gas emissions will have little short-term impact on corn-ethanol demand, but in the long term it is seen hurting the biofuel.
The state's Air Resources Board approved the measure by a 9-1 vote Thursday. The regulation will require a lower "carbon intensity" in fuels starting in 2011.
It also includes land-use changes due to ethanol production in assessments of ethanol's carbon intensity, a facet of the rule fiercely opposed by the ethanol industry.
The change would mean that emissions stemming from crop production, including the destruction of forestland or pasture to make way for crops, would be added to ethanol's carbon footprint. Ethanol industry officials argued that other fuels don't face the same standard.
For instance, the industry has pointed out it doesn't calculate emissions from military action related to protecting crude-oil supplies.
The decision is widely seen as a psychologically bearish influence on the Chicago Board of Trade corn market. Ethanol usage accounts for roughly a third of the U.S. corn crop, and ethanol demand helped push CBOT corn futures to record highs in 2008, although ethanol supporters say it was only a minor factor.
Nearby-month May corn closed at $3.77 per bushel Friday, compared with highs last year of around $8.
The decision is a long-term roadblock that indicates "less of a bright future for corn-based ethanol," said Michael Swanson, agricultural economist with Wells Fargo.
"We went from having endless ethanol growth to having: 'hmm, what kind of future do we have there anyway?'" Mr. Swanson said.
Fortis Bank said in a Friday research note that corn traders are concerned about the rule's effect on demand, "but there is likely to be a fierce debate over the details in the meantime." Mr. Swanson said it's probably "several court cases and wranglings from being final."
California's View
The chairwoman of California's Air Resources Board, Mary Nichols, to soothe the ethanol industry, said in a letter to retired U.S. Gen. Wesley Clark, who is heading an ethanol industry group, that the new standard "supports the market for corn ethanol in California over the next decade at least."
Gen. Clark's group, Growth Energy, says that the proposal unfairly singles out corn ethanol, and he criticized the rule as unfair.
Some corn traders noted that the rule isn't supposed to go into effect until 2011. It also will be implemented incrementally, with a goal of cutting the carbon content of the fuels sold in California by 10% by 2020.
"I think the impact today, next week, next month is minimal," said Vic Lespinasse, analyst for grainanalyst.com. "It could have an impact down the road."
Still, the decision is a reminder that "corn ethanol is a passing phase" in a transition to the next generation of biofuels, Mr. Lespinasse said. Farmers will be producing less corn for ethanol in 20 years than they do now, he said.
Other States Coming?
Some traders also said that California is seen as a trend-setter for environmental policy, and that several other states have similar proposals in the pipeline.
The ethanol market has broader economic concerns, analysts said. Chad Henderson, analyst for Prime Ag Consultants, said that corn traders see ethanol demand as more politically motivated than economically driven.
He said he isn't anti-ethanol or pro-ethanol, "but at some point down the road, you would think ethanol needs to stand on its own two feet economically."
Mr. Swanson said that main problems facing ethanol are weak demand and improved fuel efficiency, which could cause a cut in ethanol demand even as it increases market share. He said there is little bullish news emerging from the ethanol market for corn traders.
"There are a lot of people in the ethanol industry who are hoping for a strong corn crop and a gloomy price finish so they can lock up a lot of good supply for next year," Mr. Swanson said. "Why wouldn't they? Corn buyers usually like cheaper prices."
Traders point out that over the shorter term, many expect the Obama administration to increase the minimum blend rate for ethanol in gasoline up to as high as 15% from the current level of 10%.
Write to Ian Berry at ian.berry@dowjones.com
Subscribe to:
Posts (Atom)
Posts
