Daily Archives: July 15, 2009

Kate Mackenzie

Last week’s arrest of Stern Hu, a senior Rio Tinto executive in China, for alleged bribery shocked Australia (and presumably Rio Tinto too, although the company has so far limited its response to simply stating that it was aware of any wrongdoing).

None of the anxiety of Hu’s fate will be eased by news today that Chen Tonghai, the former chairman of Sinopec was given a suspended death sentence for accepting bribes worth $28m.

Meanwhile the state-run China Daily newspaper today reported an unnamed source claiming Rio officials had bribed 16 steel mill customers for information. As the ABC notes, the newspaper’s reports are sometimes used by the Chinese government to send a message to foreigners.

In Australia political pressure has been building on Mandarin-speaking prime minister Kevin Rudd to take a firmer stance on Stern’s arrest.  He did so today, pointing out to China that ‘a range of foreign governments and corporations’ would be watching Stern’s progress. He also said that Australia’s relationship with China – a big customer of its abundant natural resources – did not go one way.

Related links:

Suspended death sentence for ex-Sinopec boss (Reuters, 15/07/09)
Rudd ups the ante (ABC News, 15/07/09)
Rio employee accused of bribery (FT, 10/07/09)

Ed Crooks

In the UK government’s low-carbon strategy, published today, one number stands out in several hundred pages of analysis and forests of statistics: 8 per cent.

That is the expected increase in domestic energy bills as a result of the measures that are being put in place to cut the UK’s emissions by 34 per cent from their 1990 levels by 2020. It works out at about £92 per year on the average bill, or less than £2 per week: an amount that the government hopes the public will be prepared to accept as the price of saving the planet.

To get to that number, however, officials have had to strain every sinew.

Sheila McNulty

The US government took steps this week toward building the country’s first commercial scale carbon capture and sequestration project. The Department of Energy has decided to work with the FutureGen Alliance, a public-private partnership to design, build and operate the world’s first coal-fueled, zero emissions power plant and proceed with the first phase of the project.

That means that over the next eight to 10 months, the Alliance will complete a preliminary design, refine its cost estimate, develop a funding plan and expand the sponsorship group. It is then that the Department of Energy and the Alliance will decide whether to continue with the project, through construction and operation.

The vast amounts of coal left to be turned into electricity in a world increasingly concerned about where future fuel will come from means the commodity is unlikely to be left in the ground. So finding a way to burn as cleanly as possible is vital.

Kate Mackenzie

Do you have a green job? If you’re reading this, you might do

Who’s not happy about extra commodity regulation?

Sarah Palin and the energy security argument

Markets: Gains extended

Reva: The anti-Nano?
Further reading:

Some Democrats become increasingly irritated with James Hansen (ClimateWire)

Chu urges China to commit to an emissions reduction target (The Times)

‘Zero energy homes’ are nothing new, but GE’s new campaign could expand it (Technology Review)

The Oil Drum’s Oil Watch Monthly for July is out

The Ambani brothers’ dispute over gas could have implications for investment in India (Economic Times)

Nigeria’s MEND reportedly calls for a ceasfire (OilVoice)

‘Carbon footprint’ makes it into a dictionary (chron.com)

New on FT.com:

UK sets out plans for low-carbon economy

Suspended death sentence for ex-Sinopec boss

By Izabella Kaminska

Last week the US Treasury Secretary Timothy Geithner provided more details on how he plans to give regulators  greater powers in policing the world of  commodity exchange-listed and OTC derivatives. The biteback from the industry is now gathering pace.

Barcap’s daily energy note on Tuesday infers such moves are ‘misguided’ (our emphasis):

Reservations about the path and timing of a global recovery, but more importantly uncertainties pertaining to the possibilities of misguided intervention through regulatory reforms, kept a lid on WTI prices, with the front-month contract falling by 0.33% to $59.69/bbl. August Brent prices, however, increased by similar amounts to $60.69/bbl, increasing its premium to WTI to $1. In our view, the tightness in the Atlantic crude market notwithstanding, the recent move down in WTI relative to Brent has also been a product of CFTC’s proposed actions, whereby there has been an additional incentive to scale back US futures market exposure.

Stephen Schork of the Schork Report, meanwhile, notes the following from the industry in general (emphasis FT Alphaville’s):

Kate Mackenzie

Sarah Palin’s comment in the Washington Post about cap-and-trade makes a predictable argument:

We must move in a new direction. We are ripe for economic growth and energy independence if we responsibly tap the resources that God created right underfoot on American soil.

The gist, in case you missed it: cheap energy made the US great, therefore making energy more expensive is bad, and importing energy makes the US vulnerable. This adds up to her argument for further exploiting US oil and gas reserves – although ironically those same arguments are just as often used to make the case against a continuing dependence on fossil fuels.

More interesting is another piece in the Washington Post a week earlier, focusing on Palin’s legacy in Alaska. Her two big energy-related achievements, to raise taxes on big oil companies and broker a plan for a new gas pipeline. But the first achievement may be thwarting the latter:

Although Palin won acclaim for her tough negotiations with oil companies, today it remains uncertain whether she will see the Alaska Natural Gas Pipeline come to fruition.

Lawmakers said they expect oil companies to ask them to renegotiate the tax increase, posing a potential threat to Palin’s deal. If the oil companies are unsuccessful, they have indicated that the costs associated with building the pipeline may be too high, the profits too narrow.

Commodity markets extended their advance for a second session on Wednesday helped by further dollar weakness, with crude oil prices rising in advance of the latest US weekly inventories data while base metals gained and gold climbed towards the $930 level.

In energy markets, Nymex August West Texas Intermediate rose 98 cents to $60.50 a barrel while ICE August Brent gained $1.16 at $62.02 a barrel.

US inventories data, due out later in the session, was expected to show crude stocks falling for a sixth week in succession, down 1.6m barrel last week, according to a poll of analysts by Reuters.

Fiona Harvey

The UK government’s low-carbon industrial strategy, published today, sets out how the UK is to achieve the emissions cuts of 22 per cent by 2012 and 34 per cent by 2020 that the government has pledged.

Nestling in among the thicket of figures is the following gem:

“The UK low carbon environmental goods and services (LCEGS) market is worth £106 billion and employs 880,000 people directly or through the supply chain. It is estimated that over 1 million people will be employed in the LCEGS sector by the middle of the next decade. These are skilled jobs, with the average market value per employee well above the national average. The UK LCEGS sector is one of the few areas of the economy expected to maintain positive growth rates through the downturn and is expected to grow by over 4% per annum up to 2014/15.”

That number – 880,000 jobs – sounds very impressive. And it’s a number that has grown remarkably in recent years.

Kate Mackenzie

The world’s biggest electric vehicle factory is being built in India, according to the Reva Electric Car Company.  But will the clutchless, gearless Reva (known as the G-Wiz in the UK) be much of a rival to internal combution-based Tata Nano, much feted as the world’s cheapest car? Tata Group after all is a huge multinational conglomerate and India’s biggest private-held company. More than 200,000 Nanos have been  ordered and paid for – less than the 500,000 the company was hoping for, but on a much bigger scale than the Reva.

Reva’s founder, Chetan Maini told the FT’s Joe Leahy:

The company has sold only about 3,000 vehicles to date, but he expects sales of up to 2,000 this year, half of them in India and the rest in at least 20 overseas markets, which include Norway, Spain and the Philippines. This would be three to four times the volume of last year, and Mr Maini predicts growth will be of this order for the next few years. “We’ve gone through the slow, testing phase. Now it’s time to take off,” he says.

There are quite a few challenges, however. Analysts believe the company will need help from large corporate rivals to become a mass consumer item – and Tata Motors is certainly a large rival.

James Fontanella-Khan

Energy plans face delays, groups warn
New nuclear power stations and wind farms risk being held up (FT)

Short View: US retail sales and oil
Oil’s rebound earlier this year seems to have choked sales again (FT)

Brown to promote wind, clean coal to curb UK’s gas dependence
Government will try to persuade utilities to build more green energy parks (Bloomberg)

Exxon joins algae-based biofuel push
Exxon and Craig Venter enter a $600m research partnership (FT)

India’s Reva plugs in to green market
A Bangalore-based company plans to build the world’s largest electric car factory (FT)

Directors stifle green enthusiasm
More than half of company directors are ‘climate change cynics’, says report (FT)

Bulgaria signs up for Azeri gas pipeline
The 160km pipeline set to end Bulgaria’s reliance on Russia for gas (FT)

India’s Sterlite, Suzlon to raise over $1bn
Both companies plan to finance their expansion plans and retire debt (Economic Times)

Solar thermal can meet 25% of power demand by 2050, report says
Investment in solar technology will total $3.5bn in 2010 (Bloomberg)

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