The Chilean Energy Minister recently announced plans to invest $200 million in geothermal energy projects in Chile over the next two years.  Chile will also grant 170 land concessions to developers now through 2012.

These concessions are expected to eventually yield additional hundreds of millions of dollars in revenues.

The Chilean geothermal market is at its nascent stages, with only one major project underway, developed by Italian utility Enel.  However, other geothermal companies such as Ram Power, Magma Energy and Ormat have been looking into geothermal resources in Central and South America.

Chile, with its 4,300 mile long mountain range, provides many interesting locations for energy exploration.

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The success or failure of China’s $736 billion plan to invest in solar, wind, biofuel and nuclear energy is likely to depend on one thing – the price of coal.

Policy and industry analysts warn that if the costs of these new technologies are not commensurate with that of coal, China’s clean tech push may fizzle and fail to attract the private sector investment it needs for long term success.

“The government must gradually lift fossil fuel prices while granting incentives to non-fossil fuels to establish a long-term price signal,” said Wang Yi, deputy head of Policy and Management at the China Academy of Science.  Without changes in tariff structures, there would be little incentive for private firms to invest, analysts warn.

State-run firms would be the only ones able to operate at a loss as “they are the ones who can afford to lose money,” said Lin Boqiang, head of Center of Research on Energy Economics at Xiamen University.  “The private sector can’t afford waiting around for 5 to 10 years operating at a loss.”

China’s low-carbon energy potential is enormous.  The government is aiming for a 45% cut in carbon intensity from 2005 levels by 2020 and a 15% increase in share of renewable vs. primary energy consumption.  Certain estimates say that China is ready to build at a minimum 20 nuclear power plants over the next 5 years, each with a capacity of 2GW.

Coal, however, is the elephant in the room.  Providing 80% of all electricity for its growing economy, China is the world’s #1 coal user.  It constructs, on average, one new coal-fired power plant every week.  Switching away from such a plentiful albeit highly polluting resource will be difficult for the economic giant.

On top of that, China has been making improvements to its coal plants to make the burning process cleaner.  These generators are called supercritical plants, and they produce approximately 15% less CO2 that conventional plants at about $500-$600 per kW less than in developed OECD nations.

China has overtaken the U.S. as the world’s top emitting country, and it faces tremendous pressure from the international community to wean itself off its coal addiction and get serious about reducing its emissions levels.

Foreign firms such as nuclear Areva of France, wind power equipment producers Gamesa of Spain, U.S.-based First Solar and India-based Suzlon are just a few that will be waiting to see how China’s investment plans develop and how it meets this coal-pricing challenge.

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A new investment program announced by the French government will invest €1.35 billion into renewable energy and green chemistry over the next four years.

The funding support, coming in the form of subsidies and loan guarantees, will accelerate over the years, eventually reaching €290 million/year by 2014.  The program aims to attract an additional €2 billion from private investors and other research groups.

France’s extensive use of nuclear-fired plants has contributed to the country’s claim to 90% low carbon electricity.  However, President Sarkozy’s administration is furthering efforts to develop renewable energy sources such as solar and wind.  The new funding will also support sustainable transportation initiatives and smart grid technology developments.

Read more here…

Regulators in California have approved a license for the first large-scale solar thermal plant to be built in the United States in twenty years.

After a 2 ½ year-long environmental review, the Beacon Solar Energy Project will be constructed on a 2,012 acre plot of former farmland.  Solar thermal plants generate electricity by using long trays of parabolic mirror to reflect the sun’s rays and heat a tube of liquid.  The super-heated liquid then creates stem to fire a turbine which generates electricity.

“I hope this is the first of many more large-scale solar projects we will permit.  This is exactly the type of project we want to see,” said an Energy Commission member.

However, the Beacon project still has more hurdles to overcome, including environmental concerns about impact on limited water supplies and vulnerable wildlife.  Beacon must also secure a contract to sell the electricity they generate.  The project supporters are optimistic about obtaining this type of contract, considering California’s utilities are required to purchase 20% of the electricity from renewable sources by 2020.

Read the full article here…

Two major partnerships have taken shape recently between global oil conglomerates and smaller cellulosic biofuel companies, including a $12 billion joint venture between Shell and Brazilian ethanol producer Cosan, and an $11 million deal between Petrobas and KL Energy Corporation to expand Brazilian operations.

Corn-based ethanol has been criticized as an energy-intensive fuel source with a very large carbon footprint.  Competition between corn crops grown for food and crops grown for fuel production has been a major concern.

Cellulosic ethanol, on the other hand, can be made from just about any crop or plant matter that has a high concentration of cellulose, which means that waste crops, stalks, leaves and husks can be turned into fuel.  Technology developments and a drop in the price of necessary enzymes for the fuel conversion process has helped cellulosic ethanol production more economical, and therefore more practical as a major-scale substitution for gasoline-based liquid fuels.

Besides providing a major boost to the Brazilian cellulosic ethanol industry, these deals will allow the smaller companies to access broader markets and sources of capital.  The partnerships also demonstrate continued interest of Big Oil in “next-generation” biofuels as the wave of the future.

Read more here…

According to a draft document obtained by Reuters, Japan is planning to institute a mandatory carbon trading program which would cover the country’s largest emitting companies.

Japan is the world’s fifth-largest emitter of carbon dioxide.  In an effort to reduce emissions and become a leader in the clean energy industry, Japan has increased its focus on clean energy technologies and climate change mitigation measures.

A plan to implement a nation-wide carbon trading program was scrapped by Parliament earlier this year.  In this new proposal, heavy emitting Japanese firms would be held to carbon emissions quotas, and any emissions above the set levels would require purchases of carbon credits from either domestic or overseas reductions projects.

Japan will hold an extraordinary Parliament session on Septmeber 14^th, where a party leadership challenge is expected; the outcome of which could influence the passing of this legislation.  It is in the interest of the Environment Ministry to “have it passed smoothly” so we will be “ready and accountable in international climate talks,” remarked one government official.

Read more here…

Over 30 new coal-fired power plants have been built or are currently under construction in the United States since 2008; the industry’s largest expansion in over twenty years.

New coal plants are being built across swaths of the Mid-West and Southeast to take advantage of the plentiful coal resources in the United States. Utilities believe that coal is cheaper than natural gas and nuclear power, and more consistent than intermittent renewables such as solar and wind.

All together, the 16 large plants in operation and the 16 new plants under construction will generate approximately 17,900 MW of electricity. That is enough to power 15.6 million homes, or roughly the combined number of homes in California and Arizona.

The BP oil spill and the tragic coal mine accident in West Virginia have increased public awareness of the social and environmental costs of fossil fuels. However, based on this recent expansion, it appears the coal industry is not convinced that the U.S. will implement legislation to regulate carbon emissions in the near future.

“Building a coal-fired power plant today is betting that we are not going to put a serious financial cost on emitting carbon dioxide,” warned Severin Borenstein, director of the Energy Institute at UC-Berkeley. It is estimated these new 32 coal plants will emit about 125 million tons of greenhouse gases every year, the equivalent of adding 22 million vehicles to the nation’s roadways.

Despite the Obama administration’s dedication of $3.4 billion in stimulus funds to “clean coal” research, none of these new plants incorporate the experimental technology, which filters out carbon before it is emitted into the atmosphere. New investments in traditional coal plants amount to more than $35 billion.

John Grasser, a spokesman for the Department of Energy, acknowledged that these new plants were a “missed chance” to incorporate carbon-limiting technologies into construction. “This is not something that’s going to happen tomorrow,” he remarked, warning that wide-spread carbon neutralizing technologies, he warned, are at least 15-20 years away.

Read the full article here…

Figures released by the Energy Information Administration (EIA) indicate that stronger economic activity and use of traditional energy such as coal and natural gas will lift U.S. carbon emissions in 2010.

Fossil-fuel related emissions may rise by 3.4%, and emissions from the industrial and electric power sectors may rise by 3.9%, according to the EIA.  Coal-related emissions alone are on track to rise by 6% this year.

Despite these projected increases, total U.S. carbon emissions for 2010 and 2011 will still fall below 2008 levels, (or any year dating back to 1999.)

Read more here…

“Rare earth” resources such as indium, gallium and lithium are essential components of many high-tech devices, from battery technologies to solar cells and wind turbines. China is far and away the world’s leading rare earth exporter, controlling 95% of the world’s resources.

Chinese officials recently announced plans to decrease rare earth shipments by 72%, causing anxiety amongst global clean tech firms. However, it will reportedly offer access to restricted resources to companies that move operations to China.

Many companies are already picking up and moving to the region because of the attractiveness of low labor costs and proximity to Asia’s fast-growing renewables sector. Many analysts expect this moving trend to speed up as clean tech firms take precautions for potential limitations on rare earth exports that are essential to production.

Read more here…

Royal Dutch Shell Plc, Europe’s largest oil company, is making a major strategy shift and increasing its focus on natural gas.  Ann Pickard, Chairman of Shell Australia, expects over 50% of Shell’s total production to come from natural gas by 2012.

As the company transitions, Shell is planning significant new investment in Australian liquefied natural gas (LNG) projects, on the scale of $50 billion.  Investment in LNG projects is being catalyzed by increased demand for cleaner-burning fuels, especially in Asia, as well as advancements in technology.

PetroChina, which joined with Shell to acquire Arrow Energy Ltd. and its reserves in Queensland, expects continued “long term” demand for LNG from Australia.  “Its a booming economy and more and more dirty energy is being replaced by clean energy.  There is a need,” remarked PetroChina project manager Ge Aiji.

Read the full article here…

Reduced Emissions from Deforestation and Degradation (REDD) is a fledgling program backed by the United Nations designed to save the world’s tropical forests.

One of the few proposals to achieve widespread support at the Copenhagen climate talks, REDD encourages developing nations to preserve their vulnerable forest land by linking conservation measures with carbon offsets which can then be traded on the global market.

REDD uses a complex accounting system to monitor the carbon offsets resulting from various forest projects and ensure standards around the world.  This system recently passed the first of two formal audits required by the Voluntary Carbon Standard (VCS), a Washington-based group charged with ensuring the legitimacy and transparency of REDD projects by imposing strict standards.

“The methodology is expected to be broadly applicable where mosaic patterns of deforestation occur throughout Southeast Asia and Africa,” says Leslie Durschinger, founder and managing director of Terra Global Capital, a finance and advisory firm specializing in REDD projects.  These “mosaic” projects include various plans to protect forests from logging, farmland conversion, fires and collection of fuel wood and thus reduce carbon emissions.

Deforestation is a major contributor to climate change,  which the U.N. says accounts for between 20-25% of total global emissions.  Many developed nations have lent support to help develop REDD, most notably Norway, which has signed a $ billion forest conservation deal with Indonesia.  REDD aims to become part of a broader global climate accord in 2013.

Seeking to become a player in the global carbon trading system, China announced it will launch a series of test trading programs in 2011 with an eye towards the possible implementation of a mandatory system in the future.

The International Energy Agency reports that China is the world’s largest energy consumer, although the Chinese government has denied these figures and claims it is still #2 behind the United States.  Regardless, Chinese power consumption is expected to continue to grow strongly, as its domestic power production.  By some estimates, Chinese power capacity could double to 1,600GW within the decade.

China has focused its efforts on energy efficiency and reducing the carbon intensity of its economy as it faces international pressure to keep its skyrocketing greenhouse gas emissions under control.  Introducing a carbon price, something the United States has thus far been unable to achieve, would help to increase efficiency without limiting capital flows to the renewable energy and cleantech space.

No firm details have been released yet, but it is expected that a commitment to carbon trading will be incorporated into China’s next 5-Year Plan.

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Although Germany is scaling back incentives for renewable energy, reports indicate the government is considering a tax on coal to make up for lost revenues as energy policies are reshuffled.

The government proposed abolishing tax breaks for energy-intensive companies, but came under fire from industry groups.  If introduced, this coal tax would target €410 million in 2011 and €710 in 2012, partially making up for revenue lost by keeping the tax breaks.

Read more here…

Russia’s major heat wave – the worst in over 130 years – is the latest example of extreme weather having a significant economic impact on the global agriculture sector.  Droughts and forest fires have caused a wheat crop crisis in Russia, raising global prices by nearly 70% and promptin President Vladimir Putin to ban wheat exports entirely.

Similar scenarios are playing out elsewhere in the world.  Droughts in Kansas, for instance, have killed off over 2,000 cattle and flooding in Pakistan has destroyed thousands of acres of crops.

“Over the whole globe all these changes in climate… are going to cause some real ripples in our capabilities of producing food,” warned Jerry Hatfield, laboratory director at the U.S. Department of Agriculture’s Agriculture Research Service.

Analysts at HSBC warn that if countries cannot not adapt to higher temperatures and more extreme weather, grain production in G20 countries may fall 8.7% by 2020.  With population growth taken into account, HSBC predicts G20 per capita grain production could drop between 11.9% and 16.1% by 2020.

Reduced output could “create havoc” in agricultural markets around the world, driving up the price of food and other essential goods.  There is grave concern that price spikes could result in unrest in many poor or resource-scarce countries similar to the riots that took place during 2007-2008, when global food prices spiked based on rampant market speculation.

Watch video of air pollution from Russian fires – released by NASA

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China is taking serious measures to curb its energy usage by investing in energy efficient vehicles and shutting energy-intensive factories across the country.

Over 2,000 steel mill, cement works and other energy-intensive factories have been ordered to close down by the end of September.  This announcement comes on the heels of another made by the powerful National Development and Reform Commission last week, which forced 22 provinces across China to stop providing discounted electricity to energy-intensive industries such as aluminum production.

Energy efficiency has become increasingly important in Chinese economic planning.  The nation’s current five-year plan targets 20% less energy usage per unit of economic output this year compared with 2005.

However, high industry output since last winter has driven China’s energy consumption to sky-high levels, producing the single largest surge ever of greenhouse gases by a single country.  According to the International Energy Agency (IEA), China surpassed the United States last year to become the world’s largest consumer of energy after becoming top global carbon emitter in 2006.  These rankings, combined with continued high expectations for economic growth, lead many to doubt China’s ability to meet its stated energy intensity goals.

Nevertheless, China is forging ahead with plans for major new investment in energy efficiency, including $15 billion into energy efficient vehicles.  $8 billion of this proposed funding would be set aside for development into pure energy efficiency techniques.  The remaining funding will be funneled towards infrastructure construction, potentially including electric vehicle charging station.

China is currently pushing to put 4 million eco-friendly vehicles on its roads by 2012.

Read more about energy efficiency here and proposed vehicle investments here

BP is nearing completion of a relief well to seal once and for all the Deepwater Horizon spill site in the Gulf of Mexico.  Upon completion, BP will begin its “bottom kill” operation to plug the leaking well with mud and cement.  The well has been provisionally sealed with a containment cap since July 15th.

“They are closing in on the last 30-40 feet,” said retired Coast Guard Admiral Thad Allen, the government’s lead point person on the scene.  He expects to intercept the remaining space between the well shaft and the surrounding rock  “sometime before the end of the week,” depending upon the path of a developing tropical storm moving across the Florida peninsula.

Carol Browner, the energy and climate change adviser to President Obama, says approximately three-fourths of the spilled oil has been recovered from the Gulf of Mexico waters. Deliberate burning, skimming and direct recovery accounted for about 25%, while natural evaporation, dispersion and other processes took care of about 50% of the volume.  The remaining oil has either congealed into tarballs, been embedded into sediment, or remains as a sheen on the water’s surface.  “The good news is that the vast majority of the oil appears to be gone,” Browner said during a recent television appearance.

So far, BP has spent $6.1 billion dealing with fallout from the Gulf spill, the worst in United States history.  BP has already paid $319 million in compensation to businesses and individuals that have been affected by the spill, and will likely continue to face high costs as it continues environmental cleanup operations in the afflicted region.

Read more here and here….

Global Fund Exchange is pleased to present you with our July 2010 newsletter – “Investing in the Future of Energy.”

This month’s newsletter analyzes the response to the BP oil spill in the Gulf of Mexico, solar energy developments in Europe, growth in Chinese and Indian carbon emissions as well as growing corporate awareness of sustainability and the business bottom line.

Please click on the image to open our latest newsletter.

China’s renewable energy industry has skyrocketed in recent years, and the nation has now overtaken the United States as the world’s leading clean energy investor.  The Chinese government continues to encourage this growth with favorable policy support.   Some key Chinese policy developments as related to the industry are as follows:

Renewables

• Total renewable power capacity in China reached 226GW in 2009, representing 1/4 of the nation’s total.  The government is calling for a total of 500GW of renewable power capacity by 2020, or about 1/3 of total power capacity.
• Renewable Portfolio Standards (RPS) for Chinese utilities require 8% of all capacity and 3% of power to be generated from non-hydro renewables by 2020.
• Revisions to the 2005 Renewable Energy Law will require increased cooperation between new renewables and the grid to ensure the generated power is transmitted efficiently.  The revisions also strengthened the Ministry of Finance’s renewable energy fund, which collects a tax on all electric power sales.

Wind

• Chinese wind power in particular grew thirty times over between 2005-2009.   China is now just behind the U.S. in total installed wind capacity.  Its turbine manufacturing industry grew to the world’s largest in 4 years.  The government has amended the wind power Feed-in-Tariff, and aims for 150GW of new installations by 2020.

Solar

• The “Golden Sun” program, introduced in 2009, will provide generous subsidies for solar PV installations.  Currently 300 projects have been proposed, totaling nearly $2.9 billion in investment.

Nuclear

• China has expanded its pledge to achieve 15% of all primary energy from “non-fossil fuel sources” by 2020.  This expanded directive will allow nuclear power to be included in the total accounting.

Carbon

• New carbon intensity targets were announced in Dec 2009, which aim to reduce the carbon intensity of GDP by 40-45% by 2020 relative to 2005 levels.

Energy Efficiency

• The 5 Year Plan for 2006-2010 aims to increase energy efficiency by 20%, including pumps, fans, boilers and the production of materials like steel and cement.

Read the full article here ….

The Kyoto Protocol climate pact is set to expire in 2012, and thus far there is no succession treaty in sight.  What will happen if a new or updated treaty is not prepared in time?

In order to implement a new round of emissions targets in the existing Kyoto framework, three-quarters of all parties to the Protocol, or 143 countries, must agree.  Before each country ratifies the treaty, extensive domestic negotiations and review commonly take place – “a process that may involve a considerable amount of time,” according to the U.N.  In light of these concerns, the United Nations has released for the first time a Kyoto “Plan B” set of contingency options should a new global climate deal fail to materialize.

A gap in coverage between Kyoto’s 2012 expiration date and when a replacement treaty might take effect could be very costly to the $20.6 billion global carbon trade.  The value of these traded emissions credits rests on stipulations as determined in the Kyoto Protocol.

To avoid this time gap, one facet of the U.N.’s “Plan B” would consider reducing the number of countries required to approve any proposals for new targets or proposals to extend the current caps through to 2013 or 2014, when climate negotiators hope to secure a more comprehensive update to the treaty.

After a disappointing showing in Copenhagen this past December, climate negotiators are looking forward to making progress in their third year of talks.  The next major conference will begin this November in Cancun, Mexico.

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Investing in “green growth” can help catalyze Greece’s economic growth and attract outside investment into the nation’s ailing economy, officials say.

Greece’s  €12 billion investment plan includes urban improvement projects, new natural gas pipelines and storage facilities in northern Greece.  The government hopes to attract a total of €22 billion in external private investment in the coming decade.  Environment Minister Tina Birbili hopes the program will “decisively contribute to face recession and lead to dynamic economic growth.”

Although Greece has ample wind and solar resources, renewable energy contributed only 4% of the nation’s electricity generation in 2009.  However, by 2020 Greece has pledged to ramp up renewables’ share to 40% of its total electrical output.

Read the full article here…