Indonesia has set a target of attracting $160 billion in foreign investment over the next few years, and through recent deals with China and India, it is coming closer to achieving this goal.   China and India have agreed to finance billions of dollars worth of Indonesian infrastructure projects- including railways, road, ports and bridges – in exchange for coal.  The nature of the agreements is similar to the controversial “minerals-for-infrastructure” deals China has entered across Africa to secure access to that continent’s resources.

Leading purchasers of Indonesian coal are China, India, South Korea, Japan and Taiwan.  Indonesian production levels are predicted to rise nearly 90% to 480 million tons by 2020.

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Below are some excerpts from the report:

1. Electric Vehicles: Worldwide hybrid electric vehicle sales predicted to double by 2014.  Exponential growth predicted in Europe, Australia and South Korea.  New market opportunities in India & China.
2. Enhanced Oil Recovery: Practice can improve oil producing methods by 70 – 90%.  Oil viscosity is improved through steam, gas or injection of chemicals.
3. Green Building: Use of recycled materials, sustainable sources, efficient building insulation and improved construction techniques contribute to sector growth.  Predicted to grow to $580bn by 2015, a 21% combined annual growth rate.
4. Offshore Wind: Installations expected at higher rate than land-based turbines.  U.K. in particular may more than double offshore market value to $5bn by 2015.
5. Smart Grid: Growth in grid infrastructure, information and communications technology and software and applications slated to grow as more renewables come online.  Predicted growth to $171bn by 2014.
6. Solar: Concentrated solar power (CSP) market to jumpstart by 2012.  This fastest-growing segment of solar may grow to $3bn by 2014 from $700,000 in 2010, representing a 42% annual growth rate over the time period.

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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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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.

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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.

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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.

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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.

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“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.

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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.

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Clean up and other associated costs related to the spill, the largest in U.S. history, may reach as high as $30 billion.  Since the rig explosion in April which broke open the deep-sea well, estimates say over 5 million barrels of oil have spilled into the Gulf of Mexico, endangering marine life and resulting in major closures of fishing waters and tourist beaches along the Gulf coastline.

The U.S. House of Representatives took up debate today on a bill to reform off-shore drilling practices in the wake of the spill.  The Senate, the SEC and the Department of Justice have also launched their own investigations, and private lawsuits against BP have piled up as well.  The combined effect of these developments has knocked nearly 40% of BP’s market value since the explosion.

BP says it could begin its “static kill” drilling operations to seal the leaking well shut once and for all by this weekend, ahead of schedule.  Still, retired Coast Guard Admiral Thad Allen, the government’s main representative in the region, says conclusive clean up of the region will be both costly and time-consuming, requiring many more millions, many more years and much more effort from BP over the long-term.

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