As green power investments rise, a fear they are being misguided

By James Kanter

PARIS: Long considered marginal and even quixotic, energy from sources like the wind, sun and plants is turning into one of the world's most highly valued industries. And while power generated by "green" sources remains tiny compared with fossil fuels, the sector has begun to attract the attention of big-league investors seeking to profit from a new wave of growth in alternative energy.

But even as the amount of cash swells, environmental officials warn that financing is flowing to projects that may be doomed to failure.

Once-trendy biofuels like ethanol produced from corn are now being derided by the authorities, who say the fuels have little value in the fight against global warming. Vital components for windmills and solar cells have run short over the past year, requiring expensive projects to a halt. Meanwhile, subsidies for renewable energy remain at the whim of politicians, creating a boom and bust cycle for wind farms and solar projects, particularly in the United States.

Such a risky environment means some bankers are placing bets on projects that are unlikely to develop into serious, profitable alternates to fossil fuels, and could ultimately slow investment flows

"Some of these green investments are going in the wrong direction," said Yvo de Boer, the executive secretary of the United Nations Framework Convention on Climate Change. "Very well-intentioned projects can go awry, particularly where government policies on cutting emissions aren't clear."

Other experts say pouring money into newfangled renewable technologies could prove less cost-effective than relatively straightforward improvements in energy efficiency. Efficiency measures could cut growth in energy demand in half by 2020 and earn investors double-digit rates of return, said Diana Farrell, the director of the McKinsey Global Institute.

"Too much of the energy debate has focused on simply boosting supplies that are destined to be wasted," she said.

Global investment in alternative energy last year soared 60 percent, to $148.4 billion, from 2006. That would need to triple in the next five years to roughly $500 billion if governments are to meet their targets to reduce emissions and generate energy from renewable sources, said Michael Liebreich, the chief executive of New Energy Finance, which tracks investment flows.

But any transformation of the energy industry still may take decades, and investors should be wary, said Kevin Parker, the global head of asset management at Deutsche Bank.

"Climate change may be the most important investment megatrend of our lifetimes," Parker said. "But it creates a highly dynamic and treacherous investment landscape, and some of today's winners are bound to turn out to be tomorrow's losers."

Just three years ago, renewable energy was largely a niche area for specialist venture capital and private equity firms.

Since then, warnings by scientists about the link between emissions and climate change have sparked a flurry of new financing as authorities in the United States and Europe mandated greater quantities of power from renewable and clean energy sources.

Today, top-tier banks and big-name financiers dominate a closely watched annual rankings compiled by New Energy Finance.

Credit Suisse handled stock market listings worth $2.8 billion last year making it the most active in public market offerings, according to the third edition of the rankings to be released Friday. Merrill Lynch ranked second with deals worth $2.4 billion while Morgan Stanley was in third place, with deals worth $2.3 billion.

Good Energies, a firm based in Zug, Switzerland, made the largest number of venture capital and private equity investments in 2007 while heavyweights of the Silicon Valley start-up industry - Khosla Ventures and Draper Fisher Jurvetson - placed second and third.

In terms of overall amounts of venture capital and private equity, Goldman Sachs led with investments of $443 million followed by Credit Suisse, with $428 million, and Macquarie Bank, with $334 million.

Capitalizing on the trend, John Lynch, a banker with Merrill Lynch, arranged a spinoff of Iberdrola Renovables, the world's largest renewable energy company, from its Spanish parent.

But he had one concern about selling shares in a company in the red-hot wind power sector: The long shadow of the Internet boom and bust.

"We had to educate naysayer investors that this isn't dot-com all over again," said Lynch, the lead banker handling the initial public offering of its shares. "We had to convince investors that the cash flow couldn't just evaporate," he said.

Lynch explained how the value of Iberdrola Renovables - as with many Internet companies - was based on future cash flows. But unlike dot-com-era offerings, wind, Lynch was able to tell investors, is a viable business because of legislated rates to buy the product - clean electricity - at favorable prices from farms, many of which already are built.

His campaign paid off: the company raised €4.48 billion in its debut and is now valued at about €17.2 billion, or $26.2 billion - more than many conventional utilities.

Having used the proceeds from its IPO to pay off debt, Renovables now is seeking financing to double its wind capacity, mostly through building new farms in Spain, Britain and the United States.

But even for wind - which raised about $10 billion in public offerings in the past three years, beating amounts raised by solar and biofuels companies - hazards remain.

Legislators in two of the most important wind markets, the United States and Spain, have not yet renewed subsidy programs, helping depress the stocks of some wind operators, including Iberdrola Renovables.

But some of the most serious concerns are in the solar sector, where shares dropped sharply in recent weeks after some companies doubled or tripled in value last year. A number of solar companies have postponed or cancelled initial public offerings.

A major problem with solar is that it still costs more than wind to produce a unit of electricity from photovoltaic cells. Another problem is a shortage of a key ingredient, silicon, to make solar cells.

In a rush to secure silicon, a number of solar companies have developed their own production operations. But some, like REC Group of Norway, have seen their shares tumble because of production problems.

The volatility of the renewable energy sector has prompted speculation that investment could slow dramatically as it did after the oil shocks of the 1970s. Once oil prices stabilized, the vogue for renewable energy waned, particularly in the United States. Other challenges to renewable energy include a renaissance in nuclear power and the emergence of technologies to make cleaner-burning coal and gas.

With mounting evidence of weak spots in renewable energy at a time when the global economy is slowing, the rate of growth in the sector could slow to 20 percent from a white-hot rate of 60 percent growth last year, Liebreich of New Energy Finance said.

"The world is repricing risk, and these are risky assets," Liebreich said, referring to renewable energy investments.

Parker of Deutsche Asset Management agreed that big investors were heeding warning signs in the renewable energy sector and now were refining their investment strategies accordingly.

He said bankers already were becoming more discerning about projects by starting to favor financing for energy efficiency projects and showing greater interest in technologies like "concentrating solar power" - which uses mirrors to concentrate the sun's rays rather than relying on sometimes scarce inputs like silicon - to avoid supply shortages.

To be continue in other article...

(Jakarta, Rabu 05 Maret 2008)

Re-publish by Jacob Paradox from link (www.routers.com),(www.iht.com), (www.routers.com), (www.nytimes.com)

Foundation to Offer $100 Million to Deal With Global Warming (Global Warming Problem)

Foundation to Offer $100 Million to Deal With Global Warming

By STEVE LOHR

The Doris Duke Charitable Foundation is creating a $100 million program to support research intended to encourage policies aimed at reducing the threat of global warming.

The foundation’s climate change project, which is being announced today, comes amid an increasing political push for legislation to curb emissions of carbon dioxide from burning fossil fuels like coal, natural gas and gasoline.

Several bills that would set mandatory restrictions on emissions of carbon dioxide, the main greenhouse gas, have been introduced in Congress. Other clean-energy bills under consideration are intended to increase the use of renewable energy and promote energy efficiency. Most of the presidential hopefuls for 2008 have proposals to deal with climate change.

“This a well-timed contribution of support for the enormous job we face in the next few years trying to figure out the most productive carbon policy for the United States,” said Robert H. Socolow, a professor and co-director of the Carbon Mitigation Initiative at Princeton University.

All charitable grants for climate change programs add up to nearly $100 million a year, according to philanthropy experts. So the Duke foundation commitment of $100 million over five years is “a very big deal,” said Eric Heitz, president of the Energy Foundation, a partnership of foundations that promotes energy efficiency and renewable energy.

But the Duke foundation’s commitment, while sizable, is probably most significant for its focus. “It has decided to take a path that should have a disproportionate impact, to sponsor the analysis and research to shape policy,” said Hal Harvey, director of the environment program at the William and Flora Hewlett Foundation, a leading philanthropic supporter of environment and energy programs.

The Duke foundation decided on its approach to climate change philanthropy after talking to dozens of scientists, policy analysts and other experts over the last 18 months, said Andrew J. Bowman, director of the new program. The guiding principal, he said, is that smart policy would stimulate the deployment and adoption of clean-energy technologies.

Though just getting under way, the broad outlines of Duke foundation’s research agenda are set. It will, for example, support research into issues like the appropriate price that should be placed on emitting a ton a carbon dioxide into the atmosphere from power station smokestacks or car tailpipes, and how to best design a system to either tax emissions or set up a cap-and-trade scheme.

Cap-and-trade is the approach embodied in the current legislative proposals, and it would involve setting an economywide cap on total carbon dioxide emissions, allocate or auction emissions allowances to utilities and other companies, and create a trading market in these “permissions to pollute.”

“How these policies are designed is crucial in terms of getting the right price signals that will encourage efficient private sector investment,” said Robert N. Stavins, director of the environmental economics program at Harvard University. “And getting the design of policy right is where the Duke foundation’s support could have a real impact.”

Mr. Bowman of the Duke foundation said that putting a price on carbon dioxide emissions was crucial to provide the economic incentive for needed investments in industrial cleanup, innovative low-carbon technologies and renewable sources of energy like solar and wind power.

“But we also need policies that complement carbon price policy,” Mr. Bowman said.

Huge gains, Mr. Bowman said, should be achievable in energy efficiency with more stringent rules for building codes and appliance standards, which mandate the use of modern electronics and materials. The regulatory regime for utilities, he added, should be overhauled to encourage investment in “smart grids” that can monitor and conserve electricity. In most states, utilities are still paid to produce megawatts but not to save megawatts.

Homes, offices and power plants, Mr. Bowman noted, often last for 50 or 60 years. “We have to do everything we can to make sure we deploy the most efficient technologies that we can over the next five and ten years to prevent having an economy that is locked in to a really inefficient infrastructure,” he said.

The Duke foundation also plans to support research in strategies for adapting to climate change, which includes steps like protection from floods, building dikes and emergency evacuation plans. Adaptation policies assume that it is best to prepare for the ill effects of a warmer planet, even while taking action to reduce greenhouse gas emissions.

To be continue in other article...

(Jakarta, Senin 19 February 2008, 16.03 sore)

Re-publish by Jacob Paradox from link (www.nytimes.com)

Living in the Greenhouse (Global Warming Problem)

Living in the Greenhouse

By ANDREW C. REVKIN

EUREKA moments are rare in science. Achievements like the deduction of DNA's structure etch our imagination precisely because they are exceptional. In most fields, research is more akin to climbing a mist-shrouded mountain of unknown dimensions. Climate science, perhaps above all, has been a perpetual ascent toward understanding. A major achievement so far is a broad consensus that beginning in the industrial era humans, by burning ancient buried stores of carbon-rich coal and oil, have liberated billions of tons of heat-trapping greenhouse gases, warming earth.

Debate persists over the extent of human-driven warming and what to do about it. But recognition that in a short span our species has nudged the thermostat of a planet remains a momentous, and sobering, finding.

''The Discovery of Global Warming'' describes the intellectual journey toward that conclusion, with all of its false starts, flawed hypotheses, inventiveness and persistent uncertainties. It reveals the effort as one of the great exercises in collective sleuthing, with pivotal insights provided by experts in fields as varied as glaciology, physics and even plankton paleontology. Charting the evolution and confirmation of the theory, Spencer R. Weart, director of the Center for the History of Physics of the American Institute of Physics, dissects the interwoven threads of research and reveals the political and societal subtexts that colored scientists' views and the public reception their work received.

In many instances, he writes, researchers were pursuing knowledge for other purposes and only later were their data used to determine if humans had influenced the climate. He notes that much of the oceanographic and polar research that eventually helped point to human-driven warming was paid for by the United States Navy and other government agencies that were eager to exert American hegemony during the cold war.

The narrative starts with the 150-year-old notion that some trace gases are transparent to sunlight but opaque to infrared radiation, the radiant energy that pulses from a sun-warmed sidewalk long after dusk. This insulating property of the atmosphere prevents the planet from turning into an iceball. Weart uses excerpts from pivotal papers to let us glimpse the thinking of climatology's pioneers. Thus, in 1862, John Tyndall, a British researcher, wrote about infrared radiation, ''As a dam built across a river causes a local deepening of the stream, so our atmosphere, thrown as a barrier across the terrestrial rays, produces a local heightening of the temperature at the earth's surface.''

As the Industrial Revolution accelerated, scientists soon figured out that emissions of heat-trapping gases from burning coal and other fossil fuels might intensify that natural ''greenhouse effect.'' Chief among these gases was carbon dioxide. One omission from Weart's book is a prescient phrase written in 1896 by Svante Arrhenius, a pioneering Swedish chemist: ''We are evaporating our coal mines into the air.''

Still, the human contribution to climate was presumed to be far outweighed by the great cycles of ice ages revealed in fossil and geological records. The puzzle of those cycles remained the prime quarry of Arrhenius and others and has still not been completely solved.

A warm period in the 1930's brought the first specific predictions that humans could alter the climate, but then things cooled down for a few decades and the possibility of a human influence remained a fringe notion. (Later, Weart explains, it was shown that the temporary cooling could also have been caused by humans -- through the release of vast sun-reflecting plumes of sulfates and other tiny pollution particles in the industrial boom after World War II: one human emission was canceling out another until clean-air laws began removing the cooling veil.)

Weart next focuses on the great burst of geophysical research starting in the 1950's, when data started showing for the first time that humans were indeed changing the atmosphere. He describes how individual scientific obsessions, like Charles David Keeling's preoccupation with creating a precise record of carbon dioxide concentrations, produced vital puzzle pieces.

To be continue in other article...

(Jakarta, Senin 19 February 2008, 10.32 pagi)

Re-publish by Jacob Paradox from link (www.nytimes.com)

From Ozone Success, a Potential Climate Model (Global Warming Problem)

From Ozone Success,

a Potential Climate Model

By ANDREW C. REVKIN

In 1985, scientists studying the air over Antarctica stumbled on a gaping breach in the billion-year-old atmospheric radiation shield that makes Earth’s surface habitable. NASA, Satellite instruments monitoring the ozone layer are used to create images depicting ozone over Earth. The blue and purple show where there is the least amount of ozone; the green, yellow and red show where there is more.

The discovery of a seasonal “hole” in this veil of ozone molecules was so unexpected — “the surprise of the century,” one chemist later called it — that it was presumed to be a data glitch. It wasn’t. Soon other experts found a connection between the ozone hole and the use of chlorofluorocarbons, or CFCs, and similar synthetic chemicals in solvents, refrigeration, sprays and the like.

The chemical threat to the ozone layer had been identified in 1974, and industries and governments were planning to shift to safer substitutes. But it took the ozone hole, glaring from satellite images like a purple bruise, to make eliminating such chemicals a global imperative. On Sept. 16, 1987, an initial batch of countries signed the Montreal Protocol, a treaty that has since grown and led to bans on 95 percent of the ozone-eating compounds. On Sunday, diplomats, scientists and environmentalists gathered in Montreal to celebrate the 20th anniversary of the treaty and to spend a week discussing possible new steps to speed an end to remaining ozone threats.

Many are using the anniversary to bolster the idea that a similar success can be achieved with carbon dioxide and other heat-trapping greenhouse gases linked to global warming (including some of the ozone-destroying chemicals and some of the replacements for them). Fresh international climate talks begin at the United Nations on Monday and at a meeting in Washington organized by the White House late next week. Some veterans of both the ozone and climate fights insist that the Montreal success is a model for climate action. “The lesson from Montreal is that curbing global warming will not be as hard as it looks,” said David D. Doniger, an early campaigner against ozone-damaging chemicals for the Natural Resources Defense Council who now directs the group’s climate work.

But many experts on the circumstances — scientific, diplomatic and economic — surrounding the 1987 treaty signing say that while some things are similar now, like the looming environmental risks revealed by evolving science, almost everything else is very different. Ozone molecules, tenuous trios of oxygen atoms, serve as a planetary sun block of sorts, limiting the bombardment of the Earth’s surface by ultraviolet radiation that can cause skin cancers and cataracts, and harm some plants and animals.

When F. Sherwood Rowland and Mario J. Molina first posited in 1974 that CFCs and similar chemicals could waft to the stratosphere and break up ozone, the threat quickly captured public attention. In 1977, long before the climate disaster movie “The Day After Tomorrow,” Hollywood released “Day of the Animals,” in which ozone destruction caused wildlife to run amok.

But it was cancer that really brought the issue home, said Susan Solomon, a senior scientist with the National Oceanic and Atmospheric Administration who in 1986 led work linking CFCs and related chemicals to polar ozone losses. “Skin cancer is deeply personal, and virtually every person on the planet has either known someone who has had cancer or had it themselves,” Dr. Solomon said.

The risks from global warming are far different, said Dr. Solomon, who was the co-leader of the latest scientific report by the Intergovernmental Panel on Climate Change. “It is much less personal for most people, except perhaps if you’re in places like Vanuatu,” she said, referring to one of several low-lying island nations threatened by rising seas. “It’s mostly beyond our generation.” In the 1980s, despite persistent scientific uncertainties over the threat to the ozone layer, action to move away from ozone-damaging chemicals was swift, largely because there was little cost involved and alternatives were developed as the need arose, experts said.

To preserve the ozone shield, the United States, joined soon by Canada and Scandinavian countries, banned “nonessential” uses of CFCs — hair sprays, for example — in 1978, just three years after the theory was first described in the journal Nature. The Natural Resources Defense Council, seizing on an opening left by a proposed rule to limit CFCs that was written in the last days of the Carter administration, filed a lawsuit in 1984 that prompted the Environmental Protection Agency to seek broader bans. The domestic action helped set the stage for treaty talks.

“That N.R.D.C. suit was critical because it turned the burden of proof around from having to show there was a problem to proving there was not,” said Roger A. Pielke Jr., a political scientist at the University of Colorado, Boulder. Still, $135 billion worth of air conditioners and other equipment in the United States, and billions more around the world, relied on the old chemicals, and the science remained murky. So DuPont and other companies waited to seek alternatives, according to company scientists. In 1985, the murk cleared somewhat. An international scientific assessment of CFCs and ozone created a near-worldwide consensus that the risks of allowing the long-lived chemicals to keep building in the atmosphere were unacceptable.

DuPont, while gaining less than 2 percent of its revenues from such compounds, saw a need to find substitutes and the prospect of new markets, and began a $500 million research effort that spawned a suite of alternatives. With global warming, in contrast, economists and climate experts say it will take billions of dollars a year in basic research, sustained over many years, to even have a chance of finding energy sources that can compete with fossil fuels but produce no greenhouse gases.

In addition, the ozone treaty gave developing countries a decade-long grace period on CFC phaseouts and compensated them for the cost of shifting to safer chemicals. Talks over strengthening climate agreements have stumbled repeatedly over efforts to get concrete commitments on emissions cuts from the United States, and the involvement of developing countries, particularly giants like China. The final momentum for the Montreal treaty was provided by the discovery of the ozone hole, which served as kind of wake-up call, for the first time bringing home the realization that humans could have a direct effect on the planet’s future.

Environmental campaigners have for years been seeking a comparable icon for climate change, be it drowning polar bears, Hurricane Katrina or the deadly European heat wave of 2003. But the incremental nature of the threat posed by building greenhouse gases is for many still trumped by concerns like Iraq and health care.

Mack McFarland, the chief atmospheric scientist for DuPont, said the surprise appearance of the ozone hole should serve as a warning to anyone waiting for stronger evidence of danger before acting to cut emissions of greenhouse gases. “The science of ozone is so simple compared to the global climate system,” Dr. McFarland said. Referring to the discovery of the polar hole, he added: “If we missed something so fundamental with ozone, what are we missing with the climate system? Admittedly, it can go either way. But do we want to take that chance?”

To be continue in other article...

(Jakarta, Senin 19 February 2008, 10.32 pagi)

Re-publish by Jacob Paradox from link (www.nytimes.com)

The Power of Green (Global Warming Problem)

The Power of Green

By THOMAS L. FRIEDMAN

One day Iraq, our post-9/11 trauma and the divisiveness of the Bush years will all be behind us — and America will need, and want, to get its groove back. We will need to find a way to reknit America at home, reconnect America abroad and restore America to its natural place in the global order — as the beacon of progress, hope and inspiration. I have an idea how. It’s called “green.”

In the world of ideas, to name something is to own it. If you can name an issue, you can own the issue. One thing that always struck me about the term “green” was the degree to which, for so many years, it was defined by its opponents — by the people who wanted to disparage it. And they defined it as “liberal,” “tree-hugging,” “sissy,” “girlie-man,” “unpatriotic,” “vaguely French.”

Well, I want to rename “green.” I want to rename it geostrategic, geoeconomic, capitalistic and patriotic. I want to do that because I think that living, working, designing, manufacturing and projecting America in a green way can be the basis of a new unifying political movement for the 21st century. A redefined, broader and more muscular green ideology is not meant to trump the traditional Republican and Democratic agendas but rather to bridge them when it comes to addressing the three major issues facing every American today: jobs, temperature and terrorism.

How do our kids compete in a flatter world? How do they thrive in a warmer world? How do they survive in a more dangerous world? Those are, in a nutshell, the big questions facing America at the dawn of the 21st century. But these problems are so large in scale that they can only be effectively addressed by an America with 50 green states — not an America divided between red and blue states.

Because a new green ideology, properly defined, has the power to mobilize liberals and conservatives, evangelicals and atheists, big business and environmentalists around an agenda that can both pull us together and propel us forward. That’s why I say: We don’t just need the first black president. We need the first green president. We don’t just need the first woman president. We need the first environmental president. We don’t just need a president who has been toughened by years as a prisoner of war but a president who is tough enough to level with the American people about the profound economic, geopolitical and climate threats posed by our addiction to oil — and to offer a real plan to reduce our dependence on fossil fuels.

After World War II, President Eisenhower responded to the threat of Communism and the “red menace” with massive spending on an interstate highway system to tie America together, in large part so that we could better move weapons in the event of a war with the Soviets. That highway system, though, helped to enshrine America’s car culture (atrophying our railroads) and to lock in suburban sprawl and low-density housing, which all combined to get America addicted to cheap fossil fuels, particularly oil. Many in the world followed our model.

Today, we are paying the accumulated economic, geopolitical and climate prices for that kind of America. I am not proposing that we radically alter our lifestyles. We are who we are — including a car culture. But if we want to continue to be who we are, enjoy the benefits and be able to pass them on to our children, we do need to fuel our future in a cleaner, greener way. Eisenhower rallied us with the red menace. The next president will have to rally us with a green patriotism. Hence my motto: “Green is the new red, white and blue.”

The good news is that after traveling around America this past year, looking at how we use energy and the emerging alternatives, I can report that green really has gone Main Street — thanks to the perfect storm created by 9/11, Hurricane Katrina and the Internet revolution. The first flattened the twin towers, the second flattened New Orleans and the third flattened the global economic playing field. The convergence of all three has turned many of our previous assumptions about “green” upside down in a very short period of time, making it much more compelling to many more Americans.

To be continue in other article...

(Jakarta, Senin 18 February 2008, 15.44 siang)

Re-publish by Jacob Paradox from link (www.nytimes.com)