Thursday, January 11, 2007

Exxon is coming to the table to negotiate on climate change

Exxon is signaling it's ready to negotiate on climate change and probably for its shareholders not a moment too soon. With Democrats trying to run Capitol Hill and California making significant strides toward reducing carbon emissions there and setting an example nationally, this could be the last big hurdle preventing a practical and market-driven policy to start reducing greenhouse gas emissions in the U.S.

Today's Wall Street Journal calls it a "subtle softening" but after funding dozens of skeptics to undermine climate change science, the move to the negotiating table is huge. Among the skeptics it has stopped funding is the Competitive Enterprise Insitute which last year ran TV ads saying carbon dioxide, the main greenhouse gas, is helpful to our environment. Exxon's pulled the plug on similar funding for at least five other skeptics this year.

Now comes the question of what type of carbon cap makes sense and what sectors of the economy and what types of companies should the cap apply to. Former Congressman Philip Sharp, now president of Resources for the Future, is quoted in the Journal piece saying Exxon now is "taking this debate very seriously."

climate change, global warming, Exxon, Congress, Resources for the Future, Philip Sharp, greenhouse gas emissions

Friday, January 05, 2007

Could demand for corn be twice as much as USDA estimated?

Earth Policy Institute eco-guru Lester Brown contends the demand for corn to fuel the growing number of ethanol distilleries throughout the midwest is twice as much as the U.S. Dept. of Agriculture estimated last February. He was quick to assert the emerging competition for corn between ethanol-blended fuels and food processsors could drive corn and other grain prices to record levels. And with that, in time, could come a consumer backlash against the ethanol industry and riots in lower-income countries that rely on grain imports.

The U.S. corn crop, according to a newly-released Institute study, accounts for 40 percent of the global harvest and supplies 70 percent of the world's corn exports. Brown called for a time-out on the licensing of new distilleries and a strategy to deal with the emerging food-fuel battle. "We need to make sure that in trying to solve one problem--our dependence on imported oil--we do not crate a far more serious one: chaos in the world food economy," Brown said.

ethanol, corn, Earth Policy Institute, Lester Brown, renewable energy

Policy makers willing to look beyond oil price slide

As spot and futures prices for crude oil -- $55 per barrel at this writing -- continue to slip due largely to warm weather in the eastern U.S. and parts of Europe, how much of a long-term vision will policy makers have in assessing the most productive ways to inspire sustainable energy investments? If they think lower energy prices negate the need, forward-thinkers need to stand up and persuade them otherwise.

$55 is an 18-month low on the New York Mercantile Exchange. Analysts agree the warm weather has more than offset recent OPEC production cutbacks. Pelosi said Democrats will work, according a Reuters report, to create "a new America that declares our energy independence, promotes domestic sources of renewable energy, and combats climate change."

oil prices, OPEC, renewable energy, Congress, Pelosi,

Thursday, January 04, 2007

$18 billion in U.S. rollbacks could fund alternative energy

As much as $18 billion in tax breaks could be in flux as the now Democratically-controlled Congress begins debate over how to boost "green energy" as today's Washington Post front-page story puts it. Solar Energy Indusry Association President Rhone Resch spotlighted the need to focus on 21st-century technologies by funding solar, wind and biofuels now and not later.

The three principal sources of money Democrats are eyeing include:
1. changes in future royalty payments on 1998-1999 leasesin the Gulf of Mexico, estimated to be as much as $11 billion; (see previous post on this blog);
2. rollbacks of myriad tax incentives for oil and gas producers, estimated to be $5 billion; and
3. changes in the treatment of exploration expenses from deductions taken the year they are incurred to capital expenditures spread out over the life of those assets; they are estimated to be as much as $2 billion.

Congress, energy, alternative energy, renewable energy, solar, wind power,Pelosi, biofuels, Resch

Friday, December 29, 2006

Higher royalties paying for funding boosts for renewables

If the saber rattling by U.S. House Speaker-elect Nancy Pelosi is any gauge, the debate over what constitutes fair royalties to the federal government for oil production could sap the cooperation needed for Congress to accomplish anything that can help focus investor interest in funding renewable and alternative energy technologies. Or maybe money garnered from higher royalities could pay for new programs aimed at promoting renewables, etc.

While House Democrats are talking of establishing a fund dedicated to promote renewable energy and conservation using money from oil companies, they haven't spelled out where that money will come from. Maybe royalties based on the now controversial leases let during 1998 and 1999 are the answer.

Pelosi recently told reporters, "What we'll do is roll back the subsidies to Big Oil and use the resources to invest in a reserve for reseach in alternative energy."

Do subsidies = royalties? It's not clear to what extent, if any, that they do. Either way, the stakes are high. Congressional estimates put the potential royalty loss as as much as $10 billion over the life of the 1998-99 leases. Five companies recently agreed to a compromise to pay royalties on future production but not from oil and gas already taken from federal waters involved.

President Bush has said the industry doesn't need many of the subsidies it enjoys given today's oil prices and industry profits. by economist Steve Stoft could become a useful resource in sorting out the hype which is sure to come from both sides of this debate.

Friday, December 01, 2006

Friedman: keeping heat on Bush until last day of his Presidency

With a sermon-like panache, New York Times columnist Tom Friedman garnered a standing ovation from about 450 renewable energy faithful at the ACORE policy conference on Capitol Hill Thursday, Nov. 30 after laying out some cold observations about global warming as THE "political issue of our time." He said he would press President Bush on his energy policy until the last day of his term in January.

If the faithful think biofuels will play a key role in reducing greenhouse gas emissions, people should think again. Friedman claimed the green movement in the EU sees the biofuels and related industries as the next great threat to biodiversity. He predicted that a widespread boycott looms there and that it would eventually jump to the U.S.

Friedman cautioned that Chinese multinationals are not operating under any real environmental scrutiny and with each passing week they are leaving more of a damaging footprint that will a long time to deal with if more sustainable actions are not put in place very soon. He also stepped his campaign about our dependence on insecure sources of oil and natural gas saying we're funding BOTH sides of the war in Iraq: with our taxes for U.S. military expenditures and our energy purchases for the petro-authoritarians.

FYI: Friedman's newest, favorite bumper sticker: 'Green: the new Red, White & Blue', or something along those lines. It's supposed to be available at altho a quick check of that site showed no evidence of that early Dec. 1.

global warming,
Tom Friedman,
greenhouse gas emissions,

Wednesday, November 29, 2006

The REAL issues at stake in Massachusetts v. EPA

Respecting the pros and cons of today's oral arguments before the U.S. Supreme Court in the closely-watched greenhouse gas case, "Massachusetts v. the Environmental Protection Agency," a major legal issue is "standing." For non-lawyers, the question is this: will federal courts be available to people with claims about damages cause by climate change? Are they equipped to deal with claims over how carbon emissions are speeding up global warming?

Whatever the legalities, one must ask how can the EPA all but ignore changes affected by greenhouse gas emissions? Perhaps more interesting: how can EPA maintain this posture overall while the widely-respected Energy Star and related initiatives at EPA and the U.S. Department of Energy spend so much time and resources focusing on -- guess what -- reducing carbon emissions?

Massachusetts has been joined by at least 11 other states, 13 environmental-advocacy groups and three states in arguing that EPA has shirked its responsibility and is ignoring the Clean Air Act. If anything, today's arguments and the resulting media coverage should help illuminate what can and should be done without the courts.

Here's a little-known fact: the case originates from an application over emissions by new passenger vehicles in 1999, while Bill Clinton was president.

What do you think?

greenhouse gases, Supreme Court, Massachusetts v. Environmental Protection Agency, Energy Star, global warming, vehicle emissions, Department of Energy

Monday, November 27, 2006

Eco-advantage reaching a tipping point

Although The Economist declares the rush to clean energy to be a "risky boom," INC magazine this month declared that actions to create and operate more sustainable companies are "being driven as much by markets as morality." Not far behind them are The Washington Post, capturing the growing chorus of energy executives, led by Shell's John Hofmeister and Duke Energy's John Stovwell, acknowledging the need to do something about climate change (they might as well be a part of the solution) AND the erstwhile voice of free enterprise, The Wall Street Journal, pushing a lengthy feature story on to its front page about a maker of silicon photovoltaic materials, Stanford Ovshinsky and his six-month backlog of orders.

Will policymakers respond with credible incentives, laws and regulations designed to capitalize on the enormous brain power and capital standing ready to fuel a greener future and at a much faster pace? The latest hints could be found at this Thursday's policy summit by the American Council on Renewable Energy (ACORE) on Capitol Hill.

ACORE, solar power, climate change,
Shell, Duke Energy, renewable energy, Ovshinsky,

clean energy

Wednesday, November 08, 2006

Prop 87's failure: impact on alternative energy investments?

The defeat of California's Proposition 87, by far the most expensive ballot initiative in the state's history, is a blow to national alternative and renewable energy and efficiency advocates and will almost certainly derail a lot of venture capital that would have pursued the $4 billion in revenue generated by the proposed tax on in-state oil production.

The apparent 55% to 45% defeat shifts the focus to what the now Democratically-controlled U.S. House of Representatives, and perhaps the U.S. Senate, might do with the upcoming farm bill alongside of a stab at addressing pressing issues that didn't make the cut in the Energy Policy Act of 2005. Perhaps more important for the environment is the penchant for Congress and the White House do take action on climate change, which a growing number of insurance companies and energy-intensive corporations would like to see from the next President, if not from Congress starting in January.

Many eyes will be on Department of Energy Assistant Secretary Andy Karsner for how he is championing alternative energy projects already in the pipeline and helping to focus private sector capital - intellectual and financial - on programs, products and new technologies that can improve efficiency, reduce carbon emissions and stabilize America's dependence on unreliable supplies of crude oil and natural gas. Are DOE and the White House up to the task of going beyond what many analysts are privately asserting has been, overal, a 'timid' commitment to alternative energy and renewables?

If you didn't see this spoof via Yahoo Video of a 'debate' between a Prop 87 proponent and opponent, it's worth seeing.

Proposition 87, Karsner, alternative energy, renewable energy, climate change, Energy Policy Act of 2005, Department of Energy

Friday, November 03, 2006

Corn and ethanol prices catching up with importance of oil prices

As corn futures prices pushed up to a 10-year high this week, estimates of corn production by the U.S. Department of Agriculture's market information unit, and their resulting impact on futures trading on the Chicago Board of Trade, are taking on growing importance as ethanol's role as a significant biofuel gains traction. The December contract on the CBOT hovered around $3.43 per bushel as this week came to a close, breaking the price in September 1996.

BUT, while the U.S. is projected to harvest the third largest corn crop in history and as a dozen or so ethanol plants are slated to open in 2007, ethanol prices are falling from their recent peak of $4.23 per gallon in June due to concerns about too much supply flooding the market. Just as the ethanol industry starts accelerating, the looming market correction -- dare anybody say 'bust" -- will test the resolve of farmers, vehicle manufacturers and policy makers alike to maintain a strategic focus on ethanol as a source for lessening our dependence on unreliable crude supplies and improving economic prospects throughout the Farm Belt. Stay tuned.

ethanol, ,
U.S. Department of Agriculture, corn prices,

Tuesday, October 24, 2006

3 out of 4 large companies measuring their carbon footprint

Ninety-five percent of companies surveyed by the U.S. Conference Board see discernable opportunities -- and risks -- of emerging carbon constraints, which are most likely to manifest themselves in "cap and trade" markets. Three out of four companies are actively measuring their carbon footprints from both direct and indirect operations.

Nearly 30 percent of the 92 companies surveyed said their are figuring the costs of carbon emissions in their planning of future projects and another 39 percent are weighing how to include such costs in the future.

The survey also showed that about half of the companies contacted report their emissions publicly. Of those who don't 60 percent said they plan to.

carbon footprint
cap and trade
Conference Board
greenhouse gases

Wednesday, October 18, 2006

DOE's Andy Karsner in Silicon Valley

DOE's Principal Deputy Assistant Secretary for Energy Efficiency and Renewables Energy, (EERE), John Mizroch, disclosed that Alexander "Andy" Karsner, DPE's Assistant Secretary for EERE, is in Silicon Valley this week trying to connect the dots between venture funds and technologies that can help reduce the United States' reliance on fossil fuels.

Mizroch was mum on details but he said Karsner and his allies inside the Administration, which included many at the U.S. Department of Agriculture, are going all-out to make the most of the two-plus years left of the Bush Administration.

The White House is doing its part. Deputy White House Chief of Staff Joel Kaplan gave an interview to the Washington Post, published today (Wed. Oct. 18) asserting "There's still plenty of time to get important things done if people on both sides of the aisle are willing to work together to do it." Kaplan said Bush will "look for partners in Congress" to develop, among other things, alternative energy supplies.

Andy Karsner, DOE, John Mizroch, Silicon Valley, venture capital, energy, cleantech, U.S. Department of Energy

More investors want climate-change risk disclosure

A group of large institutional investors and other organizations representing trillions of dollars in assets have offered guidelines to companies for providing their investors information on the financial risks of global warming. They're calling it a "Global Framework for Climate Risk Disclosure."

The investors involved included large pension funds in the Australia, the United Kingdom and two U.S. states: California, and Connecticut.

This is among the recent moves demonstrating a sharper focus by a growing number of investors on how corporate bottom lines are affected by how they, and their governments, deal with or ignore global warming.

The four key elements of any risk mitigation plan, according to the 14 funds and other organizations:
1. measurement of greenhouse gas emissions
2. analysis of climate risks and emissions menagement
3. assessment of physical risks of climate change
4. analysis regulatory risk, including different regimes and the confusion they sew

Among the funds/organizations are:
- California Public Employees' Retirement System (aka CalPERS);
- Connecticut State Treasurer's Office
- Institutional Investors Group on Climate Change
- United Nations Foundation, led by former U.S. Congressman Tim Wirth of Colorado
- Ceres

CERES, climate risk, global warming, climate change, climate risk disclosure, Tim Wirth, pension funds

Wednesday, October 11, 2006

Big Oil squares off against Silicon Valley

Big oil squared off against Silicon Valley Wednesday, Oct. 11 at the first-ever "Advancing Renewable Energy" conference in St. Louis organized by the U.S. Departments of Energy and Agriculture. American Petroleum Institute President Red Cavaney warned renewable cheerleaders not to overpromise and be wary of underperforming. He said biofuels need to be self-sufficient. Venture capitalist Vinod Khosla shot back that in the very next session that oil has never been self-sufficient. And that, Khosla added, says nothing about the "indirect" subsidies benefitting oil companies in the form of gasoline priced way below its environmental, health and national security costs. "Oil has been locked up and not subject to innvovaton" the way the telecommunications and Internet industries have been, Khosla said.

On one facet of the debate they seem to agree: let the free markets decide. Which begs the question: who is willing to surrender their subsidies first?

renewable energy, biofuels, gasoline, Vinod Khosla, Red Cavaney, oil companies, Silicon Valley, American Petroleum Institute,

Wednesday, October 04, 2006

Guess what? Detroit's survival may depend on better fuel efficiency

The higher their fleets' fuel efficiency, the more Detroit's automakers can profit. If domestic car makers don't see this light yet, they have fresh fuel for thought from a credible study by the University of Michigan's Transportation Research Institute weaving its way into blogs and mainstream media.

Co-author Walter McManus, who heads the Institute's auto analysis division, apparently convinced Wall Street Journal columnist and hybrid critic Holman Jenkins, writing today, Oct. 4, that "fuel efficiency is not a virtue independent of economics--the chief selling proposition behyind hybrids, which expect you to pay extra for the privilege of saving gas."

The authors contend that at any gas price between $2 and $3.10 per gallon, GM, Ford and Chrysler can make more money by investing a dollar in fuel efficiency than by any other approach with technologies already available.

Bottom line: Detroit's survival depends on making significantly more fuel efficient cars with new designs in the months to come for cars due out in 2010. No doubt that constitutes a deep transformation. How much brighter does the light need to shine?

fuel efficiency, miles per gallon, U.S. automakers, University of Michigan, hybrids, GM, Chrysler, Ford

Friday, September 29, 2006

Cap and trade talk from the Bush Administration

It's just talk right now but politics and credible state actions to meet environmental challenges such as California's new law to reduce greenhouse gas emissions might be nudging the White House toward some type of cap and trade program. In a transcript of an interview with The Wall Street Journal now available, Bush said if the administration's current programs to combat global warming don't meet his targets "relative to economic growth . . . the country ought to consider a cap and trade."

It cannot be lost on the White House that California Governor Arnold Schwarzenegger just Wednesday signed the country's first greenhouse emissions law into effect and that a cap and trade program is almost certain to become the centerpiece of the state's approach, according to an interview of Robert Sawyer, Chairman of the California Air Resources Board, by EnergyForward.

Bush added: "Listen, all these issues require intense -- the issue of warming, the environmental issue, requires intense focus and dedication to new technology. New technologies will not only enable us to be good stewards of the environment, but will also achieve another important objective -- it will achieve a national security objective and an economic security objective."

Wednesday, September 27, 2006

7-11 tells Citgo to take a Big Gulp

7-Eleven announced this morning that it has ended its relationship with Citgo, the American subsidiary of Venezuela's state-run oil company. The convenience-store chain said that Venezuelan President Hugo Chavez's recent derogatory comments at the United Nations about President George W. Bush prompted it to drop Citgo gas at 2,100 of its 5,300 stores.

Several reports note that the move may be more business PR than a slap at Chavez -- 7-Eleven has been talking about launching its own branded gasoline line for more than a year.

Also, since Japan's Seven & I Holdings bought the chain in 2005, it hasn't actually been an "American" company -- it trades on the Tokyo Exchange, not the NYSE. So much for national pride driving the decision.

And, keep in mind that 7-Eleven -- then operating as Southland Corp. -- was the company that sold Citgo to the Venezuelans in the first place. Southland bought Citgo from Occidental in 1983, then flipped it Petroleos de Venezuela -- half in 1986, the other half in 1990.

The original Citgo company started around 1910 as Cities Service Company, a gas and electric utility in the Southwest that eventually moved into oil production. When the Public Utility Holding Company Act of 1935 (PUHCA) forced Cities to divest either its utility or its oil and gas holding, Cities picked oil.

If only PUHCA reform had come earlier: Oklahomans would still own Citgo, Hugo Chavez would be driving a cab in Caracas, and a gallon of gas might still cost less than a gallon of milk down at the 7-11.

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Oil import fee and lower Social Secuirty taxes to combat petro-authoritarianism

That's the upshot from veteran economist Phil Verleger via Tom Friedman's column in today's (September 27) editions of The New York Times: "If Bush were the leader he claims to be, he would impose an oil import fee right now to kep gasoline prices high, and reduce the tax rate on Social Security for low-income workers, so they would get an offsetting increase in income."

Friedman himself dispells talk of any conspiracy connected with the dramatic drop in oil prices since July. He attributes them to several reasons - "some cyclial, some technical and some having to do with the emergence of alternative fuels and conservation." That emergence is threatened, Friedman argues, if gasoline doesn't stay above $3 a gallon.

As for the petro-authoritarians, Friedman fingers not only Venezuelan President Hugo Chavez and Iranian President Mahmoud Ahmadinejad for widely apparent reasons, but China's U.N. ambassador, Wang Guangya, as well. Why Guangya? China National Petroleum Corporation owns 40 percent of the Sudan consortium that pumps more than 300,000 barrels of oil a day from Sudanese wells. And Guangya tried blocking a U.N. resolution calling for the deployment of peacekeeping troops to Sudan to halt the genocide in Darfur.

What a tangled web we weave with our dependence on foreign oil.

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