UK's Gordon Brown asks World Bank to finance clean energy development

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Brown delivers green power push to IMF / G7 / G8

Gordon Brown has called on the world's top industrial nations to put more money into tackling climate change.

The Chancellor was in New York for talks with his fellow G7 finance ministers on proposals for a $20 billion scheme to help developing economies invest in alternative energy sources.

He insisted there was a moral need to tackle climate change, saying: "For the well-being of the world's peoples to be enhanced not just in this generation, but in succeeding generations, we have a compelling and even more urgent duty of stewardship."

But Mr Brown said the need to cut greenhouse gases must be balanced with the UK's economic needs.

He made clear that he was not planning any increase in taxes on petrol to encourage people to cut their carbon emissions.

The Chancellor's comments follow a trip to Norway on Friday by Conservative leader David Cameron to see the effects of global warming first-hand.



from Reuters.co.uk:


Gordon Brown wants world consensus on environmental policy

By Fiona Shaikh

LONDON (Reuters) - The world must reach a new consensus on tackling environmental issues, Chancellor Gordon Brown will argue this week, as he calls on the Group of Seven rich nations to promote energy efficiency.

In a speech to the United Nations on Thursday, Brown will set out measures to tackle climate change, boosting speculation that he is straying further from his Treasury remit in the hope of taking over from Prime Minister Tony Blair, who has said he will not fight another election.

Brown's proposals may also help the Labour party wrestle the advantage on environmental issues from the opposition Conservative Party ahead of local elections on May 4.

"Environmental sustainability is not an option, it is a necessity," Brown will say in a speech on Thursday, according to extracts seen by Reuters. "Failure to act on the environment will put at risk future economic activity and growth."

Brown will argue that climate change is partly to blame for some of the humanitarian crises suffered by the developing world and that rich countries must work together to tackle the underlying cause as financial aid is just a short-term solution.

In his speech, Brown will suggest boosting existing measures to cut carbon emissions, for example, extending the European Emissions Trading scheme, with the ultimate goal of setting up a global carbon trading system.

"We will need the cooperation of all countries with significant energy needs and emission levels if we are going to tackle the global challenge of climate change comprehensively and cost effectively," Brown will say.

He will also urge electrical goods manufacturers to make their products more energy efficient and point out that around 10 percent of electricity supply is wasted by items such as televisions, DVD and CD players being left on "standby" mode.

Brown will travel to Washington on Friday, where G7 finance ministers will meet ahead of the semi-annual meetings of the International Monetary Fund and World Bank.

There, he will try to win support for the World Bank to set up a $20 billion (11 billion pounds) fund to help developing countries invest in alternative energy sources.

He will also use Friday's G7 meeting to call for greater dialogue between oil producers and consumers and enhance transparency on the functioning of the energy market.



UK Chancellor Brown proposes global clean power funding

By Sumeet Desai

LONDON (Reuters) - Chancellor Gordon Brown will this week call for a new $20 billion (11 billion pounds) World Bank fund to help developing countries invest in alternative energy sources in order to combat climate change.

Group of Eight policymakers had asked the World Bank last year to come up with an investment framework to enable middle-income countries shift towards cleaner, more efficient energy such as advanced coal burning techniques.

Brown will tell this week's meetings of the International Monetary Fund and World Bank in Washington that urgent action is needed and with a level of funding that would make a difference to global emissions.

"The developed world has a responsibility to help developing economies meet their energy needs in an environmentally sustainable way," said Brown, who is expected to succeed Prime Minister Tony Blair before the next election expected in 2009.

"I will propose a World Bank facility - a $20 billion fund - for developing economies to invest in alternative sources of energy and greater energy efficiency."

Brown's proposal may also help his ruling Labour party regain the initiative on environmental issues ahead of local elections on May 4 after the government admitted it will not meet its key target to cut carbon emissions.

Conservative Party leader David Cameron, meanwhile, is set to travel to northern Norway this week to see first-hand polar ice caps disappearing because of global warming.

Treasury officials said countries such as China, India, and Brazil are experiencing rapid growth and a corresponding reduction in overall poverty and are now making investments to meet their increased demand for energy.

Their decisions now will influence their carbon emissions over the next 50 to 100 years and so acting now to channel their investment into more efficient or renewable forms of energy generation can lock in less pollution for the long-term.

At the same time, officials said that the world's poorest countries are the most at risk from the effects of climate change such as droughts and floods and there is an urgent need to support them in improving their capacity to respond.

"Climate change is an issue of justice as much as economic development. It is a problem caused by the industrialised countries, whose effects will disproportionately fall on developing countries," said Brown. who also chairs the IMF's main policy steering group.

"It is now clear that the largest impacts of climate change will occur in the great land masses of Africa, Asia and Latin America. Indeed many are already occurring, from reduced rainfall in the Sahel to floods in Bangladesh and Mozambique."

Ethanol to reduce Ethiopia's foreign exchange costs

Addis Ababa

Ethiopia may soon introduce blended petrol in their local market to reduce imports.

The government has tasked experts to study whether the blended product, a mixture of benzene and ethanol, would be viable.

The Fincha Sugar Factory currently manufactures large amounts of ethanol. The company is working with the Ethiopian Petroleum Enterprise (EPE) to see if a blend of 40 percent ethanol and 60 percent benzene will work.

This would require certain motor adjustments, but Brazil has shown that this is possible. If 10 percent ethanol is used, no adjustments will be needed, however, the aim of the exercise is to drastically reduce the cost of foreign exchange.

Ethiopia spends over $230mn annually on petroleum imports and using a high ratio of ethanol will help the government reduce foreign spending.




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BOLD Energy Act in the United States

Renewable Energy Bill Introduced in U.S. Senate

USA Senator Conrad introduces legislation to extend solar electricity, wind power tax credits, biofuels and alternative energy systems and technologies

Washington, DC [RenewableEnergyAccess.com] With energy independence and renewable energy development a legislative priority for Congressional leaders, the introduction of another renewable energy legislative proposal made its way to the Senate floor last week. Senator Kent Conrad's (D-ND) bill, called Breaking Our Long-term Dependence (BOLD) Energy Act, includes a five-year extension of the solar investment tax credit for businesses through 2012 and an extension of the wind energy production tax credit for the same period.

The bill would also require ethanol use in the U.S. to increase from 4.7 billion gallons in 2007 to 30 billion gallons by 2025, and would establish a new biodiesel and alternative diesel standard of 250 million gallons in 2008, increasing to two billion gallons in 2015, creating greater demand for biodiesel as a transportation fuel -- and greater demand for biodiesel manufacturing plants.

Recognizing the need for conservation, the BOLD Act encourages the manufacture and purchase of fuel-efficient and flexible-fuel vehicles. Purchasers of fuel-efficient vehicles would qualify for rebates up to $2,500. Automakers would be encouraged to install advanced technologies, including flexible-fuel technology, by 2017. They would be eligible for either a 35 percent tax credit or retiree health care grants to make this transition.

The residential credit for solar, however, was not included in the bill, according to the Solar Energy Industries Association (SEIA). Conrad's bill would also establish a federal Renewable Portfolio Standard (RPS) with a goal of 10% renewables by 2020, with a triple-credit multiplier for distributed generation projects less than one megawatt in size.

Not surprisingly, the SEIA does not anticipate this bill to move forward in its current form with some of the strong measures such as a national RPS, which has historically been voted down by lawmakers.

Senator Conrad is now the third member of the Senate Finance Committee in the last month to introduce legislation to extend the solar investment tax credit (ITC). As mentioned earlier by Renewable Energy Access, Senators Charles Grassley and Max Baucus have proposed the Alternative Energy Extender Act, S. 2401, which would extend both the residential and the commercial ITCs for solar for an additional three years, creating a total of five years for both credits (see related story at the link below).

"Although both bills provide a shorter window than the eight-year extender we are advocating for, it is encouraging that the Senate is willing to push extenders this year in a bipartisan fashion," said a statement from SEIA.

There were other nonrenewable energy initiatives in the comprehensive package including a USD $500 million grant program to fund the development of coal-to-liquid fuel technology. It would also help increase domestic oil production by increasing tax credits for oil companies that use carbon dioxide to extract more oil from aging oil fields.




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China becoming world leader in photovoltaic solar electric power

From RenewableEnergyAccess.com

China's Solar Industry riding on more than being the Low-Cost Player

by Jesse W. Pichel, Senior Research Analyst, Piper Jaffray

China is likely to be of paramount importance to the solar industry because of its low-cost manufacturing capabilities and potentially enormous domestic demand driven by new government programs. This was made abundantly clear in a recent visit to the country.

We hosted a solar panel discussion at the Piper Jaffray Internet and Technology Conference in Beijing, China, on March 3, and later met with senior management and toured five of the top six solar companies in China. We also met with wafer suppliers in Eastern Europe that supply Chinese solar cell OEMs.

We anticipate that many global solar OEMs are likely to pursue China strategies following the lead of Ersol Solar Energy AG (which appeared at the Piper Jaffray Solar conference in NYC on 2/21) with its JV investment in Shanghai Electric Solar Energy, Ltd. (a module supplier). Conversely, many of the Chinese solar OEMs may forward integrate by acquiring installers/ integrators in Europe and the U.S. Despite the blossoming low cost and integrated solar food chain in China, and several polysilicon feedstock plants that are under construction, there is no panacea to the current polysilicon shortage. Furthermore, we found little next-gen (thin film) technology other than a small 5 MW line in Tianjin.

How has our thesis changed? Our thesis remains that investors should focus on solar companies that offer the promise of lower cost per watt. To that end, solar companies operating in China will play an important role. However given that polysilicon, the major cost driver of solar today (raw poly is 40% of cost), is in short supply with rising prices, we prefer companies that possess technology that reduces (Evergreen Solar) or eliminates (Energy Conversion Devices) the need for polysilicon. Also we view polysilicon suppliers as lower risk solar investments (WFR).

Enormous solar capacity ramp under way in China: Chinese-based manufacturing will help lower the cost of solar. China has enormous (>1,000 MW) low-cost manufacturing capacity coming online over three years, and the entire solar food chain can now be found within China, including polysilicon feedstock, wafer, cell, and module production in addition to domestic wet-chemistry and equipment suppliers. In aggregate, the solar companies in China have focused on module capacity serving historically as an outsourced module- manufacturing partner. Module capacity of 450 MW will rise to 1200 MW by 2008. The 200 MW of domestic solar cell making capacity will rise to 1200 MW exiting 2008 with the ramp of three large cell makers and as certain wafer suppliers forward integrate. Wafer capacity of 100 MW in 2005 will grow to circa 800 MW by 2008 thanks to the production ramp of domestic polysilicon supply as well as large poly supply contracts beginning in 2008.

Chinese manufacturing cost advantages: In addition to labor costs that can be less than $200/month per worker, Chinese solar companies also benefit from lower SG&A (Sales, General and Administration or 'cost of doing business') Research & Development, peripheral costs, and tax rate. There is also an expanding solar manufacturing equipment industry that provides equipment at a fraction of the cost of equipment made overseas. The current generation of Chinese manufactured solar equipment includes module lamination, wafer etch/bath, and mono-crystalline wafer pullers (~$150,000 each). Also there is a growing list of lower cost wet-chemistry suppliers for slurry and aluminum paste. Chinese manufacturing lines tend to be more labor intensive and use more domestic equipment, requiring substantially lower capital expenditure. In particular, the Chinese module lines we toured do not run automated assembly equipment and instead favor an all-labor approach; the only equipment required are laminators and module testers.

No Chinese panacea to polysilicon shortage: Three Chinese polysilicon manufacturers dominate the domestic landscape. Sichuan Xinguang is still under construction with initial production in 2007, and 2008 planned capacity of 1,250 metric tons. LSCS now has capacity of ~300 ton, and plans 2007 capacity of 1,000 metric ton. ESM currently has annual polysilicon production of ~100 tons. Domestic poly production will not address near-term poly needs, as most production will not come online until 2008. Spot virgin poly prices are now as high as $200/kg, and many Chinese solar OEMs will happily pay $170/kg to secure poly. High-grade scrap (ingot tops and tails) command >$150/kg, while lower end scrap (pot scrap) can command $50-$70/kg. All solar companies are using a mix of scrap and virgin poly to keep their blended poly cost at ~$130/kg. Several Chinese solar companies, in anticipation of a future capital market transaction, have been stockpiling poly to the order of hundreds of metric tons. Additionally, we toured a major wafer reclaim facility that uses low-cost labor to sort and recycle broken/ rejected wafers from the semiconductor and solar industry.

Large domestic demand anticipated beginning in mid-2006: Solar demand in China is expected to increase significantly over the next several years driven by the Chinese renewable energy program enacted in February. Although the government has not communicated the details, the law is expected to generate 500 MW of annual capacity by 2010 ($3.5B USD), 3 GW by 2020, and 60 GW by 2050. Western China is an ideal location for solar given its 9 to 11 hours of sun per day (greatest in Tibet). Furthermore, many areas in Western China are off-grid and the government has an aggressive rural electrification initiative of ~300 MW. While details on the amount of subsidy have not been communicated, we learned of three large 30 MW solar power station projects planned for 2H06-2007. The prospect of large solar demand in China is likely to only benefit OEMs in China or global players with a manufacturing presence/JV in China. We believe that as funding for Chinese projects are finalized we may see more global OEMs partner or acquire suppliers in China.

Higher module prices and leading edge wafer thickness: Across industry, we find that spot module prices are now at $4.20 per watt. Contract prices remain circa $3.50 and below. In terms of wafer thickness, 240 um thickness is the norm in China and as a result, some manufacturers can now slice 45 wafers per kg of silicon (~100W at 10g/W), up from ~40 wafers (~88 W, 11.5 g/W) just six months ago -- a ~15% energy output improvement per kg. Although wafers can be sliced <100 um, thinner wafers are fragile and much more difficult to process into cells and modules.

About the author

Jesse W. Pichel, is Senior Research Analyst, Piper Jaffray & Co., a full-service brokerage firm based in Minneapolis, member NYSE and SIPC.



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