Tag Archives: green
Agriculture: Abundance Of Land Spurs Big Commercial Drive
http://www.ft.com/cm…l#ixzz2VRnoVe3v By William Wallis Olam, the Singapore-registered commodities trading house, owes its origins to cashew nuts and the dark days of military rule in Nigeria. This was when currency controls made getting foreign exchange a permanent headache. In 1989, the Indian group Kewalram Chanrai hired Sunny George Verghese, now Olam’s chief executive, to find a forex solution for its textile and chemical business in Nigeria. He did this initially by selling cashews on international markets. So began a long journey across dozens of countries and numerous commodities, which, in its latest iteration, has seen Olam launch an expansion from trading into large-scale commercial farming in Gabon. Olam’s plans to transform tens of thousands of hectares of forest into rubber and palm oil plantations are among the most visible signs of returns from the recent government drive to spur investment – long neglected – in agriculture. “In 2010, we started looking at Gabon differently, with a new government with clear priorities and looking for investment,” says Gagan Gupta, the 36-year-old manager of Olam’s expanding operations. “We wanted to do palm and rubber. The government wanted a special economic zone.” This included running a purpose-built industrial zone outside Libreville, where timber companies have begun processing wood to conform to regulations banning the export of unprocessed logs. Gabon is blessed with fertile soils and a favourable climate, which deliver some of the highest yields in the world for, particularly, rubber. Gabon’s big landmass – most of which is still forested – and low population density make it easier for commercial farmers to gain land titles and manage community relations than in many other African countries. This is at a time when global demand, lack of available land elsewhere and soaring food prices are driving the most significant push into farming on the continent by external forces since colonial times. As in other oil-rich African states, the focus on oil production in Gabon, to the near exclusion of other economic activity, has greatly reduced the role of agriculture over the years. For now, much of the country’s food requirements are imported from elsewhere in Africa and from Europe. The most visible evidence of the produce of local farmers can be found at market stalls along the country’s main highways. About 100km from the capital, Libreville, and beyond the bridge at Kango, the scale of things is now apparently changing. A short drive through secondary rainforest and you emerge into what must count as one of the fastest-growing oil palm plantations on the continent. Tens of thousands of four-foot-high plants stretch across undulating hills towards the horizon and on either side of numerous forested zones, where protected flora and fauna and sensitive local sites have been left alone (along with buffer zones to the surrounding rainforest). Mr Gupta says the cost of leasing land in Gabon is average for the continent. Labour costs are higher than average at a prescribed minimum wage equivalent to $300 a month. But he hopes that higher yields and the chance to operate the plantations using environmental and social best practice will compensate for that. “There is limited land available for certified palm oil. We can do socially responsible green certified oil here that will fetch a premium. You can’t get certified in Malaysia – here it is possible,” he says. The company is treading in the footsteps of Siat, a Belgian agro-industrial group that is part Chinese-owned, which took a more traditional route in acquiring state palm and rubber plantations about 10 years ago, and which has $600m expansion plans. Gert Vandersmissen, Siat Gabon’s general manager, says one of the biggest constraints to growth is the shortage of labour and the time it takes to get authorisation for visas for immigrants. Most of Gabon’s inhabitants live in Libreville, Franceville and Port Gentil and not everyone is keen on the hard labour associated with plantation work. Rubber prices tend to be sensitive to global financial conditions and, following the 2008 recession, they dipped to below the cost of production, according to Mr Vandersmissen. He maintains that yields in Gabon are among the best in the world and long-term prospects are good. Like Olam with palm oil, Siat is making a strategic calculation for the future. This takes into account rising demand for palm oil in Africa, the shortage of available land in other parts of the continent and the link that is emerging between palm oil prices and those of crude, because of palm’s potential to be converted into biofuels. Oil palms take at least three years to begin producing, and 12 years to peak over a lifespan of 25 years, so it is a long term bet. “We are riding structural changes,” says Mr Gupta. Continue reading
So The 2030 Decarbonisation Target Didn’t Pass – What Now?
04 Jun 2013, 16:30 Robin Webster MPs in the House of Commons today voted down a proposed new target to virtually decarbonise the power sector by 2030. So where does that leave plans to switch to low-carbon energy sources while keeping consumer bills down? The UK’s Energy Bill , now in its third reading in Parliament, contains a package of measures aimed at changing the way the UK generates electricity, shifting the country from fossil fuels to nuclear and renewables. But government advisor the CCC has said if the government wants to meet its legally-binding emissions reductions, it should create an interim target to virtually decarbonise the power sector by 2030. Conservative MP, Tim Yeo, who is chair of Parliament’s Energy and Climate Change (ECC) Committee, introduced an amendment to the bill that would have created the target, against the wishes of the Tory whips. But despite an energetic campaign in favour, the government opposed the measure and it was voted down by 290 to 267. So where does that leave us – and what happens now? The 2030 target – not dead yet The first thing to note is that the 2030 power decarbonisation target is in the bill. But the government has delayed discussion of whether it will be enacted until 2016 – or until after the CCC provides another round of advice. This is an odd position, however. The CCC has been very clear that it sees the decarbonisation target as fundamental to the government’s plans to reduce emissions. It doesn’t look that likely that it’s going to change its mind. The 2016 date is widely seen as a way of kicking the 2030 target into the long grass . No target, no long term plan? The government has promised to bump up renewables supply to 15 per cent of total energy by 2020 – and it has made a plan for how to do it. But there is confusion about the government’s intentions for renewables in the longer term. The government’s gas strategy , launched in December, contained no less than three different future scenarios for the future development of the country’s energy sector. One of the scenarios proposed significantly expanding the amount of power the country gets from gas – threatening emissions reductions targets. The CCC say the mixed messages coming from government are confusing. Investors need to know what the policy landscape – and what the subsidy levels – are going to look like if they are going to put money into big long-term projects like offshore wind farms. A variety of businesses agree. Could the ETS do the same job? But not everyone does. Thinktank, Policy Exchange , says the carbon cap created by the EU Emissions Trading Scheme (ETS) means that it doesn’t make sense to set targets for the power sector – as any emissions reductions made over here would allow countries elsewhere in the EU to increase their emissions: “… British wind turbines will allow Polish coal to continue burning. While the ETS remains in place, the only way to reduce emissions from electricity further is to tighten the ETS cap.” There’s a practical problem with this argument, however. The European carbon price hit a record low at the beginning of this year and the scheme is struggling to stay afloat . If the UK waits for the ETS to reform before it sets any targets for the power sector, it could be waiting a while. What does the vote mean for consumer energy bills? There have been endless arguments over recent months about what renewables targets – and the energy bill as a whole – could mean for consumer energy bills. In a recent report, the CCC argued that a clear commitment to hitting the 2030 target could save the country somewhere between £25 and £45 billion. That’s partially because the country would avoid the cost of relying on gas. But it’s also because it would avoid the costs of decarbonising in a hurry after 2030. It’s worth noting that the CCC’s cost savings only apply if the country maintains its commitments to the climate change act. According to the committee, the 2030 target would essentially create a stepping stone towards the cheapest possible route to cutting emissions. Abandoning the targets in the climate change act could be cheaper still. But that relies on the price of fossil fuels like coal and gas staying low over the next couple of decades – not always a safe bet . Do we need targets? Predicting what’s going to happen to energy policy ten or fifteen years from now involves a lot of unknowns. Nuclear power stations might not get built, carbon capture and storage (CCS) technology might not work commercially, or offshore wind could prove prohibitively expensive for example. Conservative MP, Charles Hendry , argues that this means it’s not a good idea to introduce the decarbonisation target: “…we would be requiring it [the target] to be set without knowing that it can be met, and that cannot be a responsible decision for government to make, when the costs of getting it wrong would have to be picked up by consumers for decades to come.” Of course, setting a target without knowing how the country is going to meet it isn’t exactly unprecedented in this area. Rumour has it that Tony Blair only signed up to an EU target for the expansion of renewables by mistake – because he got electricity and energy mixed up. The resulting EU-mandated target – which requires the country to expand the amount of renewable energy it uses to 15 per cent of total supply by 2020 – has created considerable controversy. But it has also driven expansion of UK renewables like never before. In the end, the immediate absence of the 2030 decarbonisation target from the energy bill won’t prevent investment in low carbon technologies, or stop the country hitting its emissions targets. But deadlines – even not very logical deadlines – are motivational, and create certainty about where the country is going. If a variety of energy businesses, investors and the committee on climate change are to be believed, today’s vote probably made it just a little bit less likely that the UK will hit its emissions targets. UPDATE: According to BusinessGreen , campaigners are hopeful that the amendment for the target could pass when the energy bill is discussed in the House of Lords. This would mean MPs have to discuss the issue again. 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Industry Outlook For Carbon Prices To Remain Low To 2020
Monday 3rd June 2013 The value of carbon allowances traded on the EU’s Emissions Trading System (ETS) won’t recover to pre recession levels before 2020 according to an annual survey of industry players, raising concerns about the long term impact of the UK’s carbon price floor for energy intensive businesses in the UK. The views come in an annual survey by PwC for the International Emissions Trading Association (IETA), examining views of carbon market investors, traders and advisors, who meet today at the industry’s annual conference in Barcelona. The outlook for price recovery remains weak according to members, due to the oversupply of allowances, reduced demand and policy uncertainty. EU allowances (EUAs), which traded at over €30 before the recession, are currently trading at around €3.50, and only 7% of the value of what is believed to be necessary to shift economies onto a low carbon pathway (€47). 56% of respondents expect EUAs to trade at €5-10 between now and 2020, a 47% fall from last year’s expectations for the same time period, and a 68% fall from those in 2011. With such low prices for energy intensive businesses including manufacturers and energy generators, the Carbon Price Support Mechanism was introduced to incentivise investment in low carbon power generation, through a carbon tax. But the collapse in European carbon prices since 2011 means the UK faces higher carbon prices than elsewhere in Europe. The results raise competitiveness concerns for UK businesses with carbon leakage likely if companies relocate production to other EU countries to avoid costs. Jonathan Grant, director, PwC Sustainability & Climate change, said: “With a sustained period of low prices expected for EU carbon permits, the UK’s Carbon Price Floor looks increasingly out of line with the rest of Europe, which raises concerns about the impact on UK business, when other countries in the EU don’t have a similar tax.” In the survey, members also overwhelmingly backed intervention by the European Commission to reform the EU ETS within 12 months. The Council is due to vote on proposals in June, but the survey shows members feel the proposals will not go far enough to boost values. Four out of five now feel that domestic or regional policy initiatives are likely to be more important than international negotiations over the next five years. The linking together of domestic or regional carbon markets was particularly highlighted, with 94% expecting the EU and Australian carbon markets to be linked before 2020, and 25% for both California and South Korea. The new Californian carbon market, launched at the start of the year, is expected to increase its share of the global market in terms of value, with California Carbon Allowances expected to continue trading at US$10-20 over the first three years of the programme. Jonathan Grant, director, PwC, who performed analysis on the survey, said: “Despite the collapse of carbon prices, it’s reassuring that all regulated entities surveyed said that the carbon price is still relevant to their capital investment decisions, with four out of five saying it is an important factor. “However a sustained period of low prices expected for EU carbon permits, means business looks set to face a patchwork of climate tax and regulation over the coming years which may raise concerns about competitiveness and high administrative costs.” Continue reading
