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U.S. Forest Management Policy Must Evolve To Meet Bioenergy Targets

Jun 19, 2013 U.S. forest management policy must evolve to meet bioenergy targets In order to keep pace with the burgeoning demand for renewable energy, forest management policy in the U.S. must change to address environmental sustainability issues, according to an article by a University of Illinois expert in bioenergy law. Unless the forestry sector can tailor sustainable forest management policies specifically to forest-to-energy feedstocks, its role in helping the country broaden its energy portfolio – and by extension, meeting ambitious bioenergy targets – may be limited in large part because of uncertainty about whether existing policies can effectively constrain overharvesting, said Jody Endres, a professor of bioenergy, environmental and natural resources law at Illinois. “Because we have a federal system of government, we don’t have a one-size-fits-all policy on land use and biofuels,” said Endres, who also is an affiliate of the Energy Biosciences Institute, a collaboration between the U. of I., the University of California at Berkeley, the Lawrence Berkeley National Laboratory and the energy company BP. “In a lot of environmental and natural resources law in the U.S., the primary role lies with the states to manage private land. But we also have national-level problems, like climate change, biodiversity and water-quality issues, which span jurisdictions. In other words, ecosystem services are not confined to a single state’s jurisdiction. So we have this crazy-quilt system in the U.S. that needs to be untangled.” The paper, which was published in the Vermont Law Review, was written to pinpoint what U.S. policy looks like, “which is very complicated because of the intermingling of state and federal policy,” Endres said. “We don’t have a coordinated public, state or federal policy in the U.S. about what sustainability means in the bioenergy context,” she said. “We don’t have one overarching policy that says, ‘This is how you assess land for biodiversity, or for water quality.’ So this patchwork of policies really makes it difficult for outsiders like European regulators looking in. A lot of misperceptions grow out of that.” According to Endres, the U.S. needs to craft some sort of integrated standard that covers not only the purpose-grown, short-rotation biomass crops such as the perennial grass miscanthus, but also forested plantations and seminatural environments, and be able to assess whether there are actually some ecological and climate benefits for getting those lands into the bioenergy system. “Those are the problems that bioenergy in the U.S. is facing, and it’s all really very nascent, but we know it’s problematic,” she said. “How do we translate that into a policy and into a sustainability certification? How do we make it economic while also providing an on-ramp for consideration of the ecological properties of forests in terms of larger scale landscapes and connectivity? That’s yet to be decided, but the paper lays it out what the points of contention look like.” It’s an interesting conversation to have in the U.S., because unlike Europe, “we still have some natural or seminatural forest left,” Endres said. “Ultimately, the goal is for U.S. forestry interests to access the European bioenergy, which may involve an additional level of certification or verification. We certainly have mandates here in the U.S., but they’re becoming much more stringent about certification in Europe.” According to Endres, there are two main certification programs in the U.S. – the Forest Stewardship Council and the Sustainable Forestry Initiative. “Those are the two dueling standards in the U.S., but what they don’t do is address bioenergy applications specifically, and that’s mainly the carbon foot-printing of managing forests for bioenergy,” she said. “Through all of these bioenergy policies, one of the main goals is to reduce greenhouse gas emissions. But we’re not there yet in terms of how to design a policy that chooses the appropriate measurement methodology for carbon fluxes within forests, because what you really want is a net greenhouse gas reduction. Private standards have not determined yet how to account for that – the science is still nascent on the effects of sustainability standards, as well as the time horizons for accounting in comparison to business as usual.” Assessing whether a land is natural, seminatural or a plantation is also something that the U.S. doesn’t do neatly in one overarching bioenergy policy. “We need to be able to classify land so we know whether or not we can access it for bioenergy applications that would be additional to, for example, lumber or paper, although those markets have been in general decline over the past decade,” Endres said. “The renewable energy directive in Europe is not going away. Forest product industries are actually gearing up to access those markets, and ultimately consumers, especially the type who go to big-box stores and look for sustainability certification on two-by-fours and other products, will likely want to see that forests aren’t overharvested. The European Union also may want to see that in some type of formal certification.” Thus, bioenergy now carries the burden, whether justified or not, to address perceived shortfalls in sustainable forest management, Endres said. “It is simply not enough in policy design, given the historically highly charged debate about forest sustainability, to make assumptions that existing sustainable forest management policies provide the assurances necessary for stakeholders, particularly environmental and wildlife organizations, to support forest-based bioenergy initiatives,” she said. “The main environmental groups are very concerned with over-sourcing from natural and seminatural private forest lands and federal lands. And they were actually successful at the federal level at keeping federal forests off-limits from the Renewable Fuel Standard.” According to Endres, forest policy since the early 1970s has grappled with how to manage forests holistically, “so I applaud bioenergy for bringing that conversation to the forefront on how we can really manage forests in a more informed, connected way at the ecosystem level,” she said. “We could really learn a lot from Brazil’s Forest Code protections for water quality and habitat connectivity derived from forests simply because they’ve been under the microscope since the 1990s for how they’ve managed their forests, including the Amazon rainforest,” she said. “But with the emergence of bioenergy, the whole world is going to participate in that conversation, and I see that dialogue as paradigm changing, as something that will ultimately benefit both the environment and humanity.” The Energy Biosciences Institute supported the research. Source: UI Urbana-Champaign Continue reading

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Emerging Markets Suffer The Advent Of The Taper

http://www.ft.com/cm…l#ixzz2WqnxHnE7 Last updated: June 20, 2013 6:36 pm Emerging markets suffer the advent of the taper By Robin Wigglesworth, Amy Kazmin and James Crabtree Back in late 2010, as the US was embarking on its second round of monetary easing and emerging economies were struggling to cope with the hot inflows that came hand in hand with it, Brazilian finance minister Guido Mantega coined the phrase “currency wars”. He was complaining about countries like the US possibly using quantitative easing to devalue their currencies and boost growth following the crippling financial crisis. Three years on, as the US Federal Reserve provides clarity over its plan to start slowing QE3, those currencies appear to be in full retreat. India’s rupee and the Turkish lira bore the brunt of the emerging market rout on Thursday, both hitting record lows, after Fed Chairman Ben Bernanke said the central bank would probably start reducing its $85bn-a-month asset purchases this year, and end it in 2014. The rupee’s precipitous slide prompted the Reserve Bank of India to intervene to stop the currency from breaching Rs60, the psychologically important threshold, according to currency traders. The RBI declined to comment. Despite Mr Mantega’s complaints of currency wars, many developing countries benefited from western central bank-supplied money seeping into their healthier and less indebted economies, as investment in companies, infrastructure and their capital markets aided growth. But analysts fret that some states could suffer as that flow of money starts to reverse. “It’s a shot across the bow,” said David Jacob, vice-chairman of Henderson Global Investors. “Emerging markets are vulnerable. A huge amount of money has flowed there.” The prospect of less easy monetary policy in the US comes at an awkward time for many developing countries. Economic growth is already slowing, and a combined current account surplus of almost 5 per cent before the financial crisis has now shrunk to just 1 per cent, according to the International Monetary Fund. Countries with current account deficits – such as India and Turkey – are seen as particularly vulnerable to outflows, and it was their currencies that were hurt the most on Thursday. These economies import more than they export, and need foreign capital to plug the gap. Of the 25 largest emerging market currencies, only the Indonesian rupiah managed to hold its ground against the US dollar. Indians’ hunger for gold has fuelled its record current account deficit of 6.7 per cent of economic output. Finance minister P. Chidambaram has made an impassioned appeal to Indians to stop buying gold. “If we can have minimal gold imports for six months or one year, it would dramatically change the current account deficit, and you would see the impact on every other index that measures the economy.” The crucial issue for emerging markets is whether market turbulence persists and exacerbates this economic slowdown by pushing up borrowing costs for their governments, companies and households. Brazil and Ukraine are vulnerable, while better performing economies like the Philippines and Mexico are also facing higher borrowing costs as international investors edge out of their markets. Many investors are confident that the impact could be limited, highlighting the structural, financial and economic progress made since the developing world was plagued by crises in the 1980s and 1990s. Budgets and debt levels remain far healthier than in the west. The Fed’s tapering of QE3 is also expected to be gradual and interest rates kept on hold until 2015. The IMF forecasts that emerging economies will grow 6 per cent a year between 2013 and 2018. If the Fed does begin to taper its asset purchases, that will be on the back of a stronger US economy, which should help global growth, analysts said. Emerging markets also rely less on foreign investors and overseas debts than in the past, with many having shifted to local bond markets in the wake of past crises. Bryan Pascoe, global head of debt capital markets at HSBC, said that emerging markets are “in much better shape to weather storms these days.” Continue reading

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[Invest Korea] New Tax Rules Beneficial for Foreign Investors

Friday, June 14th, 2013 KOREA IT TIMES (INFO@KOREAITTIMES.COM) This month we present Part II of our two-part series on Korea’s amended Presidential Decree under the Law for Coordination of International Tax Affairs and other relevant tax laws. Below we look at important tax regulation changes providing foreign investors with advantageous effects. Background In order to provide better conditions for investing in Korea, the Korean government amended some provisions of the Enforcement Decree of Corporate Income Tax Act and the Enforcement Decree of Special Tax Treatment Control Law early this year. Related tax incentives encompass those relating to not only foreign direct investment but also investments through domestic funds or foreign funds, considering that the portion of foreign investment through an investment fund or a private equity fund is ever growing. 1. An Exception to the General Tax Treatment Toward a Limited Partner’s Income of a Domestic Private Equity Fund Prior to the amendment, if foreign investors invested in Korean shares through a Korean private equity fund (PEF), all income allocated to limited partners (including the foreign pension fund) by the Korean PEF was classified as dividends; therefore, regardless of the character of the underlying income, all distributed income by the Korean PEF was subject to withholding at 22 percent for dividends (or a reduced rate under an applicable tax treaty). Because foreign private equity investors, including foreign pension funds, usually realized investment profits in the form of capital gains, rather than dividends, such taxation had the effect of depriving investors investing through a Korean PEF of the opportunity to claim a capital gains tax exemption under an applicable treaty. Effective 2013, however, the amended tax law allows look-through treatment to determine the character of income of a Korean PEF allocated to certain foreign pension funds, thereby affording them the opportunity to claim tax treaty exemptions. As a result of the amended rule, such income allocated to eligible foreign pension funds will be classified as interest, dividends or capital gains from alienation of shares depending on the character of the underlying income recognized by the PEF. 2. Special Tax Treatment for Foreign Investment Entities Under the past tax regulation, certain domestic joint investment entities such as domestic private equity funds can elect to be treated as a partnership, which is a quasi pass-through entity subject to no entitylevel tax. On the other hand, the permanent establishment of foreign corporations is not entitled to this partnership election and was subject to corporate income tax of maximum 24.2 percent at the entity level. To eliminate this tax inequity and attract foreign investments, the lawmakers expanded the special partnership taxation election regime to include foreign eligible entities carrying on a business in Korea through a permanent establishment. According to the new rule, there is no partnership-level tax if the eligible foreign entity with a Korean permanent establishment elects to be treated as the partnership. Instead, limited partners, as passive investors in such foreign entity, are subject to Korean withholding tax with respect to their share of Korean income as dividend at the rate of 22 percent. However, a reduced treaty rate ranging from 5 percent to 16.5 percent should be available depending on the residency of the limited partner. After a one-year grace period, the proposed change will be applicable to taxable years commencing on or after January 1, 2014. 3. Amendments to Foreign Direct Investment Incentive Regime The foreign investment zone regime’s prescription of eligible businesses was expanded to include information technology services from February 15. Until the end of last year, the following businesses were eligible for the incentives: (i) manufacturing with a minimum investment amount of USD 30 million; (ii) tourism with USD 20 million; (iii) logistics services with USD 10 million; and (iv) research and development with USD 2 million. However, the amended rules include computer programming, system integration and management services, data processing/ hosting services and other related information services with a minimum investment amount of USD 30 million. Source : Invest Korea Continue reading

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