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China Takes Cautious Step Toward Carbon Emissions Trading
http://s1.reutersmed…r=CBRE95H0GNH00 By David Stanway BEIJING | Tue Jun 18, 2013 1:59am EDT (Reuters) – China launched its first pilot carbon emissions exchange on Tuesday, though plans for a nationwide rollout and efforts to apply the scheme to some polluting heavy industries could be undermined by a slowdown in the world’s No.2 economy . High-emission industries such as aluminum and steel are likely to resist higher costs as they are already battling weak prices due to tepid demand and a persistent supply gut. “It is a very big concern for Beijing and for local governments – how to strike a balance between controlling emissions and maintaining economic growth especially amid a general slowdown in the economy ,” said Shawn He, lawyer and carbon specialist at the Hualian legal practice in Beijing. While the exchange in the southern city of Shenzhen will not immediately lead to a big cut in China’s emissions of climate-changing greenhouse gas , now the world’s highest, it does still represent a statement of intent by Beijing, campaigners said. “This is just a baby step when you look at the total quantity of emissions, but it enables China to establish institutions for carbon controls for the first time,” said Li Yan, head of environmental group Greenpeace’s climate and energy campaign in China. Under such a cap-and-trade scheme, companies must buy allowances from others if they want to exceed carbon limits. But there is still a long way to go in China, and the design of its pilot platforms – as well as the national scheme that would eventually replace them – face economic and social pressures. “Of course, decision makers have to look at the social impact – the carbon market cannot be designed in an idealistic way and you have to make sure the design of the mechanism will address such issues as social stability,” said Wu Changhua, China director with the London-based Climate Group consultancy. And the example of carbon markets overseas is not encouraging, with the global financial crisis saddling Europe’s Emissions Trading Scheme with a crushing oversupply of carbon credits and record low prices. The Shenzhen exchange is one of seven pilot schemes due to be launched this year or next, and will involve 635 local industrial enterprises accounting for more than a quarter of local GDP and more than 30 million metric tons (33.07 million tons) of CO2 emissions. But that is still a drop in the ocean compared to the country’s total emissions of around 8 billion metric tons last year Other platforms due to start in 2013 include one in the business hub of Shanghai, where leading steel mill Baoshan Iron and Steel will participate, and Hubei province, home of Wuhan Iron and Steel. INDUSTRIAL IMPACT While giant oil firms like CNOOC and PetroChina will take part in the Shenzhen scheme, few of the companies involved will be from bloated but carbon-intensive heavy industrial sectors such as steel or aluminum , and figuring out how to include them is likely to be a bigger challenge. Late last year, China’s industry ministry told firms in sectors like steel to reduce their 2010 carbon intensity rates – the volume of CO2 produced per unit of output – by 18 percent by 2015. That was a massive burden for a sector already bruised by rising input costs and minimal returns, with the country’s economy growing at its slowest pace for 13 years in 2012 and data so far this year surprising on the downside. But while it will add to the costs of struggling firms, it could also give Beijing another tool to bring wayward industries in line with state policies and force polluting firms to close. Carbon trade will give local governments an alternative source of revenue as well as an incentive to free up some of their CO2 allocations by closing small steel mills. Jiang Feitao, a researcher at the China Academy of Social Sciences who has studied the impact of environmental policy on the steel sector, said smaller companies would be hit hardest by costs. NATIONAL TRADE After Shenzhen, Shanghai and Hubei, four more pilot exchanges are due to open in the capital Beijing, the sprawling industrial municipalities of Tianjin and Chongqing, and the manufacturing center of Guangdong province on the southeast coast, probably next year. The National Development and Reform Commission said the seven pilot schemes will begin a process of integration in 2015 and that a nationwide platform will go into operation some time before 2020. But the seven regions were given considerable leeway to design their own schemes and it remains unclear how they will connect together. “My guess at this moment is that they will set up a national platform and gradually integrate the seven pilot schemes into that one, but we don’t know the architecture yet – this is very new,” said Climate Group’s Wu. He, the lawyer, said China still needed legislation to give legal recognition to the concept of carbon trading. It also needed to solve the longstanding problem of measuring emissions. “I don’t think it is possible to get to a national market by 2015 – there are many technical issues to be addressed to integrate these islands into one continent,” He said. China also eventually needs to set a national limit on emissions and allocate this to individual industries and provinces to establish a full countrywide trading scheme. “Realistically, we are looking at 2025 before we have a cap – a few years ago some were saying 2040 or 2035 so we have already made progress,” said Wu. “Growth will continue to be the No.1 priority. Cap-and-trade will be one of the ways of trying to grow differently, but China is still a developing country and we have to grow.” (Editing by Joseph Radford) Continue reading
Business Properties With Commercial Appeal
The retail sector may be struggling to pick itself up following the recession but there are still plenty of profitable non-residential options for investors. Here, Zoe Dare Hall offers advice for landlords looking to buy a commercial property. Head space: the right tenant can make innovative use of commercial premises Photo: Rex Features By Zoe Dare Hall 5:36PM BST 14 Jun 2013 In the world of commercial property , Ray Bloom is a young star. Now aged just 25, four years ago he bought the Mayfair-based commercial property company John D Wood and has since doubled turnover to more than £2m. He is now developing a UK-wide network of franchises and is branching out into commercial property in Egypt. Not everyone seeking to enter the market can emulate Bloom’s level of ambition or success. But in trying to find that first step on the commercial ladder, the trick, says Bloom, is timing. “If you buy well, fix the building and then sell smart, you will be successful. In today’s rather stagnant market, where growth is difficult to achieve, the key is to be a good manager of the property and work closely with your tenants, who are your customers.” Unlike the residential market, commercial property is mainly income-driven. There are three key sectors – offices, industrial and retail – and all are potentially available to private investors, who own around 12 per cent of UK commercial property, according to Christopher Reeve, partner at the property consultancy Bidwells. “It sounds small,” he says, “but it is a significant and growing sector when you bear in mind the average commercial property investment lot size is more than £1 million.” The timing is good. Commercial property is on the turn and individual investors need to find smaller opportunities off the radar of big commercial companies and pension funds. For example, in Bolton you can buy a shop on a busy road with a flat above (and the same residential tenant for 12 years) for £60,000-£80,000 through Miller Metcalfe. Or in Bloomsbury’s Lambs Conduit Street, commercial agents LDG are marketing a mixed-use, 508 sq ft building with an A3 licence (suiting a café or restaurant) for £300,000, with credit a projected annual rent of £30,000. Ideal, say LDG, for a new commercial investor. Shops may be an attractive entry point into commercial property but recession has hit the retail sector hard, with one in six high street shops now said to be empty – and our consumer habits are rapidly changing. “A number of investors who bought what they perceived to be good quality investments such as Woolworth and Comet have suffered,” says Richard Cleminson, head of Kinleigh Folkard & Hayward’s commercial services division. “Towns still suffering from the recession have seen landlords accepting rents at 50 per cent of what they were previously achieving – if they can relet the unit at all.” Damian Lloyd, director at the commercial property agency GVA, is more positive about retail opportunities. “In thriving towns such as Stratford-upon-Avon, where a Jessops closes, a trendy new perfume shop opens,” he says. “I see this as a catalyst of growth for some high streets – not all – but you need to think carefully what shops stand a chance of survival.” And for landlords who fear empty shop units, one possible lifeline is being offered by AppearHere.co.uk , a new online marketplace that brings together landlords looking to find tenants and individuals or retailers seeking a pop-up shop. Alternatively, smaller units such as a 500-1,500 sq ft lock-up are a good starting point for first-time commercial property investors, because of good returns and easy lets. Lloyd recommends looking at industrial premises. “They are very sought-after at the moment. As long as we’re still making things in this country, there are always going to be start-up businesses that need premises.” Office space is another area to consider – although this can be “difficult to crack” for individual investors, says Damian Lloyd. “They tend to come in large lots, which means they are expensive, or on business parks, which is a flat market at present.” Outside London, the office market is stifled by a lack of liquidity, with regional values down by 48 per cent on their peak and owners reluctant to sell at a loss. The lack of Grade A office stock in regional cities – Birmingham is one example – means some investors are spotting an opportunity in refurbishing older stock. And the internet and homeworking, it seems, haven’t killed off the need for offices. Knight Frank reports that Google’s new 800,000 sq ft campus in London and Yahoo’s ban on working from home will create a wave of IT jobs that didn’t exist 20 years ago and are mostly office-based. “We see retail as best suited in the next cycle to those prepared to actively and imaginatively manage the asset, possibly incorporating leisure and hotels,” reports Knight Frank’s latest UK Market Outlook. “In contrast, offices we see leading the upswing.” Continue reading
U.K. Commercial Property Values Rise for First Time in 18 Months
By Patrick Gower – Jun 14, 2013 U.K. commercial real estate values rose for the first time in 18 months in May, led by increasing demand for offices, Investment Property Databank Ltd. said. The average value of stores, offices and warehouses climbed 0.01 percent from April, London-based IPD said in a statement today. Total return, which combines changes in real estate values and rental income, was 0.6 percent last month. “It may seem like insignificant growth, but this is an important milestone for the U.K. property market ,” Phil Tily, a managing director at IPD, said in the statement. “After the double-dip recession and a fall in values of over 37 percent, U.K. property has finally, painstakingly, clawed itself back to growth.” The commercial property market is improving as bank lending increases and overseas buyers look beyond London to purchase real estate. Bank of England Governor Mervyn King said on June 4 that stimulus provided by the central bank meant there were “good reasons to suppose that a gentler recovery is under way.” Office property values had a 0.2 percent gain in May and retail and warehouse values were little changed, according to IPD. To contact the reporter on this story: Patrick Gower in London at pgower@bloomberg.net To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net . Continue reading
