Global Fund Exchange September Newsletter 2010

8/8/2019 Global Fund Exchange September Newsletter 2010

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Global Fund Exchange is

an asset management

business specializing in a

diversified global macro

approach to investing in

dynamic opportunities

across all sectors of the

New Energy Revolution.

Featured in this issue:

Global Commodity Surge Worlds Largest Solar Thermal U.S. & China Coal Dependency Japans New Carbon Mandates Water Storage & Food Security $100bn Climate Green Fund

SPOTLIGHT ON:COMMODITIES SURGEGlobal Trends & Supply Fears Contribute to Price Increase

Commodities have been a top concern for investors heading into the fall.

Goldman Sachs recently published forecasts for commodity sector returns over

the next twelve months, with energy commodities reigning at the top of the list.

The investment giant predicts a 27% rise in energy over the coming year, as well

as 17% increase in precious metals and 15% in industrial metals.

Chinas drive to reduce pollution and close inefficient and unsafe mines has

resulting in higher prices for coal, lead, tin and rare earth metals , as well as little-

know commodities such as antimony, a metal used for fire-proofing. Chinacontrols 90% of the world market. Since its sweeping mine closures, the price of

antimony has increased 150% since Jan 2009 to nearly $11,000 a ton.

Goldman Sachs, however, does not have high expectations for agricultural

commodities. In fact, analysts expect losses over the next 12 month period.

Despite this overall unfavorable outlook, Goldman Sachs did take special

exception to corn, cotton, Arabica and raw sugar when it raised its 3-month

outlook for these particular commodities.

Corn and cotton prices in particular have responded to a confluence of global

events. Flooding has devastated cotton crops in Pakistan, one of the worlds top

five cotton producers. In conjunction with increased demand from China, someestimates foresee global cotton prices increasing by as much as 15% in

2010/2011.

An unimpressive U.S. harvest has likewise spurred a jump in corn prices. Corn

has risen to its highest trading levels since 2008, with a 40% rally since July 2010.

Newsletter September 2010

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RENEWABLE ENERGY NEWS

Cellulosic Ethanol Producers & Big Oil

Companies Sign Joint Ventures in BrazilTwo major partnerships have taken shape between global

oil conglomerates and smaller cellulosic biofuel companies

in Brazil, including a $12 billion joint venture between Shelland Brazilian ethanol producer Cosan, and an $11 million

deal between Petrobas and KL Energy Corporation to

expand Brazilian operations.

Besides providing a major boost to the Brazilian cellulosic

ethanol industry, these deals will allow the smaller

companies to access broader markets and sources of

capital, and provide evidence ofBig Oils continued interest

in next-generation biofuels, which many see as the wave

of the future.

Unlike corn-based ethanol, which has been criticized for

competing with food crops for land space and its largecarbon footprint, cellulosic ethanol can be made from just

about any crop or plant matter that has a high

concentration of cellulose. This means discarded waste

crops, stalks, leaves and husks can be turned into fuel.

Technology developments and a drop in the price of

necessary enzymes for the fuel conversion process has

helped cellulosic ethanol production more economical, and

therefore more practical as a major-scale substitution for

gasoline-based liquid fuels.

South Korea Expands Off-shore WindEfforts with 1,000 New Turbines

As part of a major newventure into off-shore wind, South

Korea announced the launch of a $7.8bn offshore wind

turbine testing ground in the Yellow Sea.

This testing facility is the precursor to South Koreas

planned installation of 1,000 new off-shore turbines to be

built over the next ten years. Located nearly 30 km off

shore, these turbines would generate roughly as much

power as four nuclear reactors.

South Koreas new energy plans also encompass the launch

of a domestic electric vehicle market, increased solar power

installations and construction of new nuclear power plants.

By 2030, South Korea aims to build eleven new reactors to

add to the nearly twenty currently in operation. Eight

reactors are already under construction.

Regulators Approve Worlds Largest Solar

Thermal Plant in California Desert

Energy regulators in California have granted a license for theworlds largest solar thermal power plant in the Mojave

Desert. The 1,000 MW solar complex, called the Blythe Solar

Power Project, will cover 9.3 square miles in the Southern

California desert.

The plant will use long rows of parabolic troughs to reflect

sunlight on liquid-filled tubes which lead to a central power

block. The super-heated liquid is used to create steam which

drives a turbine to generate electricity.

Given the challenge of climate change at this time, it is very

important to reduce fossil fuel use by moving forward with the

largest solar project in California, remarked Robert

Weisenmiller of the California Energy Commission. At peak

output, the Blythe plant will supply enough electricity to

power 800,000 homes.

By the end of this year, the Commission will make decisions on

a number ofsolar projects that together would produce

another 2,829 MW of electricity. In comparison, the total

amount of installed solar capacity in the United States last year

was a mere 481 MW, a fraction of what could be coming on

the slate in the years ahead.

These new developments in California could help transformrenewable energy from a small portion of our energy base to

becoming the backbone of the states power base, said Alice

Herron, a senior director at Solar Millennium, the Germany-

based developer of the Blythe project.

S-to-N Transfer Project Source: ChinaEnvironmentalLaw.com

Blythe Solar Power Project Source: California Energy Commission


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TRADITIONAL ENERGY NEWS

Chinas Clean Energy Future Depends on Coal

Thesuccess or failure of Chinas $736 billion plan to invest in

solar, wind, biofuel and nuclear energy is likely to depend on

one thing the price of coal.

Supplying 80% of all electricity for its growing economy, China is

the worlds #1 coal user. It constructs, on average, one new

coal-fired power plant every week. Switching away from such a

plentiful albeit highly polluting resource in favor of clean energy

technologies will be difficult for the economic giant.

Also added to the equation are new technology developments

that make coal combustion processes cleaner. Called

supercritical plants, these new generators produce

approximately 15% less carbon dioxide than conventional plants

at a cost of about $500-$600 per kW less than in developed

OECD nations.

China has overtaken the U.S. as the worlds top greenhouse gas

emittor, and it faces tremendous pressure from the

international community to wean itself off its coal addiction

and get serious about reducing its emissions levels. However,

policy and industry analysts warn that if the costs of new energy

technologies are not commensurate with, Chinas clean tech

push may fizzle and fail to attract the private sector investment

it needs for long term success, especially as coal becomes

cleaner.

The government must gradually lift fossil fuel prices while

granting incentives to non-fossil fuels to establish a long-termprice signal, said Wang Yi, deputy head of Policy and

Management at the China Academy of Science. Without

changes in tariff structures, there would be little incentive for

private firms to invest. State-run firms would be the only ones

able to operate at a loss as they are the ones who can afford to

lose money, said Lin Boqiang, head of Center of Research on

Energy Economics at Xiamen University. The private sector

cant afford waiting around for 5 to 10 years operating at a loss.

Price of coal important in Chinese clean energy development

With 32 New Plants, U.S. Coal Industry

Experiences Largest Growth in 20 Years

The U.S. coal industry has experienced its largest expansion in

over twenty years. Since 2008, thirty-two new coal-fired

power plants have been built or are currently under

construction in the United States.

All together, these coal plants will generate approximately17,900 MW of electricity - enough to power 15.6 million

homes, or roughly the combined number of homes in

California and Arizona. They will also emit about 125 million

tons of greenhouse gases every year - the equivalent of

adding 22 million vehicles to the nations roadways.

Public awareness of the social and environmental costs of

fossil fuels has increased after the BP oil spill and the tragic

coal mine accident in West Virginia. However, this public

sentiment has not translated into legislation which would

dissuade the coal industry from expanding. On the contrary,

the failure of U.S. lawmakers to enact tough carbon emissionslegislation has kept the industry comfortable in the status quo.

As Severin Borenstein, director of the Energy Institute at UC-

Berkeley says,Building a coal-fired power plant today is

betting that we are not going to put a serious financial cost

on emitting carbon dioxide.

Despite the Obama administrations dedication of $3.4 billion

in stimulus funds to clean coal research, none of the thirty-

two new plants incorporate this experimental technology,

which filters out carbon before it can be released into the

atmosphere. New investments in traditional coal plants, on

the other hand, amount to more than $35 billion.

Strategic Location May Propel Indonesia to

Worlds Largest Exporter of Coal

To satisfy growing demand, energy-hungry nations such as

China and India have begun looking to their southern

neighbor Indonesia as important source of thermal coal.

Desperate for foreign investment to help achieve major

infrastructure overhauls, Indonesia is a willing partner and has

recently signed blockbuster deals with its energy-hungry

partners. Indonesian production levels are predicted to rise

nearly 90% to 480 million tons by 2020.

Indonesia has set a target of attracting $160 billion in foreign

investment over the next few years. China and India have

agreed to finance billions of dollars worth of Indonesian

infrastructure projects- including railways, road, ports and

bridges in exchange for coal.

The nature of the agreements is similar to the controversial

minerals-for-infrastructure deals China has entered across

Africa to secure access to that continents resources.


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Energy regulator says UK needs energy reform Source: Daily Mail

CARBON NEWS

Japan to Mandate CO2 Trading Scheme for

High-Emitting Companies

According to a report obtained by Reuters, Japan is planning

to institute a mandatory carbon trading program in 2013.

Reviving a climate protection law that had previously been

scrapped earlier this year, the legislation would require thecountrys largest emitting companies and industries to comply

with carbon emissions quotas. Any emissions above the set

levels would require purchases of carbon credits from either

domestic or overseas reductions projects.

Japan is the worlds fifth-largest emitter of carbon dioxide. In

an effort to reduce emissions and become a leader in the clean

energy industry, Japan has increased its focus on clean energy

technologies and climate change mitigation measures.

Earlier this spring, Toyko launched its own carbon trading

initiative, becoming the first Asian metropolis to do so. Thiscap-and-trade system is operated separately from the

proposal national scheme. Under the first phase of the

program, which runs until 2014, participating organizations

must trim carbon emissions by 6%.

WATER NEWS

Water Scarcity Threatens Chinese Crops

China is faced with a daunting food challenge that has been

getting worse as the population expands. The nation

possesses only 7% of global arable land, but must feed 22% of

the worlds people. Its per capita water supplies are only 25%

of the worlds average levels. Chinas northern regions hold

18% of total water supplies and 65% of the nations arable

land, but the climate in those areas has become drier over the

years.

Chinese scientists warn that rising temperatures could

accelerate evapo-transpiration and limit freshwater supplies

for agriculture.

By the end of 2015, Chinas population is expected to reach

1.39 billion, requiring a 4 million ton increase in annual grain

supply over the next decade,but according to the Naturearticle, water limitations may reduce rice yields by 4 to 14%,

wheat by 2 to 20% and corn by 0 to 23% by the middle of this

century. By 2050, total crop yields may be reduced by as

much as 13%.

Chinas agriculture minister acknowledges the nation faces a

formidable task in meeting food demand inthe face ofgrowing resource scarcity.

Insufficient Water Storage Poses Risk to

Global Food Security

According to a report by the International Water Management

Institute (IWMI), the worlds food security and economic

growth prospects are in jeopardy due to insufficient waterstorage capacity.

Changing climate and rainfall patterns have hit many of the

worlds agricultural production regions hard, especially in

regions of Africa and Asia. Despite advances in irrigation

technology, it is estimated that 66% of Asian agriculture is

dependent on rainfall, and in Sub-Saharan Africa, that

percentage is as high as 94%.

Experts are urging policy makers to help farmers improve

storage systems and develop better water management skills.

For millions of people dependent on rain-fed agriculture,reliable access to water can make all the difference between

chronic hunger and steady progress toward food security,

said hydrologist Matthew McCartney.

Just as modern consumers diversify their financial holdings to

reduce risk, smallholder farmers need a wide array of water

accounts to provide a buffer against climate change impacts.

The report warns against over-dependence on one source of

water, and encourages governments in vulnerable regions to

consider storage solutions big and small, from large-scale

dams to local ponds, tanks and reservoirs.

Even small amounts of stored water, by enabling crops and

livestock to survive dry periods, can produce large gains in

agricultural productivity and in the wellbeing of rural people,

said McCartney.

Source: stock.XCHNG


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SOURCES

We regularly gather information from the following reputable news sources, including but not limited to:

RenewableEnergyWorld.com EnergyandCapital.com

Forbes.com: Energy News New Energy Finance

Green Inc. The New York Times Streetwise Reports: The Energy Report

New Energy World Network Thomson Reuters

Scientific American: Energy REChargeNews.com

SustainableBusiness.com Climate Change Business Journal

GREENBUZZ WSJ.com: Environmental CapitalNew Carbon Finance Carbon Credit Capital

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Please visit ourFuture of Energy blogfor more news updates.

CLIMATE POLICY NEWS U.N. Climate TalksProgress on $100bn Green Fund

Looking ahead to U.N. climate talks in Cancun, Mexico this winter, environment

ministers and senior officials from over 50 nations have made headway on a

green fund which would aid developing nations coping with climate change

and the shift away from fossil fuels. U.N. climate chief Christiana Figueres calls

this fund a golden key to the negotiations and an important way to reassure

poor nations that wealthy countries are serious about global warmingmitigation. The Fund aims to raise $100 billion a year in climate aid by 2020.

Although there is little hope of securing a binding legal treaty in Cancun,

negotiators are optimistic about this Green Fund proposal. However,

Mexicos Foreign Minister Patricia Espinoza warned that the climate aid fund is

only one part of a broader climate package which needs attention.

Unresolved issues remain, including methods for clean energy technology

sharing and mechanisms to protect vulnerable forest land.

U.S. climate envoy Todd Stern concurred. We are not going to move on the Green Fund, and the $100 billion, if issues central to the

Copenhagen Accord, including mitigation and transparency, dont also move. Stern reiterated President Obamas commitment to

reducing U.S. greenhouse gas emissions by 2020, despite the Senates lack of progress in passing comprehensive climate legislation.

The U.S. is the worlds only major developed nation without a legal cap on greenhouse gas emissions.

Source: Julian Rotela
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