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Archived material from historical editions of The Generator

  • Garnaut raps Rudd on knuckles

    Matthew Warren and Matthew Franklin | The Australian

    KEVIN Rudd’s handpicked climate expert has warned that Australia must make far steeper cuts to carbon emissions than previously thought and demand developing nations follow suit if the world is to avert a climate change catastrophe.

    Ross Garnaut has also warned that taxpayers will have to compensate low-income households and industries, such as forestry and agriculture, for income they will lose as part of the fight against climate change.

    The findings were released yesterday in an interim report produced by Professor Garnaut discussing the economic implications of Australia setting sharp, short-term targets for the reduction of carbon emissions.

    As power generators and businesses warned of adverse effects if the Rudd Government accepted the recommendations, Climate Change Minister Penny Wong refused to commit to the Garnaut prescription.

    Senator Wong promised responsible action but said she was also awaiting Treasury modelling, due to be finished in June.

    The Greens attacked her position as evidence the new Labor Government was a hostage to the coal industry and had started backsliding on climate change.

    Last year, Mr Rudd, in Opposition, commissioned Professor Garnaut, an economist and former colleague, to study the implications of reducing carbon emissions in the wake of the 2006 Stern report to the British Government, which warned of catastrophic consequences if the world did not move decisively to combat climate change.

    Mr Rudd had committed Labor to setting a target to reduce carbon emissions by 60 per cent by 2050 but wanted the Garnaut report to provide a basis for establishing a shorter-term target.

    Professor Garnaut said Australia must accept deeper cuts of between 70 and 90 per cent of emissions by 2050 to avoid the risk of dangerous climate change.

    It should also set a target this year for emissions reduction by 2020 – similar to those accepted by other developed nations. The European Union has a 2020 goal of cutting emissions by 20 per cent. "Australia should be ready to go beyond its stated 60per cent reduction target by 2050 in an effective global agreement that includes developing nations," Professor Garnaut said.

    The Prime Minister yesterday told parliament the nation could no longer afford to ignore climate change because, as the driest continent, it stood to suffer the greatest effects of global warming.

    "The costs of inaction on climate change are much greater than the costs of action," Mr Rudd said. "Australia must therefore seize the opportunity now to become a leader globally.

    "This is where we need to position Australia, not in a state of denial but out there ahead of the pack, because it is in our deep economic interest, our deep national interest, to do so."

    The interim report, released in Adelaide yesterday, said the world was moving towards high risks of dangerous climate change more rapidly than had been generally understood.

    "This makes mitigation more urgent and more costly," the report said.

    "At the same time, it makes the probable effects of unmitigated climate change more costly for Australia and the world."

    Blaming much of the growth in emissions to economic growth and the aspirations of developing nations such as China, Professor Garnaut said it was not feasible to expect the developed world to lower its expectations.

    "The challenge is to end the linkage between economic growth and emissions of greenhouse gases," he wrote.

    He said the nation should also establish an emissions trading scheme as a centrepiece of a domestic mitigation strategy.

    This would need to include "measures to correct market failures or weakness" and would have to distribute the costs of the scheme fairly across the community. The report says such an approach would see the nation play a positive role in global talks for a new climate pact to replace the Kyoto agreement on emission reductions, which expires in 2012.

    "Australia should formulate a position on the contribution that it would be prepared to make to an effective global agreement, and offer to implement that stronger position if an appropriately structured international agreement were reached," it says.

    It added that efforts to include poor countries in a global scheme would enable richer countries such as Australia to buy excess permits from them, rather than trying to deliver deep cuts themselves.

    Developing countries refused to be included in a global regime of targets at last December’s UN climate negotiations in Bali.

    Professor Garnaut said there was no risk the Government’s target of 60 per cent cuts by 2050 would overshoot Australia’s likely long-term cuts in any global agreement sealed to take effect with the expiry of Kyoto.

    "A reduction target of, say, 70per cent does not imply that actual future emissions in Australia would be restricted to the extent suggested by the reduction in emissions rights," the report said.

    Professor Garnaut proposed compensation for major energy-intensive industries exposed to losses in international trade, such as aluminium and cement.

    The Australian Chamber of Commerce and Industry expressed concern about the cost of emissions reduction in Australia, particularly its impact on small- and medium-sized enterprises if the emissions cap were implemented on a per capita basis.

    Power generators say they stand to lose much of the value of Australia’s $50 billion network of power stations if the Government accepts Professor Garnaut’s recommendation not to compensate them in an emissions trading scheme.

    A full report on the design of an emissions trading scheme will be delivered next month, but the report excluded a mandatory renewable energy target as part of the ideal greenhouse mitigation strategy and suggested it should be phased out early.

    The report said the Government’s 20 per cent renewable target could create most of the incentives to introduce lower emission technologies in the first years of the scheme and duplicate the role of a trading scheme.

    Opposition environment spokesman Greg Hunt said the Government had "dropped the ball" on the Howard government’s work in driving the development of clean coal technologies and encouraging developed nations to tackle deforestation.

    – Additional reporting: Siobhain Ryan

  • UK releases offset guidelines

    New guidelines for carbon offsetting will do little to curb malpractice in the rapidly growing market for “carbon credits”, industry critics said on Tuesday.

    The government issued draft guidelines more than a year ago, but their official publication was delayed until Tuesday after the FT revealed companies were profiting from selling carbon credits which were environmentally worthless.

    The option of selling one form of such worthless credits, those issued under the European Union’s emissions trading scheme, is now closed. The government said on Tuesday companies and individuals following its new guidelines could be confident they were achieving their environmental goals.

    Carbon credits are bought by those wishing to balance out the negative impact of their activities on the climate by funding low-carbon technology, such as wind farms or solar panels.

    These projects are awarded credits, some of which are certified by the United Nations.

    But credits without UN approval can also legally be sold, despite doubts about the validity of some.

    The government’s new guidelines advise companies and individuals should only purchase UN credits, known as Certified Emission Reductions.

    Copyright The Financial Times Limited 2008

  • UK backs sustainable agriculture research

    "We hope that this flagship initiative shows that the pursuit of the economic and social benefit from science [by British scientists] does not have to equate with making money for UK plc," Alf Game, deputy director of the BBSRC, said at the launch.

    Among the 12 projects to be supported is an investigation into ways of identifying varieties of staple crops that are resistant to the parasitic plant ‘witchweed’, which cripples otherwise healthy plants in 40 per cent of the cereal-producing areas of Sub-Saharan Africa.

    The collaborative research will be led by the UK-based University of Sheffield, with scientists from the International Crops Research Institute for the Semi-Arid Tropics in India and the African Rice Centre in Senegal.

    The research aims to identify the genetic basis of the ability of some varieties of rice to kill the parasite, and to use this knowledge to explore ways of breeding other cereals with the same characteristic.

    Other projects will focus on how fungi can be used as biological control agents to combat the nematode worms that infect the roots of many different crops of vegetables, and how the genetic characteristics of pearl sorghum confer its ability to thrive in the hot, dry conditions that are expected to spread as a result of global warming.

    According to Gordon Conway, the chief scientist at DFID, the high level of interest in the new scheme –– known as Sustainable Agriculture Research for International Development –– is reflected in the fact that more than 200 applications were received from across the world.

    He emphasised that projects selected for funding are intended to explore how promising new scientific ideas could be developed and applied to the problems facing farmers in developing countries, rather than to seek novel scientific breakthroughs.

    "We are looking for the most appropriate technologies to solve such problems," Conway said.

  • Roundup Ready weeds appearing

    According to the report, the amount of weed-killing herbicides used by farmers has exploded, rising fifteenfold since biotech crops were first planted. The report lists eight weeds in the U.S.—among them horseweed, common waterhemp, and hairy fleabane—that have developed resistance to glyphosate, the most commonly applied pesticide. The next generations of biotech seeds include some that have been modified to withstand stronger doses of herbicides, while another strategy has been to develop tolerances to different herbicides and to combine multiple types of resistance in the same seed. "It’s a chemical arms race against these weeds," says Bill Freese, a policy analyst at the Center for Food Safety and a co-author of the report.

    Monsanto Profit Forecast Up

    In response, Monsanto said in an e-mailed statement: "The Friends of the Earth report makes numerous inaccurate and false claims. Information sources cited are rarely from peer reviewed scientific journals or research and are not representative of actual impacts." Apropos weed resistance, the company said, in part, "Monsanto takes product stewardship and claims of resistance to glyphosate very seriously.…Monsanto also sponsors internal and external research to understand the various aspects of glyphosate-resistant weeds, and research on best management practices in Roundup Ready crops."

    The boost in herbicide use is proving to be a financial boon for Monsanto. Its Roundup business was thought to be an albatross, as the pesticide came off patent in 2000 and revenue quickly plunged. Chief Executive Hugh Grant hastened the company’s shift away from reliance on Roundup sales to an emphasis on GMO (genetically modified organism) seeds—in particular, commodity crops such as corn and soy, which are the grist for animal feed, food processing, and biofuels. As demand for agricultural commodities has soared in recent years, stoked by growing wealth and changing diets in developing nations, so too have the plantings of GMOs (BusinessWeek, 12/6/07).

    But as more seeds with a baked-in resistance to Roundup are planted around the world, it’s helping prop up sales of the herbicide. Some 80% of biotech seeds have herbicide-tolerance in them, and the vast majority of those tolerate Roundup specifically. In fact, on Feb. 12, Monsanto Executive Vice-President Brett Begemann told investors at a conference that the company would raise its 2008 earnings guidance, thanks in part to better-than-anticipated Roundup sales. In the company’s first fiscal quarter, sales of Roundup and other chemicals jumped 47%. The company expects up to $1.4 billion in gross profit for the year from its chemicals business, Begemann said, which would be a 10% increase from 2007. (Monsanto forecasts $3.5 billion in gross profit from its seeds businesses, a 16% increase.)

    Environmental Impact Unclear

    Superweeds are most directly a nuisance for farmers, who have to work harder to tend their fields and spend more on buying and applying herbicides. But the impact reaches consumers, too, argues Freese, as increased levels of chemicals hit plants and can work their way into groundwater. So far, the concerns have not hindered the adoption of biotech crops: On Feb. 13, a biotech industry group, the International Service for the Acquisition of Agri-Biotech Applications, is expected to release its own report showing an uptick in plantings of GMO crops around the world.

    But many of the side effects, both actual and potential, continue to stir debate. Companies such as Monsanto, DuPont’s (DD) Pioneer, and Syngenta (SYT) must submit environmental assessments to the U.S. Agriculture Dept.’s Animal & Plant Health Inspection Service (APHIS) before a biotech plant can be approved for commercial use. Freese argues, however, that more rigorous regulatory evaluations of biotech crops’ impact can stave off environmental side effects. In March, 2007, a federal judge in Northern California halted plantings of biotech alfalfa, ruling that the USDA’s oversight was inadequate.

    For its part, Monsanto said in the Feb. 12 statement: "As part of the petition for deregulation, Monsanto includes information on glyphosate-resistant weeds and Monsanto’s weed resistance stewardship program. USDA reviews that information, along with other information such as research journal articles, in preparing their environmental assessment."

    Academics have been studying the impact of GMOs, but the research is still nascent. Just last November, the National Academy of Sciences convened a workshop of entomologists, geneticists, biologists, and others to discuss research priorities on how genetically engineered plants and animals impact the environment. The results are expected later in the year.

  • Wall Street shows skepticism over coal

    [chart]

    It also marks the latest obstacle to coal, which provides about half of U.S. electricity but emits large amounts of CO2. Citing costs, the U.S. government last week pulled support for a project called FutureGen that many utilities saw as a step toward burning coal cleanly.

    The standards, which would apply to all but the smallest plants, result from nine months of negotiations among the three banks and some of the biggest U.S. utilities and environmental groups. The standards could hurt coal-dependent utilities that haven’t begun factoring a future price of CO2 emissions into their planning. But they could help utilities that have.

    The banks say they don’t want to be involved with debt that goes bad as a result of government emissions caps that require the power plants they finance to buy large numbers of extra pollution allowances. Under a cap-and-trade system to limit greenhouse-gas emissions, the government would distribute a certain number of emission allowances each year. Companies whose emissions exceeded their allowances would have to buy more from companies that had more than needed. Congress is considering several cap-and-trade proposals.

    "We have to wake up some people who are asleep," says Jeffrey Holzschuh, vice chairman of institutional securities at Morgan Stanley.

    The banks are likely to continue to finance certain coal-fired power plants: those designed to capture greenhouse-gas emissions and shoot them underground if that technology became practical. But they make it less likely the banks will finance other coal-fired plants. Several dozen are on the drawing board in the U.S., many not yet financed.

    The standards follow TXU Corp.’s proposal to build 11 coal-fired power plants in Texas — a plan it scaled back to three last year. TXU was later taken private by a group led by Kohlberg Kravis Roberts & Co. and TPG, formerly Texas Pacific Group. Citi, J.P. Morgan and Morgan Stanley — top financiers to the U.S. power industry — were among the banks that advised the buyers.

    The banks are under pressure from environmental groups but say their bigger motive is financial. Most major presidential candidates favor legislation to limit emissions. "What is earth-shakingly different between now and two years ago is the focus on CO2," says Eric Fornell, vice chairman of J.P. Morgan’s natural-resources banking division. Several states have begun requiring utilities to account for the potential cost of emissions in new-plant plans.

    The banks say they will encourage energy-efficiency and renewable-energy pushes before backing new coal plants. And they say they will help utilities push for new government policies that make efficiency programs and renewable energy more practical.

    When utilities apply for financing for coal-fired plants, the banks will use "somewhat conservative" assumptions about future caps, says Hal Clark, co-chairman of Citi’s power-sector investment-banking division. The banks say they will consider the possibility that utilities will have to pay for their allowances — an idea utilities are fighting.

    Two environmental groups — Environmental Defense and the Natural Resources Defense Council — worked with the banks to develop the standards. Mark Brownstein, an Environmental Defense official, says if utilities have to pay for emission allowances, "the days of conventional coal really are over."

    But several utilities that helped draft the standards say they shouldn’t have to pay for most of their allowances. Michael Morris, chief executive of American Electric Power Co., says his company believes it should get 90% to 95% free. Most big coal-fired utilities paying for their allowances would drive up their costs and consumers’ electric bills.

    Some conventional coal-fired plants could pass muster if the utility showed it could raise its rates to cover the higher cost of polluting. "It’s still conceivable that conventional coal plants might make the most sense in a specific location in a specific community," J.P. Morgan’s Mr. Fornell says.

    AEP’s Mr. Morris says the new standards clearly make it "more difficult" to build a conventional coal plant. AEP is designing new plants to capture and store CO2 if that technology becomes viable. The Wall Street seal of approval, he says, might help surmount local opposition. "A regulator may find this another reason to go forward" in approving a new coal-fired plant, Mr. Morris says. A spokesman for Southern Co., another big utility that helped draft the standards, says it believes they will stimulate more discussion.

    Source: Wall Street Journal

  • Wong won’t say Garnaut’s wrong

    Climate Change Minister Penny Wong, in Honolulu for talks with nations responsible for 80 per cent of the world’s carbon emissions, said the Rudd government would deliver on a short-term greenhouse gas reduction target, regardless of Professor Garnaut’s comments.

    "We have said very clearly that we will set an interim target," she told ABC Radio.

    "We think targets are important because they do send a signal to the market and to the community and they also give an impetus to government (for) policy action."

    But Senator Wong said there was some value in Professor Garnaut’s comments.

    "We have stated we will set an interim target but we have also stated that we will consider very closely the advice of Professor Garnaut," she said.

    Major greenhouse-gas emitters, including the United States, China and India, must be part of an effective agreement to tackle climate change, Senator Wong said.

    She said nations in Honolulu had discussed setting a long-term emissions goal.

    Following United Nations climate change talks in Bali last month, the White House expressed "serious concerns" about a pact to negotiate emissions cuts of between 25 and 40 per cent by 2020.

    "The United States understands our position and the position of all parties and itself has said it sees … this meeting as an important contribution to the UN process," Senator Wong said.

    "If we don’t have the United States, India and China .. involved in these global negotiations and ultimately part of an effective agreement to tackle climate change, then we don’t have a response to climate change across the globe."

    Senator Wong said tackling climate change was a crucial issue for the US, regardless of who becomes the next president.