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  • Penrith By-election

    MEDIA RELEASE Penrith by-election: Greens vote surge, bad news for Labor in Balmain The doubling of the Greens vote in the Penrith by-election underlines the level of voter anger with Labor and indicates a likely Lower House breakthrough for the party in the NSW 2011 state election. With 60 per cent of the vote counted the Greens candidate Suzie Wright has received 12.6 per cent. At the 2007 state election the Greens received 5.5 per cent of the vote in Penrith. Labor’s vote has halved to 24 per cent of the vote. The Liberals won with a primary vote of 50.9 per cent. “Labor’s failure to address the needs of Penrith and western Sydney has resulted in the crash in the government’s vote,” Ms Wright said. “Although the Liberals have received a massive swing I believe this was a vote against Labor rather than a vote for the opposition. “The swing to the Liberals is more than 20 per cent on the two party preferred vote. “The collapse of Labor’s vote puts the government and the opposition on notice. This area needs a major upgrade of public transport services. Greens MP Lee Rhiannon said that today’s results for the Greens suggests a strong result at the 2011 state election. “The Greens beat Labor in all four lower Blue Mountains polling booths. “Penrith is not normally a strong seat for the Greens so the fact that we have more than doubled our vote is very encouraging. “These results will be unsettling for Labor in state seats like Balmain and Marrickville where they are under threat from an increasing Greens demographic. “These results are in keeping with recent polls that have had the Greens between 13 and 16 per cent of the vote. “The Greens have also received a strong result in the Hawkesbury City Council by-election with our candidate Danielle Wheeler gaining 23 per cent of the vote. This is up from 10 per cent in the last local council election,” said Ms Rhiannon. For more information – 0427 861 568 — Another message from the Greens Media mailing list. Too many messages? Don’t unsubscribe – try switching to a daily digest. You can unsubscribe or change your subscription settings here: Or send an email to

  • Cutting greenhouse gases will be no quick fix for our weather, scientists say

     

    The research suggests that increased floods and droughts could continue long after future efforts to stabilise temperature may succeed.

    Vicky Pope, head of climate change advice at the Hadley Centre, said: “We can’t say that if we manage to bring down our carbon dioxide emissions then we don’t need to worry any more. There will still be changes beyond that point.”

    A team led by Peili Wu used a computer model to analyse how the Earth’s water cycle could react to changes in future amounts of carbon dioxide in the atmosphere.

    It found that once carbon dioxide levels rise to a high level, even sharp reductions fail to prevent longlasting impacts on snow and rainfall.

    This is down to accumulated heat in the oceans, which dissipates slowly and drives changes in the water cycle as it does so.

    Writing in a paper to be published in the journal Geophysical Research Letters, the scientists say: “Our results suggest that relationships between precipitation and warming may significantly underestimate precipitation changes during periods of [greenhouse gas] stabilisation or reduction.

    “The inertia due to the accumulated heat in the ocean implies a commitment to changes long after stabilisation.”

    They add: “This effect must be taken into account when assessing the implications of various mitigation options for flooding, water supply, food production and human health.”

    The study simulated the effects of a steady rise in carbon dioxide levels until the equivalent atmospheric concentration topped 1,000ppm (parts per million).

    The current CO2 level is just over 390ppm, and most policies aimed at tackling climate change suggest the world should not exceed 450ppm-550ppm, though this would require significant curbs on carbon pollution.

    In the study, the scientists then rapidly brought the CO2 level back down to pre-industrial levels of around 280ppm.

    In practice, this would be impossible – without geo-engineering techniques that could actively remove it from the atmosphere – but the scientists wanted to see what would theoretically happen.

    The model showed that, while temperatures dropped sharply as CO2 was reduced, the disruption to precipitation continued for several decades.

    How the rainfall may change for a particular region is a more complicated question, though the scientists said their model suggested significant drying in South America, Southern Africa and Australia.

     

  • Rudd predicts poll thrashing over mining tax

     

    But Mr Rudd said that despite an election nearing, the Government is determined to introduce the tax.

    “This business of reform is a tough business, is a hard business. It’s never some sort of even and smooth trajectory,” he said.

    “I expect that we’re going to continue to take a whacking in the polls for some little time to come yet.

    “You can’t just dodge hard questions like tax reform – you’ve got to engage in it.”

    The Prime Minister appeared flustered when pressed by presenter Kerry O’Brien on the issue, but avoided a display of emotion like his last appearance on the show.

    Last month, a visibly angry Mr Rudd accused O’Brien of living in “7:30 Report land” after being questioned over his decision to shelve the emissions trading scheme.

    The Opposition seized on Mr Rudd’s performance in the interview, comparing him to former Labor leader Mark Latham.

    But this time round, Mr Rudd started the interview with smiles, saying he was “happy to be back in 7:30 Report land”.

    Mr Rudd appeared unworried by his recent thrashing in the polls, saying results were “up and down” for former prime ministers John Howard and Paul Keating.

    “Numbers are up and down … depending on the toughness of the fight,” he said.

    “These debates are always tough and that is why the Government is going through a tough time.”

     

    ‘Gang of four’

     

    Mr Rudd also defended the Government’s decision-making process against claims that power is too concentrated in a small group of senior ministers.

    Some in the Labor caucus are privately critical that key decisions are made by the so-called “kitchen cabinet” or “gang of four” of Julia Gillard, Lindsay Tanner, Wayne Swan and Mr Rudd.

    There have also been several reports that key ministers have been left out of the decision-making process.

    But Mr Rudd said he has a strong and capable cabinet.

    “It’s pretty easy to become fixated on one thing or another, but this list of reforms is impressive,” he said.

    “Those ministers are impressive ministers as are their colleagues and they’ve taken charge of these things themselves.”

    Tags: mining, government-and-politics, federal-government, tax, rudd-kevin, australia, wa

    First posted 1 hour 16 minutes ago

  • Offshore investors retreat on profit tax

     

    “The sentiment from them has been not just overwhelmingly negative, they are just baffled,” Mr Schellbach told journalists during a briefing on Thursday.

    “That’s why the traded volumes that we had through them over the last six weeks have dried up. They are staying on the sidelines.

    “Essentially they look at this situation and are thinking ‘whoa, what exactly are you guys trying to do here?’”

    Since May 2, when the government announced the proposed tax on mining companies, the local S&P/ASX200 index has fallen 5.2 per cent.

    At the same time, the S&P500 index on Wall Street has slipped 6.1 per cent and London’s FTSE 100 has backpedalled 5.7 per cent.

    The Shanghai Composite was down 10.5 per cent over the same period.

    Mr Schellbach said the combination of low valuations on equities, combined with the improving cost of corporate debt, may tempt private equity players back to the table in the year ahead.

    He also said potential mega deals, such as the unsuccessful attempt for national flag carrier Qantas Airways Ltd, were unlikely.

    Instead, private equity firms were likely to focus on “pretty boring”, non-cyclical businesses with stable, predictable cashflows and market capitalisation between $1 billion and $2 billion.

    “Because the banks are not as willing to provide funding of the magnitude as was the case three years ago, you are not going to get the front-page type blockbuster deals of buying out $10-$20 billion corporate icons,” Mr Schellbach said.

    Sectors to look out for were healthcare, beverages and consumer stables, he said.

    Private equity firms have made bids for hospital operator Healthscope Ltd and Boom Logistics recently.

  • China’s Wind Industry Is About To Get Squeezed

     

    In addition, all Chinese wind turbine manufacturers (including to a lesser extent the “big three” — Sinovel, Goldwind and Dongqi) rely to varying degrees on technologies that they must acquire from abroad, which puts even greater pressure on their profitability.
     

    The Chinese themselves are increasingly worried about a shakeout in the wind equipment industry as tremendous capacity development has lead to the familiar insidious malady in Chinese industry: invidious competition based primarily on price. The general manager of one wind farm developer described this phenomenon as “collective suicide” among Chinese wind equipment manufacturers, while another wind farm developer said that the price war among Chinese wind equipment manufacturers has left them all “drenched in blood.”   

    Statistics paint a stark picture: in 2004 China had only 6 wind turbine manufacturers; as of the end of 2009 that number had skyrocketed to nearly 90 companies.  Of those 90 companies, 57 already have produced at least one prototype and 30 Chinese wind turbine manufacturers now are producing at the rate of 100 units or more per annum.  In addition to the proliferation of wind turbine manufacturers in China, there are now upwards of 100 wind parts manufacturers operating in China.  China now is home to more than 50 wind turbine blade manufacturers. 

    Almost surely many of these wind industry equipment manufacturers will be caught up in the major shakeout that is on the horizon — repeating a familiar plot line played out in countless other Chinese industries.  An official with Xiang Power Wind Power Co., Ltd. has observed that a large number of wind equipment manufacturers are now losing money and that in the next stage the industry will experience failures on a large scale.  

    Goldwind, one of the “big three” wind turbine manufacturers, also is feeling the pressure from steadily increasing competition. Mr. Wu Gang, the Chairman of the Board of Directors of Goldwind recently referred to the competition as “savage” and worried about what the effects of this “self-destructively pernicious” competition would be on the healthy development of the wind industry.  The competition is so fierce because the low-end segment of the market is over-saturated, which in turn has lead to price competition and falling profitability, which further squeezes companies’ ability to invest in the research and development necessary to move up the value-added chain.  

    In addition, all Chinese wind turbine manufacturers (including to a lesser extent the “big three” — Sinovel, Goldwind and Dongqi) rely to varying degrees on technologies that they must acquire from abroad, which puts even greater pressure on their profitability. 

    Though the increasingly intense price competition in the wind turbine industry is worrisome to Vestas, the international wind turbine manufacturer that has substantial operations in China, because the most intense competition is in low-end products, Vestas has not felt the pressure that smaller Chinese “commodity” wind turbine manufacturers are experiencing.  Rather the international wind turbine manufacturers and the “big three” Chinese wind turbine manufacturers are able to continue to dominate the market for the most technologically advanced products, even as the “commodity” wind turbine market becomes saturated. 

    On the Other Hand Falling Prices Equals More Development

    The flip side of shrinking profitability among Chinese wind equipment manufacturers is the growing enthusiasm among wind farm developers as the cost to develop wind power has declined.  As the price war in the Chinese wind equipment industry has become heated, the price of wind equipment has begun a steep decline.  Based on recent surveys in Inner Mongolia, Liaoning, Hebei and Guangdong, there already has been a 1000 Yuan/kilowatt (kW) decline in the price of wind generating equipment compared with 2008.  

    According to Ma Yugang, the general manager of the Huaneng Tongliao Wind Power Generating Co., Ltd., a China Huaneng Group Company, when the company built the Baolong Wind Farm in 2008, the average construction price per kW for the wind farm was 9250 Yuan/kW.  In 2009, when the company constructed the Zhuri River Wind Farm, the average price per kW for construction had fallen to 9000 Yuan/kW or lower.  As of 2010 Huaneng Tongliao is anticipating building its newest wind farms for an average price per kW near 8000 Yuan/kW. 

    One of the routes Chinese wind equipment manufacturers now are taking to avoid being swept away by this increasingly pernicious tide is to become wind farm developers themselves.

    The tried and true “safety value” for excess capacity development throughout Chinese industry — exports — is quickly becoming a necessary component in the marketing strategy of every Chinese wind equipment manufacturer.  The export market, however, is in its infancy for the Chinese wind equipment industry and it is unlikely that even the largest Chinese wind equipment manufacturers will be more than a statistical asterisk in international markets in the next several years. 

    With wind installations expected to skyrocket through 2010 and beyond, the world’s absorption of wind turbines could be as high as 3 to 4 times the volume of what is already installed in China.  As a result, the Chinese undoubtedly will find a way to become a significant supplier of wind turbines worldwide. Now that the Chinese have commoditized smaller (1.5-MW and below) wind turbines, there is likely to be a flood of those products exported from China.

    Goldwind has ramped up its preparations to break into the North American market by opening a North American office and hiring industry veterans as its general manager and director of sales.   Likewise, Sinovel, which is the world’s third largest manufacturer of wind turbines (based almost exclusively on its sales in China), sold a batch of 1.5-MW wind turbines to India in 2009. Sinovel also continues to source crucial electronics systems from American Superconductor for the 5-MW wind turbines that Sinovel has developed itself.   According to Sinovel’s CEO, these large-scale wind turbines will be the focus of Sinovel’s export strategy. 

    So, as Yogi Berra famously said “it’s déjà vu all over again.”  The Chinese appear to be poised to be the low-cost supplier at the low-tech end of the export market, but continue to rely on Western technology to produce the larger, more sophisticated wind turbines.   Relatively good news for Western suppliers of high technology into the wind industry, but a challenge for Goldwind and Sinovel, who may well find themselves squeezed between the big international players and the Chinese commodity suppliers.  

    For reference, see some of my former articles, “China’s Wind Power Industry: Blowing Past Expectations”, China’s Wind Power Industry: Localizing Equipment Manufacturing, and China’s New Generation: Driving Domestic Development.

    Lou Schwartz, a lawyer and China specialist who focuses his work on the energy and metals sectors in the People’s Republic of China, is a frequent contributor to Renewable Energy World.   Through China Strategies, LLC, Lou provides clients research and analysis, due diligence, merger and acquisition, private equity investment and other support for trade and investment in China’s burgeoning energy and metals industries. Lou earned degrees in East Asian Studies from Michigan and Harvard and a J.D. from George Washington University.  He can be reached at lou@chinastrategiesllc.com.

  • Whitehouse has BP over a barrel as estimate of oil outpouring soars

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    Under US law, BP will be fined for the spill according to the size at the rate of $US1100-$US4300 a barrel.

    The formula suggests that BP’s civil fines have been increasing at the rate of up to $US258 million a day for the past 59 days – and are likely to continue until a relief well can be drilled in August.

    Further billion-dollar penalties will also be incurred for violations of the Clean Water Act and other legislation.

    The figures exclude a $US20bn compensation fund agreed with President Obama for victims of the spill.

    BP had profits of $US17bn last year and sales of $US239bn.

    The company has denied talk of bankruptcy, but yesterday its chief financial officer Byron Grote tried to reassure investors.

    US shareholders have been selling shares in the company, once Britain’s largest, while it was reported that Bank of America Merrill Lynch had ordered its traders not to enter into oil deals with BP extending beyond June 2011.

    On Monday, Fitch, the international ratings agency, downgraded the company’s credit rating by six notches to BB, just two notches shy of junk status.

    BP has also retained Goldman Sachs, Credit Suisse and Blackstone, a restructuring specialist, to help it deal with increasing liabilities.

    Experts said that BP’s chances of surviving – without being forced to sell off assets, limit its liabilities through a partial bankruptcy filing or by accepting a takeover bid – depended on how quickly the chief executive Tony Hayward and the chairman Carl-Henric Svanberg could resolve the crisis.

    BP has promised that a relief well can be drilled by August, allowing for the injection of a cement plug that would stop the leak.

    But some have suggested that this could be optimistic.

    Dan Pickering, the head of research at the energy investor Tudor Pickering Holt in Houston, said that the worst-case scenario would be that the leak continued until Christmas.

    “This process is teaching us to be sceptical of deadlines,” he said.

    One senior lawyer familiar with the company, which celebrated its 100th birthday in 2008, said: “The speed with which this has happened is just extraordinary.”

    He suggested that placing part of the business, BP America Production – the unit responsible for the spill – into bankruptcy would protect the rest of the company, although still carried risks.

    A demerger of its US business to free the rest of the company is another possibility.

    Professor Freeman said that a better option would be to make a deal with Congress that would create legislation to protect it from liabilities.

    However, this would be possible only if BP could stop the leak and the political atmosphere cooled sufficiently to allow it.

    Whatever happens, she added that BP would probably drag out proceedings for as long as possible to spread the impact on the company’s finances.

    “It took 20 years to settle after the Exxon Valdez spill. There could eventually be some large settlement that resolves claims once and for all.”

    But the outlook for BP’s top executives remains difficult.

    One senior source in the oil industry said: “Hayward will have to go and the chairman (Mr Svanberg) will probably have to go too. He was a bad choice because they needed someone with more of an American profile and experience.”

    He said that they were unlikely to resign until the well had been capped.

    Pierre Terzian, director of Petrostrategies based in Paris, said that BP, which was built on a lucrative concession to produce oil in Persia with the backing of Winston Churchill, likened the company’s actions to its colonial past.

    “This was 19th-century behaviour – where the safety of people and the environment were neglected and put ahead of higher profits and production,” he said.