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  • EU finance ministers prepare for Spanish bailout

    EU finance ministers prepare for Spanish bailout

    Updated June 09, 2012 22:13:09

    Spain is widely expected to ask the International Monetary Fund on Saturday afternoon (local time) for a bailout from the eurozone’s rescue fund.

    Spain would become the fourth country to request financial aid since the start of Europe’s sovereign debt crisis two years ago.

    However, a Spanish government official reiterated on Saturday that there “had been no change” and Spain would not be asking for a bailout.

    Eurozone finance ministers are set to discuss the possibility of bailing out the Spanish economy during a conference call at 2:00pm (GMT), with a request for financial aid expected “any time now” according to European government sources.

    Finance ministers will discuss a “declaration on Spain’s intention to request aid and the [eurozone’s] commitment to granting it,” one European government official said.

    The conference call comes after the IMF announced on Friday that Spain’s weakest banks need at least 40 billion euros in new capital.

    However, the IMF warned the amount would not be enough to cover other costs, and some experts have suggested a bailout in the order of 200 billion euros will be needed.

     

    Spain’s deputy prime minister Soraya Saenz de Santamaria said on Friday that the government would wait for the results of an IMF report and two independent audits into Spanish banks’ recapitalisation needs before making a decision.

    US president Barack Obama has called on European leaders to act quickly to stabilise the European financial system.

    The head of Germany’s central bank, Jens Weidmann, is pressing Spain to seek a bailout for its troubled banks from the eurozone’s current rescue fund, the European Financial Stability Facility (EFSF).

    “If Spain feels overwhelmed by its financial needs, it should use the instruments which have been created for that,” Mr Weidmann said in an interview for the weekly Welt am Sonntag newspaper.

    “The motto must not be: above all no rescue funds. Hoping for central bank aid to avoid fulfilling one’s responsibilities is a bad move.”

    Stress tests

    Meanwhile, stress tests performed by the IMF on Spain’s battered banking sector have indicated the top two banks, BBVA and Banco Santander, were solid.

    But the rest of the banking sector could not measure up to official banking capitalisation standards in the case of a sharp continuing contraction of the Spanish economy.

    “Under the adverse scenario, the largest banks would be sufficiently capitalised to withstand further deterioration, while several banks would need to increase capital buffers by about 40 billion euros in aggregate to comply with the Basel III transition schedule,” the IMF said in a statement on Friday.

    But that would not be enough to cover other restructuring costs and loan portfolio downgrades, the statement said.

    Speaking on the condition of anonymity, an IMF official said the banks would likely need a lot more to ensure there was a “credible backstop” in worst-case scenarios.

    “In our view the stress tests are a good indicator but they are basically a floor for what you would probably need,” the official said.

    Often, the official said, in order to convince markets of the strength of the banks they would need a buffer of one-and-a-half to two times the level of new capital mandated under the stress test.

    “Usually you come up with a buffer … large enough to convince markets so that people don’t say, ‘Oh well, what if this happens, what if the growth is even worse?’”

    The stress test results were originally scheduled to be released on Monday, but were moved ahead as European diplomats said Spain would likely move Saturday to begin crafting a deal for an EU rescue of its banks.

    Alberto Gallo, a senior strategist at the Royal Bank of Scotland, told Saturday AM the lifeline might need to be as much as $230 billion in additional capital.

    “If Spain asks for external help, this external help will come with strong conditionality, similar to what happened in Greece or in Ireland,” he said.

    “It would be very hard for Spain to make an exception.

    “However, more generally, I think the core European countries, the IMF as well, is shifting its stance a little bit more towards growth, which is also what’s needed, not only austerity and I think that should be something that they would have to do over the next month also.”

    ABC/wires

    Topics:international-financial-crisis, banking, economic-trends, world-politics, spain

    First posted June 09, 2012 20:53:04

  • $130m solar project for outback NSW

    $130m solar project for outback NSW

    AAPUpdated June 9, 2012, 6:34 pm

    One of Australia’s largest solar projects is to be built in NSW after AGL Energy and PV manufacturer First Solar were awarded a $130 million grant from the federal government.

    The $450 million project, to be built across two sites in Broken Hill and Nyngan, will generate enough electricity to power 30,000 homes when completed by the end of 2015.

    AGL Energy and First Solar were awarded the $130 million grant under the federal government’s solar flagships program which supports the construction of large-scale, grid connected solar power stations.

    Energy Minister Martin Ferguson reopened first-round bidding in February after the consortium behind the initial winner – the Moree Solar Farm – proposed major changes to its project and failed to meet a December deadline to secure a power purchasing agreement.

    Mr Ferguson on Saturday said the 159 megawatt project in Broken Hill and Nyngan represented excellent value for money and would ensure Australia brought industrial-scale solar power to market.

    “At the end of the day it all comes down to cost and if large scale solar is going to succeed in Australia it has to be cost competitive,” Mr Ferguson said in a statement.

    The project is expected to create 150 jobs in Broken Hill during construction and up to 300 in Nyngan.

    The energy minister said a rigorous assessment process by the independent Solar Flagships Council found the AGL-First Solar bid had the highest level of merit overall “representing value-for-money, low risk and high commercial viability”.

    But he noted all short-listed applicants, including the Moree Solar Farm, TRUenergy and Infigen-Suntech bids, were of “high merit” and would be referred to the new Australian Renewable Energy Agency for future funding consideration.

    AAPUpdated June 9, 2012, 6:34 pm

    One of Australia’s largest solar projects is to be built in NSW after AGL Energy and PV manufacturer First Solar were awarded a $130 million grant from the federal government.

    The $450 million project, to be built across two sites in Broken Hill and Nyngan, will generate enough electricity to power 30,000 homes when completed by the end of 2015.

    AGL Energy and First Solar were awarded the $130 million grant under the federal government’s solar flagships program which supports the construction of large-scale, grid connected solar power stations.

    Energy Minister Martin Ferguson reopened first-round bidding in February after the consortium behind the initial winner – the Moree Solar Farm – proposed major changes to its project and failed to meet a December deadline to secure a power purchasing agreement.

    Mr Ferguson on Saturday said the 159 megawatt project in Broken Hill and Nyngan represented excellent value for money and would ensure Australia brought industrial-scale solar power to market.

    “At the end of the day it all comes down to cost and if large scale solar is going to succeed in Australia it has to be cost competitive,” Mr Ferguson said in a statement.

    The project is expected to create 150 jobs in Broken Hill during construction and up to 300 in Nyngan.

    The energy minister said a rigorous assessment process by the independent Solar Flagships Council found the AGL-First Solar bid had the highest level of merit overall “representing value-for-money, low risk and high commercial viability”.

    But he noted all short-listed applicants, including the Moree Solar Farm, TRUenergy and Infigen-Suntech bids, were of “high merit” and would be referred to the new Australian Renewable Energy Agency for future funding consideration.

  • UAE readies crude export detour to avoid Hormuz

    UAE readies crude export detour to avoid Hormuz
    MENAFN.COM
    Once the UAE’s pipeline is running at full volume, it will let the country get two-thirds of its peak oil production to the market without using the Strait of Hormuz. (MENAFN – Khaleej Times) By night, the lights of dozens of ships anchored off
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  • Oceanic circulation: Heat loss strengthens the gyre circulation

    Oceanic circulation: Heat loss strengthens the gyre circulation

    Posted: 08 Jun 2012 07:05 AM PDT

    A new study explains decadal variations in the oceanic circulation south of Greenland and Iceland.
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  • Rio+20 Earth summit: leaked draft reveals conflict among countries

    Rio+20 Earth summit: leaked draft reveals conflict among countries

    UN’s vision for one deal to save the Earth is in peril as countries bicker over phrasing of clauses and key terms in the draft text

    • Read the UN draft text here

    MDG : Rio+20 : globe

    Rio+20 Earth summit is just days away and yet there is no consensus over the definition of sustainable development goals. Photograph: Noel Celis/AFP/Getty Images

    The latest draft text that 180 governments are expected to sign up to at the end of the Rio+20 Earth summit has been leaked to the Guardian. According to the UN, only about 20% of the wording has been agreed, so with just three days formal negotiating time before world leaders arrive in Brazil on 20 June, and with the most contentious language still in, there is unlikely to be a strong agreement.

    Sha Zukang, the Chinese diplomat who is head of the UN Department of Economic and Social Affairs and will chair the Rio+20 summit, accepts that crucial issues remain unresolved.

    According to Third World network, the only non-governmental group to publish daily reports on the progress of the negotiations, developed countries are still firmly opposed to proposals by developing countries calling for the provision of “new and additional financial resources”. This has created serious tensions and frustrations with Pakistan, speaking for the G77 and China, saying there was no point in discussing further and no scope for further work and that it was better to “eliminate the entire finance chapter itself”, given the response of developed countries.

    WWF director general, Jim Leape is deeply concerned that the talks could collapse under the pressure of having to negotiate so much in such a short time. Earlier this week he said: “Currently we are a long way from where we need to be in these negotiations. Heads of state still have a unique opportunity in Rio to set the world on a path to sustainable development – but they need to step up their game dramatically. As things currently stand, we are facing two likely scenarios – an agreement so weak it is meaningless, or complete collapse.”

    The most recent text is a significant weakening of previous drafts, particularly in the areas of valuing natural wealth, energy and ocean protection, and even this draft was privately rejected by a number of delegations. “When they gather in Rio, governments must restrain the flow of weasel words that is threatening to emasculate any agreement,” said Leape. “They are not helping their people or the planet by ‘noting’, ‘recognising’ or ’emphasising’. We need to see time-bound commitment and action words like ‘will’, ‘must’ and ‘deliver’,” he said.

    To give some idea of the divisions and tensions in the negotiations, here is a much abridged extract from Third World network’s report of the negotiations about one single paragraph, number 50. Note how countries are arguing about the headings to sections as well as the order of words, and the meaning of the order of words:

    “The division over the role of the ‘green economy’ concept was apparent in disagreement over the title of the section. The G77 asked the chair to retain the title previously proposed by the group which was, ‘Framing the context of green economy, challenges and opportunities, as well as other approaches, visions, and models of sustainable development and poverty eradication.’ This was rejected by the US, Switzerland, EU and Korea.
    “Similarly, in negotiation on paragraph 50 of the co-chair’s proposed text, which attempts to define ‘green economy’ and give it context, there were deep differences between developed and developing countries with only a tentative agreement on phrasing of the subject of the section. That phrasing was: ‘policies for a green economy.’

    “The EU then inserted words in paragraph 50 to make the primary subject of the paragraph, and therefore the section, ‘the transition towards a green economy’ and insisted, with a textual insertion, that it should be a ‘tool’ for ‘all countries.’

    “The G77 introduced language to paragraph 50 to clarify that ‘green economy policies’ were to be ‘one of the tools’ and ‘should not be a rigid set of rules.’ In the splinter group, the G77 noted it could support the chair’s text in general but that the “feeling” of the group was that they were ‘not heard’ and the new iterations of the text did not include much of the G77 position. However, paragraph 50 was, in general, one of the few it was happy with and so asked for flexibility from other countries.

    The EU said to the splinter group that the beginning of the section required some kind of message ‘our leaders’ would be comfortable with, and insisted it was about the ‘tone of the sentence’.

    “The G77 said … the question was “how can we contextualise green economy” and it felt the co-chair’s text had a reasonable compromise. To raise “environmental protection” was unbalanced as, for the Group, to achieve sustainable development, reform of international financial institutions was needed; and so if environmental protection was mentioned then that issue should be mentioned too. Equally, it said, if states wanted flexibility, the word ‘transition’ did not help as it did not suggest green economy was just ‘one’ of the options.”

    When the G77 asked what the difference was between “policies for a green economy” and “green economy policies”, the US replied that “green economy policies” was more explicit about the subject but if the objective was a green economy then you could have either formulation.

    This textual hard grind is enough to make a sane person mad. Whether it can produce a deal to save the planet, we will have to wait and see.

  • Court: Closed Nuclear Plants Can’t Store Spent Fuel for 60 Years

    U.S. Court rules Nuclear Regulatory Commission failed to fully evaluate the
    Enformable
    A US appeals court ruled that the US Nuclear Regulatory Commission has failed to answer questions about the potential environmental impact of storing spent nuclear fuel at sites around the country. The petitioners, including the state of New York and
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    Appeals court rejects waste storage at nuke plants
    KGWN
    A federal appeals court has thrown out a rule that allows nuclear power plants to store radioactive waste at reactor sites for up to 60 years after a plant shuts down. A federal appeals court on Friday threw out a rule that allows nuclear power plants
    See all stories on this topic »
    Court: Closed Nuclear Plants Can’t Store Spent Fuel for 60 Years
    Hartford Courant
    By MARA LEE maralee@courant.com The Hartford Courant A federal appeals court ruled Friday that spent nuclear fuel cannot be stored at closed plant sites for 60 years, a decision that spurns the US Department of Energy and sides with environmental
    See all stories on this topic »