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China air pollution moved to the top of the political agenda for the new government this year

China air pollution moved to the top of the political agenda for the new government this year

http://www.globalfundexchange.com/blog/2013/05/20/china-air-pollution-moved-to-the-top-of-the-political-agenda-for-the-new-government-this-year/

Reducing the extreme levels of air pollution in China has moved to the top of the political agenda for the new government this year. Without reform, China’s air pollution could worsen by another 70% in 2015. Construction and industrial emissions contribute approximately 20% of particle matters (as measured by PM2.5). We expect measures to address this crisis may have important implications for industrial sector activity. In fact, the forthcoming power rationing in Hebei province highlights that provincial governments may step up their effort to tackle pollution crisis.

According to Bloomberg, Tangshan city will shut 199 polluting factories by rationing their power supply from May 20th. Power supply for three ore-sintering lines at Tangshan Steel and two at Guofeng Steel will be cut. Operations won’t be resumed until desulfurizing devices are added to satisfy environmental standards. Furthermore, outdated, unlicensed and illegal facilities in Tangshan will also be closed by May 31st. If these measures are implemented strictly, we expect this could support steel prices while depress iron ore demand.

Chinese authorities have sought to appease public anger after smog in Beijing hit hazardous levels in January. Pollution has surpassed land disputes as the biggest cause of protests in China, Chen Jiping, a former leading member of the Communist Party’s Committee of Political and Legislative Affairs, said in March.

Related Video Post:  Think China’s Air Pollution is bad – try again – look at its water pollution problem.

Related FAQ:  What is PM2.5 ? Click here to find out

by Anric

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Jeremy Grantham on how to feed the world and why he invests in oil – Part 2

Jeremy Grantham on how to feed the world and why he invests in oil – Part 2

http://www.globalfundexchange.com/blog/2013/04/17/jeremy-grantham-on-how-to-feed-the-world-and-why-he-invests-in-oil-part-2/

Part 2 of the excellent interview that Leo Hickman completed with Jeremy Grantham:  the co-founder of investment group GMO on what books he’s reading and why he wants to fund ‘avant garde’ farming.

Jeremy Grantham on what first led him to engage with environmental issues:

It started [in the mid-1990s] with a visit to the Amazon and to Borneo with the kids. And without thinking about it you start talking about the logs along the side of the river and the lack of mature forests in Borneo. We were on family trips and happened to do a couple of tropical forests back to back. I’m sure that played a role, but we didn’t treat it as an epiphany. I would argue that one of our children got there first. While we were environmentalists, but low key, one of my sons happened to get a job which saw him end up in a dry tropical forest in Paraguay for five years and then off into the forestry business. Shortly behind that, we [his investment company GMO] began to follow that interest in forestry. We started our own forestry operation 15 years ago [at GMO] because our interest in forestry and of our realisation that land is so important. Forests were mispriced and were an attractive investment. My interest in forestry at that point was entirely commercial and then it began to morph into a decent investment, plus, “look how important these forests are to maintain fresh water, carbon sequestration, etc”…
I picked up none of that [James Hansen’s 1988 testimony before Congress on climate change and the 1992 Rio Earth Summit]. No. Absolutely not. I was following along afterwards [once the foundation launched in 1997] asking the big NGOs where was the leverage for the birds flying through Costa Rica and Panama. Let’s put our money there. Where were the hotspots? The climate question wasn’t there for me at that time. Now it is at least half of the focus for the foundation. And in the other half it brushes up against climate all the time. We are late arrivals to all this and I have nothing but admirations to those who beat me to the punch by a few decades.

On why his environmental interests moved beyond habitat conservation:

I was a moderate environmentalist 10-15 years ago. But then I started to get embroiled in resources and that [the rise in price of] oil was the first paradigm shift that we’d ever come across in an important asset class, and nothing is more important than oil. I realised that the price of oil had changed forever and is not going back to the old $15 a barrel. There had been a majorly important shift. That led us to asking the question, why only oil? Why not every finite resource? And so we ended up about four years ago saying, “watch out, we seem to be running out of things”. Two years ago, we did a very detailed paper which took on a life of its own and helped to put these issues onto institutional agenda items, I think. That led me to the realisation, by looking at the data, that between population growth and China gobbling up the world that the world had changed – and dangerously so – and hidden under that that oil and food were the two most dangerous components and within that [the availability of] phosphorous was perhaps the most dangerous long-term issue of all. Digging into the phosphate problem, you realised that it can be handled, but only if the great majority of the world is fed via sustainable farming which means nurturing the soil and having it once again full of micro-organisms. If you kill them every year with herbicides and pesticides then you’re dealing basically with sand. You’ve got to restore and renew the ability to grow by re-applying all the nutrients in very big, expensive doses every year. This is in contrast to well-nurtured soil. There’s a 30-year patch in Pennsylvania at the Rodale Institutewhere they’ve never put on any phosphorous at all and they are getting productivity equal to regular farming up the road.
We arrived at all this just by looking at the numbers and the more I did the more I became concerned that we were already deep into a food crisis. Arab Spring countries were already getting throttled a bit by rising price of energy and food. They don’t spend 8-10% of their budget on these, they spend 40%. So when that starts to double on you, you can see how quickly why people take to the streets. And that’s where we are. The rich countries are really not that concerned and their casual behaviour is only serving to push up the price which is not that big a deal to them, certainly not the movers and shakers who make all the money. But it’s a terrible deal for the poor half of the world and a disaster for the poorest 10% or so. That’s the world we’re in and it could lead to country after country being destabilised.
It has forced me to go back and read all the classics. On my iPad I think I have 40 or so books now. I recommend a book by a scholar who summarises all these works back to Gibbon’s Decline and Fall of the Roman Empire. It’s called Immoderate Greatness: Why Civilisations Fail by William Ophuls. And then there’s perhaps my favourite book of a more detailed type which is called Dirt: The Erosion of Civilisation [by David R Montgomery]. That’s a really good read. Then there’s Collapse by Jared Diamond, which seems to have done quite well and is reasonable. A lot of details are queried by the experts in the field, but I thought it was fine. Then there are books on peak oil and shortages of raw materials. Books on the whole package of long-term growth on a finite planet, going back to the Limits to Growth and a book by one of the co-authors that looks at the next 40 years. That’s called 2052 [by Jorgen Randers]. And so on and so forth.

On the strengths and weaknesses of capitalism:

Capitalism does millions of things better than the alternatives. It balances supply and demand in an elegant way that central planning has never come close to. However, it is totally ill-equipped to deal with a small handful of issues. Unfortunately, today, they are the issues that are absolutely central to our long-term wellbeing and even survival. It doesn’t think long-term very well because of high discount rate structure. If you’re a typical corporation anything lying out 30 years literally doesn’t matter. Or, as I like to say: QED, your grandchildren have no value. And they usually act as if that was true, even though I’m sure they are actually very kind to their grandchildren.
My favourite story is about the contract between the farmer and the devil. The devil says, “sign this contract and I’ll triple your farm’s profits”. But there are 25 footnotes, as there always is with the devil. Footnote 22 says that 1% of your soil will be eroded each year, which is actually horrifyingly close to the real average over the past 50 years. The farmer signs and makes a fortune on a 40-year contract. And his son then signs up for the next 40-year contract and makes a fortune. And his son then signs up for the third and final contract. He still does very well, and in the final 20 years the family has accumulated enormous wealth, but the soil has gone. It’s the same story for all his neighbouring farms and everyone is out of business. My sick joke is that at least he will die a rich farmer when all the starving hordes arrive from the city.
Every graduate who took Econ 101 would probably sign that contract. There is no single theory that is used in economics that considers the finite nature of resources. It’s shocking. But not as shocking as the pathetic waste of space over the last 50 years given to “rational expectations“, which allows a whole generation of bankers and central bankers to believe that the market is efficient. None of it applies to the real world, or to messy human beings, many of whom are a little crooked when they have to be. It’s been a disaster and a complete waste of time. It has been remarked before that modern economics is belief in a perpetual motion machine. Capital and labour, but no mention of energy. Without energy the whole thing grinds to a halt and the whole theory is demonstrated to be totally false. I’m late in the game at recognising this. One of my new heroes is an economist called Kenneth Boulding who, at 22, got a paper into Keynes‘s journal. At the age of about 50 he realised that economics was not taking its job seriously, that it was not interested in utility, in real serious improvement in the world, but that it was increasingly interested in new, elegant mathematical theories designed to get career advancement, over usefulness. He said the only people who believe you can have compound growth in a finite world are either mad men or economists. He also said: “Mathematics has brought rigor to economics. Unfortunately, it also brought mortis.”

On whether there’s any conflict in him (via GMO and/or his foundation) investing in oil and gas companies?

The first point is that each fund we have at GMO – maybe 80 or so – is run by its own team. I don’t think that money management can easily have too many rules coming down from the top. Our first responsibility is to make money for our clients. I’m happy to write them letters trying to persuade them to do this, that and the other, but if they choose not to, that is their choice, not ours. We should just be a conduit for the client’s decision on ethics. They will usually sign up for a strategy for which quite a lot of institutions have the same portfolio. My job as the quarterly-letter writer is to try and influence the game a bit, but it has to be done in a firm like ours at the top level. The solitary factor that might appear to be an exception is that we are getting close to the decision [at GMO] not to carry coal stocks and anything that has a material amount of tarsands. We have a resource fund which, of course, has stuff in the ground. It owns oil and gas companies, but it does not own coal companies or tarsands enterprises. I have written in Fortune magazine that those extreme, dangerous, carbon-intensive and polluting resources run the very substantial risk of being stranded assets because, on one hand, I think the progress of solar and wind is moving faster than most investors realise and, on the other, I expect the continuous rise in the price of hydrocarbons as we continue to move through the cheap stuff and move on to the more expensive stuff in terms of getting it out of the ground. And I don’t think that if you put billions of dollars into a new tarsands project that you will see a decent return on it. It will be underpriced by solar, wind and other alternatives which are moving at considerable speed. And point two is they will slap a carbon tax on coal and tarsands which increasingly countries here and there will do – and, eventually, the US in the hopefully not-too-distant future – and that will be a death blow. If all this doesn’t make these investments unprofitable, they will be very lucky. The probability of them running into trouble is too high for me to take that risk as an investor. If you look at the damage and you adopt a practical triage attitude, what you realise quickly is that every barrel of good, old-fashioned, relatively cheap oil will be pumped, as will every cubic foot of old-fashioned, low-cost natural gas. The real damage to the environment is the massive reserves of coal and tarsands, and elaborate, high-cost secondary/tertiary recovery of oil and gas. That’s where the battle will be fought out and, frankly, that’s going to turn out to be 60%-70% of the potential damage to the planet and we, with a bit of luck, can adjust to a world that uses up its conventional oil and gas if we behave well and drag that period out into the distant future. A lot of it will be used as chemical feedstock which is a higher and better use than using those precious resources as a fuel. Fracking enters the grey area. It’s not old-fashioned natural gas that desires to burst to the top under its own free will. You have to torture it out of solid rock and that takes extra energy and extra pollution, and so on. That’s why it is a grey-area fuel and that runs some risk of eventually becoming too high cost…
The [Grantham] foundation can invest in anything it wants. It would be nice to make lots of money [for the foundation]. I believe there are certain forms of sustainable farming that will indeed perform well in the stock market and as an investment. This is not the money that we give out as grants each year. This is the principle behind it. So it’s good to have some influence on both ends. [At GMO] we don’t aim to have more than 10-15% in farms and forestry. The funds we run for clients are, to a certain degree, neutral on ethical issues. If there is a demand from the client – which I hope there will be – to have more green and sustainable funds, I hope GMO will do it one day. But in the meantime, with my foundation, I am the client, so it is entirely my right to set our own ethical standards. For the record, for the foundation I also approve the purchase of oil companies. I just won’t buy coal and tarsands, for the reasons I’ve given. I reserve the right at a later date to say that one or two oil companies are simply too badly behaved. I haven’t done that yet, partly because I don’t have the required information.
It also involves different interpretations of effectiveness and propaganda. I have an honest disagreement with Bill McKibben. Our foundation helps fund his efforts and I have great admiration for him. But I have argued with him that there’s probably more juice to be had by going to the campuses and getting the students to stamp their feet that the college endowment should get rid of all their coal and tarsands investments because they can do that.
For the record, we need oil. If we took oil away tomorrow, civilisation ends. We all starve. It’s a little impractical and idealistic [to abandon oil immediately], perhaps. Now I understand there are other big issues, such as what does it take to concentrate the mind of a student and get them enthusiastic. In the long run, the carbon equation that Bill McKibben has gloriously helped to popularise in Rolling Stone is in front of everyone’s nose. We’ve got five times the amount of carbon reserves to cook our goose. The question is what can we get away with and what sends the biggest signal. My thinking is that, if we could get dozens and dozens of colleges and foundations to sign up to getting rid of coal and tarsands, we’re attacking something that is doable at the portfolio level – the college is not going to feel that is a tremendous encumbrance for them to optimise their return – but it represents 60-70% of the whole climate problem. By my reckoning, it’s a very focused and efficient strategy. And when everything has been disposed of and there’s a groupthink on the issue it’s a very powerful statement to send rattling round the world. Coal and tarsands are not even 1% of a typical portfolio. Oil and gas, as one of the biggest industries out there, is huge, but coal and tarsands is negligible. Far better to nail that and send a very powerful signal. And why wouldn’t the colleges sign up because it’s very good business. I love the idea when you have an environmental argument backed by a good economic argument. I would like to concentrate my efforts in those areas. I understand the principle entirely of not interfering [with a fund manager’s decision-making], but I wouldn’t dream of doing that unless I believed the pay-off was very large and the penalty for doing nothing was very high. I think there is a wonderful case for a prestigious, leading university to have their endowment officially to take into account the long-term effect on the environment – not blanket forbidding this, that and the other, but just taken into account in a sensible way.
There are other advantages, too. Rather like the corporations who have become quite green and project that image, the people who have signed up for a job have broadened a bit and as they build that image it has become a commercial advantage. It might be that only 10-20% of the graduating population of the top students are interested in the long-term wellbeing of the planet, but it’s a measurable number and it’s getting bigger and it’s enough to be commercially interesting. If you are losing 20% of the brightest students because you have an undesirable image then you had better start to change it. This is one of the soft underbellies of the capitalist system and it’s one way that they are impacted by, let’s call it, good behaviour and sustainability in the broadest sense. It would also apply to students applying for college.

On good, long-term investments:

My view of food leads me to believe that a spectacular investment is in farm land and in forestry. Or, if you prefer it, land. They don’t make any more of it, as they say. Fifteen years ago we started a forestry division [at GMO] because I had fallen in love with land and trees and because I realised it was a mispriced asset class. We have done extremely well in that sector outperforming the benchmark for 15 years. I think farm land is a terrific investment area. But that doesn’t mean that some mid-western land isn’t ahead of itself because of recent grain prices. It’s a very inefficient asset class and every farm is different, but you can hunt around the edge, and outside America, and you can find a decent return in an equity market that is becoming, in the US at least, rather overpriced. If you were to buy a farm, and I would be urging any buyer to think in terms of the sustainability of the farming technique, but here again our farming portfolio is relatively green but it’s not by any means limiting itself to sustainable or organic farming. My foundation, on the other hand, is at the early stages of what I hope to be a long and interesting experiment of investing in this kind of more avant garde sustainable farming. As we discover useful information and potentially profitably information we will pass it on to our GMO unit for the clients’ benefit.

On where he plans to take his foundation next:

We’ve recently become very aware of the fact that as our knowledge base accumulates so rapidly, our learning curve is so steep, that the point of maximum sensitivity is shifting so we are quite grateful that we can’t commit all our resources on one project. Now we’re beginning to think, perhaps, we should cool it for a year or two, because our learning curve is so steep, and wait to see. But if I had a magic wand it would be energy storage. Secondly, alternative energy, in general. And, perhaps, co-equally, farming and looking ahead to the next problem of how do we move the world to sustainable farming.
We could go to a couple of leading farm research universities and ask what does it take to beef up the programme and to train organic farmers and to publicise it so that every young man or woman with an urge to think about this can go and get a good training. They don’t really exist, by the way. The three people on the planet who do exist might write in and protest, but it’s insignificant, a rounding error compared to the training in “Big Ag”. One could have quite an effect, such is the small base. Research into organic farming – there’s been fairly minimal research into the intermediate crops that you can put on between the cash crops. They flower two weeks too late, or early, to be convenient.
One of things we tried to do last year, but failed because we couldn’t buy a farm, was to scale up the efforts of the very best organic system which had only taken place on very small plots. We were going to buy enough land to offer a project where they would have 350 acres each, maybe three of them, and would have three years to work out which system was best. We wanted to see how close to Big Ag you could get in productivity. In half-acre lots they can get to parity. Could you do that with 350 acres? And they used far less of the expensive in-puts and increasingly less as the years go by. And as the price of fertiliser and fuel rises that becomes more and more commercial, so it will be pushing in favour of sustainable farming and it will continue to push until its fully commercial. But in the meantime, it would be nice to save 5-10 years along that road by doing trials. We would like to be able to start doing a few things like that that will save a few years when it matters…
We’re moving quite fast on various types of highly improved organic farming, upgrades to land, sequestered carbon, doubling of cattle capabilities, re-considering marginal land that had been degraded. It might not fall with organic certification standards, but it takes those principles and concentrates on developing sustainable methods of food production…
We [at the foundation] also want to project the argument for sensible behaviour in a world where the news media is full of anti-science nonsense. Heartbreakingly, the Guardian is an island amid remarkably bad British coverage of the environment, much worse, on average, than in the US. The newspaper industry [in the UK] has covered itself in shit when it comes to environmental reporting, except the Guardian. The TV is much worse in America than the UK, though. An accident of history.

On genetically modified food:

I can tell you where I stand today [on GM crops] and I will have to tell you again next year. That’s part of the reason why we want to do these trials to find out exactly what you can do in terms of sustainability and simultaneously ask the question of what are the compromises. How much would it hurt your productivity and cost structure to move to a more hybrid version of organic? Is it a bargain given that pure organic gets a big premium? It may well be that hybrid form of farming may give you the best output per unit of sustainability, but the most money per unit may well come from total organic following the rule book and picking up a 50% premium for your product…

On whether organic food can “feed the world”:

We have a 50% surplus of food, as we speak. We have tons of waste and a decent amount of land and huge areas which can be increased in efficiency by going organic in, say, Africa. If hypothetically someone said to you we all must change to organic across the board, you wave your wand and everyone does it, your productivity drops by 18%. We can absorb that today. By if we wait 30-40 years and have an 18% hit they all starve.

On “austerity”, debt and monetary policy:

Fiscal and monetary policies are extraordinarily difficult at the moment. The history is not clear as to what works. The theory is even less clear. My guess is that you want to be careful about how quickly you tighten the austerity screws and that the more austerity-orientated approaches look to me more dangerous and seem to be delivering greater pain on the economy. Eventually, you have to address the question of debt, but I’m on the record as saying that I think the world in general exaggerates the significance of debt. That isn’t to say it’s insignificant, but what it is to say is that it’s a paper world and it takes our attention away from the real world of the quality of education and training and the quality and quantity of capital investment and legal structure. We don’t build things on paper and yet we’ve begun to talk as if we do. People say that the Chinese have built all their railroads on debt, to which I say, “no, they haven’t”. They’ve built them with real Chinese people and real cement and real steel that are part of the real world. When you run out of people and capital capacity then you can’t increase any more. America conducted the world’s greatest experiment in debt. It tripled the debt-to-GDP level from 1982, where it was 1.25x GDP, up to 3.5x over the next 30 years. And during this time what effect did this have on the long-term growth of the system? And that’s the only reason they do it, just to get more growth? Everyone says that, of course, the financial burst caused devastation and brought us to our knees. Yes, it was a terrible idea and eminently avoidable, but if you look at the breaking of the housing bubble in America and you realise how many trillions of dollars would evaporate if it went back to the trend line of the ratio of house price to family income, you must realise that people are going to feel devastatingly poorer than they were. They still have the same house, but, in perception terms, they thought they had a pension fund stored up in their house and it went away. They feel poor and they are going to spend less and it will be a drag on the economy. It was a well-behaved bubble. It went extraordinarily high then all the way back in three years to trend line, and slightly below, and is now moving back up to trend. It was a huge hit to the economy and guaranteed the recovery would be slow. And if that was not enough there was a second factor – the price of oil quadrupled and the price of other assets, such as metals and food, tripled from 2002-2008. Every time that had happened before, like 1974 and 1979 in the two oil crisis, it was followed by global recession. That alone should have been enough to cause a recession. Add that to the housing bust and you don’t need to create any space to explain why we had a recession and a slow recovery. I remain open to persuasion that debt is that big a deal. We have had it foisted upon us that the general idea that finance is so incredibly important that, if a corner bank goes bust, the whole of civilisation grinds to a halt. It’s enormously helpful to the banking system to have believed such nonsense, but I think that’s what it is.

On the human species’ chances of overcoming its environmental challenges:

Whether we have the nous to pull it off is an interesting question, but I think the odds are we will scrape through. Not that we deserve to. [Laughs]. It’s a 50/50 shot that declining fertility rates and alternative energy will save our bacon. But nature and development don’t run on a puritan basis of just punishment. It’s often sheer luck. It’s sheer luck we found hydrocarbons. It’s sheer bad luck that carbon dioxide has a greenhouse effect. It’s sheer bad luck that the oil industry has incredible vested power and is prepared to use it to delay the speed of our reaction…
It isn’t that we can’t do it, it’s that the Anglo-Saxon countries – where, by the way, there is a vast concentration of oil companies – are rather intractable on this issue and they’ve managed to find a little army of non-scientific, persuasive “loony lords”, as I call them, to argue the case, either because they like being wined and dined by the enemy, or because they’re naturally contrarian and like the publicity, or that they are genuine idiots. Who knows? I’m always puzzled by the modus of these people.
What we forget at the end of all this is Pascal’s Wager. What is the penalty for acting as if this was really serious? You spend some money and end up with wonderfully cheap alternative energy? Big deal. Or you continue acting as if it’s trivial and keep listening to the loony lords and doing nothing and having it cripple the planet as we know it? If the potential threat is big enough – like insuring your house, it’s a necessary payment even though you don’t expect the house the burn down – any sensible person who understands Pascal’s Wager will agree to that. It’s simply asymmetrical. The downside risk of this getting out of control is massive. The penalty for spending more money than you should have done because as it turns out, for scientific reasons, we have completed messed up and it’s not as bad as we thought, are very modest in cost by comparison. That’s the killer argument for any rational person, but, as we know, this is not about rationality. It’s about our unwillingness to process unpleasant information. And the unwillingness of vested interests to stop funding this damn stuff.

On the Manhattan Project:

The Manhattan Project was brilliant and is the highpoint of our achievements as a species. Anyone who says government can’t do this, or can’t do that, I say a pox on you, have a look at the Manhattan Project. They did remarkable things. They were outside the box. They stuck the brightest minds out in the desert. They were herding cats with great egos, but it worked. Amazing effort. If we did that on alternative energy we are home free. Even half that. It was our best-ever response to a problem. Civilisations have fallen for the lack of something like that. For once, we came up with the right response, but you can’t count on that being our natural reflex as a species. If it was, we would have analysed the problem of climate change and energy, and decided it was a bigger threat than Hitler. But we didn’t get a Pearl Harbour or invasion of Poland. We’re not programmed to respond to vague, problematical – you can’t put a precise number on it – and the long term. That is not our strength. We’re much better when the tiger attacks and the bombs drop. [Superstorm] Sandy was probably the closest thing we’ve had [in the US] to a Pearl Harbour moment in terms of moving public opinion of whether climate change is real.


by Anric

 

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Jeremy Grantham on population growth, China and climate sceptics – Part 1

Jeremy Grantham on population growth, China and climate sceptics – Part 1

http://www.globalfundexchange.com/blog/2013/04/17/jeremy-grantham-on-population-growth-china-and-climate-sceptics-part-1/

‘The world’s most powerful environmentalist’ on battling the ‘misinformation machine’ and why China is his ‘secret weapon’

Jeremy Grantham, co-founder of GMO, speaks during the Ira Sohn Investmen Research Conference: Photograph: Daniel Acker/Getty Images
‘China knows this is serious’… environmental philanthropist Jeremy Grantham.

The following interview by Leo Hickman of the Guardian  with Jeremy Grantham, the environmental philanthropist and legendary fund manager, was published in the Guardian on Saturday.

Leo Hickman:  ”As I have done for my interviews with the likes of Al GoreBill McKibben and James Lovelock (in 2010 and 2012), I have taken the time to transcribe the full interview so readers can see what Grantham said in the kind of detail that the print edition of the Guardian can’t provide. The interview lasted three hours, so I have split the transcript in two. I will publish part two tomorrow, but here’s part one…”

Jeremy Grantham on why he has stepped up his environmental activities:

It’s data driven. We [the Grantham Foundation for the Protection of the Environment] were gracefully moving into the environment, save these animals and habitats, and all these good things, then the data on resources – starting about four years ago – made me realise that some of these were really urgent. That we were already entering a foodcrisis, for example. This time last year I thought it was clear from the data that we were already five years into a food crisis and it is highly unlikely to go away. And unless we get our act together it is likely to become a cascading problem.

On how much time we have to tackle the world’s environmental problems:

We’re already in a bad place. We’re on a sliding scale. The language “it’s too late” is very unsuitable for most environmental issues. It’s too late for the dodo and for people who’ve starved to death already, but it’s not too late to prevent an even bigger crisis. The sooner we act on the environment, the better. The sooner we cut off the carbon dioxide going into the air, etc. The worse accidents we will prevent from happening are 20, 30, 40 years from now. The same applies to food. The faster we act to improve the situation, the fewer Africans – North Africans, in particular – will come to grief. What is happening through the market mechanism is that the rich countries, by being unnecessarily sloppy – and by the Chinese getting richer in a real hurry and eating more meat – we are pricing up grain so that the poor are getting hungry. It’s hard to see this stopping in the immediate future. It’s also very hard to see the poor and hungry getting richer at the same speed as the way we are driving up the price of grain.

On feeding a growing human population:

There is a stretching disparity between the haves and have nots. It’s not the win-win of globalisation that we all grew up with studying in Econ 101. The irony is that as China gets richer, it burns more coal. They put pressure on the global environment and on global grain prices. So in order to give them a nice middle class, variegated diet, they could cause poorer Asians and Africans to starve. There is no mechanism to prevent that. Egypt runs a trade deficit. Their population is programmed to grow dramatically. Three million at the time of Napoleon. Eighty-three million, said their standard when they marched into the Olympic Games last year. And they’re on their way to 140m. They’ve always been very efficient, but they can’t feed much more than half their people. The price of grain from about 2002-2008 – a tiny window – tripled. Why did it grow so sharply? We knew population was growing, but it was growing steadily, if dramatically. When I was born there were two billion, now there are seven billion. It’s the kind of curve than anyone in finance would look at and jump nervously, when you see an exponential curve like that. That’s one factor, but nothing particular to the period of 2002-2008…

On the rising price of oil:

…2002 was a nothing year. The only numbers I was paying attention to in 2002 was for oil. A little wheel was turning at the back of my brain that noted that oil was beginning to act differently. Our firm specialises in the study of investment bubbles. We have the best data. Over the years, we have put together a database that has 330 bubbles of which about 40 are really important ones. What we found about the important bubbles is that every single one had burst completely back to the original trend. Three years up to something triple, and then three years down. They actually tend to go down a little more quickly than they went up, which is surprising. But they always broke. I used to specialise in asking financial audiences to give me an example of the paradigm shift, a major shift in a major financial asset class. And never was one offered. Six years ago I wrote about the paradigm shift in the New York Times. It had 100 years of oil prices – very volatile, but a very central, steady trend line of about 16 dollars a barrel in today’s currency. But then around OPEC in 1972/3, the price trend leaps up to $36.

On the unwillingness to process unpleasant data:

I find the parallels between how some investors refuse to recognise the trends and our reaction to some of our environmental challenges very powerful. There is an unwillingness to process unpleasant data. In a bull market you want to believe good news. You don’t want to hear that the market is going to go off a cliff. You don’t want to listen to the climate people who are telling you it is getting worse and even worse unless you do this and that. You want to listen to the good news. There were always people willing to tell you that smoking was OK and that stuff about cancer was exaggerated. There’s a professor at MIT who defended tobacco who now defends carbon dioxide saying it seems to have lost its greenhouse effect, or whatever. And then there are the vested interests. They are the single most powerful force because you are dealing with an audience who wants to hear good news and into the stock market come all the bullish stock market giant firms telling you everything’s fine because they love bull markets because they make a fortune. They don’t even mind crashes because they don’t do so badly there either. What they would die at is if the market went up at its long-term trend line at 1.8%, plus inflation, a year. But we’re not going back to 2% growth. Maybe we’ll do 1% and it will be reported as 1.5% and once again people don’t want to hear that. They want to hear Ben Bernanke‘s news that it should return to 3%…
Me calling bubbles correctly is all data driven and based on the optimism that is built into humans. Every time we see a bubble, we see an army of people screaming, “No, no, it’s not a bubble, everything is fine.” We see the climate and scores of people screaming the same that everything is fine, or that it’s a plot. It’s par for the course. The general public don’t want to hear it and will choose to listen to the optimistic interpretation. It’s a real uphill struggle. You don’t stop the bubble really until the damage is done. It goes so high that it can’t sustain itself and just pops. And maybe that will happen here and our job is to try to do a better job than we did in the tech bubble.

On climate sceptics:

The misinformation machine is brilliant. As a propagandist myself [he has previously described himself as GMO’s “chief of propaganda” in reference to his official title of “chief investment strategist”], I have nothing but admiration for their propaganda. [Laughs.] But the difference is that we have the facts behind our propaganda. They’re in the “screaming loudly” rather than the “fact based” part of the exercise, because they don’t have the facts. They are masters at manufacturing doubt. What I have noticed on the blogs and in the comments section under articles is that over several years, as the scientific evidence for climate change gets stronger, the tone of the sceptics is getting shriller and more vicious and nastier all the time. The equivalent on the other side is a weary resignation, sorrow and frustration and amazement that people on the other side can’t look at the facts. The sceptics are getting angrier and more vicious every year despite the more storms we have, and the more mad crazy weather we have…
One of the problems is that typically you are not dealing with the facts. Putting in more facts makes the sceptics more angry. They have profound beliefs – as opposed to knowledge – that they are willing to protect by all manner of psychological tricks. So you have people who are very smart – even great analysts and hedge fund managers – who on paper know that their argument is wrong, but who promote it fiercely because they are libertarians. Libertarians believe that any government interference is bad. Anyone with a brain knows that climate change needs governmental leadership and they can smell this is bad news for their philosophy. Their ideology is so strongly held that remarkably it’s overcoming the facts. They are using incredible ingenuity to steer their way around facts that they do not choose to accept philosophically. Laying down more facts just makes them more angry. You may win over a few neutrals. They are the people you can win over. But it’s very hard to win over the hardcore sceptics, of which there are plenty.
We can try to bypass them on one level and we try to contest the political power of the sceptics. They are using money as well as propaganda to influence the politicians, particularly in America. It almost doesn’t even exist in countries outside the US, UK and Australia. A cynic would say that the petrol-chemical industry also happens to be Anglo-Saxon. Where are the great oil companies based? They still have great power. The oil companies seem to have pulled back from directly supporting climate sceptics over the past few years because – in England, in particular – they were embarrassed and it became untenable to be so obvious. But they’re still influential. You don’t have go via back-channels any more, courtesy of the US Supreme Court, because it is completely legal for a corporation to invest tons of money in advertising programmes to say who is good and who is bad in a race for the Senate without even asking permission from the people who actually own the company. Corporations are treated as human beings and money is treated as having the right to speak. There’s dark money and light money. The anonymity they adopt is legal. They don’t have to say who their donors are. It is quite remarkable. And then you get the Something Something for the Environment, which are actually just sceptics funded by the bad guys. And then there are the thinktanks who have become propaganda-tanks. I used to respect the Cato Institute when it came out with reports on this, that and the other, and they have received a lot of hydrocarbon funding. But when the University of East Anglia break-in was engineered they had something like 20 press conferences the following month. The response to the break-in was almost immediate and co-ordinated. I don’t think it was suspiciously rapid, but I do think it was unusually and unexpectedly rapid. It’s very likely that it was simply a terrific response of their behalf. They moved very fast. The good guys are learning slowly, but surely, to step up their response time…
If you’re saying something that people don’t want to hear or accept, a significant proportion of them will reply with hostility. Not because they know the facts, or because they have researched it themselves, but because they’re so psychologically involved in believing good news that they will oppose it with a reflex. In addition, if the solutions proposed sound like they involve the government, you will have all the political rightwing try to block it as a reflex, even if it means them overriding hard science, which is what’s going on today. Changing people’s minds is almost impossible, even among scientists. Max Planck said, to paraphrase, that science advances one funeral at a time. You could add that economics advances the same way. You have to wait to get rid of the people who have career investment in a topic before a new generation can see the light.

On the UK’s unseasonably cold spring in 2013, and recent icy winters:

The scientists are getting very concerned privately – they are conservative in public and have yet to write it up – that blocking processes are sticking in the system. The jet stream is behaving very strangely. One very senior atmospheric scientist said to me recently off the record that we are liable to wake up one day and find ourselves on the latitude – which we are in the UK – of Montreal. It’s a liveable place, but not like London. They have underground tunnels because of their winters. The Gulf Stream is having a few wobbles, too, and the theory there is the melting in Greenland and the Arctic is creating a lot of cold, fresh water, which is a possible source for loss of power in the conductor, so it moves less warm water up from the Caribbean.

On how he chooses where to spend his foundation’s money:

We don’t fund the hard science of solar technology. That would take hundreds of millions. But what we are funding is bringing together the data and put it together and representing it conveniently to the outside world. And we want to train people with a good range of skills so they can produce good PhDs for the future at LSE and Imperial. We also fund old-fashioned style investigative journalism which is dying out in newspapers because the newspaper industry has become incredibly tough. The first people to get fired were the environmental journalists. We had a prize for environmental journalism which we brought in at the top of the market, but we discontinued it last year because there was basically no leverage left for the two-and-a-half environmental journalists left. All we were interested in was the net result of whether it could produce a more effective presentation of the facts. We got going in the nick of time to see that it could drag up environmental journalism, but then all the “dragees” were suddenly looking for different jobs, or put on different beats. Or that they were already working for the handful of independent investigative organisations. We fund about a dozen fledgling journalistic projects. Our argument was they are all fledgling so let’s fund them all first, then winnow them down later – come back in 3-4 years and pick eight and, a couple of years later, pick five. In the end, it doesn’t matter if there are one or two, but that they are the best. They whole point really is to allow these people to do their thing and to play to their skills and to pick the people who are highly motivated and very skilled. None of them would be very happy if we tried to tell them what precisely to do and we don’t know what they should do.

On assessing if the money his foundation spends has achieved its objectives:

It’s a great problem for philanthropists and NGOs. The problems where you can measure the impact are not common in the environmental field. If you can measure them, they tend to be over decades. One is the wildlife population of Namibia. That is by far and away the most successful [conservation project the foundation has funded], by the way. You can see the population of the various types of antelope have improved. But that is unusual. But the ones you feel are most important are the vaguest of them all. How do measure the shift in attitudes towards processing the data? There are guys working on studying the changes in attitudes in the media. But you have to take a leap of faith that they are smart and dedicated.

On whether he tries to persuade other philanthropists to support his causes:

No, I don’t. We might discuss such things informally over lunch. There’s a handful of hedge fund managers, mainly, who have decided to be aggressive about the environment, thank heavens. This doesn’t exist in England where you could get them all on the finger of one hand. I can try to persuade them. I gave a talk in London recently at the head office of a major financial player and someone went to considerably effort to make sure a couple of hundred potential philanthropists and wealthy individuals were there for me to have a go at them. A lot of them left their business cards and if you do that you are kind of asking for trouble. [Laughs.] I believe the majority left their cards, which as things go, is a huge potential hit because even if you get one or two that could be significant. They were a receptive audience. I try to paint the picture of how I got to where I am [as an investor] and then of how fact based the issues appear to be to me. I now try to add my thoughts about food and the “carbon math”…

On the “carbon math”:

…It’s simple, comprehensible maths, as Bill McKibbenexplained in Rolling Stone last year. There are five times the amount of proven carbon reserves as we can possibly allow to be burned if we want to remain under 2C of warming, which is now not even considered to be a safe margin. We must burn just a fifth of what’s there. We will burn all the cheap, high-quality oil and gas, but if we mean to burn all the coal and any appreciable percentage of the tarsands, or even third derivative, energy-intensive oil and gas, with fracking for shale gas on the boundary, then we’re cooked, we’re done for. Terrible consequences that we will lay at the door of our grandchildren. Some things might change very quickly, though. For example, the business mathematics of alternative energy are changing much faster than the well-informed business man realises.

On the falling costs of alternative energy:

Read my next quarterly newsletter entitled, “The Race of Our Lives”, [will be available here] on why civilisations fall and why they’ve always fallen and why we may not because we have two advantages that they did not – a voluntary fall in fertility, which is just amazing, and alternative energy. Every wave of technology has seen an incremental increase in energy needed – steam engines, cars, air conditioning, iPads – they all add to our energy needs and mean we dig a deeper hole, but we feel we are making wonderful progress. But now we have a technology wave which protects us from needing to burn every last ton of coal. Solar, wind, biomass, intelligent grids, and storage – please, more storage – protect us. That is the best part of capitalism. The price of solar panels is now 25% of what it was two years ago and that’s the bit people have missed. If these prices were to be held – they may not be – we are competitive, without a carbon tax, in the areas that have the sun – California, North Africa, Spain, etc. You can build a solar farm and it can be commercial. Meanwhile, the price of hydrocarbons are getting more expensive all the time, because you’ve extracted all the easy stuff first and with China rising and still growing at 7% a year. And that’s just China. Don’t forget India which actually has more coal power plants down to be built on the books at the moment than China. Now you start to get an idea of, wow, why this does not compute. If it computes, it’s only at the enormous increase in cost of digging and shipping coal. Meanwhile, back at the ranch, solar and wind power are getting cheaper and cheaper. Those lines are going to cross big time in the next 20 years. There is no such thing as “locked in and committed” because you can reverse. They might build a few more coal-fired plants, but then they will stop completely. The pay-off for China of getting out of the way of those lines crossing is so great.

On why China is his big hope:

China is my secret weapon. I call them the Chinese cavalry riding to the rescue. They have the capital. They have an embarrassment of capital – 50% of their GDP is capital investment. We have a shortage of capital and also have debts. Their problem is how to invest all that capital. My partners worry all the time about them wasting their money. What better programme could they possibly have, with huge social pay-off, than a massive replacement of sustainable energy? When you think what it would mean to them – it would get rid of their pollution – it makes sense. Because of that pollution, they announced recently an incredible increase of 65% in their plans to install by 2015 – just three short years away – 36GW, which is equivalent to 20 vast, state-of-art coal plants, of solar. Throw in wind, too. And, by the way, we will have many breakthroughs in storage. If I had to make a bet, I would say that’s the most promising, important breakthrough of the next several years. Everyone is working on this. If you have a big smart grid – and all the desert of Xinjiang and all the wind of Inner Mongolia – and it’s all swirling around with relatively little loss and you have a grid smart enough to go in there Chinese-style and turn your fridge off for half an hour to save energy, and do this and do that, you don’t need nearly the back-up. The bad guys will tell you that you need 100% back-up and messianic environmentalists will tell you that you need 0%. But maybe 20% back-up will be needed as everyone is working on storage. I’m certain it will happen. Some technologies take time then go, “Bang!”. Look at video conferencing. It has been around forever and the quality was terrible. But now it is so clear and instant. Technology has a habit of boring you to death and disappointing you for 20 years then suddenly it delivers a new world…
I have very high hopes for China because they have embedded high scientific capabilities in their leadership class. And that is huge. They know this is serious. They can calculate the social threat of getting this pollution, weather instability, water out of control. And they are acting much faster now than we are. They have it within their capabilities of coming back in 30 years with the guarantee of complete energy independence – all alternative and sustainable forever. They have an embarrassment of capital. We have an embarrassment of debt. So they can set a stunning pace, which they are doing. And they could crank it up. To hell with their five-year plans, they should move up to 25-year plans for alternative energy – energy security, reducing pollution and low cost. They would have such low-cost energy at the end of it they will be the terror of the capitalist system. With low energy and low labour, that’s the ball game. Five years into a 25-year programme and any capitalist will be urging their government to copy them.

On the Scandinavian countries:

I am inspired by [them]. They have to cope with short-term election cycles and a parliamentary system and all four of them nevertheless act responsibly, not just on alternative energy and environmental issues, but also on social issues that matter. They are, by and large, models of good behaviour. They say in America to me what’s the solution to all this, I say cede your government to Denmark. [Laughs]. They are good enough that they would get the job done.

On environmentalism’s track record of making predictions:

Go and read Limits to Growth, which I did recently. They pretty much predicted doom and gloom 20 years from now. They have been grossly misinterpreted and are pretty much on schedule. There are details that are over and under, but it is amazingly accurate. The William Ophuls model is that we are hard-wired to collapse. Given half a chance we will over-reach. We are over-confident that we will solve every problem. But we will leave it too late and we will crash. All the confidence that people try to give you – the “infinite capacity of the human brain”, unquote – all of that hinges on the apparent infinite supply of hydrocarbons. No civilisation looked durable and resilient until coal and then we acquired this amazing power. We are now coming to the end of that era. If we don’t use that window to fix it and have a sustainable replacement, we are toast. Don’t worry about peak oil, worry about peak temperature. All our flora and fauna has thrived in the last 10,000 years since the end of the last ice age, a period which has seen unbelievable stable weather by long-term standards. Now it is becoming unstable. If you drive the temperature above 40C, well-known brands of corn will not produce. They just stop. You might be able to twist and turn and get it to produce at 41C, and you might move further north in latitude, but temperatures rises are very bad news for grain. The wider point is it [temperature rise] is generally bad for everything that evolved in one stable environment. It has no resilience to produce outside the temperatures experiences during this 10,000 year period. Quite a few grains are now topping out in terms of productivity. I look around and I say just look at the food-producing problems we face. In fact, let’s make it even simpler: look at the grain-producing problems we face around the world. We’ve just had three consecutive monster-bad grain harvests. Not one of those three poor harvests was more likely than a one-in-25-year harvest. But the terrible thing is they went, “whack, whack, whack”. I took some grief when I wrote about the first one and said next year was bound to be less bad, but the next year became a monster. I’ve done more research and reading in the last two years than I ever did at college. I’ve read all the classics. All the limits to growth, all the end of civilisations stuff, all the peak everything stuff, all the soil destruction stuff.

On confronting our environmental problems:

Asking, “Are we too late?”, is not the logic for this problem. It is too late for the dodo. It is too late for the one third of arable land that we have destroyed in 10,000 years. It’s too late for 10% of global biodiversity, and almost certainly another 10%, and 50/50 for yet another 10% after that. But it would be nice to end up with a planet that we can still relate to, that still has a fairly handsome biodiversity. We can still do that. There is one chance that the real pessimists are right. The chance that on our way to a 4-8C rise, and a 10-15ft rise in the oceans, which is probably what’s going to happen over the next two centuries, that things will get worse before they get better, because there is inertia built into the system. You can easily imagine resource wars breaking out unless we put our best foot forward on alternative energy. This would buy us time for everything else to be solved. If you can become energy sustainable in the next 40 years and suck up the pain that will have been paid by then, then you have probably bought the time for another 40 years to transfer the whole of global agriculture into a fully sustainable system before we run out of the resources to run old-fashioned agriculture. And if you do that then, in turn, you have probably bought enough time to deal with the intractable long-term issue of metals, which are entropy writ large. No matter how careful you are with them, they slip through your fingers. In the end, you will need to use organic replacements, which will take a long, long time [to develop]. We’d better start working on it now, but not too many are and they’re not getting much funding. You’ve got to get the population down and you’ve got to ignore the Economist magazine and others talking about rising population as a terrible economic problem. It is a necessary, short-term, intermediate pain to pay for the absolute minimum hope of survival, which is a gracefully declining population, because if you don’t do that you will have a rapidly imploding population one day.

Continue to PART 2

by Anric

 

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China’s Massive Water Problem

China’s Massive Water Problem

http://www.globalfundexchange.com/blog/2013/04/03/chinas-massive-water-problem/

The construction site of Shahe Aqueduct Project, part of the South-North Water Transfer Project, in China's Henan province, May 10, 2012. It is the world's largest aqueduct project. AP Photo

Author: Scott Moore, Giorgio Ruffolo Doctoral Research Fellow, Sustainability Science Program/Energy Technology Innovation Policy research group

Belfer Center Programs or Projects: Energy Technology Innovation Policy; Environment and Natural Resources; Science, Technology, and Public Policy

This month, a hundred years after the completion of the Panama Canal, China is expected to finish the first phase of its gigantic South-North Water Transfer Project, known in Chinese as Nanshui beidiao gongcheng— literally, “to divert southern water north.” The phrase evokes the suggestion, attributed to Mao, that “since the south has a great deal of water, and the north very little, we should borrow some of it.”

In realizing Mao’s dream of moving huge quantities of water from areas of plenty to those of want, Beijing is building a modern marvel, this century’s equivalent of the Panama Canal. But whereas the canal inaugurated a century of faith in the ability of human ingenuity to reshape the natural world, the South-North Water Transfer Project is a testament to the limits of engineering solutions to problems of basic environmental scarcity.

China is one of the most water-rich countries in the world. But as Mao observed, its water resources are unevenly distributed and overwhelmingly concentrated in the south and far west. Water scarcity has always been a problem for northern China, but shortages have reached crisis levels as a result of rapid economic development.

For most of the 1990s, northern China’s major river, the Yellow, failed to reach the sea, and the water tables around Beijing and other major northern cities have dropped so low that existing wells cannot tap them. In response, the government has tried to promote water conservation and limit water use. But these measures have had little impact, and there simply isn’t enough water to satisfy growing demands for drinking water, irrigation, energy production and other uses.

Rather than face the political challenge of allocating water resources among these competing interests, Beijing has placed its faith in monumental feats of engineering to slake the north’s growing thirst. The South-North Water Transfer eventually aims to pipe 45 cubic kilometers of water annually northward along three routes in eastern, central and western China. All three pose enormous technical challenges: The eastern and central routes will be channeled under the Yellow River, while the western route entails pumping water over part of the Himalayan mountain range.

The estimated cost of $65 billion is almost certainly too low, and doesn’t include social and ecological impacts. Construction has already displaced hundreds of thousands, and issues the like possible increases in transmission of water-borne diseases have not been properly studied. But Beijing’s calculus is political: It is easier to increase the quantity of water resources, at whatever cost, rather than allocate a limited supply between competing interests.

For an authoritarian regime with weak institutions of governance, this reluctance is understandable. But it also puts China’s economic and ecological future at risk, because Beijing cannot keep increasing supplies of water indefinitely. Already, the southern regions slated to pump water northward are facing water shortages themselves. In the long run, warming in the Himalayas is likely to reduce the flow of China’s major rivers, increasing water scarcity throughout the country.

Further feats of engineering can help China manage some of these impacts, but will not solve the underlying problem of water scarcity. Doing so requires contentious reallocations of water, including by dramatically increasing the cost of water for farmers — something the Communist Party is loath to do.

Ultimately, China needs significant political reform to meet the challenge of water scarcity. In order to make difficult decisions about who gets how much water, the country needs robust, transparent and participatory decision-making mechanisms. Moreover, in order to make policy ideas like water-rights reform work, the legal system and the rule of law must be strengthened. Finally, Beijing needs to stop relying on technology to avoid making hard choices about scarce resources. The United States and the rest of the world need to push the Chinese government to make its development more sustainable through political reform, lest China’s economy and social stability be endangered.

The architects of the Panama Canal overcame the inconvenient separation of two oceans by a narrow strip of land with a gigantic feat of engineering. But solving the problem of water scarcity in China is not so simple. Beijing will find that simply adjusting the supply of water, or of any other critical resource, is not enough: At some point it has to decide who gets how much. And that is a process that, without dramatic reform, is likely to leave the party high and dry.

Scott Moore is Giorgio Ruffolo Doctoral Research Fellow in Sustainability Science at the Harvard Belfer Center for Science and International Affairs, and a doctoral candidate at Oxford University, where he studies Chinese environmental politics.

Full text of this publication is available at:
http://www.nytimes.com/2013/03/29/opinion/global/chinas-massive-water-problem.ht
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by Anric

 

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Reacting to China’s Goal of 49 GW of Renewables in 2013

Reacting to China’s Goal of 49 GW of Renewables in 2013

http://www.globalfundexchange.com/blog/2013/01/23/reacting-to-chinas-goal-of-49-gw-of-renewables-in-2013/

 Information coming out of China about its renewable energy plans, and prospects for both domestic and international suppliers hoping to continue riding one of the world’s most optimistic growth markets, have commanded headlines in the early weeks of 2013.

China plans to add 49 gigawatts (GW) of renewable energy capacity in 2013: 21 GW of hydropower, 18 GW of wind, and 10 GW of solar, according to its National Energy Administration.

Chinese solar panel makers are optimistic. Trina Solar recently said shipments will surge 30 percent in 2013, and Jinko Solar expects a 20-30 percent jump in shipments, on hopes that global demand is rising — gains in Asia (most notably domestically in China), plus regions including the U.S. and Asia, should offset declines in Europe — and price decreases could slow or cease later this year. Yingli Green Energy, which topped a record 2.2 GW in shipments in 2012, enters 2013 with expectations of downstream expansion.

Investors quickly responded with renewed interest in the battered sector; Suntech and LDK saw an upswell of investor support. Underlying concerns remain, though, about the financial viability of domestic solar manufacturers in a severely and government-fed market. Read the rest of this entry »

 
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Posted by on January 23, 2013 in Clean Energy, Solar

 

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JIM ROGERS: The China Boom Could All Come Apart Over Water

China bull Jim Rogers tells us what he thinks of the upcoming leadership transition, Chinese monetary policy, and how water could end the China story.

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Posted by on November 8, 2012 in Agriculture, Water

 

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Confronting Water Scarcity & Energy Demand in China

Choke Point: China is an on-the-ground report that displays in text, photographs, and interactive graphics the powerful evidence of a potentially ruinous confrontation between growth, water, and fuel that is already visible across China; a confrontation that is virtually certain to grow more dire over the next decade.

Keith Schneider: Circle of Blue is a news organization that uses science, data, design, and collaboration and convening in order to produce solutions to our most important problems, one of which is water scarcity on the planet.

Our latest global project is Choke Point: China. China is getting dry at the same time as its energy demand is increasing at a momentum never before seen on the planet. We sent four teams of reporters to China; they went to 10 provinces, and we were there. We collected data and we produced a narrative in two parts — we had a good news story and a bad news story.

The good news story is that China has increased its water consumption by only 1 percent a year — 15 percent since 1995, the same years its economy grew eight-fold. And they did this by amassing an enormous amount of technology, public policy, entrepreneurs around water conservation and energy efficiency, and new technology. And they were able to convince their citizenry that as a nation they could begin to solve a significant problem of water scarcity.

The bad news story is that it’s a nation that’s growing in a way that has never been seen before. So everything that it’s doing isn’t going to solve the choke point that we identified for the first time for China — that in their northern and western provinces, which are their energy provinces and also their driest regions in the country — they are facing a very significant energy shortage, not because they don’t have the energy, but because they don’t have the water to develop the energy. And unless they solve that, it’s going to have global implications because anything China does today has implications for every nation on Earth, including the United States.

Video production by Travis Miller. Photos by J. Carl Ganter and Aaron Jaffe. Graphics by students at Ball State University.

 

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