Global Fund Exchange Newsletter August 2010

8/9/2019 Global Fund Exchange Newsletter August 2010

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Global Fund Exchange is

an asset management

business specializing in a

diversified global macro

approach to investing in

dynamic opportunities

across all sectors of the

New Energy Revolution.

Featured in this issue:

Threats to Global Agriculture New Chinese Energy Policies BP Spill The Aftermath REDD Forest Conservation Water Shortage in China New Player in Carbon Trade

SPOTLIGHT ON:AGRICULTURE CRISISExtreme Temps & Weather Threaten Global Production

Russias major heat wave the worst in over 130 years is the latest example of

extreme weather having a significant economic impact on the global agriculture

sector. Droughts and forest fires have caused a wheat crop crisis in Russia, raising

global prices by nearly 70% and prompting President Vladimir Putin to ban wheat

exports entirely.

Similar scenarios are playing out elsewhere in the world. Droughts in Kansas, for

instance, have killed off over 2,000 cattle and flooding in Pakistan has destroyed

thousands of acres of crops.

Over the whole globe all these changes in climate are going to cause some real

ripples in our capabilities of producing food, warned Jerry Hatfield, laboratory

director at the U.S. Department of Agricultures Agriculture Research Service.

Estimates from HSBC analysts warn that if countries cannot not adapt to higher

temperatures and more extreme weather, grain production in G20 countries may

fall 8.7% by 2020. With population growth taken into account, HSBC predicts G20

per capita grain production could drop between 11.9% and 16.1% by 2020.

Reduced output could create havoc in agricultural markets around the world,

driving up the price of food and other essential goods. There is grave concern thatsuch price spikes could result in unrest in many poor or resource-scarce countries

similar to the riots that took place during 2007-2008, when global food prices

spiked based on rampant market speculation.

Newsletter August 2010

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RENEWABLE ENERGY NEWS

With New Energy Policies, China is a Leader

in Global Renewables Sector

Chinas renewable energy industry has skyrocketed in recent

years, and it has now overtaken the United States as the

worlds leading investor in clean energy. The Chinese

government continues to encourage this growth with favorable

policy support.

Renewables

Total renewable power capacity in China reached

226GW in 2009, representing 1/4 of the nations total.

The government is calling for a total of 500GW of

renewable power capacity by 2020, or about 1/3 of total

power capacity.

Renewable Portfolio Standards (RPS) for Chinese utilities

requires 8% of all capacity and 3% of power to be

generated from non-hydro renewable sources by 2020.

Revisions to the 2005 Renewable Energy Law will require

increased cooperation between new renewables and the

grid to ensure the generated power is transmitted

efficiently. The revisions also strengthened the Ministry

of Finances renewable energy fund, which collects a tax

on all electric power sales.

Wind

Chinese wind power grew thirty-fold between 2005 and

2009. China is now just behind the U.S. in total installed

wind capacity. Its turbine manufacturingindustry grew

to be the worlds largest in 4 years. The government has

amended the wind power Feed-in-Tariff law and aims for150GW of new installations by 2020.

Solar

The Golden Sun program, introduced in 2009, will

provide generous subsidies for solar PV installations.

Currently 300 projects have been proposed, totaling

nearly $2.9 billion in investment.

Nuclear

China has expanded its pledge to achieve 15% of all

primary energy from non-fossil fuel sources by 2020.

This expanded directive will allow nuclear power to beincluded in the total accounting.

Carbon

New carbon intensity targets were announced in Dec

ember 2009, which aim to reduce the carbon intensity

of GDP by 40-45% by 2020 relative to 2005 levels.

Energy Efficiency

The 5 Year Plan for 2006-2010 aims to increase energy

efficiency by 20%, including pumps, fans, boilers and the

production of materials like steel and cement.

Greece to Invest 12 Billion in Green

Growth by 2015

Greek officials say investing in green growth can help

catalyze Greeces economic growth and attract outside

investment into the nations ailing economy. Greeces

recently announced 12 billion investment plan will includeallocations for new urban improvement projects, natural gas

pipelines and storage facilities in northern Greece. The

government is aiming to attract a total of 22 billion in

external private investment over the coming decade.

Although Greece has ample wind and solar resources,

renewable energy contributed only 4% of the nations

electricity generation in 2009. However, Greece has pledged

to ramp up the share of renewable energy to 40% of its total

electrical output by 2020. Environment Minister Tina Birbili

hopes the program will decisively contribute to face recession

and lead to dynamic economic growth.

Rare Earth Minerals Lure Clean Tech Firms

to ChinaRare earth resources such as indium, gallium and lithium are

essential components of many high-tech devices, from battery

technologies to solar cells and wind turbines. China is far and

away the worlds leading rare earth exporter, controlling 95%

of the worlds resources.

Recently, Chinese officials announced their intent to decrease

rare earth shipments by 72%, causing anxiety among globalclean tech firms. However, it will reportedly offer access to

restricted resources to companies that decide to move their

operations to China.

Many companies are already picking up and moving to the

region because of the attractiveness of low labor costs and

close proximity to Asias fast-growing renewables sector.

Many analysts expect this relocation trend to speed up as

clean tech firms gear up for potential limitations on rare earth

exports, many of which are essential to their production.

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

Greece aims for green growth with 12 billion new investment


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TRADITIONAL ENERGY NEWS

BP CEO: Gulf of Mexico Spill is a Wake-Up

Call for Entire Offshore Drilling Industry

Bob Dudley, the new CEO of BP says the Gulf of Mexico spill

must be a wake-up call for the entire offshore drilling industry.

BP successfully placed a cap on the leaking well on July 15th

and

expect to permanently seal the well by the end of the month.

However, the saga is far from over. Since the rig explosion on

April 20th

that broke open the deep-sea well, nearly 5 million

barrels of oil have spilled into the Gulf of Mexico, endangering

marine life and resulting in major closures of fishing waters and

tourist beaches along the Gulf coastline. Estimates vary widely

on how much oil remains either as surface sheen, tar balls, or

lurking beneath the water. Scientists warn of continued hazards

to marine life.

So far, BP has spent $6.1 billion dealing with fallout from the

Gulf spill, the worst in United States history. Clean up and other

associated costs may reach as high as $30 billion. BP has

already paid $319 million in compensation to businesses and

individuals that have been affected, and will likely continue to

face high costs as environmental cleanup operations proceed in

the region.

In the wake of the accident, the U.S. House of Representatives

has taken up debate on legislation to reform off-shore drilling

practices, and the U.S. Senate, the SEC and the Department of

Justice have also launched their own investigations. Private

lawsuits against BP have piled up as well. The combined effecthas knocked nearly 40% of BPs market value.

Although all are relieved that the leak has been capped, retired

Coast Guard Admiral Thad Allen, the U.S. governments main

representative in the region, expects conclusive clean up of the

region will be both costly and time-consuming, and will require

many more millions, many more years and much more effort

from BP over the long-term.

An aerial view of the Deepwater Horizon offshore site

Australian Natural Gas Projects Attract $50

Billion in New Investment from Shell

Royal Dutch Shell Plc, Europes largest oil company, is making a

major strategy shift to increase its focus on natural gas. As

part of this transition, Shell is planning nearly $50 billion in

new investment in Australian liquefied natural gas (LNG)

projects.

Investment in LNG projects is being catalyzed by increaseddemand for cleaner-burning fuels, especially in Asia, as well

as advancements in technology. By 2012, Ann Pickard,

Chairman of Shell Australia, expects natural gas to contribute

over 50% of Shells total production.

PetroChina, which joined with Shell to acquire Arrow Energy

Ltd. and its reserves in Queensland, expects to see continued

longterm demand for LNG from Australia. Its a booming

economy and more and more dirty energy is being replaced

by clean energy. There is a need, remarked a PetroChina rep.

ENERGY EFFICIENCY NEWSChina Cracks Down on Energy Use, Invests

in Electric Vehicles & Shuts 2,000+ Factories

China is taking serious measures to curb its energy usage and

reduce economic carbon intensity.

Over 2,000 steel mills, cement works and other energy-

intensive factories have been ordered to close down by the

end of September. This announcement comes on the heels of

another order by the powerful National Development and

Reform Commission which forced 22 provinces to halt

provision of discounted electricity to energy-intensiveindustries such as aluminum production.

Energy efficiency has become a high priority for Chinas

economic planners. Chinas current five-year plan targets 20%

less energy usage per unit of economic output this year

compared with 2005.

However, high industry output since last winter has driven

Chinas energy consumption to sky-high levels, producing the

single largest surge ever of greenhouse gases by a single

country. According to the International Energy Agency (IEA),

China surpassed the United States last year to become the

worlds largest consumer of energy after becoming top global

carbon emitter in 2006. These rankings, combined withcontinued high expectations for economic growth, lead many

to doubt Chinas ability to meet its stated energy intensity

goals.

Nevertheless, China is forging ahead with plans to invest $15

billion into energy efficiency. Of this proposed funding, $8

billion would be dedicated for development into pure energy

efficiency techniques. The remainder would be funneled

towards infrastructure construction, potentially including

electric vehicle charging stations. China is currently pushing to

put 4 million eco-friendly vehicles on its roads by 2012.


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Energy regulator says UK needs energy reform Source: Daily Mail

CARBON NEWS

With Launch of Pilot Trading Program,

China Enters Global Carbon Trade

Seeking to become a player in the global carbon trading

system, China announced it will launch a series of test trading

programs in 2011 with possible implementation of a

mandatory system in the future.

The International Energy Agency (IEA) reports that China has

overtaken the United States as the worlds largest energy

consumer. However, the Chinese government disputes these

IEA figures and claims it is still #2. Regardless, Chinese energy

consumption and domestic power production are expected to

continue to grow strongly. By some estimates, Chinese power

capacity could double to 1,600GW within the decade. This

growth has already had significant impact on carbon

emissions.

Under intense international pressure to control its

skyrocketing emissions, China has focused on increasingenergy efficiency and reducing the carbon intensity of its

economy. No firm details have been released yet, but it is

expected that a commitment to carbon trading will be

incorporated into Chinas next Five-Year Plan.

By introducing a carbon price - something United States

lawmakers have thus far been unable to do China believes it

can ramp up its energy efficiency efforts without limiting

capital flows to its growing renewable and cleantech space.

Higher Economic Activity & Coal Usage Will

Raise U.S. Carbon Emissions in 2010 EIA

Figures released by the Energy Information Administration

(EIA) indicate that stronger economic activity and use of

traditional energy such as coal and natural gas will lift U.S.

carbon emissions in 2010.

Fossil-fuel related emissions may rise by 3.4%, and emissions

from the industrial and electric power sectors may rise by

3.9%, according to the EIA. Coal-related emissions alone are

on track to rise by 6% this year.

Despite these projected increases, total U.S. carbon emissionsfor 2010 and 2011 will still fall below 2008 levels, for that

matter or any year during the period 1999 2008.

WATER NEWS

China Begins Construction of $62B River

Diversion Plan to Supply Industrial Region

To combat massive water shortages, China has begun

construction on a $62 billion project which would essentially

re-route the flow of the nations largest rivers from southern

river deltas to parched northern regions.

The drought in Chinas industrial north is reaching dangerous

levels the area is home to 44% of the population, but only

14% of the water. As industrial production increases, Chinese

power plants in the north will need 82 million ML of water

each year by 2030. This river diversion project will transport

44.8 million ML of water every year through a complex, three-

pronged plan which encompasses nearly 1800 km of pipelines,

23 pumping stations, up to 7 dams and 2 giant tunnelsbeneath the Yellow River. The project will drain one river to

fill another while pumping water against gravity.

Although officials say this project may ease the water

shortage in the north in the short term, conservation and

new efficiency measures are the true long-term measures to

solve Chinas water woes.

China is not the only nation experiencing firsthand the impact

of limited water supplies on industrial production and energy

generation. According to a special report by IEEE Spectrum

magazine on the water vs. energy supply conundrum, it is

estimated by the year 2030, the Earths 8 billion people will

demand 45% more water than today. Annual water shortfall

vs. demand may be as high as 2,700 billion cubic meters.

As evidenced in China, vast quantities of water are needed for

electricity generation. In the United States for example, over

500 billion liters of freshwater travel through power plants

everyday twice what flows through the Nile River. Thirty-

nine percent of all withdrawn freshwater in the U.S. goes

towards cooling of thermoelectric power plants as they

generate power for consumers.

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


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SOURCES

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

RenewableEnergyWorld.com EnergyandCapital.com

Forbes.com: Energy News New Energy Finance

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

New Energy World Network Thomson Reuters

Scientific American: Energy REChargeNews.com

SustainableBusiness.com Climate Change Business Journal

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

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Please visit our Future of Energy blog at www.globalfundexchange.com/press

CLIMATE POLICY NEWS

U.N. Forest Conservation Plan Moves Forward in Fight

against Deforestation

Reduced Emissions from Deforestation and Degradation (REDD) is a fledgling

program backed by the United Nations designed to save the worlds tropical

forests and reduce deforestation, which contributes between 20-25% of total

global emissions, according to the U.N. The REDD program assed an important

hurdle recently when its carbon accounting system passed the first of two

audits required by the Voluntary Carbon Standard (VCS), a Washington-based

standards group.

One of the few proposals to achieve widespread support at the Copenhagen

climate talks, REDD encourages developing nations to preserve vulnerable

forest land by awarding conservation measures with carbon offsets which can then be traded on the global market. Projects

approved by the REDD scheme range widely and encompass various plans to protect forests from logging, farmland conversion, fires

and collection of fuel wood and thus reduce carbon emissions.

Many developed nations have lent support to help develop REDD, most notably Norway, which has signed a $1 billion forest

conservation deal with Indonesia. REDD aims to become part of a broader global climate accord in 2013.

The REDD program seeks to limit global deforestation
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Global Fund Exchange Newsletter August 2010