Leaked data: Palm biodiesel as dirty as fuel from tar sands

There are good biofuels and bad biofuels and the worst are as filthy as the foulest fossil fuels. But the good biofuels are essential to tackling climate change

There are good biofuels and bad biofuels: the trick is telling one from the other. That's particularly difficult when trying to take account of the natural forests and wetlands that can destroyed in the drive to grow some biofuel crops. But we're getting closer, it seems, and palm oil and soy beans now appear utterly unsupportable as a source of biodiesel.

The new data comes from a leak obtained by EurActiv from the European Commission. The EC is considering what level of carbon emissions each type of biofuel causes once burned, after everything - including "indirect land-use change" - is taken into account.

It is obvious that for a biofuel to be useful in cutting the emissions driving global warming it needs to have a smaller carbon footprint than regular fuel from crude oil. So I have added the numbers for crude oil and oil from the highly-polluting tar sands for reference in the table below. The leaked biofuel numbers are, I'm told similar to several recent studies, and therefore credible.

Here's the data (the units are grams of carbon dioxide per megajoule energy of energy).

So palm oil and soy bean biodiesel is just a touch less polluting than fuel from tar sands: that's pretty damning. Maize and sugar do better than crude oil but still cause significant carbon emissions.

The better news comes from the second generation fuels (2G), particularly when the are "non-land using", i.e. when they use only waste such as straw. Factories doing this are setting up now in, for example, Italy. The "land-using" fuels are made from non-food crops, such as jatropha, but that can bring its own problems, as I saw for myself in Tanzania.

The EU's scheme for certifying biofuels as sustainable requires them to emit 35% less CO2 than regular fuel, increasing to 60% by 2018, making palm oil, soy bean, rapeseed and sunflower looking all but dead.

Palm oil biodiesel also received another blow on Friday, with the US Environmental Protection Agency suggesting it fails to meet the US requirement of emitting at least 20% less carbon than diesel from crude oil.

Robbie Blake, biofuels campaigner, at Friends of the Earth Europe, told me: "It's getting quite indisputable that the use of soy or palm oil to fuel our cars is even dirtier than conventional fossil fuels. Forests in Asia and South America are being destroyed by the expansion of plantations to meet the European market. It's a delusion for politicians to think that biodiesel will solve climate change."

The European Union's target for 10% of all transport fuels to be biofuels by 2020 has been described as "unethical" because the production of some types violates human rights and damages the environment. But the same researchers described do nothing to find alternative to the fossil fuels that currently power transport as "immoral".

So the difficult task of distinguishing good and bad biofuels remains essential, as does the research of even more promising technologies, such as algae and seaweed.

EU energy policy drives changes in UK – with mixed results

Green groups and the energy industry have embraced many of the changes, but there are grumbles

Fiona Harvey, environment correspondent

guardian.co.uk, Wednesday 25 January 2012 14.58 GMT

Energy has been one of the most active areas of EU legislation: the ban on old-style lightbulbs, the introduction of renewable energy targets, an obligation to mix biofuels in petrol, carbon trading for energy-intensive businesses, the scrapping of ageing coal-fired power stations , support for pioneering new power plants that capture and store carbon dioxide, the development of smart meters and energy efficiency labels on electrical appliances.

All of these have driven changes in the UK, from the obvious such as changing lightbulbs to the more subtle such as farmers growing energy crops destined for power stations or use in petrol.

Joss Garman, a campaigner at Greenpeace, says many of the shifts have been wholly positive. "The renewables directive has driven a change in Whitehall culture to take advantage of Britain's unparalleled homegrown clean energy resources, with the opportunity to move our economy away from an over-reliance upon imported gas and coal. This can reduce our vulnerability to spikes in international fossil fuel markets."

Consumers have benefited, too, he says. "European standards for electrical appliances like fridges and lightbulbs, as well as for cars, have helped consumers get the most energy for their money – and begun to separate energy prices from energy bills. Air pollution rules for cars and power stations have driven a move towards cleaning up the energy sector and making the air we breathe cleaner and healthier."

The energy industry has embraced many of the changes, but there are grumbles. The level of prescription – not just changing our lightbulbs but dictating decisions such as whether to invest in coal, gas or offshore wind – is too great for David Porter, chief executive of the UK's Association of Electricity Producers. "Prescribing cuts across the reasons for having a market," he says.

He is also concerned about the impact of regulation on consumer prices. Carbon trading, for instance, adds to the cost of producing electricity from fossil fuels. "Quite major initiatives can be launched by the unelected officials of the European commission, without the accountability that our politicians have to live with. They are quite remote from the impact on the paying customer of the policies that they develop. Decisions made in Brussels can affect energy prices in the member states and when they do, it is the energy companies and governments that incur the wrath of the customers," says Porter.

Jonathan Gaventa, senior policy adviser at the green thinktank E3G, says the EU has failed to go far enough in some cases. "We have a single market in bananas, but not in energy," he points out.

According to EU targets, the UK should have 10% of electricity capacity coming from interconnections with other member states, but it has achieved less than half of that, says Gaventa. More interconnectors would help the UK to use a higher proportion of renewable energy, because when the wind fails to blow it would be possible to meet demand with power from France or Norway.

Other targets have yet to be met. The EU has promised financial support for carbon capture and storage operations in the UK, but none have yet been built. Proposals for a fuel quality directive that would effectively halt the import of fuel from tar sands are yet to come into force.

Greenpeace says some of the EU's policies are counter-productive or ineffective. Doug Parr, the group's chief scientist, says: "By making it law to put biofuels in the fuel tanks of cars across Europe, they've incentivised the destruction of rainforests around the world in the name of fighting climate change. And European governments made the emissions trading scheme the centrepiece of their strategy to deal with rising greenhouse gas emissions, but it's bureaucratic and complicated, it's hard to see what changes in energy infrastructure it has really driven, and it has handed a windfall to some of Europe's most polluting industries."

The traffic is not all one way from Brussels to London. Though they may not acknowledge it, other European member states have a lot to thank the UK for on climate change.

The EU prides itself on leading the world in tackling greenhouse gas emissions, and some of that leadership has been provided by the UK, not least during the negotiations on the 1997 Kyoto protocol, spearheaded by the then environment secretary, John Prescott. Under the treaty, the UK took on one of the most stringent emissions-cutting targets of any EU member: 12.5% compared with 1990 levels. As the bloc's emissions are counted en masse under a "burden-sharing" agreement, the UK's tough target meant that some member states were able to take on less stretching commitments.

What's more, the UK is on track to comfortably exceed its targets, albeit largely because of the "dash for gas" encouraged by Margaret Thatcher as prime minister, which led to the replacement of most of the UK's coal-fired electricity generation with gas-fired power stations during the 1990s. Thanks to the burden-sharing, the UK's over-achievement makes up for the failure of several other member states to meet their obligations under the treaty. Since so much of the EU's international credibility in climate change talks rests on its backing for the Kyoto protocol, without the UK's strong showing the EU's position would be impossible and the long-running negotiations would be in even worse trouble than they are.

Rare minerals dearth threatens global renewables industry

China's near-exclusive access to terbium and yttrium sent prices soaring in 2011, potentially hobbling clean energy industry

John Vidal

guardian.co.uk, Friday 27 January 2012 16.55 GMT

Shortages of a handful of rare minerals could slow the future growth of the burgeoning renewable energy industries, and affect countries' chances of limiting greenhouse gas emissions, business leaders were told at the World Economic Forum in Davos this week.

Last year, prices of many scarce minerals exploded, rising as much as 10 times over 2010 levels before dropping back, said PricewaterhouseCoopers (PwC).

Terbium, yttrium, dysprosium, europium and neodymium are widely used in the manufacture of wind turbines, solar panels, electric car batteries and energy-efficient lightbulbs. But because these "rare earths" are mined almost exclusively in China, it is becoming increasingly difficult and expensive to source them in the required quantities.


In a survey of some of the largest clean energy manufacturers, 78% told PwC said they were already experiencing instability of supply of rare metals, and most said they did not expect shortages to ease for at least five years. Currently, 95% of the rare earth minerals needed by clean tech industries come from China which has set strict export quotas. Last year China reserved most for its own for its domestic wind, solar and battery industries, shifting costs to the US and Europe which do not mine any of the minerals.

Scarcity of the mineral resources could affect disrupt entire supply chains and countries' attempts to meet emissions targets, said PwC. "The energy sector could face very great problems if the world turns to [renewables] in a big way. In the short term, there will be major supply problems. The availability of these metals will define the growth of these industry sectors. There are so far not many alternatives," said Rob Mathlener, author of a report that urged companies to build future strategies around recycling and reusing resources.

Last December, Janez Potočnik, the EU commissioner for the environment, warned that the waste of valuable natural resources threatens to produce a fresh economic crisis.

None of the minerals is likely to physically run out, but it can take 10 years for countries to open new mines. In the US there has been growing concerns that China dominates the supply of the materials considered crucial for the expansion of the US defence, computer and renewable energy sectors.

A series of US government reports have urged an immediate increase in production of rare minerals. By mid-2012, US mining company Molycorp Minerals aims to produce 20,000 tonnes a year of nine of the 17 rare minerals, or about 25% of current western imports from China.

Malcolm Preston, PwC's global sustainability leader, said: "It's a time bomb. Many businesses now recognise that we are living beyond the planet's means. If these industries, supply chains and economies are disrupted by shortages in supply, then the 'luxury of choice' lifestyle many in the Western world have become accustomed to, will also be affected."

Six other core manufacturing industries, including aerospace, automotive and chemicals, were all found to be experiencing shortages. According to the US Congress report published last September, world demand for rare elements is estimated at 136,000 tonnes per year, with global production around 133,600 tonnes in 2010. It is projected to rise to at least 185,000 tonnes a year by 2015.

EU energy policy drives changes in UK – with mixed results

Green groups and the energy industry have embraced many of the changes, but there are grumbles

Fiona Harvey, environment correspondent

guardian.co.uk, Wednesday 25 January 2012 14.58 GMT

Energy has been one of the most active areas of EU legislation: the ban on old-style lightbulbs, the introduction of renewable energy targets, an obligation to mix biofuels in petrol, carbon trading for energy-intensive businesses, the scrapping of ageing coal-fired power stations , support for pioneering new power plants that capture and store carbon dioxide, the development of smart meters and energy efficiency labels on electrical appliances.

All of these have driven changes in the UK, from the obvious such as changing lightbulbs to the more subtle such as farmers growing energy crops destined for power stations or use in petrol.

Joss Garman, a campaigner at Greenpeace, says many of the shifts have been wholly positive. "The renewables directive has driven a change in Whitehall culture to take advantage of Britain's unparalleled homegrown clean energy resources, with the opportunity to move our economy away from an over-reliance upon imported gas and coal. This can reduce our vulnerability to spikes in international fossil fuel markets."

Consumers have benefited, too, he says. "European standards for electrical appliances like fridges and lightbulbs, as well as for cars, have helped consumers get the most energy for their money – and begun to separate energy prices from energy bills. Air pollution rules for cars and power stations have driven a move towards cleaning up the energy sector and making the air we breathe cleaner and healthier."

The energy industry has embraced many of the changes, but there are grumbles. The level of prescription – not just changing our lightbulbs but dictating decisions such as whether to invest in coal, gas or offshore wind – is too great for David Porter, chief executive of the UK's Association of Electricity Producers. "Prescribing cuts across the reasons for having a market," he says.

He is also concerned about the impact of regulation on consumer prices. Carbon trading, for instance, adds to the cost of producing electricity from fossil fuels. "Quite major initiatives can be launched by the unelected officials of the European commission, without the accountability that our politicians have to live with. They are quite remote from the impact on the paying customer of the policies that they develop. Decisions made in Brussels can affect energy prices in the member states and when they do, it is the energy companies and governments that incur the wrath of the customers," says Porter.

Jonathan Gaventa, senior policy adviser at the green thinktank E3G, says the EU has failed to go far enough in some cases. "We have a single market in bananas, but not in energy," he points out.

According to EU targets, the UK should have 10% of electricity capacity coming from interconnections with other member states, but it has achieved less than half of that, says Gaventa. More interconnectors would help the UK to use a higher proportion of renewable energy, because when the wind fails to blow it would be possible to meet demand with power from France or Norway.

Other targets have yet to be met. The EU has promised financial support for carbon capture and storage operations in the UK, but none have yet been built. Proposals for a fuel quality directive that would effectively halt the import of fuel from tar sands are yet to come into force.

Greenpeace says some of the EU's policies are counter-productive or ineffective. Doug Parr, the group's chief scientist, says: "By making it law to put biofuels in the fuel tanks of cars across Europe, they've incentivised the destruction of rainforests around the world in the name of fighting climate change. And European governments made the emissions trading scheme the centrepiece of their strategy to deal with rising greenhouse gas emissions, but it's bureaucratic and complicated, it's hard to see what changes in energy infrastructure it has really driven, and it has handed a windfall to some of Europe's most polluting industries."

The traffic is not all one way from Brussels to London. Though they may not acknowledge it, other European member states have a lot to thank the UK for on climate change.

The EU prides itself on leading the world in tackling greenhouse gas emissions, and some of that leadership has been provided by the UK, not least during the negotiations on the 1997 Kyoto protocol, spearheaded by the then environment secretary, John Prescott. Under the treaty, the UK took on one of the most stringent emissions-cutting targets of any EU member: 12.5% compared with 1990 levels. As the bloc's emissions are counted en masse under a "burden-sharing" agreement, the UK's tough target meant that some member states were able to take on less stretching commitments.

What's more, the UK is on track to comfortably exceed its targets, albeit largely because of the "dash for gas" encouraged by Margaret Thatcher as prime minister, which led to the replacement of most of the UK's coal-fired electricity generation with gas-fired power stations during the 1990s. Thanks to the burden-sharing, the UK's over-achievement makes up for the failure of several other member states to meet their obligations under the treaty. Since so much of the EU's international credibility in climate change talks rests on its backing for the Kyoto protocol, without the UK's strong showing the EU's position would be impossible and the long-running negotiations would be in even worse trouble than they are.

Solar subsidies cuts: UK government loses court appeal

Thousands of homes and businesses may now be able to claim higher payments after the government fails to overturn earlier ruling that cuts were illegal

• Read the court's full judgment
Damian Carrington

guardian.co.uk, Wednesday 25 January 2012 16.52 GMT

HomeSun solar panels. Thousands of homes and businesses may now be able to claim higher payments. Photograph: Simon Burt/PA


The government lost its appeal on Wednesday against a judge's ruling that its cuts to solar power subsidies were illegal, suggesting thousands of homes and businesses will now be able to claim the higher payments.

Three court of appeal judges unanimously rejected the appeal from Chris Huhne, the secretary of state at the Department of Energy and Climate Change (Decc), who said he would be taking the case on to the supreme court. "We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations," he said.

The decision to prolong the uncertainty that has seen the number of solar panel installations crash since 12 December was immediately condemned by opponents of the cuts. Green party MP Caroline Lucas said: "Having lost twice in the courts and been roundly humiliated over the shambolic handling of solar policy, it is absolutely beggars belief that Huhne is planning to appeal to the supreme court."

Daniel Green of HomeSun, one of the companies that took the government to court, said: "Almost everybody except Decc have appreciated the potential and importance of the solar industry – from the National Trust, the Church of England through to the CBI as well as the British people. Surely this must be the point at which Huhne stops taking the side of the big six energy companies and realise that solar is part of our future."

The government announced proposed cuts to the solar feed-in tariff payments in October. Ministers said the cost of solar panels had dropped and unless the subsidy was also cut, funding for a range of low-carbon technologies would be rapidly exhausted. But in December, a high court judge ruled that the government's handling of the cuts was "legally flawed", after a challenge by Homesun, SolarCentury and Friends of the Earth.

Encouraging the development of renewable energy is a key part of the government's plans to meet the UK's legally binding cuts in carbon emissions, although wind power receives far more support than solar power. Green campaigners and the solar industry say many thousands of jobs have been lost and that the government's actions profoundly undermine its claim to be the "greenest ever", though they agree some cut in the solar subsidy was necessary.

On 19 January, the government said that if it lost the legal case, it would fund the higher rate payments for any panels installed by 3 March, which would affect about 3,700 homes and businesses. A Decc spokeswoman said: "We totally appreciate the uncertainty in the solar industry and hopefully the 3 March date will provide some certainty."

Decc's legal fees have cost taxpayers £58,000 so far, though this does not include the costs of their opponents, which the appeal court said Decc must also pay.

The court of appeal refused permission for Huhne to seek a hearing in the supreme court, but this does not prevent the secretary of state going directly to the higher court. He has 28 days to lodge permission to appeal. Some campaigners have suggested this continued uncertainty will reduce the number of new installations, and therefore reduce the number eligible for the higher feed-in-tariff if the government ultimately loses its case.

John Cridland, director-general of the CBI, said: "The judgment should be used to draw a line under this saga, which saw the government scoring a spectacular own goal and confidence in the renewables sector undermined."

Gaynor Hartnell, chief executive of the Renewable Energy Association, said the rejection of the appeal prevented a precedent being set which would allowed the government to make retrospective policy changes in future. "The government is well aware that it would be incredibly unwise to reduce payments to renewable energy producers after they had commissioned their projects, as it knows what immense damage that would do," she said.

The judgment stated: "The question [is] whether parliament conferred a power [to Decc] to make a modification with such a retrospective effect. It did not."

The cuts proposed in October – from 43.3p per kWh of energy generated to 21p – prompted a furious backlash, with the main complaint being the speed of the changes, which were designed to come into effect just six weeks later, on 12 December. Critics also drew attention to the fact that the consultation did not end until 23 December – over a week after the changes were proposed to take place.

In December, a cross-party group of MPs said in a strongly worded report that the reductions were "clumsily handled", had threatened jobs and could have dealt a fatal blow to the scheme, because the changes required homes to meet the C-rated energy efficiency standard before becoming eligible for the solar feed-in tariff.

David Parsons, chairman of the Local Government Association's environment board, said: "By announcing the cuts at such short notice, Decc caused the cancellation of thousands of solar panel installations. Some councils wrote off millions of pounds which had been spent preparing and tendering for installations."

How Green Became Obama's Albatross

The president is trapped by his own rhetoric amid America's energy boom.

Barack Obama may believe a lot of things, but he probably doesn't believe the Sierra Club is key to his re-election. His decision to nix the Keystone XL pipeline will cost him votes but he did it anyway.

We'll admit that Mr. Obama's global warming talk has often seemed to us perfunctory. Perhaps we mistook his lack of heat for a lack of conviction. He just released his first 2012 campaign ad and it's a paean to green energy. Maybe he's no less a believer than Al Gore, for all the problems this might seem to pose for what we thought we knew about our president.

For one thing, he's not given to unrealistic goals. He knows China and India are opening a new coal plant every week. He knows the huge amounts of fossil energy lying at humanity's feet won't be abandoned just because an American president says so. He can't fail to notice that Canada's oil sands won't remain undeveloped; the oil will go to the Far East.

Mr. Obama also seems enough of a free thinker to entertain the possibility at least that global warming theory may be wrong. In a telling exchange with interviewer Charlie Rose a few years ago, Al Gore was asked to describe the evidence of man's role in climate change. Each time Mr. Gore recurred to some version of a "consensus of scientists" or "the most respected scientists whose judgment I think is the best."

The truth is, the theory may be popular, but the evidence has thus far eluded the tens of billions spent on climate science. The temperature data are so noisy that they reveal no pattern connecting rising CO2 in the industrial age with temperature trends. Some say because CO2 is a "greenhouse" gas, shut up, case closed. But the known relationship between carbon and climate doesn't actually indicate a big reason to worry.

To produce worrisome scenarios, climate models must posit "feedbacks" that magnify the impact of CO2 by 300% to 500%. A cynic notices that these models became especially popular in the '90s, when measured warming exceeded what could be attributed to CO2, so new fudge was needed to preserve CO2 as the culprit.

Mr. Gore is not smart (no matter what the Nobel committee thinks) whereas Mr. Obama is smart and all these things have likely occurred to him. But he's also a political operator and an acolyte of radical theorist Saul Alinksy. He understands politics as a matter of power, and democratic politics as a matter of powerful coalitions cultivated and maintained with self-interest (aka money, money, money).

Oil, in Mr. Obama's world, is a "Republican" interest group; anything that's good for the oil industry is bad for the alternate power structure he's been trying to build with handouts and mandates for green energy.

Mr. Obama's relationship with global warming may indeed be perfunctory, but he understands the necessity of shibboleths to rationalize and justify the "investments" he's dishing out to manufacture a support base whose need for subsidies and regulatory favors jibes with the Democratic Party's need for donations. Oil sands are the "dirtiest" fossil energy, requiring great releases of CO2. To approve Keystone, then, not only would undermine his side's crucial shibboleths. It would compromise his own credibility as a leader who can be trusted to deny advantage to "Republican" industries and deliver it to "Democratic" ones.

Not for nothing did Canadian Resources Minister Joe Oliver, after Mr. Obama's Keystone decision, gripe about the influence of "billionaire socialists from the United States." Not for nothing did Mr. Obama's own supporters crow about Mr. Obama's ruling as a triumph over the industrialist Koch brothers, an allusion to whom even opens the new Obama campaign spot.

Presidents make traps for themselves: Signature initiatives cannot fail; they can only be doubled down on, as Mr. Obama was expected to do in Tuesday's State of the Union even as he also tried to make peace with the natural-gas fracking boom. Only fresh waves of rhetoric praising electric cars will suffice when taxpayers are figuring out that Obama policy has them subsidizing electric playthings for the affluent. Solyndra must be defended all the more fiercely now that solar is collapsing globally as countries repent of foolish subsidies. Green energy must be hugged to Mr. Obama's breast all the more tightly as the shale revolution renders hopeless any chance of wind and solar becoming cost-competitive with fossil fuels.

Mr. Obama is engaged in a "long game," says Andrew Sullivan, writing in Newsweek, making a point that no one doubted. But there's a difference between playing the long game and playing it well. The Obama long game is exactly how green energy metamorphosed from a policy notion into a political strategy and then into a dead weight his campaign must lug to November.

Still, let us admire the high-rolling political risk Mr. Obama takes in spurning affordable, strategically convenient energy from Canada. That risk includes, between now and Election Day, looking like a chump if oil prices surge because of the world's vulnerability to the narrowness of the Strait of Hormuz.

What does it take to change a lightbulb?

New US standards help spur the global move towards low-energy lighting technologies such as LEDs, and away from incandescent bulbs


Dave Levitan for Yale Environment 360, part of the Guardian Environment Network

guardian.co.uk, Tuesday 24 January 2012 17.04 GMT

Despite an outcry from U.S. conservatives that new lighting efficiency standards infringe on personal freedom, legislation mandating greater efficiency became law on January 1. Those new standards, along with major progress in lighting research and development, are helping usher in a technological revolution: Lighting companies — both large and small, in the U.S. and abroad — are rapidly building a better light bulb.

The incandescent bulbs that have lit the world since their invention by Thomas Edison are on their way out, to be replaced by newer technologies offering dramatic improvements in efficiency, energy use, and other environmental impacts.

Indeed, the way Americans think about a light bulb will have to change: Instead of a throw-away item worth merely a few cents, buying a light bulb will more closely resemble the purchase of a long-lived appliance. LED and CFL bulbs, along with other technologies, can offer one or two decades of use, rather than the paltry year of most traditional incandescent lights.

Lighting companies in the U.S. support the new standards, which, beginning this year, will gradually phase out traditional bulbs like the 100-watt in favor of new technologies that use at least 28 percent less power. These changes bring the U.S. in line with many other countries, including those of the European Union, which began a phase-out of inefficient bulbs three years ago. China's ban on 100-watt bulbs takes effect this year, followed by efficiency improvements for lower wattages through 2016.

The U.S. changes are long overdue. Efficiency standards for other technologies, such as refrigerators and washing machines, have been around since the Reagan Administration. With lighting accounting for around 15 percent of residential electricity use (and 35 percent in commercial buildings), phasing out the inefficient old bulbs represents a huge economic and environmental opportunity.

"There are about four billion screw-in sockets out there [in the U.S.], and today only a quarter of them have an energy-saving bulb in them," said Noah Horowitz, a senior scientist with the Natural Resources Defense Council. "When the standards are in full effect, we'll cut our nation's electric bill by about $12.5 billion a year and eliminate the need for 30 large power plants and all the pollution that comes from them. It's a big deal."

The new U.S. lighting standards are part of the Energy Independence Act of 2007, signed into law by President Bush with broad bipartisan support. The lighting provisions remained uncontroversial until last year, when they became a Tea Party rallying cry. "The American people want less government intrusion into their lives, not more, and that includes staying out of their personal light bulb choices," said U.S. Rep. Michelle Bachmann.

Some members of Congress falsely claimed that the legislation would ban all incandescent bulbs and require the purchase of compact fluorescent bulbs (CFLs). In fact, the legislation does not ban any class of bulbs, but rather requires that a 100-watt bulb now use a maximum 72 watts to give off the same 1,600 lumens. In December, Republican members of the U.S. House of Representatives managed to defund enforcement of the new legislation until October of this year, but despite that, the lighting industry is moving ahead with the new standards.

"The legislation is in effect, it has not been repealed, it has not been changed," said Terry McGowan, the director of engineering for an industry group, the American Lighting Association. "We made all the decisions for this back in 2007. Once you start investing money and changing production lines, that's very hard to turn off, and also very expensive."

The new U.S. standards come as lighting companies — ranging from leaders like GE and Philips to smaller companies such as Venture Lighting, GrafTech, and Vu1 Corporation — are developing a host of new technologies. These include a new generation of incandescent bulbs, called halogen incandescents: 72-watt bulbs are available now, for only a few dollars and with light output close to standard 100-watt incandescents, and can screw into existing sockets.

"It's a bulb that costs only marginally more," said Brian Howard, co-author of a book on new lighting technologies, Green Lighting. "You get the same color, temperature, light that we're used to. So really the only disadvantage is that they don't last quite as long as fluorescents." The lifetime of halogen incandescents is about two to three years, compared to six years and more for CFLs.

"I don't think we would have these new improved incandescents on the market if it wasn't for the standard," Horowitz said. "The industry has known how to do this for a long time."

In the new lighting revolution, the controversial compact fluorescent bulb will almost certainly lose ground to newer technologies. The unfamiliarly shaped CFL bulbs gained infamy due to shortcomings in light color and quality, along with warm-up delays and an irritating hum. But prices have come down and many of the technical problems have been addressed. The efficiency improvement is undeniable: A 100-watt-equivalent bulb that produces 1,600 lumens uses only 23 watts and lasts up to 10 years.

One issue seized on by opponents is the small amounts of mercury inside CFLs. But Horowitz said that CFLs still release far less mercury into the environment than incandescent bulbs. "While incandescents don't have mercury in them, they cause three times more [mercury] emissions at the power plant than the CFL does," Horowitz said. "And CFLs are down to two to three milligrams of mercury, which is the size of a pen point, and it stays inside the bulb." When a CFL burns out, consumers do need to recycle them properly, but Home Depot, Lowes, and others offer such services for free.

Howard and industry experts say that CFLs are likely to be replaced in the coming decade by LEDs, or light-emitting diodes. A solid-state technology, LEDs feature electroluminescence from semi-conductors, rather than thermal radiation coming off an electrical filament as with an incandescent bulb. LEDs provide light nearly equivalent in quality and color to incandescents, while offering both efficiency and lifetime improvements over CFLs. They also are completely programmable and will allow for smarter management of a home's lighting. Their drawback, for the moment, is sticker shock: Instead of a quarter for an incandescent bulb, a typical LED still costs more than $20.

That is changing fast. Sylvie Casanova, a spokesperson for Philips Lighting, said her company's standard LED bulb (equivalent in brightness to a 75-watt incandescent bulb, though requiring only 17 watts) was released about a year ago at almost $40, and is already down to $24.99. GE, Sylvania, and others have similar prices for their 75-watt-equivalent LED products. With rebates now available in some states, that can come down to $15.

"Fifteen dollars for a bulb that is going to save you $142 over the life of the bulb, which is 20 to 25 years, and your break-even point is at three years," Casanova said. "But the consumer doesn't consider what it is going to cost them to run that light bulb. They just look at the upfront cost."

Those upfront costs will most likely keep consumers away from some other technologies for the moment, but these may end up playing a role in the market in various ways. Electron-stimulated luminescence bulbs, or ESLs, for example, are efficient bulbs made by the Vu1 Corporation with a quality of light similar to incandescents. They make use of accelerated electrons that stimulate phosphor on the surface of the bulb, which emits light. The company says this results in 70 percent efficiency improvements over incandescents. So far, only a 65-watt-equivalent floodlight bulb is commercially available, but other versions are in the works.

Howard said that plasma lighting is also useful, especially for large commercial or industrial spaces. One company, Stray Light Optical Technologies, produces plasma bulbs with a stunning 23,000-lumen output and a 50,000-hour lifetime. They work by converting electrical power to radio frequency power, which turns a gas inside a tiny bulb to a plasma state that generates light.

Among the technologies that may enhance or reduce the cost of LEDs are organic LEDs, or OLEDs, and quantum dots. The former, already used in television screens and other displays, provides the electroluminescence from a layer of organic compounds that responds to a current flowing through it. Quantum dots, meanwhile, are tiny bits of semi-conducting material that allow for precise tuning of the light's wavelength. Effectively, that means that a LED bulb could approach even closer the light quality and color of a traditional incandescent bulb.

Casanova, of Philips, as well as the ALA's McGowan, acknowledged that the industry generally views LED dominance as inevitable. But not everyone thinks that is a foregone conclusion. Horowitz said that each of the main technologies — CFLs, LEDs, and new incandescents — has its advantages, and which one comes out on top is far from guaranteed.

One thing is certain, experts say: Consumer savings will start to pile up quickly. "Many people have 20 to 40 sockets in their home, so it really adds up," Horowitz said. "The average consumer... once they switch out their bulbs could save 100 to 200 dollars per year."

Even small steps have big ripples in this field: According to the U.S. Energy Star efficiency program, if every home replaced just one bulb with a more efficient version, the country would save $600 million a year.

Phasing out fossil fuel subsidies 'could provide half of global carbon target'

Such a move could save the equivalent of Germany's annual emissions by 2015, says chief economist at the IEA

• Fossil fuel subsidies: a tour of the data
Duncan Clark

guardian.co.uk, Thursday 19 January 2012 11.21 GMT

Eliminating subsidies for coal, gas and oil could save as much as Germany's annual greenhouse gas emissions each year by 2015, according to one of the world's leading energy experts.


Speaking to the Guardian, Fatih Birol, chief economist at the International Energy Agency (IEA), said such a move could provide half of the carbon savings needed to stop dangerous levels of climate change.


While the G20 pledged in 2009 to phase out such fossil fuel subsidies in the "medium term", the hundreds of billions that governments spend each year rose in 2010. The World Bank, economist Lord Nicholas Stern and green groups have also called for their removal.




"Energy markets can be thought of as suffering from appendicitis due to fossil fuel subsidies. They need to be removed for a healthy energy economy," said Birol. "Energy is significantly underpriced in many parts of the world, leading to wasteful consumption, price volatility and fuel smuggling. It's also undermining the competitiveness of renewables."



According to IEA research, 37 governments spent $409bn on artificially lowering the price of fossil fuels in 2010. Critics say the subsidies significantly boost oil and gas consumption and disadvantage renewable energy technologies, which received only $66bn of subsidies in the same year.




Birol and the IEA said that a phase-out would avoid 750m tonnes of CO2 a year by 2015, potentially rising to 2.6 gigatonnes by 2035, a level sufficient to provide half the emissions reductions needed to limit global warming to 2C, considered the limit of safety by many scientists. "Fossil fuel subsidies are a hand brake as we drive along the road to a sustainable energy future," he said. "Removing them would take us half way to a trajectory that would hold us to 2C."


Most of the world's fuel subsidies are given out in transitional and developing countries – especially those which themselves export fossil fuels. Sometimes the policies are seen as a way to alleviate poverty, but IEA analysis suggests that the poorest members of society do not see their fair share of the benefits.


"Just 8% of the $409bn spent on fossil-fuel subsidies in 2010 went to the poorest 20% of the population," Birol said. "It's clear that other direct forms of welfare support would cost much less." He added that the poorest people were being "punished twice", because the money used to make fossil fuels cheaper could instead be spent on schools, hospitals and other public services.


But phasing out fossil fuel subsidies can be hugely controversial. In Nigeria, the government's decision to scrap petrol subsidies at the start of this year led to more than a week of crippling strikes, as unions protested against a massive increase in prices at the pump. The country's president, Goodluck Jonathan, was only able to end the strikes by promising to partially reinstate the subsidies.


Birol said: "The drastic reactions we are seeing in Nigeria do not justify the indefinite maintenance of subsidies, but they highlight that reforms need to be implemented gradually and include targeted assistance." He added that Nigeria's subsidies hadn't necessarily been helping the poorest members of society, citing IEA research showing that "76 million people, or 49% of [Nigeria's] population, still lack access to electricity", despite the fact that it would cost only 0.6% of fossil fuel export revenues to solve this problem.


Most developed countries have already phased out policies that directly subsidise fossil fuel consumption. But recent analysis by the OECD suggests that these nations continue to prop up the oil, gas and coal industries in less obvious ways, such as providing tax breaks or favourable access to land and infrastructure.


These indirect mechanisms are worth an estimated $45–75bn. Coal, the most polluting of the three main fossil fuels, currently receives 39% of this support – mostly as a result of governments in Europe, and to a lesser extent Australia, Canada, Korea and the US, trying to ensure that changes to their coal-mining industries happen gradually rather than overnight.

GM microbe breakthrough paves way for large-scale seaweed farming for biofuels

Scientists have created a genetically engineered microbe that turns the algae into low-carbon biofuel, but must make the technique commercially viable


Damian Carrington

guardian.co.uk, Thursday 19 January 2012 19.00 GMT

The ancient art of seaweed farming could provide a solution to a 21st-century energy dilemma, with the creation of a genetically engineered microbe that turns the algae into low-carbon biofuel, scientists said on Thursday.

Biofuels have been touted as low-carbon replacements for petrol and diesel, but those made from crops like corn and sugar have been blamed for increasing global food prices and delivering only modest benefits.

Earlier studies have indicated that large-scale use of seaweed as an energy source could in theory supply the world's needs several times over and the UK government envisages between 560 and 4700 km sq of seaweed farms in its long-term energy planning.

The new microbe research, published today in the leading journal Science, represents a "critical" technological breakthrough, but the challenge of making the approach commercially viable remains.

"Natural seaweed species grow very fast - 10 times faster than normal plants - and are full of sugars, but it has been very difficult to make ethanol by conventional fermentation," said Yannick Lerat, scientific director at Centre d'Etude et de Valorisation des Algues, the algae study centre in France. "So the new work is a really critical step. But scaling up processes using engineered microbes is not always easy. They also need to prove the economics work."

The fact that a seaweed industry already exists is a major advantage, said Daniel Trunfio, chief executive at Bio Architecture Lab (BAL) in Berkeley, California, where the research was conducted. "People have been farming seaweed for 1,000 years. In China and Japan, you will see farms that are the equivalent of the midwest cornfields in the US," he said. "This can be a substantial addition to the fuel portfolio." He argues that using 3% of the world's coastal waters to grow seaweed would produce 60bn gallons of ethanol – more than 40% of the fuel burned by US cars and trucks. His company is backed by the US Department of Energy, Norwegian oil company Statoil and the government of Chile, where BAL owns seaweed farms and is building a pilot plant.

There are also seaweed farming pilot projects in Europe, including Swansea in Wales, Roscoff in France and a project testing the growing of seaweed among offshore windfarms.

A new microbe had to be engineered because the main sugar in seaweed, alginate, cannot be metabolised by microbes such as E Coli, which are widely used in laboratories and industrial processes. BAL chief science officer, Yasuo Yoshikuni, said the team worked out how a marine bacterium called Vibrio splendidus broke down alginate, then they took the genetic machinery responsible and spliced it into E Coli. Yoshikuni said their microbe gives 80% of the theoretical maximum yield, converting 28% of the dry weight of the seaweed into ethanol.

Farmed seaweed requires no fertiliser, said Yoshikuni, because coastal waters are often polluted by nutrients washed into rivers from farmers' fields. Cleaning these up would prevent large algal blooms that pollute some areas.

Significant challenges remain, however, according to Ben Graziano, technology commercialisation manager at the Carbon Trust. "From what I know of the use of seaweed in general, the costs are still five times higher than they need to be to get to a reasonable fuel price," he said. "The use of genetically modified microbes could be a concern in Europe - where the perception of negative impacts can be quite harmful - but less so in the US and elsewhere."

"But the potential is certainly there, not least because most of the Earth is covered in water," Graziano said. "If they can get the scale up and the costs down, it has huge potential."

Yoshikuni said that it would be possible to use the seaweed and microbe system to create other chemicals that may be sell for a better price than fuel, such as plastics, by switching in other metabolic pathways to the E Coli.

The use of microalgae - the green scum seen on lakes - is more common, with the US Navy, global shipping companies and Exxon Mobil all investing in the technology. But while seaweed produces ethanol that can be substituted for petrol, microalgae produces oils that can replace diesel. Microalgae also requires large growth ponds or tanks and fresh water, while seaweed has to be harvested, with most currently being collected by hand.

Another alternative biofuel source, which does not compete directly with food, is wood and straw. But breaking down lignin, the tough chemical – which with cellulose make up much of the material – is hard, according to Trunfio. "You are working against mother nature: lignin is why trees stand up for so long."

• The original version of the article stated that Daniel Trunfio argued that using 3% of the world's coastal waters to grow seaweed would produce 60bn gallons of ethanol instead of the correct figure of 60bn gallons.

'Bicycle pump' to turn wave power into clean energy

Searaser device that pumps saltwater to an onshore generator has been tested in prototype and praised by ministers

Damian Carrington

The Guardian, Monday 23 January 2012

Ecotricity has acquired the Searaser device, which harnesses the power of ocean swells to create electricity. Photograph: Ecotricity


An aquatic "bicycle pump" is set to take to the seas and turn wave power into clean electricity after being acquired by green energy company Ecotricity. The Searaser device, which pumps saltwater to an onshore generator, has been tested in prototype and praised by ministers.

Searaser uses the rise and fall of a large float to pressurise water, but unlike other wave power technologies does not generate the electricity in the hostile environment of the ocean. "If you put any device in the sea, it will get engulfed in storms, so it all has to be totally sealed," said inventor Alvin Smith. "Water and electricity don't mix – and sea water is particularly corrosive – so most other devices are very expensive to manufacture and maintain." The technology means the salt water and electricity-generating equipment never meet, and is done routinely in Japan.

The potential wave and tidal power available to the UK is considered enormous by government and could make a significant contribution to replacing coal and gas plants that emit the carbon dioxide that drives global warming. But the challenge of engineering devices that can survive in the hostile marine environment has left the technology lagging behind other renewable energy sources. Only one device, the Marine Current Turbines operation in Strangford Lough, Northern Ireland, is so far producing a meaningful amount of electricity for the National Grid.


Announcing the purchase of a controlling stake in Searaser, Ecotricity founder, Dale Vince, claimed: "We believe Searaser has the potential to produce electricity at a lower cost than any other type energy, not just other forms of renewable energy but all "conventional" forms of energy too."

Existing marine technologies, such the Pelamis "wave-snake" have encountered unforseen financial and technical difficulties. But Ecotricity claims "it is not over-ambitious" to expect 200 of the 18 metre-deep Searaser devices to be installed around the UK within five years, generating enough renewable electricity to power 236,000 homes.

The idea of Searaser came to Smith when he was playing with a ball in his swimming pool and felt the energy released when the ball bobbed to the surface. He said the device has the advantages of being extremely simple - like a bicycle pump - contains no lubricating or hydraulic oil, and is not a rigid structure and so can go with the flow in heavy seas.

But Smith said the most important aspect of his device is that it enables low-carbon energy to be stored in reservoirs on land and then released when needed, addressing the intermittent nature of much renewable energy. An existing quarry on Portland would be an ideal site, he said, or disused freshwater reservoirs. A project in Alderney is also planning to store saltwater in reservoirs, but in this case the water would be pumped using electricity generated by underwater tidal generators.

In Japan, grid electricity is used to pump the saltwater in order to store the energy for later use.

"Hydro has always been the cleanest and best energy," Smith said. "The problem in the UK is we don't have a Colorado river [that powers the Hoover dam] running off our hills."

The government plans to more than double the subsidy available to marine energy and the Crown Estate, which owns the seabed surrounding the UK, this month reduced the financial guarantees it requires from wave and tidal developers in case of accidents. "The UK leads the world in developing marine energy technology and it's vital that the sector continues to bring forward innovative new technologies," said Greg Barker, energy and climate change minister. However, ministers cut a marine energy deployment fund by 60% to £20m in June 2011.

MoD radar breakthrough promises green light to 4GW of windfarms

Ministry of Defence confirms it has tried and tested 'windfarm-friendly radars'

Jessica Shankleman for BusinessGreen, part of the Guardian Environment Network

guardian.co.uk, Monday 16 January 2012 11.18 GMT

The Ministry of Defence (MoD) has signed a deal that could unlock more than 4GW of windfarms currently stuck in the planning system, after successfully trialling a radar system that can ignore the spinning blades of turbines.

The MoD announced late last week that contractor SERCO had installed and successfully tested a Lockheed Martin TPS-77 Air Defence Radar at Trimingham on the Norfolk coast, which allows it to conditionally scrap its objections to five offshore wind farms in the Greater Wash.

The proposed wind farms boast a combined capacity of up to 3.3GW.

The department also confirmed, as reported last year, that it has ordered two more "wind farm-friendly radars", which will be paid for by developers and installed at Staxton Wold, North Yorkshire and Brizlee Wood, Northumberland, potentially unlocking a further 750MW of proposed projects.

The Brizlee Wood replacement was purchased to allow North British Windpower's 48 turbine Fallago Rig project to progress. But the mitigation solution could also remove objections to a number of other wind farms planned nearby.

According to the government's Renewables Roadmap, most of the 1.9GW of onshore wind farms that have been unable to gain planning consent for more than two years are held up by objections over radar interference because the spinning blades disrupt radar signals.

Wind turbines as small as 50kW can reflect radar waves, appearing on tracking screens as 'clutter' in an unpredictable and confusing way. However, independent wind farm developers often cannot afford to invest in expensive mitigation technologies designed to reduce the impact on radars.

Dr Gordon Edge, RenewableUK's director of policy, hailed the news as "the end of what has been a long-term obstacle for the expansion of wind energy".

"Through close co-operation with the Ministry of Defence, the industry is identifying its impact on our defence infrastructure and bearing its share of the costs of mitigating that impact," he said. "By doing so, we expand our ability to tap into Britain's world-beating renewable energy resources."

Today's news is the product of two memorandums of understandings between the wind energy industry and stakeholders, such as the MoD, the Crown Estate, and air traffic control operator NATS.

Commenting on the news, Minister for Defence Personnel, Welfare and Veterans Andrew Robathan said the MoD had played an "instrumental" role in "convincing the energy companies to collaborate and jointly fund the cost of the radar".

"This is good news for all parties to this arrangement," he added.

Smart meters could lead to huge rise in energy bills

Committee of MPs concludes that installation of intelligent meters is open to abuse by suppliers

Rajeev Syal

The Guardian, Tuesday 17 January 2012

Plans to roll out new and more sophisticated meters to every home in Britain are open to abuse by energy companies and should be regulated with more vigour by the government, a powerful committee of MPs has concluded.

Savings to the supplier from the installation of so-called "smart meters" might not be passed on to customers, while ministers may be over-reliant on an ineffective market to drive down prices, a report by the public administration committee finds.

It comes just days after one consumer group called for the government to halt the plans over fears that costs could escalate uncontrollably.

Margaret Hodge, the chair of the committee, said that the government will have to do more to ensure that consumers reap the benefits from the changeover.

"Consumers will have to pay suppliers for the costs of installing and operating smart meters through their energy bills and no transparent mechanism presently exists for ensuring that savings to the supplier are passed on. The track record of energy companies to date does not inspire confidence that this will happen.

"The government is relying on competition in the market to drive down prices. But, as has been previously reported by Ofgem, the energy market does not currently operate as an effective competitive market," she said.

"The department [of energy and climate change] should clearly set out what energy suppliers' responsibilities will be for engaging with consumers to deliver the benefits of smart meters; and how they will be held accountable to both the department and consumers," she added.

Under European directives, all member states are required to install "intelligent metering systems" to at least 80% of domestic electricity consumers by 2020.

The government has opted for a more challenging programme, with plans for energy suppliers to install smart electricity and gas meters in all homes and smaller non-domestic premises by 2019. The government plans to install 53m of them in all homes and small businesses in the country by 2019, at an estimated cost of £11.7bn.

The committee also voiced concerns over how the programme will affect vulnerable consumers and those on low incomes.

"Expecting these consumers to pay for smart meters is of itself regressive, and there is a risk that they may end up paying more through their bills where the costs of installing the meters outweigh the savings they are able to make," it concludes.

"The department should set out how it intends to ensure that vulnerable and low-income consumers do not miss out on the benefits from smart metering," a committee spokesman said.

Recently ministers were urged to halt the planned rollout of new energy meters until they can guarantee that the costs will not escalate uncontrollably.

The consumer campaign group Which? said the government's hands-off approach to the installation of smart meters by energy companies meant it was at risk of becoming a "fiasco".

The energy minister Charles Hendry, commenting on the report, said that the coalition government could not accept further "dither and delay" by re-examining how smart meters will be rolled out.

"We accept that in the past government had been too hands-off and that is exactly why we have brought the programme in-house. We are determined to take the scheme forward, with ministerial oversight and safeguards for consumers built in."

Cargo boat and US navy ship powered by algal oil in marine fuel trials

Substituting biofuel for bunker fuel may bring about revolution in world's shipping fleets

John Vidal, environment editor

guardian.co.uk, Friday 13 January 2012 17.59 GMT

Giant cargo boats and US navy warships have been successfully powered on oil derived from genetically modified algae in a move which could herald a revolution in the fuel used by the world's fleets – and a reduction in the pollution they cause.

The results of substituting algal oil for low-grade, "bunker" fuel and diesel in a 98,000-tonne container ship are still being evaluated by Maersk, the world's biggest shipping company, which last week tested 30 tonnes of oil supplied by the US navy in a vessel travelling from Europe to India. Last month, the navy tested 20,000 gallons of algal fuel on a decommissioned destroyer for a few hours. Both ran their trials on a mix of algal oil – between 7% and 100% – and conventional bunker fuel.

"The tests are not complete yet, but we had very few problems," a Maersk spokesman said.

Collaboration between the world's two biggest shipping fleets is expected to lead to the deployment of renewable marine fuels. Maersk uses more than $6bn of bunker fuel a year for its 1,300 ships, and the US navy, the world's biggest single user of marine fuels, burns around 40m barrels of oil a year. The navy plans to test more ships on algal fuel next year as part of its "green fleet" initiative and has pledged to cut 50% of its conventional oil use a year by 2020. Maersk hopes to achieve similar cuts in the same time.

"Shipping takes 350m tonnes of oil a year and causes 3-4% of all greenhouse gas emissions, so it is very attractive to find alternatives. We can envisage [the world's] ships being 10% or more powered by biofuels in 20 years' time," Jacob Sterling, the Maersk head of climate and environment, said.

The exact nature of the algae, one of 30,000 single-cell organisms known to exist in the wild, is a secret closely guarded by Solazyme, the company that manufactures the fuel in giant fermentation tanks in Pennsylvania. The fast-growing algae are fed crop or forest waste and convert their sugars to oil.

"The technology is there. The question now is how to scale up," Tyler Painterm, the chief finance officer of Solazyme, which has a contract to produce 450,000 gallons of biofuels for the navy's trial, said. "We have tested thousands of algae, found in swamps, in mountains and at sea and we know we can be competitive. By using different strains of algae, we can produce different kinds of oils."

The company, which is set to expand shortly with a 50m gallon-a-year plant in Brazil, is backed by the oil company Chevron, the giant US agribusiness Bunge, and Sir Richard Branson, whose Virgin airline has tested planes on algal fuel.

Unlike early biofuels, which made transport fuel from food crops, the new "second generation" process uses only plant waste and does not displace foods which could be fed to people or animals. Nevertheless, immense amounts of feedstock would be needed to power the world's ships. Maersk estimates it could take the crop waste of an area half the size of Denmark to completely power its ships.

But even a partial switch to algal oils would massively reduce air pollution. Bunker fuel, which is little more than asphalt, can produce as much pollution from a single ship in a year as 50m cars and is the most polluting fuel in the world.

But there is uncertainty over how much algal fuels would reduce greenhouse gas emissions. Algae sequester CO2 when growing, but release it when burned as oil. Solazyme and Maersk claim they reduce carbon emissions by 80% compared with petroleum-derived fuels in a "lifetime" analysis.

The race is on between different companies to produce competitive algal oils. In October 2010, the US Navy purchased 20,055 gallons on algae biofuel at $424 per gallon, but by December 2011, the price had reduced to $26.67 per gallon. Meanwhile, Craig Venter, the scientist who first sequenced the human genome and designed the first synthetic cell, is trying to develop a genetically-engineered algae fuel that depends only on sunlight and sea water and can be grown and harvested at sea.

In an interview in this month's Scientific American, he said: "We need three major ingredients: CO2, sunlight and seawater, aside from having the facility and refinery to convert all those things. We're looking at sites around the world that have the major ingredient. To us, this is a long-term plan."

If the US navy does switch to algae or other biofuels, it would mark the end of an era of oil-burning navies ushered in by Winston Churchill. In 1911, as the British navy minister, he controversially ordered the huge British fleet to switch from coal to oil for efficiency.

Two years later, he bought a 51% controlling interest in the then small Anglo-Persian Oil Company for the UK government. Within a few years, the company changed its name to BP, and is now the world's fourth-largest corporation.

Green energy investment soars to $260bn

New data shows worldwide funding of green energy projects rose by 5% last year
Suzanne Goldenberg in New York

guardian.co.uk, Thursday 12 January 2012 20.10 GMT

Global investment in clean energy reached a new high of $260bn (£169bn) last year – despite the financial crisis and the anti-environment agenda of Republicans in the US Congress, a United Nations investors' summit was told on Thursday.

Data from Bloomberg New Energy Finance, which tracks clean energy investment, showed a 5% increase compared with 2010, driven largely by a surge of money going to the solar industry.

Investment in solar power rose 36% last year to $136.6bn. And while the US domestic political scene was riven by the furore over a $535m government loan to the now bankrupt solar-panel manufacturer Solyndra, there was apparently little immediate direct fallout for industry.

The US made $56bn in clean energy investment last year, overtaking China, which invested $47.4bn. It is the first time since 2008 that the US has invested more. The surge reflected the phasing out of Barack Obama's economic recovery plan, which set aside as much as $80bn for the green economy, once investment in high-speed railways is factored in.

"The stimulus went out with a bang," said Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance.

The analysis was presented to 500 global investors meeting at the UN to try to mobilise the large-scale funds needed to address climate change. The $260bn figure includes investment in renewables, biofuels and smart technologies. It does not include natural gas, nuclear energy or clean coal.

The summit, organised by the Ceres sustainable business group, was also aimed at giving momentum to the Rio sustainability summit, to be held in June.

A separate analysis by Deutsche Bank's climate change advisors' group, which used a narrower definition of global investment in clean energy and energy efficiency, found an even more striking rise to $140bn in the first nine months of last year from $103bn over the equivalent period in 2010.

Kevin Parker, global head of Deutsche Asset Management, said: "Investors really have no excuse any longer for dealing with climate risk because it's going mainstream."

But there were also big losers in the clean energy world last year. Investment in wind fell 17% to $74.9bn. Meanwhile, manufacturers of wind turbines and solar panels are being squeezed by a drop in the price of raw materials and oversupply. The same pressures led to the downfall of Solyndra, which collapsed after receiving half a billion dollars under Barack Obama's recovery plan.

Republicans used the company's collapse to try to discredit Obama's entire clean energy agenda. But while those at the meeting dismissed the Republican charges as "smoke and mirrors", they acknowledged the difficulties for clean energy manufacturing.

In an another such example, Vesta Wind Systems, the world's biggest turbine maker, said on Thursday that it was halting production at one factory and cutting 2,335 jobs, or about 10% of its staff, to try to compete with Chinese manufacturers.

The company said another 1,600 jobs in the US were at risk as tax credits supporting the industry expire at the year's end.

That phasing out of economic recovery plans around the world could also affect prospects for 2012, Zindler said.

"Most of those dollars have now been spent," he said. "What that means is that next year industry will have to be more competitive and more cost-effective without government support."

But he said the "vast majority" of the $260bn figure was private funds. And – despite the political climate — there remained growing demand in America for renewable power, with 29 states in the US requiring utilities to generate a share of their electricity form wind, solar, geothermal, and biomass.

Analysts believe those mandates will create a demand for as much as $400bn in new construction of renewable power plants – a process under way despite the harsh Republican rhetoric against the shift to clean energy.

"This is about building stuff. This is about infrastructure," said one analyst.

There is also strong interest in clean energy from developing countries, with emerging economies such as India and Brazil needing more power.

"They need more power generation and they don't necessarily want that to be coal," said Zindler.

Biofuels become a victim of own success - but not for long

For the first time in a decade, the vast biofuel industry has stalled. But with crude prices still high, charting a course towards biofuels that do more good than harm is more vital than ever

Biofuels have become a victim of own success, it appears: for the first time in a decade global production has dropped. Production in 2011 dropped a touch from 1.822m barrels a day in 2010 to 1.819m in 2011, according to IEA statistics (p30) highlighted by the Financial Times.

The key reason has been the rising cost of the feedstock for most biofuels, corn, sugar and vegetable oil. And the main reason for the rising food prices is, many argue, the huge quantity consumed by biofuels. It's a big business. The global biofuels business would, if a nation, rank 16th in the world for oil production, just above the UK and Libya and a bit below Norway and Nigeria, all major oil producers. In the US, 40% of the corn crop now gets diverted into fuel tanks, giving the US 50% of global biofuel production.

On top of the peaking of production, the US has just phased out some fat subsidies and tariffs protecting the domestic biofuel industry from international competition. So is the biofuels boom over?

In a word, no. The key driving factor is the price of ordinary oil. In the medium and long term, crude prices seem very likely to remain high and vulnerable to shocks, such as the current Iranian situation. "Once oil is over $70 a barrel, conventional and new generation biofuels become cost competitive, certainly with tar sands and shale, and with oil from much of the Middle East and Brazil's new offshore fields," said Jeremy Woods, at Imperial College, when I spoke to him in March. Today, Brent crude is at $113. The IEA predicts a 20% rise in biofuel production to 2.2m b/d by 2015, although that is a slower rise than in the past.

This brings us to the environmental crux. "The less biofuel you have the more gasoline you need," Amrita Sen, oil analyst at Barclays Capital in London, told the FT. With petrol and its emissions known to be harmful to the atmosphere, and frequently the land and oceans, surely environmentalists would campaign for more biofuels?

As we know, that has not been the case and with good reason. Rising food prices, destruction of forests and other habitats and poor treatment of workers - which I have seen with my own eyes - has brought opposition from greens. Better public transport and electrified private transport are the answer, they say, and in any case many biofuels do not even lead to cuts in climate-warming carbon emissions.

However, there's one very striking line in the IEA statistics I linked to above. There is virtually no biofuel production in Africa, a continent where energy is frequently in desperate demand. The like-for-like replacement that biofuels offer means cheap, existing vehicles could be run on them. And Africa has land, lots of land. In the best of worlds, sustainable and equitable biofuels produced in African countries for domestic use would solve many problems.

The economic pressure on Brazil's biofuels industry - from poor sugar crops and underinvestment - is relevant here. Brazil will not let its biofuel industry wane: it has ambitions to be the "world's environmental first superpower". A grand phrase, you might think, but it's backed up by some hard facts too. Brazil has more patents related to biofuels than any other nation and it is working hard to export that know-how to Africa.

Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out. But with crude prices showing no prospect of falling, biofuels certainly have a future, especially in the developing world. So we'd better make it a good one.

'Green Deal' suffers setback as number of lofts being lagged plummets

Government's flagship energy policy appears doomed after figures show 93% decline in efficiency measure

Damian Carrington

The Guardian, Friday 13 January 2012

The government's flagship green policy to transform the energy efficiency of 14m homes and create 65,000 jobs appears doomed to fail, with the revelation of its own figures showing the number of lofts being lagged is set to plummet by 93%.

The Green Deal is at the heart of the government's ambition to be the "greenest ever" as it will deliver large cuts in climate-warming carbon emissions, as well as curbing high energy bills by making houses warmer and less expensive to heat.

The disclosure is the most startling yet about the Green Deal programme, which starts in October and has been billed by ministers as the most ambitious national refurbishment scheme in the world.

Britain's homes are old and leaky by international standards and millions of lofts and cavity walls remain poorly insulated. These home energy efficiency measures are seen as the cheapest way to cut bills and carbon emissions.

But the new data, obtained by Building magazine and from Department of energy and climate change's own impact assessment, throws the government's grand ambition into serious doubt. Current government schemes that subsidise insulation have resulted in just over 1m lofts a year being lagged in recent years, yet this will plunge to just 70,000 a year under the Green Deal, according to Decc figures. This is also far below the 2m per year required to meet climate targets. For cavity walls, the current 510,000 a year being filled will fall to 170,000, a drop of 67%, and again far below the 1.4m a year required.
Home insulation installations Photograph: guardian.co.uk
"These stunning figures show that the government's Green deal is in danger of becoming a car crash," said Luciana Berger, Labour's shadow climate change minister. "At a time when millions of families are struggling with their energy bills, it beggars belief that this government will cut the number of people getting help to insulate their homes by as much as 90%, scrapping successful schemes introduced by Labour."

"The most effective way people can save money on their bills is by improving their home's energy efficiency, but this government is so out of touch it is making it harder to do," she said.

Existing insulation schemes subsidise the cost of insulation with, for example, energy company E.on this week offering free loft and cavity wall insulation plus a £100 incentive. The funding comes from a levy of £25 a year on all bills and from government coffers. The Green Deal, by contrast, offers no subsidy for these measures and instead provides a loan enabling the up-front costs to be paid back using the savings made on heating bills.

However, the new Decc figures show that the take-up of the Green Deal is expected to be very low. In December, in an unprecedented intervention, the government's official independent advisers warned in an open letter that the Green deal was set to fail, reaching just 2-3m households of the 14m targeted. "The paradox is that the government's own impact assessment suggests the policy will not deliver its objective," said David Kennedy, chief executive of the Committee on Climate Change. "There is a difference between the rhetoric and their own assessment."

He said the Green Deal removed the existing obligations on energy companies to deliver installations and left it to the open market to deliver. "We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK."

The government's plans, currently undergoing a public consultation, do include an Energy company obligation, funded by a levy on all bills. But as it stands that will only be available to so-called "hard-to-treat" homes, in effect those with no cavity wall and hence needing solid wall insulation. The Decc figures show solid wall insulation rising by 10-fold to 153,000 a year.

But Decc signalled to the Guardian on Friday that the ECO might be used for some cavity walls. "One of the things we are considering is whether four million harder to treat cavity wall jobs that still need to be done could be covered under ECO," said a spokeswoman. "The ECO will provide extra financial support for very expensive jobs that don't pay for themselves over their lifetime. But the reality is that loft and cavity wall insulation is something that millions have already taken up meaning there's a finite number of jobs left to do."

In the UK, Decc statistics show that 10m (43%) of all lofts remain unlagged and 8m houses with cavity walls (42%) have yet to be insulated.

"Decc has been staring a big question in the face for a long time: why would people take out a loan to pay for something they can currently get cheap or for free?" said Dave Timms, energy campaigner at Friends of the Earth. "These figures show they won't and that installation rates of loft and cavity wall insulation are going to drop off a cliff. It needs to turn around a come up with a comprehensive strategy to tackle fuel poverty and energy efficiency. The Green Deal is a finance plan, not a strategy, and as it stands, the results will be disastrous. You need to surround the Green Deal with a much more potent mix of tax breaks, compulsory improvements and other incentives."

The government has already announced a £200m fund to help incentivise take-up and other measures that have been discussed include cashback offers, council tax or stamp duty rebates, and changing building regulations so that people who renovate their homes improve its energy efficiency at the same time.

Free book: The Rough Guide to Community Energy

A new book is being distributed for free to encourage people to launch carbon-cutting and renewable-energy projects in their local communities. The book covers everything from setting up a group to picking a renewable technology, as well as providing advice on finances and governance. It also features many case studies of real-world groups – two of which are extracted below

• Read the full version or request a printed copy

Duncan Clark and Malachi Chadwick

guardian.co.uk, Friday 6 January 2012 14.22 GMT

MOZES in the meadows

The MOZES project, in the Meadows area of Nottingham, is a great example of the wider community benefits of local energy projects. Separated from the rest of the city by main roads, the Meadows has struggled with poverty and crime. In 2004, a group of residents decided to see if an energy project could help restore pride to the increasingly embattled community. The result was Ozone, a regeneration scheme designed to help the Meadows become the first inner-city community to actively reduce its carbon footprint.

After a year, with the project foundering due to lack of proper backing from the council, some of the people involved explored the idea of establishing a community-owned energy services company to help residents cut carbon and avoid debt and fuel poverty. With startup funding and practical support from National Energy Action, MOZES (the Meadows Ozone Energy Services Company) was born – an inspiring initiative that gives the lie to the idea of community energy as a worthy, middle-class preoccupation.

The group was given a boost when Nottingham Energy Partnership stepped in with funding for a part-time energy assessor and debt advisor based at the Meadows Partnership Trust (MPT) – a local regeneration organisation that was to become one of MOZES' primary allies in the area. A few years on, MOZES has a number of successful projects under its belt and shows no sign of slowing down. Key to its success has been the Green Streets programme, which helped the group provide dry-lining insulation, modern boilers and energy monitors to 32 Victorian homes on the estate.

The economic profile of the area has made MOZES wary of the community share issue model preferred by many energy service companies, but the group's zealous pursuit of grant funding paid off when they secured £650k as part of the government's Low Carbon Communities Challenge. This paid for solar panels on 55 local houses, three schools and two community buildings – in the process throwing up some technical challenges. MOZES director Julian Marsh, a local architect and lecturer, explains: "We realized we could only put PV on a few houses per street – any more and the local networks can't take it. Some people's household electrics weren't up to scratch either. For domestic PV to work the systems need to be up-to-date and properly earthed."

Those hosting the panels can use the electricity generated, but the revenue from the Feed-in Tariff is returned to the community. Marsh sees this as an ideal use of the FIT subsidy. "The idea is to create a community endowment. The panels should bring in about £20,000 a year, which can be reinvested in future projects. We're looking forward to doing something similar with solar thermal when the Renewable Heat Incentive comes in."

The team are already seeking to broaden the scope of the project. After working with English Nature to resolve "some bat issues", they have secured planning permission for a 300kW wind turbine on the banks of the River Trent, and are looking at their options for funding construction. The Green Streets relationship has also allowed MOZES to turn the Meadows into a test bed for future energy systems. An experimental carbon-negative house has been built, with 38 more ultra-efficient residences in the pipeline. Plans are also in place for a trial of residential CHP.

Marsh encourages those looking to emulate MOZES' success to "take advantage of what's already available" in the area. In the Meadows, that included MP Alan Simpson, who recently stood down to focus on full-time environment work. "Without the help of our MP, MOZES would be nowhere."

Settle Hydro

Small-scale hydropower was commonplace in the Yorkshire Dales until cheap fossil fuels and the decline of local industry consigned it to history. Now, the push for renewable energy is giving this venerable technology a new lease of life in schemes such as Settle Hydro – a 50kW reverse Archimedean screw that sits on a weir built for watermills and even uses the original mill race to draw power from the River Ribble. A small amount of the resulting electricity is fed to the building next to the old mill, with the rest (around 90%) being sold to the grid.

The project arose from a partnership between local environmentalists (Green Settle) and a community group (Settle Area Regeneration Team). Helped along by H₂OPE, an organisation that supports community hydro, the coalition formed a volunteer-run Industrial and Provident Society to manage the scheme. The volunteers' commitment was soon put to the test, however, after being denied planning permission twice. The team went to the final appeal armed with a summary of every carbon reduction pledge the council had ever made, which project co-founder Ann Harding read out to the committee. That seemed to do the trick.

The £410,000 upfront cost was raised in stages. September 2008 saw the first community share issue. The group put a great deal of work into the share prospectus and promotion and by December they had already raised £140,000 from 166 investors. That success gave the project access to grants from environmental and regeneration bodies, which brought them up to the two-thirds level they needed for a bank loan from Charity Bank, which provided £125,000 on "massively helpful" terms. Investors, Ann says, can expect a return in the sixth or seventh year of operation, though much of the income will flow directly to community projects.

As one of the first projects of its kind, Settle Hydro's dealings with the regulatory system were frustrating. It should, for example, be receiving income from the Feed-in Tariffs, but that has been held up because Ofgem had no procedure for community hydro schemes. The Environment Agency was also unhelpful, insisting on major design changes without explanation. (To its credit, the Agency appears to have learned from these mistakes, overhauling its procedures and hiring a full-time hydro support officer.)

By an unfortunate coincidence, the first turns of Settle's screw coincided with the start of the biggest drought since 1929, putting the first year's output at less than a third of the 165,000kWh originally projected. But the team expects to be able to make efficiency gains by lifting the screw's maximum speed (which is limited to reduce noise) and project co-founder Steve Amphlett sounds confident when he predicts 140,000kWh in year two.

Ann and Steve receive correspondence from groups all over the world seeking to reproduce their success. They consider this outreach work to be crucial but are wary of the potentially bottomless pit of work it presents. "It's our responsibility to lead by example and make sure the site always looks fantastic, but we're still just volunteers, and there's only so much we can do."

At least the project development work is out of the way, however. Juggling the legal, financial and bureaucratic elements required to get the scheme up and running took 20–30 hours of Ann and Steve's time each week, on top of already demanding full-time jobs. But the hard work was worth it, as their pride in the project is unmistakeable. "Lots of people talked about doing this but we can come back years from now and say we actually went ahead and did it … we fought the battles and cleared a lot of obstacles so others won't have to."

• These case studies are excerpted from The Rough Guide to Community Energy, by Duncan Clark and Malachi Chadwick. The book is published by Rough Guides, supported financially by M&S and is being distributed by 10:10.

The communities taking renewable energy into their own hands

Despite the economy, people are investing in solar, wind and hydro power for their local communities

• Free book: The Rough Guide to Community Energy


Ed Mayo for Ecologist, part of the Guardian Environment Network

guardian.co.uk, Friday 6 January 2012 14.40 GMT

Late last year we - Co-operatives UK and The Co-operative Group - published a new report which reveals the growing number of people who are choosing to start renewable energy co-operatives in their communities, against all the odds.

What is exciting about the report is that it is the first and most comprehensive guide to what amounts to a new movement of communities who are taking action for greener energy into their own hands.

In a time of doom – when all talk is of cuts, unemployment and rising prices – this report highlights a different story. Despite, or maybe even because, of the wider economic woes, people across the UK are creating a co-operative movement for green energy.

There are now 43 communities who are in the process of or already producing renewable energy through co-operative structures. They are set up and run by everyday people – local residents mostly – who are investing their time and money and together installing solar panels, large wind turbines or hydro-electric power for their local communities.

The report highlights a series of examples. Like Ouse Valley Energy Service Company, which is owned by 250 people who have installed solar panels on a local brewery. Or River Bain Hydro, which installed a hydro electric power generator in its local river with investment of £200,000 from around 200 people.

The report also shows that together across the UK local residents have invested over £16 million in these co-operatives. These range from over £4 million which has been invested by over 2,700 people in Westmill Wind Farm in Oxfordshire, right through to around £38,000 which has been invested by around 34 local residents to install solar panels on a local primary school in Nayland, Suffolk.

Overall, Co-operative renewable energy in the UK is a testimony to the fact that green economy co-operatives are the fastest growing part of the UK co-operative sector, having grown by an astonishing 24 per cent since 2008.

What amazes me about this growing movement is that it is emerging against all the odds. This government's rhetoric about supporting community owned renewable energy has not yet been backed up by an integrated plan to make it a reality. As many of the people in renewables co-operatives in the report say, there's a lot stacked against communities on this – changing legislation and red tape, not to mention hard economic times.

For a start, government legislation keeps shifting, and there's no better example of this than the government's recent slashing of the solar Feed in Tariff. Whilst we recognise that the solar tariff was generous, the early and dramatic nature of the cut means several energy co-operatives have been put on hold.

Like many, Co-operatives UK and The Co-operative Group are campaigning on this in the hope that government will introduce the planned premium community tariff that encourages communities to create green energy together. But the fact that it was cut at such short notice has been a serious set back for many co-operatives.

Planning hurdles and bureaucracy are also a major problem for small community renewable schemes. With complex planning regulations and a wide range of organisations to deal with – the Environment Agency, Distribution Network Operators, local authorities, funders and so on – it is hard for small community renewable schemes, often set up and run by local volunteers, to get things set up.

River Bain Hydro, for example, has successfully set up a hydro electric scheme in North Yorkshire, despite spending a large proportion of its limited time negotiating with power companies because of a lack of co-ordination. As they explain: "Between the power house and the grid, a distance of a hundred yards, we ended up with five different organisations involved in delivery."

With a financial crisis, cuts and difficult environment, perhaps we shouldn't be surprised that people across the UK are coming together to create green energy themselves. The co-operative sector, which has always been there to support people trying to make a difference, is doing all it can to help – whether through schemes to support community shares or through The Co-operative Bank's commitment to invest £1 billion in renewable energy by 2013, and its broader support for new co-operative enterprises.

As we all know now, we have built an economy based on a financial house of cards of banks, bonds and bail-outs. When you strip away the hype and hope, the only feasible alternative strategy is one that is based on bootstrap development of local enterprises such as these, making use of the three unlimited sources of wealth we have – people, ingenuity and renewable energy.

• Ed Mayo is Secretary General of Co-operatives UK, the trade association for co-operative enterprises.

Vestas Future Questioned After Revenue Forecasts Cut Twice

Jan. 4 (Bloomberg) -- Vestas Wind Systems A/S, the biggest wind-turbine maker, fell to its lowest since 2003 in Copenhagen after cutting its sales forecast, prompting analysts to say management’s future and chances to avoid a bid may be in doubt.

Reducing its revenue and profit outlook for the second time in two months yesterday was “another blow to investor confidence” in the Aarhus, Denmark-based manufacturer, which already was at an “all-time low,” said Sean McLoughlin, vice president of clean technology research at HSBC Bank Plc.

Vestas, whose shares have lost 92 percent from a 2008 high, blamed higher costs and delayed wind farms, helping drive down shares in rivals Gamesa Corp. Tecnologica SA of Spain and India’s Suzlon Energy Ltd. Its plan to unveil a restructuring on Jan. 12 without giving a hint of its nature left analysts questioning management’s credibility.

Chief Executive Officer Ditlev Engel may face investor pressure to resign as stumbling in the second half of 2011 was related to “bad execution” rather than turbine demand, said Julien Desmaretz, an analyst at investment bank Bryan, Garnier & Co., who lowered his rating to “neutral” from “buy.”

Michael Holm, a spokesman for Vestas, brushed aside takeover speculation saying, “We are for sale every day on the stock exchange.” He said questions about the impact on management will be answered next week by Engel.

‘No More Credibility’

“Investors are willing to see a new management on board because the current one has no more credibility,” he said. “Vestas struggled to deliver according to its plan and that is the main problem.”

The stock closed down 19 percent at 56.25 kroner. local time. Vestas’ 600 million euros of 4.625 percent bonds that mature in 2015 fell 3.2 percent to 84.50, the lowest price since the bonds were sold in March 2010.

“The cheaper it gets the more attractive takeover target it becomes,” McLoughlin said. The possibility of a bid on Vestas is “modest” at the current price though increases “as the shares drift towards 50 kroner,” Arnaud Brossard, an analyst at Exane BNP Paribas, wrote in a note.

Vestas and U.S. rival General Electric Co. are suffering from slower demand growth and narrowing margins caused by subsidy cuts in Europe and rising competition from Asian turbine makers such as China’s Sinovel Wind Group Co., the world’s second biggest, according to a BTM Consult ranking.

Restructuring Plan

The Danish company said yesterday it would announce a “significant change of the whole organization” on Jan. 12, giving no details except that it wouldn’t involve tapping equity markets or seeking a strategic investor.

“Only a large group would be able to handle the required R&D investments and the likely continued price war in the wind industry in the coming years,” Brossard said. He mentioned General Electric Co., Siemens AG and United Technologies Corp. as large industrial groups already involved in wind.

The company has “a good product portfolio and customer base, which is always attractive for a bidder,” Desmaretz said. “I still see a lot of value in Vestas.”

Vestas said it would defer 400 million euros in 2011 revenue to this year because of delays in connecting wind farms to power grids and bad weather stalling construction of several projects. Its forecast for earnings before interest and tax for last year was reduced from about 255 million euros to zero. Ebit margin forecasts were cut Oct. 30.

The restructuring “could actually be a damp squib rather than necessarily a new beginning,” McLoughlin said today by phone. It will likely increase volatility in the stock while investors speculate over its nature, he said, downgrading his rating from “neutral” to “underweight.”

Cost Cuts

The company will likely announce a cost-saving program to help 2012 margins, Desmaretz said in an interview. Vestas may choose to locate more of its production facilities outside of Europe in Asia or the South American market, he said.

Rupesh Madlani, an analyst in London at Barclays Capital, was more positive, saying today in an e-mail that it may be a “turning point” for the company.

“The restructuring will involve a leaner, more customer focused business model with fewer operating regions and a more globalized approach to managing customer relationships, the supply chain and capacity,” Madlani said.

Delays at the company’s Travemuende generator factory in Germany during the third quarter led to late delivery and commissioning of projects, meaning Vestas had to push revenue into this year.

Wind Rivals

Gamesa Corp. fell as much as 5.9 percent today. Haakon Levy, an Oslo-based analyst at DNB Markets, has a “sell” recommendation the Spanish turbine maker due to its loss of market share and deteriorating earnings.

“Vestas’ very high order intake in 2011 that was announced yesterday confirms our view that Vestas is actually gaining market share at the expense of smaller and mid-sized European players such as Nordex and Gamesa,” Levy said today by e-mail. Suzlon fell as much as 3.5 percent.

Vestas announced cost overruns of 125 million euros linked to development of the company’s V112-3.0 megawatt turbine model and GridStreamer technology for its 2-megawatt design.

Both Gamesa and Nordex are boosting production of new products, according to Desmaretz. “Market may fear similar cost overruns for them too,” he said.

“The only read-across from yesterday to other stocks is in the negative commentary on the renewal of the production tax credit in the U.S.,” Martin Prozesky, an analyst at Sanford C Bernstein Ltd., said in an e-mail. The so-called production tax credit that gives an incentive to turbine operators is due to expire at the end of this year. Engel said in November U.S. turbine sales may “fall off a cliff” unless it’s extended.

Zero Ebit

Vestas now expects sales of about 6 billion euros for 2011, down from the 6.4 billion euros it forecast on Oct. 30, which itself was a reduction from 7 billion euros.

About 130 million euros of the shortfall in Ebit is due to last year’s delays and revenue deferral while the development costs of the V112-3.0 model and GridStreamer would absorb 100 million euros, according to Vestas.

As a result, the company’s Ebit margin will be “approximately zero percent” down from about 4 percent with cash flow remaining positive in 2011.

Delays relating to weather, connecting wind plants to the grid “and other disruptions” meant some projects would not be counted as revenue until the first quarter of this year.

Orders Increase

Vestas also said it had orders for turbines with 7.4 gigawatts of capacity last year worth 7.3 billion euros, in step with its forecast of between 7 gigawatts and 8 gigawatts. Some customers postponed signing contracts for a “number of major orders from 2011 to 2012,” according to the statement.

The company could become a takeover target, according to Desmaretz. Potential bidders could be a large electrical company. Alternatively, a Chinese or Korean company seeking European or U.S. markets may be tempted by Vestas’s track record in the biggest wind markets.

The delayed turbine orders mostly were from customers in Europe, the company said during the call yesterday, and most fourth-quarter sales originated in Europe.

Vestas is scheduled to announce full-year orders data in its annual report on Feb. 8.

--Editors: Todd White, Reed Landberg

To contact the reporters on this story: Sally Bakewell in London at sbakewell1@bloomberg.net; Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net