Climate change clash in U.S. 'a debate over the economics'
Some of the most powerful corporate leaders in America have been meeting regularly with leading environmental groups in a conference room in downtown Washington for over two years to work on proposals for a national policy to limit carbon emissions.
The discussions have often been tense. Pinned on a wall, a large handmade poster with Rolling Stones lyrics reminds everyone, "You can't always get what you want."
What unites these two groups — business executives from Duke Energy, the Ford Motor Company and ConocoPhillips, as well as heads of environmental organizations like the Natural Resources Defense Council — is a desire to deal with climate change. They have broken with much of corporate America to declare that it is time for the federal government to act and set mandatory limits on emissions.
What divides them is that dealing with climate change will almost certainly hurt some industries and enrich others. Billions of dollars are at stake.
"It's really now a battle over the economics," said James Rogers, chief executive of Duke Energy, who has long advocated curbing carbon emissions. "The debate is not about the climate problem. Everybody could agree on the principles and still get the economics wrong."
"If they are not at the table, they will not have a hand in the making of the regulation," said Robert Stavins, director of the environmental economics program at Harvard University.
That recognition led to the Climate Action Partnership, the Washington group, in which corporate behemoths and environmental groups have been debating climate policy for over two years, sometimes meeting every week, in order to force the issue.
"The reality is that cutting emissions is going to cost money," said Peter Fusaro, chairman of Global Change Associates, an energy and environmental consulting firm.
U.S. lawmakers scramble to close energy 'loopholes'
With gasoline prices in the United States perhaps bubbling up toward a once-unthinkable $5 a gallon, lawmakers in Washington are running frantically to do something - anything - to halt the parabolic rise in the price of oil.
Congressional leaders are focusing their attention on speculation in the energy markets by index funds, investment banks and hedge funds, which, they believe, are behind the recent increases in the oil price. They say that Wall Street has been exploiting many "loopholes" created in the past few years by legislation aimed at liberalizing the futures markets. They argue that this has basically turned the commodity market into a virtual casino where the American consumer always loses.
If successful, the new limits on trading could shut down a profit center that many on Wall Street have come to depend on. But some traders argue that it could just shift the profit-making machine from exchanges and hedge funds to the investment banks and prime brokers, as the laws would force trading underground. But if it kills investors' appetite for commodity investing, Wall Street could lose big.
U.S. surveillance of oil trade seen as only short-term solution
Energy experts said the move could spook some big investors into trimming back their positions to stay under the regulatory radar and defend against the possibility that other big investors will do the same.
"Just as traders may have been more willing to bet on prices rising higher in the belief that there was this ongoing flow of buying to drive it to new highs, now there's more of a question mark," said Tim Evans, analyst for Citi Futures Perspective in New York.
Oil prices have risen sixfold since 2002 to a record of more than $135 a barrel as surging demand in China and other developing economies strains global supplies, drawing in billions of dollars in cash from short-term speculators to longer-term investors like pension funds.
The amount of money put into commodity index funds, which give investors exposure to a basket of commodity futures, has swelled from $70 billion at the beginning of 2006 to $235 billion in mid-April, according to Lehman Brothers estimates.
Some analysts argue that a steep increase in investment in these indexes in recent months is responsible for the 30 percent rise in crude this year, sending prices to levels not supported by supply and demand fundamentals and creating an oil "bubble."
Oil-price spike spurs search for new technology and alternatives
The surge in the price of crude has now reached the point where it is threatening global growth, adding urgency to the scramble to find new technology to either keep conventional oil flowing or supply cheaper and less polluting energy alternatives.
"Our time is very definitely coming," said Jeremy Leggett, chairman of British solar power company Solarcentury and a former environmental campaigner. "The world is going to be beating a path to our doors."
In a sign of the shifting mentality, the famous Texas oilman T. Boone Pickens, who made billions betting on higher oil prices, has gone green with a plan to spend $10 billion to build the world's biggest wind farm.
The energy analyst and oil historian Daniel Yergin said last month that record U.S. crude oil prices had reached a "break point" that would spur a shift away from transportation running on oil toward alternatives.
"We'll see growth slow globally," said Jay Bryson, global economist at Wachovia Bank. "But the big losers are the oil importers of the world, including Korea, Japan, China and a lot of other Asian economies."
"Obviously, the winners in this game are those who export oil," said George Friedman, founder of the intelligence group Stratfor. "The victory is not only economic, but political as well. The ability to control where exports go and where they don't go transforms into political power."
Oil companies eschew renewable energy
Oil companies are facing more and more calls from shareholders to invest in alternative energy but the companies themselves may lack the profit motive, the entrepreneurial skills or indeed the will to satisfy their demands.
Other oil companies, including Royal Dutch Shell and BP, already have renewable energy operations. Still, even they are being pushed to do more by investors attending their annual meetings this year who called on them to boost their investments, which currently amount to 1 percent of total capital expenditure.
With oil prices soaring to records of more than $130 a barrel, the firms certainly have plenty of money to invest.
But instead of splurging on research on new forms of energy, they are returning billions of dollars of excess cash to investors in the form of share buybacks, which help support the stock price, and dividends.
"Most oil firms seem profoundly uninterested in disrupting a business model that is delivering substantial returns," said Innosight's Wunker.
They also don't seem to feel much urgency about the issue.
Most of the world's largest oil companies are confident that there is enough oil left on the planet for them to continue drilling for decades to come. The key, they say, is to obtain access to these supplies, much of which are held by nations who have placed more onerous terms on the majors as the cost of crude has soared.
Exxon has argued that fossil fuels will continue to provide about 80 percent of global energy in 2030. And Shell's chief executive, Jeroen van der Veer, said in a March strategy presentation that he would like for the company to have at least one material renewable business - by the middle of the century.
Even BP, the oil company that has moved most prominently into alternative energy, acknowledged earlier this year that investors had not been helped by its investment in renewable energy.
"None of us believe that there is very much of that, if anything, in our share price today," the BP chief executive, Tony Hayward, said in February. He argued that the roughly $1 billion the company has spent on its renewable energy division should be worth up to $7 billion.
Jason Kenney, oil analyst at ING, agreed that share targets did not reflect the value of the renewable assets.
BP is now looking at a part flotation of some of its renewable energy businesses, although the company said it would continue to invest in green projects where they made sense.
Some analysts and investors are concerned that the push for diversification into green energy may be motivated more by environmental concerns than a focus on the companies' bottom line.
CHILDS DAY WITHOUT THE CHILDREN
It is meant to be a celebration of childhood, but in Sichuan Province on Sunday, Children's Day turned into a day of mourning, and a provocation to parents whose children were crushed to death by falling school buildings during the powerful earthquake three weeks ago.
At a half dozen schoolyards across the region, where jagged piles of former classrooms are encircled by undamaged apartment buildings, parents came to grieve and to demand answers.
In the town of Wufu, they shouted slogans about corrupt politicians. In Mianzhu, they staged a sit-in. And in Juyuan, they were shooed away by soldiers who had sealed off the grounds of a middle school so workers could search for the bodies of seven children still missing. By noon, one had been recovered.
Over the weekend, the government raised the death toll from the May 12 earthquake to just over 69,000, with 18,800 more missing and thought to be dead. The state news media reported that a helicopter evacuating injured survivors crashed Saturday in the fog near Wenchuan, with the fate of the five crew members and 14 passengers unclear.
On Sunday, government news agencies reported the completion of a canal designed to drain water from a blocked river that had been threatening more than a million people downstream.
The official news media, however, largely ignored the parents' Children's Day gatherings.
At Xinjian Primary School in the city of Dujiangyan, about 600 people put on white T-shirts with red lettering on the front and back. "We firmly ask for justice for the dead students," read one side. "Severely punish the corruption in the tofu construction," read the other, a reference to flimsy buildings.
More than 240 children died at the school.
Dallaglio off in style with Wasps win
LONDON: Lawrence Dallaglio signed off in style when the Wasps team he has served for 18 years outmuscled, outkicked and outlasted great rivals Leicester to win the English Premiership final 26-16 at Twickenham on Saturday.
A crowd of 81,600, a world record for a club game, rose as one to salute former England captain Dallaglio when he left the field after 68 minutes, with half of them similarly vocal when he lifted the cup that marked Wasps as champions for the sixth time and made it six successive seasons that the London club have finished with a major trophy.
"I'd say this was one of our greatest achievements," Dallaglio, 35, said. "We were 10th in the table at Christmas; it's a monumental effort."
The number eight was keen to play down his own involvement though. "Today was about Wasps and the game of rugby and I didn't want to detract from that," he said.
RUGBY UNION SUPER 14
Carter kicks Canterbury Crusaders to their 7th crown
CHRISTCHURCH, New Zealand:
The All Blacks flyhalf Daniel Carter kicked four penalties and a dropped goal to guide the Canterbury Crusaders to a 20-12 victory over New South Wales in the Super 14 rugby final, claiming their seventh title in 13 years in the Southern Hemisphere club competition.
The Crusaders were outscored two tries to one by the Waratahs, but their otherwise spotless defensive performance on Saturday and Carter's 15 points ended Coach Robbie Deans' eight-year tenure with a championship.
'The Spies of Warsaw'
Instead, "out in the countryside, the first paw prints of wolves were seen near the villages." It is late 1937 in Poland, and the atmosphere is charged with peril. The wolves are both metaphorical and real.
NEW DELHI: Sterlite Industries of India agreed over the weekend to buy the operating assets of the bankrupt copper miner Asarco for $2.6 billion, the latest in the series of overseas acquisitions by Indian firms.
"Asarco is a strategic fit with Sterlite's existing copper business," the Indian company said in a statement Saturday.
Asarco is owned by Grupo Mexico, the largest copper miner in Mexico. Asarco, which is based in Tucson, Arizona, had revenue of $1.9 billion in 2007, Sterlite, a unit of Vedanta Resources of London, said.
Asarco, formerly known as American Smelting and Refining, produced 235,000 tons of refined copper in 2007, and its mines have an estimated reserve of five million tons of contained copper.
British government considers banning logos, branding from cigarette packs
The British government is also considering banning cigarette vending machines. Another idea is to outlaw the sale of smaller, cheaper packs of 10 cigarettes available in Britain.
Public Health Minister Dawn Primarolo said Saturday that the government's priority is to protect children from smoking by taking away the temptation.
ALL PHOTOGRAPHS COPYRIGHT IAN WALTHEW 2008