Wednesday, October 31, 2007

Billions at stake in greenhouse gas debate

From MarketWatch:
...The process puts billions of dollars on the table. Studies show the emission credits could be worth anywhere from $50 billion to $300 billion, in 2007 dollars by 2020, depending on how the plan is constructed, according to the nonpartisan Congressional Budget Office....MORE
Friends of the Earth comes up with the biggest numbers I've seen.

Windfalls in Lieberman-Warner Global Warming Bill: Quantifying the Fossil Fuel Industry Giveaways

In the attempt to set the United States on a course to mitigate our global warming emissions, Senators’ Lieberman (I-Conn.) and Warner (R-Va.) America’s Climate Security Act of 2007 gives hundred of billions of dollars away to corporate polluters.

All in all, nearly a half a trillion dollars is allocated directly to the fossil fuel industry, over half of which goes to coal. In addition, approximately $324 billion in auction revenue is given away to the coal industry. In total, the fossil fuel industry receives approximately $800 billion through in America’s Climate Security Act of 2007.

The way in which the federal government hands out these valuable permits will determine whether companies receive a windfall or if the money benefits the public at large.

There are two clear options for how the federal government distributes the permits. The government can either give companies or sectors the permits for free, or it can auction or sell the permits.

Allocating the permits, or giving the permits away for free, essentially hands the value of the permit from the government to the company at zero cost to the company. It is then up to the company to choose how to use the economic value of the permit.

According to the Congressional Budget Office, “giving away allowances could yield windfall profits for the producers that received them by effectively transferring income from consumers to firms’ owners and shareholders.”

7 page PDF

Greenhouse gases: Demand control policies, supply and the time path of carbon prices

From VoxEU:

EU leaders don’t determine the pace of climate change. Demand reduction by some consumers only lowers fossil fuel consumption to the degree that resource owners decide to curtail their supply. Ultimately, the volume of fossil fuel burnt globally depends upon the rate of extraction and this is in the hands of oil producers who care about carbon’s intertemporal price path. Policies aimed at lowering carbon demand without concern for its price path of carbon may backfire.

...
What Might Work
In light of this ‘green paradox’ of environmental policies, the measures currently demanded by European governments have little in common with policy efforts that would be truly effective in reducing global warming.

Meaningful measures would include the introduction of worldwide source taxes on capital income along with a closing of tax havens so that the resource owners would lose their investment alternatives.

In addition, an emissions trading system with no loopholes that would unite all customer countries into a worldwide monopsony could force the desired amounts from the resource exporters. It would make particular sense to exploit the technical possibilities of sequestering carbon dioxide.

A top priority should be rebuilding forests, which are the largest absorbers of carbon under human control. Currently deforestation is leading to the release of more carbon dioxide than from the whole transportation sector. If reforestation were to replace forest destruction, global warming could be slowed down significantly....MORE

From CESifo:
Hans-Werner Sinn: Not Angela Merkel but the Oil Sheiks Determine the Speed of Global Warming

From Agence France-Presse:
German think-tank derides EU environment policy

Lockheed Martin co-developing system to predict stability of nations

For all you commodity traders, the game is getting fancier.

From the Washington Business Journal:

Lockheed Martin Corp. said Wednesday that a team lead by its Cherry Hill, N.J.-based Advanced Technology Laboratories has won a $1.3 million contract to develop a system for predicting crises and the stability of countries.

The contract is for the first phase of development, which covers 15 months. The Defense Advanced Research Projects Agency doled out the award to the Bethesda-based contractor.

The system is called the Predicting Stability through Analyzing Germane Events system and will be part of DARPA's Integrated Crises Early Warning System....MORE

Japan Needs Measures to Avert $10.5 Billion Carbon Credit Cost

From Bloomberg:

Japan needs to implement measures to lower greenhouse gas emissions and avoid a bill of as much as 1.2 trillion yen ($10.5 billion) to buy carbon credits in global markets, a government report says.

Japan may fail to cut emissions and meet the target set out in the Kyoto Protocol, forcing the government to increase spending on credits to offset higher industrial pollution, the report by the finance ministry's fiscal system council said. Prime Minister Yasuo Fukuda's government is reviewing plans to achieve the nation's goal under the United Nations treaty.

``Our tax payers won't accept the financial strain,'' the finance ministry panel said in the report....MORE

Carbon market gaining traction in U.S.

From MarketWatch:

Carbon trading in the U.S. has been gaining traction on multiple fronts from Washington where legislation is being crafted to voluntary markets coming on line in New York, California and elsewhere, proponents said Tuesday at an industry meeting.

Jack Cogen, CEO of Natsource, a company with $1.1 billion in assets under management to deploy in carbon markets, said at the Carbon Market Insights 2007 conference that U.S. policy at the federal level "took a major step forward in the past few weeks."

Citing a series of Congressional white papers, and legislation introduced by Sens. Joseph Lieberman, I-Conn., and John Warner, R-Va., Cogen said the federal government, "is beginning to catch up with those in industry and the financial community that know that this issue requires attention at the federal level and understand they need to participate in the process."
Players pushing for uniform climate change and carbon-trading legislation include international energy companies, power companies, banks and financial service providers, and accountants, brokers, engineers and lawyers.

Carbon broker Andrew Ertel of Evolution Markets said he expects global emissions trading - now based mostly in Europe to increase to about $80 billion in 2007 from about $50 billion in 2006.

Ertel, who is chief executive officer of Evolution Markets, said the U.S. is ramping up efforts under regional voluntary programs such as The Regional Greenhouse Gas Initiative, or RGGI, in the Northeast and Middle Atlantic Region....MORE

Has Every Wall Streeter Gone Insane? A Graphical Guide.

The first example has been covered elsewhere but New York's sparse prose approaches elegance:

Albert Hsu

Manager, Anchor
Point Capital
hedge fund
Jealousy:
This past February Hsu
posed as his ex-mistress
on a bondage Website,
requesting to be
kidnapped and raped as
part of a sexual fantasy.

From New York Magazine:

Maybe it's hubris brought on by the second Gilded Age, but 2007 may well go down as the Year the Wall Streeters Lost It. Just in time to coincide with our Money Issue, we've assembled a handy graphical breakdown of financial-worker malfeasance, from Albert Hsu entrapping an ex-mistress in a simulated rape-kidnapping to John Fitzgerald just plain having a monstrous ego. Spooky...MORE

HT: Dealbreaker

Adam Smith – a Primer

From The Institute of Economic Affairs:
By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries.
Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?
The Wealth of Nations, Book IV, ch. II, p. 458, para. 15
... and subsidies

The bounty to the white-herring fishery is a tonnage bounty; and is proportioned to the burden of the ship, not to her diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.
The Wealth of Nations, Book IV, ch. V, p. 520, para. 32

I just read it, you should too. 69 page PDF
HT: EU Referendum

And from Forbes:

Adam Smith: Web Junkie

Adam Smith's Folly

Peak Minerals

Yesterday I was reading Monbiot on the UN Environmental Program's recent report. This snip caught my eye:
"...There are two limiting factors. One, mentioned only in passing in the report, is phosphate..."
Today Energy Balance tipped us to this post at The Oil Drum:

Abstract:
We examined the world production of 57 minerals reported in the database of the United States Geological Survey (USGS). Of these, we found 11 cases where production has clearly peaked and is now declining. Several more may be peaking or be close to peaking. Fitting the production curve with a logistic function we see that, in most cases, the ultimate amount extrapolated from the fitting corresponds well to the amount obtained summing the cumulative production so far and the reserves estimated by the USGS. These results are a clear indication that the Hubbert model is valid for the worldwide production of minerals and not just for regional cases. It strongly supports the concept that “Peak oil” is just one of several cases of worldwide peaking and decline of a depletable resource. Many more mineral resources may peak worldwide and start their decline in the near future....



...Perhaps the only case were the a decline of production can be attributed to market factors is that of potash (K2O) that peaked at a value of cumulative production considerably lower than midpoint and where market factors were indeed reported as the cause of the decline (USGS 2006).

The paper referred us to the USGS' 2006 Minerals Yearbook: Potash

Now I have to figure out what it means to AGU, MOS and POT.
Phosphate and potash. And nitrogen, oh my!
Happy Halloween.

What's in Your Wallet? The $915B Bomb

From Fortune via CNN Money:

This past summer's subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn't afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests.

...The doomsday scenario would play out something like this: Just like CDOs and other asset-backed securities, credit card debt is sliced, diced, and sold off again as packages of securities. Rising delinquencies would hurt not only the banks involved but the securities backed by the credit card receivables. Those securities would decline in value as consumers defaulted, leading to bank losses as well as portfolio losses in the hedge funds, institutions, and pensions that own the securities. If the damage is widespread enough, it could wreak havoc on the economy much as the subprime crisis has done.

To be sure, there are key differences between the subprime market and the problems brewing with credit cards....MORE

Update, from Bloomberg:
MasterCard Profit Rises 63 Percent as Purchases Rise

Sovereign Wealth Funds

From Merrill Lynch
(whatever happened to Mr. Beane, you ask?):

The overflowing bathtub, the running tap and SWFs

US$1.2tn a year, US$7.9tn by 2011 ...
Assets under management by Sovereign Wealth Funds (SWFs) are set to explode. Under reasonable assumptions we think they will grow by US$1.2tn a year to reach US$7.9tn by 2011, from US$1.9tn currently.

... as the bathtub overflows ...

This is a result of the massive build-up of reserves in recent years. Central banks control over US$5.6tn in assets, with Asia and the oil-producers leading the pack.

... while the tap is still running at full pressure

Reserves are still growing at a rate of nearly US$1tn a year, centered on China, Russia and the Middle East. We expect the tap to slowly start being turned off, as the US current account deficit reverses and global savings are re-channeled.

A massive re-allocation to riskier assets

We expect the share of SWFs in riskier global assets to double or triple by 2011, with net inflows of US$3.1-US$6tn. This should support riskier assets relative to safer assets and put upward pressure on bond yields; it is unclear, however, whether prices of riskier assets would rise per se. It also supports the corporate sector at the expense of governments, supports global liquidity and removes one pillar of the private equity industry.

Downward pressure on the USD

Growth in SWFs implies a shift out of the US dollar into other currencies, with the share of the euro likely to be largely unaffected.

Extensive use of external managers likely

The high costs and difficulties associated with setting up internal portfolio management, together with the risks of a protectionist backlash, augur for an extensive outsourcing of risk and the use of passive strategies.

Incremental revenues for the asset management industry

We highlight a potential shift of US$1.5-US$3tn of assets into the global asset management industry, generating estimated incremental fees of US$4-US$8bn.

Risks of protectionism overblown

Other than using external managers, we would expect SWFs to address protectionist fears through strategies such as swapping access to achieve a deal.

Let’s take a bubble bath
As governments focus on turning off the tap and emptying the bathtub, investors should rejoice in the more balanced global economy that this produces and the impetus it provides to continued growth and development of global asset markets.

Much more, 26 page PDF
HT: FT Alphaville (including link to update)

Bogus Numbers on Inflation?

From Forbes:

Anyone who's been to the grocery store lately or gotten a full tank of gas has been blown back by sticker shock. Milk and eggs, cell phone service and the electric bill--ordinary things cost more than they did a year ago. So do luxury goods, whether laptops or convertibles. But the Bureau of Labor Statistics reports that inflation is in check, with consumer prices up only 2.8% for the 12 months ended in September. The so-called core rate of inflation, excluding food and fuel, was 2.1%.

What gives? The problem may be the way the government calculates inflation. "The numbers are so below what people are actually experiencing that they no longer have credibility," says Walter J. Williams, an iconoclastic economist who has no academic appointment but can at least claim an M.B.A. from the Tuck School of Business at Dartmouth. His Shadow Government Statistics newsletter, he says, draws 1,000 online readers every month, and has a bit of a paranoid edge. Williams contends that inflation is really running at 10%--more than triple the official rate....MORE

UK: Rising fear of energy crisis this winter

From The Guardian:

Electricity shortages and gas supply problems predicted to push bills up

Britain faces the prospect of power shortages and soaring prices this winter after the National Grid warned of a shortfall in electricity-generating capacity yesterday. The alert coincides with a surge in gas prices, which are now 40% higher than in continental Europe, and the confirmation that a vital import plant in South Wales will not be operational this winter.

And it emerged last night that the energy minister, Malcolm Wicks, met power providers and users last week to discuss mounting concerns that the UK was heading into another winter of soaring prices and power shortages, similar to the one that forced some manufacturers to shut down capacity 24 months ago....MORE

Tuesday, October 30, 2007

MEMC and Conergy Announce $7-$8 Billion Solar Wafer Agreement

Press release via CNN Money:

MEMC Electronic Materials, Inc. and Conergy (CGY.DE), announced that they have executed a definitive agreement for MEMC to supply solar grade silicon wafers to Conergy.

Under the terms of the definitive agreement, MEMC will supply solar wafers to Conergy over a 10-year period, with pre-determined pricing, on a take or pay basis beginning in the third quarter of 2008. Sales of the wafers over the 10-year period would generate between $7 billion and $8 billion in revenue for MEMC. As part of the definitive agreement, Conergy will advance funds to MEMC in the form of a capacity reservation deposit. In addition, MEMC will participate in 5% of the increase in value of Conergy's solar module/cell subsidiary....

From the AP via BusinessWeek:

MEMC shares jump on profits, solar deals

...In a note to clients, UBS said MEMC signed a 10-year deal to sell $7 billion to $8 billion worth of solar wafers to Conergy, and expanded its original 10-year deal with Gintech by another $700 million, for a contract now worth $3 billion to $4 billion.

UBS estimated that MEMC still has enough polysilicon left to sign one more customer for a 10 year deal worth $2 billion to $3 billion.

Electric Cars: Selling the Electricity

From the New York Times:

Shai Agassi, a Silicon Valley technologist who was in competition to become chief executive of SAP, one of the world’s largest software companies, has re-emerged with a grand plan to reinvent the world’s automobile industry around battery-powered all-electric cars.

Others are developing green cars, like the Tesla and Chevrolet Volt. However, Mr. Agassi is not planning to make cars, but instead wants to deploy an infrastructure of battery-charging stations in the United States, Europe and the developing world.

The new system will sell electric fuel on a subscription basis and will subsidize vehicle costs through leases and credits.

“We’re basically saying this is just like the cellular phone model,” he said. “If you think of Tesla as the iPhone, we’re AT&T.”

On Monday, he plans to announce in New York City that he has raised $200 million from private venture partners, including the Israel Corporation, a large Israeli transportation and technology holding company, Vantage Point Venture Partners, as well as a group of private investors including Edgar Bronfman Sr., the liquor magnate, and James D. Wolfensohn, former head of the World Bank....MORE

Tough Market: Jewish Buddhist Invokes Catholic Saint to Move Property

From the Wall Street Journal Online:
"I wasn't sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes," says Ms. Luna, a writer. She figured, "Well, could it hurt?"
Source

Biodiesel group concerned over fuel subsidies

No. Not man bites dog.
Rent-seeker bites rent-seeker, maybe.

From Brownfield:

Biodiesel producers are concerned that so-called renewable diesel might jeopardize chances of extending federal biodiesel tax incentives. National Biodiesel Board CEO Joe Jobe says petroleum refiners receive the same dollar-a-gallon subsidies as biodiesel producers even if they co-process very small percentages of animal or vegetable fats with petroleum at the refinery.

...Meanwhile, Gene Batchelder, Chief Information Officer for ConocoPhillips Petroleum, maintains that one type of renewable fuel is no more important than the other.

...And Jobe agrees that refiners should be subsidized for co-processing renewable oils with petroleum, but at fifty cents a gallon....More

Stop Global Warming Gets Its Own Bling

From ecorazzi:

Stop Global Warming NecklaceEverybody wants a little bling now and then. Now, you can support “Stop Global Warming” and get your bling on at the same time.

Cool Planet Jewelry has teamed up with Laurie David...MORE

The Whole World is Channeling The Onion

Headlines from the Sydney Morning Herald.

Canada's behaviour disgusting, says Beijing
Gender imbalance a threat to stability
GI Joe turns his back on US military
Sarah Jessica Parker named world's unsexiest woman
MySpace co-founder busted for faking his age
  1. Russian restaurant sold dog meat: police
  2. Student finds valuable painting in couch
  3. BT Investment Management launches IPO
Heat to bring out the bloodsuckers
Boom or bust: Coalition can't agree

Wheat Falls as Australia Crop Forecast Bigger Than Expected

Or "Drought cuts Aussie wheat forecast 22pc".
The top headline is from Bloomberg, with the advantage of time zones.
The "22%" headline is from the New Zealand Herald.
A little closer to the problem, News.com's headline:
"Dire wheat harvest forecast"
Wheat is down almost $1.50 per bushel in the last month.

Get ready to ante up more for beer

We've posted on this story before,
"Shut up. You've got your beer, haven't you?"
Hermann Goering

Here's the latest, from the Modesto Bee:

Fans of Snipes Mountain Brewery's cloudy Hefeweizen relish the subtle wheat flavor of the bright, summery brew, and like beer drinkers everywhere, they know when their favorite brew tastes a little too hoppy or bitter.

Connoisseurs could be in for a surprise this year, and they may not be alone.

Small brewers from Australia to Oregon face the daunting prospect of tweaking their recipes or experimenting less with new brews thanks to a worldwide shortage of one key beer ingredient and rising prices for others.

Oh, and one other thing: Beer prices are likely to climb. How high is anybody's guess. Craft brewers don't have the means to hedge against rising prices, as do their industrial rivals.

"We haven't figured it all out yet," said Bill Coffey, brewmaster at St. Stan's Brewing Co. in Modesto. "But everyone will increase prices, across the board."

"I'm guessing, at a minimum, at least a 10 percent jump in beer prices for the average consumer before the end of the year," said Terry Butler, brewmaster at central Washington's Snipes Mountain....MORE


NASA wrestles ripped solar panel

CNN into buff PhotoVoltaic?

I figured I should get the semi-topical headline up before James Taranto sees it.
(the WSJ's OpinionJournal, Best of the Web Today):

Life Imitates the Onion

  • "Many Cancer Deaths Preventable"--headline, Onion, April 6, 2005

  • "Daily Onion May Deter Pancreatic Cancer"--headline, NewsMax.com, Oct. 29, 2007

Can You Hum a Few Bars?
"North Korea's Kim Knows Cooperation Key to Survival, Song Says"--headline, Bloomberg, Oct. 29

Thank Heaven for Little Girls
"Men Favor Marriage With Children"--headline, Gainesville (Fla.) Sun, Oct. 28

But 83 Other Reports Say the Opposite
"State Report Says Texas Has Too Many Reports"--headline, Associated Press, Oct. 29

There Must've Been a Dearth of Candidates
"Democratic Women's Club Elects Chair"--headline, Chronicle (Tallahassee, Fla.), Oct. 24

Help Wanted
"Portland Police Seek 'Prolific Tagger' "--headline, KPTV Web site (Portland, Ore.), Oct. 26

Breaking News From 1945
"NEW--Altoona Woman Pleads Guilty in Patton Traffic Fatality"--headline, Tribune-Democrat (Johnstown, Pa.), Oct. 30

News You Can Use

  • "Boiled Nuts Help Fight Diseases, Study Says"--headline, FoxNews.com, Oct. 29

  • "You Can Buy Excuse to Skip Work"--headline, CNN.com, Oct. 29

  • "Squirrels Safe to Eat Again in New Jersey"--headline, Daily News (New York), Oct. 30

  • "Belief in Witchcraft, Magic Serves 'Basic Human Need,' Professor Says"--headline, Science Daily, Oct. 25

Q & A with Fund Managers of Guinness Atkinson Alternative Energy Fund

AltEnergyStocks brings us another good interview.

Fund managers Tim Guinness, Edward Guinness and Matthew Page discuss the Guinness Atkinson Alternative Energy Fund in a question and answer forum covering topics from the alternative energy market to management style and methodology for selecting stocks and managing the portfolio.

...Q. Edward , at the moment most forms of alternative energy are not economically viable without government incentives. How long will it be until alternative energy can stand on its own feet and what is going to get us there?
A. Some forms of alternative energy are economical now. Electricity production from hydro and geothermal sources has been tapped for many years and the technology is fairly mature. Wind power does benefit from subsidies but in specific locations with strong and predictable winds can be economic now. Subsidies for wind projects may not be necessary in 3 - 5 years time. The solar industry is dependent on subsidies and will require subsidies for longer but some industry analysts predict electricity from solar will be at parity with the grid in 5 - 7 years time in remoter locations with good isolation. The subsidies in place allow the industry to grow and technologies to be developed and mature and drive costs down. In predicting parity of course the price level for oil and gas has to be factored in. The higher conventional energy prices rise the sooner parity can be achieved.

Q. Matthew, what percentage of world energy production is from alternative energy and can alternative energy overtake more conventional energy sources?
A. If you exclude hydro, alternative energy makes up around 2.5% of world electricity production capacity of which wind is about 1% and solar 0.1% and various forms of biomass and geothermal make up most of the balance. In the medium term (~25 years) we could see wind and solar each making up 15% and 5% respectively of world electricity production increases of 15X and 50X respectively. Eventually we believe cheap fossil fuels will run out and alternative energy sources should be cheaper sources of electricity and should therefore become the more conventional source of energy....MORE

Goldman sees easing in oil price

-Published: October 30 2007 18:39 | Last updated: October 30 2007 18:39

From the Financial Times:

Goldman Sachs, Wall Street’s most bullish investment bank on oil, on Tuesday turned negative on the short-term outlook for crude, recommending investors to take profits after prices jumped this week to a record above $90 a barrel.

West Texas Intermediate crude oil fell $2.73 to $90.80 a barrel in early trading in the US, partly in response to the warning from the investment bank which has been influential on the oil market in the past with upbeat price forecasts, including one in 2005 of a “super spike” crude to $105 a barrel.

Jeffery Currie, head of commodities research at Goldman Sachs, said that oil price “downside risks” were gaining momentum and forecast a decline towards $80 a barrel in the first quarter of 2008....MORE

China Overtaking Germany as Third Biggest Economy

From Der Spiegel:

China's economy is continuing to expand at a blistering rate -- with 11.5 percent growth in the third quarter of 2007. It is now poised to overtake Germany as the world's third largest economy within weeks and will soon also take Germany's crown as the world's biggest exporter.
MORE

History’s warning about the price of money

From the Financial Times*:

...We have sympathy for Ben Bernanke, Fed chairman, and company. The job of a price fixer is never easy. What should money cost? For most of human history this was easy: once you fixed a conversion factor with gold, you just sat back and let the forces of supply and demand do their stuff. But since the collapse of the Bretton Woods currency regime (the last vestige of thousands of years of commodity money), discretion has been the watchword. Nine smart folks at the Fed board have taken over the job of deciding what the price of money should be. If the hagiography and hatred showered on Mr Bernanke’s predecessor, Alan Greenspan, is any indication, that price should be wisely wiggled down to make jobs, up to prick bubbles and now, apparently, back down to offset losses on millions of bad credit decisions.

...As one of the great monetary economists of the last century, Jacques Rueff, pointed out in the late 1960s, people react to the “growing insolvency” of a reserve currency, such as the dollar, by acquiring “gold, land, houses, corporate shares, paintings and other works of art having an intrinsic value because of their scarcity”. Sounds familiar? Indeed, this is the story of our present decade, one in which alternatives to the dollar as a store of value have soared even while the CPI has remained subdued.

This phenomenon is well-known in developing countries, where asset booms combined with low CPI inflation have preceded monetary and financial crises. In Mexico, for example, share prices rose 12-fold between January 1989 and November 1994, while inflation fell from 35 per cent to 7 per cent. Inflation then soared as the Tequila crisis exploded.

Prices of shares and real estate more than doubled from 1993 to 1996 in Indonesia and South Korea while CPI inflation rates were declining. In May 1997, just weeks before the currencies collapsed, inflation was only 4.5 per cent in Indonesia and 3.8 per cent in South Korea....MORE

*Manuel Hinds is a former Salvadoran finance minister and author of ‘Playing Monopoly with the Devil’. Benn Steil is director of international economics at the Council on Foreign Relations and co-author of Financial Statecraft

Bidding up Basics: AIG Raises $3.5 Billion for Infrastructure Buyouts

From Bloomberg:
American International Group Inc., the world's biggest insurer, raised $3.5 billion to invest in infrastructure buyouts.

Two-thirds of the money has been committed for investments, AIG Highstar Capital said today in a statement. More than 90 percent came from outside investors, AIG said. The private equity unit has stakes in companies that run power plants, waste treatment facilities and shipping terminals, including Ports America, acquired from Dubai-owned DP World in March.

AIG collects fees to manage private equity and hedge fund investments for clients and also has put $25.5 billion of its own money into the holdings to back insurance policies. Income from the partnerships totaling $2.2 billion through the end of June helped the New York-based company beat analysts' profit forecasts this year. The assets made up 3 percent of the company's $828.8 billion holdings as of June 30.

``Infrastructure investing is a critical component of a successful and diversified alternative investment strategy, given its low correlation with other asset classes,'' Christopher Lee, managing partner of the AIG fund, said in the statement....MORE


From FT Alphaville last week:


Tony Jackson: Infrastructure investors run out of road

Amid the credit chaos, for infrastructure funds it seems to be business as usual.

But, notes Tony Jackson in his Monday column, there are few assets to buy - and a lot of money chasing them.

Collectively, the money raised from investors and not yet spent is estimated at $150bn-$200bn. If the usual leverage is still available on top, the end result could be a bubble.

Premiums have been building over regulated asset value, culminating in 30 per cent-plus for Southern Water. Dieter Helm of Oxford University, argues that the regulators have simply got their sums wrong and investors are making the rational assumption that this will persist indefinitely. The funds use far more debt than a regulator’s standard model allows, so collect a risk premium on non-existent equity.

The rationale for infrastructure investing is powerful, says Jackson. But the snag is political. Infrastructure involves precisely the kind of assets that opponents of privatisation feel most passionate about. And there is a tension between investors’ desire for safe, low returns from infrastructure, which has driven the enormous growth of funds, and what’s on offer. If you build an airport in a developing country, you are taking on construction risk, operating risk, political and regulatory risk, notes Jackson. You have left the world of infrastructure funds for the world of private equity.

The market has got ahead of itself, he concludes:

Some claim that the asset shortage will clear itself in the next couple of years. Good luck. But the bubble is inflating in the meantime. That may be a magnet for some investors these days, but it is not good news for a fledgling industry with a reputation to build.

There's Pollution and There's: Führer Flatus

From Drexel University's Smart Set:

Scent of a Führer
Hitler wanted to control the world. But he couldn't even control his flatulence.

Guests at the Berghof, Hitler’s private chalet in the Bavarian Alps, must have endured some unpleasant odors in the otherwise healthful mountain air.


Mussolini and Hitler
The dictator who smelt it, dealt it.

It may sound like a Woody Allen scenario, but medical historians are unanimous that Adolf was the victim of uncontrollable flatulence. Spasmodic stomach cramps, constipation and diarrhea, possibly the result of nervous tension, had been Hitler’s curse since childhood and only grew more severe as he aged. As a stressed-out dictator, the agonizing digestive attacks would occur after most meals: Albert Speer recalled that the Führer, ashen-faced, would leap up from the dinner table and disappear to his room
....MORE

HT: Catallaxy
UPDATE: email from a reader, "If only he had harnessed that power for good rather than evil".

Is Merrill the tip of the iceberg?

From The Economist:

IS THERE such a thing as panicky resilience? That might be the best way to describe the mood in stockmarkets. The S&P 500 index ended this week up a steely 2.6%. Yet nervousness is everywhere, with the flimsiest of rumours sending share prices sky-rocketing or lurching. Markets leapt on Wednesday after someone whispered that the Federal Reserve was about to announce an emergency rate cut. It was nonsense. The next day AIG, the world’s largest insurer, tumbled by 8%, before recovering, on unsubstantiated fears that it would suffer a whopping loss on its $33 billion of subprime mortgage-related assets.

While some investors have clearly been getting carried away, the crisis in credit markets is far from over—and may be about to get worse. One depressing indication of this was a vast, $8.4 billion writedown this week by Merrill Lynch, an investment bank....MORE

Virgin poised to unveil...

...climate change portfolio

From Fund Strategy:
Virgin Money will launch the first of a series of funds, starting with a climate change fund for retail investors.

The launch will see Virgin outsource the fund's management to GLG, a multi strategy and hedge fund manager, which will be responsible for investment decisions.

The Virgin Climate Change Leaders Fund will be long only and available to investors from January, via the Virgin Money website and phoneline. This is via a distribution deal expected to be announced through the Cofunds platform....MORE

Natural Gas' Dirty Little Secret

I've seen estimates that between 1 and 10% (rather a large range, eh) of all natural gas is lost as leakage. Maybe 15% in Russia (thanks Gazprom). As a greenhouse gas methane is over 20 times more potent than CO2 (The article says 24 x). Here's a guy with some ideas.

From the Vancouver Sun:
Researcher finds way to measure pollution from flares and venting


You can't regulate greenhouse gas emissions if you can't measure them, says Carleton University professor Matthew Johnson, who has discovered some new ways to measure what happens at pipeline leaks and gas flares at oil wells.

"If you're going to legislate a reduction, you have to be able to measure how that reduction occurred and that's a huge challenge," Johnson said Monday after presenting some new research to colleagues.

Johnson filed a provisional patent this year on his newest technique -- a combination of mathematical models and instruments -- for measuring methane leaks in pipelines. Kilo for kilo, methane is 25 times worse than carbon dioxide as a greenhouse gas, said Johnson, who is Carleton's research chair in energy and combustion-generated air emissions....MORE

James Lovelock: Reducing emissions could speed global warming

We're screwed. Toga party!

From the Telegraph:

A rapid cutback in greenhouse gas emissions could speed up global warming, the veteran environmental maverick James Lovelock will warn in a lecture today.

Prof Lovelock, inventor of the Gaia theory that the planet behaves like a single organism, says this is because current global warming is offset by global dimming - the 2-3ºC of cooling cause by industrial pollution, known to scientists as aerosol particles, in the atmosphere.

His lecture will be delivered as Hilary Benn, the Environment Secretary, launches the results of a public consultation on the Government's proposed Climate Change Bill which is intended to cut Britain's greenhouse gas emissions by 60 per cent by 2050.

Prof Lovelock will say in a lecture to the Royal Society: "Any economic downturn or planned cutback in fossil fuel use, which lessened aerosol density, would intensify the heating....MORE



News from India: Cashews, Cardamom, Concrete

With 1,200,000,000 people, including the world's richest man, India could just as easily have been the subject of Dr. Johnson's statements:

"By seeing London, I have seen as much of life as the world can shew."
Boswell: Journal of a Tour to the Hebrides
Link


"Why, Sir, you find no man, at all intellectual, who is willing to leave London. No, Sir, when a man is tired of London, he is tired of life; for there is in London all that life can afford."
Boswell: Life

Here's some news from the last few days:
Cashew Market Report
Intra-day outlook for rubber, pepper, cardamom
No respite, onion prices
Cement sector seen growing 10 percent annually
Soaring coal prices effect Krishnapatnam UMPP bidding
Goldman says could invest $2 bn more in India
During the last quarter more than half of the company’s revenue came from outside the US and the Asian business was the fastest growing part of the firm
Mumbai: Goldman Sachs, which has invested more than $1 billion in the Indian market, is ready to double or triple its exposure to the country, its chairman and chief executive said in a newspaper interview published on Monday 28 Oct.

Don't Cut the Trees, Sell Carbon Credits!

From MongaBay:

Indonesia could more than double its tax revenue by protecting forests and selling the resulting carbon emission credits instead of timber and palm oil, a University of Michigan researcher told Bloomberg.

Gabriel Thoumi, a consultant and fellow at the Erb Institute for Global Sustainable Enterprise at the University of Michigan in Ann Arbor, estimates that carbon credits would generate $515 million a year in tax revenue starting in 2013 for the Indonesian government. By comparison, tax revenue from logging and palm oil is presently around $258 million a year.
Thoumi's calculations are based on the assumption that Indonesia could sell 750 million metric tons of credits annually at a price of $11.50 per ton. United Nations-certified emission reduction credits for delivery in 2008 currently trade at nearly $21 per ton.



The $8.6 billion in annual revenue from carbon offsets would come in addition to the $5.4 billion in timber exports and the $4.4 billion in palm oil exports Indonesia presently earns....MORE

FIA Calls for New Global Policy to Tackle Vehicle Emissions

From Auto Spectator:

At its General Assembly in Paris today, the FIA and its member clubs worldwide unanimously agreed to a Declaration which sets a global CO2 emissions benchmark of 140g/km for passenger cars as part of a new international framework for greener motoring....MORE

China Grants Patent for ThermoEnergy's 'TIPS' Clean Coal Process

From CNN Money:

ThermoEnergy Corporation announced today that the Chinese Patent Office recently granted the patent for the Company's new zero air emission, carbon capture technology known as the ThermoEnergy Integrated Power System, or "TIPS" process.

TIPS burns carbonaceous fuels, including coal, oil, natural gas or biomass, to make steam and power without air emissions. Carbon dioxide (CO2) and water produced in the combustion process are captured for sequestration or beneficial reuse. TIPS represents a totally different thermodynamic approach in power plant design that will allow greater process efficiencies and economic performance as well as eliminating greenhouse gas emissions.

The Chinese patent is the sixth TIPS foreign patent to be granted, along with two US patents already issued. The Company has approximately 31 foreign patents still pending. "China represents the one of the Company's four key strategic markets for our TIPS clean energy process," said Dennis C. Cossey, CEO of ThermoEnergy Corporation, "the other markets are the US, Russia and India.

The Russian patent issued earlier this year and we expect the Indian patent to issue in due course." Concurrent with the TIPS technology development effort, the Company has engaged in preliminary discussions with potential joint venture partners already operating in these key markets. In addition, the Company is also talking to the US Department of Commerce concerning the possibility of joining their upcoming 'Clean Energy' trade mission to China and India.

"Now that the TIPS patent has been granted in China, the Company can begin to fully implement its China strategy," said Alex Fassbender, EVP and Chief Technology Officer for ThermoEnergy. "Up until now, we have been forced to adopt a very cautionary stance as far as engaging in transactional negotiations with potential Chinese partners," added Fassbender....MORE

Al Gore, Generation Investment Management 13F Filing Oct. 23, 2007

GIM filed earlier than they usually do. I won't be able to do the position comparison until this evening. Here's our last comparison, Aug. 7, 2007, with links to GIM's Q1 and Q2 filings.
Remember, 13F's only show the publicly traded names.
Generation Investment Management 13F link.
Central Index Key (CIK): 0001375534


                                                     FORM 13F INFORMATION TABLE
VALUE SHARES/ SH/ PUT/ INVSTMT OTHER VOTING AUTHORITY
NAME OF ISSUER TITLE OF CLASS CUSIP (x$1000) PRN AMT PRN CALL DSCRETN MANAGERS SOLE SHARED NONE
- ------------------------------ ---------------- --------- -------- -------- --- ---- ------- ------------ -------- -------- --------
AFLAC INC COM 001055102 38468 674401 SH SOLE 503445 33500 137456
AMDOCS LTD ORD G02602103 21491 577857 SH SOLE 425034 28197 124626
AUTODESK INC COM 052769106 23086 461991 SH SOLE 347471 23089 91431
BECTON DICKINSON & CO COM 075887109 30650 373554 SH SOLE 281984 18300 73270
BLACKBAUD INC COM 09227Q100 19558 774873 SH SOLE 583745 37890 153238
DONALDSON INC COM 257651109 10920 261485 SH SOLE 196821 12977 51687
GENERAL ELECTRIC CO COM 369604103 29475 711954 SH SOLE 537122 35706 139126
GREENHILL & CO INC COM 395259104 21970 359872 SH SOLE 271496 18070 70306
HDFC BANK LTD ADR REPS 3 SHS 40415F101 7081 66100 SH SOLE 49800 3300 13000
JOHNSON CTLS INC COM 478366107 47609 403093 SH SOLE 303994 20000 79099
LABORATORY CORP AMER HLDGS COM NEW 50540R409 15196 194247 SH SOLE 146249 9600 38398
METABOLIX INC COM 591018809 6672 275000 SH SOLE 275000 0 0
MILLIPORE CORP COM 601073109 18780 247751 SH SOLE 186239 12291 49221
MUELLER WTR PRODS INC COM SER B 624758207 9603 873000 SH SOLE 652301 43374 177325
NORTHERN TR CORP COM 665859104 25315 381997 SH SOLE 287254 19027 75716
PROCTER & GAMBLE CO COM 742718109 28608 406712 SH SOLE 306118 20300 80294
SPDR TR UNIT SER 1 78462F103 504 3300 SH SOLE 0 3300 0
STAPLES INC COM 855030102 18173 845671 SH SOLE 636464 41900 167307
TECHNE CORP COM 878377100 26163 414760 SH SOLE 323103 20800 70857
UBS AG SHS NEW H89231338 12835 239511 SH SOLE 182493 12000 45018
VARIAN MED SYS INC COM 92220P105 9952 237565 SH SOLE 177863 11600 48102
WATERS CORP COM 941848103 16722 249887 SH SOLE 187963 12400

Monday, October 29, 2007

FUTURES: NordixPrecipitationHydro

Finally! A market I can rig*! Coming soon, to a monitor near you.

NORDIX Precipiation and Hydro Futures and Options Coming Soon...

TYPE

ZONE

TERM

TICK

MAX PAYOUT

STRIKE

STRUCTURE

CREDIT


Precipitation Option

Georgia

3 Year. Settled Monthly

$10,000 per inch (wep)

$100,000 month $1,000,000 Contract

30% below 20Y monthly avg.

purchased option

required or cleared


From Nordix.
HT: Environmental Economics.


*INDIGENOUS WEATHER MODIFICATION
Shamanistic Weather Control

*And from TWM
CATEGORIES

Rainfall - generation, dissipation or prevention.

Severe weather - generation, dissipation or prevention.

APPLICATIONS

Disaster prevention or mitigation - drought, flood or storm.

Water supply augmentation - unique bulk water delivery.

OTHER SERVICES - modified weather events for

Weather-dependent businesses eg. aviation, agriculture, fishing,
forestry, hydro power, etc.

Outdoor activities and events eg. sporting events, promotions,
celebrations, film & TV production, etc.

Emergency situations eg. air pollution dispersal, bush | forest fire
suppression, etc.

Handicapping the Environmental Gold Rush

From the Wall Street Journal Online:
In the race to profit off the scramble to go green, there will be winners and losers. Here's how the players currently stack up.

The green stampede is on.

As a global economy powered by cheap fossil fuel comes under intense pressure to change, corporate executives are racing to stay ahead of the tectonic shift in their world.

From Capitol Hill to California and Brussels to Beijing, multinational companies are stepping up their lobbying and tweaking their product lines in response to demands that they get more environmentally attuned. New companies -- even new industries -- are challenging the established giants to exploit a growing market for everything from green cars to green fuels.

And a host of middlemen have sprung up to make markets in new financial instruments created by the proliferation of green-oriented subsidies and mandates. All these players are jostling to shape the new government rules to give them the bulk of the benefit -- and hit someone else with the bulk of the burden. Ultimately, the cost will be passed on to consumers.

Big energy burners are experimenting with ways to use fossil fuel more efficiently -- and to roll out supplemental fuels. General Motors Corp., for instance, is developing more hybrid gasoline-and-electric cars, a technology it dismissed a few years ago. ConocoPhillips plans to start brewing small quantities of diesel fuel from animal fat. Utilities are experimenting with a technique to turn coal into electricity that would shoot the resulting greenhouse-gas emissions underground instead of up into the air....MUCH MORE

The Clean Energy Alternative

From Barron's Getting Technical blog:

WITH A BARREL OF CRUDE OIL KISSING
the $93/barrel level today, it is no wonder that alternative energy stocks have been doing quite well, too. After all, the higher oil goes, the more incentive companies have to bring competing products to market.

One look at the Powershares Wilder Hill clean energy ETF bears that out as it continues to reach new highs (see Chart 1). Clearly, it is still in a bull market but as is the case with many sectors in the market it is starting to reach an unsustainable pace. It's not the end of the rally but rather a time for a more conservative strategy and a chance to look for lagging stocks within the sector that might be ready to catch up....MORE

WRAPUP 1-Fed adds $31 bln reserves: biggest day in 2 weeks

As a bookend to our earlier post
(and because I forgot to include the link to the New York Fed).
This is dated Oct. 25.
From Reuters:
The U.S. Federal Reserve on Thursday added a total $31 billion of temporary reserves to the banking system via repurchase agreements, its biggest daily open market injection in two weeks.

On October 11, also a Thursday, when multiple open market operations are common, the Fed added a total $35.5 billion of temporary reserves to the banking system.

Thursday's three operations were a $6 billion 14-day repo, a $19 billion 7-day repo and a $6 billion overnight repo....MORE


Federal Reserve Bank Of New York

Deal Date: Monday, October 29, 2007
Delivery Date: Monday, October 29, 2007
Maturity Date: Tuesday, October 30, 2007
Type of Operation1: Repo
Settlement: Same Day
Term of Operation2: 1 Day
Operation Close Time: 09:40 AM

Results Amount ($B) Rate (%)
Collateral Type Submitted Accepted Stop-Out3 Weighted
Average4
High Low
Treasury
30.400
1.172

4.75


4.750


4.75


4.60

Agency
20.675
4.500

4.83


4.830


4.83


4.65

Mortgage-Backed
14.600
3.078

4.88


4.886


4.89


4.75

Total
 65.675
  8.750

Nuclear Power to Explode in India, but China Prefers Coal

An unfortunate headline from Wired.

To curb greenhouse gas emissions, India is poised to dramatically increase its reliance on nuclear energy -- but there'll be no overall benefit to the planet if China's coal binge continues.

A new report by the International Atomic Energy Agency forecasts India will increase nuclear production eight-fold by 2030 to account for 26 percent of its power grid.

However, China plans to use nuclear power for only 4 percent of electricity generation by 2030. Globally, the IAEA estimates there'll be drop an overall drop in nuclear energy from around 15 percent in 2006, down to 13 percent in 2030.

"The world should be encouraging China to get out of coal into non-greenhouse gas emitting energy production," said Alan McDonald, a nuclear-energy analyst with the IAEA.

Coal is a dirty, carbon-dioxide spewing energy source, but like gasoline, it is cheap, scalable and reliable. The Pew Center for Climate Change estimates that coal contributes 20 percent of the total greenhouse gases emitted on earth.

Among the green alternatives to coal, nuclear is the only technology with proven capacity. Worldwide, nuclear power generates 370 gigawatts of energy; estimates of global wind capacity are around 74 GW and solar-power capacity at only 1.7 GW....MORE

Quoted wind capacity should be mentally halved. Nukes run at 90-100% of nameplate capacity; coal, 70 to 90%; wind, 33-40%.

Mukesh Ambani is world's richest man

From the Business Standard (India):

Billionaire Mukesh Ambani today became the richest person in the world, surpassing American software czar Bill Gates, Mexican business tycoon Carlos Slim Helu and famous investment guru Warren Buffett, courtesy the bull run in the stock market.

Following a strong share price rally on in his three group companies, India's most valued firm Reliance Industries, Reliance Petroleum and Reliance Industrial Infrastructure, the net worth of Mukesh Ambani rose to $63.2 billion (Rs 2,49,108 crore)....MORE

From The Hindu:
Ambanis 1st to hit $100-bn mark on wealth street, but together
The Ambanis on Monday became the world's first family to own a fortune of over 100 billion dollars in stock market wealth, based on the combined worth of two brothers Mukesh and Anil, separated for over two years now.

Mukesh Ambani's net worth on Monday surged to a staggering 63.2 billion dollars, while that of younger brother Anil rose to 38.5 billion dollars on the back of a sharp surge in the share prices of their group companies.

Their combined wealth of 101.7 billion dollars is well ahead of Waltons, considered to be the world's richest family. The Walton family is the promoter of US-based retailer Wal-Mart Stores and holds a net worth of about 71 billion dollars, based on its 39 per cent stake in the behemoth....

From Forbes:
Paulson Has Advice For India At Execs' Gathering

The Subprime Blame Game: Where Were the Realtors?

The National Association of Realtors is a big strong lobbyist
($6,360,000 in the first half of this year,
I didn't look at political contributions).

Wharton is a big strong Business School.

Dear NAR, I didn't write the headline, let my family live.


From Knowledge@Warton:

It is a scene millions of Americans have been in -- sitting next to a real estate agent at closing to sign the loan contract and other papers for a new home. Often, the buyer has spent months with the agent. And to hear agents tell it, they are indispensable guides through the hazardous home-buying terrain.

How is it, then, that millions of borrowers took on toxic subprime mortgages that could cost them their homes? Why did their agents not warn them off? While much criticism has been leveled at subprime lenders and mortgage brokers, real estate agents have yet to receive their fair share of the blame for the subprime mess, says Shanna Smith, president of the National Fair Housing Alliance. "I think the greed factor works with agents as well as loan originators," she recently noted....MORE

Hangin' with Warren Buffett: U.S. Sub-prime, Korea

From the AP via MSNBC:
Billionaire says housing slump will affect consumers for up to 2 years
..."In the next 6 months, one year, two years the problems in the mortgage market can cause a lot of problems with consumers and hurt buying power in the United States," he said at a press conference after arriving earlier in the day from China on his private jet.

However, the U.S. economy has often had to face various difficulties and the present was no exception, Buffett said.

"Overall the economy will make progress," he said....MORE

From Reuters
Buffett sees dollar weakness

Billionaire investor Warren Buffett said on Thursday he expected the dollar to weaken further, adding that South Korean stocks offered better value than other world markets.

Buffett, worth $52 billion according to Forbes magazine in March, said his Berkshire Hathaway (BRKa) company is still on the hunt for bargains as the U.S. subprime mortgage crisis plays out.

"We are still negative on the dollar. We bought stocks in companies that are earning their money in other currencies," he told reporters during a visit to Berkshire's Korean cutting tool maker subsidiary, TaeguTec....MUCH MORE

From Dong-A:

...Regarding the question on his willingness to invest in North Korea, he said, “For me to invest in North Korea, there would first have to be a lot of changes in the country. In this regard, my company will not make an investment in North Korea in my lifetime.”

“I don’t invest in companies that I don’t understand” -



The Flat Side Of Global Warming

Russell Seitz, proprietor of the ADAMANT weblog goes on excursion, stopping at albedo* and skipping past semi-gloss.
*Not a commentary on Pulitzer and Grammy nominee Al Gore's global warming income.
...Light or dark, black or shiny, dim or glaring - these are words that describe the surfaces of things, not their massive interiors (again, not the former veep.-ed.), and what things weigh has little to do with how sunlight or radiant warmth interacts with their surfaces, or their interfaces with air or water. It is a capital error , economic and dimensional, for analysts to overlook the fact that two-dimensional solutions generally entail using-- or avoiding the use -- of far less mass of fuel or material than climate control policies aimed exclusively at the mass of the atmosphere in three dimensions.

...In case you're wondering, a gallon of flat white paint of excellent quality , costing $20 at retail, can cover ~80 square meters. At 25 cents a square meter, that's one thousandth the cost of solar cells, and were everyone to commence painting their patch at the rate of one square meter per day , in a little over five year's we'd quite run out of land to paint. Though, like Flatland, this is not offered as a How To Guide...

I like his light touch viz. the shadow world "... it is hard to weigh a shadow..." as the shadow is the two-dimensional representation of the three-dimensional (but expanding) world.
Although I think I could follow Euler angles I'm thankful he didn't go all Lobachevskian on us.
Esp. as my current topology is leanin' Riemann.

Mammoth wind farm by SD firm slated for South Dakota

Joe Kafka of the AP via the San Jose Mercury-News:

Plans for the world's largest wind farm, proposed to be built in South Dakota, have become more grandiose.

South Dakota is officially rated No. 4 in the nation for the potential capacity to make electricity from wind, although the ranking is more than a decade old. Many industry officials believe the Great Plains state is the windiest of all.

Clipper Windpower of Carpinteria, Calif., intends to erect enough wind turbines in several South Dakota counties to produce up to 6,000 megawatts of electricity, said Bob Gates, the firm's senior vice president of commercial operations.

That would be eight times larger than the biggest wind farm in the world, a 735-megawatt FPL Energy facility with 421 turbines stretching across three Texas counties.

Clipper Chairman and Chief Executive Officer James Dehlsen told The Associated Press in 2004 the company intended to develop a $3 billion wind complex with 1,000 turbines that could produce 3,000 megawatts of juice in South Dakota.

But as envisioned now, the project would be twice as large and cost $6 billion, Gates said....MORE

Potash Upgraded

We passed this story along Friday:
Potash suspends sales as Russian sinkhole expands

Today, from the AP via BusinessWeek:

Shares of Potash Corp. of Saskatchewan Inc. climbed in Monday premarket trading, after a Banc of America Securities analyst upgraded the shares of the fertilizer company and said a major competitor may exit the market, which could lead to higher potash prices.

Analyst Marshall E. Reid said Silvinit, a Russian potash producer, may be forced to stop shipping potash when it loses a main rail line.

Reid said Silvinit is likely to lose its only rail line in the next few weeks, which will take the company out of the market, at least temporarily. Reid said a new rail line will be built, but that will take at least four months. Silvinit ships all its potash on one line.

"The potash market is already very tight," Reid wrote in a client note...MORE
Also on Friday, the WSJ's Energy Roundup had this note and link:
When investors think of hot stocks, Potash Corp of Saskatchewan usually doesn’t make the list. It probably should. Shares of the Saskatoon, Saskatchewan, fertilizer maker have more than doubled this year, mostly because of the ethanol-driven agriculture boom. As the price of corn, an ethanol ingredient, soared early this year, farmers rushed to cash in. That resulted in one of the biggest corn crops on record and huge demand — and rising prices — for fertilizers like potash.

Climateer "Quote of the Day"

I know it's early but how do you beat this exchange?
From Inner City Press:
(Investigative Reporting From the Inner City to Wall Street to the United Nations)

...Inner City Press: There's an article in the Canadian press over the weekend saying that Montreal made a $2.2 billion proposal to the UN to move the UN to Montreal. Have you ever heard of that?

[UN] Spokesperson: I've heard of it, we are aware of those reports.

Inner City Press: Is it true?

Spokesperson: Not that I know of.

Inner City Press: There was never a proposal made?

Spokesperson: Well, maybe there was a proposal made but it was not accepted if it was made.

SA coal at Saudi level of oil equivalent

This will be the last piece on coal today and possibly the most important.
From Mining Weekly (South Africa):

South Africa has as many barrels of oil equivalent in its coal reserves as Saudi Arabia has in its oil reserves, says Sasol CEO Pat Davies.

South Africa thus has an opportunity to convert more of its coal into petrol, diesel and jet fuel, as is currently being done at a rate of 150 000 barrels a day (bbl/d) in Secunda.
Currently 3,5-billion people in India and China consume less than 0,01 bbl/d.

...But as China and India grow, consumption is expected to rise to the same levels as those of the developed world, with the US level at 0,07 bbl/d.

Oil demand in China and India alone is expected to rise to 17-million bbl/d compared to world demand of 80-million bbl/d.

...GREENHOUSE GAS REDUCTION

Greenhouse-gas (GHG) emissions represent a principal strategic challenge to Sasol and many other coal users around the world.

Its the old balance between development on the one hand and environmental protection on the other. We need to do both, says Davies.

Sasol is committed a 10% reduction in GHG emissions per ton of product off its 2004 base.

In switching away from coal to natural gas in Sasolburg, it eliminated six-million GHG tons.

It has also introduced a world first in the registration of its clean development mechanism project at Sasol Nitro.

This involves nitrous oxide abatement at its two nitric acid plants in Sasolburg and Secunda.

This will cut GHG emissions by a million tons of CO2 equivalent a year.

Sasol is the first company globally to register a nitrous-oxide abatement project that converts nitrous oxide into harmless nitrogen and oxygen gases.

The project is expected to earn income through the sale of carbon credits, a share of which will be invested to benefit community projects....MUCH MORE

World's addiction to coal growing, despite worries about global warming

From the AP via the IHT:

Almost nonstop, gargantuan 145-ton trucks rumble through China's biggest open-pit coal mine, sending up clouds of soot as they dump their loads into mechanized sorters.

The black treasure has transformed this once-isolated crossroads nestled in the sand-sculpted ravines of Inner Mongolia into a bleak boomtown of nearly 300,000 people. Day and night, long and dusty trains haul out coal to electric power plants and factories in the east, fueling China's explosive growth.

Coal is big, and getting bigger. As oil and natural gas prices soar, the world is relying ever more on the cheap, black-burning mainstay of the Industrial Revolution. Mining companies are racing into Africa. Workers are laying miles of new railroad track to haul coal from the Powder River Basin in the U.S. states of Wyoming and Montana.

And nowhere is coal bigger than in China.

For another measure, look at the ticker on the Web site of St. Louis-based Peabody Coal Co., the world's largest coal mining company, which tracks its growing sales second by second. Last year: 248 million tons sold. For 2007: On track for up to 275 million tons....MORE

From AFX via Forbes:
China Sept coal prices at new high, exports down - regulator

UK govt says increased coal production could play part in future energy mix

From Reuters:
Xstrata ups coal price offers to Japanese utilities

From The Times of India:
Coal India eyes blocks in Australia and Canada
...The government sees annual domestic demand rising to 2 billion tonnes by 2031-32 from 460 million tonnes at present. Captive mining too is seen rising from 17 million tonnes a year to over 100 million tonnes by then.