Climate Change
February 28, 2011
South Korea is one of the biggest shipbuilders with major companies like Daewoo,Hyundai Heavy and Samsung.However its being beaten down by the low cost Chinese companies which are using cheaper capital and lower labor costs to press their advantage.South Korean Shipbuilders have been trying to diversify into offshore wind energy in order to safeguard their revenues.However they face tough competition in this renewable energy sector as well from incumbent wind turbine compaeis as well as Chinese WTG companies like Sinovel,Goldwind and others.Now the South Korean government is helping them with a 300 billion won research fund.This fund will be used to do R&D into building of "Green Ships" which are becoming the new growth segment.
February 18, 2011
Leading GHG emitter and Biggest Coal Exporter Australia Kills Most Green Program using Floods Excuse
Australia is the biggest exporter of coal in the world and one of the leading emitter of GHG emissions.Its huge mining industry generate tons of carbon and earns billions for the Australian Treasury.However despite its leading role in global warming,Australia has almost no subsidies for green energy.The federal government has conveniently used the recent Queensland Floods to cut off a number of Green Programs such as Green Car Innovation Fund, Cleaner Car Rebate Scheme, the Carbon Capture and Storage Flagships and Solar Flagships, the Solar Hot Water Rebate, Green Start Program, Solar Homes and Communities Plan.The Solar Flagships Program which was supposed to generate around 1 GW of Solar Energy has also been killed.Note Australia generate 92% of its electricity from Fossil Fuel which is quite high compared to other developed countries.
February 16, 2011
Solar Panel Prices have decreased at a jaw dropping 50% in the last 2 years and will probably decrease 10-15% more in 2011.That is an astounding number given the increasing energy and electricity prices being faced around the globe.Though solar energy is costlier than other forms of energy,it starts on a low base.With 2010 solar growth pegged at more than 100% and 16 GW of solar panels installed,Solar Energy is starting to become more mainstream.Like Solar,the entry of Chinese players has decreased the cost of Wind Energy as well.Despite increasing input steel and copper prices,wind turbine prices have declined.Stiff competition amongst Chinese WTG companies has made the price of a Wind Turbine go as low as $600,000-700,000 in China.This has brought a depression in prices in other places in the world as well.
February 15, 2011
India's Environment Ministry Jairam Ramesh has been portrayed as the devil incarnate by the industrial lobbies as he has struck down various billion dollar realty, mining and power projects.First it was Vedanta's mining project in Orissa,then the Lavasa township in Pune and then power projects in Andhra Pradesh.While some of these infrastructure projects should go ahead with modifications,it has brought some regard for the environment.While some of the projects like the Jaitapur Nuclear Plant in Maharashtra were given the environmental go-ahead despite serious concerns raised by TISS and local citizens,the trampling of ecology by the corporate lobbies seems to have been curtailed.However India's growing economy and its massive energy needs cannot be kept at bay for long.
February 15, 2011
Carbon Capture and Sequestration (CCS) has been mooted as one of the main weapons against climate change.With little alternative to Coal based power generation,CCS is touted as a temporary solution.However CCS as a global warming solution is like putting lipstick on a pig.The technology for CCS remains immature at best and even the biggest users of coal,the Chinese utilities have ruled out using CCS before 2015.Though big pilot projects have been announced in Australia,USA and UK,CCS is not a serious option as far as dealing with climate change.This however has not prevented companies from playing in this area.Toshiba is the latest company to join the CCS fray hoping to set up a 5 MW pilot plant in JV with India's biggest power utility NTPC.
February 10, 2011
China has repeatedly cropped up in the news for cyberattacks on various governments as well as large multinational companies.While the Chinese government has denied responsibility for these cyberattacks,the evidence continues to grow as large reputed organization have blamed hacking on Chinese origin IP addresses.Note South Korea,USA and India have blamed China for cyberattacks on government computers.Growing cyberwarfare from China has made India start a cyberattack centre of its own reflecting the serious growing nature of these attacks.The recent Stuxnet virus attack on nuclear plants of Iran has been also been blamed on a Chinese attack on India gone wrong.Note cyberattacks are not considered of very serious nature in today's geopolitics and has deniability.This has probably made China to continue with cyberwarfare on countries considered hostile to its interests.
January 25, 2011
India's Fossil Fuel Subsidies have led to a massive growth of the petrol and diesel mafia in the country.India gives subsidies on diesel,kerosene and cooking gas through its state owned petro/gas companies like BPCL,IOCL,HPCL etc.These subsidies have been given for a long time and have led to the growth of a parallel black economy in these products.They not only lead to capital misallocation but also to the massive illegal profits for a few.It is a well known fact that all petroleum pump owners adulterate petroleum ( which power most of the cars) with subsdized diesel and kerosene.This massive racket earns millions of dollars (if not billions) for a network of company officials,pump owners,government bureaucrats and politicians.The mafia is so strong and powerful that it thinks nothing of burning alive a senior police official.The racketeers are so rich and well connected that despite common knowledge nothing gets done about it.
January 12, 2011
Asset Financing for utility grade projects accounted for $128 billion while a substantial amount was also raised for Green IPOs notably Enel Green Power,Goldwind,Datang,Longyuan etc.The figure does not include M&A figures not that there were any big bang acquisitions though a number of M&A activities took place in the Smart Grid space.Government individually ramped up the subsidies for Green Industries despite a failure to arrive at a meaningful global agreement to reduce carbon emissions in the Copenhagen Meet.Most of the investments tool place as countries increasingly jockey for the top spot in the emerging Green Industry.Conglomerates like Samsung,GE,Mitsubishi,Siemens have made Green Industry the focus of their management focus and investment leading to the astounding 39% growth.Note Green Advocates have said that $500 billion in annual investments will be required by 2020 to restrict carbon emissions to a tolerable level.
December 7, 2010
Russia huge huge wind and solar energy resources with gigawatts of potential.It also has great geothermal energy resources as well however most of them are not developed at all.There is no significant support for Renewable Energy Resource as well with Green Energy capacity in low double digits (15 MW of Wind in 2006).With Putin calling Wind Turbine hazardous to birds and causing Environmental Problems,It looks like Russian Leadership will not change its Fossil Fuel Centric Policy any time soon.While Middle East Countries are dead against Climate Change efforts,they are developing Nuclear Energy and some Renewable Energy for exporting more Energy.However Russia does not even want to do that despite being a leader in Nuclear Energy.
December 7, 2010
Ragpicking is a developing and poor country concept alien to developed countries of the West busy bickering over responsibility over carbon emissions.Millions of people in India […]
December 4, 2010
Note China has not passed a solar feed in tariff despite expectations amongst solar companies for a long time.China is a solar equipment leader with 60% of Solar Panel Production taking place in China.However 98% of the panels are exported making trading partners angry.High cost Europeans and Japanese companies have been almost driven away from the global solar market unable to compete with the Chinese solar majors.Solar Energy Demand in China is still minuscule compared to the world.Soaring Coal Prices,insufficient energy supply and carbon emissions have made China think of investing a trillion dollars into green industry.Solar however has not found sufficient love despite 280 MW national auction for solar projects.Wind Energy has grown exponentially in China and now accounts for 50% of the world demand.If the same thing were to happen to Solar Energy,the China's Solar Demand would grow by 20 times.
December 3, 2010
Coal Prices have started to increase in the international market alongwith other commodities like wheat,sugar,corn,gold,copper etc.But unlike other commodities,Coal has a disproportionate effect on Energy Prices.Note Coal is the principal supplier of top energy consumers like China,USA,India,Germany etc.The cheap price and abundance of coal has made it the fossil fuel of choice for generating electricity.The Technology for mining,processing and using coal to generate energy is well developed and cheap.This is the main reason for Coal's growing use despite its reputation as the Dirtiest Form of Energy.Coal Mining also regularly leads to hundreds of deaths even in developed countries like USA and New Zealand.However Growing Carbon Emissions due to Coal and its Supply Shortages has resulted in looking for alternative forms.Clean Coal Technology and CCS are looked upon as means to try and improve the carbon footprint of Coal.However the CCS Technology remains immature and expensive as of now .
December 3, 2010
Renewable Energy has faced a very bad year in 2010 at least in terms of stock prices.The failure of the Copenhagen Climate Meet in 2009 and the complete indifference towards the Cancun Meet in Mexico has made the Green Energy Sector one of the worst performing ones.Wind Energy has been the worst hit with falling gas prices and falling subsidies with USA and Europe the worst hit.Other sectors like Solar Energy and Biofuels have not got much love from the markets either.In fact major financial insitutions have sharply reduced their Renewable Energy Holdings with Short Interest Rising to a Record High amongst Green Companies like American Semiconductor,Jinko Solar etc.However despite the ascendancy of the Republicans in USA and the cold shoulder given to climate and energy bill,this might mark a bottom for Renewable Energy
November 22, 2010
Climate Change in the last year has faced one hit after another which should culminate in the failure of the Cancun,Mexico talks which is to start on November 29.Note there are not many expectations from the Cancun Climate Change negotiations in sharp contrast to the Copenhagen Talks in 2009.Despite the global attention and expectations from the Danish hosted Climate Meet,Copenhagen was a total disaster putting Global Warming in the Backburner despite more and more evidence of the massive global harmful effects.In the recent year,the Fossil Fuel Lobbies have been trying to discredit the very agency in charge of spearheading the war against Global Warming.They have been largely successful with global polls revealing a distinct cooling towards Global Warming Efforts.China despite huge investments into Clean Technology is emitting more Carbon Dioxide while USA has completely given up its Global Leadership on the most pressing World Problem.Here are the Reasons why the Cancun Climate Change Talks would fail.
November 22, 2010
Coal Demand continues to grow at steep pace in India and China defeating the efforts of Climate Change Activists in the Developed World.Building a Thermal Power Project in Europe and USA has become exceedingly difficult due to concerns of the detrimental health,air quality and pollution effects of Coal Derived Electricity and Heat.Coal is considered as the Dirtiest Form of Fossil Fuel Energy making it a prime target in Climate Change Fighting Efforts.However China with around 3 Billion Tons of Coal Consumption and India with another 500 million Tons depend on King Coal for majority of their Energy Needs.While China generates 80% of its Electricity from Coal,India generates around 65%.While both countries have Huge Reserves and Production of Coal,their voracious demand is leading to surging imports.These Imports are being sourced from countries like Australia,Canada and USA which are going through Coal Mining Booms.Ports are getting congested as Infrastructure failed to meet the growing coal needs of India and China.
November 16, 2010
India's Relations with its Neighbours in South Asia has mostly been strained despite sharing a common history and culture.While China and Pakistan remains India's topmost concerns with 4 wars being fought with these 2 countries in the last 65 years,the other smaller neighbours have not always been too friendly.However things seem to be improving with Bangladesh which is completely encircled by India on 3 sides.Bangladesh has viewed Big Brother India with suspicion despite India playing a crucial role in Bangladesh's Liberation from Pakistan during 1971.However the Bonhomie since 1971 was lost as subsequent military rulers and the BNP ruled coalition viewed India as an adversary.However the coming back to power of Shiekh Hasina led AWP has put India and Bangladesh on a new level.The reasons behind India-Bangladesh closeness are due to
November 13, 2010
Solar PV Technology have made a huge advance in the last 2-3 years leading to a demand explosion with more than 100% growth forecast this year.Crystalline PV Technology as well as Thin Film Technology like CIGs and CdTe have reduced their costs drastically.While Solar PV still requires generous government subsidies for their growth,grid parity has come very close.Solar PV Technology has become economically competitive in parts of Italy where a unique combination of high electricity rates and sunshine have made Solar PV Technology very attractive.Costs are being reduced at more than 10% per year which would make Solar PV competitive in 2-3 years in most parts of the world.However mainstream and reputed forecasters and companies like Boston Consulting Group remain blind and ignorant to this.BCG in a recent report has said that biofuels and Concentrated Solar Thermal (CSP) Technology will become competitive.I have issues with both of these technologies.
November 13, 2010
4) Parking Fights - Most of Indian cities are unplanned without any parking for most houses.This leads to a huge problem in terms of illegal parking.Even Legal Parking sees fights between neighbours leading to fights and sometimes even deaths.With thousands and millions of car hitting the roads every day and month,the problem is growing even more acute.No solution in sight as Indian politicians happily line up their pockets in corruption scams.
Summary
India's Transport Policy is a total mess with no solution in sight.Public Transport is not given enough money or resources to make a difference while Indian auto companies are making huge profits.Construction of the recent Metro Railway to Delhi's satellite city of Gurgaon has already been filled to capacity not reducing the pressure on the main highways which remain chock a block with cars 24 hours a day.India needs to massively invest in public infrastructure and dis-incentivize private modes of infrastructure like cars through congestion and fuel taxes.
October 28, 2010
Pennsylvania is the Ground Zero for Shale Gas Development globally with more than 2500 Gas Wells in Operation.The State is situated on top of the Marcellus […]
October 25, 2010
Wind Energy Companies in the Developed Markets have taken it on the chin in 2010.Companies dependent on the Wind Energy Markets in the West like Vestas,Gamesa,Suzlon,Iberdola Renewables etc. have had a very bad 2010 as their stocks price keep finding new lows.A Combination of Tough Financing Markets,Low Gas Prices and Declining Electricity Demand has made the livers of Wind Executives hellish in recent times.More competition in terms of Chinese heavyweights like Sinovel,Goldwind and Koean shipbuidlers precludes an easy recovery.Green IPOs in recent times have faced huge volatility with some managing success while others have led to huge losses.China's Ming Yang Power which is a Chinese Turbine Manufacturer has seen a 30% erosion of its IPO stock price of $14 as it was priced a tad too aggressively.First Wind which is a bit different being a Wind Energy Developer similar to renewable energy developers like Enel Green Power,EDF Novellas might face a frosty reception as well.Its not a good time to be in the wind energy business as increasing competition and declining demand cause problems.Note John Deere sold off its Renewable Energy Arm for a bargain as US Climate Change Legislation seems stuck in an everlasting limbo.Without a Federal RPS and an expiring 30% Treasury Cash Grant for Wind Farms,2011 is very uncertain for Wind Energy in the USA.
October 25, 2010
India hopes to derive annual revenues of more than $1 billion dollars from a new coal tax it has introduced.These revenues will go to a proposed Green Bank which will fund Green Energy Projects and R&D in the Country.While initially the funds will be managed by the government's financial agency IREDA,later on a full fledged Green Bank will be managing the annual $1 Billion Coal Tax.Note Coal is the biggest Energy Source for India and China.Both countries are trying to diversify their dependence from Coal as it is the dirtiest form of energy.However the cheapness and abundance has made coal indispensable to the voracious energy requirements of both countries.Coal India Limited (CIL) which came out with an IPO recently was a resounding success in India showing that investors believe that Coal will contiue to grow and dominate the Energy Scene in India.
October 21, 2010
Food Prices are rising at an incredible pace around the world due to a combination of money printing by the USA and Bad Weather in Russia and Asia.The major cause of the Food Price Increase has been the global rush towards investing in commodities as currencies get devalued by countries eager to increase exports in a zero sum game.Wheat Prices were the first to rise after Russia stopped exports leading to the sharpest gain in the last 2 years.Corn prices have increased with increased demand from ethanol,bad harvests and relentless QE.Rice and Soybean prices were bound to rise in empathy with other grain prices.Note these two food varieties are substitutes of corn and wheat.So it makes sense for speculators and consumers to increase the demand for these 2 commodities as well.
Rice Price Increase after Flooding in Biggest Exporters
Rice Prices have shown a record increase after floods sharply reduced output in the 2 main exporter Vietnam and Thailand.With inventories being sharply cut and harvests going down it is not much of a surprise.Rice importing countries like Philippines will be badly hit as their per capita income is quite low and they have a large poor population highly sensitive to increasing food prices.Expect 2011 to be a Hunger Year for a large chunk of the world's population thanks to Ben Bernake and print his way to prosperity team.
October 20, 2010
According to a report from Maplecroft,India and Bangladesh are the countries most at risk from the deleterious effects of Climate Change.The other countries in South Asia like Nepal,Myanmar,Pakistan are not far behind.Maldives the smallest country in South Asia is the heaviest in danger with its very existence at stake.Next in the list are African countries like Mozambique,Madagascar and others from Global Warming Changes like Droughts,Floods,Submersion etc.Note Climate Change has faced massive setbacks in recent time with the failure of the Copenhagen meet and not much chance of success with the next Cancun meet.USA and China the two biggest emitters of GHGs have been reluctant to move forward in the the Climate Change issue.Note the poorest countries are the most vulnerable to climate change and they have the least voice in climate change talks.Rich countries like Saudi Arabia have even blocked studies on climate change by poor island nations.
October 18, 2010
India's Massively Growing Industry is clashing head-on with the Environment leading to huge fissures.There have been numerous clashes already with many of the mega industrial projects being cancelled or shifted.Tata Motor's Nano Project in Singur,West Bengal was probably the most famous project to be scrapped after a huge people's uprising due to loss of land and livelihood.Unlike China,where industry manages to always win over people's protests,it is not that easy in India's Democracy.Orissa recently saw Vedanta Resources Bauxite Mining Project cancelled over loss of tribal sacred land loss concerns.This was a huge victory for India's environmentalists as officials and companies were found breaking forest and environment laws.Now POSCO which has been trying to build a $12 Billion Steel Plant in the Mineral Rich State of Eastern India finds that Green Approvals given might be cancelled by a panel of government experts.Note the POSCO project was stopped recently pending an environmental assessment whose report will be published on Oct 25.Despite hectic lobbying by POSCO and the provincial Orissa government,the project looks set for more delays.Note the Steel Plant which was started in 2005 is already way behind schedule.
October 14, 2010
Coal India IPO the biggest primary market-raising company in the history of the markets has raised a huge amount of investor interest.The investor is barraged with […]
October 11, 2010
Abu Dhabi has got the largest sovereign wealth fund in the world with asset of over $600 Billion.The small emirate which is a part of the larger United Arab Emirates is one of the richest countries in the world due to its Oil Riches.The country had made ambitious Renewable Energy Plans setting up a Fund/Company dedicated to its Green Ambitions called Masdar.The Company has faced a number of reverses as it tried a number of things all at once in a new industry.Its "Jack of All Trades" Strategy has proven to be a failure as it lost/fired a number of top executives.Its Solar Plans have also come up a cropper as Thin Film Technology has faced a lot of reverses in recent times.The Company has tried to change tactics by concentrating now on Solar Thermal Technology partnering with Abengoa and Total in building a CSP plant near Abu Dhabi.With its Renewable Energy Arm facing a number of reverses,its plan for a futuristic,zero carbon Green Masdar City has also been scaled down.
October 11, 2010
Constellation Energy has become the latest USA Utility to cancel its proposed new nuclear energy plant to be built in Maryland.Despite a Loan Guarantee from Department of Energy (DOE) as part of the US Green Stimulus,Constellation has found the economics of the Nuclear Reactors as unworkable.In fact this is keeping with the trend of other utilities in the Developed World who have found New Nuclear to be too expensive.While a number of cyclical factors are at play (Wind Energy has also been affected) in hindering the development of these plants,it seems a secular shift has occured.Finland has become the poster boy of a Nuclear Project Disaster with the main developer Areva bleeding from losses as time and cost overruns have almost doubled.The increaseing costs of environment and safety regulations has increase manifold since the last spurt of nuclear energy construction in the 1980s.The Nuclear Renaissance has proven to be a complete failure in the Western Countries.While China continues with its aggressive Nuclear Expansion plans,construction in the US has come to a virtual halt.Exelon which is the largest Nuclear Energy Operator in the USA has also halted developed of 2 new reactors in Texas.These Utilities have said that they need much higher energy prices and a carbon tax before going ahead with reaction construction.Note Exelon recently bought a Wind Energy Operator as Solar/Wind become the favored Green Energy choices.
October 11, 2010
Coal India is coming out with India's biggest IPO offering in the Stock Market History.The company seems fundamentally strong on almost all aspects and is also pricing itself at a significant discount to its global peers.Both superficially and deep down,the analysis points CIL to be a very safe investment at a cheap valuation.Other analysts are also coming to the same conclusion,as Rating Agency has given CIL a 5/5 Rating which is probably the first in the history of IPO Grading .In order to give a more balanced perspective and avoid herd tendencies,I am listing out what the risks and negatives are with this company.Note this does not make me negative on the stock on which I am very positively biased.It is just to give investors the other side of the debate which I think general analysis will lack.
Despite the above Risks , I think that Coal India is one of the best quality stocks to come out in India's Primary Markets.However investors should be wary of the risks which will be glossed over by the mainstream media and brokerages . As with every investment however safe it might look,there are risks.This does not mean that investors should be fearful of every investment.It is by being aware of the risks,that prudent risk management can be done which is essential to successful investing.
October 7, 2010
Coal India Limited (CIL) is the biggest IPO in the history of the Indian markets.The Company has generated a lot of investor interest because of a number of firsts.It is the largest coal producer in the world in one of the biggest demand growth regions.The company has excellent fundamentals being rated 5/5 by the rating agency.The government has disallowed anchor investors for the IPO as it finds that allocation could be construed as biased.Note Anchor Investors in Indian IPOs are favored investor who are preallocated a fixed amount of shares by investment bankers.This is similar to the US practice where all of the IPO is offered to institutional investors by investment bankers solely on their discretion.India is much more egalitarian in its approach to IPO regulation with a fixed amount 35% reserved for retail investors .The pricing of the issue has been a hot topic of speculation with the expected price range to give it a multiple of around 15x which is around 20-30% cheaper than comparable large US and China coal companies like Massey,Shenhua and others.
October 5, 2010
The Government of India has formed a high powered panel to look into replacing the usage of diesel powered gensets by Renewable Energy in Telecom Towers.India has around 300,000 Telecom Towers most of which are powered by expensive diesel generators.The reason is that a lot of the telecom towers are situated in far flung areas where the grid does not exist.Also the power supply in India is erratic and not reliable with 10 hour electricity blackouts not an infrequent occurrence.In these cases a backup supply of electricity supply is badly needed.Diesel Generators are the most popular form with Diesel heavily subsidized by the government in comparison to normal petroleum.Also Diesel Generators are widely available without huge capital costs.