tag:blogger.com,1999:blog-77838862111746712222024-02-08T09:46:56.053-08:00HughBartling.comHugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-7783886211174671222.post-69305564305244213442008-07-21T09:40:00.000-07:002008-07-21T09:41:47.090-07:00Climate Report Cites Role of Cheney's Office<div class="headerBlack"><strong>U.S. News: Climate Report Cites Role of Cheney's Office</strong></div><div class="textMedium"><!--Start AUTHORS--><em>Siobhan Hughes</em>. <!--End AUTHORS--><!--Start PUB_TITLE--><b>Wall Street Journal</b><!--End PUB_TITLE-->. <!--Start PMEDITION-->(Eastern edition). <!--End PMEDITION--><!--Start PMQUAL-->New York, N.Y.: <!--End PMQUAL--><!--Start PC_DATE-->Jul 21, 2008. <!--End PC_DATE--> pg. A.3</div><table border="0" cellpadding="2" cellspacing="0"></table><!--End CITATION--> <div style="width: 12px; height: 12px;"><!-- --></div> <a name="summary"></a><!--Start ABSTRACT--><a name="abstract"></a><div class="docSection" style="padding-top: 4px; padding-left: 4px;"><span class="textSmall"><strong></strong></span><br /></div><!--End ABSTRACT--> <a name="fulltext"></a><!--Start FULL TEXT--><div class="textSmall docBar2"><table><tbody><tr><td class="langDir" nowrap="nowrap"><span class="left"><strong>Full Text</strong> </span><span class="right">(619 words)</span></td></tr></tbody></table></div><span class="italic">(c) 2008 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.</span><br /><br /><p style="margin-top: 0px;">WASHINGTON -- Bush administration officials agreed that greenhouse gases could endanger the public and should be regulated under clean- air laws, but later reversed course amid opposition from Vice President Dick Cheney's office and the oil industry, a congressional report said.</p><p style="margin-top: 0px;">The report, by the U.S. House Select Committee on Energy Independence and Global Warming, offers a look at the breadth of Bush administration support for regulations before such plans abruptly stopped. The report draws heavily on an interview with a former Environmental Protection Agency official who had told Congress that Mr. Cheney's office tried to censor federal testimony on the danger of global warming. It is also based on confidential interviews with EPA staff and documents subpoenaed from the EPA.</p><p style="margin-top: 0px;">"This is the dysfunctions and motivations of the Bush administration laid bare," Chairman Ed Markey (D., Mass.) said in a statement.</p><p style="margin-top: 0px;">The White House rejected the committee's findings. "Chairman Markey's report is inaccurate to the point of being laughable," said White House spokesman Tony Fratto.</p><p style="margin-top: 0px;">For months, Congress has been investigating a series of decisions by EPA Administrator Stephen Johnson, including stopping California from regulating motor-vehicle greenhouse-gas emissions. Previous congressional reports showed that Mr. Johnson originally sided, at least in part, with EPA staff on several matters, including the idea that greenhouse-gas emissions pose a danger to the public and should be regulated. But the latest report suggests that Mr. Cheney's office came to play a key role in interagency discussions.</p><p style="margin-top: 0px;">Megan Mitchell, a spokeswoman for Mr. Cheney's office, disputed the report. "I don't accept their premise," she said. The latest report said the oil industry argued against regulatory action and had the support of Mr. Cheney's office. In the end, the report said, the Bush administration backed off regulation. "Frankly, that's ridiculous," Ms. Mitchell said.</p><p style="margin-top: 0px;">Jason Burnett, a former EPA associate deputy administrator who played a key role in coordinating the agency's climate-change activities, told the House committee that people in Mr. Cheney's office and the White House Office of Management and Budget felt regulations would hurt President George W. Bush's legacy. Mr. Burnett didn't return a phone call seeking comment.</p><p style="margin-top: 0px;">The report said F. Chase Hutto III, Mr. Cheney's energy adviser, argued against new regulations, along with unidentified individuals from Exxon Mobil Corp. and the American Petroleum Institute. It also said that Mr. Bush's deputy chief of staff, Joel Kaplan, and Energy Secretary Samuel Bodman, Transportation Secretary Mary Peters and Commerce Secretary Carlos Gutierrez had originally endorsed an EPA finding that greenhouse-gas emissions endanger public welfare and should be regulated under the Clean Air Act.</p><p style="margin-top: 0px;">Earlier this month, those officials signed a letter saying that the Clean Air Act isn't an appropriate vehicle for regulating greenhouse- gas emissions.</p><p style="margin-top: 0px;">Energy Department spokeswoman Angela Hill said that Mr. Bodman "has not reversed course" and that the department considers the Clean Air Act fundamentally ill-suited to effectively regulating greenhouse-gas emissions.</p><p style="margin-top: 0px;">Brian Turmail, a spokesman for Ms. Peters, said that she "was involved in an intellectual process to explore whether the Clean Air Act was an appropriate vehicle for regulating fuel-economy standards. The decision was 'no.' You shouldn't confuse engaging in an intellectual exercise with supporting the idea."</p><p style="margin-top: 0px;">A Commerce Department spokeswoman didn't respond to a request for comment. American Petroleum Institute spokeswoman Karen Matusic said it isn't unusual for the group to meet with federal agencies "on areas of mutual concern," and that it has repeatedly said it doesn't believe the Clean Air Act is appropriate for regulating greenhouse-gas emissions. Exxon spokesman Alan Jeffers said he didn't know who made the company's case, but that "it's not a secret what our views are." He said Exxon believes the Clean Air Act isn't the appropriate way to regulate carbon emissions.</p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-78889446960789663022007-05-05T09:01:00.000-07:002007-05-05T09:02:56.697-07:00Households Would Need New Bulbs<h1 class="articleTitle" style="margin: 0px;">Households Would Need New Bulbs<br />To Meet Lighting-Efficiency Rule</h1> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>JOHN J. FIALKA</b> and <b>KATHRYN KRANHOLD </b><br /><span class="aTime">May 5, 2007; Page A1</span></span><br /></div> <p class="times">WASHINGTON -- Manufacturers and environmentalists are hammering out a nationwide energy-saving lighting standard that, if enacted by Congress, would effectively phase out the common household light bulb in about 10 years. That in turn could produce major cuts in the nation's electricity costs and greenhouse-gas emissions.</p> <p class="times">The new standard is expected to compel a huge shift by American consumers and businesses away from incandescent bulbs to more efficient -- but also more expensive -- fluorescent models, by requiring more light per energy unit than is yielded by most incandescents in use. The winner, at least in the near term, likely would be the compact fluorescent light bulb, or CFL.</p> <p class="times">Whatever rule is proposed by the groups would likely be incorporated into energy legislation passed last week by the Senate Energy Committee that the full chamber is set to debate by the end of the month, committee aides say. This bill, the Democrats' first major energy initiative since taking control of Congress in January, calls for new efficiency standards for appliances and motor vehicles and mandates the use of more alternative fuels, such as ethanol, by 2022.</p> <img src="http://online.wsj.com/public/resources/images/HC-GJ963_Bulb_20070504234451.gif" class="imglftbdy" alt="[Fluorescent Bulb]" align="left" border="0" height="356" hspace="0" vspace="0" width="136" /> <p class="times">While the move could face resistance from some consumer groups and from low- and fixed-income constituencies, Energy Committee aides say there is bipartisan support in Congress for a new lighting standard.</p> <p class="times">"Congress should do all it can to encourage industry and consumer groups to work with government in setting standards for energy-efficient products, including light bulbs and new lighting technologies," said Sen. Jeff Bingaman, a New Mexico Democrat who is chairman of the panel.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">Fluorescent bulbs have been around for years and are known to be more economical over the long run, but consumers have shown a clear preference for the softer and more easily adjusted glow of incandescent bulbs, which also carry a much cheaper sticker price. Now, there is push toward using regulation to force adoption of the more energy-efficient product.</p> <p class="times">The Senate panel estimates a shift from the standard tungsten filament incandescent bulb and other relatively inefficient forms of lighting would save $18 billion in electricity costs every year. Because 50% of the nation's electricity comes from coal-fired power plants, this would also reduce demand equivalent to that currently met by 80 coal-fired power plants. Burning coal releases pollutants including carbon dioxide, which scientists think is accelerating climate change, and mercury, which can damage the nervous systems of small children.</p> <p class="times">The move away from the current incandescent bulb, invented by Thomas Edison in 1879, would create at least an $8 billion market for more-efficient lighting, analysts say. There are four billion electric light sockets in the U.S., most of them in homes, and some would be filled with CFLs, which use 75% less energy and can last more than six times as long, according to industry estimates. Manufacturers expect over the next decade to provide consumers with other choices as well, since CFLs don't work as well in applications such as reading lamps.</p> <p class="times">"It's the right thing to do," says Randall B. Moorhead, vice president for the North American affiliate of Royal Phillips Electronics NV of the Netherlands. "But we're also hoping we'll make some money. It's not entirely altruistic."</p> <p class="times">The three biggest light-bulb makers, Philips, <b>General Electric</b> Co. and Osram Sylvania, a unit of Germany's <b>Siemens</b> AG, have more efficient lighting products in development. GE is the biggest seller of compact fluorescent lights in the U.S. In February, the Fairfield, Conn., company announced it would be introducing an incandescent bulb that will be comparably efficient to CFLs and would likely meet standards now being discussed. Manufacturers also are re-engineering light-emitting diodes that are currently too pricey for the consumer market but will likely fall in price over time.</p> <p class="times">One reason bulb makers are willing to negotiate a new federal standard is that a half-dozen states, led by California and Texas, are weighing bans on incandescent bulbs. Australia, Canada and the European Union are also considering phasing out such lights.</p> <p class="times">"If there are all these intrastate regulations, it will become tough as a skunk to get these things to work. It becomes very challenging to the retailer," says Richard Upton, president and chief executive of the American Lighting Association, which represents lamp makers and retail-lighting showrooms in the U.S. and Canada.</p> <p class="times">The talks on establishing a new nationwide standard include the bulb makers, the lighting association, the Alliance to Save Energy, the American Council for an Energy Efficient Economy and the Natural Resources Defense Council, among others. They have been under way since March, after Phillips declared that incandescent bulbs should be phased out within 10 years.</p> <p class="times">"I think we're half to two-thirds of the way there," says Noah Horowitz, a senior scientist with the Natural Resources Defense Council. He predicts the result will be a two-stage federal standard that will require bulbs that use 30% less electricity within five years and bulbs that are 75% more efficient within 10 years. The talks are also aimed at standards that would remove the least-efficient street lights and fluorescent lights that are used in offices.</p> <img src="http://online.wsj.com/public/resources/images/P1-AH846_WBULBe_20070504212545.gif" class="imgrgtbdy" alt="[Bulb]" align="right" border="0" height="364" hspace="0" vspace="0" width="471" /> <p class="times">The resulting sharp cut in electricity demand would be the quickest and most effective energy curb in this year's energy bills, says Bill Prindle, acting executive director for the American Council for an Energy Efficient Economy. Noting that electricity consumption is scheduled to increase by 20% by 2020, Mr. Prindle says new "clean tech" energy forms such as alternate fuels and advanced wind power won't begin to reduce emissions until energy demand is cut. "We have to do both," he says.</p> <p class="times">GE's Earl Jones, senior counsel for the company's consumer and industrial business, says the goal is to agree on efficiency standards that reduce greenhouse gases and cut energy consumption, but also "satisfy basic consumer interest in the quality of light in their home and at work."</p> <p class="times">"The winners will be the manufacturers whose technology can deliver the highest lumens without compromising quality of light," Mr. Jones said. A lumen is a measure of light.</p> <p class="times">Shifting to compact fluorescent light bulbs will be more expensive for homeowners at the outset. Incandescent bulbs can be bought as cheaply as 25 cents, but compact fluorescent bulbs can cost between $2 and $3. However, because the more-expensive bulbs use much less electricity and last far longer, they can pay for themselves in as little as six months, depending on usage, says Jeff Harris, vice president for the Alliance to Save Energy, a coalition of business, government, environmental and consumer leaders that advocates efficiency policies that minimize costs to society and consumers. In addition, the prices of compact fluorescents are falling. But it isn't known whether CFLs will be more economical or efficient than future technologies.</p> <p class="times">There are other drawbacks that have limited the more efficient bulb's market penetration. Aside from lighting quality, compact fluorescent bulbs include a tiny amount of mercury that would require their disposal through recycling programs. According to Mr. Moorhead of Philips, CFLs only fill an estimated 6% of American sockets.</p> <p class="times">GE and Osram, in weighing the details of a new standard, need to ensure that they have enough time to retrofit their incandescent-light factories to make more energy-efficient lights. Philips doesn't have any incandescent factories in the U.S. CFLs, which are much more labor intensive, are mostly manufactured in China.</p><br /><p class="times"><br /></p><p class="times">Source: Wall Street Journal<br /></p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-91229849320873693462007-05-05T09:00:00.000-07:002007-05-05T09:01:07.356-07:00Climate Economics<h1 class="articleTitle" style="margin: 0px;">Climate Economics</h1> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Fight Over Who Pays for Emission Curbs</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>JEFFREY BALL</b><br /><span class="aTime">May 5, 2007; Page A4</span></span><br /></div> <p class="times">A new United Nations report is the latest sign that the global-warming debate is moving beyond science to hardball economics, dividing nations and industries in a scramble over how the cleanup bill will be divided -- and how big it will be.</p> <p class="times">Amid mounting political and public pressure to curb global-warming emissions, companies and governments are reaching general consensus on what technologies need to be deployed and how much it could cost. Now a battle is heating up over the details.</p> <div id="inset" style="border: 1px solid rgb(113, 148, 186); margin: 0px 3px 12px 0px; padding: 5px 8px; float: left; width: 254px; display: table;" class="arial black p11"> <span class="p11">•</span> <b> The News:</b> A new U.N. report says the world can curb global-warming emissions over the next several decades without significantly crimping global economic growth.<span style="font-size: 5px;"><br /><br /></span> <span class="p11">•</span> <b> The Background:</b> The report was issued by the U.N.'s Intergovernmental Panel on Climate Change, an international panel of scientists.<span style="font-size: 5px;"><br /><br /></span> <span class="p11">•</span> <b> Outlook:</b> A clean-up would reduce global economic output 3% below the level it would otherwise reach in 2030.<span style="font-size: 5px;"><br /><br /></span> </div> <p class="times">The report issued Friday by the United Nations' Intergovernmental Panel on Climate Change, an international panel of scientists, says the world can meaningfully curb global-warming emissions over the next several decades without significantly crimping global economic growth. But that would require sweeping changes to the global energy system -- and the cost would hit some sectors much harder than others.</p> <p class="times">"There's not a win-win here," says Ray Kopp, a senior fellow at Resources for the Future, a Washington-based think tank studying global-warming policy. "Somebody gets hammered and somebody doesn't."</p> <p class="times">The U.N. report says reducing greenhouse-gas emissions enough to avoid the worst consequences of global warming could reduce projected global economic output in 2030 by as much as 3% below the level it would otherwise reach that year. Whether that is a significant economic drag is a matter of dispute.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">Bush administration officials argue a 3% reduction in the global economy in 2030 would be too severe. It is "something that we probably want to avoid," James Connaughton, chairman of the White House Council on Environmental Quality, said Friday. He said the effects could fall unevenly across the economy, causing some factories to move abroad and particularly hurting lower-income Americans. He said the administration supports emission-reduction measures it believes can be made at lower cost.</p> <p class="times">Officials who led the U.N. report played down the cost. "It's not an order of magnitude that cripples the economy," said Bert Metz, a Dutch researcher and co-chairman of the report.</p> <p class="times">Jonathan Pershing, director of the climate and energy program at the World Resources Institute, a Washington-based environmental think tank, said the potential cost to the economy "suggests you want to be pretty careful" in designing the emission-reduction system. "But if you do this right, it's not going to break the bank."</p> <p class="times">Reducing emissions to the levels studied in the U.N. report would cost between $20 and $100 for every ton of carbon dioxide, the main global-warming gas, that is kept out of the atmosphere, the report says. That is the price companies would have to pay either to curb their own emissions enough to comply with a cap or to buy emission "credits" on a trading market that pay someone else to do the cleanup.</p> <p class="times">Prices are approaching those levels already in parts of the world where emission caps are in place. In Europe, which in 2005 imposed a carbon cap on itself, a credit allowing the bearer to emit a ton of CO2 next year is trading today at about $25.</p> <p class="times">The rise in prices envisioned in the U.N. report is broadly in line with what many are predicting by 2030. Consultant McKinsey & Co. estimated in a January study that greenhouse-gas cuts approximately as stringent as those surveyed in the U.N. study would cost as much as $40 a ton of avoided CO2.</p> <p class="times">Both the U.N. and McKinsey studies assume the world attacks global-warming emissions in the most economically efficient way. For instance, the U.N. study assumes the cuts come from across geographic regions and economic sectors, spreading the costs broadly. If that doesn't happen, the costs would rise. Currently, the world's two biggest global-warming emitters, the U.S. and China, haven't accepted emission caps.</p> <p class="times">Another question is what sectors of the economy cough up the bulk of the emission cuts. Like most studies, the U.N. report says that improving the energy efficiency of buildings and cars can produce significant emission cuts while actually saving money. That is because the extra initial investment in, say, home insulation or a more fuel-efficient auto engine can more than pay for itself in lower electricity bills or fewer trips to the gas pump.</p> <p class="times">But that assumes consumers will be willing to wait many years to recoup the extra up-front costs. In reality, many consumers don't keep their houses or cars that long. So the government also would have to dangle incentives to consumers or mandate that car makers lift mileage.</p> <p class="times">"A carbon price that gets a lot to happen in other sectors of the economy does not make much happen in transport," explains Robert Socolow, a professor at Princeton University focusing on climate change. He says a carbon cap that imposes a $30-a-ton price for CO2 emissions raises the retail price of a gallon of gasoline by about 30 cents -- not enough to prod many people to go out and buy a more-efficient car.</p> <p class="times">In Europe, the carbon cap has fallen on utilities and manufacturers, largely because targeting a relatively small number of large power plants and factories is easier than targeting millions of cars and trucks. In the U.S., many heavy-emitting companies now say they think a federal emissions cap is all but inevitable. That is why utilities are lobbying particularly hard to shape the details of any cap.</p> <p class="times">One is <b>Duke Energy</b> Corp., based in Charlotte, N.C. James Rogers, Duke's chief executive, said in an interview earlier this year that the company already has "made a lot of investment decisions in recognition of the fact that we're going to live in a carbon-constrained world." But he said it remains far from clear how high the cost of avoiding each ton of CO2 emissions will climb. For planning purposes, he said, over the life of potential power plants, "I've used $7.50 to $30" a ton.</p> <b>Write to </b>Jeffrey Ball at <a class="times" href="mailto:jeffrey.ball@wsj.com">jeffrey.ball@wsj.com</a>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-10277829103751951022007-05-03T07:26:00.000-07:002007-05-03T07:27:31.353-07:00As Its Population Declines, Youngstown Thinks Small<h1 class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline">SHRINK TO FIT</span></i><br />As Its Population Declines,<br />Youngstown Thinks Small</h1> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Rather Than Trying<br />To Grow, Ohio City<br />Plans More Open Space</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>TIMOTHY AEPPEL</b><br /><span class="aTime">May 3, 2007; Page A1</span></span><br /></div> <p class="times">YOUNGSTOWN, Ohio -- Hanging next to city planner Bill D'Avignon's desk is a giant map of this city, divided into neighborhoods. One is Oak Hill, a gritty enclave just south of downtown. The neighborhood, once densely populated, has lost 60% of its population in recent decades and is dotted with abandoned buildings and empty lots.</p> <p class="times">Faced with the devastation of Oak Hill and other depressed pockets of the city, Youngstown is trying an unusual approach: Allow such areas to keep emptying out and, in some cases, become almost rural. Unused streets and alleys eventually could be torn up and planted over, the city says. Abandoned buildings could be razed, leading to the creation of larger home lots with plenty of green space, and new parks.</p> <a class="times" href="http://online.wsj.com/public/resources/documents/info-Youngstown0705.html" onclick="OpenWin('http://online.wsj.com/public/resources/documents/info-flash07.html?project=Youngstown0705&h=550&w=875&hasAd=1&settings=Youngstown0705&initSelectedList=0','Youngstown0705','875','720','off','true',40,10);return false;"><img src="http://online.wsj.com/public/resources/images/OB-AK110_Youngs_20070502193656.jpg" class="imglftbdy" alt="[go to map]" align="left" border="0" height="202" hspace="0" vspace="0" width="258" /></a><sup>1</sup> <p class="times">Youngstown, a former steel-producing hub, has been losing residents for years as a result of the closing of most of its steel mills. But rather than struggle to regain its former glory or population, it has adopted an economic-development plan that boils down to controlled shrinkage. By accepting the inevitable, the city says it can reduce its housing stock, infrastructure and services accordingly.</p> <p class="times">The plan is still in its early stages. As a first step, Mr. D'Avignon and other city planners have divided Youngstown into 127 neighborhoods, and labeled them as stable, transitional or weak. Now they're working on a customized plan for each one, noting which corners need street signs, which sidewalks need to be repaired and which buildings need to be demolished. The goal is to craft plans for about 30 neighborhoods a year.</p> <p class="times">Another goal is to wipe away the most obvious blight. The city estimates it will take about four years to bulldoze the biggest eyesores, including about 1,000 abandoned homes and several hundred old stores, schools and other structures.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">"The vision is still evolving, but the ultimate result will be to create more open space where there used to be part of the city," says Mr. D'Avignon.</p> <p class="times">Talk like that would be considered blasphemy in most cities, where officials are taught to promote growth and development and fight against population decline. Accepting that a city is going to shrink goes against conventional wisdom that a bigger city means more jobs, more taxpayers, more revenue, better education, and better services -- in essence, a higher standard of living.</p> <div id="inset" style="border: 1px solid rgb(113, 148, 186); margin: 0px 0px 12px 3px; padding: 5px 8px; float: right; width: 254px; display: table;" class="arial black p11"><span class="b13">PODCAST</span><br /><div style="border-top: 1px solid rgb(204, 204, 204); line-height: 5px; font-size: 5px;"> </div> <a class="p11" href="http://podcast.mktw.net/wsj/audio/20070501/pod-wsjaeppel/pod-wsjaeppel.mp3"><img src="http://online.wsj.com/public/resources/images/it_podcast08102005141132.gif" class="imgrgtins" alt="[Podcast]" align="right" border="0" height="48" hspace="0" vspace="0" width="44" /></a><sup>2</sup> <div class="p11" style="padding: 1px 0px 3px;"><a class="p11" href="http://podcast.mktw.net/wsj/audio/20070501/pod-wsjaeppel/pod-wsjaeppel.mp3">Youngstown Mayor Jay Williams</a><sup>3</sup> explains the strategy behind the plan to scale down the town.</div> </div> <p class="times">"It's un-American. It seems like you're doing something wrong if you're not growing," says Hunter Morrison, director of the Center for Urban and Regional Studies at Youngstown State University, who worked with the city to come up with its strategy. But he says the idea is "not really about growth or shrinkage, it's about managing change."</p> <p class="b13"><b>Controversial Approach</b></p> <p class="times">The approach is controversial. Encouraging and accepting the hollowing out of neighborhoods will, by default and design, hit Youngstown's poor and minority residents the hardest. About 45% of Youngstown's residents are black, another 5% Hispanic, and the blight is heavily concentrated in minority neighborhoods, which are slated for the biggest makeovers.</p> <p class="times">"You always have to ask yourself: 'What areas are going to be abandoned?'" says John Russo, who teaches labor and working-class studies at Youngstown State. "And most of those are the African-American parts of the city."</p> <p class="times">Youngstown has promised not to force anyone to move, which has helped allay some fears in minority neighborhoods.</p> <p class="times">Others think the idea could be a hard sell. "You have to be skeptical, because it's really hard to do something like this," says Frank Popper, a Rutgers University land-use planner who studies regions with population declines. "The one thing you always run up against is that Americans don't want to be told about decline."</p> <table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="245"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/P1-AH814_SHRINK_20070502181430.jpg" alt="[Photo]" border="0" height="174" hspace="0" vspace="0" width="245" /></td></tr><tr><td class="medcptnocrd">The Oak Hill neighborhood in Youngstown, Ohio</td></tr></tbody></table> <p class="times">Youngstown, which has lost half its population since the 1950s, says it needs a radically different approach to halt decay. It's pointless to try to revive certain neighborhoods, the city's leaders argue, since the exodus of residents often makes those areas unpleasant and dangerous places to live, leading to further decline.</p> <p class="times">"The concept of trying to grow out of economic malaise is just not realistic for us," says Mayor Jay Williams, 35 years old. One of his first official acts after being elected in 2005 was to apply surplus money to demolition in the city.</p> <p class="times">Although Youngstown is one of the first cities to openly embrace this philosophy, the idea of planning to get smaller is gaining consideration around the world. Earlier this year, the University of California, Berkeley, held a symposium called "The Future of Shrinking Cities" that attracted 100 people from five continents.</p> <p class="times">In parts of eastern Germany, the government has earmarked some $3.4 billion for tearing down communist-era prefabricated apartment blocks and replacing them with green space, partly in response to an exodus of residents to the West.</p> <p class="times">European cities are more experienced with the phenomenon of shrinking urban centers, having endured centuries of war and famine that caused many of the region's great cities to fluctuate in size over time.</p> <p class="times">A Berlin-based "Shrinking Cities" project, partly funded by the German government, compiles research about urban-population loss. The group says that during the 1990s more than a quarter of the world's large cities saw population declines, mostly in industrial regions such as eastern Germany and the U.S. heartland, but also in Japan, Russia, and China, where people are moving from remote cities to booming coastal centers.</p> <img src="http://online.wsj.com/public/resources/images/HC-GJ944_Willia_20070502171251.gif" class="imgrgtbdy" alt="[Jay Williams]" align="right" border="0" height="225" hspace="0" vspace="0" width="136" /> <p class="times">"The issue is most visible in cities that are concentrated in a single industry, like steel," says Philipp Oswalt, an architect who heads the German project. Indeed, a similar pattern is now being repeated in a host of other Midwestern cities, including smaller ones such as Muncie, Ind., and Flint, Mich., which have seen huge shutdowns of auto-related plants and subsequent population declines.</p> <p class="times">Population loss can manifest itself in unexpected places and for a variety of reasons, says Mr. Oswalt. Paris, for instance, has a vibrant center, but is surrounded by rings of industrial suburbs where, in some cases, population is falling. New Orleans was radically downsized in a matter of hours by a hurricane and floods.</p> <p class="times">The German group has put together a traveling art exhibit on the topic, with works from more than 200 artists in 12 countries. One film profiles a suburban family moving the remains of a loved one from a city cemetery to a nearby township. A painting depicts a neighborhood scene where little remains but a utility pole surrounded by children's toys. The exhibit recently opened in Cleveland after a run in Detroit, two cities grappling with population declines.</p> <p class="times">Few cities have adopted a plan like Youngstown's. The city is a classic "hole in the donut" community -- increasingly empty in the middle, but with growing suburbs.</p> <p class="times">In 1950, Youngstown's population stood at 168,000. The steel industry was booming and city leaders envisioned Youngstown growing to a quarter of a million people by the end of the century. New neighborhoods were laid out on the fringes of the city in anticipation of growth.</p> <p class="b13"><b>A Tailspin</b></p> <p class="times">But by the 1980s, the steel industry had gone into a tailspin as producers faced an influx of lower-priced, foreign-made steel. Today, only a single large steel mill is left and the city's population has wilted to about 80,000. Most of the mills have been torn down.</p> <p class="times">Like other Midwest cities, Youngstown tried to find other big employers to replace steel. City officials lured both a state "supermax" prison and a for-profit prison. Other efforts, including redeveloping about 450 acres of former steel-mill sites into industrial parks, have been successful, but not the job-creating dynamos that steel was.</p> <table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="150"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/P1-AH815_Shrink_20070502181413.jpg" alt="[Youngstown, Ohio]" border="0" height="241" hspace="0" vspace="0" width="150" /></td></tr><tr><td class="medcptnocrd">A neighborhood on the north side of Youngstown, Ohio</td></tr></tbody></table> <p class="times">Youngstown is bisected by the Mahoning River, a meandering waterway once lined with the mills. The city has made some headway in recent years, sprucing up downtown buildings, while Youngstown State -- located not far from downtown -- has invested in new buildings and landscaping. But population continued to decline and abandoned buildings blighted entire city blocks. Property- and income-tax revenue fell, and delinquencies rose.</p> <p class="times">In 1999, city officials decided they had to come up with a new master plan. The task was assigned to Mr. Williams, then a city planner and now mayor.</p> <p class="times">"We came up with a simple concept," he says. "This will be a smaller city, but that doesn't have to be a bad thing."</p> <p class="times">He doesn't mean physically smaller. Youngstown will never reduce its overall footprint, he says, because political boundaries are too deeply ingrained. Lopping off neighborhoods would likely prompt litigation from residents who don't want to lose city services. Meanwhile, neighboring suburbs aren't that interested in annexing Youngstown's problems.</p> <p class="b13"><b>'Clean and Green'</b></p> <p class="times">But within the city, which sprawls out over 35 square miles, there are sizable areas that can be shifted to other uses, Mr. Williams says. He envisions large blocks of green space throughout the city. The theme of the master plan is to make Youngstown "clean and green," he says.</p> <p class="times">The mayor has sharply increased the city's annual budget for demolition -- to $1.5 million this year from $320,000 in 2005. Youngstown is filled with properties that have been essentially abandoned by owners who failed to keep up tax payments. The city places liens on the properties it clears, to cover the cost of demolition, and recently shifted to a policy of trying to negotiate with owners to gain control over such parcels. These blurred ownership lines are one of the reasons the city expects it will take years to reshape many neighborhoods. "At this stage, we're focused on clearing decades of blight that had built up," says the mayor.</p> <p class="times">Tearing things down is relatively easy and is done by many cities. Much tougher is figuring out creative ways to use vacant land and getting residents to accept a new vision for what it means for their city to prosper.</p> <p class="times">With this in mind, Youngstown in late 2005 asked a group of urban planners to come up with design ideas, focusing on the Oak Hill neighborhood. Planners canvassed the neighborhood, asking residents what they would like to see. The answers surprised them.</p> <p class="times">Many city planners, for instance, favor creating dense developments. But many Oak Hill residents told them something very different.</p> <p class="times">"They said that the one thing they liked was that their area was becoming less dense -- that there was more space between them and their neighbors," says Terry Schwartz, an urban planner from Kent State. They weren't eager to see new housing built either, since many long-time residents fear new units are almost certain to be low-income housing.</p> <p class="times">Joseph Jennings, a 74-year-old retired steelworker, has lived in Oak Hill since he came to Youngstown in the 1950s from West Virginia to work in the mills. He says he likes the idea of reshaping his neighborhood so it's less crowded. "It'd help hold up the value of the property and make people more willing to invest," he says. "It's a good thing to spread things out -- that's the way people like to live nowadays anyway."</p> <p class="times">He built his house nearly 30 years ago, buying a double lot so he would have room for a two-car garage. He notes there are a number of empty lots on his street today.</p> <p class="times">Norma Stefanik, an urban designer who lives in one of Youngstown's most desirable neighborhoods, on the city's north side, says more attention should be paid to basics -- such as using existing building codes to pressure landowners to do a better job of maintaining their properties. "A lot could be done just by going after the people who are letting their properties decline," she says.</p> <p class="times">Rufus Hudson, an African-American councilman who represents Youngstown's largely minority east side, knows the areas slated for emptying out are mostly occupied by minorities. But he says the city can't continue to serve an infrastructure built for a much more densely populated city. "Our population has fallen steadily," he says, "but we still have 535 miles of roads that have to be kept paved and plowed."</p> <p class="times">The forces of demographics are doing much of the clearing for the city. Mr. Hudson estimates that within a decade, about 10% of the residential streets in his district will be empty enough to allow them to be closed.</p> <p class="times">The city has told residents that it will stop investing resources to redevelop certain areas. City officials say there are many places where streets could ultimately be dug up, street lights taken down, and sidewalks removed in order to create green spaces where there were once densely settled blocks.</p> <p class="times">While it doesn't have specifics yet, the city says it expects certain vacant land to be turned into parks or community gardens. Another idea, already taking place to a limited extent, is to take empty parcels on blighted streets and sell them for small amounts to remaining residents -- so homeowners who have decided to stay would be allowed to expand their yards or even rebuild their houses to spread out over more than one lot.</p> <p class="times">The day-to-day task of planning for a smaller Youngstown is handled by Mr. D'Avignon, director of the city's Community Development Agency, who works out of an office in a converted post-office building downtown. "We have to break the downward cycle," he says, noting that many people in Youngstown's stable neighborhoods are hesitant to invest in their homes, because they worry that the blight will eventually engulf them. "There's a mindset in Youngstown that says, 'It's coming my way, the blight is moving this way.' We have to put a stop to that."</p> <p class="times"><b>Write to </b>Timothy Aeppel at <a class="times" href="mailto:timothy.aeppel@wsj.com">timothy.aeppel@wsj.com</a></p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-44445822690771545142007-03-09T13:33:00.000-08:002007-03-09T13:35:05.238-08:00Ethanol Tariff Loophole Sparks a Boom in Caribbean<table border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td colspan="3" class="boldPumpkinSixteen" align="left" valign="middle"> PAGE ONE </td> </tr> <tr><td height="8"><br /></td><td align="right" height="8"><br /></td></tr> </tbody></table> <div style="border-left: 1px solid rgb(204, 204, 204); width: 180px; margin-left: 5px; padding-left: 5px; float: right;"> <span class="boldTwelve"><span style="font-family: Arial,Helvetica,sans-serif;"><b></b></span></span><span class="elevenpxArial"><a href="http://www.djreprints.com/"></a></span><br /> <!-- This module has no content --> <!-- This module has no content --> </div> <!-- ID: SB117337559713131065.djm --><!-- LEVEL: normal --><!-- TYPE: Leader (U.S.) --><!-- DISPLAY-NAME: Leader (U.S.) --><!-- PUBLICATION: "The Wall Street Journal Interactive Edition" --><!-- DATE: 2007-03-09 00:01 --><!-- COPY: Dow Jones & Company, Inc. --><!-- ORIG-ID: --><!-- article start --> <!-- CODE=SUBJECT SYMBOL=OUSB CODE=SUBJECT SYMBOL=OWON CODE=INDUSTRY SYMBOL=DEN CODE=SUBJECT SYMBOL=OAME CODE=SUBJECT SYMBOL=OPOL --> <h1 class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline">ALTERNATIVE ENERGY</span></i><br />Ethanol Tariff Loophole<br />Sparks a Boom in Caribbean</h1> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Islands Build Plants<br />To Process Brazil's Fuel;<br />Farm Belt Cries Foul</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>LAUREN ETTER</b> and <b>JOEL MILLMAN</b><br /><span class="aTime">March 9, 2007; Page A1</span></span><br /></div> <p class="times">PORT OF SPAIN, Trinidad -- Surrounded by ramshackle watermelon stands and burning sugar-cane fields, Texas oil man Ron White shows off the site for his next big investment: a planned $20 million ethanol processing plant. His company, EthylChem Ltd., is just one of a rush of new Caribbean enterprises trying to serve the suddenly booming U.S. ethanol market.</p> <img src="http://online.wsj.com/public/resources/images/HC-GJ637_White_20070308174851.gif" class="imglftbdy" alt="[Ron White]" align="left" border="0" height="226" hspace="0" vspace="0" width="136" /> <p class="times">These biofuel entrepreneurs won't actually make ethanol from Caribbean sugar cane, even though sugar makes the best base for the fuel. Instead they'll just import it from ethanol powerhouse Brazil, and process it here. Then they'll try to cash in on the islands' sweet tariff status: an exemption from a 54-cents-a-gallon U.S. tariff on ethanol processed anywhere else. "Avoiding the tariff -- that's the economics of our business," says Mr. White.</p> <p class="times">As President Bush meets Brazil's president, Luiz Inácio Lula da Silva, today in São Paulo to promote a loose alliance to encourage more production of ethanol and other biofuels, the Caribbean ethanol industry illustrates how U.S. energy policy and trade policy can stand at odds.</p> <p class="times">A top energy priority of Mr. Bush is to end a U.S. "addiction" to foreign oil partly by encouraging alternative sources such as ethanol, which can be made from sugar, corn or other agricultural products. (See related article on page C5). But the U.S. tariff, which Mr. da Silva has been lobbying unsuccessfully for Washington to remove, damps the supply in order to protect prices for U.S. corn growers in Farm Belt states.</p> <p class="times">A tortured route around the tariff goes through the Caribbean Basin. There, two dozen small countries are exempted as part of a 24-year-old trade agreement from near the end of the Cold War, designed to combat communism by feeding the U.S. dollar into their poor economies. Even that tariff exception -- which requires entrepreneurs like Mr. White to jump through legal hoops while risking losses from volatility of supply and demand in Brazil and the U.S. -- is under attack.</p> <reprintsdisclaimer></reprintsdisclaimer><table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="270"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/OB-AI182_caribb_20070308123842.jpg" alt="[caribbean-refinery.jpg]" border="0" height="223" hspace="0" vspace="0" width="270" /></td></tr><tr><td class="medcptnocrd">Jamaica is home to more and more ethanol installations. Above, storage tanks and, inset, cooling towers at an ethanol plant in Kingston harbor run by ED&F Man of London.</td></tr></tbody></table> <p class="times">U.S. farm-state lawmakers want to close the loophole. Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, last year accused a Trinidad ethanol business of unfairly harming U.S. farmers. Last week he asked the president in a letter to refrain from using taxpayer dollars to encourage foreign ethanol production, as intended by the planned agreement with Brazil, the second-largest ethanol producer after the U.S.</p> <p class="times">Caribbean ethanol businesses also are in some danger from the opposite camp, which wants to drop ethanol tariffs generally. That would wipe out the Caribbean advantage. Mr. Bush's brother, former Florida governor Jeb Bush, has forged a coalition of American and Brazilian ethanol interests called the Inter-American Ethanol Commission to lobby to drop the tariff. At times Mr. Bush and his cabinet members have indicated interest, though given the farm-state objections it's unlikely to be removed any time soon.</p> <p class="times">In a world without trade barriers -- and trade politics -- Brazil would be ethanol king, and the U.S. would be importing Brazilian fuel far more heavily, stoking production further in turn. With efficient sugar-cane production and chemical processing, Brazil can produce ethanol for as little as 80 cents a gallon, less than half the price of U.S. ethanol producers, who mainly convert corn to make the fuel. Sugar cane is a better raw material for ethanol because it ferments more quickly into alcohol. But the 54-cent tariff, on top of the cost of shipping to the U.S., wipes out much of the price advantage. There are exceptions: In the summer of 2006, the U.S. price spiked enough that Brazilian producers that reacted quickly made money exporting large quantities to the U.S., despite the tariff.</p> <p class="times">Encouraging more imports of foreign ethanol would drive down prices and likely boost the American market further. While the 54-cent tariff early on encouraged the U.S. domestic industry, now it has become counterproductive, contends Robert Howse, a trade expert at the International Food & Agriculture Trade Policy Council, an advocacy group sponsored largely by agricultural companies. "If we wanted to achieve the energy goals in the U.S. we would disassemble a lot of the protectionist policies," he says.</p> <img src="http://online.wsj.com/public/resources/images/P1-AH345_Caribb_20070308203656.gif" class="imglftbdy" alt="[Growing Thirst]" align="left" border="0" height="327" hspace="0" vspace="0" width="222" /> <p class="times">The Caribbean sugar industry is so antiquated that it can't produce the fuel competitively from its own cane fields. Instead, Caribbean companies take on a middle step in the production process: They dehydrate the ethanol from its original state, then ship it to U.S. refiners, which add gasoline to make the fuel useable in American cars.</p> <p class="times">The dehydrating meets the U.S. requirement that products be "substantially transformed" in Caribbean Basin countries, if they don't originate there, to escape tariffs. Such techniques to satisfy trade rules often are controversial: In the 1980s and 1990s, Caribbean Basin countries ran afoul of U.S. apparel makers when they started finishing low-cost apparel from Asia and sending it on to the U.S., skirting trade barriers aimed at the Asian products.</p> <p class="times">U.S. farm-state lawmakers like Sen. Grassley say that merely siphoning water from ethanol shouldn't qualify Caribbean firms for tariff breaks. "It's subterfuge," he says.</p> <p class="times">The Caribbean tariff exception originates in a Reagan Administration agreement called the Caribbean Basin Initiative in 1983, between the U.S. and most countries with Caribbean coastline, plus El Salvador, not geographically in the Caribbean Basin but seen then as vulnerable to communism.</p> <p class="times">Nations in the group were awarded incentives to increase local production of ethanol and given duty-free access to the U.S. equal to 7% of the U.S. ethanol market. That trade preference is currently worth $600 million. A U.S. International Trade Commission study says that ethanol was Jamaica's leading export to the U.S. under the initiative in 2004, the most recent year for which those data are available.</p> <p class="times">As the U.S. appetite for ethanol grows, and total consumption swells, so will the volume of Caribbean exports that can enter the U.S. duty-free. This year, the 7% rule means the nations in the agreement can export about 350 million gallons of dehydrated ethanol duty-free. Next year that's estimated to grow to 420 million gallons. If the U.S. manages to meet President Bush's goal of using 35 billion gallons of alternative fuels, up from six billion gallons last year, the Caribbean Basin nations' 7% slice would probably top two billion gallons.</p> <p class="times">So investors are lining up at Caribbean Basin ports. In Trinidad, Angostura Ltd., better known for its bitters and rum products, started processing ethanol in 2005. In El Salvador, U.S. agricultural giant Cargill Inc. is producing the fuel as part of a joint venture. In Jamaica, two ethanol processors are up and running, with two more ready to start production this year. Another is trying to line up backing from U.S. venture capitalists. In Haiti, an idled ethanol dehydration plant has attracted renewed attention. Projects also are in the works in Guyana, the Dominican Republic and Aruba.</p> <img src="http://online.wsj.com/public/resources/images/P1-AH346_Caribb_20070308204031.gif" class="imgrgtbdy" alt="[From the Field to the Pump]" align="right" border="0" height="391" hspace="0" vspace="0" width="481" /> <p class="times">So many players are entering the Caribbean market that the ethanol exporters may produce more than the duty-free allotment -- meaning some shipments would have to pay tariffs after all. "The Caribbean is heading to 397 million gallons" capacity this year, or almost 50 million gallons above the estimated cap for 2007, warns Jeffrey Tuite, managing director of London-based ED&F Man Holdings Ltd., which operates an ethanol dehydrator outside Kingston, Jamaica. "We're looking at a quota race. Then it will be first come, first served." In 2006 about three-quarters of the fast-rising quota was produced, up from less than half in recent years.</p> <p class="times">Smart operators can do extremely well, especially if they time market swings properly. But that's no simple task. Despite the bravura of the dehydration crowd, fat profits are hardly guaranteed, given price fluctuations in energy markets. "We've always referred to [Caribbean] plants as 'fireflies,' for the way they turn on and off whenever the price window fails to open in their favor," says Manfred Wefers of Coimex Trading Co., one of Brazil's largest ethanol traders. Demand for ethanol is so strong in Brazil that no more than 20% of the fuel production is exported, and sometimes at prices that are too high for Caribbean dehydrators to make any profit. On the other end, sometimes the U.S. price rises so high Brazilian producers can make a profit bypassing the Caribbean step.</p> <p class="times">Along a seafront highway east of Kingston, a relic known as Jamaica Ethanol Processing Ltd., which is ED&F Man's subsidiary on the island, has made money despite relying on ancient equipment. Some of the storage tanks, originally built to hold petroleum for Royal Dutch Shell, are still clad in brick masonry, a defense rushed into place against Axis submarine missions in the 1940s. The boilers were built in the 1980s, but look a lot older as they sputter and squirt steamed ethanol through creaking pipes. The little plant employs 30 people to run round-the-clock shifts dehydrating "wet" ethanol, mostly from Brazil.</p> <p class="times">The business works, managing director Erwin Jones says, because the company has learned to lock in prices for "wet" ethanol when it's cheap, and pounce on opportunities to ship far from Jamaica when the price of dehydrated ethanol spikes.</p> <p class="times">On the southern tip of Trinidad, Angostura's ethanol subsidiary, Trinidad Bulk Traders Ltd., wasn't profitable last year -- because its 50-million-gallon-a-year dehydration plant couldn't get enough fuel from Brazil. But Curtis Mohammed, an Angostura general manager, says he's confident of profits this year, and is doubling annual capacity. He says the revenue generated from the ethanol business will be funneled back into Angostura's rum business, which has taken a hit in recent years from increased prices for raw materials like molasses.</p> <p class="times">EthylChem's Mr. White says the years he spent calculating risk as a sales representative for Exxon Mobil and other refiners should help in the ethanol business -- although sometimes his calculations worked out poorly. In 1999, he became president of Global Octanes Corp., a small Texas company that manufactured methyl tertiary-butyl ether, called MTBE, which oil refiners were using at the time to reduce air pollution and comply with environmental regulations. It looked like a growing business -- until MTBE was discovered to contaminate ground water. Global Octanes folded in 2003, after California banned MTBE, and in 2005 Congress failed to give liability protection to its refiners, effectively ending the business. Mr. White took a course to become an insurance salesman.</p> <p class="times">Before he started going door-to-door, however, the 62-year-old entrepreneur met Patrick Johnson, a Texas businessman familiar with the Caribbean ethanol business, which was getting a boost from the failure of MTBE. He joined Mr. Johnson's EthylChem on Trinidad, whose economy is built on petroleum, natural gas and petrochemicals. Trained labor was abundant, as was the energy to run an ethanol dehydration plant.</p> <p class="times">The pair cobbled together a small number of investors from Trinidad and the U.S. and hired a Houston investment banker to scour for more funds. They found a Trinidad bank willing to kick in construction financing and are working on a deal with a second bank overseas. Mr. White is telling investors they can expect returns on investment of between 30% and 50% when the initial debt is paid down. He figures he can reduce the risk of not getting enough Brazilian supply, if necessary, by reversing the business model and charging Brazilian producers to dehydrate their ethanol and avoid the tariffs, without EthylChem buying the fuel.</p> <p class="times">In 2004, Petrojam Ltd., Jamaica's state-owned oil company, put together a joint venture with Brazil's Coimex Trading to process ethanol for the U.S. market. At the time, Petrojam executive Winston Watson recalls, ethanol was selling for about $1 a gallon in Brazil and U.S. buyers were paying between $2 and $2.20 a gallon for dehydrated fuel. "Our break-even number was about $1.50 or $1.60," says Mr. Watson.</p> <p class="times">But last year, Brazilian ethanol export prices soared to $1.60 a gallon as Brazilian ethanol makers fed their growing domestic market for flex-fuel cars, which can run on either gasoline or ethanol. At the same time, the U.S. purchase price for dehydrated ethanol dropped below $2 a gallon, as American ethanol makers improved productivity. "We didn't lose money," Mr. Watson insists, but acknowledges that the plant still isn't running at full capacity.</p> <p class="times">Ultimately, says Karl James, chairman of Jamaica's Petrojam Ethanol Ltd., and leader of that country's Sugar Industries Association, Caribbean producers must learn to produce ethanol from the abundant sugar cane on the islands, either for the U.S. or other energy-thirsty markets. But few Caribbean players are in any position to convert sugar production to capitalize on ethanol.</p> <p class="times">In many parts of the Caribbean, the sugar-cane industry is rotting. The governments of Trinidad, St. Kitts and Barbados have already decided the sugar sectors of their islands are not worth further investment. They'd rather use their islands' limited land for tourism and retirement real estate, figuring that even with the booming ethanol demand, there isn't enough growing space to make modernizing worthwhile. Rum distillers like Trinidad's Angostura and Jamaica's Appleton Ltd. now reach all the way to Fiji for molasses to import for their spirits.</p> <p class="times">But Angostura's Mr. Mohammed wants to encourage sugar-cane production in the Caribbean Basin in Guyana. And Jamaica hopes the sale this year of five government-owned sugar-cane estates will lead to a renewal of the sugar business there for ethanol production. Authorities are encouraged that among the prospective bidders at this summer's auction are Brazil's Coimex Trading and India's Dhampur Sugar Mills Ltd., both big ethanol traders.</p> <p class="times"><b>Write to </b>Lauren Etter at <a class="times" href="mailto:lauren.etter@wsj.com">lauren.etter@wsj.com</a><sup>1</sup> and Joel Millman at <a class="times" href="mailto:joel.millman@wsj.com">joel.millman@wsj.com</a><sup>2</sup></p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com1tag:blogger.com,1999:blog-7783886211174671222.post-83574256069846790782007-02-02T16:21:00.000-08:002007-02-02T16:23:09.379-08:00Wal-Mart Wants Suppliers, Workers to Join Green Effort<h1 class="articleTitle" style="margin: 0px;">Wal-Mart Wants Suppliers,<br />Workers to Join Green Effort</h1> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>KRIS HUDSON</b><br /><span class="aTime">February 2, 2007; Page A14</span></span><br /></div> <p class="times"><b>Wal-Mart Stores</b> Inc. Chief Executive Lee Scott called on the retailing giant's suppliers and employees to aid its green campaign, including a request that suppliers eventually eliminate nonrenewable energy from their processes and products.</p> <img src="http://online.wsj.com/public/resources/images/HC-GG952_Scott_20051101114057.gif" class="imglftbdy" alt="[Lee Scott]" align="left" border="0" height="231" hspace="0" vspace="0" width="136" /> <p class="times">For the past year the company has been expanding its environmental push even as its sales growth has waned and it has faced persistent criticism over its wages and health benefits. But Mr. Scott's remarks yesterday in London marked Wal-Mart's first formal call for suppliers to decrease their use of nonrenewable energy such as that generated by burning coal or gas. Wal-Mart pledges to eventually power its operations entirely with renewable energy sources such as wind and solar energy.</p> <p class="times">Mr. Scott issued the call while introducing a campaign he christened "Sustainability 360." In another aspect of the campaign, Wal-Mart will ask its 1.35 million U.S. employees this year to make commitments of their own, such as biking to work or encouraging friends to buy energy-efficient light bulbs.</p> <p class="times">Among the initiatives Mr. Scott outlined, prodding suppliers off nonrenewable energy could have the largest commercial ramifications. Wal-Mart, with an estimated $350 billion in sales last year, buys goods from more than 60,000 suppliers globally.</p> <p class="times">"Just think about this: What if we worked with our suppliers to take nonrenewable energy off our shelves and out of the lives of our customers?" Mr. Scott said, according to a transcript of the speech, at an executive seminar hosted by the University of Cambridge and Prince Charles.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">Some suppliers, such as <b>General Electric</b> Co., already are working with Wal-Mart to promote products such as energy-efficient light bulbs. Osram Sylvania, a unit of <b>Siemens</b> AG, produces 30 types of energy-efficient, compact fluorescent light bulbs.</p> <p class="times">In another facet of the campaign, Wal-Mart will encourage its employees to adopt what it calls Personal Sustainability Projects this year. The program encourages Wal-Mart employees to embrace a cause in areas such as environmental sustainability or personal health, like starting an in-store recycling program or organizing weight-loss or smoking-cessation support groups.</p> <p class="times">Some Wal-Mart employees have yet to hear about the program. Ada McBride, a greeter at a Wal-Mart in Apopka, Fla., said she would like to see the retailer "focus on wages," but she anticipates the new initiative will be well-received by employees. It could be viewed favorably by conservation groups, too, especially if it gains widespread participation.</p> <p class="times">"While we are not familiar with the details of this effort, any program that can engage over a million people in working for a healthy and sustainable environment is good news," said Bob Perciasepe, chief operating officer of the National Audubon Society.</p> <p class="times">As it expands its green initiatives, Wal-Mart is struggling on another front: perpetuating its sales growth. The retailer in recent years has increasingly pushed into denser urban and suburban markets in the U.S. Subsequently, its same-store sales -- sales at stores open at least a year -- have steadily diminished. Those measures reached rare lows with a 0.5% gain in October and a 0.1% decline in November. Wal-Mart anticipates reporting a gain of 1% to 2% for January.</p> <p class="times"><b>Write to </b>Kris Hudson at <a class="times" href="mailto:kris.hudson@wsj.com">kris.hudson@wsj.com</a><sup>1</sup></p> Wall Street Journal, 2 Feb. 2007Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-70519279284251460642007-01-30T07:02:00.000-08:002007-01-30T07:04:24.794-08:00How Politics Influenced A Big Clean-Up Deal<table border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td colspan="1" align="center" height="12" width="418"><p style="font-family: times new roman,times,arial; font-size: 15px; font-weight: bold; margin-top: 7px; margin-bottom: 0px;"> January 29, 2007 </p> <!-- ----- Date ends here ----- --> </td> </tr> <tr> <td colspan="4" height="23" width="630"><br /></td> </tr> </tbody></table> <!-- ----- Header Table Ends Here ----- --> <!-- ----- Article Title and Author Table Starts Here ----- --> <table border="0" cellpadding="0" cellspacing="0" width="97%"><tbody><tr> <td rowspan="2" width="20"><img src="http://online.wsj.com/img/b.gif" alt="" border="0" height="1" width="20" /></td> <td> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td colspan="3" class="boldPumpkinSixteen" align="left" valign="middle"> PAGE ONE </td> </tr> <tr><td height="8"><br /></td><td align="right" height="8"><br /></td></tr> </tbody></table> </td> </tr> <tr><td> <div style="border-left: 1px solid rgb(204, 204, 204); width: 180px; margin-left: 5px; padding-left: 5px; float: right;"> <span class="boldTwelve"><span style="font-family: Arial,Helvetica,sans-serif;"><b><br /></b></span></span> <div width="100%"><img src="http://online.wsj.com/img/g.gif" alt="" height="1" width="100%" /></div> <div width="100%"><img src="http://online.wsj.com/img/b.gif" alt="" height="5" width="100%" /></div><br /> <!-- start outset --> <table style="width: 173px; height: 42px;" border="0" cellpadding="0" cellspacing="0"> <tbody><tr><td class="p11"> <span style="font-size: 5px;"><br /><br /></span> </td></tr> </tbody></table> <!-- end outset --><br /> <!-- This module has no content --> </div> <!-- ID: SB116982364899289030.djm --> <!-- LEVEL: normal --> <!-- TYPE: Leader (U.S.) --> <!-- DISPLAY-NAME: Page One --> <!-- PUBLICATION: "The Wall Street Journal Interactive Edition" --> <!-- DATE: 2007-01-29 00:01 --> <!-- COPY: Dow Jones & Company, Inc. --> <!-- ORIG-ID: --> <!-- article start --> <!-- CODE=SUBJECT SYMBOL=OUSB CODE=SUBJECT SYMBOL=OWON CODE=SUBJECT SYMBOL=OPOL --> <h1 class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline">SMELL TEST</span></i><br />How Politics Influenced<br />A Big Clean-Up Deal</h1> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Tiny Start-Up Wins<br />Border Sewage Contract;<br />A Meeting With Cheney</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>SCOT J. PALTROW</b><br /><span class="aTime">January 29, 2007; Page A1</span></span><br /></div> <p class="times">IMPERIAL BEACH, Calif. -- As Tijuana has boomed, fueled by industrial expansion, something else has also surged: the flood of raw sewage the Mexican border city sends gushing downhill into neighboring California. Less than 60% of the city's sewage is being treated at all, and that only to minimal levels, leaving tons to flow into the canyons and surf of Southern California.</p> <p class="times">To stem this growing mess, the American government has chosen an unusual solution. Without any competitive bidding, the U.S. gave Bajagua LLC, a start-up company with no experience in treating waste water, sole authority to build and operate a treatment plant in Mexico.</p> <table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="257"> <tbody><tr><td><a class="times" href="http://online.wsj.com/article/SB116826423792970173.html" onclick="OpenWin('/article/SB116826423792970173.html','infogrfx',760,524,'off',1,0,0,1);void('');return false;"><img src="http://online.wsj.com/public/resources/images/OB-AF864_slides_20070108091935.jpg" class="imgpln" alt="[slideshow promo bajagua]" border="0" height="186" hspace="0" vspace="0" width="257" /></a><sup>1</sup></td></tr><tr><td class="medcrd">Scot Paltrow </td></tr><tr><td class="medcptcrd">Imperial Beach</td></tr></tbody></table> <p class="times">The tale of Bajagua's success in getting the contract involves, among other things, well-timed campaign contributions to local members of Congress and other political figures. The firm also enlisted people with crucial connections as lobbyists. And when that didn't prove enough, Bajagua obtained backing from Vice President Dick Cheney and the White House, which cleared away opposition by federal agencies, several former senior federal agency officials say.</p> <p class="times">The Bajagua plan ("Bajagua" is a contraction of the Spanish "baja," for Baja California, and "agua," water) has prevailed even though, when it was first proposed in the late 1990s, it faced opposition from all of the relevant federal agencies. Records show that the State Department, the Environmental Protection Agency, the Justice Department and the Clinton White House's Office of Management and Budget dismissed the proposal as inadequate and impractical, and said it would violate existing law and treaties. Opponents of the plan say it won't stop the main causes of the waste and garbage flowing across the border.</p> <table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="150"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/P1-AG968_BAJAGU_20070128202040.gif" class="imgpln" alt="[Photo]" border="0" height="395" hspace="0" vspace="0" width="150" /></td></tr><tr><td class="medcptnocrd">An ocean beach sign in Imperial Beach, Calif.</td></tr></tbody></table> <p class="times">Bajagua's tale shows how plans for federal public-works projects could be diverted by a small group of lawmakers, who were able to push contracts toward big campaign contributors. It also highlights the political difficulties posed by the pollution flowing into the U.S. from burgeoning Mexican border cities.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">Recently, the project's backers have missed important deadlines, and officials are questioning whether the company has taken vital steps it claims already were achieved, including obtaining commitments for financing, essential permits and land. The federal government's contract with Bajagua calls for cancellation if the plant isn't built and running by September 2008, leaving the company only 19 months to build and open a plant. As a result, U.S. and Mexican officials have begun to express concern about whether it can succeed. Bajagua's principals say they are on track.</p> <p class="times">In an unusual step, the U.S. committed itself without appropriating money for the plant, and the final cost isn't known. The federal agency in charge estimates the total cost to the U.S. will be between $580 million and $780 million.</p> <p class="times">Coastal southern San Diego County lies at the bottom of a drainage system that originates in Baja California mountains in Mexico, feeds into the Tijuana River flowing through the heart of Tijuana and down into the ocean at Imperial Beach, Calif. As it passes through Tijuana, the river picks up raw human waste, battery acid, old tires, household garbage and toxic chemicals. From hilltop squatter settlements surrounding Tijuana, meanwhile, more sewage flows directly down canyons into San Diego County.</p> <p class="times">Beaches as far north as northern San Diego County are affected, but Imperial Beach, a favorite California surfing spot, has borne the brunt of the pollution. All or parts of the beaches along Imperial Beach and the estuary just to the south of it were closed for 198 days in 2006, according to the San Diego County statistics. The pollution causes health hazards, a weakened local economy, low home prices and harm to endangered wildlife, according to public-health experts, local business owners and others.</p> <table class="imgrgtbdy" align="right" border="0" cellpadding="0" cellspacing="0" width="245"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/P1-AG955_BAJAGU_20070128162129.jpg" class="imgpln" alt="[sewage]" border="0" height="197" hspace="0" vspace="0" width="245" /></td></tr><tr><td class="medcptnocrd">Raw sewage and garbage flow from hilltop slum neighborhoods in Tijuana, Mexico, across the border into the U.S. via Smuggler's Gulch canyon, after rain on Nov. 27.</td></tr></tbody></table> <p class="times">In the dry season, a system of special drains often catches the waste flowing through the Tijuana River (which would be dry without waste water) as well as the sewage running down the canyons. These pump the waste to a treatment plant in San Ysidro, Calif. But the drains are overwhelmed in the November-to-April rainy season and sometimes in the dry season too.</p> <p class="times">The problem was obvious on a late November day, when the San Diego-Tijuana area had its first rain of the season. After only a few tenths of an inch of rain, the raw sewage flow was too much for a drain in the river bed. Water covered with floating garbage and white foam from detergent, and filled with raw human waste, washed into the Tijuana Estuary on the U.S. side, soon reaching the ocean. Health officials closed the beach at the mouth of the Tijuana River.</p> <p class="times">Justin Jeter has surfed around the landmark Imperial Beach pier for 20 years and says he can't resist going in when the surf is up. But he adds that lately he has suffered frequent sinus and ear infections, which, like many surfers, he attributes to the pollution.</p> <p class="times">A recent study in the journal Applied and Environmental Microbiology by Richard Gersberg, professor at San Diego State University's Graduate School of Public Health, and colleagues documents high levels of hepatitis A virus and human intestinal viruses in ocean water off the mouth of the Tijuana River and at the Imperial Beach pier after seasonal rains.</p> <p class="times">The pollution also affects the estuary, a 2,531-acre wildlife reserve, sandwiched between the border and Imperial Beach, through which the Tijuana River empties into the ocean. Joy Zedler, an ecology professor who has studied the estuary, says polluted sediments from Tijuana have eliminated clams, sand dollars and fish species from the estuary and adjacent waters. Endangered birds, such as the light-footed clapper rail, have been harmed, and plants native to the estuary killed off, including a rare species of pickleweed.</p> <p class="times">Once a sleepy border town, Tijuana is now Mexico's fourth-largest city, with a population of more than 1.3 million. About 2,000 people on average arrive daily to stay. Tijuana's growth stemmed from <i>maquiladora</i> plants -- foreign-owned plants allowed to import materials and export finished goods duty-free -- and more recently the North American Free Trade Agreement and growing cross-border trade.</p> <p class="times">With the city's flat land used up, hundreds of thousands of new dwellings eat up the surrounding steep hillsides so quickly that whole new neighborhoods appear in days. Even in many legal developments, the dwellings aren't connected to sewers or running water. Instead, plastic pipes run from indoor latrines, dumping raw waste into the dirt roads. The outflow etches gullies in the roads and flows into the Tijuana River or down the hillsides to the estuary on the U.S. side.</p> <p class="times">The municipal sewage system is leaky. A reporter driving one day in the city's center during the dry season saw a geyser of sewage shooting up from around a manhole cover and running down the street.</p> <p class="times">Tijuana has a sewage treatment plant of its own on the coast just south of Tijuana that receives 25 million gallons of raw sewage daily. It treats 17 million gallons to a "primary" standard before dumping it into the surf. Only solids are filtered out, not toxic chemicals, heavy metals and other dangerous stuff. The rest of the sewage is spewed untreated directly into the ocean.</p> <p class="times">The U.S. has long recognized that Mexico was unlikely to pay all the costs of treating sewage that washes north of the border. Under treaties, agencies in both countries work together on sewage and other issues. The U.S. agency is the International Boundary and Water Commission, an El Paso, Texas-based arm of the State Department.</p> <p class="times">In the 1990s the commission built the San Ysidro plant, on the U.S. side of the border. It takes in 25 million gallons per day of Tijuana sewage, treats it to a primary stage, then sends it through an 11-foot-wide pipe before discharging it in the ocean 3.5 miles offshore.</p> <p class="times">That partly treated discharge falls far short of U.S. Clean Water Act standards. In response, the IBWC intended to expand treatment at the plant. It acquired land and planned to increase capacity in steps.</p> <p class="times">Then Bajagua entered the picture. The small company was established solely to try to build a plant in Mexico under a U.S. government contract to address the Tijuana waste problem.</p> <img src="http://online.wsj.com/public/resources/images/HC-GJ419_Landa_20070128190842.gif" class="imglftbdy" alt="[Enrique Landa]" align="left" border="0" height="231" hspace="0" vspace="0" width="136" /> <p class="times">It grew out of a partnership in the 1990s between James D. Simmons, a former San Marcos, Calif., city councilman who runs a consulting business, and Enrique Landa, a Rancho Santa Fe, Calif., architect-turned-entrepreneur and son of a Mexico City architect. Messrs. Landa and Simmons had put together packages of permits which they sold to construction companies to build a waste-treatment plant in Sonora state in Mexico, and to upgrade treatment at a Mexico City plant.</p> <p class="times">Mr. Simmons says Mr. Landa's travels in northern Mexico, where he saw an acute shortage of usable water and waste treatment, led him to the idea of building a Tijuana treatment plant. (Through a Bajagua spokesman, Mr. Landa declined to be interviewed.) The two men concluded that they could make money by treating waste, eventually, to cleaner standards and selling the reclaimed water.</p> <p class="times">Under Bajagua's plan to build a plant in Tijuana, 25 million gallons a day of raw sewage would continue to flow to the San Ysidro plant on the U.S. side where, as now, it would be treated only to primary standards. Then new pumps and pipes would send it back uphill into Mexico to the new Bajagua plant.</p> <p class="times">After treating the sewage there, Bajagua would send it downhill again, through yet another set of new channels, where it would cross the border a third time, to San Ysidro. Then it would be shunted into the ocean through the existing pipe. Eventually, the Bajagua plant would also treat an additional 34 million gallons of sewage directly from Tijuana, to be sent across the border to the ocean pipe.</p> <p class="times">The idea of a U.S.-funded treatment plant in Mexico ran counter to an agreement the U.S. had with Mexico committing to build treatment facilities on its own side of the border.</p> <p class="times">A 1999 environmental-impact statement prepared by the Environmental Protection Agency and the IBWC called the Bajagua plan "not a feasible alternative." It said the plan wouldn't expeditiously meet the goal of additional treatment -- which it said could be accomplished at the San Ysidro plant.</p> <p class="times">A big criticism, then and now, was that no plan addressed a key source of pollution: the millions of gallons of Tijuana sewage that don't go into any sewer system at all.</p> <p class="times">Engineers who evaluated the Bajagua plan, including Michael L. Evans, a senior IBWC engineer at the time, concluded that it was unnecessarily costly, because the same sewage would ping-pong across the border three times before being discharged into the ocean.</p> <p class="times">Bajagua executives say their plan makes sense because the San Ysidro plant has limited room for expansion and faces local opposition. They also say Bajagua would be reimbursed in annual increments only after its plant is up and running. "The only way we get paid back is if we build it, it works and it operates to standards," says Mr. Simmons.</p> <p class="times">The commission and other federal agencies reviewed Bajagua's plan, and rejected it.</p> <img src="http://online.wsj.com/public/resources/images/HC-GJ418_Filner_20070128154452.gif" class="imglftbdy" alt="[Bob Filner]" align="left" border="0" height="229" hspace="0" vspace="0" width="136" /> <p class="times">But that wasn't the end. Local members of Congress blocked the IBWC's plan to expand the San Ysidro plant and pushed the Bajagua alternative. Democratic Rep. Bob Filner, whose district includes the San Ysidro plant, and Republican Rep. Brian Bilbray, from a nearby district, in 2000 sponsored a bill promoting Bajagua's plan. A draft of the bill actually named Bajagua as the firm to do the work. When some lawmakers complained, the sponsors changed to wording that they hoped was so specific it would make Bajagua the only possible choice.</p> <p class="times">"We basically wanted one company," Mr. Filner says. "So we had to find a way to do it within the law."</p> <p class="times">From 1996 through 2005, Bajagua officials and their immediate relatives gave more than $56,000 in campaign contributions to Mr. Filner, federal campaign records show, more than to any other candidate in that period. Mr. Filner says he supported Bajagua because he considers it the best solution and his constituents wanted the plant in Mexico. "I'm doing this for my district, not for Enrique [Landa] who is my friend," he says.</p> <p class="times">The Clinton White House opposed the bill. The Office of Management and Budget stated, "Its approach raises serious foreign policy and legal concerns and will hinder our ongoing efforts to address the region's wastewater treatment needs." But after some amendments, and facing strong congressional support, Mr. Clinton signed it. The bill paved the way for a new treaty with Mexico that would allow the Bajagua project.</p> <p class="times">Even Congress's backing wasn't enough to overcome opposition by the IBWC and other federal agencies. Arturo Duran, IBWC commissioner in 2004 and 2005, says he had reservations because "it's not normal to sole-source to a company a contract for hundreds of millions of dollars. It's not how the federal government operates."</p> <img src="http://online.wsj.com/public/resources/images/P1-AG965_Bajagu_20070128201626.gif" class="imglftbdy" alt="[Bajagua]" align="left" border="0" height="469" hspace="0" vspace="0" width="606" /> <p class="times">With progress at a standstill, the California Water Quality Control Board in 2001 sued the IBWC, as owner of the San Ysidro plant. The suit led to a federal court order to bring the plant's discharge up to less-toxic "secondary" standards by September 2008.</p> <p class="times">It took intervention from the White House and Republican Rep. Duncan Hunter of Southern California to turn events to Bajagua's favor.</p> <p class="times">On Oct. 14, 2002, Bajagua's Messrs. Simmons and Landa traveled to Roswell, N.M., where Vice President Cheney appeared at Republican fund-raisers. After a public rally, Mr. Cheney met privately with a small group of big contributors at the home of a local Republican backer, energy executive George Yates, Mr. Yates says.</p> <p class="times">Mr. Simmons says he and Mr. Landa went in response to an invitation received in the mail to the fund-raiser. "Dick Cheney attended that, I got to shake his hand, and had my picture taken, and that was the end of it," he says.</p> <p class="times">But the next day Mr. Simmons sent a letter on Bajagua stationery to the vice president, expressing gratitude "that you could spend some time with us in Roswell." It added, "I appreciate the opportunity I had to briefly introduce the Bajagua Project to you and your staff." Mr. Simmons also gave a five-page "Bajagua Project Briefing" to Catherine Martin, a top adviser to Mr. Cheney.</p> <p class="times">In early 2003 -- Bajagua officials say they can't recall the date -- Matthew Simmons, then a lobbyist for Bajagua, met with a Cheney aide about the project in the vice president's offices. (Mr. Simmons, a former legislative director for Rep. Hunter, isn't related to James Simmons.) Other lobbyists hired by Bajagua include James R. Jones, former U.S. ambassador to Mexico.</p> <p class="times">On Sept. 4, 2003, Bajagua representatives including James Simmons met with officials of the White House's Council on Environmental Quality, which oversees executive branch environmental policy, Bajagua says. The same day Rep. Hunter met with James Connaughton, chairman of the environment council, to press for support of Bajagua, according to emails by IBWC officials disclosed on the Web site of William Weaver, a University of Texas at El Paso professor.</p> <p class="times">Public records show that Bajagua spent $585,000 on lobbying from 2001 through the first half of 2006.</p> <p class="times">Beginning in 2003 the White House pressed the relevant federal agencies to embrace the Bajagua project, according to interviews, a report by the Project on Government Oversight, a Washington, D.C.-based nonprofit organization, and email messages and documents posted on Mr. Weaver's Web site. At the Justice Department, a staff attorney who had backed the IBWC's opposition to Bajagua on legal grounds was replaced by a political appointee who reported to then-Assistant Attorney General Thomas Sansonetti, a longtime friend of Mr. Cheney. Staff at the IBWC who had opposed the project were overruled or moved aside, say Mr. Evans and other former IBWC staff.</p> <p class="times">Lea Anne McBride, a spokeswoman for Mr. Cheney, declined to respond to questions about the vice president's role in the Bajagua case. "The bottom line is that the vice president does not issue government contracts," she said.</p> <p class="times">In 2004, Rep. Hunter pushed through amendments to the 2000 law that favored Bajagua, further exempting it from normal restrictions on federal contracts. In 2005, the IBWC chose Bajagua as the sole "preferred option" for additional treatment of Tijuana sewage.</p> <p class="times">The 2002 thank-you letter from Bajagua to Mr. Cheney praised Rep. Hunter, chairman of the House Armed Services Committee, as "our champion." Before the encounter at the fund-raiser with the vice president, Rep. Hunter had received a total of $4,000 in campaign contributions from Messrs. Simmons and Landa and a Bajagua lawyer. Two days after the meeting, he received another $1,000 each from Mr. Landa's brother and sister-in-law.</p> <p class="times">Bajagua spokesman Craig Benedetto says timing of the contributions was "coincidental." He says Rep. Hunter had no role in arranging access to Mr. Cheney.</p> <p class="times">Mr. Hunter's spokesman said the congressman "doesn't specifically recall coordinating a meeting" with Mr. Cheney, but "it would be entirely appropriate for the vice president to be involved in such a meeting" given the importance of the sewage issue.</p> <p class="times">Concerning the Bajagua campaign contributions, he said, "Congressman Hunter does what he thinks is right for the nation and in the best interest of the San Diego community. This project is no exception." Rep. Hunter has announced he is running for president in 2008.</p> <p class="times">Meanwhile, Rep. Bilbray, the other sponsor of the 2000 law, received $2,500 in contributions from Bajagua-related individuals. He lost his seat in the 2000 elections and soon went to work as a lobbyist. He represented Mr. Benedetto's public-relations firm to lobby on behalf of Bajagua, for which he received $35,000, records show.</p> <p class="times">In December 2001, less than a year after Mr. Bilbray's term ended, he testified before the House Water and Environment Subcommittee at a hearing on progress under the 2000 Bajagua-related law. He didn't disclose that he was a Bajagua lobbyist.</p> <p class="times">Mr. Bilbray says he didn't violate lobbying rules, which forbid a former lawmaker to appear before, or even communicate with, members of Congress to try to influence them on anyone else's behalf for a year after leaving office. He says he testified at the hearing "just representing myself as an author" of the 2000 law.</p> <p class="times">Last year, Mr. Bilbray was reelected to Congress, taking the seat vacated by Randy Cunningham, now in federal prison for soliciting bribes from federal contractors. Bajagua-related individuals gave Mr. Bilbray $6,850 in campaign contributions.</p> <p class="times">The cost to the government of the Bajagua project remains unknown. Bajagua and the commission missed a March 2006 deadline to negotiate an agreement which would have set the financial terms. The U.S. would reimburse the company's investment, with an added percentage of profit over 20 years once the plant opens.</p> <p class="times">Although Mr. Simmons says Bajagua's hopes for big profits lie in selling treated sewage someday as "reclaimed water," U.S. and Mexican officials say Bajagua hasn't submitted any plans for an additional plant to produce the water and has no land or approvals to build one. It isn't clear whether Bajagua legally could sell reclaimed water.</p> <p class="times">IBWC Commissioner Carlos Marin says Bajagua has missed deadlines for the Tijuana plant. Bajagua insists that, as required, it has arranged for financing. Mr. Simmons says flatly: "We have a commitment from Citibank to finance the project." But the IBWC says Bajagua hasn't given it any documents supporting the claim. Mr. Marin says, "We don't have any proof" of financing. Also, California denied Bajagua a permit it was required to obtain by September 2006 to discharge treated waste into the ocean. Bajagua is appealing.</p> <p class="times">Bajagua also was to have reached an agreement by September 2006 to purchase land. Mr. Simmons recently said Mexico would be announcing the specific site "in a few weeks." But José de Jesús Luévano, an official at the IBWC's Mexican counterpart, says the government has no intention of selling land to Bajagua. He says a lease is under discussion between Mexico and the company, but any announcement is months away.</p> <p class="times">Mr. Marin admits doubts about whether Bajagua will meet the 2008 deadline. "The more time that passes, that's getting a little bit leery," he says. Yet the IBWC has put all its eggs in Bajagua's basket. Failure would mean years before any alternative could be in place. Mr. Marin acknowledges that the IBWC has no backup plan.</p></td></tr></tbody></table>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-34798925550777566392006-12-28T09:21:00.000-08:002006-12-28T09:22:24.603-08:00US Secretary of the Interior Press Conference 27 Dec. 2006 - Polar Bear Protection<b>HEADLINE:</b> SECRETARY OF THE INTERIOR DIRK <b>KEMPTHORNE</b> HOLDS A NEWS BRIEFING TO DISCUSS THE STATUS OF POLAR BEARS<br /><br /> <b>SPEAKER:</b><br />SECRETARY OF THE INTERIOR DIRK <b>KEMPTHORNE</b><br /><br /> <b>BODY:</b><br /><br /> <br />SECRETARY OF INTERIOR DIRK <b>KEMPTHORNE</b> HOLDS A NEWS BRIEFING<br />TO DISCUSS THE STATUS OF POLAR BEARS<br /> <br />DECEMBER 27, 2006<br /> <br />SPEAKERS: SECRETARY OF INTERIOR DIRK <b>KEMPTHORNE</b><br /> <br />H. DALE HALL,<br />DIRECTOR,<br />U.S. FISH AND WILDLIFE SERVICE<br /> <br />MARK MYERS,<br />DIRECTOR,<br />U.S. GEOLOGICAL SURVEY<br /> <br />SCOTT SCHLIEBE,<br />POLAR BEAR PROJECT LEADER,<br />U.S. FISH AND WILDLIFE SERVICE<br /> <br />DEPUTY SECRETARY OF INTERIOR LYNN SCARLETT<br /> <br /> <br /><br /><br /><b>KEMPTHORNE:</b> Today the Interior Department's U.S. Fish and Wildlife Service is proposing to list polar bears as a threatened species under the Endangered Species Act.<br /><br />We're making this proposal because a scientific review of the species by the Fish and Wildlife Service found that populations may be threatened by receding sea ice, which polar bears use as a platform for many activities essential to their life cycle, including hunting for their main prey, Arctic seals.<br /><br />Polar bears are one of nature's ultimate survivors. They're able to live and thrive in one of the world's harshest environments. But there's concern that their habitat may literally be melting. <br /><br />I, like all Americans, support conservation of the polar bear, and will work in partnership on measures to achieve this goal.<br /><br />The proposal I'm announcing today will be open for public comment for the next three months, with a final decision on whether or not to list as threatened to come in 12 months.<br /><br />I'm directing the U.S. Fish and Wildlife Service and the U.S. Geological Survey to aggressively work with the public and the scientific community over the next year to broaden our understanding of what is happening with the species.<br /><br />This information will be vital to the ultimate decision on whether these species should be listed.<br /><br />The total number of polar bears worldwide is estimated at between 20,000 and 25,000 individuals, distributed throughout most ice-covered ares of the Northern Hemisphere, in the United States, Canada, Greenland, Norway and Russia.<br /><br />Canada's Western Hudson Bay population of polar bears in Canada has suffered a significant 22 percent decline. Alaska populations have not experienced a statistically significant decline. But Fish and Wildlife Service biologists are concerned that they may face such a decline in the future.<br /><br /><b>KEMPTHORNE:</b> While the proposal to list the species as threatened cites the threat of receding sea ice, it does not include a scientific analysis of the causes of climate change. That analysis is beyond the scope of the Endangered Species Act review process, which focuses on information about the polar bear and its habitat conditions, including reduced sea ice.<br /><br />However, climate change science and issues of causation are discussed in other analyses, undertaken by the administration. The administration treats climate change very seriously, and recognizes the role of greenhouse gases in climate change.<br /><br />The service extensively analyzed the impact of both on-shore and off-shore oil and gas development on polar bear populations, and determined that development does not pose a threat to the species.<br /><br />The service had its preliminary analysis of polar bear populations upon which this proposal is based peer reviewed by 12 outside experts on polar bear biology.<br /><br />I recognize, also, that harvesting polar bears is of great social, cultural and economic importance to native peoples throughout much of the Arctic. Therefore, maintaining a harvest within sustainable limits remains one of my priorities.<br /><br />This subsistence harvest is carefully monitored to ensure it is consistent with polar bear conservation. Even if the polar bear is listed next year -- and that decision has not been made -- the Endangered Species Act would provide for the continuation of this subsistence harvest, as long as it continues to be consistent with the long-term conservation of the species.<br /><br />Polar bears are already protected under the Marine Mammal Protection Act of 1972. In addition, the species is protected by international treaties involved countries in the bears' range.<br /><br /><b>KEMPTHORNE:</b> For example, earlier this month, Congress passed the United States-Russia Polar Bear Conservation and Management Act of 2006, implementing a treaty with Russia designed to conserve polar bears shared between the two countries. And I expect President Bush to sign this legislation into law.<br /><br />This treaty calls for the active involvement of native people and their organizations in Alaska and Russia in managing subsistence harvest levels.<br /><br />Additionally, the treaty establishes a bilateral commission that will direct research and establish sustainable and enforceable harvest limits.<br /><br />The Russians are ready to implement the treaty and the Interior Department is working with the State Department to coordinate U.S. implementation of the treaty, including appointment of commissioners once it has been presented to the president for signature and signed into law.<br /><br />The proposed rule does not include a proposal for designating critical habitat. As part of the request for comments on the proposed rule, the services seeking information regarding measures to consider and reasons why any habitat should or should not be determined to be critical habitat for the polar bear if the listing becomes final.<br /><br />I share the desire to conserve this species. When making our final decision on whether to list the polar bear a year from now as a threatened species, we will again consider the best available science and the efforts being made by states and other nations to protect the polar bear.<br /><br />Our goal, ultimately, is to combine the best science available with the power of working hand-in-hand with states and tribes and foreign countries, industry and other partners to minimize the threats to polar bears and to conserve this great icon of the Arctic for future generations.<br /><br />With that, I'm going to turn to Dale Hall for some comments before we then open this up to questions.<br /><br />HALL: Thank you, Mr. Secretary.<br /><br />I think I would like to just highlight three points that the secretary has mentioned in his discussion with you.<br /><br />The first point is that we star with the facts that we know what has happened. We know that the polar cap has been reduced by an estimated 20 percent over the last 20-plus years and a rate of permanent ice loss of as much as 9.8 percent per decade.<br /><br />HALL: And we know that the west Hudson Bay in Canada has experienced a bear population decline of between 20 percent and 22 percent.<br /><br />And in that decline, they were -- a prelude to that was a loss in weight of some of the adults, a lack of cub survival and recruitment and a general lessening of the health of the adult bears and the young prior to them going into a population decline.<br /><br />While we do not have a statistically valid population trend downward in the Southern Beaufort Sea, we do see the same sorts of physical health criteria that were witnessed in West Hudson Bay.<br /><br />So, over the next 12 months, we will be looking very hard at the reliability, the probability, if you will, of the models that are out there -- how accurate are they, both in the sea ice melting and in the timeline in which it melts, because 45 years has been established as the foreseeable future for the polar bear?<br /><br />That's generally three generations. The International Union of Conservationists and Naturalists recommended that, as well as other polar bear experts, and we accepted that.<br /><br />We'll be evaluating the sea ice models and the polar bear population models that we have to try and determine what is the reliable and what isn't.<br /><br />And then, the final point I'd like to stress is there are five factors that must be analyzed in listing a species under the Endangered Species Act, as either threatened or endangered.<br /><br />Only one of those factors was found to be relevant for the polar bear. And that was the range and extent of its habitat: the polar ice.<br /><br />And so oil and gas was analyzed thoroughly and found not to be a threat.<br /><br />Subsistence harvest was analyzed thoroughly and found not to be a threat.<br /><br />So the other activities that are going on in Alaska were not found to be a threat to the bear. This is directly tied to the sea ice loss and the ultimate dependence of the polar bear on drift ice and on its prey species and being able to hunt the seals, which are its main prey species.<br /><br />So with that, Secretary, I'll turn it over.<br /><br />QUESTION: Hi. Thanks for holding the briefing.<br /><br />Recent estimates I've seen for the total polar bear population is thought to be increasing. How much of your focus is on -- I mean, is it just one population you would need to find that has trouble that could get you to a threatened listing?<br /><br /><b>KEMPTHORNE:</b> Dale, why don't you respond to that?<br /><br />HALL: The current global population of polar bears is estimated between 20,000 and 25,000. We have information on very few of the 19 populations that are out there, very little recent information.<br /><br />We have pretty substantial information on the Hudson Bay population that I discussed, and the USGS has done an excellent job of looking at the Southern Beaufort Sea populations.<br /><br />We have not been seeing increases in polar bear except possibly in localized areas, and there we are uncertain as to whether or not that's actually an increase in the population numbers in that area or whether or not the loss of sea ice drift has simply pushed more bears on land than we were normally used to seeing.<br /><br />But we are looking at this globally, and if we can find out some connections between the sea ice retreat and polar bear reduction in population numbers in certain areas, and if the models that Steve Amstrug (ph) and others at USGS will be running on the relationship between those factors that we talked about earlier of the health of the bears and the reduced populations, we believe that that would be legitimate to be thinking about that wherever the bear occurs.<br /><br />HALL: If the sea ice is retreating and they are not able to do their normal feeding on seals and be mobile on drift ice -- and they depend a lot on drift ice to conserve energy, to move around and catch their prey -- then we believe that there is a correlation there.<br /><br />But we'll need to substantiate that. Right now, we really don't have a substantiation for that. But the information that we do have is a strong indicator that we should move to this next step, which is going another 12 months and doing more evaluations.<br /><br />QUESTION: I'm really not totally clear on who might be to blame. Are you saying that your research found that northern industries, in the Arctic, in Alaska, is not to blame, but domestic industry in North America may be?<br /><br /><b>KEMPTHORNE:</b> No. The analysis done by U.S. Fish and Wildlife Service on this proposed rule is stating that oil and gas development is not a factor, period; that the factor that's causing the Fish and Wildlife Service to propose this rule is that the sea ice is melting, which is the prime habitat for the polar bear.<br /><br />So, again, as they looked at those five factors, one of those factors -- about oil and gas development -- is not one of those factors that is a threat to the polar bear.<br /><br /><b>KEMPTHORNE:</b> Dale, I don't know if you want to add to that.<br /><br />HALL: Yes, sir.<br /><br />The polar bear spends the vast majority of its life on ice -- on the drift ice, on the sawed ice. There are maternity dens that we know of where they can come on shore, where there's snow, and build their dens. And they'll do some maternity activity there. And then they move -- tend to move back off shore back onto the ice, because their main prey is the seal. And so they spend the vast majority of their life out on the ice.<br /><br />And so what we're saying about oil and gas exploration on and off shore is that we have seen no demonstrated impact from oil and gas operations on the polar bear's life history. And what we're saying is that the cause of us taking this next step is the warming of the climate to produce the sea ice that the polar bear depends so much upon.<br /><br />QUESTION: So I guess the question is: Who is to blame for that; the warming of the ice?<br /><br />HALL: That's not an analysis that is either required or that we have the expertise to perform under the Endangered Species Act with Fish and Wildlife Service biologists.<br /><br />(CROSSTALK)<br /><br />HALL: Can I put a little tag on the end of that question? The administration has spent approximately $29 billion trying to find the answer to last question the gentleman asked, but other people and other organizations outside the Fish and Wildlife Service are dealing with that.<br /><br />QUESTION: I guess my question is: What is the real world goal of this rulemaking, if the main legal reason for undertaking this rulemaking is that the polar bear's habitat is shrinking?<br /><br />Well, I mean, there's nothing that can be done about that. There's no thermostat under the Arctic that can be turned down.<br /><br />So, you know, obviously, the polar bear is going to be moving south. We're going to allow -- apparently harvesting will be allowed. I think this has got to be the first time in the history of endangered species where we're going to have harvesting of an endangered species.<br /><br />You know, what are we trying to do here?<br /><br /><b>KEMPTHORNE:</b> Dale?<br /><br />HALL: OK. I guess you had two or three in there.<br /><br />Let me start with the harvest aspect of it. We certainly -- we do have examples where threatened species are harvested under the Endangered Species Act, where the harvest either has a benefit in helping us learn more about the movements of the species or whatever, or it causes no harm.<br /><br />A threatened status allows those sorts of permissions to be given. And, you know, we have bowhead whales and sea otters, both that have the ability to be harvested, and yet they're both on the list.<br /><br />And I'm sorry, I missed the first part of your question.<br /><br />QUESTION: Well, is the purpose then just to protect the polar bear as it inevitably -- the populations move south into areas populated by humans and in effect to limit whatever harvesting there is.<br /><br />Because nothing can be done about the polar bears' habitat. There's no one, no climate scientist will say that, you know, we can reverse what's going on in the polar region, whatever that is.<br /><br />HALL: I think it's important to remember the mandates of the law here. The Endangered Species Act -- and I mentioned a while ago that there are five factors that we analyze. That fifth factor says "manmade or natural causes for the decline of the species." And any one of those factors -- loss of habitat, overharvest or overutilization, disease and predation, lack of regulatory protections in place, and then that fifth one of natural or manmade, any one of them qualifies the species to be placed on the list, whether or not we have the answers as to how to solve the problem.<br /><br />QUESTION: Yes, I understand that. And my original question is so what is the real world goal here, since we can't stop the shrinking habitat, what is the real world goal?<br /><br />HALL: Well, the real world goal is in two steps right now. The first step is 12 months from now, to walk through and try and understand what we know or don't know, what we can rely on, what we can't rely on, so that a decision can be made as to whether or not to place it on the list.<br /><br />If it is placed on the list, and if we reach that point, then we would follow the normal process of trying to pull together all of the people that can help make this happen, from international to national to Alaskan to the native Americans, all of the scientists that we have, everyone to try to sit down and help us craft a recovery plan.<br /><br />And that's where those sorts of questions would be vetted out.<br /><br />But the main thing right now is to get through the first 12 months and understand the science and what we can rely on and what we can't.<br /><br />QUESTION: OK, so right now, you don't have any idea whether in fact the polar bear can be saved without, you know, perhaps infringing on the rights of folks in Alaska, for example?<br /><br />HALL: We're not at the point of being able to answer that question based on the analysis and the depth of them we've done so far.<br /><br />QUESTION: Thanks very much. Secretary, thank you.<br /><br />In your opening remarks, you pointed out very clearly that the melting sea ice was the cause of this loss of habitat.<br /><br />And I think you also said, if I remember what you said correctly, that the administration treats climate change very seriously and recognizes the role of greenhouse gases.<br /><br />In those circumstances, under the 1973 act, is the administration now obligated to act to curb the omission of greenhouse gases? And, if not, why not?<br /><br /><b>KEMPTHORNE:</b> After the -- and this was stated earlier -- with the Endangered Species Act -- and that's the element that we're working with right now -- that whole aspect of climate change is beyond the scope of the Endangered Species Act.<br /><br />Now, as also has been pointed out, with President Bush, with his administration -- where there's been an investment of $29 billion dealing with this issue of climate change.<br /><br />So in a different venue, there will continue to be discussions, identification of the science, discussions as to what efforts can be done.<br /><br />But we're actually seeing that there has been some reductions here in the United States, so we're going to continue that effort.<br /><br />But that is outside the scope of this.<br /><br />What we're talking about right now with the Endangered Species Act is one species, a polar bear.<br /><br />And during the next 12 months, it will be an evaluation of that animal, what is happening to its habitat and what sort of mitigations could be brought forward that could be of help to that species.<br /><br />QUESTION: Thanks so much.<br /><br />If I may follow up, if you're saying the act obliges you to trying to protect the habitat, and you're also admitting that the administration sees a link between climate change and greenhouse gases: Why are you not, therefore, legally obliged to try and deal with those greenhouse gases?<br /><br /><b>KEMPTHORNE:</b> Well, again, it's not part of the Endangered Species Act.<br /><br /><b>KEMPTHORNE:</b> Dale, I don't know if you have any further on that.<br /><br />HALL: Well, the president set a goal for 18 percent reduction in greenhouse gases by, I believe, 2012. And that's happening in other aspects under other mandates and funding sources.<br /><br />Sir, to be honest with you, we don't have the expertise in the Fish and Wildlife Service to make those kinds of analyses. We're biologists by trade. And so we deal with the facts that are out on the landscape, and in this case we're dealing with the fact of reduced sea ice, and that's what we're able to analyze.<br /><br />QUESTION: OK. Thank you.<br /><br />QUESTION: Just to follow up a little bit, you're saying climate change is beyond the scope of the ESA completely.<br /><br />Mr. Secretary, you said we're actually seeing there have been some reductions in the United States. Were you talking about greenhouse gases?<br /><br /><b>KEMPTHORNE:</b> Well, efforts in this whole environmental effort. So...<br /><br />QUESTION: OK. So no reductions in -- you're not talking about greenhouse gas reductions in the U.S.<br /><br />I just wanted to be sure, because you weren't referring to polar bears, right?<br /><br /><b>KEMPTHORNE:</b> Right. That's right.<br /><br />QUESTION: OK.<br /><br />One other question, on the peer reviews. Will those be made available? Can we get those online?<br /><br /><b>KEMPTHORNE:</b> Dale, can you respond to that?<br /><br />HALL: The peer review information will certainly be part of the record that we will have that will be available for review.<br /><br />QUESTION: OK.<br /><br />HALL: The peer review is on the status review itself, and then we took the status review and the peer reviews and put the rule together.<br /><br />QUESTION: Just one quick one. On the five listing factors, there is -- I think you're mentioning, Director Hall, manmade?<br /><br />HALL: Yes, the fifth factor is...<br /><br />QUESTION: Manmade habitat modification...<br /><br />HALL: ... the effect of our manmade impacts.<br /><br />QUESTION: Right. Right. And, you know, just to follow up on what the guy from (inaudible) was talking about, I mean, we do cause pollution. So how can we not look at that? I mean, if there's a mountaintop mining operation that is depositing fill into a stream and endangering a mussel or some kind of species there; I mean, that's a direct impact.<br /><br />But this is something where many people believe the climate is changing, the climate -- you know, that change is causing the sea ice to melt. So, I don't know -- how do you say that's beyond the scope of the ESA completely?<br /><br />HALL: Well, I'm not sure that we're not twisting some questions here, but let me answer it this way.<br /><br />If we have pollution going into a stream or if we have wetlands being filled or if we have various activities that our expertise allows us to analyze and make the conclusion on, then we do that.<br /><br />In the case of atmospheric and climate change, we don't have that kind of expertise, so we depend on NASA, we depend on USGS, we depend on others to do those kinds of analyses for us, and then we understand what it is they're telling us and try and work with the science to understand what the reasonable prediction is as to what really will happen.<br /><br />QUESTION: Is there any explanation in the proposal about "warranted, but precluded"? Did you consider that as an option? And how do you justify proposing the bear as threatened when there are other species that are already warranted, but precluded?<br /><br />HALL: Well normally, as you know -- because, I've visited with you before and respect the work that you do. You know that the "warranted, but precluded" is generally used when we get a petition and we say that we don't have the staffing or the funding or there are other higher priority species ahead of this one to work.<br /><br />And that is when we use the "warranted, but precluded". In this case, Alaska was able to work the petition and was able to work through the court settlement timeframe. And so it seemed to us to be a little disingenuous to say "warranted, but precluded" when we've done the work to analyze the information, at least to this stage.<br /><br />(CROSSTALK)<br /><br />MYERS: Yes, this is a little bit of clarification on the secretary's statement. I think what has occurred is an actual decrease in the rate of increase of CO2 and other greenhouse gases.<br /><br />QUESTION: You can't propose reducing emissions of greenhouse gases to help the polar bears. What real, tangible thing can you do to help the polar bears? Or will you be able to do nothing?<br /><br />HALL: Do you want me to go ahead, Secretary?<br /><br /><b>KEMPTHORNE:</b> Yes, that would be fine, Dale.<br /><br />HALL: OK.<br /><br />I think that that was part of what we were discussing a little while ago. We are now analyzing: Should it even warrant being placed on the endangered species list as a threatened species? If we reach that point, that question is exactly the kind of question that we would ask a recovery team to advise us on. What are those feasible, practical things that can actually be done to try and help the polar bear?<br /><br />And we form these recovery teams in order to give us advice from a lot of different perspectives. And they're always very valuable.<br /><br />(CROSSTALK)<br /><br />HALL: And those perspectives are always very valuable because they are from different views, and they come up with some pretty innovative ideas sometimes in recovery plans.<br /><br />So I would not want to prejudge what a recovery team that we would ask to come and advise us on how to try and address it, if we reach the point of listing at this point.<br /><br />QUESTION: Is this a symbolic designation? And are there going to be attached provisions that would ensure the ice habitat is not in jeopardy?<br /><br />HALL: Well, I'm not sure what you mean by symbolic, because we're following the letter of the law here and analyzing the science as we know it.<br /><br />We have a court settlement. We had a petition to list the bear as threatened. Then we were delayed in getting that under way and so we reached an agreement with the plaintiffs on the court settlement date of today to have an answer at the 12-month finding stage. And that's what we're going through.<br /><br />The law requires us to analyze the information that we're analyzing and to make decisions at various points along the way. And this is one of those required points.<br /><br />Getting onto the endangered species list, by any species, is a step-wise progression. If we're doing it internally, we would spend time analyzing the information first, then deciding whether or not we should propose, then proposing, then getting more information from the public and from other scientists, and then moving on to whether or not we should list.<br /><br />In the case of a petition, we analyze the petition to see if it has adequate information to warrant further review. And if it does, then we pick up and do that next step, which is to analyze the information and decide whether or not it should be proposed for listing.<br /><br />That's what we've done here. And so, it is not a symbolic effort for us. It is our responsibility under the law.<br /><br />QUESTION: And what about attached provisions? Are there going to be attached provisions that would ensure that the ice habitat is not jeopardized?<br /><br />HALL: Well, I'm not sure what you mean by attached provisions. When we list a species, we place it on the list of threatened or endangered species. We identify, in the rule, what the causes are. And the only cause that we can identify now that warrants further review is the ice melting.<br /><br />And then once we list a species, we move into a recovery planning process, where we get that kind of advice on what we could do that's feasible, practical. And out of that comes the measures that we work with others to try to implement.<br /><br />QUESTION: One just quick follow-up, please: Are you acknowledging that the ice melting to due to global warming?<br /><br />HALL: Yes, ma'am?<br /><br />QUESTION: So the answer is yes, you're acknowledging that?<br /><br />HALL: Yes, ma'am.<br /><br />QUESTION: Thank you.<br /><br />QUESTION: I was wondering if you're aware of polar bear denning areas in either the National Petroleum Reserve or in the Arctic National Wildlife Refuge?<br /><br /><b>KEMPTHORNE:</b> If you would, I'd like some of our Alaska biologists, while they're getting their information here, to try to answer it.<br /><br />We do know that there are a little over 60 denning sites across the north slope. But I'll turn to Scott to answer that question.<br /><br />SCHLIEBE: In answer to your question, we are aware of denning that takes place by polar bears -- within NPRA, on the northern coast of Alaska, along barrier islands, within some of the riverine and bluff habitat, as well as further to the east in the Arctic National Wildlife Refuge.<br /><br />This information comes to us from satellite telemetry studies that are being conducted by the U.S. Geological Survey group, and have been conducted over a series of years.<br /><br />Telemetry goes back to the mid-1980s and our data base is quite strong on den-site selection and fidelity to these areas.<br /><br />So I do think that we have a wealth of information on how bears are selecting some of these areas for denning.<br /><br />And it's certainly going to be a very beneficial piece of the equation (ph) that we will look at.<br /><br />And we've already been looking at it quite closely, actually, and working closely with operators up on the north slope, in order to mitigate, minimize or eliminate effects of human activities when they may occur in denning habitat.<br /><br />So we will continue to operate in that fashion. And, you know, denning habitat is probably -- in the event of denning -- is probably one of the most important polar bear functions during their lifecycles.<br /><br />It's the way that new animals are recruited into the population.<br /><br />QUESTION: The administration just opened up large areas of the National Petroleum Reserve to oil and gas leasing.<br /><br />QUESTION: I mean, given the uncertainty of this listing, Mr. Secretary, do you think it's important to maybe slow down on that? Or what are your views of that leasing?<br /><br /><b>KEMPTHORNE:</b> No, my views at this time are, number one, we'll always abide by the most stringent of environmental standards, but also in this proposed rule it's very clear that the oil and gas activity in that area does not pose a threat to the polar bear. And also, in fact, they have been effective partners, the industries.<br /><br />So, no, I think that we can proceed while on a parallel course during the next 12 months doing this analysis by Fish and Wildlife and by the USGS.<br /><br />QUESTION: This is a question for the secretary. I have just a clarification.<br /><br />So, right at this moment, a discussion of the reasons behind climate change is beyond the remit of the department, but that could change if the polar bear were listed as threatened? Or is that never going to be on the table no matter how it's classified?<br /><br /><b>KEMPTHORNE:</b> No, that is not a factor with the Endangered Species Act.<br /><br />Again, we need to just concentrate and focus on the species and its habitat, but, again, referencing that the Bush administration, throughout the administration, has made investments of $29 billion on this issue, and that will continue as the scientific community keeps working to make a determination what is occurring, how does that fit into historic realities, what is the projection for the future.<br /><br />QUESTION: So if the estimation was made that it deserved to be on the list, and it was put on the list, then the department would turn to other agencies as in the Bush administration to make a determination of what was causing the habitat to change?<br /><br /><b>KEMPTHORNE:</b> Well, again, that's -- I cannot prejudge that. I mean, that's part of what the 12 months is about.<br /><br />Dale, do you want to add anything to that?<br /><br />HALL: During the 12-month period, we will be going -- we've already gone to NASA and U.S. Geological Survey. We've gone to Alaska, the biologists up there. We've gone to international scientists.<br /><br />I'll reiterate that the peer review of our status review on the bear, which was the foundation for writing the rule, literally had scientists from every country that has polar bears doing the peer review.<br /><br />We asked for 12 people to review; 10 did. And all five countries had their scientists there.<br /><br />That's a process that we will simply keep going down, in order to better understand over the next 12 months exactly what the right path is.<br /><br />QUESTION: But what I guess -- just a very quick follow-up -- what I really just don't understand is how it is that the department can make a very firm determination today, before the 12 months is over, that the oil and gas industry has nothing to do with the changing habitat, but that it's beyond the remit of the department to decide what's going on with the climate change.<br /><br />How is one -- how can one be such a firm conclusion and then now making any sort of conclusion on another question?<br /><br />HALL: The proposal to list the species is just exactly that: It is a proposal. If you want to look at it that way, it's a draft that we would move forward with, and it contains what we know today.<br /><br />And all of the 30 years of experience that we have with the oil and gas industry up on the North Slope has proven to us, so far, that the oil and gas industry has had no negative impact on polar bears. That's all we're saying in this. And it's open -- it will be out there for 90 days for the public to give us comments and give us information that maybe we don't have.<br /><br />STAFF: Before we take our last question, which will be the next question, I want to recognize Lynn Scarlett, the deputy secretary of the interior, who's joined the call.<br /><br />Lynn, are you with us?<br /><br />SCARLETT: Yes, I am.<br /><br />STAFF: You have a couple of points on some of the questions.<br /><br />SCARLETT: Yes. There's been a lot of discussion in the questions about the administration's position on climate change, and I just wanted to amplify the responses that you've heard so far on that.<br /><br />SCARLETT: You've heard both Dale Hall and Secretary <b>Kempthorne</b> indicate that the administration has expended some $29 billion on both climate research as well as technology development to address greenhouse gases.<br /><br />But I want to add to that that, in addition, we have over 60 measures, ranging from mandatory measures to voluntary measures and partnerships, designed to reduce greenhouse gases and greenhouse gas intensity; that is, the level of greenhouse gases emitted in relationship to economic productivity.<br /><br />And those measures include partnerships with 14 different industry sectors to help us reach our 18 percent reduction in greenhouse gas intensity by 2012; as well as, for example, mandatory requirements for appliance efficiency.<br /><br />Many of you are familiar with the light truck fuel emission standards that were promulgated and a variety of other measures along those lines.<br /><br />So I want to underscore that while this particular proposal to list is focused on the ESA, there are many other measures being undertaken on climate change.<br /><br />QUESTION: Oil and gas development is not a relevant factor; that's been said earlier. I just wanted to know: If the polar bear is listed as threatened, how will oil and gas development be affected?<br /><br />HALL: This is Dale Hall. If it is listed as threatened, then the oil and gas industry would have to -- whoever's permitting it, from the federal government standpoint, would have to enter into a Section 7, government to government, under the law -- Section 7 consultation, which they already do for the (inaudible) wherever a species is listed.<br /><br />This would be another factor that they would consider in environmental impact statements, in describing the potential impacts of the action, and then a Section 7 consultation that we would give them dealing with that.<br /><br />That, primarily, would be the impact to oil and gas that would occur.<br /><br />QUESTION: OK. Has the (inaudible) or any other animal that's listed as endangered actually halted any kind of project or slowed down any kind of oil and gas development project in Alaska?<br /><br />HALL: Well, you know, I'm not with the National Marine Fishery Service, but I understand that whales have been an issue, at least to be considered in the past -- offshore. But that's the only one that I can recall.<br /><br />QUESTION: OK. Thank you.<br /><br />STAFF: Thank you very much, everyone.<br /><br />Before I close, I just wanted to reiterate that <a href="http://www.doi.gov/">www.doi.gov</a> has the press release announcing this proposed listing, as threatened, of the polar bear, and other materials, including photos and downloadable video.<br /><br />END<br /><br /> <b>NOTES:</b><br />[????] - Indicates Speaker Unknown<br /> [--] - Indicates could not make out what was being said.[off mike] - Indicates could not make out what was being said.<br /><br /><b>LOAD-DATE:</b> December 27, 2006Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-23156977652989731072006-12-27T08:10:00.000-08:002006-12-27T08:13:34.119-08:00Illegal Power Plants, Coal Mines In China Pose Challenge for Beijing<table border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td colspan="3" class="boldPumpkinSixteen" align="left" valign="middle"> </td></tr></tbody></table><table border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td colspan="3" class="boldPumpkinSixteen" align="left" valign="middle"> <span style="font-style: italic;">Wall Street Journal</span><br /></td> </tr> <tr><td height="8"><br /></td><td align="right" height="8"><br /></td></tr> </tbody></table> <div style="border-left: 1px solid rgb(204, 204, 204); width: 180px; margin-left: 5px; padding-left: 5px; float: right;"> <span class="boldTwelve"><span style="font-family: Arial,Helvetica,sans-serif;"><b></b></span></span><br /><br /> <!-- This module has no content --> <!-- This module has no content --> </div> <!-- ID: SB116718773722060212.djm --><!-- LEVEL: normal --><!-- TYPE: Leader (U.S.) --><!-- DISPLAY-NAME: Page One --><!-- PUBLICATION: "The Wall Street Journal Interactive Edition" --><!-- DATE: 2006-12-27 00:01 --><!-- COPY: Dow Jones & Company, Inc. --><!-- ORIG-ID: --><!-- article start --> <!-- CODE=SUBJECT SYMBOL=OECN CODE=SUBJECT SYMBOL=OUSB CODE=INDUSTRY SYMBOL=DEN CODE=SUBJECT SYMBOL=OASI --> <h1 class="articleTitle" style="margin: 0px;">Illegal Power Plants, Coal Mines In China Pose Challenge for Beijing</h1> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>SHAI OSTER</b><br /><span class="aTime">December 27, 2006; Page A1</span></span><br /></div> <p class="times">JUBAO VILLAGE, China -- On the edge of this dusty farming hamlet, the massive smokestack of the half-finished Xinfeng Power Plant looms as a monument to China's out-of-control demand for energy.</p> <p class="times">Unlike two other power plants nearby, Xinfeng isn't supposed to exist. China's electricity regulators never authorized the $362 million coal-burning plant. But in 2004, the provincial government here in northern China's Inner Mongolia ignored Beijing's call to slow down investment and started building the plant anyway, hoping to ensure enough juice for the region's supercharged industrialization by tapping its rich reservoirs of coal.</p> <img src="http://online.wsj.com/public/resources/images/P1-AG674A_CENER_20061226195242.gif" class="imglftbdy" alt="[Chart]" align="left" border="0" height="283" hspace="0" vspace="0" width="234" /> <p class="times">Inner Mongolia's disobedience might have escaped notice. But in July 2005, in the rush to finish the plant before regulators found out about it, the housing for a turbine collapsed, killing six workers. During the yearlong investigation that followed, the central government discovered that Inner Mongolia had illegally built about 10 power plants, or 8.6 gigawatts of electricity-generating capacity -- equal to about a 10th of the United Kingdom's total capacity.</p> <p class="times">The illegal plants have had unintended -- and detrimental -- consequences. By eschewing even basic environmental safeguards, they stand out as polluters even in an industry that is one of China's leading sources of emissions, officials say. They also have driven up the demand for and price of coal, the country's most abundant source of fuel. That, in turn, has spawned thousands of illegal coal mines that have contributed to more than 4,000 coal-mining deaths in China this year.</p> <p class="times">The illegal power plants show how China's economic transformation is outpacing Beijing's ability to manage it. Never before has a country with such a big population grown as rapidly as China. The country's economy has expanded an average 10% a year since the late 1970s. The process of economic modernization is happening twice as fast in China as it did in the U.S. or Japan, where it took half a century or more.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">One fifth of the power plants in China are illegal, according to government estimates -- enough to light up all of the U.K. While the electricity they supply is essential to power China's growth, the uncontrolled manner in which they are multiplying, often under the protection of local authorities, poses a challenge to Beijing's authority and its grip on energy policy.</p> <p class="times">"It is impossible for our central government to go everywhere to see, when the small power plants start building," said Zhang Guobao, vice chairman of the National Development and Reform Commission, China's top energy policy planner, in an interview.</p> <p class="times">The central government is likewise finding it hard to crack down on illegal coal mines. In past years it has shut down thousands of mines -- only to see thousands more spring up in their place. The primary reason: the soaring profits to be made from selling coal to China's power plants are a powerful temptation. Many regions have embraced coal mining to boost their growth rates, including Inner Mongolia, one of China's most coal-rich provinces.</p> <p class="times">Infuriated by the illegal Xinfeng power plant, central-government officials earlier this year demanded that the province's top leadership present self-criticisms before China's powerful State Council, or cabinet. Under China's Communist system, that's an unusually public form of rebuke, designed to send a message to others against defying Beijing's will.</p> <p class="times">Even so, construction continues today at the Xinfeng plant nearly a year after Beijing ordered it stopped. Officials at the company building the plant say they expect to get approval to complete it "sooner or later."</p> <p class="times">In China, more power plants almost invariably mean more coal consumption. The country has been unable to diversify away from coal, which is cheaper than alternative fuels, some of which are imported.</p> <p class="times">But China's coal consumption is costly in human and environmental terms. Amid the push to feed the country's power plants last year, 5,938 coal miners were killed in accidents, mostly in smaller, illegal mines. Such accidents are so commonplace here that only the larger ones rank as news.</p> <p class="times">Coal is one of the biggest pollution sources in China, which some experts think is on the verge of an environmental crisis. This year, the central government set a target of reducing the amount of energy the country consumes relative to its economic output. But the soaring demand for coal-fueled electricity has upended Beijing's efforts to rein in pollution.</p> <p class="times">"It will be very difficult to realize our targets of saving energy and reducing pollution," Ma Kai, China's top economic policy planner, said this fall.</p> <p class="times">The implications of China's mushrooming hunger for energy go far beyond its own borders. As incomes rise in China, energy use per person is starting to catch up with the richer West. The typical American consumes about eight metric tons of oil a year, or its equivalent in coal and other fuels. Japanese consume about half that sum. In China, per capita energy consumption now stands at just 1.2 metric tons.</p> <p class="times">It would require a doubling of world oil production -- an impossible feat -- for every Chinese to live the energy-intensive lifestyle of an American, as well as more coal than some believe China could ever dig up.</p> <p class="times">"We can't copy the big home and the big car" that so many Americans enjoy, said Zhou Dadi, a top researcher with the Energy Research Institute, a government-backed think tank. "It's just not doable."</p> <img src="http://online.wsj.com/public/resources/images/P1-AG676_CEnerg_20061226202850.gif" class="imglftbdy" alt="[cenergy]" align="left" border="0" height="220" hspace="0" vspace="0" width="506" /> <p class="times">China's current energy predicament is rooted in the decision it made three decades ago when it began to embrace a market economy. For the first 20 years of its transition, as China shifted from a mostly agrarian country to light industry, it was able to quadruple the size of its economy while only doubling its energy needs.</p> <p class="times">Throughout the 1990s, however, a new and faster phase of expansion quietly took hold as the government loosened restrictions on investment and the mobility of its citizens, accelerating China's industrialization and urbanization. Manufacturing accounted for a steadily greater share of the economy. Energy-intensive heavy industries boomed, from petrochemicals to auto production, aided by China's entry into the World Trade Organization in 2001.</p> <p class="times">Low energy prices, made possible in part by government controls, encouraged consumers to use more. Coal consumption initially crept up slowly, to around 1.5 billion metric tons a year in the mid-1990s, from just under one billion metric tons a year a decade earlier. Last year, however, China consumed about 2.2 billion metric tons of coal, one-third of the world's total and more than any other country.</p> <p class="times">Beijing's efforts to reduce reliance on coal have largely failed. China has plenty of coal -- an estimated 114.5 billion metric tons of recoverable reserves. Only the U.S. and Russia have more. Natural gas, which burns more efficiently and causes far less pollution, has proved too expensive to compete effectively. Planned increases in nuclear-power production would fill only a fraction of China's energy demand. Even China's more-ambitious plans for hydropower power and wind farms won't seriously challenge coal's dominance.</p> <p class="times">Coal miners are on the front lines of the battle to meet China's energy needs. It is dangerous work. As with power plants, China's government has had great difficulty regulating coal mines. In the U.S., which produces about half as much coal as China, 47 miners have been killed so far this year, up from 22 last year. In China, the number of deaths has declined slightly this year, but it is still enormous: 4,236 dead so far.</p> <p class="times">The number of casualties goes up in the winter. More than 400 miners died in November alone. "In winter, demand goes up, the market prices go up, and the profit motive goes up," said Huang Yi, spokesman for the State Administration of Worker Safety, the agency that investigates mine accidents.</p> <p class="times">Smaller, often inefficient, and dangerous mines account for about a third of China's coal production. They are so important to meeting its energy needs that the central government recently delayed plans to improve safety by shuttering many of them.</p> <p class="times">Whole regions of China are pockmarked with tiny, illegal mines like the one in Wangyu in central China's gritty Shanxi province, where an accident in early November killed 34 miners. Four tons of demolition explosives illegally stored in a shaft caught fire and destroyed the small mine, according to government safety officials. The dead, who had just started the night shift, were mostly from the same village some 250 miles away.</p> <p class="times">Wang Chenliang, from Sichuan province, had just ended his shift when the explosion occurred. He rushed back to help with rescue efforts. He and others pulled survivors from the wreckage and pumped air into the mine to aid anyone who was trapped but still alive.</p> <p class="times">"This work is tiring and dangerous," Mr. Wang said a few days after the accident, only moments before police detained a journalist attempting to interview survivors. Like others, he got his job through introductions from fellow villagers. "We came here to earn money. The money here is much higher than back home in Sichuan."</p> <p class="times">The mine's safety certificate and production permit had both expired, according to central-government officials. But the local government was protecting it, they said, because it held a financial interest in the mine.</p> <p class="times">That sort of corruption is common. Last year, the central government found that more than 4,500 government officials illegally held stakes in coal mines and frequently covered up safety violations. Many of these mines lack basic safety equipment. Workers scrabble down narrow pits, where the most modern tools may be the sticks of dynamite used to dislodge the coal. At the accident site in Wangyu, there was no rescue equipment on hand, another common problem.</p> <p class="times">Over the past few years, provincial officials in Inner Mongolia have decided to build power plants and encourage heavy industry to relocate to the region to take advantage of its coal resources. The strategy has paid off in economic terms.</p> <p class="times">Last year, the province's economy grew 21.6%, roughly double the national rate. In 2004, it grew 19.4%. Industrial output has grown an average 30% a year over the past four years. Such unbridled growth caught China's central government off guard.</p> <p class="times">In 2003 and 2004, massive power shortages in the south led to rolling blackouts. Local authorities across China decided to build power plants, often illegally, to keep their local economies humming. Around that time, officials in Inner Mongolia approved a plan to build the Xinfeng Power Plant in the small town of Fengzhen, in a bid to attract more factories.</p> <p class="times">"Inner Mongolia has a lot of coal. Other parts of China need the electricity. Of course Inner Mongolia should take advantage of its natural resources," said Yan Keji, a construction worker at one of the three power plants near Jubao.</p> <p class="times">It isn't just heavy industry that needs power. China's consumers are using more, too. Mr. Yan's hometown in the mountains of Hunan didn't have electricity until 1990. At first, his house had one light bulb. Now, the money he earns from construction has paid for a television, washing machine, refrigerator and air conditioning, a pattern repeated in millions of homes across China as people get richer.</p> <p class="times">China's sprawling cities are also driving up power demand. Inner Mongolia now provides Beijing with 20% of its electricity, according to Jim Brock, an independent energy consultant in the Chinese capital.</p> <p class="times">Nearly two years ago, China's central government started cracking down on the unauthorized power plants because they feared a surplus of power. In Inner Mongolia, local officials ignored orders to stop building the Xingfeng plant, figuring they could always get retroactive approval, according to the official Xinhua news agency. But the death of the six workers in July 2005 set in motion the investigation that culminated in the public castigation of the provincial chief and the order to stop work on Xinfeng.</p> <p class="times">Some construction work on the plant continues. Workers interviewed at the site said the plant would be able to produce electricity next year. They declined to give their names.</p> <p class="times">Na Guiting, an official at Inner Mongolia Energy Generation Investment Co. Ltd., the plant's owner, said the company is eager to finish building and has reapplied for approval. "Mongolia still has a very serious power shortage. If Xinfeng would be approved, it could be generating in three or four months," the official said.</p> <div align="right"><p style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">--Kersten Zhang contributed to this article.</p></div> <b>Write to </b>Shai Oster at <a class="times" href="mailto:shai.oster@dowjones.com">shai.oster@dowjones.com</a>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com1tag:blogger.com,1999:blog-7783886211174671222.post-57407635091549495132006-10-04T08:11:00.000-07:002006-10-04T08:12:44.663-07:00Yes, in My Backyard!<h1 class="articleTitle" style="margin: 0px;">Yes, in My Backyard:<br />Tiny Sauget, Illinois,<br />Likes Business Misfits</h1> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Chemical Plants? Strip Clubs?<br />Toxic Town Has It All;<br />The EPA's Report Card</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>WILLIAM SPAIN</b><br /><span class="aTime">October 3, 2006; Page A1, Wall Street Journal</span></span><br /></div> <p class="times">SAUGET, Ill. -- When construction and waste-management firm Fred Weber Inc. sought to build a trash-transfer station in the St. Louis area, it was shooed away by activists and residents opposed to having thousands of tons of other people's garbage being trundled through their communities.</p> <p class="times">But across the border in Illinois, the village of Sauget rolled out the welcome mat. "This kind of industry has to go someplace," says the village's president, Richard A. Sauget Jr. "We are very comfortable with it here."</p> <p class="times">That "Yes, in my backyard" ethic has made Sauget, population 250, a peculiar island of prosperity in the sea of urban economic blight across the Mississippi River from St. Louis. While the little towns around it are marked by crime, shuttered factories, burned-out buildings and trash-strewn streets, Sauget boasts clean parks, neat homes and beautifully maintained roads.</p> <img src="http://online.wsj.com/public/resources/images/HC-GI777_Sauget_20061002154851.gif" class="imglftbdy" alt="[Richard A. Sauget ]" align="left" border="0" height="248" hspace="0" vspace="0" width="136" /> <p class="times">Sauget, named for its most prominent family, might offer some lessons for other Midwestern towns desperately seeking economic rejuvenation. Sauget has no downtown to dress up, no chamber of commerce. It has done nothing to try to attract new housing or a Wal-Mart.</p> <p class="times">Instead, Sauget has embraced some of the less-popular remnants of the industrial Midwest as well as the seamier side of the U.S. service economy. Along with companies that smelt zinc, treat sewage and incinerate toxic waste are a brace of strip clubs, two nightclubs and a 24-hour liquor store that doubles as an off-track betting parlor and the largest lottery outlet in Illinois.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">"The town allows us to operate as a business, not making moral judgments, but expecting us to obey the law," says Michael Ocello, president of VCG Holdings of Denver, owner of the strip clubs that locals have nicknamed "Ballet du Sauget."</p> <p class="times">What the village lacks are schools, churches and supermarkets. There is now a village maintenance shed where a school once stood. While Mr. Sauget's three children attend Catholic school, the village pays into the district in nearby Cahokia for kids who go to public schools.</p> <p class="times">Many of the residents are police officers, firefighters and other village employees. Given the population's relatively static nature, housing turnover is rare. "I have never sold a house in Sauget," says Linda Frierdich, owner of Advantage Real Estate in nearby Columbia, Ill. "I don't think anyone has. Nobody wants to move there."</p> <p class="times">Yvonne McDaniel, 58, has lived in Sauget for 55 years and raised four children here with her husband, a retired Sauget police officer. "It might not be the most beautiful place in the world but there are more important things than beauty," she says.</p> <p class="times">Sauget's per capita income of about $19,000 is just $1,000 less than Chicago's. And with annual property and other tax revenues of $7 million -- which works out to a remarkable $28,000 per person -- residents of Sauget (pronounced so-ZHAY) enjoy free sewer service and trash pickup, and a force of 16 police officers and 16 firefighters -- one of each for every 15 locals.</p> <p class="times">Sauget's location -- just a five-minute drive from downtown St. Louis -- makes it easy for thousands of weekend visitors to sample its nightlife.</p> <p class="times">But perhaps nothing is more vital to Sauget's success than the unabashedly pro-business leanings of its leading family, the Saugets.</p> <p class="times">Mr. Sauget, 33 years old, is a former minor-league ballplayer who has been attending village meetings since he was 13 and is known around town as "mayor." He is the third Sauget to be elected village president since the town's founding as "Monsanto," after the chemical giant, in 1926. Members of his family control the Gateway Grizzlies, a local minor-league baseball team, several nightclubs, and a portion of its four square miles, including about 20 of its roughly 100 homes. His father, Richard Sauget Sr., lives in a mansion in Sauget complete with a tennis court and meticulously trimmed lawn and hedges.</p> <p class="times">Tooling around town in his black GMC Yukon Denali SUV, the younger Mr. Sauget proudly points out the many industrial landmarks. "There's Stellar Manufacturing," he says, adding, "They make the 'hockey pucks,' " the deodorizing cakes used in many public toilets.</p> <p class="times">Kathy Andria, president of the American Bottom Conservancy, a local environmental group, occasionally gives "toxic tours" of East St. Louis and other poor industrial towns just east of St. Louis. She says Sauget is a must-see because it's a "magnet" for industries that deal with pollutants. "They think of the companies as their constituents."</p> <p class="times">The village was created to offer Monsanto a tax- and regulation-free dumping location at a time when environmental rules existed mainly at the local level.</p> <p class="times">"We were basically incorporated to be a sewer," Mr. Sauget says.</p> <p class="times">The town thrived under the oversight of its first president, Leo Sauget, Richard's great-grandfather, who was once described by the St. Louis Post-Dispatch as "a gentleman farmer who ... would shock blue bloods by showing up at board meetings in overalls." The town also got a reputation for its smell, memorialized in the 1992 song "Sauget Wind" by rock band Uncle Tupelo, which includes the verse, "They're poisoning the air / For personal wealth..."</p> <p class="times">In the late 1960s, polychlorinated biphenyl (PCB) contamination of land, ground water, rivers and the food chain began to cause concern -- and the Monsanto plant in Sauget was the nation's largest producer of PCBs. Production of PCBs was banned in 1977, but they remain part of a noxious chemical stew at an Environmental Protection Agency Superfund site along Dead Creek in Sauget.</p> <p class="times">"Sauget is one of the most polluted communities in the region," says Richard Karl, director of the EPA's Superfund Division, Region 5. "It's basically a soup of different chemicals," including PCBs, benzene, toluene, and dioxin and organic solvents. Heavy-metal pollutants include cadmium, silver, selenium and zinc. So far, the agency has spent tens of millions of dollars to clean up the area. "We have eliminated a lot of the direct contact threats but we won't be leaving anytime soon," says Mr. Karl.</p> <p class="times">Around the time of the PCB imbroglio, the town changed its name from Monsanto to Sauget, after Leo Sauget, who had just stepped down as village president. Today, the plant is owned by Solutia Inc., which was spun off from Monsanto Co. in 1997, and makes products including oil additives and agricultural chemicals.</p> <p class="times">Over the years, the town has occasionally sided with local companies in court against regulators and groups worried about pollution. Paul Sauget, Leo's son and successor as village president, once handed a complaining EPA official a gas mask at a public meeting.</p> <p class="times">A trucking company recently built a terminal and a new dialysis clinic opened next to the ballpark. In August, a new $100 million ethanol plant broke ground. "The heavy industry is not as strong as it used to be, but all the infrastructure is still [here]," Mr. Sauget says. "We have the access, we have the roads. And we will talk to anybody."</p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-59904414682057670422006-09-15T08:28:00.000-07:002006-09-15T08:31:14.234-07:00WHO Calls for Spraying Controversial DDT to Fight Malaria<p class="articleTitle" style="margin: 0px;">WHO Calls for Spraying<br />Controversial DDT<br />To Fight Malaria</p> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>BETSY MCKAY</b><br /><span class="aTime">September 15, 2006; Page B1<br />Wall Street Journal<br /></span></span> </div> <p class="times">The World Health Organization, in a sign that widely used methods of fighting malaria have failed to bring the catastrophic disease under control, plans to announce today that it will encourage the use of DDT, even though the pesticide is banned or tightly restricted in much of the world.</p> <p class="times">The new guidelines from the United Nations public-health agency support the spraying of small amounts of DDT, or dichloro-diphenyl-trichloroethane, on walls and other surfaces inside homes in areas at highest risk of malaria. The mosquito-borne disease infects as many as 500 million people a year and kills about a million. Most victims are in sub-Saharan Africa and under the age of 5.</p> <p class="times">For public-heath officials in countries losing the fight against the disease, the new guidelines promise difficult choices between fighting malaria and protecting the environment. The technique the WHO backs involves less DDT than what the U.S. and other countries sprayed over crops and residential areas decades ago. Still, the agency's push is certain to trigger fierce criticism from environmentalists who insist that DDT, which can take as long as 20 years to break down in the environment, is a threat to humans and animals.</p> <p class="times">It isn't clear which countries have agreed to test the new guidelines and ramp up spraying with DDT or other pesticides. Agency officials have discussed the idea with India, Indonesia, Sudan and Yemen, according to people familiar with the situation. The WHO guidelines don't address outdoor spraying of DDT, which isn't approved for malaria control.</p> <reprintsdisclaimer></reprintsdisclaimer><p class="times">DDT already is on a list of WHO-approved chemicals for indoor spraying. But until now, the agency hadn't strongly endorsed its use, and donors funding malaria programs were reluctant to finance purchases of it. As a result, countries hit hardest by malaria generally have been unable to afford substantial supplies. The WHO's new stance is aimed partly at encouraging even countries that ban the pesticide to help finance its use in areas ravaged by the disease.</p> <p class="times">The spraying of DDT has led to a sharp reduction in malaria cases in the few countries where it has been used, such as South Africa. Malaria experts say it is one of the cheapest and most effective forms of prevention. But it must be sprayed in more than 70% of the homes in targeted areas, and nearby regions also must be sprayed to halt mosquitoes there from reintroducing the disease.</p> <p class="times">Some environmentalists link DDT with cancer and disruptions of the endocrine system, but scientists disagree about DDT's effects on human health. The fear is that spraying DDT in high-risk areas would increase other health risks without eliminating breeding grounds of mosquitoes that spread the disease.</p> <p class="times">Wider use of DDT "is shortsighted and doesn't recognize the long-term problems and hazards," said Jay Feldman, executive director of Beyond Pesticides, a Washington group pushing for the elimination of toxic pesticides. "It behooves us to advocate the phase-out of this chemical around the world and find solutions to malaria that go to the cause of infestation." He says officials need to focus more on eliminating mosquito breeding grounds, such as standing pools of water.</p> <p class="times">Some African government officials have expressed concern that increased use of DDT could hurt exports of agricultural products to the European Union, where the pesticide has been widely banned for more than 20 years. The EU is the main trading partner for most African countries, with EU imports from developing African, Caribbean, and Pacific countries totaling some $36.04 billion in 2004.</p> <p class="times">The malaria parasite, borne by infected mosquitoes, clogs a patient's circulatory system, impeding blood flow to the brain and other vital organs. There are drugs for the disease, but some of the cheapest and most commonly used aren't very effective because the parasite has developed resistance.</p> <p class="times">Other pesticides and malaria-fighting methods have often proved to be less-effective and more costly than DDT. Insecticide-treated mosquito nets hung in sleeping areas are successful, but cost, distribution problems and varying usage make them less effective than they could be. Malaria experts say deployment of a malaria vaccine that is now in development could still be years away.</p> <p class="times">Pressure has been growing in the past few years for the WHO to support DDT more aggressively. Jon Liden, a spokesman for the Global Fund, which pays for indoor spraying of DDT or other pesticides in 41 countries, says the organization welcomes the WHO's move. "The Global Fund....is ready to finance increased use of the strategy if affected countries request it," he says.</p> <p class="times">The U.S. government has stepped up support for indoor pesticide spraying of homes in Africa. While it spent less than $1 million on such programs in 2005, it plans to spend $20 million in fiscal 2007, according to Admiral R. Timothy Ziemer, coordinator of the President's Malaria Initiative and the U.S. Agency for International Development's malaria programs. This year, the U.S. government purchased DDT for a spraying program in Zambia.</p> <p class="times">In a June letter, U.S. Sen. Tom Coburn, an Oklahoma Republican, urged European Union Prime Minister José Manuel Barroso not to boycott agricultural products from countries using DDT for malaria control. "As the experiences of South Africa, Swaziland, Mozambique and Zambia have demonstrated, DDT alone can reduce malaria disease and death rates by 75% in less than two years," he wrote. In a reply to Sen. Coburn, Mr. Barroso said that agricultural exports from African countries had not been disrupted due to DDT contamination, and that the EU adheres to the Stockholm Convention, which allows for the use of DDT for malaria-control purposes.</p> <img src="http://online.wsj.com/public/resources/images/MK-AH061A_DDT_20060914221418.gif" class="imglftbdy" alt="[ddt]" align="left" border="0" height="195" hspace="0" vspace="0" width="283" /> <p class="times">DDT, once hailed as a "miracle" pesticide, was first used widely during World War II to help control everything from typhus to the body lice on U.S. soldiers. Within a few years, the U.S. was free of malaria. In 1955, the WHO endorsed DDT use for a global campaign that within 12 years freed developed countries, along with parts of Asia and Latin America, from risk of infection.</p> <p class="times">But reports in the 1960s, launched by environmentalist Rachel Carson in the book "Silent Spring," that DDT was killing off bald eagles, in part by thinning their eggshells, and seeping into the food chain, raised concerns about the powerful chemical's heavy use. Environmental protest led the Environmental Protection Agency to ban the use of DDT in the U.S. in 1972. It currently is made by one company in India and two in China.</p> <p class="times">The WHO's new endorsement of DDT partly reflects a push to reinvigorate the agency's malaria-fighting operation under its chief since October, Arata Kochi. The 57-year-old Japanese public-health expert has been shaking up policies and personnel, hoping to repeat his success in the 1990s overseeing the WHO's comprehensive tuberculosis-control strategy.</p> <p class="times">Dr. Kochi has pressed pharmaceutical companies to stop selling a malaria medication that he fears will promote resistance to the only remaining, consistently effective drug against the disease. Last month, Dr. Kochi called on AIDS activists to pressure African countries that import insecticide-treated mosquito nets to remove high tariffs that sharply increase the price of the nets.</p> <p class="times">In southern Africa, where malaria is epidemic, indoor spraying is an increasingly common method of controlling the disease. Governments use a variety of pesticides, not just DDT, and more and more countries, such as Zambia and Mozambique, are combining indoor spraying with increased distribution of insecticide-treated nets. While community and other local organizations carry out other malaria efforts, indoor spraying is usually conducted by government health or malaria-control officials, because of the need to keep tabs on the chemicals.</p> <p class="times">While DDT is effective, there are alternatives, including a class of insecticides called synthetic pyrethroids, some of which are used to treat bed nets, says Kent Campbell, program director for MACEPA, a malaria control program at PATH, a Seattle nonprofit organization, and a former malaria branch chief at the U.S. Centers for Disease Control and Prevention.</p> <p class="times">The political debate over DDT impedes its effectiveness in preventing the disease, he adds. "It's extremely effective when used -- as long as the discussion is not moved to pro or contra DDT," he adds.</p> <p class="times"><b>Write to </b>Betsy McKay at <a class="times" href="mailto:betsy.mckay@wsj.com">betsy.mckay@wsj.com</a></p>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-62764280143354212442006-08-18T10:24:00.000-07:002006-08-18T10:26:31.203-07:00Global warming fund could succeed where Kyoto failed<div class="ft-story-header"><h2>Global warming fund could succeed where Kyoto failed</h2><p>By Jagdish Bhagwati</p><p>Published: August 15 2006 19:05 | Last updated: August 15 2006 19:05<br /></p><p>From the Financial Times<br /></p></div><div class="ft-story-body"><p><span id="kctD">A</span>l Gore has been busy returning global warming to centre stage with terrifying warnings of disaster with his bestselling book, <span id="U171463603960bhG">An Inconvenient Truth</span>, and the popular companion documentary. Tony Blair, the UK prime minister, has joined – even led – the renewed focus on global warming, charging Sir Nicholas Stern, the economist, with solving the problem. Alongside his successful initiative on Africa, this is to be his sure-fire international legacy as he ends his last term in office.</p><p>Getting global warming on the radar screen is only half the game, however. The other half has to be the design of policies to address it effectively. The centrepiece of world action has been the 1997 Kyoto Protocol to the Framework Convention on Climate Change. But while it embodied national obligations on carbon dioxide emission reductions and has now been ratified and approved by more than 160 countries, the US has not done so. So, the Kyoto protocol is dead in the water: you cannot stage <span id="U171463603960FIC">Hamlet</span> without the Prince.</p><p>Even though Bill Clinton, then president, and Al Gore, then vice-president, were fulsome supporters of the Kyoto accord – Mr Clinton even signed it – they could not get it ratified by the Senate that had united against it by a vote of 95-0 in 1997. When President George W. Bush rejected Kyoto, he was therefore resurrecting a corpse and knifing it, simply to please his anti-environmental constituents. But despite the presence of many who share the alarm over global warming, the unwillingness of the US Senate to sign on to Kyoto cannot be put down to US capriciousness. Rather, it reflects a serious flaw in the design of the protocol. When this is understood, the outlines of a better international assault on the global warming problem, which is both more attractive and likely to bring the US on board, become evident.</p><p>The fatal flaw in the Kyoto protocol is that it left India and China out of the emission-reduction obligations. Both are major polluters; India still way behind but China is closing in on the US. The US Senate could not buy into this exemption of India and China. First, the principle of “progressive taxation” that would leave the poorer countries with little obligation no longer has political salience in the US. Second, the image of these two giants long asleep and snoring has shifted to that of giants astir and spewing out significant levels of CO<span id="U171463603960zQF">2</span> into the atmosphere, undermining the credibility of those who would exempt them from burden-sharing. So, why were India and China left off the hook?</p><p>The answer lies, as often, in analytical confusion and a political fudge. While the emissions of today are substantial and growing for India and China, the emissions of yesterday are mainly by the rich countries. The accumulated fossil fuel CO<span id="U17146360396019C">2</span> for 1850-2004 shows the damage attributable to India and China as less than 10 per cent while the European Union, Russia and the US jointly account for nearly 70 per cent.</p><p>India and China argued successfully that because they were hardly responsible for the “stock” problem – past damage – they should be exempted from the “flow” obligation – the current damage – at least for now. So, the stock problem was addressed by fudging the solution to the flow problem. The political fudge left Kyoto unsaleable. It will remain so unless it is revised to reflect the distinction between the stock and flow obligations and, therefore, the disconnect between the nations that did damage in the past and those that are joining their ranks with a vengeance. How is one to do this?</p><p>The stock problem can be addressed by adopting the very technique that the US has used at home to deal with past damage to the environment. Consonant with the American fascination with torts actions, the US enacted in 1980 the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the Superfund. Under it, a tax was levied on the chemical and petroleum industries and, among other actions, liability established for people responsible for the release of hazardous waste at closed and abandoned hazardous waste sites. It established a trust fund (which would also receive the payments for past damage under the act) to provide for “clean-up” when no responsible party could be identified.</p><p>This principle for dealing with past damage makes sense and can surely be applied in the international context. The rich nations, which have been responsible for the overwhelming bulk of the release of CO<span id="U171463603960ggB">2</span> into the atmosphere in the past, would have to agree to payment of damages into a global warming superfund. These payments could be assessed for a period of no less than 25 years. The estimated damages could reflect the opportunity cost of reducing the CO<span id="U171463603960WEH">2</span> emissions by a corresponding amount in the next 25 years.</p><p>Since “clean-up” does not make sense in the context of global warming, these funds would instead be allocated to researching a variety of CO<span id="U171463603960PuH">2</span>-saving technologies, such as wind and solar energy, and to subsidising the purchase of environment-friendly technologies by the developing countries, including India and China. Such subsidies would rebound to the benefit of the rich countries paying into the superfund, since their companies typically produce these technologies. So, aside from the global warming superfund being palatable to the rich countries because it reflects a principle already in domestic practice, business support for it can be expected as well.</p><p>On the other hand, the flows need to be taxed, just as in the polluter-pays principle. The existing obligations are based broadly on the half-baked principle of “prevention of significant deterioration”, whereby those who pollute more do not have to pay more and only the excess pollution generated by each country is sought to be redistributed more equitably.</p><p>Instead, efficiency and fairness require nations to be taxed on their total CO<span id="U1714636039608ZC">2</span> discharge annually. China and India would then have liabilities reflecting their net discharges and the US burden would be significantly higher than that of almost all other nations because it pollutes most. Again, funds collected could be partly added to the global superfund for international uses; the rest could be spent on domestic projects for the same purposes. It is hard to imagine the US, the ideological ally of markets, objecting to this application of the market principle: making each nation pay for its total pollution. The tax is only a way – like selling tradeable permits for CO<span id="U171463603960iIC">2</span> discharges – of creating a missing market.</p><p>There will be differences on how much we ought to spend on preventing global warming. But the difficulties posed by the flawed Kyoto design are gratuitous and can be remedied. It is time to correct them.</p><p><i>The writer, university professor of economics and law at Columbia University and senior fellow at the Council on Foreign Relations, is the author of In Defense of Globalization (Oxford)</i></p></div>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0tag:blogger.com,1999:blog-7783886211174671222.post-74030970831876608262006-08-16T12:29:00.000-07:002006-08-16T12:31:14.399-07:00South Africa Has a Way to Get More Oil: Make It From Coal<p class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline">Wall Street Journal<br /></span></i></p><p class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline"><br /></span></i></p><p class="articleTitle" style="margin: 0px;"><i><span class="ArtFlashline">Black Gold</span></i><br />South Africa Has a Way to Get<br />More Oil: Make It From Coal</p> <div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Company's Method Attracts<br />Interest From U.S., China;<br />CO2 Emissions Are an Issue</div><div style="margin: 0px; padding: 13px 0px 0px; color: rgb(102, 102, 102); font-family: Times New Roman,Times,Serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 16px; line-height: 17px; font-size-adjust: none; font-stretch: normal;">Wooed by Montana Governor</div> <div style="padding: 12px 0px 0px; font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;"><span id="byl" style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">By <b>PATRICK BARTA</b><br /><span class="aTime">August 16, 2006; Page A1</span></span><br /></div> <p class="times">SECUNDA, South Africa -- Every day, conveyor belts haul about 120,000 metric tons of coal into an industrial complex here two hours east of Johannesburg.</p> <p class="times">The facility -- resembling a nuclear power plant, with concrete silos looming over nearby potato farms -- superheats the coal to more than 2,000 degrees Fahrenheit. It adds steam and oxygen, cranks up the pressure, and pushes the coal through a series of chemical reactions.</p> <p class="times">Then it spits out something extraordinary: 160,000 barrels of oil a day.</p> <p class="times">For decades, scientists have known how to convert coal into a liquid that can be refined into gasoline or diesel fuel. But everyone thought the process was too expensive to be practical.</p> <p class="times">The lone exception was South Africa, a one-time pariah state that had huge reserves of coal and, thanks to anti-apartheid sanctions, limited access to foreign oil. <b>Sasol</b> Ltd., a partly state-owned company, built several coal-to-liquids plants, including the ones at Secunda, and became the world's leading purveyor of coal-to-liquids technology.</p> <reprintsdisclaimer><img src="http://online.wsj.com/public/resources/images/P1-AF479B_SASOL_20060815210816.gif" class="imglftbdy" alt="[Barrels and Lumps]" align="left" border="0" height="426" hspace="0" vspace="0" width="234" /> </reprintsdisclaimer><p class="times">Now, oil prices are above $70 a barrel, and Sasol has emerged as the key player at the center of the world's latest alternative-energy boom.</p> <p class="times">China is building a coal-to-oil plant costing several billion dollars in Inner Mongolia and may add as many as 27 facilities -- including some with Sasol's help -- over the next several years, according to a recent tally by Credit Suisse.</p> <p class="times">In the U.S., the Defense Department is studying coal-to-oil technology as a way to reduce the American military's dependence on Middle Eastern crude oil. And the National Coal Council, an industry association, is pushing for government incentives to help generate some 2.6 million barrels of liquid fuel a day from coal by 2025. That would satisfy some 10% of America's expected oil demand that year. The plan would require 475 million tons of coal a year, which represents more than 40% of current annual U.S. production. Industry officials believe America's coal reserves are big enough to allow for the extra production.</p> <p class="times">Coal-to-liquids "is not going to replace oil," says Lean Strauss, a Sasol executive who directs the company's overseas energy business. "But it's an important substitute. It is one of the solutions to energy security."</p> <p class="times">In June, two senators from coal-producing states, Barack Obama of Illinois and Jim Bunning of Kentucky, introduced a bill to offer loan guarantees and tax incentives for U.S. coal-to-liquid plants.</p> <p class="times">Sasol has found a particularly receptive audience in Montana's Democratic governor, Brian Schweitzer, who says he carries a lump of coal and a vial of liquefied coal with him at all times. He is lobbying coal companies and others to build coal-to-liquid plants across his state, which has some of the biggest coal reserves in the U.S.</p> <p class="times">Current estimates indicate the world has just 41 years of known oil reserves and 65 years of natural-gas supplies. It has enough coal reserves to last an estimated 155 years, with some of the largest reserves in the two biggest oil-consuming countries, the U.S. and China.</p> <p class="times">It's far from clear, however, that the world would be better off -- economically or environmentally -- by burning more coal to fuel cars and trucks.</p> <p class="times">One problem is that coal-to-oil projects are extremely expensive. A single plant capable of producing about 80,000 barrels of oil equivalent a day -- less than 0.5% of America's daily oil diet -- would cost an estimated $6 billion or more to build.</p> <p class="times">Energy analysts reckon that some coal-to-liquids projects can offer an acceptable return on investment when oil is priced as low as $30 or $35 a barrel, though such ventures might require government tax incentives to reduce operating costs. It seems likely that oil prices will stay above that level for a while, but the longer-term outlook is anyone's guess. An earlier flurry of interest in coal-to-oil facilities in the U.S. during the Carter administration in the late 1970s died after oil prices collapsed.</p> <p class="times">Coal-to-oil projects also pose serious environmental questions. When the South African facility superheats coal and turns it into a gas, one of the main waste products is carbon dioxide, thought to be a significant cause of global warming.</p> <p class="times">The Natural Resources Defense Council, a U.S.-based environmental advocacy group, estimates that the production and use of gasoline, diesel fuel, jet fuel and other fuels from crude oil release about 27.5 pounds of carbon dioxide per gallon. The production and use of a gallon of liquid fuel originating in coal emit about 49.5 pounds of carbon dioxide, they estimate. Even some boosters of the coal-to-oil plants describe them as carbon-dioxide factories that produce energy on the side.</p> <p class="times">"Before deciding whether to invest scores -- perhaps hundreds -- of billions of dollars in a new industry like coal-to-liquids, we need a much more serious assessment of whether this is an industry that should proceed at all," said David Hawkins, director of the Climate Center at the Natural Resources Defense Council, at a recent U.S. Senate hearing.</p> <p class="times">Coal-to-oil is one of several promising but potentially polluting technologies that are receiving new attention amid high oil prices. Energy companies are trying to unlock natural gas trapped in shale and other difficult rock formations. They're also tapping oil-soaked sands in Canada and so-called heavy oils in politically challenging places such as Venezuela. Environmentalists fear these new sources will outshine conservation as the way to address the world's growing thirst for energy.</p> <img src="http://online.wsj.com/public/resources/images/P1-AF480A_SASOL_20060815210835.gif" class="imgrgtbdy" alt="[From Coal to Oil]" align="right" border="0" height="318" hspace="0" vspace="0" width="500" /> <p class="times">In South Africa, environmental groups say Sasol's facilities have emitted huge volumes of carbon dioxide and pollutants, including sulfur dioxide. They say these have caused a host of respiratory problems in nearby communities. Sasol says its emissions of these pollutants are small compared to emissions by other companies' coal-burning electricity plants in the region.</p> <p class="times">Sasol officials acknowledge their facilities emit greenhouse gases and that building more coal-to-liquids facilities around the world "could have potentially significant implications, in the long run, for our commitment to reducing carbon intensity," according to a recent company report on its social and environmental programs.</p> <p class="times">Sasol says it plans to reduce its greenhouse-gas emissions per ton of product by 10% by 2015. Sasol and many other coal-to-oil proponents say that future coal-to-liquids plants can be built with newer technologies that trap carbon dioxide and store it, sharply reducing their emissions.</p> <p class="b13"><b>Success Story</b></p> <p class="times">To many South Africans, Sasol is a huge success story. The company's daily production now meets about 30% of South Africa's transport-fuel needs. The country's 50-rand bank note even features a picture of one of Sasol's plants.</p> <p class="times">Sasol's share price has more than tripled over the past three years. Analysts estimate it earned about $2 billion in the year ended June 30, about 35% higher than the year before -- such a sharp rise that South African authorities are contemplating a "windfall tax" on the company.</p> <p class="times">Coal-to-oil technology dates back to the 1920s, when two German chemists, Franz Fischer and Hans Tropsch, developed a process to convert coal into a gas and then use it to make synthetic fuels. Coal-to-oil technology helped fuel the Nazi war machine, which lacked access to sufficient crude oil. International oil companies also experimented with the process but put it aside because oil was cheaper.</p> <p class="times">South Africa took a different view. The country lacked oil, but had enormous deposits of coal, much of which had limited market value because of its poor quality. In 1950, the government set up Sasol as a state-owned company and authorized funding for its first project, a coal-to-liquids facility called Sasolburg in the South African countryside.</p> <p class="times">When oil prices soared in the 1970s, South African officials decided to up the ante. They lent Sasol $6 billion to build two new facilities at Secunda -- each 10 times as large as Sasolburg. The government also privatized the company, listing it on the Johannesburg Stock Exchange in 1979. (The government maintains a 23.5% stake).</p> <table class="imglftbdy" align="left" border="0" cellpadding="0" cellspacing="0" width="298"> <tbody><tr><td><img src="http://online.wsj.com/public/resources/images/OB-AC448_SASOL__20060815170449.jpg" class="imgpln" alt="[Sasol's Secunda, South Africa, complex converts tons of coal into 150,000 barrels of oil each day.]" border="0" height="237" hspace="0" vspace="0" width="298" /></td></tr><tr><td class="medcptnocrd">Sasol's Secunda, South Africa, complex converts tons of coal into 150,000 barrels of oil each day.</td></tr></tbody></table> <p class="times">By the time the facilities were completed in the early 1980s, international oil prices were collapsing. The project was nonetheless a success for the white-dominated apartheid government because international sanctions were restricting South Africa's ability to buy foreign oil. The plants managed to stay profitable by continually boosting efficiency and expanding their end products to include plastics, fertilizers and explosives.</p> <p class="times">Besides the government loans, Sasol at various times received cash payments from the government when oil prices fell below a certain level. It eventually paid back the loans and stopped receiving subsidies for its coal-to-oil business by 2000.</p> <p class="times">Today, Secunda is a buzzing industrial hub with 16,000 employees, miles of interlocking pipes and cables, and eight colossal silos. The silos, each big enough to contain a football field, cool steam involved in the conversion process. Fuel trucks wait along the edge of the facility to fill up with gasoline. Nearby mines produce more than 40 million metric tons of coal a year -- as much as all of Illinois.</p> <p class="times">Outside the plant gates, Secunda has a boomtown feel. It has some 35,000 people, a BMW dealership and a multistory casino hotel called Graceland designed to evoke the "grand old age of Colonial America."</p> <p class="times">A growing focus for Sasol is marketing its technology overseas. The company first tried to do so in the 1990s, after apartheid ended, but executives found doors slammed in their faces. Oil was trading for less than $25 a barrel at the time. "We sat in corridors waiting for meetings that never happened because they didn't even know who Sasol was," recalls Pat Davies, Sasol's chief executive.</p> <p class="b13"><b>First Inroads</b></p> <p class="times">Sasol made its first inroads in countries such as Qatar that have big stockpiles of hard-to-transport natural gas. These countries were interested in Sasol's technology for turning natural gas into liquid fuel.</p> <p class="times">As oil prices began to perk up, Sasol drew interest on the coal front from China, with its big coal reserves and energy needs. In marketing materials produced for Chinese government officials and investors, Sasol offers a simple message: By 2015, 70% of China's oil imports will come from the Middle East. Yet the country has coal reserves equivalent to more than half the oil in the Middle East.</p> <p class="times">By 2004, Chinese energy planners began meeting with Sasol executives in Beijing to discuss the coal-to-oil process. That was followed by a series of meetings with policy makers and Chinese companies, capped by a gathering in Cape Town in June attended by visiting Chinese Premier Wen Jiabao.</p> <p class="times">Coal-generated pollution is emerging as a major environmental crisis in China. Yet Chinese officials are apparently willing to accept more coal use if it means improving the country's energy security, especially if local companies can design facilities to use relatively clean-burning varieties of coal.</p> <p class="times">Shenhua Group, China's largest coal producer, has started work on China's first commercial coal-to-oil facility, designed eventually to produce as many as 200,000 barrels of oil equivalent a day. Although that plant uses a different process from Sasol's at Secunda, Shenhua officials are in negotiations with Sasol to jointly build at least one additional 80,000-barrel-a-day plant using the South African company's technique.</p> <p class="times">While Sasol would charge a fee for licensing its technology, its main interest is to share ownership in the facilities once they're built because it wants a share of the long-term profits. In China, Sasol is asking for a 50% equity stake in the projects. A Shenhua official says negotiations are going smoothly and the company hopes to begin construction soon.</p> <p class="times">In Montana, at least two companies, including the world's largest private-sector coal company, <b>Peabody Energy</b> Corp. of St. Louis, have said they are looking at potential coal-to-oil sites. Montana's Gov. Schweitzer says any excess carbon dioxide from a facility could be given to oil companies to be injected back into the ground to enhance recovery from old wells.</p> <p class="times">Bringing Sasol on board is critical, says Gov. Schweitzer. He says Wall Street banks want the South Africans to play a role because Sasol is the only company with a track record in the business. To woo Sasol executives, he says, he took them on a flight over Montana coal country last year.</p> <p class="times">"These are the guys everyone wants to take to the prom," Gov. Schweitzer says.</p> <p class="times">Sasol officials say they're interested in Montana and other potential sites in the U.S., provided they can find a suitable partner and receive tax or other incentives.</p> <p class="times">Coal-to-oil "is coming to the United States," Gov. Schweitzer proclaims. When it does, he says, other countries "will be scrambling to protect their oil supplies -- and we'll be energy independent."</p> <div align="right"><p style="font-family: times new roman,times,serif; font-style: normal; font-variant: normal; font-weight: bold; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal;">--Shai Oster in Beijing contributed to this article.</p></div>Hugh Bartlinghttp://www.blogger.com/profile/16828408862564730968noreply@blogger.com0