Do Regulators Overestimate the Costs of Regulation?

http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumber/2011-07

Abstract: It has occasionally been asserted that regulators typically overestimate the costs of the regulations they impose. A number of arguments have been proposed for why this might be the case, with the most widely credited one being that regulators fail sufficiently to appreciate the effects of innovation in reducing regulatory compliance costs. Most existing studies have found that regulators are more likely to over- than to underestimate costs. Moreover, the ratio of ex ante estimates of compliance costs to ex post estimates of the same costs is generally greater than one. In this paper I argue that neither piece of evidence necessarily demonstrates that ex ante estimates are biased. There are several reasons to suppose that the distribution of compliance costs would be skewed, so that the median of the distribution would lie below the mean. It is not surprising, then, that most estimates would prove to be too high. Moreover, we would expect from a simple application of Jensen’s inequality that the expected ratio of ex ante to ex post compliance costs would be greater than one. In this paper I propose a regression-based test of the bias of ex ante compliance cost estimates, and cannot reject the hypothesis that estimates are unbiased. Despite the existence of a number of papers reporting ex ante and ex post compliance cost estimates, it is surprisingly difficult to get a large sample of such comparisons. My most salient finding does not concern the bias of ex ante cost estimates so much as their inaccuracy and the continuing paucity of careful studies.

...

A very thorough comparison of ex ante to ex post estimates of costs was conducted in 2000 by Winston Harrington, Richard Morgenstern, and Peter Nelson. The researchers considered 28 regulations written by EPA, OSHA, and a handful of other regional and international regulators. A number of different industries were covered. Ex ante cost estimates were considered “accurate” if they were within ± 25% of ex post values, and either too high or too low if they fell outside this range. By this standard total costs of regulation were overestimated in 15 instances, underestimated in only three, and deemed reasonably accurate in the remaining 11.

...

The next major retrospective study of the costs of regulation was completed in 2005 by the Office of Management and Budget (OMB 2005). OMB reviewed 47 regulations initiated between 1976 and 1995. EPA issued 18 of the regulations in the OMB sample, the most of any of the five federal agencies included in the study (the others were the National Occupational Safety and Health Administration (13 regulations included), the National Highway Traffic Safety Administration (8), the Department of Energy (6) and the Nuclear Regulatory Commission (2)). As is generally the case with estimates of regulatory costs, the sample was determined by the availability of data, not by any attempt to generate a random cross-section of regulatory activity. The results of the OMB study are less striking than those of some other researchers. Of 40 regulations for which comparable ex ante and ex post data are available, 16 ex ante projections overestimated cost, 12 underestimated them, and 12 were approximately accurate. The OMB study was not completely independent of earlier work, however: for instance, nine of the studies in its sample were adopted from Harrington, et al. 2000.

At least three studies have been conducted of the accuracy of ex ante cost measures in other countries (in addition, Harrington et al. 2000 includes three examples drawn from Singapore, Norway, and Canada among their 28 case studies). While such inquiries obviously consider costs generated under different legal and regulatory structures than prevail in the U. S., they may still be useful in interpreting general approaches to regulatory cost estimation. It might also be noted in passing that international standards for the analysis of regulatory impacts have become more similar over time, with the United Kingdom (MacLeod, et al., 2006) and the European Union adopting such requirements.5 A study conducted by the Stockholm Environmental Institute considered the cost estimates presented by industry in regulatory negotiations, and found them to be consistently higher than ex post realizations of actual costs (Bailey, et al., 2002).

China Gets Rolling on Carbon Trading

http://www.sustainablebusiness.com/index.cfm/go/news.display/id/23316

China's prime minister confirmed the country will increase the amount of non-fossil fuel energy it uses to 11.4% by 2015, and will "vigorously" develop renewable energy as part of its 5-Year Plan. 8.4% of China's electricity came from non-fossil fuel sources in 2010....

...
China's five year plan also calls for reducing carbon emissions per unit of gross domestic product (carbon intensity) 17% by 2015.

To achieve that, China's planning agency, The National Development and Reform Commission, informed seven provinces and cities they need to set emissions caps to prepare for the country's pilot carbon trading program.  They must submit proposals explaining how they will allocate emission permits to achieve the caps, establish a dedicated fund to support the carbon market, and develop a detailed implementation plan, according to Reuters.  Beyond the seven official pilots, 100 other regions and cities want to start carbon exchanges.  Guangdong province has already received approval for its plan....

China is also seriously considering a carbon tax.

For now, China's massive use of coal continues to outstrip its growing use of renewable energy. Coal still provides 70% of electricity, almost half of that burned on our planet. If current use continues, it's on track to consume five billion tons of coal a year by 2020, up from 3.2 billion tons in 2010, reports The Guardian.

Alarmed by the rapid increase, the National Energy Administration is calling for a cap on energy consumption - below 4.1 billion tons of coal equivalent a year by 2015.

In related news, China approved a $913 billion, 300 megawatt offshore wind farm off the coast of its northern Hebei province, to be online before the end of 2015.  China could soon issue a second RFP for 2 GW of offshore wind. The plan is to have 5 GW by 2015, amounting to 5% of total wind capacity.

Here are details of China's 5-Year Plan: http://www.sustainablebusiness.com/index.cfm/go/news.display/id/22006

FOR FULL STORY GO TO:
http://www.sustainablebusiness.com/index.cfm/go/news.display/id/23316 
www.SustainableBusiness.com
January 17, 2012

How has Oregon's land use planning system affected property values?

http://www.sciencedirect.com/science/article/pii/S0264837711000469

Abstract: Oregon's landmark land use planning system has been criticized for imposing large negative effects on landowners’ property values, although evidence to support these claims has been lacking. This paper examines longitudinal data for undeveloped parcels since before adoption of the planning system. The sample includes parcels under different land use regulations, and it compares Oregon to Washington. The results indicate generally that property values have increased at similar rates both inside and outside urban growth boundaries, and across parcels zoned for different uses and across state lines. The results are consistent both with theory and with other studies indicating land use regulations can have positive, neutral or negative effects.
 

Highlights:

► The effects of land use regulations on property values in Oregon are evaluated.

► “Before-and-after” data covering 35 years are examined in Oregon and Washington.

► Results find property values have risen at similar rates inside and outside urban growth boundaries. ► Results find property values have risen similarly across zoning types and state lines.
 

Many states in the USA attempt to manage urban growth so that development is directed to urban areas equipped to accommodate development, and rural lands are preserved for resource and other non-urban uses. The state of Oregon is entering its third decade of what many commentators describe as the nation's most aggressive urban growth management programme administered statewide. This article reports a recent evaluation of the effectiveness of the state urban growth management policies as they are implemented by the metropolitan Portland area. The metropolitan Portland area contains the largest population, employment and land base within a single urban growth boundary in the USA. Using primary data collection and analysis, the effectiveness of the urban growth management and resource land preservation effort is assessed. Nearly all regional development has been directed to the urban growth boundary and away from resource lands. Many problems with administration are found, however. Policy implications are suggested.

...

In Lane County Oregon data show a large difference between real per-acre property values inside and outside the Urban Growth Boundary (UGB). By 2002, this difference was $24,894 per acre. [This implies] that the UGB, by limiting development opportunities, has greatly reduced the value of parcels outside the boundary.  However, this conclusion is not necessarily warranted. While the current average value of land inside the UGB is higher than that outside, the same was true in 1965. The differences in values in 1965 cannot be due to the UGB, as it had not been designated at that time. They likely were due to locational advantages, particularly proximity to the city center. The average distance to the Eugene city center for our sample of parcels outside the UGB is more than twice that for those inside the UGB.

... 

Location relative to the UGB is a relatively coarse filter. High-density residential development is not necessarily permitted on all parcels within the UGB. Thus, we also evaluated the effects of different zoning classes. For the parcels in our sample, the highest density residential zoning category (a maximum of 14 single-family housing units per acre) was low-density residential zoning (R-1). Residential housing development is allowed on parcels zoned rural residential (RR), but at lower densities (in our sample, either 5- or 10-acre minimum lot size). Finally, exclusive farm use (E) and forest lands (F) zoning are very restrictive in terms of housing development.  For example, dwellings may be constructed on EFU land only if they are directly related to the agricultural enterprise.

...

Land with R-1 zoning has the highest average value in 2002, in large part because of its proximity to the city center. This is followed by land with RR zoning, E zoning, and F zoning. This suggests that zoning restrictions have not greatly reduced property values. Land that eventually was zoned R-1 already had the highest average per-acre value in 1965: $1266 per acre, compared to $389 per acre (RR), $504 per acre (E), and $210 per acre (F). Like parcels located inside the UGB, R-1 land tended to have locational advantages such as proximity to the Eugene city center.

We compared the growth in land values for each zoning designation relative to values prior to implementation of land use regulations. For each subsample, we took the 1965–1972 average value as the base and computed the increase in value in each period relative to that base. The highest rates of  appreciation were realized on land with F zoning. By 2002, the value of this land had grown about 200 percent more than land with the least restrictive zoning (R-1). A high growth rate was also seen on land with RR zoning. The lowest growth rate was on the developable lands (R-1 zoning).

...

In Jackson County as expected, parcels with the least restrictions on residential housing construction have the highest average values in 2005. However, the growth in average land values over the 1965–2005 period was greatest for parcels with OSR and WR zoning. The average value of parcels with OSR and WR zoning relative to their 1965 value was 1,160 percent and 1,602 percent, respectively.

For RR and EFU parcels, the 2005 value was about 530 percent of the 1965 value. Thus, properties with OSR and WR zoning appreciated more by 2005 than properties with RR and EFU zoning. A similar result was found in Lane County.

by William K. Jaeger 1, Andrew J. Plantinga 1, and Cyrus Grout 2
1. Department of Agricultural and Resource Economics, Oregon State University, United States; 213 Ballard Extension Hall, Corvallis, OR 97331, United States. Tel.: +1 541 737 1419.
2. INRA (French National Institute for Agricultural Research), France
Land Use Policy via Elsevier Science Direct www.ScienceDirect.com
Volume 29, Issue 1, January 2012, Pages 62–72
Also see: http://arec.oregonstate.edu/sites/default/files/faculty/plantinga/jaeger_plantinga_grout_2011_land_use_policy.pdf
Keywords: Land use regulations; Property values; Urban growth boundaries; Land use planning

An Energy Supergrid for Europe Faces Big Obstacles

http://www.nytimes.com/2012/01/17/business/global/17iht-rbog-grid17.html
Advocates of renewable energy say an electricity supergrid could enhance the clean-power industry by connecting power sources like wind farms in Scotland and solar arrays in Spain or North Africa to the population centers of Europe.

The technical arguments for a significantly expanded and upgraded power network in Europe are clear, they say. Yet the political, regulatory and economic obstacles are formidable.

... Doug Parr, chief scientist at the British arm of Greenpeace [noted]... “it’s not garnering political weight and support”...

With its windy weather, Britain could be a big beneficiary of better international power connections....

Britain is working ... to negotiate the North Sea Countries Offshore Grid Initiative, a planned network of underwater cables that would connect offshore wind farms and other power sources to nearby countries.

The project, likely to take decades, is seen as a potential building block for a broader European grid....

Some cross-border power connections exist, but many European countries still produce and supply most of their own electricity.... Experts say a richer cross-border network will reduce power prices for consumers and make supplies more secure by promoting competition and distributing surplus production more efficiently.

Renewable power advocates say improved connections are essential for making sources like wind and solar practical on a large scale. Potential energy-producing areas, like the windy coasts of Scotland and Ireland and the deserts of North Africa, are often far from larger cities with their power-hungry consumers.

Broad networks could also help ease one of renewable energy’s biggest problems: intermittency. When the wind drops in Britain, it may still be strong in Germany, or the sun may be shining in Tunisia....

The Energy and Climate Change Committee of Britain’s main parliamentary chamber, the House of Commons, said in a report in September that a drastically improved grid would be crucial for the viability of the country’s plans for significant investment in offshore wind power.
...
But the report listed several caveats about the development of a Europe-wide grid, saying the cost would probably be high and the challenge of coordinating national energy regulations would be daunting.
...
The decades-long time frame for investing in energy infrastructure inevitably contrasted with the shorter-term focus of politicians.

Because energy is a heavily regulated sector, one of the biggest obstacles to building a supergrid is the long negotiations required to bridge differences among individual countries’ rules.

Budget woes, too, may limit the availability of investment from Brussels and national capitals.

Still, some advocates said poor economic conditions could actually make it easier to raise private financing.

“There are pension funds and many investors looking for safe returns,” Julian Scola, spokesman for the European Wind Energy Association in Brussels, said by phone. “Electricity infrastructure, which is a regulated business with regulated returns, ought to and does provide very safe and very attractive investment.”
...
The estimated price tag varies widely; James Cox of Poyry, a Finnish engineering and management consulting firm, said a wide-reaching grid could cost 100 billion euros, or about $127 billion.  A study by Poyry in March said that better regional interconnections would only partially solve the intermittency problem because weather patterns could extend over large areas.... Over all, he said, more links made economic sense. But winning permission for transmission projects can be difficult....

The European Union wants to create a unified electricity market, and Brussels is debating a bill that would streamline permit-granting for power transmission and provide more than 9.1 billion euros.
...
New linkups are therefore likely to happen piecemeal.... Mr. Parr of Greenpeace U.K. said. “It could get very expensive if it’s not done right.”

By Beth Gardiner
FOR FULL STORY GO TO:
http://www.nytimes.com/2012/01/17/business/global/17iht-rbog-grid17.html
The New York Times www.NYTimes.com
January 16, 2012

A Regulatory System for the Twenty-First Century Cass Sunstein, Administrator, Office of Information and Regulatory Affairs

http://www.whitehouse.gov/sites/default/files/omb/inforeg/speeches/a-regulatory-system-for-the-twenty-first_century-11-30-2011.pdf
As you may have noticed, the national debate over regulation has become unusually politicized and polarized.
In recent months, some people have stressed the crucial importance of regulatory safeguards – including rules that reduce deaths on the highways, prevent fraud and abuse, keep our air and water clean, and ensure that the food supply is safe.

Other people have objected to expensive regulations and burdensome mandates that impair growth, competitiveness, and innovation -- and that cost jobs.

In some contexts, both sides make exceedingly important points. The first sentence of the President’s January Executive Order explicitly recognizes those points, emphasizing the need to protect public health and welfare while also promoting growth and job creation.

But in some ways, the polar positions remain stuck in outmoded and decreasingly helpful debates from decades ago – from the 1970s and before.

In recent years, we have learned a lot about regulation. We know a lot more than we did during the New Deal period and the Great Society; we also know far more than we did in the 1980s and 1990s.

Here are eight of the most important things that we have learned:

• Cataloguing consequences. We have developed state-of-the-art techniques for anticipating, cataloguing, and monetizing the consequences of regulation, including both benefits and costs.
• Systemic effects. We know that risks are part of systems. We know that efforts to reduce a certain risk may increase other risks, perhaps even deadly ones, thus producing ancillary harms. At the same time, we know that efforts to reduce a certain risk may reduce other risks, perhaps even deadly ones, thus producing ancillary benefits.
• Flexibility. We know that flexible, choice-preserving approaches, respecting heterogeneity and the fact that one size may not fit all, are often desirable, both because they preserve liberty and because they cost less – sometimes a lot less.
• Small steps, large benefits. We are aware that large benefits can come from seemingly modest and small steps – including simplification of regulatory requirements, provision of information, and sensible default rules, such as automatic enrollment for retirement savings.
• Public participation. We know, more clearly than ever before, that it is important to allow public participation in the design of rules, because members of the public will have valuable and dispersed information about likely effects, existing problems, creative solutions, and possible unintended consequences.
• Disclosure. We know that if carefully designed, disclosure policies can promote informed choices and save both money and lives. Consider, for example, the recently redesigned fuel economy label, drawing attention to the concrete economic consequences of differences in miles per gallon, and the substitution of the clear Food Plate for the confusing Food Pyramid.
• Evidence, not anecdotes or intuitions. We know that intuitions and anecdotes, however compelling they may seem, and however suggestive that regulation is helpful or harmful, are both unreliable, and that advance testing of the effects of rules, as through pilot programs or randomized controlled experiments, can be highly illuminating.
• Continuing scrutiny. We know that it is important to explore the effects of regulation in the real-world, to learn whether they are having beneficial consequences or producing unintended harm. In short, we need careful assessments before rules are issued, and we need continuing scrutiny afterwards.

Of course it is true that people’s values differ, and in some cases, the relevant values will lead in a certain direction even if the evidence is clear. What I want to emphasize here is the opposite possibility, and the neglected one – that when the evidence is clear, it will often lead in a certain direction even when there are differences with respect to underlying values.

If, for example, a regulation would save a lot of lives and cost very little, people are likely to support it regardless of their party identification; and if a regulation would produce little benefit but impose big costs on real people, citizens are unlikely to favor it, regardless of whether they like elephants or donkeys. At least this is so if we engage on the facts.

To evaluate regulation, and its actual benefits and costs, we have to do that. Consider three facts:

1. In the first two years, the net benefits of rules issued in the Obama Administration have been over $35 billion – over three times the corresponding number in the first two years of the Clinton Administration, and over ten times the corresponding number in the first two years of the Bush Administration.
2. There has been no increase in rulemaking in this Administration. On the contrary, the number of significant rules reviewed by OIRA and issued in the first two years of the Obama administration is lower than the number issued in the last two years of the Bush administration – and indeed, the Obama Administration average is, through its first two years, lower than the Bush Administration average through its eight.
3. In the past decade, the costs of economically significant rules reviewed by the White House Office of Information and Regulatory Affairs (OIRA) were highest in 2007 and 2008, not 2009 and 2010. In its last two years, the administration of George W. Bush imposed far higher regulatory costs than did the Obama administration in its first two years.

On January 18th of this year, President Obama set out a fresh approach to federal regulation – an approach that reflects a lot of the new thinking about regulation. The very first paragraph of his executive order, a kind of mini-constitution for the twenty-first century regulatory state, emphasizes the importance of “economic growth, innovation, competitiveness, and job creation.” It states that our regulatory system “must promote predictability and reduce uncertainty.” It adds that our regulatory system “must measure, and seek to improve, the actual results of regulatory requirements.”

The new approach promises, at once, to maximize net benefits and to eliminate unnecessary regulatory burdens and costs on individuals, businesses both large and small, and state and local governments.

Among other things, the President called for an unprecedentedly public, and an unprecedentedly ambitious, government-wide “lookback” at federal regulation. The lookback requires all agencies to reexamine their significant rules, and to streamline, reduce, improve, or eliminate them on the basis of that examination.

Over two dozen departments and agencies have released final plans to remove what the President has called unjustified rules and “absurd and unnecessary paperwork requirements that waste time and money.” The plans span over 800 pages and offer more than 500 proposals.

In the coming years, billions of dollars in savings are anticipated from just a few initiatives from the Department of Transportation, the Department of Labor, HHS, and EPA. And all in all, the plan’s initiatives will save tens of millions of hours in annual paperwork burdens on individuals, businesses, and state and local governments.

Some of the plans list well over fifty reforms. Many of the proposals focus on small business. Indeed, a number of the initiatives are specifically designed to reduce burdens on small business and to enable them to do what they do best, which is to create jobs.

Many of the reforms will have a significant economic impact. Here are just a few examples:

• The Department of Health and Human Services recently announced proposed and final rules that are expected to eliminate over $1 billion in annual regulatory costs.
• The Occupational Safety and Health Administration has announced a final rule that will remove over 1.9 million annual hours of redundant reporting burdens on employers and save more than $40 million in annual costs.
• OSHA plans to finalize a proposed rule projected to result in an annualized $585 million in estimated savings for employers. This rule would harmonize U.S. hazard classifications and labels with those of a number of other nations by requiring the adoption of standardized terms.
• Since the 1970s, milk has been defined as an “oil” and subject to costly rules designed to prevent oil spills. In response to feedback from the agriculture community and the President’s directive, EPA recently concluded that the rules placed unjustifiable burdens on dairy farmers -- and exempted them. The exemption gives whole new meaning to the phrase “don’t cry over spilled milk.” And over the next decade, the exemption will save the milk and dairy industries, including small business in particular, as much as $1.4 billion.
• The Departments of Commerce and State are undertaking a series of steps to eliminate unnecessary barriers to exports, including duplicative and unnecessary regulatory requirements, thus reducing the cumulative burden and uncertainty faced by American companies and their trading partners. These steps will make it a lot easier for American companies to reach new markets, increasing our exports while creating jobs here at home.
• In line with proposals from the Jobs Council, the Department of State has indicated that it will revisit current visa requirements and consider how best to promote tourism, thus promoting growth and creating jobs.

Of course, we don’t only need to look back; we also need to look ahead about how we regulate in the future.
The January Executive Order provides a series of new directives to govern future rulemaking. Emphasizing the importance of predictability and certainty, those directives are consistent with, and informed by, what we have learned about regulation in recent years. And those directives have been explicitly informing our efforts since January. You may have noticed that several rules, including some in the area of labor, have been withdrawn or are being rethought with reference to the principles in the new Executive Order.

Let me emphasize five key points.

1. Public participation. The President made an unprecedented commitment to promoting public participation in the rulemaking process – with a central goal of ensuring that rules will be informed, and improved, by the dispersed knowledge of the public. Agencies are not merely required to provide the public with an opportunity to comment on their rules; they must also provide timely online access to relevant scientific and technical findings, thus allowing them to be scrutinized.
2. Advance consultation. The Order directs agencies to act, even in advance of rulemaking, to seek the views of those who are likely to be affected. This group explicitly includes “those who are likely to benefit from and those who are potentially subject to such rulemaking.” Among other things, this emphasis on early involvement is an effort to acquire relevant information and to avoid unintended harmful consequences.
3. Simplification and harmonization. The Order specifically directs agencies to take steps to harmonize, simplify, and coordinate rules. It emphasizes that some sectors and industries face redundant, inconsistent, or overlapping requirements. In order to reduce costs and to promote simplicity, it requires greater coordination. The order also explicitly connects the goal of harmonization with the interest in innovation, directing agencies to achieve regulatory goals in ways that promote that interest.
4. Quantification. The Order firmly stresses the importance of quantification. It directs agencies “to use the best available techniques to quantify anticipated present and future benefits as accurately as possible” – and to proceed only on the basis of a reasoned determination that the benefits justify the costs.
5. Flexibility. The Order directs agencies to identify and to consider flexible approaches that reduce burdens and maintain freedom of choice for the public. Such approaches may include, for example, public warnings, appropriate default rules, or provision of information “in a form that is clear and intelligible.” We know that simplification of existing requirements can often promote compliance and participation and that complexity can have serious unintended consequences. We also know that flexible performance objectives are often better than rigid design standards, because performance objectives allow the private sector to use its own creativity to identify the best means of achieving social goals. To promote flexibility, we have recently issued a call to all agencies to reduce reporting burdens on small business and to eliminate unjustified complexity. We have received dozens of important initiatives in response; they were made public in September.

...

Cass Sunstein
http://www.whitehouse.gov/sites/default/files/omb/inforeg/speeches/a-regulatory-system-for-the-twenty-first_century-11-30-2011.pdf
November 30, 2011

Environmental concerns prove to be only tiny piece of puzzle

http://www.smh.com.au/national/environmental-concerns-prove-to-be-only-tiny-piece-of-puzzle-20111208-1olg9.html
MEASURES of economic wellbeing are great at assessing the value of the land and minerals we own and mine, but poor at reflecting the other side of the coin: the cost of resource depletion and land degradation due to agriculture, mining and development.

They are worse still at capturing the cost of pollution - where it causes illness, it can actually push up the gross domestic product of the health sector - and the value people placed on loss of species and ecosystems.

On resource depletion, the Herald/Lateral Economics wellbeing index borrows a model from the Australian Bureau of Statistics, which estimates the cost of land degradation based on impact on land values and yield rates.

In 2009-10, this was equivalent to $406 million. But this alone does not tell the story. The index must also reflect the value of new mineral discoveries and the cost of the exploration. Once these are factored in, it reaches $1.05 billion. While this may sound large, it is small in relative terms - just 0.1 per cent of net national income.

''If you are looking at resource depletion it has a small impact on wellbeing, and if you are looking at it quarter-to-quarter you would hardly notice the change,'' the chief executive of Lateral Economics, Nicholas Gruen, says.

This is not a universally held view. Left-leaning think tank the Australia Institute placed much greater weight on the impact of environmental damage in a report released earlier this year.

Gruen says he expects some people will be surprised by the low cost of resource depletion. ''But when you think these things through, technology keeps improving and we keep finding new resources,'' he says.

''Even if you were starting to end up with fewer reserves, the other thing that happens is we get much better at mining and processing.''

He gives the example of the central Victorian goldfields - an asset that was written off after the 19th century but where resources companies have recently returned with some success.

On climate change, the index weighs the cost and likelihood of three scenarios - that the world does nothing to cut emissions and temperatures rise by more than 5 degrees, that the increase is between 2 degrees and 3 degrees, and that the Copenhagen Accord goal of limiting warming to 2 degrees is achieved.

Estimates of the cost of each scenario are taken from the Garnaut Review; the probability of each happening from a climate models review by the United Nations Environment Programand emissions data from the International Energy Agency.

On current evidence, Lateral Economics concludes there is a 5 per cent chance of the worst-case scenario, a 70 per cent chance of 2-3 degrees warming and 25 per cent chance of less than 2 degrees. The net present value last year of the future economic damage caused by climate change was estimated at $400 million.


On environmental and ecosystem health, the wellbeing index database includes the Yale Environmental Performance Index, which assesses agriculture, forestry, biodiversity and air pollution. But, in what is likely to be a controversial assessment, the results are given no dollar weighting. .

Gruen calls it ''the Spice Girls question'': when people are asked what they ''really, really want'' in financial terms, ecosystems do not rate well.

''People say they want a clean environment and they care about air pollution. They will rally around the Franklin Dam, but if you tell them something is endangered it is hard to see any evidence of the extent to which they are prepared to pay for that,'' he says.

Related:
Nation richer, older and a little bit wiser
WELLBEING has risen even more quickly than gross domestic product, thanks to the boom in Australia's commodity export prices and big improvements in the combined knowledge of its people, according to five years of historical data from the Herald/Lateral Economics Index of Australia's Wellbeing released today. Read more: http://www.smh.com.au/national/environmental-concerns-prove-to-be-only-tiny-piece-of-puzzle-20111208-1olg9.html#ixzz1gHtcytAj

Putting a figure on inequality adds to strength of statistical spotlight
New numbers are to the press as shiny bottle caps are to magpies. Statistics have the power to shape a debate or provide oxygen to an issue. From a major bank's survey of consumer confidence to a political party's targeted release of ''internal polling'', numbers are often used to bring publicity to a company or a cause. When even condom manufacturers use surveys to get publicity, you know what the new maxim must be: statistics sell.
Read more: http://www.smh.com.au/national/environmental-concerns-prove-to-be-only-tiny-piece-of-puzzle-20111208-1olg9.html#ixzz1gHu1ZfIH

When the Best Start in Life Turns Out to be an Early Start
HUMAN capital - the skills and know-how of our people - is the biggest positive contributor to wellbeing after net national income. The index measures it through a combination of indicators that track learning and innovation.
Read more: http://www.smh.com.au/national/environmental-concerns-prove-to-be-only-tiny-piece-of-puzzle-20111208-1olg9.html#ixzz1gHuTMK5R

Distribution of Money Makes a Big Difference
MONEY isn't everything - but it is a major driver of national and individual wellbeing.

Happy to live longer but mental illness and obesity still need to be dealt with 
IF LIFE expectancy at birth is any measure, Australians are some of the healthiest people on Earth.
Read more: http://www.smh.com.au/national/environmental-concerns-prove-to-be-only-tiny-piece-of-puzzle-20111208-1olg9.html#ixzz1gHvmPs7W

by Adam Morton
The Sydney Morning Herald http://www.smh.com.au
December 9, 2011

Subsidizing Wall Street to Buy Chinese Solar Panels

http://online.wsj.com/article/SB10001424052970204903804577082631863392956.html
...
Consider the current 30% federal solar energy subsidy. A home solar system with 60 solar panels produces about 15,000 watts of power, enough to completely offset the $6,000 annual electricity bill of a typical upscale California home. The system costs about $90,000 prior to the 30% federal income-tax credit, which reduces its cost to $63,000. After a simple payback period of about 10 years, the homeowner literally enjoys free electricity for the remainder of the guaranteed 20-year system life, a very profitable 10 years.

But what if that $27,000 tax credit, the accelerated-depreciation tax savings, and most of the hefty post-payback profits went to Wall Street firms with a "tax appetite," not the homeowner? That's just what happens with the majority of new home solar-system installations today.

... Today's most successful pitch for home solar financing goes like this: "Why pay a lot of money when you can get your solar system installed free and immediately reduce your utility bill?" Most homeowners find that proposition compelling. They ignore the fine print: "You must give your tax credit and depreciation to us and sign a long-term contract to buy power from us at prices just below market."

Today, most new home solar systems are purchased by special Limited Liability Corporations (LLCs) that are specifically created by Wall Street firms to purchase home solar systems and to sell power to the homeowner on a cell-phone-like contract. The homeowner does not mind giving up the tax benefits as long as the "free" system reduces utility bills.

However, when the system is paid off and the monthly LLC profit jumps to 100% of the electricity bill, the LLC solar electricity price to the homeowner is maintained just below market—and the profit really begins to roll into the LLC. Since the risks to the LLC grow as the solar systems age, many banks offload their risk by selling the LLCs before their 20-year lifetime is up, locking in much of the long-term profit. There is now a growing market for what might be called "solar-backed securities." Wall Street understands the time-value of money; the federal government and consumers do not.

One of the largest solar-system installers in the U.S., SolarCity Corp., uses the LLC strategy and currently buys a majority of its solar panels from the low-cost Chinese supplier, Yingli. Thus when President Obama said that we must subsidize our solar industry to remain competitive with the Chinese, it would have been more accurate to say that we subsidize Wall Street to create employee-less corporations that buy and install Chinese solar panels in the U.S. Wall Street and consumers understand that free markets are borderless; Washington does not.

Just last week, the U.S. International Trade Commission found the Chinese solar industry guilty of "dumping" solar panels in the U.S. Tariffs are likely to be levied against Yingli and others....

by T.J. Rodgers, Founder, President and CEO of Cypress Semiconductor
The Wall Street Journal www.WSJ.com
December 8, 2011
FOR FULL STORY GO TO:
http://online.wsj.com/article/SB10001424052970204903804577082631863392956.html

RepRisk's Water Scarcity Report

http://www.reprisk.com/downloads/mccreports/22/Water Scarcity - FINAL.pdf
RepRisk has released a new special report on companies and projects involved in Water Scarcity issues. RepRisk has been tracking the overuse and pollution of water resources by industrial firms. Based on negative published stakeholder sentiment, the most controversial include: Halliburton, Chevron, Royal Dutch Shell, Encana, Barrick Gold, Black Mountain Resources and BHP Billiton.

Although RepRisk found criticism of overuse of water related to the Food and Beverage, Forestry, Paper, Alternative Energy and Biofuel industries, this report focuses on three industries over the past twelve months to analyze the impact of their operations on local communities and ecosystems. These industries are: Mining, Utilities and Oil & Gas. The Reprisk Reputation Risk Index (RRI®) and its trend are provided over a two year period for each sector.

Mining has been criticized for using vast quantities of underground water and for discharging toxic waste into freshwater sources. Indigenous groups have organized protests against companies in the Utilities sector, claiming that power plants are destroying their communities by drying out their sources of drinking water and irrigation. The ‘fracking’ technique and tar sands extraction method used by the Oil and Gas sector have been harshly criticized for using vast quantities of water and for contaminating underground water reserves.

Companies face a number of risks related to water scarcity and contamination. These include increased regulation or even the nationalization of water resources, loss of license to operate and/or lack of water supplies required for production. They may also face litigation, public backlash, protests, or shareholder resolutions, leading to reputational damage and ensuing financial loss.
...
According to the UN, nearly 900 million people have no access to clean drinkable water, almost 1.8 billion live in areas where water is scarce, and a further 1.6 billion live in countries, which lack the infrastructure to extract water from natural sources. The World Bank calculates that by 2030, water demand will exceed supply by 40 percent, as a growing world population demands more water for agricultural, industrial and personal use.
...
According to UNESCO, industry currently accounts for approximately 72 percent of global usage but this volume is rapidly increasing as emerging markets become more industrialized.
...
There have been repeated warnings that Barrick Gold’s Pascua Lama and Veladero mines in Argentina are reducing the size of the glaciers located in the central Andes. In July 2011, opponents of the company’s Pueblo Viejo Mine, in the Dominican Republic alleged that it would generate 6,736 million cubic meters of wastewater annually.
...
In the US, the coal-fired, Merrimack Power plant has been criticized for using 287 million gallons of water a day and for causing water pollution.... In the Philippines, the Davao Coal Plant will allegedly extract at least 1,500 cubic meters of freshwater a day from the city’s aquifers and the Fukushima accident had a massive impact on water sources in Japan.

To read the full report click here: http://www.reprisk.com/downloads/mccreports/22/Water%20Scarcity%20-%20FINAL.pdf

About RepRisk
RepRisk™ monitors environmental, social and governance issues. Through this monitoring, our analysts cover negative news in 13 languages on more than 20,000 listed and unlisted companies. The coverage of companies is not limited and the data is updated daily. The criticism on companies from thousands of publicly available sources is collected, analyzed and quantified by the analysts. This results in summaries describing the relevant accusations specific to the companies and projects in each article, together with the RepRisk Index (RRI), a unique quant based indicator of reputational risks. These risks are specifically related to a company’s, project’s, sector’s or country’s environmental footprint, community and employee issues, human rights violations, corruption, fraud, and tax evasion issues, among others.

On November 29, 2010 RepRisk released “RepRisk 2012”, the first enterprise edition of its reputation risk management tool. This software as a service (SaaS) application, previously only provided to financial institutions, can be used to proactively monitor environmental, social and governance (ESG) risk exposure for multinational corporations, sectors or countries.

On November 28, 2011 SunGard added up-to-date environmental, social and governance (ESG) data for publicly listed companies and projects around the world to its MarketMap global market data terminal via an integration with RepRisk AG. The information gives MarketMap users the ability to identify controversial companies across sectors and countries and to compare companies’ ratings with their peers and their sectors.

On November 11, 2011 RepRisk was nominated as a finalist for the OG25 2011 Innovative Green Start-up Award in the US. The 3rd annual green startup competition recognized twenty-five of the most innovative eco-startups. OG25 Innovative Green Startup finalists were showcased on November 11 at the Annual Opportunity Green Conference, held in Los Angeles.

REPRISK www.reprisk.com
Press Release November 10, 2011

A Gold Rush of Subsidies in Clean Energy Search

http://www.nytimes.com/2011/11/12/business/energy-environment/a-cornucopia-of-help-for-renewable-energy.html
... NRG Energy is building ... a compound of nearly a million solar panels that will produce enough electricity to power about 100,000 homes.

... Taxpayers and ratepayers are providing subsidies worth almost as much as the entire $1.6 billion cost of the project. Similar subsidy packages have been given to 15 other solar- and wind-power electric plants since 2009.

The government support — which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates — largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG — even Google.

A great deal of attention has been focused on Solyndra, a start-up that received $528 million in federal loans to develop cutting-edge solar technology before it went bankrupt, but nearly 90 percent of the $16 billion in clean-energy loans guaranteed by the federal government since 2009 went to subsidize these lower-risk power plants, which in many cases were backed by big companies with vast resources.

When the Obama administration and Congress expanded the clean-energy incentives in 2009, a gold-rush mentality took over.

As NRG’s chief executive, David W. Crane, put it ... early this year, the government’s largess was a once-in-a-generation opportunity, and “we intend to do as much of this business as we can get our hands on.” NRG, along with partners, ultimately secured $5.2 billion in federal loan guarantees plus hundreds of millions in other subsidies for four large solar projects.

“I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects,” he said in a recent interview....

From 2007 to 2010, federal subsidies jumped to $14.7 billion from $5.1 billion, according to a recent study [by the Energy Information Administration available at http://www.eia.gov/analysis/requests/subsidy/.]

Most of the surge came from the economic stimulus bill, which was passed in 2009 and financed an Energy Department loan guarantee program and a separate Treasury Department grant program that were promoted as important in creating green jobs.

States like California sweetened the pot by offering their own tax breaks and by approving long-term power-purchase contracts that ... will also require ratepayers to pay billions of dollars more for electricity for as long as two decades. The federal loan guarantee program expired on Sept. 30. The Treasury grant program is scheduled to expire at the end of December, although the energy industry is lobbying Congress to extend it. But other subsidies will remain.

The windfall for the industry over the last three years raises questions of whether the Obama administration and state governments went too far in their support of solar and wind power projects, some of which would have been built anyway, according to the companies involved.

Obama administration officials argue that the incentives, which began on a large scale late in the Bush administration but were expanded by the stimulus legislation, make economic and environmental sense....

The first subsidy [for NRG’s California Valley Solar Ranch project] is for construction. The plant is expected to cost $1.6 billion to build, with key components made by SunPower at factories in California and Asia. In late September, the Energy Department agreed to guarantee a $1.2 billion construction loan, with the Treasury Department lending the money at an ... interest rate of about 3.5 percent, compared with the 7 percent that executives said they would otherwise have had to pay.

That support alone is worth about $205 million to NRG over the life of the loan, according to an analysis performed for The New York Times by Booz & Company....

When construction is complete, NRG is eligible to receive a $430 million check from the Treasury Department — part of a change made in 2009 that allows clean-energy projects to receive 30 percent of their cost as a cash grant upfront instead of taking other tax breaks gradually over several years.

... Under a [California] law ... NRG will not have to pay property taxes to San Luis Obispo County on its solar panels, saving it an estimated $14 million a year. ... [Due to] mandates that California utilities buy 33 percent of their power from clean-energy sources by 2020, the project’s developers struck lucrative contracts with the local utility, Pacific Gas & Electric, to buy the plant’s power for 25 years.... Ultimately its electric customers, will pay NRG $150 to $180 a megawatt-hour, according to a person familiar with the project, who asked not to be identified because the price information was confidential. At the time the contract was awarded, that was about 50 percent more than the expected market cost of electricity in California from a newly built gas-powered plant, state officials said. While neither state regulators nor the companies will divulge all the details, the extra cost to ratepayers amounts to a $462 million subsidy, according to Booz, which calculated the present value of the higher rates over the life of the contracts.

Additional depreciation tax breaks for renewable energy plants could save the company an additional $110 million, according to Christopher Dann, the Booz analyst who examined the project.

The total value of all those subsidies in today’s dollars is about $1.4 billion, leading to an expected rate of return of 25 percent for the project’s equity investors, according to Booz.

Mr. Crane of NRG disputed the Booz estimate, saying that the company’s return on equity was “in the midteens.”

NRG, which initially is investing about $400 million of its own money in the project, expects to get all of its equity back in two to five years, according to a statement it made in August to Wall Street analysts.

By 2015, NRG expects earnings of at least $300 million a year before interest, taxes, depreciation and amortization from all of its solar projects combined, making these investments some of the more lucrative pieces in its sprawling portfolio, which includes dozens of power plants fueled by coal, natural gas and oil.
... At least 10 of the 16 solar or wind electricity generation projects that secured Energy Department loan guarantees intend to also take the Treasury Department grant, and all but two of the projects have long-term agreements to sell almost all of their power....

...Legislation that has been passed in about 30 states ... pushes local utility companies to buy a significant share of their power from renewable sources, like solar or wind power. These mandates often have resulted in contracts with above-market rates for the project developers, and a guarantee of a steady revenue stream.

“It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” said Kevin Smith, chief executive of SolarReserve. His Nevada solar project has secured a 25-year power-purchase agreement with the state’s largest utility and a $737 million Energy Department loan guarantee and is on track to receive a $200 million Treasury grant.

Because the purchase mandates can drive up electricity rates significantly, some states, including New Jersey and Colorado, are considering softening the requirements on utilities.

Brookfield Asset Management, ... will receive so many subsidies for a New Hampshire wind farm that they are worth 46 percent to 80 percent of the $229 million price of the project, when measured in today’s dollars, according to analyses for The Times performed by Booz and two other two industry financial experts....

...The chief executive of Brookfield Renewable Power, the division that oversees the Granite Reliable project in New Hampshire, declined to discuss his profit expectations in detail, but said the project might not have happened without government assistance.

...
Google has invested in several renewable energy projects ... in part to get federal tax breaks that it can use to offset its profits from Web advertising.

... In the 2010 fiscal year, the oil and gas producers got federal tax breaks of $2.7 billion, according to an analysis by the Energy Information Administration.
...
In an October 2010 memo prepared for the president, Lawrence H. Summers, then his top economic adviser; Carol M. Browner, then his adviser on energy matters; and Ronald A. Klain, then the vice president’s chief of staff, expressed discomfort with the “double dipping” that was starting to take place. They said investors had little “skin in the game.”
...
Energy Department officials said they had carefully evaluated every project to try to calculate how much money the developers and investors stood to make. “They were rejected, if they looked too rich or too risky,” Mr. LaVera, the Energy Department spokesman said.

In at least one instance — NRG’s Agua Caliente solar project in Yuma County, Ariz. — the Energy Department demanded that the company agree not to apply for a Treasury grant it was legally entitled to receive. The government was concerned the extra subsidy would result in excessive profit, NRG executives confirmed.

In other cases, the agency required that companies use most of the Treasury grants that they would get when construction was complete to pay down part of the government-guaranteed construction loans instead of cashing out the equity investors.

G.E. ... lobbied Congress in 2009 to help expand the subsidy programs, and it now profits from every aspect of the boom in renewable-power plant construction. It is also an investor in one solar and one wind project that have secured about $2 billion in federal loan guarantees and expects to collect nearly $1 billion in Treasury grants. The company has also won hundreds of millions of dollars in contracts to sell its turbines to wind plants built with public subsidies.
...
Satya Kumar, an analyst at Credit Suisse ... said ... “But the industry could have done a lot more solar for a lot less price, in terms of subsidy,” he said.

by Eric Lipton and Clifford Krauss
FOR FULL STORY GO TO:
http://www.nytimes.com/2011/11/12/business/energy-environment/a-cornucopia-of-help-for-renewable-energy.html
The New York Times www.NYTimes.com
November 11, 2011

Climate Policy Initiative Finds that Global Climate Finance Totals at Least USD 97 Billion a Year - Most funding comes from private investors rather than public funds

http://www.climatepolicyinitiative.org/generic_datas/view/press_release/121

The Climate Policy Initiative (CPI) finds that at least USD 97 billion is already being provided annually to finance low-carbon, climate-resilient activities. However, CPI also points to definitional uncertainties that make it difficult to assess whether the international community is close to meeting its commitment to mobilize USD 100 billion per year by 2020 to help developing nations tackle climate change. For example, questions arise about how much of the USD 97 billion can be considered "new and additional," and whether both public and private sources of finance should be considered as aid. Additionally, the USD 97 billion figure relates to commitments, not disbursements, counted at their gross value (rather than the net 'aid' value); it is not clear whether the USD 100 billion commitment is similarly defined.

"While the debate about the amount of funding is topical leading up to the COP 17 in Durban, for us the data also prompts questions about how current flows correspond to countries' needs, whether current uses are effective, and how climate finance can be scaled up to support the transition to a low-carbon, climate-resilient future," said Barbara Buchner, director of CPI Venice. "We hope that these questions are addressed in the next phase of discussions."

CPI also finds that:

• The total amount of private finance is almost three times greater than total public finance, indicating the importance of capital investment to mitigation and adaptation activities. Finance derived from offset markets plays only a small role at present.
• Intermediaries, including bilateral and multilateral financial institutions, play a key role in distributing climate finance (around 40% of the total). Dedicated climate funds represent a small but growing portion of finance.
• Most climate finance (USD 74-87 billion out of USD 97 billion) can be classified as gross investment that has to be paid back (e.g. loans, equity).
• The vast majority of climate finance (95%) is used for mitigation; only a small share goes to adaptation measures.
• While there are many efforts underway to track and document elements of the climate finance landscape, information is fragmented and definitions and methodologies vary. This impedes a better understanding of what is needed to enhance the effectiveness of climate finance.

The Climate Policy Initiative www.ClimatePolicyInitiative.org

Press Release Dated November 7, 2011

via/hat tip The Economist http://www.economist.com/node/21536641

Evaluating “Cash-for-Clunkers: Program Effects on Auto Sales and the Environment

http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=21670
Abstract: “Cash-for-Clunkers” was a $3 billion program that attempted to stimulate the U.S. economy and improve the environment by encouraging consumers to retire older vehicles and purchase more fuel-efficient new vehicles. We investigate the effects of this program on new vehicle sales and the environment. Using Canada as the control group in a difference-in-differences framework, we find that the program increased new vehicle sales by about 0.36 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy. In addition, the program will reduce CO2 emissions by only 9 to 28.4 million tons, implying a cost per ton ranging from $91 to $288 even after accounting for reduced criteria pollutants.

by Shanjun Li, Joshua Linn and Elisheba Beia Spiller
Resources For the Future (RFF) www.RFF.org
RFF Discussion Paper 10-39-REV; October, 2011

Temperature, Aggregate Risk, and Expected Returns

http://papers.nber.org/papers/w17575 
Abstract: In this paper we show that temperature is an aggregate risk factor that adversely affects economic growth. Our argument is based on evidence from global capital markets which shows that the covariance between country equity returns and temperature (i.e., temperature betas) contains sharp information about the cross-country risk premium; countries closer to the Equator carry a positive temperature risk premium which decreases as one moves farther away from the Equator. The differences in temperature betas mirror exposures to aggregate growth rate risk, which we show is negatively impacted by temperature shocks. That is, portfolios with larger exposure to risk from aggregate growth also have larger temperature betas; hence, a larger risk premium. We further show that increases in global temperature have a negative impact on economic growth in countries closer to the Equator, while its impact is negligible in countries at high latitudes. Consistent with this evidence, we show that there is a parallel between a country's distance to the Equator and the economy's dependence on climate sensitive sectors; in countries closer to the Equator industries with a high exposure to temperature are more prevalent. We provide a Long-Run Risks based model that quantitatively accounts for cross-sectional differences in temperature betas, its link to expected returns, and the connection between aggregate growth and temperature risks.

by Ravi Bansal and Marcelo Ochoa
National Bureau of Economic Research (NBER) www.NBER.org
NBER Working Paper No. 17575; Issued in November 2011

Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States

http://papers.nber.org/papers/w17539
Abstract: This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.

by Matthew J. Kotchen, Kevin J. Boyle and Anthony A. Leiserowitz
National Bureau of Economic Research (NBER) www.NBER.org
NBER Working Paper No. 17539; Issued in October 2011

China Takes a Loss to Get Ahead in the Business of Fresh Water

http://www.nytimes.com/2011/10/26/world/asia/china-takes-loss-to-get-ahead-in-desalination-industry.html
... The Beijiang Power and Desalination Plant is a 26-billion-renminbi technical marvel: an ultrahigh-temperature, coal-fired generator with state-of-the-art pollution controls, mated to advanced Israeli equipment that uses its leftover heat to distill seawater into fresh water.

... One wrinkle in the $4 billion plant: The desalted water costs twice as much to produce as it sells for. Nevertheless, the owner of the complex, a government-run conglomerate called S.D.I.C., is moving to quadruple the plant’s desalinating capacity, making it China’s largest.
...
As it did with solar panels and wind turbines, the government has set its mind on becoming a force in yet another budding environment-related industry: supplying the world with fresh water.

The Beijiang project, southeast of Beijing, will strengthen Chinese expertise in desalination, fine-tune the economics, help build an industrial base and, along the way, lessen a chronic water shortage in Tianjin....
...
At the government’s order, China is rapidly becoming one of the world’s biggest growth markets for desalted water. The latest goal is to quadruple production by 2020, from the current 680,000 cubic meters, or 180 million gallons, a day to as many as three million cubic meters, about 800 million gallons, equivalent to nearly a dozen more 200,000-ton-a-day plants....

Institutes in at least six Chinese cities are researching developments in membranes, the technology at the core of the most sophisticated and cost-effective desalination techniques.

The National Development and Reform Commission, China’s top-level state planning agency, is drafting plans to give preferential treatment to domestic companies that build desalting equipment or patent desalting technologies. There is talk of tax breaks and low-interest loans to encourage domestic production.

... Direct government investment in seawater projects does not exceed 10 percent of their cost....The government’s plans could mean an investment of as much as 200 billion renminbi, or about $31 billion, by state-owned companies, government agencies and private partners.

Beijiang’s desalination complex, built by S.D.I.C. at the behest of the Development and Reform Commission as a concept project, was almost wholly made in Israel, shipped to Tianjin and bolted together. Nationally, less than 60 percent of desalination equipment and technology is domestic.

China’s goal is to raise that to 90 percent by 2020...

Demand for water here is expected to grow 63 percent by 2030 — gallon for gallon, more than anywhere else on earth....

In Tianjin, deemed a model city for water conservation, 90 percent of water used in industry is recycled; 60 percent of farm irrigation systems use water-saving technologies; 148 miles of water-recycling pipes snake beneath the city. Apartments in one 10-square-mile area of town feature two taps, one for drinking water and one for recycled water suitable for other uses.

The Beijiang plant, one of two, supplies an expanding suburb with 10,000 tons of desalted water daily, with plans to someday pump 180,000 tons....

The Beijiang plant has faced some hiccups. The mineral-free distilled water scrubs rust from city pipes en route to taps, turning the water brown....

The global market for desalination technology will more than quadruple by 2020 to about $50 billion a year, the research firm SBI Energy predicted last month, and growing water shortages worldwide appear to ensure further growth.

... The increasingly sophisticated membrane technologies that filter salt from seawater can be applied to sewage treatment, pollution control and a legion of other cutting-edge uses. Far outpaced now by foreign membrane producers, which command at least 85 percent of the market, China is set on developing its own advanced technologies.
...
The list of foreign companies that have plunged into China’s desalination industry is long: Hyflux of Singapore, Toray of Japan, Befesa of Spain, Brack of Israel and ERI of the United States, among others.  And just as foreigners shifted solar-energy research and production to China, desalination companies are leaving their home bases as well. The Norwegian company Aqualyng is a partner with the Beijing city government ... and is studying moving its manufacturing facilities from Europe to China.  ERI, which is based in San Francisco and claims to have the desalination industry’s most advanced technology, is moving research facilities to China and is considering moving manufacturing as well at some later date.  Most of the foreign companies have partnered with state-owned corporations.... ERI and Aqualyng say they can become researchers and manufacturers in China without losing control of their products.
...
by Michael Wines
FOR FULL STORY GO TO:
http://www.nytimes.com/2011/10/26/world/asia/china-takes-loss-to-get-ahead-in-desalination-industry.html
The New York Times www.NYTimes.com
October 25, 2011

Howard Weinstein Named Social Entrepreneur of the Year

http://www.csrwire.com/press_releases/33241-Howard-Weinstein-Named-Social-Entrepreneur-of-the-Year 
Solar Ear founder and CEO Howard Weinstein was selected as social entrepreneur of the year by World Technology Network.... Solar Ear designs and manufactures a solar-powered, battery rechargeable, inexpensive hearing aid solution. Technology partner Sonomax designs in-ear technology to custom fit earpieces to each patient in a single visit.
...
Weinstein started Solar Ear when he saw the need for an affordable, user-friendly and ecological hearing aid. WHO estimates that approximately 278 million suffer from hearing loss of which 200 million live in developing countries. Adult-onset hearing loss is the second longest cause of years lived with a disability.

“The hearing aid industry is one of the most innovative industries in the world, which is both good and bad,” said Weinstein. “Most of the innovation has been misplaced and focused on the wrong things, like developing technology for a $7500 hearing aid. That is completely out of reach for most of the world’s deaf population.” Only 12% of hearing aids manufactured are in the developing world.

Solar Ear offers hearing solutions for under $100US. The products were featured in “Brilliant Eco-Inventions; Designs to Solve the Worlds Problems,” which appeared in the November 2010 issue of National Geographic. Solar Ear products are now included in the collections of the Alexander Graham Bell Museum and the Smithsonian.
...
In addition to innovating new hearing aid technology, Weinstein has also developed a new business model. Solar Ear hires deaf workers throughout the world to invent, develop and assemble these breakthrough products.

“The key to our success is that our workers are deaf,” said Weinstein. “They are able to manufacture at a world-class level in part because they are deaf. People who are deaf and speak in sign language have better hand-eye coordination than hearing people. We need this special ability to micro-solder the tiny components for a hearing aid.”

Solar Ear capitalizes on its workforce on several continents, recently bringing Solar Ear workers from Botswana to Sao Paulo to teach a 6-month theoretical and practical electronics and micro-solder course. “Think about that journey, leaving rural Botswana and arriving 12 hours later in a city of 17 million people,” Weinstein said. “And for the Brazilian youths, this was the first time they had ever had a teacher who was also deaf.”

Next year courses will bring together Israeli and Palestinian youths in Jerusalem, and Muslims and Hindus in Kashmir.

World Technology Network www.wtn.net/index.html
Solar Ear www.solarear.com.br/solar/index.php
Corporate Social Responsibility Wire www.csrwire.com
October 27, 2011

Australia's Carbon Tax: A Sheep in Wolf's Clothing?

http://d.repec.org/n?u=RePEc:pra:mprapa:33997&r=res
Australian Government has produced a CO2-equivalent tax proposal with a difference, it is a short prelude to an emission trading scheme that will allow the increasing rate of emissions to continue, while being a net cost to the Treasury. That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised show taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme hopes to stimulate private investors to create an additional 12 percent in renewable electricity generation by 2020. A serious emissions reducing alternative would be to create a nationalised electricity sector with 100 percent renewable energy within a decade. We explore the difficulties of implementing meaningful greenhouse gas taxes in Australia.
...
According to the Australian Government ... the proposed CEP scheme, combined with its Renewable Energy Target, will invest A$20 billion in renewable energy. In addition, the commercially oriented Clean Energy Finance Corporation will be allocated $10 billion to invest in renewable energy and innovative technologies to cut pollution. The Australian Renewable Energy Agency will administer A$3.2 billion. On the surface this appears like recognition of a need for substantial change, and a large investment, but is it really? The outcome of this A$33 billion allocation is expected to be that "the equivalent of 20 per cent of Australia’s electricity will come from renewable sources by 2020". As current renewable electricity production is 8 percent, this means just a 12 percent increase in renewable energy production. The Australian taxpayer will not gain any assets for this outlay because all monies are going to fund private enterprise, commercial interests, and corporations. In addition to this A$33 billion a further A$14 billion appears to be allocated to the worst polluters. The billions to be spent on paying the coal industry to close its most polluting plants will be reinvested by that industry. They will also be able to plead for money and cheap loans under the security fund. So the public sector will be financing and underwriting private profits.
...
Beyond Zero Emission (2010), a not-for-profit organisation associated with researchers from the University of Melbourne. Their research shows that Australia can achieve 100 percent renewable electricity generation within a decade using technology that is commercially available now. This would totally replace base load power currently sourced from fossil fuels. Wind power and solar thermal with molten salt storage have the capacity to supply 60 percent and 40 percent of Australia’s electricity respectively. They estimate this will require an investment of A$370 billion over ten years, stated to be equivalent to costing A$8 per household per week. They project that the investment will generate a stimulus to the Australian economy that is equivalent to 3 percent of GDP over ten years and create permanent jobs around four times higher than currently exist in the domestic fossil fuel sector (Beyond Zero Emissions, 2010). Converting the 92 percent of Australian electricity not generated from renewable energy is technically feasible with existing technology and could be funded by a real GHG tax. In return for their investment the public could have a nationally owned electricity generating sector with public benefits in perpetuity.
...
All regulatory and public policy instruments are subject to political negotiation and can be manipulated. Different instruments inherently favour different societal actors and vested interests. Clearly while taxes favour government they can also be watered down, counterproductive and ineffectual. Levels of compensation to polluting industries can exceed acceptable standards of both efficiency and fairness. Substantial concessions in the form of tax exemptions, reductions and rebates to maintain momentum for material growth may appear in design proposals and be justified as being necessary in hard economic times. Highly polluting industries may then be able to gain more concessions than the less polluting ones. Thus GHG taxes can become primarily targeted at securing votes and jobs, and not only fail to correspond to textbook recommendations but also fail to achieve the promised internalization of social and environmental costs.
...
Australia has invented the 'polluter gets paid' principle to replace the 'polluter pays' principle, and the worse you pollute the more you get rewarded. Less energy-intensive industries will be penalised by having to purchase non-tradable permits at a fixed value, whereas the more energy-intensive industries are bestowed permits for free and allowed to sell them. What Australia exemplifies is how the rich and powerful polluters have been able to take control of the debate on human induced climate change, and manipulate it to their considerable financial advantage, while pretending to be the victims of an environmental hoax. 

by Clive L. Spash and Alex Lo
WU Wirtschaftsuniversitiat Wien, Norwegian University of Life Sciences
Munich Personal Repec Archive MPRA Paper Number 33997; October 3, 2011 
via REPEC Research Papers in Economics www.REPEC.org