Dec 2010 "Investing in the Future of Energy" Newsletter

8/8/2019 Dec 2010 "Investing in the Future of Energy" Newsletter

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Global Fund Exchange is

an asset management

business specializing in a

diversified global macro

approach to investing in

dynamic opportunities

across all sectors of the

New Energy Revolution.

Featured in this issue:

Food Supply & Price G-20 Clean Power Potential Bullish Signals for Crude Oil Cancun Climate Talks Ban on U.S. Offshore Drilling Indian Nuclear Investments

SPOTLIGHT ON: FOOD SUPPLY & PRICEWorld Dangerously Close to Food Crisis, Warns U.N.

Falling grain production around the world is putting us dangerously close to a

new food crisis, warned the United Nations Food and Agriculture Organization

(FAO) in a new report.

Weather catastrophes in Russia and Pakistan will contribute to a 63 million metric

ton decrease in global grain supply this year, representing a 2% reduction in total

global supply. Previously, the U.N. had expected total grain yields to rise by 1.2%.

The FAO anticipates a reduction of 7% in cereals, 35% in barley, and 10% in wheat.

Volatility in global food markets has raised prices for some essential commodities

to levels not seen since 2007 and 2008, when food shortages ignited riots in many

vulnerable regions of the world. There is no crisis at this stage, but it could come

if we dont act, said Abdolreza Abbassian, an economist with the UN FAO. The

numbers are getting dangerously close to what we saw in 2008.

According to the report, total costs of food imports could rise over $1 trillion in

2010. This trend has prompted strong government reactions in many parts of the

world, notably China, which has responded by imposing strict price limits on food

and taking action against agricultural commodity market speculation.

The FAO says prices may increase further if world production does not increase

substantially, especially in wheat, maize and soybeans. Just normal production

will not do anymore,warned the report. With the pressure on world prices of

most commodities not abating, the international community must remain vigilant

against future supply shocks in 2011 and be prepared.

Newsletter December 2010

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RENEWABLE ENERGY NEWS

China Takes Top Spot on Renewable

Energy Country Attractiveness Report

A new world order is apparent in the clean energy

sector, says global consulting firm Ernst & Young, which

recently ranked China as the most attractive country in the

world for renewable energy investment in its latest Country

Attractiveness Indices. Since 2003, Ernst & Young has

analyzed and ranked global renewable energy markets on

the basis of investment strategy and resource availability in

each nation. Its latest report placed China at the top of the

list, citing its record spending on clean energy this

quarter, specifically in wind power.

China has invested nearly $10 billion out of total global

investment of $20.5 billion, meaning that just about one of

every two wind turbines produced are operating in China.Chinas incredible growth of wind power comes from

carefully planned energy and industrial policy that elevates

cleantech to a national strategic level, said Ben Warren, UK

Energy and Environmental Infrastructure Advisory Leader at

Ernst & Young. Chinas solar market is on its way to great

importance in the global market place, he noted.

Although the U.S. was the global leader between November

2006 and May 2010, prolonged effects of the financial crisis

and record low gas prices resulted in a drop in rankings.

The U.S.s renewable energy competitive ranking is now

five points below Chinas.

South Korea, Romania, Egypt and Mexico all made the

attractiveness list for the first time, signaling new

opportunities for clean energy investments in those

countries. Japan also rose three points in the rankings,

thanks in part to the introduction of a Feed-in-Tariff (FIT)

which may propel significant expansion in the solar cell

market, potentially to $5.6 billion by 2020.

G-20 Clean Power Investment Potential to

Reach $2.3 Trillion by 2020: New Report

Clean power projects in G-20 nations could garner $2.3

trillion in private investments by 2020, according to a new

report by the Pew Charitable Trust.

Major energy demand combined with supportive federal

policies has made Asia in particular China and India a hotspot for clean energy development. Similar growth potential

exists in other G-20 nations, which stand to receive an

additional $546 billion in investments over the next decade on

a business as usual basis. However, implementing more

industry-friendly government policies could boost that figure

significantly.

The message of this report is clear: countries that want to

maximize private investments, spur job creation, invigorate

manufacturing and seize export opportunities should

strengthen their clean energy policies, emphasized Phyllis

Cuttino, director of the Pew Climate and Energy program.

In Clean Energy Race, U.S. Faces Sputnik

Moment on Energy: Secretary Chu

To stay competitive in the global clean energy race,

Department of Energy Secretary Dr. Steven Chu says the

United States must significantly increase investments in

energy research and development. Other nations around the

world, especially China, are outpacing the United States both

in progressive federal energy policies and government

spending on research, leaving the United States facing a

Sputnik moment on energy, he said.

America still has the opportunity to lead in a world that will

need a new industrial revolution to give us the energy we want

inexpensively but also carbon-free. Its a way to secure our

future prosperity. But, I think time is running out.

Secretary Chus remarks followed the release of a new report

from the Presidents Council of Advisors on Science and

Technology on how best to accelerate the pace of

technology development in the U.S. The reports primary

recommendations include major increases in energy research

and development spending and new demonstration projects.

Currently, the U.S. utilizes about 0.14% of the federal budgetfor energy-related research. After adding in private sector

funding, total research spending in the U.S. is around 0.03% of

GDP. This amount is three times smaller than Japans, and far

behind that of many other nations.

Instead of the $5 billion a year we spend today, the Council

says annual energy research investments should grow to $16

billion. Without more federal support, the report warns, we

will not achieve game changing technology developments

needed to make clean energy cost effective and mainstream.

Source: renewable-energy-news.info


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U.S. Policy Developments Bans on

Offshore Drilling & Nat Gas Fracking

Two policy decisions in the United States will have important

implications for both oil and natural gas production in the

year ahead.

Firstly, President Obama has extended a moratorium put inplace after the April 20th

BP oil rig explosion in the Gulf of

Mexico. This moratorium would prohibit deepwater drilling in

the Atlantic, Pacific and eastern parts of the Gulf of Mexico.

However, offshore drilling will be allowed to continue in

western sections of the Gulf of Mexico. In total, the

Deepwater Horizon rig spill poured 4.9 million barrels of crude

oil into the Gulf waters, devastating local tourism and fishing

industries and damaging coastline across many Gulf States, the

extent of which is still being determined by scientists in the

region.

Secondly, New York State has taken a step to restrict the highly

productive, yet controversial natural gas horizontal drillingprocedure known as hydraulic fracturing or fracking. New

drilling operations will not be permitted in the state until July

2011 to allow environmental regulators to conduct a review of

the process effect on drinking water supplies. The use of

fracking has contributed to a natural gas boom in the United

States. However, concerns over potential contamination in

watershed areas have turned the process into a hot political

topic. If other drilling states pass or consider legislation like

New Yorks, the natural gas industry may face very serious

repercussions.

Chinese Coal Imports to Surpass MonthlyRecord

Chinese coal imports are expected to reach an all-time high

this month as the nations appetite for energy continues to

increase. Chinese coal imports to total approximately 17.25

million this month, which leaps ahead of the previous import

record of 16.38 million tons set in December of 2009. The

majority of this imported coal will be used for heating and

electricity generation.

Although it consumes approximately 47% of all global coal, it is

estimated China only holds 14% of coal reserves. Over thepast decade, coal demand has risen about 10% a year, which

many experts are calling unsustainable.

China is expanding its domestic coal mining operations, but is

quickly finding it necessary to supplement these resources

with foreign imports from other resource-rich nations around

the world. However, it is not the only economy ramping up

coal demand. India and other developing Asian nations are

also seeking coal imports from abroad, which may translate

into price increases across the board.

TRADITIONAL ENERGY NEWS

Weather, Supply Concerns & Stimulus Action

Push Crude Higher to Reverse 2 Yr. Contango

Speculation of future stimulus moves by the Federal Reserve

plus a snap of cold weather in Europe and North America have

boosted crude oil prices to a 26 month high nearing $90 a barrel

their longest advance in four weeks.

Oil producers and merchants have increased their net-short

positions in crude futures and options, reversing a two-year

contango. In its Commitments of Traders report, the

Commodity Futures Trading Commission (CFTC) showed that

hedge funds and large oil speculators have increased net-longpositions by 26%. This bullish positioning is indicative of a

wide-spread expectation of future crude oil price increases.

Analysts have begun to see a backwardization trend with

crude contracts beginning in September 2011, where prices for

future months are dropping lower than earlier months,

suggesting oil demand may begin to outpace supply in the

second half of next year. This theory is corroborated by recent

upwardly revised demand forecasts from OPEC and the

International Energy Agency (IEA). OPEC now predicts global

consumption will reach close to 87 million barrels per day next

year, and the IEA raised its 2011 global oil demand forecast to

88.5 million barrels per day (compared with the 87.3 million

barrels per day projected for 2010).

Ninety dollars a barrel is now like a magnet that the bulls in

the market want to break through, commented Victor Shum,

senior principal at Purvin & Gertz Inc. These days, sentimentis

so bullish that any bad news on the economic front cant hurt

the rally in oil.

Source: PajamasMedia.com


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Energy regulator says UK needs energy reform Source: Daily Mail

CLIMATE POLICY NEWS

A Step Forward in Cancun Climate Talks

The United Nations climate talks in Cancun began without

much fanfare, at least compared with the much-hyped and

ultimately disappointing Copenhagen convention held last

year, but may in fact have been a more successful conference

than its more news-worthy predecessor.

Although no definitive deal was reached to reduce greenhouse

gases and set binding emissions regulation, many analysts and

observers are reporting at least moderate success from the

conference, which concluded this month.

Most notably, delegates reported progress in bridging the

divide between rich and poor nations, which has long plagued

these negotiations. Christina Figueres, Executive Secretary of

the United Nations Framework Convention on Climate Change

(UNFCCC), praised both industrialized and developing nations

for coming together to agree to commit to reducing emissions.

The agreement reached at Cancun represented the first time

all major global economies agreed to reduce emissions,

however the text is not a binding document, nor did it go as far

as stipulating an acceptable temperature rise of 2 degrees

Celcius. Of the 193 nations gathered at the conference, only

Bolivia rejected the agreement for not going far enough.

The agreement is not a legally binding treaty, but it allows the

process to continue to seek stronger steps in the coming year,

and perhaps, a more robust accord at next years climate

conference in Durban, said Figueres. Negotiators also agreedto deploy funding and share technology in order to help

vulnerable developing nations mitigate and adapt to the

effects of climate change. Countries also agreed to take

concrete steps to protect forestland in the developing world

and reduce emissions caused by deforestation.

Expanding the scope of the Kyoto agreement and its binding

targets has been no easy task. Developing nations are

demanding aid from the industrialized world, which carries

most of the historical responsibility for carbon already in the

atmosphere. Countering that claim, many industrialized

nations do not believe a viable agreement can exist withoutimposing limits on the emissions of fast growing nations like

China, now the largest emitter of carbon dioxide in the world.

The results of Cancun appear to be a step in the right

direction, but much more work remains to be done. Nations

now have one more year in which to decide to extend the

existing Kyoto Protocol on emission reductions before it is set

to expire in 2012.

World Bank Lends Support to Carbon

Markets in Developing Nations

The World Bank announced a multi-million dollar newinitiative to establish carbon trading systems in developing

nations which are particularly vulnerable to the effects of

climate change.

The carbon trading systems have a twofold purpose first, to

put a price tag on carbon to spur clean energy projects

within the participating nations, and second, to reduce

destruction of tropical forest land and slow deforestation.

Deforestation is one of the leading sources of greenhouse gas

emissions in the world.

We know that the poorest countries will suffer the earliest

and the most from climate change, said World Bank

president Robert B. Zoellick in a statement at the U.N. climate

talks in Cancun this week, remarking that the perils of climate

change were moving faster than global negotiations.

We also know that, while these countries would like to see a

comprehensive global accord on climate change, they are not

waiting for one. They are acting now and acting differently to

shift from being climate vulnerable to being climate smart.

The World Bank is aiming to provide as much as $100 million

to help establish these new carbon exchanges in countries

such as China, Mexico, Indonesia and Chile. More countriesmay join the initiative as funding grows.

Source: youwall.com


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NUCLEAR ENERGY NEWS

After the United States, France is the worlds second largest producer of nuclear energy. It is competing with the United States and

Russia to become the premier provider of nuclear energy technology to developing markets in India and China.

As fossil fuel prices rise and supply constraint concerns grow, France is predicting a resurgence in the use of nuclear power for

energy production.

SOURCES

We regularly gather information from the following reputable news sources, including but not limited to:

RenewableEnergyWorld.com EnergyandCapital.com

Forbes.com: Energy News New Energy Finance

Green Inc. The New York Times Streetwise Reports: The Energy Report

New Energy World Network Thomson Reuters

Scientific American: Energy REChargeNews.com

SustainableBusiness.com Climate Change Business Journal

GREENBUZZ WSJ.com: Environmental CapitalNew Carbon Finance Carbon Credit Capital

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Please visit ourFuture of Energy blogfor more news updates.

France Signs $20 Billion Nuclear Energy Deal with

India

President Nicolas Sarkozy of France and Prime Minister Manmohan

Singh of India signed a substantial civil nuclear energy deal during arecent state visit to India by Mr. Sarkozy.

Under the terms of the agreement, India will build two French reactors,

each worth $10 billion, in Maharashtra, one of its most industrialized

states. India already has 22 reactors in use and has ambitious plans to

expand its nuclear energy sector. Over the next 15 years, the Indian

nuclear market is estimated to reach $150 billion.
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Dec 2010 "Investing in the Future of Energy" Newsletter