Monthly Archives: March 2014

The Power of Batteries and Micro-Grids

Who needs the power grid when you can generate and store your own electricity cheaply and reliably? Such a world is drawing nearer: good news for consumers, but a potential shock for utility companies. That is the conclusion of a report this week by Morgan Stanley, an investment bank, which predicts that ever-cheaper solar and other renewable-energy sources, combined with better and more plentiful batteries, will allow many businesses and other electricity users to cut the cord on their electricity providers.

Tesla Motors, an American maker of electric cars, recently said it will build a “gigafactory”, which by 2020 will turn out as many lithium-ion batteries as the whole world produced last year (2013). These batteries can do more than power cars; they can also store electricity which is produced when it is not needed, and discharge it when it is….

In poor, volt-starved countries, a lorry-mounted aircraft engine can become a mobile gas-fired power station. GE recently installed 24 such units in Algeria, providing 30MW of power. Local difficulties meant it took six months; that was fast by the standards of big power stations, “but we could have done it in ten days,” says Lorraine Bolsinger, who heads GE’s new distributed-generation business….

Morgan Stanley reckons that if Tesla’s factory provides the cheap batteries it promises, Californian households will be able to run off a solar-plus-storage system costing just $350 a year. Buying electricity off the grid may cost them around $750 a year by then.

Morningstar, an investment-research firm, says that though distributed generation represents only 1% of America’s installed capacity now (compared with 20% in Germany), it could make up a third by 2017 and could “kill” utilities in their current form. Small-scale producers will dump their surplus power on the market at prices below those at which the utilities can recoup their cost of capital—and thus pay to maintain the grid.

America’s Electric Power Research Institute last month produced a paper highlighting the dangers of an unplanned move to distributed generation, using Germany as an example. The dash for renewables there has strained the power network and made life hard for utilities. This week one of the country’s largest, RWE, announced that it made a net loss of €2.8 billion ($3.8 billion) in 2013, its first annual loss in more than 60 years, as the rising supply of electricity from (subsidised) renewable sources undercut its prices.

Distributed generation: Devolving power, Economist,  Mar. 8, 2014, at 69

Benefits of Threshold Nuclear Power: Japan v. China

China has urged Japan to return over 300 kilograms of weapons grade plutonium to the Unites States and to explain how it intends to resolve its surplus plutonium problem. At a regular press briefing in Beijing on 17 February 2014, and in response to a question on Japan’s plutonium stocks, a Foreign Ministry spokeswoman stated:

“China attaches great importance to nuclear proliferation risks and potential threats posed by nuclear materials to regional security. China has grave concerns over Japan’s possession of weapons-grade nuclear materials… Japan’s failure to hand back its stored weapons-grade nuclear materials to the relevant country has ignited concerns of the international community including China.”

As reported in January 2014, agreement has been reached between the United States and Japan for the return of plutonium used in the Fast Critical Assembly (FCA) in JAERI Tokai Research Establishment, Tokai-mura, Ibaraki Prefecture. The formal agreement is expected to be concluded at the Nuclear Security Summit in the Netherlands in March 2014. In its latest declaration to the International Atomic Energy Agency (IAEA) and in its 2012 plutonium management report Japan stated that the FCA facility has the total of 331 kg of plutonium, of which 293 kg is fissile plutonium. The largest share of this plutonium was supplied by the United Kingdom in addition to that supplied by the United States.

Commenting further, the Chinese Foreign Ministry declared:

“China believes that Japan, as a party to the Treaty on the Non-Proliferation of Nuclear Weapons, should strictly observe its international obligations of nuclear non-proliferation and nuclear security. The IAEA requires all parties to maintain a best possible balance of supply and demand of nuclear materials as contained in the Guidelines for the Management of Plutonium. Japan’s large stockpile of nuclear materials including weapons-grade materials on its territory is an issue concerning nuclear material security, proliferation risks and big supply-demand imbalance.”

In addition to the call for the return of the weapon’s grade plutonium, the Chinese statement also raises a question over Japanese fuel cycle policy and its inability to use its existing plutonium stocks. With all 48 nuclear power reactors shutdown there is currently no demand for its separated plutonium as mixed oxide (MOX) fuel. However, Japanese policy continues to plan the commercial operation of the Rokkasho-mura reprocessing plant as early as October 2014, following a safety assessment by the Nuclear Regulatory Authority (NRA). In its latest declaration to the IAEA, Japan’s Atomic Energy Commission reported that as of 31 December 2012, Japan held 44,241 kg of separated unirradiated plutonium, of which 9,295 kg was stored in Japan and 34,946 kg was stored abroad. Japan’s plutonium program, its challenges and alternatives was recently addressed at a Tokyo symposium and in detailed analysis by IPFM.

As yet, there has been no official response from the Japanese government to the Chinese Foreign Ministry statement, which has been extensively reported through Chinese media outlets

By Shaun Burnie with Mycle Schneider, China calls on Japan to return weapons grade plutonium to the United States, International Panel on Fissile Materials, Feb 18, 2014

Killing with Missiles: the market

Late last year (2013) Forecast International predicted that manufacturers will produce 200 000 anti-armour missiles worth $9.7 billion through 2022. The company said that combat operations in Iraq, Afghanistan, and elsewhere have spurred anti-armour purchases by the U.S. and other militaries. Ironically, these missiles are not engaging tanks, but rather a host of other target types – from terrorist hideouts to unarmoured pickup trucks. Established market players have benefitted from this evolving trend, according to Forecast International.  “U.S. and Israeli firms still have the largest share of the anti-armour missile market,” said Larry Dickerson, Forecast International’s senior missile analyst. During this period, “Lockheed Martin, Raytheon and Rafael will earn $2.8 billion selling anti-armour missiles to customers worldwide,” Dickerson said.

The market positions of these manufacturers have become increasingly intertwined. For example, Lockheed Martin has cooperated with Raytheon in the development and production – and marketing – of the FGM-148 Javelin man-portable anti armour missile system. The Javelin is the U.S. Department of Defence’s standard man-portable anti-tank guided weapon, and nearly a dozen nations employ it.

Meanwhile, new systems are emerging overseas. “Europe is working on next-generation systems to win back the market share it once had,” Dickerson said. These include the Missile Moyenne Portee (MMP) and the Missile Longue Portee (MLP), which will replace MILAN and HOT, respectively.

For its part, Rafael Advanced Defence Systems is Israel’s leading anti-armour missile manufacturer. Against most expectations, Israel has slowly secured export production contracts for its anti-armour missiles and from an area once thought to present few opportunities – Europe. Rafael can count seven European countries as customers of its family of SPIKE anti-armour missiles, providing a stable production base for the company, according to Forecast International.

Companies are also working on new lightweight missiles that can perform various missions and demonstrate the blurring between different markets. “Missiles are slowly evolving, becoming more than just a weapon for use against tanks or aircraft or bunkers,” Dickerson said. “Eventually, the anti-tank missile market will cease to be an independent entity, becoming submerged in a larger strike weapons market.”

Excerpt from Shoulder launched anti-tank missile market worth $3.2 billion, defenceWeb, Wednesday, Mar. 5, 2014

What is Stratobus: a drone + satellite

StratoBus, a surprising vehicle halfway between a drone and a satellite, will be able to carry out a wide range of missions, including observation, security, telecommunications, broadcasting and navigation… and it offers a lifespan of five years.   The StratoBus project is led by Thales Alenia Space, along with partners Airbus Defence & Space, Zodiac Marine and CEA-Liten. It embodies a new concept for an autonomous airship, operating at an altitude of about 20 kilometers. This is in the lower reaches of the stratosphere, but well above air traffic and jet streams. StratoBus will be able to carry payloads up to 200 kg. The project is part of the creation of an airship company by the Pégase competitiveness cluster in southern France…

The platform itself is a high-altitude airship measuring 70 to 100 meters long and 20 to 30 meters in diameter. It will feature a number of technological innovations, in particular to make sure it captures the Sun’s rays in all seasons: a power generation system (coupling the solar panels to a solar power amplification system patented by Thales), an ultra-light reversible fuel cell for energy storage, etc.  The StratoBus platform will require continuous significant energy input to offset the wind: two electric motors will automatically adjust their output power depending on wind speed (up to 90 km/h).

STRATOBUS – HALFWAY BETWEEN A DRONE AND A SATELLITE, Thalesgroup.com, Mar. 10, 2014

Congo, Rwanda and the UN: Genociadial

U .N. peacekeepers in Democratic Republic of Congo and government forces have attacked Rwandan Hutu rebels based in eastern borderlands, U.N. and Congolese official..The Democratic Forces for the Liberation of Rwanda (FDLR) rebels have been involved in nearly two decades of conflict that spilled into eastern Congo after neighboring Rwanda’s 1994 genocide.

Government troops, backed by a United Nations brigade with a robust mandate to eradicate Congo’s myriad eastern armed groups, won a rare victory last year against M23, a Congolese Tutsi rebel force that had been the FDLR’s principal enemy.  Colonel Felix Basse, military spokesman for the Congo mission, known as MONUSCO, said U.N. troops had deployed in the Virunga National Park in North Kivu province and were backing a Congolese offensive against the FDLR.  Basse said the 3,000-strong U.N. Intervention Brigade, made up of troops from South Africa, Tanzania and Malawi, was taking part in the joint offensive. “These operations will continue. We have a mandate to protect the population and restore the authority of the state,” he said.

The FDLR is made up in part of former Rwandan soldiers and Hutu militia who fled to Congo after taking part in the killing of 800,000 Rwandan Tutsis and moderate Hutus 20 years ago. They are accused of civilian killings and rapes by rights groups.  While their numbers have dwindled to a few thousand in recent years, previous attempts to disarm the rebels have failed. They are considered one of the principal obstacles to durable peace in the mineral-rich zone.

Rwanda twice invaded Congo in the late 1990s to try to wipe out Hutu fighters, helping ignite two regional wars and countless smaller conflicts that killed millions of people. Kigali has been accused of backing armed groups in eastern Congo, most recently by a panel of U.N. experts who say Rwanda armed and organized M23. Rwanda has denied this and says Congo’s army is collaborating with the FDLR.  At the height of its 20-month rebellion M23 took control of Goma – eastern Congo’s largest city – in the most serious threat to President Joseph Kabila’s regime to date.  A U.N. experts’ report in January said there were credible reports that the M23 continued to recruit fighters in Rwanda.

U.N. and Congolese troops attack Rwandan Hutu rebels, Reuters, Mar. 13, 2014

 

Angry about Pollution: China

China is now emitting almost twice as much carbon dioxide as the next-biggest polluter, America. At current rates, it will produce 500 billion tonnes of carbon dioxide between 1990 and 2050—as much as the whole world produced between the start of the Industrial Revolution and 1970. Pollutants in the air in Beijing have hit 40 times the level decreed safe by the World Health Organisation. Yet China did not have a ministry devoted to environmental protection until 2008, and the government has done its best to keep information about the levels of filth in the air and water under wraps. Even now, the state is keeping secret a nationwide survey of soil pollution.

The new rules that have just come into effect signal the beginning of a move towards openness. They require 15,000 enterprises, including some of the biggest state-owned ones, to make public in real time details of their air pollution, waste water and heavy-metals discharges…Things are opening up at a local level, too. In 2012 only a few cities, including Beijing, published statistics on air quality. Now 179 do. And more firms are volunteering information about pollution—especially those that need foreign investors.

The impetus behind this new transparency is not a sudden enthusiasm for liberalism. Rather, the government is worried that people are increasingly angry about pollution—a recent Pew survey of the concerns of Chinese citizens found that pollution was fourth, behind inflation, corruption and inequality, but was rising fast—and attempts to clean the country up by central-government fiat are foundering.

China’s environment: A small breath of fresh air, Economist, Feb. 8, 2013, at  14

Governing the Oceans Dysfunction

About 3 billion people live within 100 miles (160km) of the sea, a number that could double in the next decade as humans flock to coastal cities like gulls. The oceans produce $3 trillion of goods and services each year and untold value for the Earth’s ecology. Life could not exist without these vast water reserves—and, if anything, they are becoming even more important to humans than before.

Mining is about to begin under the seabed in the high seas—the regions outside the exclusive economic zones administered by coastal and island nations, which stretch 200 nautical miles (370km) offshore. Nineteen exploratory licences have been issued. New summer shipping lanes are opening across the Arctic Ocean. The genetic resources of marine life promise a pharmaceutical bonanza: the number of patents has been rising at 12% a year. One study found that genetic material from the seas is a hundred times more likely to have anti-cancer properties than that from terrestrial life.

But these developments are minor compared with vaster forces reshaping the Earth, both on land and at sea. It has long been clear that people are damaging the oceans—witness the melting of the Arctic ice in summer, the spread of oxygen-starved dead zones and the death of coral reefs. Now, the consequences of that damage are starting to be felt onshore…

More serious is the global mismanagement of fish stocks. About 3 billion people get a fifth of their protein from fish, making it a more important protein source than beef. But a vicious cycle has developed as fish stocks decline and fishermen race to grab what they can of the remainder. According to the Food and Agriculture Organisation (FAO), a third of fish stocks in the oceans are over-exploited; some estimates say the proportion is more than half. One study suggested that stocks of big predatory species—such as tuna, swordfish and marlin—may have fallen by as much as 90% since the 1950s. People could be eating much better, were fishing stocks properly managed.

The forests are often called the lungs of the Earth, but the description better fits the oceans. They produce half the world’s supply of oxygen, mostly through photosynthesis by aquatic algae and other organisms. But according to a forthcoming report by the Intergovernmental Panel on Climate Change (IPCC; the group of scientists who advise governments on global warming), concentrations of chlorophyll (which helps makes oxygen) have fallen by 9-12% in 1998-2010 in the North Pacific, Indian and North Atlantic Oceans.

Climate change may be the reason. At the moment, the oceans are moderating the impact of global warming—though that may not last.,,Changes in the oceans, therefore, may mean less oxygen will be produced. This cannot be good news, though scientists are still debating the likely consequences. The world is not about to suffocate. But the result could be lower oxygen concentrations in the oceans and changes to the climate because the counterpart of less oxygen is more carbon—adding to the build-up of greenhouse gases. In short, the decades of damage wreaked on the oceans are now damaging the terrestrial environment.

Three-quarters of the fish stocks in European waters are over-exploited and some are close to collapse… Farmers dump excess fertiliser into rivers, which finds its way to the sea; there cyanobacteria (blue-green algae) feed on the nutrients, proliferate madly and reduce oxygen levels, asphyxiating all sea creatures. In 2008, there were over 400 “dead zones” in the oceans. Polluters pump out carbon dioxide, which dissolves in seawater, producing carbonic acid. That in turn has increased ocean acidity by over a quarter since the start of the Industrial Revolution. In 2012, scientists found pteropods (a kind of sea snail) in the Southern Ocean with partially dissolved shells…

The high seas are not ungoverned. Almost every country has ratified the UN Convention on the Law of the Sea (UNCLOS), which, in the words of Tommy Koh, president of UNCLOS in the 1980s, is “a constitution for the oceans”. It sets rules for everything from military activities and territorial disputes (like those in the South China Sea) to shipping, deep-sea mining and fishing. Although it came into force only in 1994, it embodies centuries-old customary laws, including the freedom of the seas, which says the high seas are open to all. UNCLOS took decades to negotiate and is sacrosanct. Even America, which refuses to sign it, abides by its provisions.

But UNCLOS has significant faults. It is weak on conservation and the environment, since most of it was negotiated in the 1970s when these topics were barely considered. It has no powers to enforce or punish. America’s refusal to sign makes the problem worse: although it behaves in accordance with UNCLOS, it is reluctant to push others to do likewise.

Specialised bodies have been set up to oversee a few parts of the treaty, such as the International Seabed Authority, which regulates mining beneath the high seas. But for the most part UNCLOS relies on member countries and existing organisations for monitoring and enforcement. The result is a baffling tangle of overlapping authorities that is described by the Global Ocean Commission, a new high-level lobby group, as a “co-ordinated catastrophe”.

Individually, some of the institutions work well enough. The International Maritime Organisation, which regulates global shipping, keeps a register of merchant and passenger vessels, which must carry identification numbers. The result is a reasonably law-abiding global industry. It is also responsible for one of the rare success stories of recent decades, the standards applying to routine and accidental discharges of pollution from ships. But even it is flawed. The Institute for Advanced Sustainability Studies, a German think-tank, rates it as the least transparent international organisation. And it is dominated by insiders: contributions, and therefore influence, are weighted by tonnage.

Other institutions look good on paper but are untested. This is the case with the seabed authority, which has drawn up a global regime for deep-sea mining that is more up-to-date than most national mining codes… The problem here is political rather than regulatory: how should mining revenues be distributed? Deep-sea minerals are supposed to be “the common heritage of mankind”. Does that mean everyone is entitled to a part? And how to share it out?

The biggest failure, though, is in the regulation of fishing. Overfishing does more damage to the oceans than all other human activities there put together. In theory, high-seas fishing is overseen by an array of regional bodies. Some cover individual species, such as the International Commission for the Conservation of Atlantic Tunas (ICCAT, also known as the International Conspiracy to Catch All Tuna). Others cover fishing in a particular area, such as the north-east Atlantic or the South Pacific Oceans. They decide what sort of fishing gear may be used, set limits on the quantity of fish that can be caught and how many ships are allowed in an area, and so on.

Here, too, there have been successes. Stocks of north-east Arctic cod are now the highest of any cod species and the highest they have been since 1945—even though the permitted catch is also at record levels. This proves it is possible to have healthy stocks and a healthy fishing industry. But it is a bilateral, not an international, achievement: only Norway and Russia capture these fish and they jointly follow scientists’ advice about how much to take.  There has also been some progress in controlling the sort of fishing gear that does the most damage. In 1991 the UN banned drift nets longer than 2.5km (these are nets that hang down from the surface; some were 50km long). A series of national and regional restrictions in the 2000s placed limits on “bottom trawling” (hoovering up everything on the seabed)—which most people at the time thought unachievable.

But the overall record is disastrous. Two-thirds of fish stocks on the high seas are over-exploited—twice as much as in parts of oceans under national jurisdiction. Illegal and unreported fishing is worth $10 billion-24 billion a year—about a quarter of the total catch. According to the World Bank, the mismanagement of fisheries costs $50 billion or more a year, meaning that the fishing industry would reap at least that much in efficiency gains if it were properly managed.

Most regional fishery bodies have too little money to combat illegal fishermen. They do not know how many vessels are in their waters because there is no global register of fishing boats. Their rules only bind their members; outsiders can break them with impunity. An expert review of ICCAT, the tuna commission, ordered by the organisation itself concluded that it was “an international disgrace”. A survey by the FAO found that over half the countries reporting on surveillance and enforcement on the high seas said they could not control vessels sailing under their flags. Even if they wanted to, then, it is not clear that regional fishery bodies or individual countries could make much difference.

But it is far from clear that many really want to. Almost all are dominated by fishing interests. The exceptions are the organisation for Antarctica, where scientific researchers are influential, and the International Whaling Commission, which admitted environmentalists early on. Not by coincidence, these are the two that have taken conservation most seriously.

Countries could do more to stop vessels suspected of illegal fishing from docking in their harbours—but they don’t. The FAO’s attempt to set up a voluntary register of high-seas fishing boats has been becalmed for years. The UN has a fish-stocks agreement that imposes stricter demands than regional fishery bodies. It requires signatories to impose tough sanctions on ships that break the rules. But only 80 countries have ratified it, compared with the 165 parties to UNCLOS. One study found that 28 nations, which together account for 40% of the world’s catch, are failing to meet most of the requirements of an FAO code of conduct which they have signed up to.

It is not merely that particular institutions are weak. The system itself is dysfunctional. There are organisations for fishing, mining and shipping, but none for the oceans as a whole. Regional seas organisations, whose main responsibility is to cut pollution, generally do not cover the same areas as regional fishery bodies, and the two rarely work well together. (In the north-east Atlantic, the one case where the boundaries coincide, they have done a lot.) Dozens of organisations play some role in the oceans (including 16 in the UN alone) but the outfit that is supposed to co-ordinate them, called UN-Oceans, is an ad-hoc body without oversight authority. There are no proper arrangements for monitoring, assessing or reporting on how the various organisations are doing—and no one to tell them if they are failing.

Governing the high seas: In deep water, Economist, Feb. 22, 2014, at 51

Russia and Poland – the nuclear option

On January 28th, 2014 the [Polish] economics ministry presented a detailed 150-page plan paving the way for the construction of two nuclear-power plants. By 2016 the sites of the two plants will be picked. Two areas close to the Baltic coast, Choczewo and Zarnowiec, are on the shortlist. Three years later construction is to begin and, by 2024, the first plant should be producing power. A state-owned energy company, PGE, will manage the project, which will cost an estimated 40 billion-60 billion zloty ($13 billion-19 billion)….

Until now, the exploration of shale gas in northern Poland has moved at a snail’s pace, thanks to a combination of bureaucracy and environmental worries, much to the frustration of foreign investors. The government is trying to change this. On February 5th the environment ministry announced a new shale-gas law intended to cut red tape and regulatory obstacles. To investors’ relief, NOKE, a state operator, will not be part of the licensing process. “I believe this will encourage exploration,” says Kamlesh Parmar, chief executive of 3Legs Resources, an investor.

Krzysztof Kilian, a former boss of PGE, doubts that the government can embark on the production of nuclear power and shale gas at the same time, as both require gargantuan investments. Meanwhile, Russia is building a nuclear-power plant in Kaliningrad, the Russian exclave north of Poland. So far Poland and Lithuania have both declined Russian offers to export power to their countries, as both are trying to reduce their dependence on Russian energy, which is overwhelming in Lithuania’s case and considerable in Poland’s. In June last year (2013) the construction of the plant was temporarily suspended.

Polish energy policy: A different Energiewende, Economist, Feb. 8, 2014, at 52

Change Your Fingertip – Deportation USA

In 2013  America removed 369,000 undocumented migrants, an increase of nine times compared with 20 years ago. This takes the total number of the deported to almost 2m in Barack Obama’s presidency…On one measure this is a great success. It is hard to find many areas where the federal government is so effective in implementing laws passed by Congress. Yet it is harmful—not just for the deported, who often have a miserable time once they are expelled  but for the country they leave behind, something which even the deporters have come to recognise….Much of that spending has created a border agency that can operate throughout the country. Before the September 11th 2001 attacks it was considered a threat to liberty for agencies to share too much information. After the report of the 9/11 Commission the opposite became true. The result is that Immigration and Customs Enforcement (ICE), the agency charged with doing the deporting, can now quickly determine whether someone serving a prison sentence for a serious crime is eligible to be deported when their time is up. More controversially, it also allows ICE to see whether someone charged by the police with relatively minor offences can also be deported.

Of the 369,000 people deported last year, roughly two-thirds were people who had been stopped while trying to cross the border. The rest—134,000 of them—were picked up in the interior of the country…Some people take more drastic steps to avoid triggering a match on the database. In November ICE arrested a doctor in Boston who flew in regularly from the Dominican Republic to alter fingerprints. A full set of unrecognisable fingertips cost $4,500.

While the police have been tracking down migrants, the Department for Homeland Security has continued to raid workplaces and audit companies to see if they employ undocumented workers. In November Infosys, an Indian IT firm, agreed to pay fines of $34m for immigration offences. …The number of people deported is largely determined by the number of beds available in detention centres, which are the holding pens for the people America expels. Each year Congress mandates funding for a certain number of beds for immigration detention and stipulates that the occupancy rate must be kept high. In 2013 that number was 34,000.   Some of these places are run by private companies for ICE, like the one in Pearsall, a small Texas town decorated with churches, car-parts shops and a high-school football field. The facility can house up to 1,800 men at any one time, sleeping on iron bunk-beds in dormitories of up to 100. This is not a prison but it has few windows, is surrounded by fences topped with razor wire and is run by the GEO Group, a company that also runs prisons…The government has to make sure that the countries where detainees were born will have them back. In rare cases this proves impossible. Families for Freedom, an NGO, says it is working with a Kenyan man who has been in immigration detention in New York for eight years. From the detention centres the deportees are rounded up and put on planes. ICE has its own air operations division which flew 44 charter flights a week in 2013, and runs a daily flight to deposit people in Central America. When flying to more unusual destinations, an ICE agent will babysit the deportee on a commercial flight.

America’s deportation machine: The great expulsion, Economist, Feb. 8, 2014, at 23

The OPEC Cartel and the US

The OPEC often described as a cartel, it is better seen as an anti-glut group. When demand is weak, its members can curb production to prevent the price plummeting. But when demand is healthy, its ability to curb new producers is limited. And new producers abound.

America’s domestic production of crude (and gas, which displaces some oil) is rocketing. The IEA says the country will produce 14m barrels a day (b/d) next year, on a par with Saudi Arabia . That has reduced America’s imports, as well as boosting exports of fuels (exports of crude oil are mostly banned). That frees crude from other places, such as West Africa, to go to Europe instead. Similarly, Latin American and Middle Eastern oil that once would have gone to America now goes to Asian customers.

For the oil-rich, even worse is in store. Other factors that have propped up the price over the past decade are likely to wane in importance. Even the slightest easing of sanctions helps Iran, potentially a huge producer….The Economist Intelligence Unit…forecasts a “significant boost” in 2014 from 2.4m b/d last year. This assumes new investment pays off, and a deal with the semi-autonomous Kurdish region. Libya could be another source of production: its exports have collapsed to only a few hundred thousand barrels a day, against 1.6m in June last year…

An alternative for Saudi Arabia would be to increase production sharply. That would send the price down: painful for the kingdom, but even more painful for higher-cost producers (not least America, where the “tight oil” now coming on stream requires prices of $50 and above to be profitable).  OPEC’s best hope is continued American protectionism. Any easing of the restrictions on the export of liquefied natural gas (LNG) or crude will exert more downward pressure on the oil price. That might be good for the world economy, but it is not a priority for American consumers, who would like cheaper petrol for cars and propane for heating…

OPEC and oil prices: Leaky barrels, Economist, Feb. 22, 2014, at 63

The Kazakh Dream

A few protesters brandishing lacy underwear may not look like a threat to the stability of the state. But the authorities of oil-rich Kazakhstan took no chances on February 16th when a group of demonstrators waving their knickers appeared on the streets of the financial capital, Almaty. The “pantie protesters” were rounded up and led away.  Their demonstration was ostensibly prompted by a rule regulating synthetic underwear due to come into force this summer under a new customs union between Kazakhstan, Russia and Belarus…  [But the real] source of anger was the devaluation of the Kazakh currency, the tenge, on February 11th. It plunged by 19%, causing fears of a spike in inflation and a dip in living standards in a country that imports many consumer goods….

The protests are small but they hint that Mr Nazarbayev’s unspoken social contract—in which citizens trade political freedoms for relative prosperity and social stability—is becoming fragile. Tensions surfaced in 2011, when 15 people were shot dead as striking oil workers clashed with police in Zhanaozhen in the west of the country. Now the devaluation has reminded many ordinary people—maxed out on credit and exasperated by the growing rich-poor divide—that they are not living the “Kazakh dream”.

Kazakhstan’s economy: Tenge fever, Economist,  Feb. 22, 2014, at 35

 

Capital – Torrents of Data

During the financial crisis regulators discovered the hard way how little they knew about the risky derivatives portfolios built up by large financial institutions. Lehman Brothers, for example, was thought to have been a counterparty to about $5 trillion of credit default swaps. When they turned sour in 2008, it brought the financial system to its knees. In response leaders of the world’s main economies demanded in 2009 that derivatives deals should all be reported to “trade repositories”—vast central databases—to make it easier to identify and then reduce systemic risks.

On February 12th, 2014 European rules came into force requiring the reporting of all derivatives to one of six approved repositories. Similar rules have already been in place in America for about a year. But the effort, although concerted, is not consistent: the American and European reforms differ, making awkward transactions spanning the two jurisdictions. Moreover, even if these data can be reconciled, it is not clear what regulators will do with it.

The American regulations allow the reporting to be taken care of by one party to the trade. Yet Europe requires both parties to report. That means every fund manager or corporate treasurer trading derivatives has had to follow cumbersome rules, not just the banks that peddle most deals.  Getting both sides to report was originally seen as a means to ensure that every entity’s exposure could be rigorously monitored. But the complexities of obliging both parties to report trades, which then have to be reconciled with one another, have led many to question whether the additional burden is really worthwhile. “Dual reporting was required to avoid omissions in the data,” says Stewart Macbeth of the Depository Trust & Clearing Corporation, one of the approved repositories. But it “captures a lot of companies in the real economy that probably do not pose a systemic risk”.

The European rules differ from the American ones in other ways too. America staggered implementation of its rules over the course of several months as different sorts of contracts and counterparties were gradually brought within their scope. European regulators chose instead to have everyone start reporting everything on a single day. That created a bottleneck as participants rushed to put the necessary procedures and agreements in place.

Now that the deadline has passed, responsibility shifts to regulators, whose duty it will be to make sense of the torrents of data that are now flooding in. In America the Commodity Futures Trading Commission has openly acknowledged the problems it has already encountered coping with the deluge, with one commissioner blaming “inconsistencies and errors” in the rules. In Europe the problems are likely to be even worse as so many more counterparties are reporting data to multiple repositories. That will create an unfortunate opportunity for both omissions and duplications of data. In time the new reporting rules should reduce risks, but much work still needs to be done.

A paper published on February 4th by the Financial Stability Board (FSB) offers a solution. It proposes aggregating data from multiple repositories into one central one. That may iron out inconsistencies in the data—but it will not necessarily make it any more digestible.

Derivatives:  Data dump, Economist, Feb. 22, 2013, at 65

Food Security Strategies: the Gulf

Feliance on food imports is problematic when countries such as Argentina suddenly restrict their exports in response to rising prices. Buying farmland in countries such as Sudan, Tanzania and Pakistan is another Gulf ploy. The UAE and Saudi Arabia are among the top ten investors in land abroad, according to Land Matrix, a body that tracks such deals. But this has drawbacks, too. Getting big projects off the ground in places that lack infrastructure is tricky. And Gulf states who fund them have sometimes been accused of being neocolonial.

Many of the region’s rulers are now considering investing in food companies abroad, often in more developed countries. The UAE’s Al Dahra Agriculture, which works closely with the government and owns land abroad, recently bought eight farm companies in Serbia for $400m. It has also invested in an Indian rice producer. In addition, countries like Saudi Arabia are looking at ways of keeping strategic food reserves.

Gulf rulers may end up following a mixture of such strategies to fill their peoples’ stomachs. They should at least be commended for grappling with the problem, says a regional food expert. Poorer and hungrier Arab countries, like Egypt and Yemen, are far less willing to address it.

Food security in the Gulf: How to keep stomachs full, Economist,  Feb. 22, 2014

Military Capabilities of India – 2014

India’s first-ever dedicated military satellite, Rukmini or GSAT-7, “seamlessly networked” around 60 warships and 75 aircraft during the massive month-long naval combat exercise in the Bay of Bengal that ended on Feb. 28, 2014…Apart from GSAT-7, the exercise this year also saw the “maiden participation” of nuclear-powered submarine INS Chakra, on a 10-year lease from Russia for $1 billion, and the newly-acquired P-8I  [Boeing P-8 Poseidon] long range maritime patrol aircraft [bought from the United States].

While the over 8,000-tonne INS Chakra is not armed with long-range nuclear missiles because of international treaties like the Missile Technology Control Regime, it serves as “a potent hunter-killer” of enemy warships and submarines, apart from being capable of firing land-attack cruise missiles.  INS Chakra adds some desperately-needed muscle to underwater combat arm at a time when the Navy is grappling with just 13 ageing diesel-electric submarines, three of which are stuck in life-extension refits  As for the P-8Is, the Navy has till now inducted three of the eight such sensor and radar-packed aircraft ordered in 2009 for $2.1billion from the US. Also armed with potent anti-submarine warfare capabilities, the P-8Is are working in conjunction with medium-range Dorniers [from Germany] and Israeli Searcher-II and Heron UAVs (unmanned aerial vehicles) to create a three-tier surveillance grid in the heavily-militarized IOR.  India, in fact, is in the process of ordering another four P-8I aircraft.

Excerpt from Rajat Pandit, Navy validates massive exercise under country’s first military satellite’s gaze, The Times of India Mar. 1, 2013

ARES: the New Drone

From the DARPA website

AERIAL RECONFIGURABLE EMBEDDED SYSTEM (ARES)

DARPA unveiled the Transformer (TX) program in 2009. Transformer aimed to develop and demonstrate a prototype system that would provide flexible, terrain-independent transportation for logistics, personnel transport and tactical support missions for small ground units. In 2013, DARPA selected the Aerial Reconfigurable Embedded System (ARES) design concept to move forward.  ARES is a vertical takeoff and landing (VTOL) flight module designed to operate as an unmanned platform capable of transporting a variety of payloads. The ARES VTOL flight module is designed to have its own power system, fuel, digital flight controls and remote command-and-control interfaces. Twin tilting ducted fans would provide efficient hovering and landing capabilities in a compact configuration, with rapid conversion to high-speed cruise flight…

The ARES program would enable numerous benefits, including:

Useful load capability as high as 3,000 pounds, more than 40 percent of the takeoff gross weight of the aircraft

Flight performance similar to light aircraft

Compact configuration and the ability to use landing zones half the size typically needed by helicopters of similar size

VTOL operations from prepared, unprepared and ship-based landing sites

 

Conservation: a Military Operation

Mander, founder and chief executive officer of the International Anti-Poaching Foundation (IAPF) – registered in Houston, headquartered in Zimbabwe, and training rangers across Southern Africa [states]…”while we’re trying to win people [over], tens of thousands of animals are being killed every year. We need to do something now, on the ground, to stop the hemorrhaging. Otherwise there won’t be anything left by the time we’ve won all the hearts and minds.”

Mander’s urgency is not misplaced. Poachers in South Africa killed the equivalent of one rhino every eight hours in 2013. They hacked or sawed off their horns and sold them on the world market for as much as $27,000 per pound – more than the price of gold. That makes the average horn on the average rhino worth close to a quarter-million dollars.  Across Africa, the number of elephants has fallen from 1.3 million 40 years ago to fewer than 400,000 today. Each year, the continent loses somewhere between 5 and 10 percent of those that remain. This has prompted organizations such as the Convention on International Trade in Endangered Species to predict that Africa will lose a fifth of its elephants in 10 years.  Other groups warn that the African elephant could be extinct within a generation, consigned to picture books, zoos, and eventually fairy tales, like the unicorn.

Mass killings of Africa’s wildlife have happened before, notably in the 1970s and ’80s, a period known as the “ivory holocaust.” In 1989, an international ban on trade in elephant ivory curtailed the supply of illicit animal parts, and populations of the hardest-hit wildlife began creeping up again.  But so did the demand. Asia’s growing middle class increasingly sought out the animal contraband that serves both as ancestral trappings of wealth and a source of traditional medicines.

To supply these expanding markets, poaching has surged again. But this time the sophistication, funding, and malevolence of the poachers and their big-time criminal underwriters have reached new heights. The few who are caught are often found with their own night-vision goggles, sniper rifles, bandoliers of ammunition, and other specialized gear. Big-money backers equip the gunmen with helicopters to land inside the electric fences that guard wildlife. They bribe veterinarians to supply the poachers with powerful animal tranquilizers, which are used to fell the beasts all the more quickly.

In the face of this onslaught, the world’s conservation organizations have significantly increased their efforts despite chronic underfunding. But Mander argues that the conservation “industry,” as he calls it, is “dangerously fragmented” and wasting energy pulling in different directions.”It’s a world wildlife war. Don’t let anyone tell you it’s anything else,” he says back at his main encampment in Zimbabwe. “And the way we’re heading, we’re going to lose.”

Mander is an unlikely poster boy for an environmental conservation movement… At age 19, he joined the Australian Navy and soon transferred into the force’s equivalent of the US Navy SEALs. Six years later, he had become a fully trained Special Forces sniper and specialist diver. But his commission ended, and he shifted into private security and protection of VIPs in Iraq. Twelve tours and three years later, he’d become a wealthy man but decided to quit. …

In Zimbabwe, a wildlife reserve manager with a team of rangers out in the bush decided that hiring Mander was worth a try…Seeing the need to teach rangers about military tactics, and using money from investments he had made during his high-paying days in Iraq, Mander set up the IAPF in 2009. To date, it has trained rangers from 10 separate wilderness areas in Zimbabwe and is expanding into Mozambique. IAPF is also leading efforts from South Africa to create an international standard for wildlife rangers around Africa and beyond….

He teaches intelligence gathering and analysis, as well as overt and covert patrolling. He shows them how to set up observation posts, how to use force properly, and how to deal with battlefield casualties. Mander deploys the gear he used when he was in Iraq, the night scopes and the infrared lights. He’s working on a new gas-driven drone that can spend five hours in the air scouring the landscape for poachers. His rangers go through physical training drills every morning. Their uniforms are new and spotless. “People will try to package it up in a softer way – I don’t know why – but antipoaching is a paramilitary operation,” he says. “Law enforcement should be a ranger’s No. 1 job, but it’s been turned into a minor role.”…

Mander is not the only one militarizing ranger training. In Kenya, the British Army is helping teach similar battlefield techniques. In South Africa, former special forces soldiers are doing the same. Drones are undergoing trials in a dozen wildlife reserves across Africa. The key ingredient in Mander’s approach is a perpetual show of force, which he believes acts as a deterrent…

Critics in the conservation community worry that militarizing the antipoaching movement raises the risk of innocent people getting caught in the crossfire. They think it sidesteps the judicial process at a time when courts are beginning to impose harsher sentences on poachers….

“A lot of people will argue that we need to be focused less on the military approach I’m trying here and more on community work and hearts and minds and sustainable alternatives for communities,” Mander goes on. “Look, I’m all for that. Let’s have people out there working on that. But while they’re at it, I’m going to be here on the ground trying to stop the bleeding and hold on to what we’ve got left before everything’s dead.”

Excerpt, Mike Pflanz, The ivory police, Christian Science Monitor, Mar. 2, 2014

The Bikini Atoll Nuclear Experiment 60 years after

The Marshall Islands marked the 60th anniversary Saturday of a U.S. hydrogen bomb test at Bikini Atoll, holding a commemorative program in the capital Majuro for people who suffered exposure to radiation from the United States’ biggest ever nuclear experiment.  The program began with a memorial walk by some 500 people in honor of the victims and survivors of the so-called “Bravo” test on March 1, 1954..Other participants included Rose Gottemoeller, acting U.S. undersecretary of state for arms control and international security…

Acknowledging the sacrifices of the Marshallese people and recognizing the effects of nuclear testing, Gottemoeller said the United States “has acted on its responsibility” by continuously providing medical and environmental programs in the Marshall Islands, on top of the $600 million it has extended as direct assistance and subsides, financial support for rehabilitation of the affected atolls, site monitoring and ongoing healthcare programs…

But Loeak and local resident Nerje Joseph, 65, who was exposed to the radiation, dismiss Gottemoeller’s pronouncement as nothing new and lament that their demand for additional compensation for the victims and the cleanup of the islands continues to fall on deaf ears.  Loeak reiterated that based on the assessment of an independent tribunal, the legitimate claims for damages amount to more than $2 billion, making the $150 million contribution of the United States in 1986 “a tiny and inadequate drop in an ocean of pain and suffering.”

“We remain the closest of friends with the United States but there is unfinished business relating to the nuclear weapons testing that must be addressed if that legacy of distrust is to become one of mutual confidence and respect,” he said.  “The United States must finally come clean and live up to its responsibility to help the Marshall Islands live with the devastation caused by their nuclear testing,” he added.

Excerpt from, Marshall Islands marks 60th anniversary of Bikini Atoll nuclear test, Kyodo News International, Feb. 28, 2014

See also Elli Louka: International Environmental Law: Fairness, Effectiveness and World Order

A Leaking Atom Bomb: Hanford, USA

There are “significant construction flaws” in some newer, double-walled storage tanks at Washington state’s Hanford nuclear waste complex, which could lead to additional leaks, according to documents obtained by The Associated Press.  Those tanks hold some of the worst radioactive waste at the nation’s most contaminated nuclear site.

One of the 28 giant underground tanks was found to be leaking in 2013. But subsequent surveys of other double-walled tanks performed for the U.S. Department of Energy by one of its Hanford contractors found at least six shared defects with the leaking tank that could lead to future leaks, the documents said. Thirteen additional tanks also might be compromised, according to the documents.  Questions about the storage tanks jeopardize efforts to clean up radioactive waste at the southeastern Washington site. Those efforts already cost taxpayers about $2 billion a year.  “It is time for the Department (of Energy) to stop hiding the ball and pretending that the situation at Hanford is being effectively managed,” Sen. Ron Wyden, D-Ore., wrote this week in a letter to Energy Secretary Ernest Moniz…

Hanford contains some 53 million gallons of high-level radioactive wastes from the production of plutonium for nuclear weapons. They are stored in 177 underground storage tanks, many of which date back to World War II and are single-walled models that have leaked. The 28 double-walled tanks were built from the 1960s to the 1980s.

Current plans call for transferring wastes from leaking single-walled tanks to the newer and bigger double-walled tanks, where the waste will be stored while a $13 billion plant for treating the waste is constructed. But the treatment plant is plagued with design problems and construction has stalled.  The situation did not appear dire until the news in October 2012 that the oldest of the double-walled tanks, called AY-102, had leaked, becoming the first of those 28 tanks to do so.

At the time, the Energy Department blamed construction problems with this particular tank for the leak and said it “seems unlikely” that the other double-walled tanks would leak.  However, Wyden said engineering reviews of six other double-walled tanks “found significant construction flaws in those six tanks essentially similar to those at the leaking tank.” Those six tanks contain about 5 million gallons of radioactive wastes, wrote Wyden, who is chairman of the Senate Energy and Natural Resources Committee….

Hanford, located near the city of Richland, stores about two-thirds of the nation’s high-level radioactive waste.  Officials have said the leaking materials pose no immediate risk to public safety or the environment because it would take perhaps years for the chemicals to reach groundwater.  The federal government built Hanford at the height of World War II as part of the Manhattan Project to build the atomic bomb.

Excerpts from Drew Vattiat, Hanford’s worst radioactive waste vulnerable to leaks from flaws in newer storage tanks, Associated Press, Feb. 28, 2014

How to Spot Secret Nuclear Reactors

The International Atomic Energy Agency (IAEA) works with its Member States to promote safe, secure and peaceful nuclear technologies. In a context of international tension and nuclear renaissance, neutrino detectors could help IAEA to enforce the Treaty on the Non-Proliferation of Nuclear Weapons (NPT)…[A] futuristic neutrino application could help detect and localize an undeclared nuclear reactor from across borders. The SNIF (Secret Neutrino Interactions Finder) concept proposes to use a few hundred thousand tons neutrino detectors to unveil clandestine fission reactors….The proposed detector will fit inside an oil supertanker. The main challenge would be to operate such a huger detector (138,000 tons) underwater.

Excerpt Thierry Lasserre et al, SNIF: A Futuristic Neutrino Probe for Undeclared Nuclear Fission Reactors, Nov. 16, 2010

 

 

Archipelago for the Military: Chagos

In November 1965, the UK purchased the entire Chagos Archipelago from the then self governing colony of Mauritius for £3 million to create the British Indian Ocean Territory (BIOT), with the intent of ultimately closing the plantations to provide the uninhabited British territory from which the U.S. would conduct its military activities in the region. On 30 December 1966, the U.S. and the UK executed an Agreement through an Exchange of Notes which permit the United States Armed Forces to use any island of the BIOT for defense purposes for 50 years (through December 2016), followed by a 20-year optional extension (to 2036) to which both parties must agree by December 2014. As of 2010, only the atoll of Diego Garcia has been transformed into a military facility.  The indigenous populations of the islands were relocated to Mauritius and the Seychelles to make way for a joint United States-United Kingdom military base on Diego Garcia.

There are two transnational political issues which affect the status of the Chagos archipelago.  First, the island nation of Mauritius claims the Chagos Archipelago (which is coterminous with the BIOT), including Diego Garcia. A subsidiary issue is the Mauritian opposition to the 1 April 2010 UK Government’s declaration that the BIOT is a Marine Protected Area with fishing and extractive industry (including oil and gas exploration) prohibited.

Second, the issue of compensation and repatriation of the former inhabitants of several of the archipelago’s atolls, exiled since 1973, continues in litigation and as of 23 August 2010 has been submitted to the European Court of Human Rights by a group of former residents.Litigation continues as of 2012 regarding the right of return for the displaced islanders and Mauritian sovereignty claims. In addition, advocacy on the Chagossians’ behalf continues both in the United States and in Europe.  According to a document released by wikileaks the marine protected area in the Chagos archipelago was established to prevent former inhabitants “to pursue their claim for resettlement on the islands.”

Excerpts from wikipedia Chagos Archipelago

More on IPS environment

 

US Subsidies for Nuclear Energy

U.S. Secretary of Energy Ernest Moniz today announced at the National Press Club that he will be traveling to Waynesboro, Georgia tomorrow, February 20, 2014 to mark the issuance of approximately $6.5 billion in loan guarantees for the construction of two new nuclear reactors at the Alvin W. Vogtle Electric Generating Plant. The project represents the first new nuclear facilities in the U.S. to begin construction and receive NRC license in nearly three decades. In addition, the deployment of two new 1,100 megawatt Westinghouse AP1000 nuclear reactors is a first-mover for a new generation of advanced nuclear reactors.

“The construction of new nuclear power facilities like this one – which will provide carbon-free electricity to well over a million American energy consumers – is not only a major milestone in the Administration’s commitment to jumpstart the U.S. nuclear power industry, it is also an important part of our all-of-the-above approach to American energy as we move toward a low-carbon energy future,” said Secretary Moniz. “The innovative technology used in this project represents a new generation of nuclear power with advanced safety features and demonstrates renewed leadership from the U.S. nuclear energy industry.”

The two new 1,100 megawatt Westinghouse AP1000 nuclear reactors at the Alvin W. Vogtle Electric Generating Plant will supplement the two existing reactor units at the facility. According to industry projections, the project will create approximately 3,500 onsite construction jobs and approximately 800 permanent jobs once the units begin operation. When the new nuclear reactors come on line, they will provide enough reliable electricity to power nearly 1.5 million American homes.  Project partners include Georgia Power Company (GPC), Oglethorpe Power Corporation (OPC), the Municipal Electric Authority of Georgia (MEAG), and the City of Dalton, Georgia (Dalton)….

The Energy Policy Act of 2005 authorized the Department to issue loan guarantees for projects that avoid, reduce or sequester greenhouse gases and employ new or significantly-improved technologies as compared to technologies in service in the United States at the time the guarantee is issued.  The nuclear facility is eligible for loan guarantees since it is expected to avoid nearly 10 million metric tons of carbon dioxide emissions annually, which is the equivalent of removing more than two million vehicles from the roads. In addition, the Westinghouse AP1000 reactor has incorporated numerous innovations resulting in significant operational and safety improvements.

Currently, the Department’s Loan Programs Office (LPO) supports a large, diverse portfolio of more than $30 billion in loans, loan guarantees, and commitments, supporting more than 30 closed and committed projects. The projects that LPO has supported include one of the world’s largest wind farms; several of the world’s largest solar generation and thermal energy storage systems; and more than a dozen new or retooled auto manufacturing plants across the country.

Sec. Moniz to Georgia, Energy Department Scheduled to Close on Loan Guarantees to Construct New Nuclear Power Plant Reactors, Press Release, US Energy Department, Feb. 19, 2014.