Joko Widodo, Indonesia’s president-elect, has a life story tailor-made for Hollywood. Universally known by his nickname “Jokowi,” the son of a timber salesman spent his childhood in a riverside slum. Having grown up in a home where timber put food on the table, Jokowi decided to make his living from the tables themselves, and started his own successful furniture company. In 2005, he was elected mayor of Surakarta, and became governor of Jakarta in 2012. He is, as they say, a man of the people. But Indonesia’s new leader is going to have to put that image at risk if he follows through on a campaign promise to remove a major obstacle keeping the country’s economy from achieving its full potential – namely, its fuel subsidies.
Buying expensive fuel overseas and then selling it cheap at home is fiscally ruinous, but that’s exactly what the country has been doing for 47 years. The population is now used to enviably cheap fuel prices, a luxury few other citizens of net oil importers share – gas costs Indonesians about $0.99 a liter, compared to $2.18 in the U.K. Not surprisingly, the subsidies are extremely popular, and reform efforts have bedeviled politicians for years. Former President Suharto’s 32-year regime, for example, collapsed just a year after the strongman raised fuel prices during the Asian financial crisis, under pressure from the International Monetary Fund. Last year, violent clashes between police and protesters broke out after Indonesia’s parliament raised the price of subsidized gas and diesel fuel by 44 percent, and similar protests took place in 2008.
But the gift to its citizenry has become larger than the country can afford. Fuel subsidies suck up 20 percent of the federal budget, some $20 billion a year. What’s more, domestic production is declining. Indonesia’s Agency for the Assessment and Application of Technology expects the country to produce just 124 million barrels of oil per day in 2030, down from 329 million in 2011. Rising imports will put further stress on the current account deficit, which reached $9.1 billion, or 4.27 percent of GDP, in the second quarter of 2014. Without fuel subsidy reform this year, Indonesia’s budget deficit will likely grow to 2.7 percent of GDP, according to Credit Suisse Head of Southeast Asia and India Economics and Strategy Santitarn Sathirathai
,. That’s well over the government’s estimate of 2.4 percent and close to Indonesia’s legal deficit limit of 3 percent. This slim fiscal cushion could easily disappear if the rupiah were to depreciate or global oil price rise by 10-15%, making the budget position highly susceptible to the mood of the financial markets.
There are long-term issues to consider as well. Indonesian GDP grew just 5.1 percent in the second quarter of 2014, its lowest rate in five years. And those pinched finances are crimping growth: Indonesia spent the equivalent of 2 percent of GDP on infrastructure in 2013, compared to 5.4 percent in India and 4.6 percent in Malaysia, according to Credit Suisse, and the inability to get from here to there in the enormous archipelago makes it difficult to for companies to ship goods or expand to new locations. According to the World Bank, the country’s poor transportation network makes it “cheaper to import oranges from China than to source them from Kalimantan.”
Indonesia’s own master plan says the country needs to spend $191 billion over the next four years on infrastructure to achieve an annual nominal growth rate of 12 percent, slightly higher than the disappointing 10.4 percent achieved in 2013. But the government is due to spend just $52 billion of that amount, with the hope that state-owned enterprises and public-private partnerships will make up the difference. But even that $52 billion is at risk. Credit Suisse says fuel subsidy reforms are critical if Jokowi is to achieve his campaign goals of building 2,000 km of new roads, 10 new seaports, airports and industrial zones, and a mass transportation system.
As governor of Jakarta, Jokowi proved he knows how to get infrastructure projects done, having jumpstarted a stalled $1.5 billion monorail project and dredged canals to combat the city’s chronic flooding. But the people wanted those things. They will not be as keen about higher gas prices. To his credit, Jokowi campaigned on the promise of reforms of all kinds, and many believed he was toying with an 83 percent hike to bring prices closer to market rate over a five-year period. The only question is whether he’s popular enough to pull it off.
Above: Indonesian President-elect Joko Widodo greets supporters with his ‘three-finger greeting’ symbolizing the third of Indonesia’s five principles, “The Unity of Indonesia”, during a gathering in Jakarta. Photo by AP Images/Dita Alangkara
David Cameron assures Solar Trade Association that Government and industry will continue to work together on laying the foundations for the successful future of solar in the UK.
original source; www.renewableenergyfocus.com
The Solar Trade Association has released a letter from UK Prime Minister David Cameron, in which Britain’s leader responds to the group’s recent request, that the UK Government “act to secure the UK solar industry and strengthen the country’s position on the thriving global solar market.” Specifically, the Solar Trade Association has voiced its serious concerns about the levels of uncertainty in the solar power industry as a result of proposed policy changes by the UK’s Department of Energy and Climate Change. These proposed policy changes, the group argues, would restrict solar’s growth in cost-effective applications such as large-scale rooftop and ground-mounted schemes.
In its letter to Prime Minister Cameron, the Solar Trade Association stated: “Just a short period of stable Government support is needed to deliver subsidy-free solar in the UK [by the end of the next Parliament]. We very much welcome the very positive benefits solar parity will deliver for UK businesses, including improving international competitiveness, lower energy price inflation and improved electricity sector competition.”
Prime Minister Cameron indeed acknowledged the positive impact of solar, adding: “It is clear from the rapid deployment of solar PV in the UK over the last four years, that is has the potential to play a valuable part of the UK’s renewable energy mix.” The Prime Minister, in his response, went on to say that “solar PV remains one of the priority renewable energy technologies set out in the Government’s Renewables Energy Roadmap and its subsequent updates.”
However, these concerns have arisen due to plans to close the current subsidy scheme for large solar farms, a move which has angered industry representatives.
The STA’s Leonie Greene criticised Cameron for failing to recognise that the planned changes will fail to boost the wider solar market, arguing that an additional boost to the feed-in tariff for large rooftop installations was needed if the government is to realise its vision of shifting the market away from solar farms and towards large rooftop projects.
“The solar industry has done its bit to lay the foundations for the successful future of UK solar,” she said. “But we can’t start building the house if the architect keeps changing the designs. Solar can become subsidy-free next Parliament, but only if government provides a level playing field and stable policy.”
To read more and follow the debate see the following articles;
UK Prime Minister responds to industry group’s call
Renewable Energy Focus – 21 Aug 2014
PM sees bright future for solar
reNews-19 Aug 2014
Cameron defends latest proposed solar subsidy cuts
Business Green-19 Aug 2014
Cameron talks up solar’s potential under CfDs
Solar Power Portal-19 Aug 2014
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Clean Green Energy LLC (CGE) today said customers of the company have saved more than 300 million kilowatt hours of energy since the company’s founding. That milestone is the equivalent of $33 million in energy cost savings, or powering about 28,000 average American homes for a year.
“Three hundred million kilowatt hours are equivalent to 450,000,000 pounds of greenhouse gas emissions or the effect of planting nearly 170,000 acres of trees,” said Bryan Zaplitny, president and CEO of CGE. “We were among the first fifty ESCOs (energy services companies) in the United States, and we’re proud that sustainability has been the foundation of our business model from day one.”
CGE guarantees and tracks the energy savings of its customers, and the company passed the 300 million kilowatt hour mark this summer. CGE works with businesses, municipalities, schools, and non-profits throughout the US, including the Salvation Army, TRW, Ford, Comerica Bank, the State of Michigan and the City of Dearborn, Michigan.
For example, six Southeast Michigan Salvation Army locations reduced their total energy consumption by over one million kilowatt hours annually. That means savings of $120,000 per year, which the non-profit can turn to its core mission of helping people in need.
The savings will continue to grow. CGE not only saves their customer in energy costs, they also supply sustainable energy through their growing business in wind and solar power purchase agreements.
“As much as we are proud of our past we are even more excited about our future,” Zaplitny said. “Next spring the launch of our innovative WIND-e20® technology is going to change the equation for stationary sustainable energy.”
Clean Green Energy LLC is an energy solutions provider headquartered in Brighton, Michigan. The company provides energy optimization services and purchase power agreements to customers in the U.S. and abroad, using energy efficient technologies that include Cree LED lighting and wind and solar generation. CGE is set to merge with publicly traded McKenzie Bay International (MKBY:OTCPink) later this year.http://www.cleangreenenergyllc.com; http://www.mckenziebay.com
Certain statements made in this release constitute forward-looking statements and do not guarantee future performance. Actual results or developments may differ materially from the projections in the forward-looking statements.
SOURCE Clean Green Energy LLC
For the eighth year in a row, Sierra magazine has dedicated a big chunk of its September/October issue to higher education. So why is the “Cool Schools” issue such a big deal? I’ll give you a hint: It’s not because of the schools.
Over the last few years, I’ve spoken to many different audiences about how clean energy is going to change our world—I never get tired of talking about it. And people seem to appreciate hearing the good news that we’re already well on our way to a future without fossil fuels. But one particular audience always leaves me with a net surplus of energy—and that’s college students. I don’t know if it’s because young people have always been passionate about social issues or because our planet’s future is especially important to the people who’ll be spending the most time there, but young people seem to possess a singular fervor for making the world a better place.
So, although the “Cool Schools” sustainability rankings of universities around the country are interesting in and of themselves, their most important function is to foster accountability. Colleges and universities should be leading the charge on sustainability and the transition from fossil fuels to clean energy. When they don’t, students will be the first to speak up.
Here’s how the Sierra Club is going to help them do that. Today, the Sierra Student Coalitionwill launch a new Campuses for Clean Energy campaign. Its goal is to build on the growing student-led movement around the country calling on school administrations to demand enough clean energy from their utility providers to power campuses with 100 percent renewable energy. Universities are often some of the biggest energy users, which means they’re well positioned to put significant pressure on utility providers.
Universities can apply pressure in other ways, too, such as divesting from fossil-fuel companies. Sierra′s “Cool Schools” issue examines a partial but significant victory along those lines: Stanford University’s decision to divest from coal-mining stocks. The U.S. currently has more than 400 student-led campaigns to persuade institutional investors to divest from fossil-fuel stocks.
In addition to committing to renewable energy and divesting from dirty fuels, colleges and universities can use their influence to advocate for statewide policies that will bring more clean energy online. Given the current inertia in Washington, D.C., such campaigns will be crucial for years to come.
Regardless of how “cool” they may be, though, colleges and universities are still institutions, and institutions tend to accumulate quite a bit of inertia of their own. You can’t say the same, thank goodness, for their students. The issue may be called “Cool Schools,” but really it’s awesome students whom we’re counting on.
Shortly after Malaysia Airlines Flight 17 was shot down over Ukraine on July 17, the U.S. and European Union announced another round of new economic sanctions against Russia. The restrictions banned government-affiliated Russian banks from issuing new debt or equity with maturity over 90 days in Western capital markets and blocked energy companies from importing equipment for deep-water drilling and fracking. Russia won’t feel the pain of these moves immediately, and if relations with Ukraine normalize soon, the country may escape relatively unscathed. But if sanctions drag on for another six months to a year, they could put the brakes on both critical business sectors and the larger economy, according to Credit Suisse’s Private Banking and Wealth Management Division.
Russia’s economy has been weakening substantially, with GDP growth slowing from above 4 percent in 2010 and 2011 to just 1.3 percent in 2013, and economists expect it to grow 0.5 percent this year. But so far, sanctions don’t seem to have made things any worse. Russia’s composite Purchasing Managers’ Index rose from 50.1 in June to a seven-month high of 51.3 in July, with a particularly strong uptick in manufacturing output. GDP grew 0.8 percent in the second quarter, down only slightly from 0.9 percent in the first quarter. Meanwhile, the ruble is trading around 36 to the dollar, 6.7 percent weaker than a recent low of 33.7 in late June, but no worse than during a broader emerging market selloff in February. A large current account surplus ($17.1 billion in the second quarter) and recent central bank tightening (rates increased from 7.5 to 8 percent in late July) should also help protect the ruble going forward.
For now, healthy internal balance sheets and the backstop of Russia’s $468.8 billion (22 percent of GDP) as of mid-July in foreign currency reserves should allow sanctioned banks to repay $48 billion in Eurobond payments due between 2015 and 2019 without needing to access additional Western capital. The Russian government has also allowed several government-affiliated banks to convert subordinated loans from the Central Bank of Russia and VEB, a state-owned development bank, into preferred shares. “We deem the exercise credit positive to the quasi-government banks at a time when their access to international capital markets for funding has been closed,” Wingson Cheng, Head of APAC Research in Credit Suisse’s Private Banking and Wealth Management Division, wrote in a recent note. “In the short run, the government-related banks have sufficient on-balance sheet liquidity, prefunding, or available funding through other avenues.” Credit Suisse therefore believes that the sanctioned banks are unlikely to default on $48 billion in outstanding Eurobonds, but that doesn’t mean investors who hold those bonds are out of the woods, and perceived riskiness of bank-issued debt will continue rising as long as Russian financial institutions remain shut out of international capital markets.
Likewise for the energy sector, which comprises some 30 percent of Russian GDP, where the sanctions are unlikely to cause serious problems unless they extend well into the future. The primary reason: Most of Russia’s oil production takes place in conventional fields that don’t need the kind of advanced equipment Western countries have stopped providing. But long-term sanctions on advanced technology could well delay efforts to develop Russia’s Arctic resources, as well as the huge reserves of so-called tight oil believed to be pent up in hard-to-reach shale formations. Tight oil currently accounts for just 1 percent of Russia’s total production, but the U.S. Energy Information Administration believes Western Siberia’s Bazhenov formation contains 75 billion of recoverable crude oil, which would make it the largest such reserve in the world.
The ultimate length and severity of current and possible future sanctions depends, of course, on how the Russia/Ukraine situation develops, but October, when European officials are due to review their policies, could be a make-or-break month. With winter just weeks away and Europe dependent on Russia for 30 percent of its gas supply, Credit Suisse doesn’t foresee the two most drastic scenarios – Russia literally cutting off gas supplies or launching a formal military campaign in Ukraine – although neither can be ruled out. The most likely scenario is that things continue as they are – and that won’t be any picnic for Russia. “There’s always a time lag before sanctions impact the economy,” says Marc Häfliger, an investment strategist in the Private Banking and Wealth Management Division. “Don’t underestimate the effect on business sentiment. If companies stop investing, it won’t start showing up in a real way for six months to a year.” Which is time enough for things to get back a little closer to…normal?
Above: Sanctions may not impact Russian oil production at first, since most production comes from conventional oil fields. But prolonged sanctions could well deliver a blow to long-term plans for offshore drilling in the Arctic.
As the global economy improves, the sustainability jobs market is growing and we are delighted to be expanding our teams to meet this increased demand for recruitment across; Environment, Corporate Sustainability, Energy Services and Renewable Energy.
Ross Courtney joins the Energy and Building Services Group, utilising his skills acquired across multiple roles whilst running his own consultancy and service provision company for 19 years. Ross brings with him significant experience and market knowledge, with wide experience within; Renewables, Energy Efficiency, Low Carbon products and IT & project management.
Tom Herbert & Ed Goddard join the Environment & Sustainability Group, as part of Allen & York’s graduate trainee scheme and are proving to be invaluable members of this busy team. Their focus is; CR & Sustainability and Environmental Consultancy (incl. EIA, Contaminated Land, Ecology and EMS)
Jack Dawkins & Greg Murphy join our Renewable Energy Group, swelling the ranks of this market leading team. A&Y have developed strong relationships and a reputation for delivery of results for challenging roles with leading; Utilities, Energy Providers and Energy Developers across the UK & Europe, Jack and Greg will be important in enhancing our service delivery across the renewable energy jobs market, focusing specifically on; Onshore & Offshore Wind, Solar & Thermal, BioEnergy and Transmission & Distribution.
Reflecting strong growth within this dynamic marketplace, Allen & York will continue to deliver outstanding technical talent to our partners throughout the UK and internationally.
Paul Gosling, Allen & York’s MD UK & Europe comments; “I’ve really enjoyed working with our new recruits who have already demonstrated the enthusiasm, skills and abilities we expect from A&Y consultants. For the last 21 years our business has been built on the quality of our people and under the guidance of our existing team of experienced consultants I’m confident that these individuals will add to our capacity to deliver world class services.”
Allen & York are a leading international sustainability recruitment consultancy, with offices in UK, Australia & UAE. We source outstanding talent across; Environment, Energy, Health & Safety, Planning & Waste. Current opportunities include;
Energy Manager – Retail
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Allen & York’s Middle East team take pleasure in supporting a number of small entrepreneurial businesses as well as the large international conglomerates.
One such business making big steps forward in the UAE Green Building industry is Alpin, for whom Allen & York recruited a new Head of Sustainability earlier this year.
More information on the challenges facing such a business have recently been highlighted in local newspaper; The National, in which Alpin highlight the challenges facing green entrepreneurs in the Middle East.
Jourdan Younis left his job in Abu Dhabi two-and-a-half years ago to set up his own company that provides green building consultancy services in the UAE. The 31-year-old from California is the managing director of Masdar-based Alpin. He says the demand for green buildings is growing enough to keep the start-up busy and expand. Mike Pidgeon, Alpin’s Head of Sustainability, and Mr Younis talk about the market in the region.
Allen & York are international sustainability recruiters, with offices in the UAE, Australia and UK. Visit our website for current job opportunities in the middle east.
Renewable energy continues growing its share of new electricity generation in the U.S.
According to the latest Energy Infrastructure Update from the Federal Energy Regulatory Commission, solar and wind energy constituted more than half of the new generating capacity in the country for the first half of 2014. Solar and wind energy combined for 1.83 gigawatts (GW) of the total 3.53 GW installed from January to June.
Natural gas constituted much of the remainder of installed capacity with about 1.56 GW. Coal and nuclear energy came to a complete half with zero projects and zero capacity. Last year, coal had two new units during the same time period. Since then, the Obama Administration issued a proposal for U.S. power plants to reduce carbon emissions by 30 percent compared to 2005 level. Coal plants account for nearly half of the country’s carbon emissions.
Solar and wind combined for 120 of the 180 projects in the first half of the year. That figure is slightly down from the 137 projects during this period last year. Installed capacity was also higher by this point last year at about 2.16 GW.
Still, natural gas suffered a much larger fall from the 41 units for nearly 4.5 GW during the first six months of 2013.
In 2013, renewable energy projects tripled the amount of new coal, oil and nuclear projects. Natural gas accounted for more than half the installed capacity for all of last year.
Here are a few renewable energy highlights from the first half of the year:
- First Wind’s 14 MW Warren Solar project in Worcester County, MA is online. The power generated is sold to National Grid USA under long-term contract.
- NRG Solar Community I LLC’s 6 MW Community Solar 1 project in Imperial County, CA is online. The power generated is sold to Imperial Irrigation District under a long-term contract.
- Two Dot Wind Farm LLC’s 9.7 MW Two Dot Wind Farm project in Wheatland County, MT is online. The power generated is sold to Northwestern Energy Montana under a long term contract.
While the rest of spent much of the past month watching the World Cup, hoping our fandom would help push the U.S. to a better outcome, one nonprofit was busy ranking the world’s top energy efficiency performers.
The American Council for an Energy Efficient Economy (ACEEE) has unveiled the top 16 countries in terms of energy efficiency policies and programs. The U.S. finished near the bottom, placing at No. 13. The country scored a 42 out of a possible 100 on its scorecard, which is based on four categories: Buildings, industry, transportation and national effort.
Meanwhile, Germany mirrored its World Cup performance, edging the competition to take home the energy efficiency championship. Here are the full rankings:
ACEEE didn’t just give its country the bad news and bail. The group also provided a few suggestions on how the U.S. can improve its ranking next time.
“There’s really no excuse for the U.S. lagging behind other nations on energy efficiency,” U.S. Rep. Peter Welch (D-VT) told USA Today regarding the rankings. “There’s bipartisan common ground on this issue in Congress.”
When the idea of high oil prices comes to mind, one quickly recalls the hot months of 2008, when crude prices of nearly $150 a barrel had summer drivers rethinking the cost vs. benefit equation of road trips. But one silver lining of the global financial crisis and economic slowdown was that it brought prices back down below $50 a barrel in November of that same year. And here we are again: Last month, the five-year rolling average price of Brent crude topped $100 a barrel for the first time ever. Worse yet, Credit Suisse energy commodity analyst Jan Stuart doesn’t think another reprieve is in the cards. He calls the current price level “a new normal.”
How did we get back here so quickly and why are prices likely to stay put?
On the demand side, it’s quite simple. Both the global economy as well as global population continue to grow, and along with them demand for fossil fuels. Global oil demand has fallen only two times in the past two decades: the height of the global financial crisis in 2008 and 2009. Global consumption should increase by 1.4 million barrels a day, or 1.5 percent, to a record 92.7 billion a day in 2014, according to the International Energy Agency, which raised its forecast in March as the economic recovery gained momentum.
For its part, supply is not keeping up with demand. While U.S. production has grown substantially thanks to shale drilling, the U.S. is the only major non-OPEC nation posting significant production increases. All-in, last year’s oil consumption grew by 1.4 million barrels a day, while production only increased 560,000 barrels a day, according to the BP Statistical Review of Energy.
As has been the case since the start, the main threat to oil supply is geopolitics. Increasing sectarian violence in Iraq, for example, has once again put the 150 billion barrels of proven oil reserves of OPEC’s second-largest producer into question, in the process helping to push the price of Brent to a high of $115.19 on June 19. Back in 2009, expectations were high: New investment by foreign oil companies was going to double Iraq’s output to 5 million barrels a day by 2013 and further increase it to 8 million by 2019. And that, in turn, would account for some 60 percent of OPEC’s overall production increase through decade’s end. Yet we’re nearly halfway through the decade and production is around 3.2 million barrels a day. Brent prices have dipped back below $110, and the current spasm of violence hasn’t reached the oil producing south, but companies including ExxonMobil and BP have begun evacuating employees, and investors are worried that continued violence could render even more modest production forecasts a pipe dream.
Iraq is just one example of many. The wave of political uprising exuberantly (and prematurely) coined the “Arab Spring” has left oil supply problems in its wake nearly everywhere it has rolled through. Protests that began last summer in Libya, which holds Africa’s largest reserves, cut output to around 350,000 barrels a day from the 1.4 million barrels a day the country was producing last year, although the country recently restarted production at its El Sharara field, which will hopefully bring between 300,000 and 340,000 barrels a day back online after a four-month strike by protesters. In South Sudan, fighting between the president and his former deputy has cut output by roughly one-third to around 160,000 barrels a day since December. Conflicts in Syria and Yemen have also cut output. “The instability in the Middle East and North Africa is so fundamental that it’s going to take a very long time for it to become a stable place for the oil industry,” says Stuart. In the meantime, production has fallen by a total of between 3 million and 3.5 million barrels a day since February 2011, according to Credit Suisse.
So let’s get back to this ‘new normal.’ Last month, Credit Suisse raised its forecast for average Brent prices in 2014 and 2015 to $110.64 and $102.50 from $107.03 and $97.50, respectively. And these things do not happen in a vacuum. Every $10 a barrel increase in oil prices reduces real U.S. income growth by as much as 0.4 percent, according to Credit Suisse estimates. “We are worried about the political events in the Middle East,” says James Sweeney, chief economist for Credit Suisse’s investment bank. “A meaningful shock in oil could really disturb a lot of our cyclical outlook.”
Photo: Iraqi laborers work at the Rumaila oil refinery near the city of Basra. (Courtesy of Associated Press)