Private Sector Initiatives

• Ford has released a new report, Business Impact of Climate Change (BICC), which is the first by a major automaker to directly address the complex factors affecting climate change. The report focuses on the business implications of climate change and details the directions that Ford plans to move in response, including the expansion of existing technologies such as variable valve timing and direct injection engines as well as the increased use of hybrid and clean diesel technologies.

• Following the launch of its first "experimental supercenter" this past July in McKinney, Texas, Wal-Mart has launched a second energy-efficient store in Aurora, Colorado. The building utilizes a variety of efficiency improvements and renewable energy sources which Wal-Mart hopes can achieve a 25-30% increase in energy efficiency and a 30% decrease in GHG emissions over the next four years. Wal-Mart has contracted with the DOE's nearby National Renewable Energy Laboratory (NREL) to monitor and quantify the building's progress over the next three years, and they plan to apply the lessons learned to the construction of future stores.

• In addition to its new experiment in energy-efficient building design, Wal-Mart announced plans to improve the fuel efficiency of its trucking fleet. Working with the Rocky Mountain Institute, Wal-Mart developed a strategy to achieve the company's goals -- a $52 million per year savings in fuel costs and a 26 billion pound reduction in carbon emissions by 2020 -- that includes several aerodynamic design efficiencies and a small diesel auxiliary power unit that will power each truck's heat and cooling systems. In addition, by 2007 Wal-Mart plans to double its current fleet of 100 hybrid vehicles.

• BP executive Lord Browne recently announced the formation of BP Alternative Energy, a new business unit that will manage BP's investments in solar, wind, hydrogen and combined-cycle-gas-turbine (CCGT) power generation. Built around BP's success in solar (its BP Solar division, which is now included in the new Alternative unit, is the world's third-largest producer of PV cells with about 10% market share), BP hopes to generate $8 billion over the next decade with the new unit, or about 2% of its total current revenue, from the initial $1.8 billion it will invest in alternatives over the first three years of the program.

Investment and Mergers

• According to a report issued by the Renewable Energy Policy Network for the 21st Century (REN21), an international policy initiative supported by energy-related departments of several governments and a team of over 100 researchers, global investment in renewable energy experienced strong growth in 2004. The fastest-growing technologies for the year (2004) were grid-connected Solar PVs at 54% growth, biodiesel at 26%, and wind power at 20% (via Worldchanging). As Renewable Energy Access notes however, despite this recent growth, these investments only represent 6.7% of total investments in the energy industry.

• In further evidence of the solar power industry's rapid growth, Future Pundit notes that venture capital flowing into the solar-energy sector has more than doubled in the past year. According to the National Venture Capital Association, a US trade organization, venture capital firms spent $31.4 million in the industry for the entire year in 2004, but spent $67.7 million in the first three quarters of 2005 alone. While (as noted above) general investment in renewables accounts for only 6.7% of total investment in the energy industry, venture capital expenditures on solar power account for more than one-third of the total $194.6 million venture investments in the energy industry.

• Looking ahead, this excellent year-end post by Cleantech Investing summarizes the year's boom in solar investing in the context of analyzing its potential for further growth.

• The Public Utilities Commission of Ohio (PUCO) recently approved the merger of Cinergy Corp. with Duke Energy, following the Federal Energy Regulatory Commission's earlier decision to do the same. Cinergy, a utilities company, agreed to be bought by Duke as a strategic move into nuclear power -- Duke owns and operates several nuclear power plants in the Carolinas, while Cinergy is known for its superior supply chain and distribution system in Ohio and Indiana. The deal is now likely final but awaits approval from regulatory commissions in Indiana and North Carolina.

• Duke will sell about 6200 MW of natural gas generation capacity to LS Power Group to help finance the acquisition.

Domestic Policies

• On December 12, the IRS posted a request for applications for its new Clean Renewable Energy Bond (CREB) program. Under the program, cooperative power companies and government bodies can borrow from a pool of $800 million in tax credit bonds to finance wind, biomass, geothermal, solar, hydropower, or, ahem, clean coal projects. Applications are due April 26, 2006.

• Last month, the Regional Greenhouse Gas Initiative (RGGI), a regional agreement amongst 7 northeastern states (NOT including Mitt Romney's Massachusetts) to cut greenhouse emissions from power plants, was finalized and signed. The program, which will rely on a regional 'cap and trade' emissions market to achieve its goals, is set to begin in 2009 and will require a reduction of power plant emissions by 10 percent of current levels by 2019. This post from the Environmental Economics blog sums up the market mechanism, while this Energy Outlook post from Geoff Styles discusses the fundamental challenges faced by this and other attempts to design and implement local responses to this global problem.

• Clean Energy Future's Arno Harris has a great year-end post analyzing the five different types of clean energy policies being implemented in the US today - Capacity Based Incentives, Performance Based Incentives (PBI), Renewable Portfolio Standards (RPS), Renewable Energy Certificates (RECs), and Tax Incentives. The post is detailed and well-grounded, with an eye toward how these policies effect the development of energy markets and businesses.

• Turning towards the EU, the European Commission announced an action plan to increase the proportion of biomass in the EU's energy mix. Incorporating more than twenty actions to take effect in 2006, the plan outlines measures to be taken in the heating, electricity and transport sectors that includes improving fuel standards, investing in research, and educating the EU agricultural industry about growth opportunities in supplying the raw material for biomass projects. The plan also focuses on de-regulating administrative and grid entry barriers for biomass energy sources.

• The EU Environment Ministers have endorsed a plan to include aviation emissions in the EU Emissions Trading Scheme, calling on the European Commission to propose legislation to facilitate this by the end of 2006. Emissions from air travel are growing faster than any other sector in the EU, and increases there could negate a significant portion of the (minor) progress that's been made on emissions reductions in other areas.

International Relations

• To no one's surprise, the recent UNFCCC meeting in Montreal on the Kyoto Protocol and the future of international climate change policy was generally quarrelsome and unproductive. As the debate increasingly shifts to what regulatory framework will come after Kyoto expires in 2012, the battle lines have hardly changed: the current parties to the Protocol are loudly blaming the US and pushing for more and deeper binding targets (despite the fact that many of them, including host Canada, are doing worse than the US in meeting their Kyoto targets), while the US, Australia, and major developing countries like China and India continue to resist them. Still, as noted by Bill Clinton and seconded by Geoff Styles, international political disagreement shouldn't - and, indeed, won't - prevent a variety of binding and non-binding, international, national, and subnational approaches to flourish in the meantime.

• Princeton professor Robert Socolow has developed one innovative new conceptual framework for formulating climate change policy: stabilization wedges. The idea is that individual countries should manage specific emissions-reducing tasks based on their nation's comparative advantages to do so (in terms of resources, capital, etc.), in one of five functional areas: energy conservation, renewable energy, forest- and land-management, nuclear energy, and fossil carbon management (including carbon sequestration). This division of labor and investment, in Socolow's words, "decomposes a heroic challenge... into a limited set of merely monumental tasks."

• NEI notes recent steps by India to enhance its international stature in the world of nuclear technology, as it concludes a technology-sharing agreement with Russia (after signing similar bilateral agreements with the US and the UK) and joins the ITER international experimental fusion reactor consortium.

• As the (recently-retired) Peak Oil Optimist reports, the Norwegian oil company DNO is drilling for oil in Kurdish areas of Iraq without permission from the Iraqi central government. The issue is particularly sensitive because the Sunni minority in Iraq fears that the country will split into factions based on ethnic- and oil revenue-based lines if energy contracts are negotiated regionally instead of nationally (Sunnis happen to inhabit the least oil-rich areas of Iraq).

• In a move that starkly highlighted its control of pipeline locations crucial for supplying natural gas to eastern Europe and, ultimately, the rest of the continent, Russian state natural gas company Gazprom shut off natural gas supplies to Ukraine in a dispute over how soon Ukraine would have to begin paying full price for Russian gas (as a former Soviet state, Ukraine currently pays much less than the market price). Fortunately, the situation was resolved late last week, in a compromise that involves Gazprom selling the gas at its asking price of $230 per 1,000 cubic meter to an intermediary, which will mix it with cheaper gas from Central Asia - from nations such as Turkmenistan - and sell to Ukraine for $95 per cubic meter. Sound like a strange solution? Guess who controls the pipeline in Turkmenistan: Gazprom.

• This post from Geoff Styles places the Russia/Ukraine dispute in the context of Russia's future as an increasingly important supplier of natural gas to the EU, which heavily relies on Russian natural gas piped through the Ukraine and was thus affected by the crisis as well.

• Speaking of Gazprom, the recently-former German Chancellor Gerhard Schroeder has found a new job managing a Gazprom subsidiary looking to build pipelines into Western Europe - a move that Mr. Styles plausibly compares to George W. Bush accepting a position with Saudi Aramco in February 2009.