Multinational construction company Hochtief JV signs contract with SN Power and Pacific Hydro for Tinguiririca River hydropower project

The Hochtief JV lined up to build the 160MW La Confluencia hydropower scheme in Chile has signed a Euro175M (US$253M) contract with the developer consortium.

The project involves the design and construction of powerhouse to take two turbines, approximately 19km of tunnel and also two river diversions. Hochtief’s local subsidiary will undertake the work in partnership with Chilean firm Tecsa on a 70:30 basis, and the are working on a engineer, procurement and construction (EPC) contract.

The scheme is being developed 150km south of Santiago by a consortium of Australian utility Pacific Hydro and SN Power, which is a Norwegian venture of utility Statkraft and the Norfund Power Invest AS fund.

La Confluencia is to be built in the Tinguiririca valley upstream of the La Higuera scheme, which the developer is also building and should be online later this year. The new project is to be commissioned in 2010. Each project is to generate approximately 1400GWh annually.

The total budget of La Confluencia is US$350M and approximately 60% of the project cost will be debt financed.

Here is the full article.

Bali's business bonanza and what it means for Chile - Pacific Hydro has as many people in its Santiago office as its Melbourne headquarters.

Bali's business bonanza

Dorjee Sun is huddled into his mobile phone, one of many players jostling for position as the nascent global carbon market opens up a goldmine of opportunity.

Dorjee Sun is huddled into his mobile phone, laptop slung over one shoulder, pacing dangerously close to the edge of the pool.

His white shirt has stuck to him in Bali's evening heat and mosquitoes are nibbling at his ankles. But the 30-year-old internet millionaire from Sydney's North Shore has a grin on his face and a hand in the air, waiting for a reciprocal high five.

He has had a breakthrough in negotiations for his latest venture, Carbon Conservation, with three Indonesian provincial governors. Sun wants to facilitate the sale of carbon credits to developed countries from projects which prevent or reduce deforestation in Aceh and Papua. He has managed to get Merrill Lynch on board and is pretty happy about it.

(While Merrill Lynch may be ecstatic the indigenous people who lands the scheme depends on are not: Indonesia: WALHI Protest against Kyoto, Carbon Trade, Clean Development Mechanism , Africa: Poor Countries Fail in Demand for Control of New Clean Development Mechanism Fund , Indigenous Peoples protest World Bank carbon scam in Bali , A gift from Scotland to Brazil: drought and despair . On top of that, such projects deforestation projects rarely bear close scrutiny: The great carbon trading scam? )

Sun has no background in science or climate change. He made his fortune out of starting up and then selling a recruitment software company and an education mentoring business.

But the carbon industry is no longer just inhabited by scientists, environmentalists and policy wonks. Over the past year, entrepreneurs like Sun - keen to make a buck and feel good about doing it - as well as the big investment banks, project developers and trading firms are looking to get a piece of the action.

Their interest is not surprising. More than $US60 billion ($68.1 billion) changed hands in the global carbon market this year, double the trade of last year and up from just $US400 million three years ago. Analysts estimate the market could be worth $US1 trillion within the next 10 years.

By 2030, according to some carbon bulls, it may even be the biggest commodity market in the world, overtaking crude oil.

(Read more here: Bank says climate change is investment "megatrend" , Global warming has a financial upside , Profiteering from Carbon Trading - How the Global Carbon Market will Destroy Patagonia, Chile )

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At the UN Climate Change Conference in Bali over the past two weeks, comparisons with the internet industry and the dotcom crash of 2001 were freely made. However, despite all of the obstacles there seems to be general agreement that while there may be a shake-up of the carbon industry, it won't collapse or disappear. Like the internet before it, carbon is here to stay and it will transform the way people do business.

"I can't guarantee that nothing will happen like the dotcom bust or the US housing market," says Olga Gassan-zade, a senior analyst at research firm Point Carbon.

"But I will say that the dotcom industry didn't die. You need a carbon market to manage emissions reductions. We'll be here in 2020 and 2050, I'm quite sure."

Australia has its own challenges. With it having only agreed to ratify Kyoto after the Rudd Government was elected late last month, companies, investors and traders are scrambling to work out what it actually means for the local market.

By not ratifying Kyoto, Australia was estimated to be missing out on $3.8 billion of economic activity a year, according to research by consulting group Cambiar, prepared for the Australian Conservation Foundation. That reflected lost revenue from project development, the sale of carbon credits and services to facilitate transactions.

(See: Kyoto deal to clear air for Australian investors, say experts - Pacific Hydro's manager says, Australia is "now open for business". )

"People are still scratching their heads trying to work out what the policy means and what it means to be a company acting responsibly in the environment," says Oliver Yates, head of Macquarie Capital Group's Climate Change Practice.

"These are not new concepts to international companies but they are new issues for Australian companies. We've largely had our eyes blinkered to this through not signing the Kyoto Protocol."

Macquarie has moved fast to shore up its position in the nascent industry. It set up an emissions trading desk in London, is already selling carbon credits out of China into Europe and last week bought half of Climate Friendly, one of the biggest players in the local carbon offset market. Climate Friendly offers people the chance to offset carbon emissions from their home, business, car, or travel by investing in renewable energy projects. (not by advocating a change in their lifestyle.)

----- PACIFIC HYDRO AND CHILE -----

Macquarie is not the only company ramping up its activities in the area. Renewable energy player Pacific Hydro, which has built up carbon projects in Chile and Fiji in recent years, is looking to hire up to 50 more people in Australia over the next 12 months. The company has as many people in its Santiago office as its Melbourne headquarters. Australia's decision not to ratify Kyoto had limited what Pacific Hydro could do within the country. Now that Australia is part of the Kyoto club and the Rudd Government has announced it will double the renewable energy target to 20 per cent by 2020, that's all about to change.

"Australia has the ability to be a world leader in carbon," says Andrew Richards, the company's head of corporate and government affairs.

"In the past all the investment and innovation has been sitting behind a dam wall. But that's now been broken down and we expect the investment and innovation will rush forward. There is a completely different mind set now."

(Read about the Pacific Hydro / SN Power's Chile dam plans here: Value of Pacific Hydro Skyrockets with Australian ratification of the Kyoto Protocol – Chilean rivers sacrificed to offset European Carbon Emissions. ,SN Power, Norway, & Pacific Hydro, Australia, move on La Confluencia dam project on the Tinguiririca River- effort to reduce Europe's Carbon Emissions , Chile Environment Exploited to Offset European Pollution , Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction , Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading . More on how Norway's SN Power (Pacific Hydro's partner) intends to oust Chile's indigenous Mapuche people from ancestral lands to pursue hydro-development schemes: Mapuche Protest against Norwegian Hydroelectric Power , Norwegian Power Projects in Mapuche, Chile Heartland Plunder Environment )

Richards expects the increase in the renewable energy target, alone, to drive $30 billion of investment into the sector over the next 12 years.

The problem for companies like Pacific Hydro, who are looking to hire, is that there are not enough carbon experts to go around. Many Australians fled to London over the past five years as it emerged as the world's carbon trading hub. Canberra-born Geoff Sinclair, who heads up Standard Bank's carbon business in London, says you might see some of those people moving home.

Pacific Hydro has sold certificates generated from hydro projects in Fiji and Chile. But that will be much easier now that Australia is seen as one of the good guys on climate change. For a start it will be easier to win approval from the host nation and once more projects are under construction there will be more demand for bankers, lawyers, brokers and consultants. Many investment banks, law firms and research groups are starting to set up special carbon teams to deal with the extra work.

"Ratification, in my opinion, makes people aware of the issues and of the commercial opportunities that already exist," says Sinclair, who was scheduled to speak at a carbon finance panel at the UN climate change conference this week but had to pull out because he was "too busy doing deals". (It should be obvious where his priorities lie.)

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Grant says the commercial opportunities in dealing with climate change have been overlooked in Australia. "There is no doubt in my mind that the Government has been looking at the impact on the economy but not on the opportunity it presents."

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But Molitor, who handles all the carbon offsetting for the entertainer Justin Timberlake and the rock group Linkin Park, says there's incredible peer pressure on companies to address climate change even without being forced to do so by governments. He cites the example of Fiji Water, a bottled water company which, facing a consumer backlash, bought up carbon credits on the voluntary market to offset the emissions from transporting its product to the US, Britain, France and Australia.

(Justin Timberlake and many other celebrities take the issue very seriously: With five private jets, John Travolta still lectures on global warming , Virgin Atlantic launches Carbon Offset Scheme )

Here is the full article.

Pacific Hydro plans Chile renewable energy projects - Wind intiatives discussed

SANTIAGO, Dec 10 (Reuters) - Australia's Pacific Hydro said on Monday it plans to invest some $500 million to develop renewable energy projects in Chile once the Andean country passes new legislation for the sector.

"Once the Renewable and Non-conventional Energy law is approved we expect to develop projects to generate some 250 megawatts, with investment of some $500 million," Pacific Hydro said in a statement.

Pacific Hydro and mine giant BHP Billiton said in November they signed an agreement to develop wind power in excess of 100 megawatts in Chile's northern mining region.

Chile's government is working on a law that could see 5 percent of the nation's electricity generated through renewable means by 2010.

The law has been approved by the lower house, or Chamber of Deputies, and the Senate is expected to give it a green light in the first months of 2008.

Here is the full article.

Kyoto deal to clear air for Australian investors, say experts - Pacific Hydro's manager says, Australia is "now open for business".

"There is no doubt that if we grab hold of this with both hands there is a lot of money to be made."

[December 5, 2007] BUSINESS will reap benefits from the ratification of the Kyoto Protocol, with easier access to global carbon projects and multimillion-dollar investments expected to flow into Australia.

Investors, as well as industry experts, have hailed Prime Minister Kevin Rudd's decision to ratify the 10-year-old global climate change agreement, saying Australian businesses will be among the main winners.

(What this will do for Global Warming is another story:

"The Kyoto Protocol has proved totally ineffective on the practical side", says Italy's Enel / Endesa CEO

Profiteering from Carbon Trading - How the Global Carbon Market will Destroy Patagonia, Chile

Time to ditch Kyoto - Mitigating European Pollution with Patagonia Dams

Global warming has a financial upside )

Australia will be able to participate more easily in two project-based mechanisms under the Kyoto Protocol that may be used to meet its abatement target — "joint implementation" (JI) and the "clean development mechanism" (CDM).

Rob Fowler, managing director of Abatement Solutions Asia Pacific, said the benefits to Australian businesses of ratifying Kyoto would be twofold.

"It makes it much easier for Australian companies to invest in renewable energy, clean development and energy efficiency in other parts of the world. It is a very big driver. Previously, if companies wanted to (participate in CDM) they had to seek approval from the UK or the Netherlands," he said.

"Secondly, if the Rudd Government decides to use a (joint implementation) mechanism, then Australian companies could do things like energy efficiency and be issued with permits which they can then sell overseas or use within Australia.

"There is no doubt that if we grab hold of this with both hands there is a lot of money to be made."

Clean Energy Council chief executive Dominique La Fontaine, in Bali to discuss a post-Kyoto agreement, said the ratification of Kyoto was more than symbolic and that Australian companies would have access to international markets through emissions trading worth $US55 billion ($A63 billion) a year.

Both Origin Energy and Pacific Hydro have expressed interest in using the mechanisms under Kyoto for future investment.

Andrew Richards, Pacific Hydro's manager of government and corporate affairs, said Australia was now "open for business" and that companies would also be more encouraged to invest overseas.

Here is the full article.

Value of Pacific Hydro Skyrockets with Australian ratification of the Kyoto Protocol – Chilean rivers sacrificed to offset European Carbon Emissions.

Weaven's foresight pays off big time

JUST over two years ago, when Gary Weaven's Industry Funds Management wrapped up control of Pacific Hydro in a deal that valued the company at $780 million, the talk in the market was that he overpaid big time.

Put aside for a moment the fact that his average entry price into the stock was much lower, given IFM was an early investor and owned 34 per cent at about $1 a share compared to the $5 a share acquisition price.

Then consider that a third of the company's Australian assets are wind farms of a similar size to the Queensland Stanwell wind project acquired last week by Transfield Services for $450 million.

Throw in this week's decision by the Rudd Government to sign the Kyoto Protocol, which significantly broadens Pacific Hydro's ability to generate carbon credits from its offshore developments, and it's not much of a stretch to say the company is worth more than double its value in 2005. Weaven won a bidding war with Spain's Accione to buy 100 per cent of the company and his foresight has paid off in spades.

Pacific Hydro already sells carbon credits into the European trading system from his small Fiji hydro projects, generating a few million dollars worth of credits, and will now be able to generate significantly more from his Philippine and Chilean ventures.

(Read about Pacific Hydro's plans for Chile below:

SN Power, Norway, & Pacific Hydro, Australia, move on La Confluencia dam project on the Tinguiririca River- effort to reduce Europe's Carbon Emissions

Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction

Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading

Chile Environment Exploited to Offset European Pollution )

The company is one of the first direct beneficiaries of the Government's move, but others can now quickly use the protocol to access offshore carbon abatement investments to lower costs.

This is precisely why former environment minister Malcolm Turnbull urged John Howard to sign the agreement once he had agreed to implement a carbon trading scheme, because it had the immediate benefit of helping Australian companies to lower costs.

Here is the full article.

SN Power, Norway, & Pacific Hydro, Australia, move on La Confluencia dam project on the Tinguiririca River- effort to reduce Europe's Carbon Emissions

RAIDERS FROM THE NORTH: Rivers of the Southern Hemisphere provide the solution to European carbon emissions pollution.

SN Power, Australian Pacific Hydro move on La Confluencia

[28 November 2007] Work on the 155MW La Confluencia project in Chile is set to commence with the JV developer having awarded the turnkey construction contract to Hochtief and Tecsa.

SN Power and Australian Pacific Hydro are the JV partners developing the project in the Tinguiririca valley upstream of the La Higuera scheme, which they are also building with the same installed capacity and is due to be commissioned late next year. La Confluencia is scheduled to come online in 2010.

Both plants are run-of-river schemes and together they should generate approximately 1400GWh per year of electricity.

The turnkey contract will see the contracting consortium of Hochtief’s local subsidiary and Chilean firm Tecsa engineer, procure and construct (EPC) the project.

SN Power and Australian Pacific Hydro are to build the La Confluencia project for US$350M. Approximately 60% of the project cost will be debt financed.

Read about the SN Power / Pacific Hydro Chile dam plans below:

Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction

Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading

Chile Environment Exploited to Offset European Pollution

More on how Norway's SN Power intends to oust Chile's indigenous Mapuche people from ancestral lands to pursue hydro-development schemes:

Mapuche Protest against Norwegian Hydroelectric Power

Norwegian Power Projects in Mapuche, Chile Heartland Plunder Environment

Here is the full article.

Australia's new government tackles Global Warming - Chile dam efforts to receive Carbon Credit / Clean Development Mechanism Kyoto Funding

SYDNEY, Australia - Australia's Prime Minister-elect Kevin Rudd took advice Sunday on how to ratify the Kyoto Protocol on cutting greenhouse gas emissions and fielded phone calls from world leaders — starting in on work the day after a sweeping election victory.

The emphatic victory for Rudd's Labor Party swings Australia toward the political left after almost 12 years of conservative rule and puts it at odds with key ally Washington on two crucial policy issues — Iraq and global warming.

After declaring victory late Saturday, Rudd attended church Sunday then held meetings with government officials about the mechanics of signing the Kyoto pact on global warming, an issue he made his top priority during the election campaign.

Read about Pacific Hydro's Dam plans below:

Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction.

Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading

Chile Environment Exploited to Offset European Pollution

Here is the full article.

Wind Energy for Chile’s Mines. BHP Billiton and Pacific Hydro to develop 100 megawatt windfarm in Northern Chile – BHP has first option to buy.

SANTIAGO, Nov 19 (Reuters) - Mine giant BHP Billiton and Pacific Hydro said on Monday they signed an agreement to develop wind power in excess of 100 megawatts in Chile's northern mining region.

BHP Billiton (BHP.AX: Quote, Profile, Research) and Pacific Hydro (PHY.AX: Quote, Profile, Research) said in a joint statement construction would begin in late 2009 and would feed into the northern power grid (SING), which mainly serves Chile's mining industry.

Pacific Hydro will do the studies, engineering, construction and operation of the resulting Aeolic (wind) projects, while the miner will have the first option to buy the energy.

"Energy is one of our big operational challenges and to confront it we have developed a plan that assures supplies of energy from conventional sources, and is complemented by sources, such as Aeolic energy," said Diego Hernandez, president of BHP Billiton's base metals division.

Chile's northern mining region has been hit by energy shortages after cuts in supplies of Argentine natural gas forced generators to use costlier fuels like diesel.

Here is the full article.

Australia's Pacific Hydro finds a loophole: Climate change, Kyoto, and carbon trading

Climate change, Kyoto, and carbon trading

The 2007 federal election is the first in which the threat of climate change has become a major political issue—and the Howard government, the Labor Party, and the Greens have responded by making great play of their environmental credentials. Opinion polls indicate that ordinary people of all ages and backgrounds are deeply concerned about the global warming crisis. Awareness has grown in recent times through the release of a series of scientific studies on the subject, the screening of popular documentaries such as Al Gore’s An Inconvenient Truth, and the increased occurrence of drought, bushfires, and storms.

While many people have a general understanding of what climate change is, there has been a deliberate suppression, by the political and media establishment, of the agendas underlying the various solutions being advanced by the major parties. Very few people even know what the most commonly used terms—Kyoto, carbon trading, carbon offsetting etc.—actually mean, let alone how these mechanisms work in practice.

What exactly is the Kyoto Protocol? Does Labor’s support for it signify a more progressive alternative to the Howard government’s approach? How does carbon trading work and does it reduce emissions? Why do the major parties advocate different long-term emission reduction targets? Do the Greens’ policies represent the most environmentally sound solution to the global warming crisis?

When one carefully examines these issues, it becomes clear, firstly, that the policy differences between all the establishment parties are minimal, and secondly, that they reflect the rival interests of different sections of the corporate elite. The privately owned coal, oil, electricity, nuclear, and renewable energy industries each has its own agenda, while the “climate change industry”—involving international carbon trading and offsetting—is now a multi-billion dollar market. These competing interests find expression in the different pro-market schemes promoted by Labor, Liberal, and Greens.

Kyoto and the European carbon trading market

The Kyoto Protocol is bound up with definite material interests. While ratifying the agreement would not oblige the Australian government to take any action to reduce carbon emissions, it would open up highly lucrative international opportunities for big business. This is because Kyoto has led to the establishment of a multi-billion dollar carbon trading and carbon “offsetting” industry based in Europe.

Kevin Rudd and Peter Garrett want the protocol signed so that Australian companies can gain access to this market. Their position has nothing whatsoever to do with protecting the environment. Labor’s key argument is that the Howard government has looked after the interests of one section of big business, the fossil fuel industry, at the expense of the broader interests of the Australian ruling elite as a whole.

A number of scientific studies have demonstrated that carbon trading and “offsetting” do nothing to reduce emissions to safe levels. Rather, they are deliberately designed to complement and extend the workings of the capitalist market, the very mechanism responsible for the climate change crisis.

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Entire divisions of some of Europe’s leading banking and financial institutions are devoted to investment and speculation in carbon credits. Carbon brokers, carbon trading exchanges, and carbon futures are on the rise. Subsidiary industries have also flourished. Accountants are needed to audit carbon inventories, while lawyers have to be on hand to resolve carbon contracts and other complex legal issues relating to the unusual trade in a commodity that does not physically exist.

Because the ETS only permits those countries that have ratified Kyoto to participate, Australian companies and financial operators have been largely locked out of this bonanza—leading to enormous losses in potential revenue. A study commissioned by the Australian Conservation Foundation and released last month estimated that Australian business was losing investment opportunities arising out of the protocol worth $3.8 billion annually.

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Carbon “offsetting” and the CDM

Some of the foregone profits relate to the so-called Clean Development Mechanism (CDM), another central component of the Kyoto Protocol. The CDM works by generating new ETS carbon credits through the promotion of projects in less developed countries that supposedly help reduce carbon emissions. Most of the projects are located in China, Brazil, and India. For many European industries unable to keep emissions under their allotted “cap”, the cheapest way to secure additional credits is by funding CDM operations. The CDM, valued at $5.4 billion, generates about one-fifth of all ETS carbon credits.

While there are enormous profits generated through the scheme, there is no evidence that it effectively reduces carbon emissions. The CDM is plagued by corruption, with one UN source recently telling the British Guardian that at least 20 percent of all carbon credits generated through the CDM were based on non-existent or fabricated emission reductions. Many other projects that reportedly lower emissions—by installing new technologies in Chinese or Indian factories for example—would have been launched anyway, irrespective of the money pumped in through the CDM. Moreover, the scheme often creates incentives for additional pollution. An article published by Newsweek in March, for example, reported on India’s Gujarat Fluorochemical, which made $42 million through the CDM in the last quarter of 2006—triple its total company earnings compared with the same period in 2005. The additional revenue helped fund a new plant that produces teflon and caustic soda, both polluting substances.

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Pacific Hydro Finds a Loophole

Once again, Australian companies are barred from investing in CDM projects—because only countries whose governments have ratified Kyoto are eligible.

Some Australian firms, however, have exploited a loophole permitting joint ventures. Pacific Hydro has invested more than $300 million in hydro-electricity projects in Fiji and Chile and sells the CDM-generated carbon credits to British electricity companies on the European market. “We’ve had to joint venture at the local level in each of those countries [Fiji and Chile] to ensure that we can paint ourselves and the joint venture as a truly non-Australian company,” Pacific Hydro’s general manager Rob Grant told the ABC last year. But the company’s growth had been stymied because the government had not ratified Kyoto. “We certainly haven’t been hoisting the Australian flag, let’s put it that way,” he said.

The inability of Australian corporations to fully access the CDM has hampered the development of the voluntary “carbon offsetting” industry. New corporations are offering industries and individuals the chance to “offset” their emissions by investing in projects that supposedly reduce emissions elsewhere. Such projects typically involve tree planting or subsidised renewable energy schemes. Major companies such as Rupert Murdoch’s News Corporation and investment bank Goldman Sachs have announced that their operations will soon be “carbon neutral”. Many wealthy individuals, keen to parade their “green” credentials, are also handing over large sums of money to offsetting companies in order to be able to boast of a “carbon neutral lifestyle”.

Carbon offsetting is a complete fraud, and it has been appropriately likened to the medieval Church’s sale of “indulgences” to sinners. It promotes the illusion that it is perfectly fine for corporate polluters to continue their current levels of carbon emissions, so long as they “offset” their emissions through the carbon offset industry. This conveniently eliminates any need to carry out the major restructuring of the global economy required to resolve the climate change crisis.

Here is the full article.

Kyoto ratification crucial in Australian plans for Chile hydro-development – Carbon Offsets purchased in Europe critical to dam construction.

SELLING INDULGENCES: The Kyoto Treaty may have failed to curb the world's carbon emissions but its Clean Development Mechanism still has substantial value to Australian mining and hydroelectric corporations.

Excerpted:

Coalition victory a Chile thought for Kyoto

PACIFIC HYDRO chief executive Rob Grant has good reason to sweat on the prospect of a Labor victory next month. It's a $200 million hydro-electric project the company wants to build in Chile next year. (More about La Confulencia Project here.)

But unless Australia ratifies the Kyoto protocol very soon, it will be very hard for an Australian-based company like Pacific Hydro to qualify for the carbon credits available under the Kyoto scheme. That's a big loss -- given that he expects to earn at least $2-3 million a year from selling these credits on to the European market.

"The timing of it is critical," he says. "If Labor gets in and ratifies Kyoto, it won't be a problem. If Labor loses, we will have to do some serious thinking about what our options are."

Underneath the fevered political rhetoric about climate change in the future, Grant's dilemma represents the complicated reality of doing business for Australian companies right now, particularly in the renewable energy sector.

Plenty are already trying to adjust to the prospect of operating in a global environment where carbon emissions cost real money.

But the Government's refusal to sign the protocol means that it is more difficult for businesses like Pacific Hydro to financially leverage their advantages, either nationally or internationally, in providing alternative energy sources, such as water or wind.

And it also means relatively few Australian companies have had practice in the confusing world of emissions trading that is already well under way and is certain to quickly grow.

This Kyoto system means, for example, that investments by companies based in developed countries can apply for a form of carbon credits for emission reducing projects in developing countries. In the arcane world of Kyoto terminology, it's called the clean* development mechanism (CDM).

*(Clean apparently does not mean the environment: False Environmental Impact Statements induce Regional Environment Commission to Implement Fines. )

Not only are these credits worth cash to companies, the reduction in carbon emissions as a result of the project would also count towards meeting the home country's emission targets. Australian companies have tried to get around this by operating joint ventures. Pacific Hydro, for example, has taken this route with its other hydro projects in Fiji and Chile (With SN Power of Norway on the Tinguiririca River). But now that it wants to own 100 per cent of a new project, it is unlikely to be officially eligible in the absence of Australian ratification.

Nor do similar emission reduction projects in Australia currently qualify either -- whether built by Australian or other international companies. The reason is basically the same. No Kyoto ratification from a government, no internationally recognised -- and internationally tradable -- credits for a company. That goes straight to the bottom line.
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Both Labor and Liberals are now promising to ratify a new international agreement -- as long as developing countries also make commitments to reducing their emissions.

This omission was always the fatal flaw of the 1997 Kyoto protocol and ensured that global emissions have only continued to rise -- and will rapidly accelerate -- no matter what targets the developed countries agreed to a decade ago. And getting agreement on what those future targets should be for everyone will take years of bitter diplomatic negotiations with no guarantees of success.

But leave that wrangling to the various governments. What has been little appreciated in Australia has been the changes going on in the market already, often in advance of the politics. Business often needs certainty and notice of changes in order to plan long-term projects. That's one reason why the Business Council of Australia finally moved a year ago into supporting the idea of developing an emissions trading scheme. After years of resistance, the Prime Minister seized on this shift to start moving too.

But the other issue is whether and how much Australian companies have been affected by not being part of the Kyoto scheme over the last couple of years.

The Prime Minister has always maintained that he would not damage Australian business or jobs by committing Australia to meeting its Kyoto targets while trading partners remained outside. But that logic has evaporated as it has become clear Australia would meet its 2012 targets anyway, even if this is largely due to a reduction in land clearing in Queensland.

On the other side, a study for the Australian Conservation Foundation says that the failure to ratify Kyoto has cost Australia $3.8 billion a year. It argues that $1.24 billion of that is in lost opportunities associated with emission reduction projects in Australia, $2.38 billion through the clean development mechanism in developing countries and $180 million in carbon credit transactions.

Those figures will always be open to dispute and extremely difficult to quantify. But Tony Beck, chairman of the Australasian Emissions Trading Forum and a consultant with Allens, says there is no doubt that Australia has been excluded from the Kyoto system to its cost.

"The international markets are opening up and we're standing on the sidelines," he says. "It is theoretically possible for major Australian companies to work around the restrictions but we are not part of a network that facilitates that, particularly for smaller companies.

"There are over 700 projects approved in developing countries under the Clean Development Mechanism and we should be a natural leader but our market share is negligible.

"We could also have expected to sell environmental credits to countries like Europe and Japan and Canada but that area of trade is cut off from us."

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BHP Billiton, for example, has a trial operating at its London office where it staples credits to coal deliveries for some customers. (Similar to the one implemented by the Norwegian Government, no doubt.)

Ian Wood, vice-president of community relations, says the company's participation in the European emissions trading system has been an extremely valuable way to get experience for the organisation.

"It's clear we are moving into an era where emissions trading will become a normal part of the operating environment," he says.

The global market is dominated by the European Union's Emissions Trading Scheme, which began operating in 2005 and recorded trading worth over $30 billion last year. Prices of credits fell dramatically due to an initial oversupply of permits but have now rebounded sharply to be worth around $30 a tonne of emissions. Japan has been a big buyer with demand expected to increase.

Here is the full article.

IFC to Help SN Power (Norway) and Pacific Hydro (Australia) with funding for La Confluencia Hydroelectric Project in the Tinguiririca River Valley

IFC to Help La Confluencia Meet Energy Needs in Chile

IFC, a member of the World Bank Group has signed an agreement to support the construction of Chile’s La Confluencia hydropower project to help meet the country’s increasing energy needs.* This project will provide clean, renewable power and help lower energy prices.

*(To offset the carbon introduced to the atmsophere by non-compliant European corporations: Chile Environment Exploited to Offset European Pollution And to power the mining industry: which consumes 35% of Chile's electricity.)

La Confluencia is a 158 megawatt run-of-river hydroelectric power plant to be built in the Tinguiririca valley, about 150 km south of Santiago. It is upstream of the IFC-financed La Higuera hydropower plant project, which is under construction by the same sponsors. As the project’s water inflows are determined primarily by melting snow, La Confluencia is expected to dispatch at full load during the dry season when water levels in the system are below average.

The project is being developed by a 50/50 consortium comprising Australia’s Pacific Hydro Pty Ltd (Pacific Hydro) and Statkraft Norfund Power Invest AS (SNPI) of Norway.** IFC’s $208 million financing package will consist of an $83 million loan for IFC’s own account and a $125 million loan for the account of participating banks, including DnB NOR Bank, HSH Nordbank, Nordea Bank, Banco Santander, and SEB.

** (The same two companies which were fined for submitting a false environmental impact statement for their La Higuera hydropower project on the same river: False Environmental Impact Statements induce Regional Environment Commission to Implement Fines. )

Rashad Kaldany, IFC Director for Infrastructure, said, “Using indigenous renewable resources, La Confluencia will help Chile meet a growing demand for power and improve the country’s energy security. The project will also help reduce carbon emissions that are associated with power generation. We are happy*** to continue building our partnership with Pacific Hydro and Statkraft Norfund Power Invest.”

***(Statkraft Norfund Power (SN Power, Norway) which presently intends on "using indigenous" Mapuche land for hydropower: Mapuche Protest against Norwegian Hydroelectric Power , Norwegian Power Projects in Mapuche, Chile Heartland Plunder Environment . It seems the World Bank is back in the native indian exploitation game, this time with a new partner: Endesa Strategy & Tactics I – Revisiting the Ralco & Pangue Hydroelectric Projects on the Rio Bio Bio )

Here is the full article.

Norwegian Power Projects in Mapuche, Chile Heartland Plunder Environment

SN Power Projects in Chile:

SN POWER CHILE

SN Power has been active in Chile since early 2003. A local holding company has been established to follow-up ongoing projects and develop new opportunities.

In the Tinguiririca Joint Venture, SN Power is constructing the La Higuera project (Which was recently fined for submitting a false environmental impact statement.) in addition to developing a second project, La Confluencia. Further project opportunities are evaluated within the same river system.

Additionally, a back up thermal power plant will be built: Colmito. Other potential projects are being developed in the Los Rios Region. The

Tinguiririca Project is the first building-block in a strategy to become a top four player in the Chilean central grid by 2010.

Tinguiririca River
(50/50 JV with Pacific Hydro)

La Higuera,155 MW (Finished in 2008)
La Confluencia 145 MW (Construction beginning 2007)
Central Colmito, 60 MW (Thermal)
Las Damas, 60 MW
Portillo, 40 MW

Trayenko Project Proposed
(80/20 JV with G. Pavez)

Pellaifa, 75 MW (Rio Tolten Basin - Proposed)
Liquiñe, 125 MW (Rio Valdivia Basin - Proposed)
Maihue, 300 MW (Rio Bueno Basin - Proposed)

Cost & Time Line
EPC cost MUSD 600
Feasibility Studies and EIA 2006-07
Decision to proceed 2007-08
Commercial operations 2012-14


Sources:

SN Power Corporate Credentials Presentation (pdf)
SNPower 2006 Annual Report (pdf)

False Environmental Impact Statements induce Regional Environment Commission to Implement Fines.

The Mayor of the Region of O'Higgins, Hector Leiva called entrepreneurs who built hydroelectric plants in the region to think more about the environment at all stages of production, stressing that the Regional Environment Commission (Corema) will be inflexible in applying fines and penalties for those who destroy the flora, fauna and natural resources in the areas near their structures.

These statements were issued by the Mayor after the meeting of the Regional Environmental Commission (Corema), which took place the morning of Tuesday (2006-03-29) in Prat Hall of the Regional Inspector. At the time, Hector Leiva said that despite the need energy to the country, there must be a respect for environmental standards, including the generation of jobs that could be created these hydroelectric projects.

He referred, in particular, to environmental problems tied to the construction of the hydroelectric station, La Higuera, on the Tinguiririca River, which suspended operation by the orders of Corema. The mayor noted that the owners (Pacific Hydro & SN Power) will report, in a forthcoming meeting of the Corema, about the mistakes that were made in environmental studies and the corrections made to address them. "Subsequently, the a decision will be made on possible fines and compensation from this company," he said.

"We must not ignore the country's energy needs and our region as well, but they should not destroy the environment, it belongs to all of us. We must be consistent and compatible with all of these activities. Today, technology and the will to implement it exists, and this company (Hydroelectric La Higuera) will make repairs and be subject to the control that we are pursuing through the Corema," said the Mayor.

Regional director of the National Commission for the Environment, Hector Gonzalez, said that in the short term he will organize a tripartite commission, along with the owners of the hydroelectric project with the goal of restarting operations next May.

This article was translated from Spanish.
The original article in Spanish can be found here.

Chile Environment Exploited to Offset European Pollution

Pacific Hydro to sell carbon credits from Chile plant

SYDNEY: Pacific Hydro, an Australian-based renewable energy producer, plans to start selling carbon credits from a hydropower project in Chile (La Higuera hydro project on the Tinguiririca River) to buyers in the European Union, the world's biggest carbon market.

Pacific Hydro, which is owned by the pension funds manager Industry Funds Management, and a partner registered the 155-megawatt La Higuera project with a Dutch authority, allowing the sale of credits in the EU once production starts by the end of 2008, the Melbourne-based company said Monday.

Under the Kyoto Protocol, factories, power stations and other polluters that exceed emissions targets set in the EU may buy certificates from projects that reduce pollution in developing countries. Pacific Hydro plans to invest more than 1 billion Australian dollars, or $870 million, in Chile over the next five years in projects eligible to create the carbon credits.

"The approval of the project with an EU member country is a significant milestone," Rob Grant, Pacific Hydro's chief executive, said in the statement. "This approval paves the way for carbon credits to be traded in the EU Emission Trading Scheme, which is currently the largest carbon market in the world."

Pacific Hydro's partner is SN Power, a venture between Norway's Statkraft SF and Norfund, an investment company funded by the Norwegian government.

Here is the full article.