Category Archives: Financial Crisis

Financial Crisis

China’s carbon intensity struggles

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New estimates from the International Energy Agency (IEA) illustrate how China has been struggling to cut its carbon intensity in the past three years.

Carbon intensity in tonnes CO2/ million US$2011 (MER) {credit}IEA{/credit}

Last week, the agency noted that China had reduced its carbon intensity — the amount of CO2 emitted per unit of gross domestic product (GDP) — by 15% since 2005. That put in context the news that China’s energy-related carbon dioxide emissions rose by 720 million tonnes, or over 9%, to hit 8.4 gigatonnes last year, over one-quarter of the world’s 31.6-gigatonne total. If China hadn’t made great efforts to decarbonize its economy, it could have been worse, said Fatih Birol, the IEA chief economist.

But the IEA’s estimates show that almost all of that welcome untangling of CO2 emissions from GDP growth came in 2005–08. In the last three years, China has not managed to reduce its carbon intensity much at all. China has set itself the target of cutting carbon intensity 40–45% by 2020 — which it may not manage, judging by this trend. (Its twelfth Five-Year Plan includes an intermediate target to reduce carbon intensity 17% below 2010 levels by 2015).

Although the IEA estimates should be viewed with caution, as statistics on carbon emissions and GDP numbers are notoriously uncertain, Chinese officials have already acknowledged the problem. At the National People’s Congress in March, Zhang Ping, head of the National Development and Reform Commission, admitted that “last year wasn’t good enough to reach emission-cut targets.” (Bloomberg BusinessWeek).
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EU ITER funding proposals set to stir budget row

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The European Commission today released proposals on the funding of the ITER nuclear fusion research project from 2014 to 2020 that seem certain to set the stage for a showdown with the European Union’s 27 member states next year, when discussions of future EU budgets enter their negotiating phase.

As expected, today’s proposals would remove the €2.7 billion EU funding for ITER — the international effort to build a fusion-energy test reactor — over that period from the EU general budget. The commission wants to reduce the exposure of the EU budget to the risks of any further repeats of the cost overruns that have plagued ITER’s construction – see my 29 November article in Nature on this all: “Outcry over EU budget plan.”

Under the new proposal, the funding vehicle for ITER – which is being constructed in Cadarache, France – would be a new “Supplementary Research Programme” that would be created within the EU’s nuclear body, Euratom. Funding for ITER itself would come from contributions by EU member states calculated on the basis of their Gross National Income (GNI).

The commission has very good political reasons for wanting to use Euratom as the vehicle for any ITER funding outside of the EU general budget, and not, for example a new intergovernmental agency as it recently proposed for the €5.8 billion of funding the Global Monitoring for Environment and Security (GMES) programme from 2014 to 2020. For a start, it does not want any new funding arrangement that could risk any reopening of negotiations on the already agreed ITER international agreement with EU ITER’s partners: Russia, Japan, China, India, South Korea and the United States – any such renegotiations would at best take years, while reopening existing agreements itself always carries risks.

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How the financial crisis barely dented carbon emissions

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Carbon dioxide emissions always sag at times of major economic crisis, as the world’s industry pauses for breath. The oil crisis of the late 1970s, the recession of the early 1980s, the collapse of the former Soviet Union in 1991 — all of them dampened global CO2 output. The global financial crisis of 2008–2009 was no exception. But as an analysis published today in Nature Climate Change and also at the Global Carbon Project’s website notes, carbon emissions have already rebounded as if the crisis never happened. The recovery has been more rapid than from any other economic downturn in the past half-century (see chart, adapted from Nature Climate Change).

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European carbon market plummets

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Prices are plunging dramatically on the world’s largest carbon-trading market. Today, it will cost large facilities participating in the European Union’s mandatory emissions trading scheme (ETS) just €7 (US$9)* to buy an allowance to emit one tonne of carbon dioxide: that’s a record low and a drop of 25% this week alone (Reuters reports). Analysts expect prices to fall further: the underlying problems driving the collapse — weak economic conditions and industrial activity and an oversupply of carbon credits — will not quickly go away. *By the end of 25 November, the price had rallied to €7.6, still a record-low close.

If you’re a scientist, not a market trader, you might hope this will have little direct effect on research. But if today’s low prices persist for a few more months, they will slash billions of euros from a European fund dedicated to clean-energy projects. That’s because the fund, named NER300, is about to raise its cash by selling 300 million carbon credits on the ETS. Eight carbon-capture projects and 34 renewables projects were set to benefit from the money. But at present prices, the sale would raise only €2.1 billion, instead of the €4.5 billion hoped for when the fund was proposed. Sales of the first 200 million carbon credits are planned to begin in December and continue for the next 10 months, says Stig Schjølset, head of EU carbon analysis for the consultancy firm Thomson Reuters Point Carbon.

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Amid political storm, Chu defends Solyndra decision

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chu.JPG When it rains it pours on the US Department of Energy. First Republican presidential candidate Rick Perry says he wants to dismantle it (though he couldn’t quite remember that at the crucial moment in a recent Republican debate). Then the department’s own inspector general releases a report recommending a large-scale restructuring of the agency (details below). And today, director Steven Chu found himself on Capitol Hill for more than three hours defending the agency’s investment in the failed solar concern, Solyndra Corporation.

The focus going into Thursday’s hearing by the House Energy and Commerce Subcommittee on Oversight and Investigations was squarely on Chu and how he would hold up under direct fire in an investigation that Republicans have been stoking since Solyndra filed for bankruptcy more than two months ago. The administration has turned over a mountain of documents to the committee, some of which Republicans have released to the press even as they demand more (Washington Post). But many saw Chu’s appearance as a critical juncture in the scandal. Would Republicans pull out the smoking gun? Would Chu crumble under pressure?

As it turned out, the answer to both questions was no. Republicans hammered home on their contention that Chu and the Energy Department should have known that Solyndra was going to fail well before investing $535 million dollars in the concern. Calling the situation “extremely unfortunate,” Chu calmly and repeatedly made simple case that the future wasn’t nearly as clear back then as the past is today. Private investors put roughly twice as much money into the company as the government, Chu said, and even the best analysts didn’t realize that solar prices were going to plummet by 70 percent in 2 1/2 years (sparking a spate of similar failures and possibly a trade war against China).

“Fundamentally this company and several others got caught in a very very bad tsunami, if you will,” Chu said. Did incompetence or undue political influence from the White House play a role? “I would have to say no.”

All told, the hearing felt more like a stalemate than a checkmate. Which is not to say that the political storm is going to subside anytime soon.

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Neglected diseases funding continues to rise

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Funding for research on neglected diseases reached $3.26 billion in 2009. But the author of a new report on the subject is warning that governments appear to have given priority to funding their own researchers over the public-private partnerships which attempt to turn research into useable products.

“Increased public spending on domestic researchers is an understandable strategy in hard economic times, but only if it also achieves the aim of creating new medicines and vaccines for those in the developing world,” says Mary Moran, director of the Policy Cures consultancy (press release).

neg dis graphic small.JPGDiseases traditionally ignored by pharmaceutical companies – such as malaria and dengue fever – have been increasing in profile in recent years, not least due to Bill Gate’s ploughing a large chunk of his personal fortune into the area.

The third Global Funding of Innovation for Neglected Diseases (G-FINDER) report shows annual funding has increased significantly since the 2007 survey found annual funding of $2.56bn.

But the report also warns that in 2009 there was a 9% drop in funding of Product Development Partnerships – the entities that combine public and private funding to develop treatments for neglected diseases.

Of the total, most of the money came from public sources, which pitched in some 66.5%. Philanthropic organisations picked up 20.5% while industry provided 12.9%. The three big diseases – HIV, malaria and TB – still get the lion’s share of this funding, 72% in 2009. But this is down from 77% in 2007 with diarrhoea and dengue both picking up more than 5% of funding for the first time.

Image: Nature, based on data from G-FINDER

Bill Gates joins California climate law war

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Silicon Valley’s richest barons are lining up to fight for California’s climate change laws, as the good, the bad and the ugly all pick sides in the fight over ‘Prop 23’.

Voters in California are deciding on 2 November whether to pass Proposition 23, which would suspend laws clamping down on greenhouse gas emissions.

Now the Sac Bee reports that Bill Gates has coughed up $700,000 for the no campaign. He joins other IT luminaries Sergey Brin ($200,000) and Gordon ‘Moore’s Law’ Moore ($1 million) in fighting for the climate law.

While oil companies can normally count on out-financing opponents in legislative campaign battles, in this case they may be out gunned. Film-maker James Cameron has previously put $1m into the no campaign, and the No On 23 group lists a plethora of healthcare groups, clean-tech businesses, local governments and others. More importantly, the LA Times lists “Arnold Schwarzenegger, George Shultz, Robert Redford, … Leonardo Di Caprio and Al Gore” as backers.

Their opponent, the Yes On 23 group, describes itself as “a Coalition of Taxpayers, Employers, Food Producers, Energy, Transportation and Forestry Companies, with major funding supported by [oil companies] Valero and Tesoro”. They say they do care about global warming, but at the moment the state just can’t afford the current legislation.

Another no-man is David Arquette, who has starred in this rather spectacular(ly bad) advert. (The yes advert is rather more traditional.)

Community pressure saves micropalaeontology group

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nhm sc.jpgA highly respected palaeontology group based at London’s Natural History Museum may escape the chop after an international campaign to ensure its future.

Huge outcry greeted the announcement that the museum was to axe its micropalaeontology group as part of a wider cost saving effort. Scientists from across the world warned that expertise vital for understanding subjects from climate change to evolution would be lost (see: ‘Axe hovers over UK museum jobs’ and ‘Researchers unite behind museum’s threatened department’).

Now the museum says that while three positions will be eliminated two new positions will be created “to meet the expressed needs of the micropalaeontology research community”. With the two new jobs earmarked for current staff this means only one job in the four-person department will go and it can continue to operate.

Richard Lane, director of science at the museum, says the new-look section will focus on four areas: the development of the museum’s collections; doing research; training the wider community; and scientific consultancy work.

“We changed because of the very large response we had externally,” says Lane.

This response highlighted a number of opportunities, he says, a point that has wider relevance as UK scientists brace for spending cuts expected in the government’s Comprehensive Spending Review on 20 October. Advocacy has the most impact, he says, when it identifies opportunities rather than just saying “please maintain the status quo”.

The new jobs will mean savings will have to be made elsewhere in the museum, although Lane says these savings are not currently planned to include redundancies. Whether that will still be the case after 20 October is currently unclear.

Image: the Natural History Museum / photo by Steve Cadman via Flickr under creative commons.

‘Health ring fence won’t keep out cuts’

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The UK body responsible for assessing the cost effectiveness of medical treatments is preparing for a 20% budget cut, its chief executive has announced.

The National Institute for Health and Clinical Excellence (NICE) – which is also about to take on an expanded role in setting research priorities – is making cuts despite the government ‘ring fencing’ health as it slashes public sector spending.

“NICE is targeting quite significant savings,” Andrew Dillon told reporters this morning, “20% out of our total budget.”

Last year’s budget for the institute was around £60 million, says Dillon, and with an expansion of its role this year’s will probably be around £74 million. From this, savings of around 10% next year and 10% the year after will be made.

“We’ve not been given that target,” he adds. “We’ve seen the writing on the wall.”

Dillon says that even though there is a ring fence around the budget of the UK’s National Health Service, there will still have to be savings made if the NHS is to continue to deliver the level of service that the public expects. NICE will assist with this by providing more “don’t do” recommendations on treatments that can be avoided and by increasing its guidance on when primary care doctors should – and shouldn’t – refer patients to hospitals.

Dillon also welcomed the new role set out for NICE in the recent government white paper on health. This envisions NICE offering guidance on research priorities.

“We’re very pleased to see that,” he said.

Related

“The Medical Research Council has awarded £2.3 million for new research into the academic methods underpinning advice given by NICE on how the NHS should make the most of its resources.”

InPharm

“NICE’s role is set to expand significantly under plans outlined in the health White Paper.”

Healthcare Republic

Cut now and regret later, warns pharma chief

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witty3.jpgThe head of pharma company GlaxoSmithKline has warned European governments against taking “easy options” to save money now at the expense of the long term health of his sector.

Both Spain and Greece have tried to force down drug prices in an attempt to alleviate some of their financial woes. Speaking to journalists at the European Federation of Pharmaceutical Industries and Associations conference in London, Andrew Witty, CEO of Glaxo and president of the federation, warned against assuming such actions would be without consequence to an industry of major importance to European prosperity.

“These are very trying times for governments,” he said. “What I would ask them to be doing is don’t mistake easy for correct. Is it easy to cut medicine prices? Of course it’s easy. Is it the ultimately best choice to take? Maybe it’s not.”

However Witty also said he did not approve of pharma company Novo Nordisk threatening to pull some drugs out of Greece in response to enforced price cuts. Making clear he was not speaking in his EFPIA role, he said, “The role of pharmaceutical companies is to develop great medicines and find ways to make them available to as many people as possible. That kind of action isn’t necessarily helpful to the debate which goes on at the moment.”

Witty insisted that the pharmaceutical industry was now engaged with cost effectiveness and working with governments to set fair prices for drugs.

“Those medicines that ultimately are developed need to be priced at a level where both sides [companies and governments] feel they have got a fair deal. Companies are not going to take 10 or 12 or 15 years of risk unless they feel they get rewarded for innovation,” said Witty.

“… What we need to avoid at all costs is that people don’t take a short sighted view, think they’ve very successfully found an algorithm that always delivers the lowest possible price and all they will discover in 10 years is there are no new drugs being developed.”

Image: Witty / GSK