How To Stack A Board  

Sydney's desalination plant looks likely to begin construction early next year (with the state government praying this doesn't happen before the election in March) - with one factor being competition for materials and experts. It seems lemmings really do run off cliffs in packs...

CONSTRUCTION of a desalination plant to sustain Sydney's water supply seems inevitable after an advisory panel urged the State Government to start building as soon as dam levels hit 30 per cent - which is likely to happen within months.

Labor's plan for a $500 million desalination plant to bolster dwindling drinking water supplies is looming as one of the big issues at next year's election, with the Coalition signalling it may scrap the plant and focus on recycling.

The Government's plan has received the endorsement of an independent six-member panel that has urged the Premier, Morris Iemma, to be ready to build the plant as soon as dam levels hit the 30 per cent trigger.

The panel, set up to review the Metropolitan Water Plan, has written to Mr Iemma to recommend that desalination remain a "central part" of the Government's water strategy for Sydney. "Considering the current dam storage levels, together with the poor outlook for significant rain in the Sydney catchment, the panel's very strong view is that the Government must … take all necessary steps to ensure that construction … could commence at around 30 per cent of dam storage levels," the panel's letter says.

"Sydney's water security could be significantly eroded if the plan is not implemented completely and in the way it has been designed … Planning should continue so that a plant could be built in a timely way as it is likely that the current extreme conditions may well persist for some time."

The panel warns that delays on construction could add to the cost because other cities in Australia and overseas are preparing to build plants and will be competing for materials and experts. Sydney's dam levels have dipped below 38 per cent, and total capacity has been dropping by about half a per cent a week.

Apparently there is an aquifer under the city which could be drained as well - I'm glad its on the other side of the harbour from me...

Tapping into an under-utilised groundwater source under Sydney could help solve the city's water crisis, a new report revealed today. Research suggests the Botany Aquifer, located between Centennial Park and Botany Bay, could could provide more than two per cent of Sydney's water needs.

Conservative estimates are that an extra 12 million litres of water a day - four billion litres a year - could be extracted from the aquifer as it stands. But University of NSW researchers believe this figure could be much higher if the aquifer was "recharged'' with additional stormwater and treated waste water.

The Botany Aquifer, which is like a sandy sponge holding water beneath the city, was Sydney's main water source before the building of the Warragamba Dam.

As John Howard's endless drought continues, electricity generating capacity is now reduced due to record low dam levels in the Snowy Hydro scheme.

The drought is starting to eat into the capacity of the power generating system as levels fall to dramatic new lows throughout the hydro system in south-east Australia. Levels in Snowy Hydro's network of dams have fallen to record lows.

Company spokesman Paul Johnston said water storages were now at only 17 per cent of capacity and inflows this year from the river system feeding the dams have been only 25 per cent of their long term average. Mr Johnston said despite the low levels in Snowy's dams "electricity delivery will not be a problem. At this stage we don't see problems in meeting our commitments in the national electricity market."

However, the long run of dry years is taking its toll on the Snowy scheme and unless rainfall patterns change the future looks grim. A note on the company's website said "because of the extremely low water inflow pattern over the last 10 years … water levels in Snowy scheme storages have steadily decreased since 1997. …Water inflows from the winter-spring snowmelt have been well below average and water levels at all Snowy scheme storages continue to drop."

Snowy's dams are also significant suppliers of irrigation water to the Murray basin regions. The disastrously low storage levels mean that farmers are having irrigation entitlements cut dramatically and some farmers are receiving nothing at all.

Victoria is still on fire and Melbourne had its hottest December day in over half a century.

Melbourne has endured its hottest December day for 53 years. The mercury soared to 42.1 degrees Celsius in Melbourne at 2.45pm (AEDT) today as bushfires raged across much of the state.

That made it Melbourne's hottest December day since December 20, 1953, when the temperature also hit 42.1. Cool wind changes were expected to sweep across the state in the next few hours.

But fire crews fighting blazes in Victoria's north-east and Gippsland areas are bracing for conditions to worsen. Bureau of Meteorology senior forecaster Terry Ryan said it was possible showers could sweep through the fire-affected areas tomorrow.

Barnyard is complaining that those nasty oil companies are thumbing their noses at the government. Isn't that what bullies do to wimps ?

Queensland Nationals senator Barnaby Joyce has called on the federal government to mandate the uptake of biofuels as oil companies continue to fall well short of their targets.

Senator Joyce said that the major oil companies are "taking the government for a ride" by failing to meet targets agreed upon last year as part of the Biofuels Action Plan.

As part of the plan, the major oil companies agreed to use between 350 and 532 million litres of biofuel by 2010. They promised a minimum uptake of 89 million litres by the end of 2006, but have so far reached less than one quarter of that target.

"The government's talks were with the oil majors who earnestly put their hand to their hearts and said that they were going to play ball, but they haven't," Senator Joyce said. "So basically once more they've thumbed their nose at the government and said we're not going to use the product because we don't want to, as it's a competing product."

The Rodent's taskforce investigating carbon emissions trading will probably also thumb their noses at the government one day (and the rest of us right now) - I'm sure a taskforce consisting of big energy consumers and producers along with some mining companies is just bound to be keen on taxing carbon. But this sort of stacked panel and predetermined outcome is just typical of the little creature's way of operating...

THE Prime Minister, John Howard, has chosen miners, bankers and power industry representatives to advise him on a possible carbon emissions trading system amid claims he has broken a nine-year-old promise to curb greenhouse gas emissions.

In a statement to Parliament in 1997 - about 18 months after he won office - Mr Howard unveiled a $180 million climate change plan to reduce Australia's net greenhouse gas emissions growth between 1990 to 2010 from 28 per cent to 18 per cent, not including land use changes.

But the most recent Government projection is that emissions will grow by 30 per cent in that time, excluding land use changes, the Australian Greens say.

The Greens senator Christine Milne said the lack of success in reducing greenhouse gas emissions was a damning failure.

"Ten years ago the Prime Minister, John Howard, made big promises to tackle climate change, but clearly he did not believe his own rhetoric and has failed utterly to respond to the greatest security threat of our time," Senator Milne said. "The Prime Minister's main promise was to reduce emissions growth by a third by 2010, yet emissions are increasing rapidly."

The Greens criticised the group, which will be chaired by Dr Peter Shergold, the secretary of the Department of Prime Minister and Cabinet, as being "stacked with miners". Labor said it was "yet another talkfest".

Mr Howard told ABC's Insiders yesterday the group had no environmental experts because he wanted "to involve the industry" and a number of government departments were represented.

New Labor environment spokesman Peter Garrett is also pointing out the Rodent's addiction to pointless bureacracy as a substitute for action.

PETER GARRETT will be bounding out of bed when he wakes up this morning as Labor's new spokesman on climate change and the environment. "I have had 25 years of strong commitment to the environment," he told the Herald last night. "And I will be absolutely waking up [today] to roll my sleeves up to continue that work."

The former Midnight Oil frontman has been criticised for his lack of pronouncements since his election two years ago.

But no longer. In his first utterances as Labor's top man on the environment, Mr Garrett called the Prime Minister, John Howard, "laggardly", saying his Government was "slipping in and out of denial" and was "addicted to process rather than action".

The former president of the Australian Conservation Foundation and one-time board member of Greenpeace International said his priority was to take "urgent and immediate action on CO 2 reductions". This included "setting targets, increasing investment in renewables and moving immediately to a CO 2 trading system, including ratification of [the] Kyoto [Protocol] and medium-term planning for those likely impacts" that climate change would have on rural infrastructure.

"Mr Howard's laggardly approach defies logic given that eight years ago former minister for environment [Robert] Hill was suggesting the necessity for a national CO 2 trading scheme to be established," he said. "Mr Howard seems only to be able to initiate taskforces, reviews and reports but fails to ever act resolutely."

But the Greens leader, Bob Brown, said: "Frankly, I doubt Peter Garrett will be let off the leash to take on the coal and uranium industries."

Crikey also has a look at "John Howard’s polluter-stacked emissions taskforce".

The contrast couldn’t be starker. On the day when Labor put Peter Garrett in charge of climate change and the environment, John Howard announced a taskforce to establish an emissions trading system which is stacked with Australia’s biggest and dirtiest polluters.

Having a couple of polluters on there would have made sense, but try these names for size:

* Peter Coates, Executive Committee Member, Xstrata, one of the big three Australian coal producers along with BHP and Rio Tinto.
* Tony Concannon, Managing Director, International Power, owner of Australia’s oldest and dirtiest power station, Hazelwood, in Victoria’s Latrobe Valley.
* Russell Higgins, Non-Executive Director Australian Pipeline Trust and recipient of numerous bureaucratic and board gigs from the Howard Government.
* Margaret Jackson, Chairman, Qantas, Australia’s biggest transport polluter.
* Chris Lynch, Executive Director, BHP Billiton, one of the big three Australian coal producers.
* John Marlay, CEO, Alumina Limited, Australia’s biggest energy consumer and recipient of billions of dollars in subsidised power from Victoria taxpayers over the years.

When asked about getting some environmental input on Insiders yesterday, the PM could only point to the secretary of his environment department, David Borthwick, being one of four bureaucrats making up the numbers among the seven business types.

But Borthwick is no green and he runs a department that has shown great scepticism about climate change. Indeed, Borthwick was previously coordinator of industry and resources development policy in the PM’s department and this followed a long career in the Federal Treasury that dates back to 1973.

It is notable that John Howard has also deliberately rejected the involvement of any CEO who signed up to the Australian Conservation Foundation’s business roundtable on climate change earlier this year. This included the CEOs of IAG, BP Australia, Westpac, Swiss Re, Visy Industries and Origin Energy.

The Business Council of Australia has been deeply split on the question of climate change and the fault lines are clearer than ever – the skeptics are on board with John Howard and those who take the challenge seriously have signed up with the ACF.

All of this makes climate change an even hotter issue at the forthcoming election and the door is wide open for Peter Garrett to perform on the biggest stage of his life.

The Energy Blog reports there are now 50 Electric Charging Stations in London - the UK has obviously decided now they aren't an oil exporter any more its time to make a dash for the future.

BBC News - Two charging stations that are thought to be the first street recharging points for electric cars in the UK have been unveiled in London.

They will join 48 free charging stations to be found in 13 of the council's car parks.

A spokesman said they were being introduced because electric cars were "ideally suited" to city driving.

This is a major step towards building an infrastructure for plug-in hybrids and electric vehicles. The rest of the world should take note.

An electric truck is now be trialled by TNT in the UK as well.

TNT Express and TNT Logistics are testing an electric 7.5 tonne truck which they believe is the first zero emission vehicle that can compete with a diesel on urban delivery routes.

The truck, built by Smith Electric Vehicles of Sunderland, has a payload of about two tonnes, a top speed of 50 mph and range of about 130 miles.

The truck, called the “Newton” is powered by four large “Zebra” 278v Sodium Nickel Chloride batteries on the underside. Fully charged, the vehicle has a range of 130 miles. It can be re-charged on board or through domestic mains or a standard three-phase socket.

If the trial proves successful, TNT will consider adding 200 other zero emission vehicles to its fleet to serve in other urban locations in the UK. Peter Bakker, TNT chief executive, said TNT wanted “to be the cleanest, greenest express, mail and logistics company on the planet”.

The LA Times has an article on the "Iraq Study Group", noting its still all about oil in Iraq. I thought this was the key line - "this is a crucial issue, with trillions of dollars at stake, because only 17 of Iraq's 80 known oil fields have been developed". Who knows how many other "unknown" oil fields are underneath "the greatest prize of all" - I wouldn't be surprised if the Baker boys have a few of those legendary treasure maps...

WHILE THE Bush administration, the media and nearly all the Democrats still refuse to explain the war in Iraq in terms of oil, the ever-pragmatic members of the Iraq Study Group share no such reticence.

Page 1, Chapter 1 of the Iraq Study Group report lays out Iraq's importance to its region, the U.S. and the world with this reminder: "It has the world's second-largest known oil reserves." The group then proceeds to give very specific and radical recommendations as to what the United States should do to secure those reserves. If the proposals are followed, Iraq's national oil industry will be commercialized and opened to foreign firms.

The report makes visible to everyone the elephant in the room: that we are fighting, killing and dying in a war for oil. It states in plain language that the U.S. government should use every tool at its disposal to ensure that American oil interests and those of its corporations are met.

It's spelled out in Recommendation No. 63, which calls on the U.S. to "assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise" and to "encourage investment in Iraq's oil sector by the international community and by international energy companies." This recommendation would turn Iraq's nationalized oil industry into a commercial entity that could be partly or fully privatized by foreign firms.

For any degree of oil privatization to take place, and for it to apply to all the country's oil fields, Iraq has to amend its constitution and pass a new national oil law. The constitution is ambiguous as to whether control over future revenues from as-yet-undeveloped oil fields should be shared among its provinces or held and distributed by the central government.

This is a crucial issue, with trillions of dollars at stake, because only 17 of Iraq's 80 known oil fields have been developed. Recommendation No. 26 of the Iraq Study Group calls for a review of the constitution to be "pursued on an urgent basis." Recommendation No. 28 calls for putting control of Iraq's oil revenues in the hands of the central government. Recommendation No. 63 also calls on the U.S. government to "provide technical assistance to the Iraqi government to prepare a draft oil law."

Further, the Iraq Study Group would commit U.S. troops to Iraq for several more years to, among other duties, provide security for Iraq's oil infrastructure. ...

All told, the Iraq Study Group has simply made the case for extending the war until foreign oil companies — presumably American ones — have guaranteed legal access to all of Iraq's oil fields and until they are assured the best legal and financial terms possible.

Oil industry spokesman Daniel Yergin might not believe in peak oil occurring in the next few decades, but he does seem to realise that alternatives are now appearing at a rapid rate.

With this rapid growth comes a degree of hype that has some echoes of the Internet frenzy. But that cycle of boom and bust left a set of technologies that are transforming business and society. And one clear difference is that in the Internet boom the business plans focused on eyeballs and didn't worry so much about how to make money. Here the market opportunity is clearer.

This diverse but intense focus on energy technology will likely have wide effects. There will be new ways to find or develop conventional energy. The competitive position of alternatives will be enhanced. The boom in conventional, corn-based ethanol, with its overwhelming political support, will nevertheless run into limits of land and food-versus-fuel competition. The current holy grail in liquid fuels is the search for economically competitive cellulosic ethanol, made from crop waste or specially designed energy crops. Overall, some of the most intriguing possibilities will come from applying biology and genetic engineering to energy problems.

Much else is now on the energy-technology agenda—from fuel cells and solar energy to advances, on the demand side, in how we use energy and the ways in which our cars are powered. Technological advances, along with regulations, enabled the United States and Japan to double their energy efficiency in the 1970s. That could happen again. When it is all added up, there has never been so much activity in new energy technologies. If it stays at this pace, expect dramatic results.

Chris Cook, the architect of the fabled Iranian Oil Bourse, has an article on a new direction for the bourse (of course, we seem to have oil bourses springing up everywhere now - Norway, Russia, Dubai and Shanghai are ones I've noticed so far this year) - so this may just be a small part of a larger trend - and one which reinforces the need for the West to lose its dependency on oil ASAP. The "Islamic Finance" journal that this was published in rang a little bell in my mind about David Martin's talk at TAI on Islamic finance and its importance post Basel 2 as well...

The “Iran Oil Bourse” project, beloved of Internet conspiracy theorists, has taken on something of a mythical character, not unlike the Loch Ness Monster, with persistent sightings but an absence of actual manifestation. Hopefully this article will both dispel the myths, and set the scene for what is potentially an extremely important development, particularly for the Islamic world.

Origins

The origins of the project lay in a disciplinary case on the International Petroleum Exchange (“IPE”) in 2000 where a trader was disciplined in respect of market manipulation, and I assisted him in defending the matter before a Disciplinary Tribunal.

It became apparent, too late to help the trader, that it was in fact the customers of the IPE who were manipulating the market, as the IPE knew perfectly well. In fact – as the Commissioner’s report into my allegations documented – the IPE had actually reported this conduct to the regulatory authorities, the UK Financial Services Authority, but did not see fit to inform the Disciplinary Tribunal of the fact.

When, because I could not believe the breathtaking cynicism and unfairness of the case, I “blew the whistle” on the systemic (unfortunately, I used the word “systematic” at the time) manipulation of IPE settlement prices by intermediary traders and investment banks, I ran up against the UK Establishment, and the scandal was buried, and so was I, in terms of ever working in the City again.

Another paper of Chris's that I haven't seen mentioned around the traps (which a reader was kind enough to send me) is this one on "Market 3.0".

Why Market 3.0?

The first generation of markets -- Market 1.0 -- was decentralised but disconnected, and 'market presence' required the physical presence of buyer and seller, typically in local and regional exchanges.

Market 2.0, which has now reached its zenith, is centralised but connected, with market presence through intermediaries such as Exchanges or proprietary Alternative Trading Systems (ATSs).

Market 3.0 represents the final evolution of markets: decentralised but connected, with market presence being through a 'network presence' on a dedicated market network. Understanding Market 3.0 requires consideration of the architecture of the Internet itself and how this relates to the communications, security, technological and legal infrastructure of markets.

"Petrodollar Warfare" author William Clark has published an essay called "Hysteria Over Iran and a New Cold War with Russia: Peak Oil, Petrocurrencies and the Emerging Multi-Polar World " (pdf).

The 21st century will likely be defined by three overarching forces: climate change, Peak Oil, and macroeconomics. The twin issues of climate change and Peak Oil are intertwined variables, and each represent extremely important phenomena that have slowly begun to enter the public debate, at least among the more objective members of society.

However, the third issue, macroeconomics, and more specifically the global trends regarding petrocurrencies, remains essentially unreported by the five US corporate media conglomerates. Nonetheless, from Washington to Caracas, from London to Moscow, and from Beijing to Tehran, in order to fully appreciate contemporary geopolitics, it is important to recognize the underlying momentum towards multiple petrocurrencies - and the growing challenge to US dollar supremacy.

The hypothesis outlined in my book, Petrodollar Warfare; Oil, Iraq and the Future of the Dollar, is that the geopolitical landscape of this century is increasingly being driven by increasing competition for energy supplies before global oil production peaks, and the erosion of dollar hegemony and emergence of new petrocurrency alignments. [3] The tragic war in Iraq is in many ways the first oildepletion and oil-currency war of the 21st century.

This essay explores disparate energy and economic alignments that are poised to produce a multi-polar world order manifestly different from the post-World War II era (i.e., bi-polar Cold War period followed by a uni-polar world order). What is not yet clear is whether today’s unfolding energy, geopolitical, and macroeconomic alignments will ultimately produce a tri-polar distribution of global power or perhaps a quadri-polar world order.

Contents
Introduction: Hegemony
Pursuit of Global Hegemony and Imperial Overstretch
Part I. Why Petrocurrencies Matter: Macroeconomic Effects of a Monopoly Petrodollar
1. Petrodollar Recycling and the Funding of the US Current Account Deficit
2. US versus Global Currency Risk for Imported Oil
3. US versus Global Gasoline Taxation Levels
4. Net Effect of the Monopoly Petrodollar Recycling System
The EU and OPEC on Petroeuros
Critics of the Petroeuro Challenge to the Petrodollar Supremacy
Part II. Manifest Subterfuge Déjà Vu: Unfolding Disinformation Campaign against Iran
Iran’s Oil Bourse and Washington’s Economic War to Undermine It
Part III. Russia’s Geopolitical Posturing for Energy Superstate Status
Cold War Part II: Introducing Russian Petrorubles
Part IV. Asia: An Emerging Pole of Global Power
Shanghai Petroleum Bourse Re-opens: China Enters the Fray
Part V. Recommended Reforms: Escaping the Destiny of Empires

The Guardian reports that Henry Kissinger's good friend Augusto Pinochet died today. One memory which has stuck with me from my visit to Chile a few years ago (besides the amazing sight of the Torres Del Paine poking through the mists) is of all the swastika graffiti on the walls in Vina Del Mar (a reasonably upmarket coastal town north of Valparaiso). Presumably plenty of Pinochet supporters live there.

General Augusto Pinochet, the Chilean former dictator whose brutal regime cast a shadow over his country and the rest of the continent for more than three decades, died yesterday at the age of 91.

He was pronounced dead from heart complications at Santiago's military hospital at 2.15pm local time. Within minutes, cars circled the centre of the Chilean capital, blowing their hooters and waving flags to celebrate the passing of the man whose US-backed military coup destroyed Latin America's first democratically elected Marxist government.

Police were quickly deployed across the city and residents in working class districts erected barricades last night as news of Gen Pinochet's death left the capital in ferment and the country in shock.

Victims of human rights abuses during his 17-year rule gathered at a statue of Salvador Allende, the Chilean president who died during the 1973 coup, and urged the government to avoid giving any special honours at the burial. Their plea was heeded by President Michelle Bachelet, herself detained and tortured by Pinochet-era security forces, who said he would be buried with military honours, but would not be given a state funeral.

As police patrols fanned across the capital to avert clashes between friends and foes of the late dictator, poorer neighbourhoods lit tyres to celebrate. "These people are not celebrating the death of anyone," said Jorge Salinas, 50, who was throwing confetti into traffic. "It is to celebrate the end of a cycle of so much pain, so much dictatorship, so much torture. Pinochet signified many deaths, so much suffering for us. That's why you see such happiness in most of the people."

Even in upper middle class neighbourhoods where Gen Pinochet was once revered, his reputation has disintegrated in recent years, because of ongoing inquiries into financial crimes, including tax evasion and illegal weapons deals.

Gen Pinochet was also under indictment in three cases stemming from the 3,000 people killed and thousands tortured during his regime, when he was feted by Washington as a bulwark against communism.

Gen Pinochet's critics regretted his passing only because it meant he could not be tried. Amnesty International said: "Pinochet's death should be a wakeup call for the authorities in Chile and governments everywhere, reminding them of the importance of speedy justice for human rights crimes - something that Pinochet has now escaped."

When Gen Pinochet seized power in 1973, he knew he would be enjoying the strong support of the US. The secretary of state and national security adviser, Henry Kissinger, was an admirer and anxious that no bridgehead for the left should be established in Latin America by President Allende.

"The prevailing mood among the Chilean military is to use the current opportunity to stamp out all vestiges of communism in Chile," said a CIA memo immediately after the coup. "Severe repression is planned." Another CIA document noted that the methods used by the junta's secret police were "out of the Spanish inquisition".

When Dr Kissinger and Gen Pinochet met in 1976, according to documents released in 1999, Dr Kissinger told him to ignore criticisms from within the US about his methods, assuring him that they were part of a communist propaganda exercise. He told him: "We wish your government well."

Dr Kissinger remained loyal to Gen Pinochet. When the retired dictator was arrested in London in 1998 and was facing extradition to Spain, he backed the campaign for him to be allowed to return home.