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Triple Crunch Log                                                                                                            

18.10.10. Coal India: money flows in despite reservations. FT: “On the first day of Coal India’s much awaited $3.5bn share sale, which is set to be the country’s biggest IPO ever, the state-owned miner attracted $1.2bn of bids on Monday: a decent start for an offer that will close on Wednesday for institutional investors, and a day later for retail buyers. In India most bids tend to come in on the final day. That’s why the optimistic bankers working on the deal predict it will be ten times over-subscribed. Investors, it seems, are expecting the shares to perform strongly on the back of growing demand for energy globally. If Coal India is eventually priced toward the top of its Rs225-245 IPO price range, it would be valued at about $35bn, making it the country’s seventh largest listed company (though it is only floating 10 per cent of its shares). … The company will also have to face a number of regulatory and environmental hurdles that may delay the ramping up of production in the short-term. Long-term risks include a new mining policy that may force the group to share profits with local communities affected by mining operations and the growing threat of Maoist attacks in the regions where the mines are. …. Crisil, the Indian ratings agency owned by Standard & Poor’s, assigned 5 out of 5 to Coal India’s IPO, as it pointed out that “the fundamentals of the IPO are ‘strong’ relative to the other listed equity securities in India.”949

CCS and Green Bank (of sorts) continue in UK post-CSR, with lower funding. Guardian: “Chris Huhne, has won a battle to secure £1bn from the Treasury to pay for the development of demonstration technology to capture and bury carbon emissions from power plants. … It now seems likely that £2bn of money largely already pledged by the government for green projects will be corralled into a watered-down green fund. In other spending areas there is mixed news, according to government sources: A 10% increase in money for nuclear decommissioning. £400m for the proposed renewable heat incentive for small-scaleprojects such as ground-source heat pumps. £60m funding to upgrade north-eastern ports critical for the go-ahead of factories building blades for wind turbines. A 10% cut to so-called feed-in tariffs – the subsidy for small renewable projects such as solar panels on houses.”950

Solar funding easier to access in Europe than the US. FT: “The US government’s loan guarantee scheme has come under scrutiny in recent days after the collapse of the JV between Constellation and EDF for a new nuclear plant. But it appears the similar scheme for the solar energy industry is also coming under fire. … But the problem appears to be largely a US one. Industry sources tell me that they find European banks more willing to take on such projects, in part because they are not as risk averse as their American counterparts have become in the wake of the banking crisis.”951

China attacks US over their probe into Chinese subsidies for alternative energy companies. FT: “The organisation bringing the complaint against China in the first place, the United Steelworkers union, is a major Democratic backer … You can understand why US industry is perturbed when you see the amount of money flowing from the Chinese government into its nascent clean energy sector. Beijing is soon expected to announce a clean energy stimulus plan that could direct as much as Rmb5,000bn ($750bn) towards new energies like solar, wind, nuclear and unconventional gas.952

Wave of closures set to hit US coal stations during the coming decade as environmental regulations hit the industry, analysts and executives believe. FT: “Ageing plants are threatened by the cost of investment needed to cut pollution, as well as by competition from cheap gas supplies created by the boom in US production from previously uneconomic shale rocks.” Regulations involve mercury, acid rain, water and (probably) greenhouse gases. … “A fifth of US coal-fired generation capacity could close in the coming decade, according to Wood Mackenzie, the consultancy, given even moderate federal controls on greenhouse gas emissions. … Old coal plants, many of them built in the 1950s and 1960s, will require replacement even without new regulations.”953

Jeremy Leggett, Huffington Post: “The singular genius of a simple solar lantern.” A singular BBC series, "The History of the World in 100 Objects," has grown its way to iconic status in the UK this year. Millions of Brits have tuned in to see each successive object unveiled. The 100th object was revealed last week. It is a solar-powered lamp and charger. This is a very encouraging choice, for those with a mind to read potentially big things into seemingly small developments.954

19.10.10. “To choose austerity is to bet it all on the confidence fairy”: Joseph Stiglitz. “The Keynesian policies in the aftermath of the Lehman brothers bankruptcy were a triumph of economic theory. In Europe, the US and Asia, the stimulus packages worked. Those countries that had the largest (relative to the size of their economy) and best-designed packages did best. China, for instance, maintained growth at a rate in excess of 8%, despite a massive decline in exports. In the US the stimulus was both too small and poorly designed – 40% of it went on household tax cuts, which were known not to provide much bang for the buck – and yet unemployment was reduced from what it otherwise would have been – over 12% – to 10%. … Now, financial markets – the same shortsighted markets that created the crisis – are focusing on soaring deficits and debts. We should be clear. Most of the increase is not due to the stimulus but to the downturns and the bank bailouts. … The two prescriptions could not have been more different. Thanks to the IMF, multiple experiments have been conducted – for instance, in east Asia in 1997-98 and a little later in Argentina – and almost all come to the same conclusion: the Keynesian prescription works. Austerity converts downturns into recessions, recessions into depressions. The confidence fairy that the austerity advocates claim will appear never does, partly perhaps because the downturns mean that the deficit reductions are always smaller than was hoped.”955

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