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Global Fund Exchange September Newsletter 2010

Global Fund Exchange September Newsletter 2010

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Published by Nicholas Yeager
Global Fund Exchange Investing in the Future of Energy September 2010 Newsletter
Global Fund Exchange Investing in the Future of Energy September 2010 Newsletter

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Published by: Nicholas Yeager on Sep 23, 2010
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Global Fund Exchangeisan asset managementbusiness specializing in adiversified global macroapproach to investing indynamic opportunitiesacross all sectors of theNew Energy Revolution. 
Featured in this issue:
Global Commodity Surge
World’s Largest Solar Thermal
U.S. & China Coal Dependency
Japan’s New Carbon Mandates
Water Storage & Food Security
$100bn Climate “Green Fund”
Global Trends & Supply Fears Contribute to Price Increase
 Commodities have been a
top concern for investors
heading into the fall.Goldman Sachs recently published forecasts for commodity sector returns overthe next twelve months, with
energy commodities reigning at the top of the list.
The investment giant predicts a 27% rise in energy over the coming year, as wellas 17% increase in precious metals and 15% in industrial metals.
China’s drive to reduce pollution and close inefficient and unsafe mines has
resulting in
higher prices for coal, lead, tin and rare earth metals
, as well as little-know commodities such as antimony, a metal used for fire-proofing. Chinacontrols 90% of the world market. Since its sweeping mine closures, the price of antimony has increased 150% since Jan 2009 to nearly $11,000 a ton.Goldman Sachs, however, does not have high expectations for agriculturalcommodities. In fact, analysts
expect losses over the next 12 month period
.Despite this overall unfavorable outlook, Goldman Sachs did take specialexception to corn, cotton, Arabica and raw sugar when it raised its 3-monthoutlook for these particular commodities.Corn and cotton prices in particular have responded to a confluence of globalevents.
Flooding has devastated cotton crops in Pakistan, one of the world’s top
five cotton producers. In conjunction with increased demand from China, someestimates foresee
global cotton prices increasing by as much as 15% in2010/2011.
unimpressive U.S. harvest has likewise spurred a jump in corn prices
. Cornhas risen to its highest trading levels since 2008, with a 40% rally since July 2010.
Newsletter September 2010
+1 212 570 7970globalfundexchange.com
Cellulosic Ethanol Producers & ‘Big Oil’
Companies Sign Joint Ventures in Brazil
major partnerships have taken shape between globaloil conglomerates and smaller cellulosic biofuel companies
 in Brazil, including a $12 billion joint venture between Shelland Brazilian ethanol producer Cosan, and an $11 milliondeal between Petrobas and KL Energy Corporation toexpand Brazilian operations.Besides providing a major boost to the Brazilian cellulosicethanol industry, these deals will allow the smallercompanies to access broader markets and sources of capital, and provide evidence of 
g Oil’s continued interestin “next
generation” biofuels,
which many see as the waveof the future.
Unlike corn-based ethanol, which has been criticized forcompeting with food crops for land space and its largecarbon footprint, cellulosic ethanol can be made from justabout any crop or plant matter that has a highconcentration of cellulose. This means
discarded wastecrops, stalks, leaves and husks can be turned into fuel.
 Technology developments and a drop in the price of necessary enzymes for the fuel conversion process hashelped cellulosic ethanol production more economical, andtherefore more practical as a major-scale substitution forgasoline-based liquid fuels.
South Korea Expands Off-shore WindEfforts with 1,000 New Turbines
As part of a major new
venture into off-shore wind,
SouthKorea announced the launch of a $7.8bn offshore windturbine testing ground in the Yellow Sea.
This testing facility is the precursor to South Korea’s
planned installation of 1,000 new off-shore turbines
to bebuilt over the next ten years. Located nearly 30 km off shore, these turbines would generate roughly as muchpower as four nuclear reactors.
South Korea’s new energy plans also encompass the launch
of a domestic electric vehicle market, increased solar powerinstallations and construction of new nuclear power plants.
By 2030, South Korea aims to build eleven new reactors toadd to the nearly twenty currently in operation.
Eightreactors are already under construction.
Regulators Approve World’s Largest Solar
Thermal Plant in California Desert
Energy regulators in California have granted a license for the
world’s largest solar thermal power plant
in the MojaveDesert. The 1,000 MW solar complex, called the Blythe SolarPower Project, will cover 9.3 square miles in the SouthernCalifornia desert.The plant will use long rows of parabolic troughs to reflectsunlight on liquid-filled tubes which lead to a central powerblock. The super-heated liquid is used to create steam whichdrives a turbine to generate electricity.
“Given the challenge of climate change at this time, it is very
important to reduce fossil fuel use by moving forward with the
largest solar project in California,” remarked Robe
rtWeisenmiller of the California Energy Commission. At peakoutput, the Blythe plant will
supply enough electricity topower 800,000 homes.
By the end of this year, the Commission will make decisions ona number of 
solar projects that together would produceanother 2,829 MW of electricity
. In comparison, the totalamount of installed solar capacity in the United States last yearwas a mere 481 MW, a fraction of what could be coming onthe slate in the years ahead.These new developments in California could help transform
“renewable energy from a small portion of our energy base to
becoming the
backbone of the state’s power base
,” said Alice
Herron, a senior director at Solar Millennium, the Germany-based developer of the Blythe project.
S-to-N Transfer Project Source: ChinaEnvironmentalLaw.com
Blythe Solar Power Project Source: California Energy Commission
China’s Clean Energy Future Depends on Coal
success or failure of China’s $736 billion plan to invest in
solar, wind, biofuel and nuclear energy is likely to depend onone thing
the price of coal.
Supplying 80% of all electricity for its growing economy, China is
the world’s #1 coal user.
It constructs, on average,
one newcoal-fired power plant every week.
Switching away from such aplentiful albeit highly polluting resource in favor of clean energytechnologies will be difficult for the economic giant.Also added to the equation are new technology developmentsthat make coal combustion processes cleaner. Calledsupercritical plants, these new generators produceapproximately 15% less carbon dioxide than conventional plantsat a cost of about $500-$600 per kW less than in developedOECD nations.
China has overtaken the U.S. as the world’s top
greenhouse gasemittor, and it
faces tremendous pressure from theinternational community to wean itself off its coal addiction
 and get serious about reducing its emissions levels. However,policy and industry analysts warn that if the costs of new energy
technologies are not commensurate with, China’s clean tech
push may fizzle and fail to attract the private sector investmentit needs for long term success, especially as coal becomescleaner.
government must gradually lift fossil fuel prices whilegranting incentives to non-fossil fuels to establish a long-term
price signal,”
said Wang Yi, deputy head of Policy andManagement at the China Academy of Science. Withoutchanges in tariff structures, there would be little incentive forprivate firms to invest. State-run firms would be the only ones
able to operate at a loss as “they are the ones who can afford tolose money,” said Lin Boqiang, head of Center of Research on
Energy Economics at Xiam
en University. “The private sectorcan’t afford waiting around for 5 to 10 years operating at a loss.”
Price of coal important in Chinese clean energy development
With 32 New Plants, U.S. Coal IndustryExperiences Largest Growth in 20 Years
The U.S. coal industry has experienced its largest expansion inover twenty years.
Since 2008, thirty-two new coal-firedpower plants have been built or are currently underconstruction
in the United States.All together, these coal plants will generate approximately17,900 MW of electricity - enough to power 15.6 millionhomes, or roughly the combined number of homes inCalifornia and Arizona. They will also
emit about 125 milliontons of greenhouse gases every year - the equivalent of adding 22
million vehicles to the nation’s roadways.
Public awareness of the social and environmental costs of fossil fuels has increased after the BP oil spill and the tragiccoal mine accident in West Virginia. However, this publicsentiment has not translated into legislation which woulddissuade the coal industry from expanding. On the contrary,the failure of U.S. lawmakers to enact tough carbon emissionslegislation has kept the industry comfortable in the status quo.As Severin Borenstein, director of the Energy Institute at UC-Berkeley says,
“Building a coal
-fired power plant today isbetting that we are not going to put a serious financial cost
on emitting carbon dioxide.”
Despite the Obama administration’s dedication of $3.4 billion
in stimulus funds
to “clean coal” research,
none of the thirty-two new plants incorporate this experimental technology
,which filters out carbon before it can be released into theatmosphere. New investments in traditional coal plants, onthe other hand, amount to more than $35 billion.
Strategic Location May Propel Indonesia to
World’s Largest Exporter of Coal
To satisfy growing demand, energy-hungry nations such as
China and India have begun looking to their southernneighbor Indonesia as important source of thermal coal.
Desperate for foreign investment to help achieve majorinfrastructure overhauls, Indonesia is a willing partner and hasrecently signed blockbuster deals with its energy-hungrypartners.
Indonesian production levels are predicted to risenearly 90% to 480 million tons by 2020.
 Indonesia has set a target of attracting $160 billion in foreigninvestment over the next few years.
China and India have
agreed to finance billions of dollars worth of Indonesianinfrastructure projects
- including railways, road, ports andbridges
in exchange for coal.The nature of the agreements is similar to the controversial
infrastructure” deals China has entered acrossAfrica to secure access to that continent’s resources.

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