Posts Tagged ‘Environment’


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Google Invests in World’s Largest Solar Power Tower Plant

Google has just sealed a deal to invest $168 million in a Mojave Desert solar energy plant.
The investment is going to BrightSource Energy, a company that developes and operates large-scale solar power plants, specifically to fund its Ivanpah project.
Ivanpah is a solar electric generating system that uses solar thermal technology and “an environmentally responsible design,” according to the project’s website, to deliver reliable, clean and low-cost power to Californians.
The plant will generate energy with a technology called power towers. Mirrors, called heliostats, are arranged in an array and aim the sun’s rays at a receiver atop a tower. The receiver generates steam; the steam causes a turbine to rotate; the rotation causes a generator to generate electricity. Because such large quantities of solar energy are being directed to such a small area, the power towers are very efficient.
The power tower at Ivanpah will be around 450 feet tall. The plant will use 173,000 heliostats, and each heliostat will have two mirrors, making Ivanpah the largest project of its kind.
Construction at Ivanpah should be completed in 2013. Here’s a video from the plant’s groundbreaking ceremony:
Google’s been on something of a clean energy investment kick over the past year or so. The company was granted the ability to buy and sell energy as a public utility last February, ostensibly to find better ways to power its own massive data centers.
A short time later, Google began making significant investments in green energy technologies. The company sealed a $38 million wind farm investment in May, bought 20 years’ worth of wind farm energy in July, and provided a substantial investment for a huge offshore wind farm in October.
Rick Needham is Google’s Director of Green Business Operations. On the company blog, writes, “We hope that investing in Ivanpah spurs continued development and deployment of this promising technology while encouraging other companies to make similar investments in renewable energy.”

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Vivendi to Buy Vodafone SFR Stake for $11.3 Billion

Vivendi, the French media conglomerate, announced on Sunday
that it had taken full control of SFR, a large cellphone
service provider, buying Vodafone’s 44 percent stake in
the company for $11.3 billion in cash.

The deal gives Vivendi full control of one of its biggest
business units, a longtime goal for the company. SFR is one
of the biggest cellphone carriers in France. It earned
nearly 4 billion euros in profit last year and had about 20
million mobile service customers as of Sept. 1.

DEALBOOK:
http://dealbook.nytimes.com/2011/04/03/vivendi-to-buy-vodafones-stake-in-sfr-for-11-billion/?nl=business&emc=dlbka9


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Water-short, energy-challenged and traffic-congested, Israel is a land of environmental experiments


The greening of Israel

Water-short, energy-challenged and traffic-congested, Israel is a land of environmental experiments, reports freelance writer CHRISTINE H. O’TOOLE

Pittsburgh Post Gazette

Sunday, February 20, 2011

NETANYA, Israel

On the coastal highway to Haifa, the sunlit Mediterranean Sea is mirrored by miles of glittering rooftop solar panels, providing residents with home-cooked hot water. It’s common sense to harvest solar radiation here at the latitudes where it’s strongest. But can a crowded, drought-prone country, packed with cars and poor in plant life, oil and water, really go green?

Israel has no choice. The constraints posed by climate, geology and rapid growth have forced the country to experiment with untested ideas in environmental sustainability.

From a landfill-turned-city park, to a national network of charging stations for battery-powered sedans, to wetlands reclaimed from agriculture, examples are everywhere. Touring the country through the sandstorms that battered it in December, I saw projects with both grit and promise.

A 60-meter hill of trash along the Tel Aviv-Jerusalem highway — it looks like a mountain on the board-flat landscape — grew over Israel’s first 50 years to become the rank centerpiece of a noxious eyesore. But the Hiraya garbage dump now is being transformed into Ariel Sharon-Ayalon Park, which will repurpose the 2,000-acre landfill for recreation.

In a city with a heavily used beachfront but no green space, the site, double the size of San Francisco’s Golden Gate Park, looks like an urban mesa, with cycling paths and public spaces. Fed by trickles of water — here called rivers — its cedars, figs and olive trees will act as a ‘green lung’ to mitigate airborne pollutants along the busy Route 1 corridor through which a half-million commuter cars pass daily.

Israeli traffic, particularly on the northern highways, is an intractable 24-7 snarl. Despite rail service connecting Tel Aviv and Jerusalem with Ben Gurion Airport, intra-city mass transit options are limited. In Tel Aviv, where a third of the country works, a light rail/subway plan has been stalled for years, and a promised city bike-share program has yet to debut.

Meanwhile, gasoline costs nearly $7 per gallon in a nation completely dependent on foreign oil. That prompted young entrepreneur Shai Agassi to ask: ‘How do you run an entire country without oil, with no new science, in a time frame that’s fast enough to get off oil before we run out of planet?’

On the northern edge of Tel Aviv, Mr. Agassi’s new venture is demonstrating the answer: A Better Place is producing an electric battery-powered car supported by a national network of charging stations.

Mr. Agassi has promoted the system as a giant leap in convenience. Drivers can use home plug-in chargers and extend the car’s range by swapping out batteries on the road. A Better Place has shrewdly built acceptance for the system with free tours and test drives at its demonstration center. Forty thousand people have visited since it opened last March.

‘We’ve created a system that will work on all-electric cars — the Leaf, the Volt, the Mitsubishi,’ Sidney Goodman, vice president of the $700 million startup, told a group of American visitors.

A Better Place’s main partner is Renault, whose Fluence Z.E. electric car will go on sale outside the United States this summer with a base sticker price of nearly $29,000, plus a monthly battery lease of about $100.

As a crowd of observers watched, Mr. Goodman demonstrated the robotic technology that runs the drive-in maintenance system. A machine lifted the car a few feet, extended one arm to detach a spent battery from below and smoothly substituted a fresh one in under five minutes. Mr. Goodman says Israel will have 50 battery switching stations by the end of this year.

The technology has the most promise for small ‘transportation islands’ like Israel and Denmark, but was successfully piloted in buses during the Beijing Olympics. Tests with taxi fleets in Tokyo will be followed by one in the California Bay Area next year.

Water is precious in Israel; the second rainfall of 2010 didn’t occur until my December visit. Although a controversial drought tax that rationed residential water usage was suspended last year, a new 40 percent hike in water tariffs is expected to have the same effect. It’s all the more surprising, then, that the country has allowed an agricultural kibbutz to revert to a wetland wildlife preserve.

As winter dusk fell over the 15,000-acre Hula Nature Reserve near the Golan Heights, thousands of grey cranes suddenly descended. They’d returned to the wetland, a migration stop for two millennia, where neighboring farmland has been turned into an eco-tourism center.

Kibbutz agriculture drained most of the swamplands in the 20th century and wildlife vanished. Now waterfowl, wild nutria, water buffalo and other species thrive in the nation’s first nature reserve. A re-flooded peat bog filters water flowing to the nation’s only fresh water lake, the Sea of Galilee.

Golda Meir famously voiced the Israeli complaint: ‘Moses dragged us through the desert to the one place in the Middle East where there is no oil.’

Israel will continue to struggle with meager resources, despite the recent discovery of a promising offshore natural gas field. But there’s a flow of fresh thinking about how to meet the nation’s environmental challenges.
Christine H. O’Toole is a freelance writer who lives in Mt. Lebanon (chris@christinehotoole.com).

First published on February 20, 2011 at 12:00 am

The greening of Israel

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Photo by: AP
Israel’s clean-tech megaproject
By AMIRAM BARKAT
12/02/2011
Bid to become a leader in renewable-energy technologies aims to help wean world off oil.
‘The global interest in Israel’s energy R&D and technology is out of all proportion to the size of the country,” says Dr. Eli Opper, a former chief scientist who is now the chairman of the Eureka High Level Group.

Israel holds the chairmanship of Eureka, the European R&D program, of which more than 40 countries are members. According to Opper, Israel’s technological achievements were an important consideration in the award of the chairmanship.

“The world looks for two things in Israel: R&D and technology,” he says. “Our manufacturing and marketing capabilities are of far less interest to it.”

Opper says Israel has an impressive record in developing breakthrough energy technologies.

“Israel was a world pioneer in developing water-desalination and solar-energy technologies,” he says. “Unfortunately, in Spain and California there are solar installations that operate using Israeli technologies, but in Israel itself we have missed the opportunity to implement them, among other things, for political reasons.

“Another reason is the small size of the Israeli market. On this point, Israel has a great deal to gain from cooperation with the large European market. Moreover, Israelis have a lot to learn from the Europeans when it comes to environmental protection. This is an area in which Israel considerably lags behind European countries.

Up to now, Israelis have preferred to deal with more urgent issues on the agenda.”

This highlights the importance of the conference organized by the European Friends of Israel in Jerusalem last week, in collaboration with Globes. The conference was attended by about 500 of the European Parliament’s 736 members.

Over the course of the conference, the European parliamentarians visited Israel’s leading industrial plants. This is no small thing, given that they represent a market of 375 million consumers who could help promote Israeli technology.

OPPER defines clean-tech as comprising three sub-fields: water, environment and renewable energy.

One of the most interesting Israel developments, he says, is in water.

“The hot topic in water technologies these days is prevention of leaks from water pipes,” he says. “There are some very interesting Israeli developments in this area that could be especially relevant to large European cities with antiquated water infrastructure.

In cities like London and Paris, the rate of water loss can be counted in tens of percents.

“The Israeli technology is twostage: The first stage is locating the leak, using sophisticated control systems; the second is blocking the leak, by introducing special, nontoxic materials.”

A few years ago, one of the technology incubators operating in Israel, Kinrot, decided to become a dedicated water-technologies incubator. Another incubator, L.N. Innovative Technologies, based near Haifa, has declared itself an “environmental incubator.”

More clean-tech technologies are at various stages of development in more than 26 incubators that operate in Israel under the aegis of the Chief Scientist’s Office in the Industry, Trade and Labor Ministry.

Opper, who was chief scientist from 2002 to 2010, says there are eight to 10 companies that have been in the incubators for an average of two years, and altogether, the state supports about 200 startup companies.

Opper says the past three years have seen substantial change in the scope of activity and investment in clean-tech R&D in Israel.

“Energy has expanded in recent years because the market understood that money could be made from it,” he says. “The figures are dramatic and indicate a very clear trend: Investment in clean-tech is growing steadily from year to year.”

In 2007, applications received in the Chief Scientist’s Office for research projects in clean-tech were worth a total of NIS 150 million.

By 2010, the amount had jumped to NIS 380m., representing a rise of more than 250 percent in three years. The amount of grants and the number of applications approved have grown by similar rates. At the same time, it must be remembered that cleantech still accounts for only a small proportion of the total of R&D projects approved by the Chief Scientist’s Office, which are worth about NIS 5 billion annually.

Investment in a technology center

The technology incubators and research budgets are only two elements of the R&D activity in Israel in renewable energy.

Another important factor that will soon come into play is the Renewable Energy Technology Center. The center will be set up by a private consortium selected by the Industry, Trade and Labor Ministry. Opper says a second technology center is planned in the next few years for developing water technologies.

Under the terms for setting up and operating the Renewable Energy Technology Center, the state committed to injecting NIS 57m. over five years, while the franchisee committed to match that amount of funding. In September, the tender for the center was won by the Eilat-Eilot Renewable Energy Initiative, a consortium that comprises some of Israel’s most important companies in R&D (Ormat, Elbit Systems, and Rafael Advanced Defense Systems), together with leading research bodies in renewable energy (Ben-Gurion University of the Negev and the Arava Institute for Environmental Studies) and venture- capital firm ProSeed.

The center will be constructed in the Arava, north of Eilat, in the Eilot Regional Council. The Eilat- Eilat Renewable Energy Administration is an important partner in the winning consortium. The win in the tender consolidates the Eilot region as the Israeli center for renewable energy.

THE MAIN focus of the region’s activity in renewable energy is the Eilat-Eilot International Renewable Energy Conference.

This year, the fourth year it is being held, the conference will take place in Eilat next Tuesday through Thursday. In 2010, the conference received official recognition as one of the most important renewable-energy events in the world, when the European Commission, the executive arm of the European Union, chose to include the event in the ECO4B (environment cooperation for business) project, promoted by the Enterprise Europe Network, which links business support organizations from 47 countries.

The conference will bring together more than 2,000 business people, academics, government representatives and large investment entities from Israel and around the world. Among other things, a large Italian delegation is expected, to be led by Economic Development Minister Paolo Romani, alongside delegations from the UK, France and Spain. Two sessions at this year’s conference are being sponsored by Eureka, which at the same time will hold its annual gathering under Luuk Borg, head of the Eureka secretariat in Brussels.

Among prominent Europeans in the renewable-energy field expected in Eilat this year are European Climate Action Commissioner Connie Hedegaard; Dr.

Karl-Josef Kuhn, principle engineer of Siemens AG and head of Siemens Corporate Technology E-Car; and Dr. Gabriel Marquette, director of European Affairs at Schlumberger Research and president of Eurogia. Besides focusing on ways of removing bureaucratic obstacles to implementation of renewable-energy projects, a large part of the discussion will be devoted to innovation and the latest technological developments in the field.

NIS 14 billion to replace oil

In the coming years, Israel’s R&D efforts will not be devoted to clean-tech so much as to a subject close to it: substitutes for oil. Last February, the government decided on “a national effort to develop technologies that reduce the world’s use of oil in transport.”

The goal could hardly be more ambitious: The developed world’s dependence on oil for transport is a political problem, but it’s also an economic and environmental problem.

Dr. Gal Luft, executive director of the Institute for the Analysis of Global Security in Washington, DC, believes this is the world’s number-one problem.

The root of the problem, he says, is that oil is a monopoly in fuel for transport that is produced by a cartel, OPEC, which controls nearly 80% of the world’s oil reserves and is committed to raising its price.

At the Globes Israel Business Conference in Tel Aviv in December, Luft predicted that oil prices would continue to rise under any possible scenario.

“Our ‘luck,’ in inverted commas, is that we have been in a global recession,” he said. “Just imagine what will happen if we emerge from the recession. On the other hand, oil prices will also rise under less optimistic scenarios, such as an outbreak of inflation or substantial weakening of the dollar.

If those things happen, investors will rush to oil as a defensive commodity, like gold.”

Over the past year, since the government decision, comprehensive staff work has been undertaken by the National Economic Council under Prof.

Eugene Kandel. Last month, the government approved a national plan for developing alternatives to oil.

The plan, which will operate between 2011 and 2020, will have a budget of NIS 4b. for its first five years and at least NIS 10b. for the next five years. The government’s participation in the budget will be NIS 1.5b.

The main goal of the plan is for Israel to become a world center of know-how in alternatives to oil.

This goal will be achieved if, by 2016, more than 100 start-up companies and research projects are set up, with the involvement of 20 Israeli global companies.

Also, by 2016, about a 100 research and academic groups in the field are due to be formed.

THE PLAN encourages investment in venture-backed companies active in alternatives to oil.

The program, which has been allocated government funding of NIS 400m., will enable the financing of pilot installations to test new technologies, and it will promote implementation of the new technologies in industry. In addition, a NIS 1.5m. annual prize will be awarded by the prime minister for world innovation in alternatives to oil.

The future scientific activity in Israel will be reinforced by collaboration programs and agreements with foreign countries. Preference will be given to countries with high research and technological capabilities and to countries with the strongest interest in finding alternatives to oil. The government’s decision specifically mentions countries such as India and China, where the number of motorized vehicles is expected to grow substantially in the coming years.

Uri Ben-Porat, economic adviser to President Shimon Peres, recommends teaming with developing countries – such as Kazakhstan, for example – that are dependent on oil exports and seek to diversify their risk. At the recommendation of Opper, the plan states that Israel will seek to strengthen collaboration between Israeli companies and multinational companies active in areas connected to alternatives to oil and with leading research bodies in that area.

“Players like automobile makers and fuel companies are conducting research on a huge scale to find alternatives to oil, and there is a great deal of strategic sense in linking up with them,” Opper said at the Israel Business Conference.

Opper, who was a member of the steering committee that formulated the national plan, believes its ambitious goal is attainable.

“If Israel helps to solve the world’s dependence on oil, it will turn out to have been a very important decision,” he says.

Israel’s clean-tech megaproject

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Demolition in El Frío Ranch

It was seized by the government of President Hugo Chávez in March 2009 upon the grounds of environmental protection


The Páez House, the emblem and centerpiece of El Frío Ranch, before the seizure Dossier
The house that once belonged to General José Antonio Páez, a hero of the Venezuelan independence; the core of El Frío Ranch and preserved for almost 150 years, is nowadays dilapidated after its premises were seized by the government of President Hugo Chávez. The image of two times dramatically shows the mood of a revolution.


Located in western Apure state, El Frío was not only one of the major cattle raising centers in the country, with 20,000 heads of cattle, but also among the most specialized natural biodiversity reservoirs in the Western Hemisphere, as well as a research center into ecological cattle raising and a renowned conservation center both inside and outside Venezuela.


The Páez House was the main house in the ranch. It accommodated the corporate administrative and professional staff. It had two big dining rooms, two kitchens and two living rooms. The gardens of the house, nowadays unroofed and in ruins, are being used as parking lot for incoming and outgoing official vehicles. The former hustle and bustle of a productive business was replaced with military officers who guard the ranch with AK-103 slung across their backs and staff in red T-shirts attending the courses of political ideology given by Cubans.


Decree on expropriation
In March 2008, the National Lands Institute declared the exceptional recovery of the plot of land called El Frío Ranch. According to Desirée Rodríguez, the corporate legal counsel, the action started in the absence of the due administrative procedure concerning land recovery. The ranch of 64,000 hectares belonged for more than a century to the Maldonados; it was incorporated as Invega in 1948 and its ownership chain comes from colonial times.


In January 2005, the local chapter of the National Lands Institute in Apure state commenced an administrative proceeding for wastelands against El Frío. In early 2009, after a request made by folk music singer Cristóbal Jiménez in the Sunday TV and radio show Aló Presidente (Hello, President!), the government resumed the confiscatory process. On March 31, seizure was carried out.


The results
The government presently has the whole property of El Frío Ranch without having paid one single bolivar. It is known that part of the 20,000 animals that used to graze in the wetlands have been killed for provision of beef, but nobody knows about the recipient of the sale proceeds.


Rodríguez claimed that the reservation areas include Guariquito ravine, where fishing is banned, but practiced now. A river port was built there and vessels come to get fish.


In addition to cattle, the reservation is the refuge of 7,000 deers, thousand capybaras, the giant nutria, the anteater, the puma, the freshwater dolphin, anacondas and small alligators. One of the most noteworthy projects was preservation and reproduction of the endangered Orinoco caiman. The project started in 1996 and managed by the local biological station succeeded in the reproduction of 2,500 caimans that were released in Guairuito ravine. In 2008, the ranch had the third largest population of reptiles in the country, particularly in Macanillal ravine. In its wetlands cattle breeding remained low to favor the best environmental conditions.


Journalist Ramón Hernández tells in his book “Story of dispossession,” next to be released that each year, near 300 undergraduate and graduate students from all universities and colleges across the nation would visit the site to complete their studies in ecology, animal protection and environment. Also, Carolina Foundation and the Spanish government implemented a master course in Management of Biodiversity in the Tropic. Latin American students used to explore at El Frío Ranch environmentally friendly cattle breeding, reintroduction of endangered species and recovery of native horses.


Today, there is glaring abandonment of farms and biological stations. Attorney Rodríguez complained that high-ranking government officers and persons of the ruling party surreptitiously engage in illegal hunting there.


The agricultural failure
Not knowing about the issue, after the seizure of El Frío Ranch, President Chávez heralded at the seized premises that Apure state would become a rice-growing superpower. Taking issue with experts, who said that the soil is V and VI class with few nutrients and able for large-scale cattle breeding, Chinese and Vietnamese were brought there to sow rice. The crop was a total failure. The delusive estimates of Elías Jaua, then Minister of Agriculture and Lands, never accomplished. Today, Venezuela needs to import 450,000 tons of rice, accounting for 40 percent of the domestic consumption. To the contrary, until 2004, Venezuela had been self-sufficient in that item and exported 120,000 tons.


While no numbers on production and profitability are known of the ranch, now managed by the socialist company Marisela, the payroll rose by 234 versus 140 workers during the previous administration. Most of the payroll was dismissed shortly after the seizure. Workers are still waiting for collection of their severance payment. Interestingly, Hernández said: “In order to bolster self-government and people’s self-defense among workers and communities for food sovereignty and integral defense of the nation, the company (Marisela) trains 1,000 militiamen with the help of the armed forces.”
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Translated by Conchita Delgado

Francisco Olivares
EL UNIVERSAL

Demolition in El Frío Ranch – Daily News – EL UNIVERSAL

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BMW’s Ultimate Driving Machine Is a Tiny Little Electric Car

BMW CEO Norbert Reithofer knows the future is about more than high-performance suburban status symbols

When former U.S. Secretary of State Madeleine Albright arrived for lunch with BMW Chief Executive Officer Norbert Reithofer in late 2008, she brought along an unexpected guest, Joschka Fischer, a one-time left-wing radical. In the early 1970s, Fischer was fired from GM’s Opel unit for trying to organize a communist revolution among his fellow workers, and in 1973 he was photographed clubbing a police officer in a street protest. Later, disavowing violence, he entered mainstream politics, rising to prominence in the Green Party and serving as German foreign minister from 1998 to 2005.
Now he has a new job. After that lunch, Reithofer hired both Fischer and Albright to help BMW win support within the company and around the world for its Megacity Vehicle. Battery-powered, and built of carbon fiber and aluminum, it is meant to win BMW a place in the fastest-growing markets—sprawling urban megalopolises.
“The Megacity Vehicle is a must-have for BMW,” says Reithofer at the company’s landmarked headquarters in Munich. Reithofer, who has been at BMW for 23 years, is an unprepossessing man of 54, rarely seen in anything but a dark, three-button suit, with all three buttons fastened. He lives in the same modest Bavarian village where he was born. He owns a beagle. But with this new vehicle, Reithofer is attempting something radical, pushing BMW beyond its core strengths of speed and style, and toward solving different problems, like global warming, oil depletion, and the shift in growth from the West to the East. China is, in a sense, the ultimate destination, a land of exponentially growing megacities—and the pollution, traffic snarls, and huge spending power that come with them.
Reithofer’s challenge is to secure a place for BMW in this new world without sacrificing its status as a rarefied drive for the open road. “We don’t see threats; we see opportunities,” says Adrian van Hooydonk, an 18-year BMW veteran whom Reithofer installed as design chief last year. “That’s an indication of how this company thinks and the kind of energy that Dr. Reithofer brings to the company. ‘It is what you make of it,’ that’s what he always says.”
Inside BMW, the Megacity message didn’t immediately resonate with all of BMW’s horsepower-driven managers. Their resistance is understandable: BMW is doing quite well as is, building beautiful cars that go fast. In 2005, it bested archrival Daimler’s (DAI) Mercedes-Benz in sales, and the company has come roaring out of the recession, expecting to sell 1.4 million vehicles this year, just off its 2007 peak, while raising margins to 6.6 percent. With both the trendy Mini badge and Rolls-Royce’s silver lady under BMW control, the Bavarian manufacturer is on more solid footing than at any time in its 94-year history. Despite its success, however, BMW is still a much smaller company than its rivals. It lacks the giant bus and truck operations that allow Mercedes to amortize research costs. Volkswagen, with a stable of 10 brands including Bentley, Porsche, and the aggressive Audi nameplate, sells nearly five times as many cars as BMW and has vowed to topple it as the biggest premium automaker by 2015. “Because of its size, BMW can’t allow itself any mistakes,” says Stefan Bratzel, director of the Center of Automotive at the University of Applied Sciences in Bergisch-Gladbach, Germany, and a former manager at Daimler’s Smart unit. “If the Megacity Vehicle doesn’t work, BMW will have considerably less room to maneuver.”
Reithofer grew up in Penzberg, a former coal-mining town about 50 kilometers (30 miles) south of Munich. Living a short distance from the house where he was born, he’s stayed in the area to be close to family and the Alps, where he unwinds by skiing and mountain biking. After studying machine tools and operating science under Joachim Milberg, BMW’s former CEO and current chairman, he joined BMW in 1987 as head of maintenance planning. Later he moved to South Africa as technical director of BMW’s plant in Rosslyn. From 1997 to 2000 he managed BMW’s factory in Spartanburg, S.C., where the company manufactures the X5 and X6 lines of sport-utility vehicles. He credits his stint in the U.S. with streamlining his management style.
“In the U.S., I learned to take quick decisions and not hold long speeches,” he says. “When I got back to Munich, it struck me right away how long it took to make decisions, but we’ve changed that now.”
Part of his plan for the Megacity project has been to leave some of the long speeches to Albright and Fischer. The two spoke separately to auditoriums filled with hundreds of BMW executives and engineers, discussing trends like urbanization and global warming that threaten to make BMW’s athletic sedans obsolete. The result has been a groundswell of enthusiasm for the electric-car program, which came out of Project i, BMW’s internal think tank for the future of transport.
Ulrich Kranz, a former Mini developer, runs Project i, and says more people want to work for the unit than he can hire. Project i has grown from a handful of diverse experts in late 2007 to a team of more than 250 people, as BMW readies for the launch of the Megacity Vehicle in 2013. “Reithofer has provided more than 100 percent support,” says Kranz. “He is an absolutely enthusiastic motivator.”
He’s also a listener, and that helped BMW navigate the financial crisis without slipping into the red. In late August 2007, on a routine swing through the U.S., Reithofer met for a light lunch with a half dozen of BMW’s top American dealers. The meeting at the carmaker’s customer center near its factory in Spartanburg was upbeat; sales were heading for a record that year. When conversation turned to prospects for 2008, however, the salesmen voiced concern about credit markets and warned that problems in the subprime market could spill over and hurt demand.
Reithofer could have been forgiven for ignoring the warning. It was after all more than a year before Lehman Brothers’ failure set off the financial crisis. Instead, when he returned to Munich, he started putting crisis plans in place. The early warning helped BMW scale back production quickly, which prevented a glut of unwanted cars eating up cash and depressing prices. The company trimmed 11,000 workers from its payrolls through attrition and buyouts, and reduced hours for another 25,000, but was able to get through the crisis without layoffs.
Reithofer also used the crisis to reduce purchasing expenses and lower development costs, hoping to move profit margins to at least 8 percent by 2012. “The crisis accelerated the process,” says Reithofer, who personally test drives competitors’ vehicles and visits dealers anonymously to get an unfiltered view of his company. “We’re farther along than we otherwise would have been,” he says. That progress is reflected in the company’s stock performance. The shares have risen 50 percent this year, outperforming Daimler’s 20 percent advance and Volkswagen’s 40 percent gain.
“Reithofer was very underrated when he came in, but he’s since become one of the most respected CEOs in the industry,” says Philippe Houchois, an analyst with UBS (USB) in London. “He’s not flashy but rather an inside guy who gets the work done.”
Reithofer’s strategy is based on maintaining BMW’s independence, keeping in mind the rescue funded by Herbert Quandt, who had inherited a stake in BMW from his father. In 1959, BMW was losing money and needed cash to develop a mid-market car. Mercedes’ parent, then called Daimler-Benz, made an offer for BMW, which was rejected by Quandt because of opposition by the workforce and small shareholders. Quandt scraped enough money together to provide BMW a life line, and today his descendants still own nearly 47 percent of the carmaker. Says Reithofer, “The advantage of our major shareholder is—among other things—that they give us the stability to think long-term.”
The long view has pushed BMW to build electric vehicles and the smaller cars that will be needed in the new urban world. BMW staff traveled to Tokyo, Mexico City, and Los Angeles, among others, to talk to mayors, city planners, and even regular folks, whom they followed on their commutes and into their homes to see how they lived and traveled. They determined that a car still had a place in crowded cities as a symbol of individuality and refuge from the bustle, but it had to be sustainable.
Tom Mouloghney, a new kind of a car nut, exemplifies the new BMW culture. Though he has a Porsche Boxster in his garage and a DeLorean in his past, he has gone electric and isn’t going back.
“It’s my intention to have at least one electric vehicle from now on; I hope the options are available,” says Moloughney, who pays $600 a month in the second year of a lease of one of BMW’s electric-powered Mini E test vehicles. “I don’t see any way around us having to reduce our dependence on oil.”
Moloughney installed solar panels on the roof to generate electricity for his daily 60-mile commute between his Italian restaurant in the New Jersey suburbs of New York and his home in rural Chester. Explaining the extent of his commitment, he cites energy independence, cost savings, and environmental concerns.
“What people like about this car is that it has no oil, so it’s not hurting the economy, it’s not hurting the environment, and it’s not supporting countries that are not friendly to the U.S.,” says Moloughney, who has a bumper sticker that says “Starve a terrorist! Drive Electric!” on his Mini. His license plate reads EF-OPEC.
There are many contestants, of course, in the race to build an electric car. Later this year, Nissan Motor will introduce the battery-powered Leaf, and General Motors will launch the electric Chevrolet Volt, which extends its range with a gas generator. More of a threat to BMW is Daimler, which has a broader development pipeline. A battery-powered A-Class compact will debut at the Paris Motor Show later this month, adding to fuel-cell buses on the streets of Hamburg, electric-powered Vito vans in Stuttgart, and a test fleet of 1,500 battery-powered Smarts in places such as Berlin, Paris, Rome, and London. The view from Munich is that the rivals are pedestrian.
“Since we’re BMW, we don’t want to create just any old electric car,” says design chief van Hooydonk. “We want to deliver what people so far think is impossible: the combination of joy and zero emissions.”
Though the Mini is popular and seems to carry some component of joy, the electric version of the car is nothing special technically. The rushed project pushed out in 2008 is a simple conversion, which placed more than 5,000 laptop batteries where the back seat is supposed to be.
BMW also has a checkered past with alternative fuels. The company spent years developing hydrogen-combustion technology, using hard-to-handle liquid hydrogen, which needs to be cooled to minus 253 degrees Celsius, just 20 degrees above absolute zero, to become a fluid. BMW showcased the technology in 2007 by outfitting 100 of its 7-Series sedans with bulky hydrogen tanks; the fuel, however, boiled away despite insulation equivalent to 17 meters (55 feet) of Styrofoam.
Perhaps the most daring part of Reithofer’s plan for the Megacity is that he expects to make money with the car, despite the use of costly materials like lightweight aluminum and carbon fiber. The company has set up a $100 million factory near Seattle, together with partner SGL Group, to make the carbon fiber for the car’s passenger safety cell. The use of carbon fiber is key to BMW’s strategy for the Megacity, which will be big enough for four people and be marketed under a new BMW subbrand. Because the material is 50 percent lighter than steel, the carbon fiber will reduce the size and cost of the battery needed to move the car. Until now the automotive use of carbon fiber has been limited to Formula 1 race cars and other high-performance autos, where price isn’t an issue. But BMW insists it can mass-market carbon fiber components, which will be glued together to form the safety cell. In addition, BMW is preparing a new test vehicle—the ActiveE, a converted 1 Series coupe—which will have lithium-ion battery packs developed by BMW and its partners Samsung SDI and Robert Bosch, as well as new electric motors.
BMW is also planning to expand its conventional business, adding more small cars to its namesake brand and expanding the Mini line with at least a roadster and coupe. It is, too, considering a new factory to support demand in Russia, India, and other emerging economies. All told, the company is looking to sell more than 2 million cars annually by 2020, an increase of 55 percent over 2009.
“I would have decided to produce the Megacity Vehicle even if, contrary to our expectations, it doesn’t make money in the first generation,” says Reithofer, who hasn’t been afraid to break with traditions such as adding front-wheel drive models to the BMW brand, exiting Formula 1 auto racing, and linking with rival Mercedes to save purchasing costs. “As a leader, you can either be an entrepreneur or an administrator. I see myself as an entrepreneur.”
When Reithofer shuttles between Penzberg and Munich, he surges down the A95, a speed-limit-free stretch of highway that begs for a car like his 12-cylinder 7-Series. But his view these days looks past the surrounding Bavarian countryside and toward the crowded avenues of Shanghai and Mumbai. Those streets demand a different type of car.

Chris Reiter is a reporter for Bloomberg News.

BMW’s Ultimate Driving Machine Is a Tiny Little Electric Car – BusinessWeekvar addthis_config = { ui_cobrand: “MasterBlog en Español”}






Drought, Fire and Grain in Russia

August 10, 2010 | 0856 GMT

By Lauren Goodrich

Three interlocking crises are striking Russia simultaneously: the highest recorded temperatures Russia has seen in 130 years of recordkeeping; the most widespread drought in more than three decades; and massive wildfires that have stretched across seven regions, including Moscow.
The crises threaten the wheat harvest in Russia, which is one of the world’s largest wheat exporters. Russia is no stranger to having drought affect its wheat crop, a commodity of critical importance to Moscow’s domestic tranquility and foreign policy. Despite the severity of the heat, drought and wildfires, Moscow’s wheat output will cover Russia’s domestic needs. Russia will also use the situation to merge its neighbors into a grain cartel.

A History of Drought and Wildfire

Flooding peat bogs appears to be bringing the fires under control. Smoke from the fires has kept Moscow nearly shut down for a week. The larger concern is the effect of the fires — and the continued heat and drought, which has created a state of emergency across 27 regions — on Russia’s ordinarily massive grain harvest and exports.
Russia is one of the largest grain producers and exporters in the world, normally producing around 100 million tons of wheat a year, or 10 percent of total global output. It exports 20 percent of this total to markets in Europe, the Middle East and North Africa.
Cyclical droughts (and wildfires) mean Russian grain production levels fluctuate between 75 and 100 million tons from year to year. The extent of the drought and wildfires this year has prompted Russian officials to revise the country’s 2010 estimated grain production to 65 million tons, though Russia holds 24 million tons of wheat in storage — meaning it has enough to comfortably cover domestic demand (which is 75 million tons) even if the drought gets worse.
The larger challenge Moscow has faced in years of drought and wildfire has been transporting grain across Russia’s immense territory. Russia’s grain belt lies in the southern European part of the country from the Black Sea across the Northern Caucasus to Western Kazakhstan, capped on the north by the Moscow region. This is Russia’s most fertile region, which is supported by the Volga River.





Drought, Fire and Grain in Russia
(click here to enlarge image)

Though drought and wildfires have struck Russia over the past three years, they have not affected its main grain-producing region. Instead, they struck regions in the Ural area that provide grain for Siberia. Those fires tested Russia’s transit infrastructure, one of its fundamental challenges. Russia has no real transportation network uniting its European heartland and its Far East save one railroad, the Trans-Siberian. While its grain belt does have some of the best transportation infrastructure in the country, it is designed for sending grain to the Black Sea or Europe — not to Siberia. The Kremlin began planning for disruptions of grain shipments to Siberia during the droughts and fires of 2007-2009. During that period, Moscow established massive grain storage units in the Urals and in producing regions of Kazakhstan along the Russian border.
This year’s drought and fires do not primarily affect Russia’s transportation network, but rather the grain-producing regions in the European part of Russia that make up the bulk of Russia’s grain exports. These regions lie on the westward distribution network, with the port of Novorossiysk on the Black Sea handling more than 50 percent of Russian exports.
Russia has focused largely on being a major grain exporter, raking in more than $4 billion a year for the past three years off the trade. This year, the Kremlin announced Aug. 5 that it would temporarily ban grain exports from Aug. 15 to Dec 31. Two reasons prompted the move. The first is the desire to prevent domestic grain prices from skyrocketing due to feared shortages. Russia’s grain market is remarkably volatile. Grain prices inside Russia already have risen nearly 10 percent. (Globally, wheat futures on the Chicago Board of Trade have risen nearly 20 percent in the past month, the largest jump since the early 1970s.)
The second reason is that the Kremlin wants to ensure that its supplies and production will hold up should the winter wheat harvest decline as well. Winter wheat, planted beginning at the end of August, typically fully replenishes Russian grain supplies. Further unseasonable heat, drought or fires could damage the winter wheat harvest, meaning the Kremlin will want to curtail exports to ensure its storage silos remain full.
Russia’s conservatism when it comes to ensuring supplies and price stability arises from the reality that adequate grain supplies long have been equated with social stability in Russia. Unlike other commodities, food shortages trigger social and political instability with shocking rapidity in all countries. As do some other countries, Russia relies on grain more than any other foodstuff; other food categories like meat, dairy and vegetables are too perishable for most of Russia to rely on.
Russia’s concentration on food volatility has a long history. Lenin called grain Russia’s “currency of currencies,” and seizing grain stockpiles was one of the Red Army’s first moves during the Russian Revolution. In this tradition, the Kremlin will husband its grain before exporting it for monetary gain. And this falls in line with Russia’s overall economic strategy of using its resources as a tool in domestic and foreign policy.

Exports and Foreign Policy

Russia is a massive producer and exporter of myriad commodities besides grain. It is the largest natural gas producer in the world and one of the largest oil and timber producers. The Russian government and domestic economy are based on the production and export of all these commodities, making Kremlin control — either direct or indirect — of all of these sectors essential to national security.
Domestically, Russians enjoy access to the necessities of life. Kremlin ownership over the majority of the country’s economy and resources gives the government leverage in controlling the country on every level — socially, politically, economically and financially. Thus, a grain crisis is more than just about feeding the people; it strikes at part of Russia’s overall domestic economic security.
Russia’s use of its resources as a tool is also a major part of Kremlin foreign policy. Its massive natural resource wealth and subsequent relative self-sufficiency allows it to project power effectively into the countries around it. Energy has been the main tool in this tactic. Moscow very publicly has used energy supplies as a political weapon, either by raising prices or by cutting supplies. It is also willing to use non-energy trade policy to effect foreign policy ends, and grain exports fall very easily into Moscow’s box of economic tools.
Russia is using the current grain crisis as a foreign policy tool even beyond its own exports, prices and supplies. It has asked both Kazakhstan and Belarus to also temporarily suspend their grain exports. Belarus is a minor grain exporter, with nearly all of its exports going to Russia. But Kazakhstan is one of the top five wheat exporters in the world, traditionally producing 21 million tons of wheat and exporting more than 50 percent of that. The same drought that has struck Russia also has hit Kazakhstan; production there is expected to be slashed by a third, or 7 million tons.
Kazakhstan traditionally exports to southern Siberia, Turkey, Iran and its fellow Central Asian states: Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. For the first time, Kazakhstan had planned to send grain exports to Asia. It had contracted to send approximately 3 million tons of grain east, with 2 million of those supplies heading to South Korea and the remainder to be split between China and Japan. The drought has forced Kazakhstan to reassess whether it can fulfill those contracts along with contracts for its immediate region.
Russia’s request that Belarus and Kazakhstan cease grain shipments does not seem primarily connected to Russia’s concern over supplies, but instead looks to be more political. The three countries formed a customs union in January, something that has caused much political and economic turmoil. Kazakhstan sought to lock in its president’s desire to remain beholden to Russia even after he steps down, while Belarus reluctantly joined as Russia already controlled more than half of the Belarusian economy.
For Moscow, however, the union was a key piece of its geopolitical resurgence. The Russian-Kazakh-Belarusian customs union was not set up like a Western free trade zone, where the goal is to encourage two-way trade by reducing trade barriers, but as a Russian plan to expand Moscow’s economic hold over Belarus and Kazakhstan. Thus far, the customs union has undermined Belarus and Kazakhstan’s industrial capacity, welding the two states further into the Russian economy.
Since the customs union has been in effect, Russia has quickly turned the club into a political tool, demanding that its fellow members sign onto politically motivated economic targeting of other states. In late July, Russia asked both Kazakhstan and Belarus to join a ban on wine and mineral water from Moldova and Georgia after continued spats with each of the pro-Western countries. Russia has added another level of demands in light of the grain shortages. As of this writing, neither Astana nor Minsk has accepted or declined the demands from Moscow, with grain exporting season just a month away.
Given current Russian production and storage supplies, Russia doesn’t actually need Belarus or Kazakhstan to curb their exports. Instead, it is seeking to use the drought and fires to create a regional grain cartel with its new customs union partners.
And this leads to the question of the other former Soviet grain heavyweight, Ukraine. Ukraine, which does not belong to the customs union, is the world’s third-largest wheat exporter. In 2009, Ukraine exported 21 million tons of its 46 million-ton production. Also hit by the drought, Ukraine revised its projected production and exports for 2010 down 20 percent, with exports down to 16 million tons. Some fear Ukraine will have to slash its export forecasts even further. Moscow will most likely want to control what its large grain-exporting neighbor does, should it be concerned with supplies or prices. Despite Russia’s recent actions with regard to Belarus and Kazakhstan, however, Ukraine has not publicly announced any bans on grain exports.
If Russia is going to exert its political power over the region via grain, it must have Ukraine on board. If Russia can control all of these states’ wheat exports, then Moscow will control 15 percent of global production and 16 percent of global exports. Kiev has recently turned its political orientation to lock step with Moscow, as seen in matters of politics, military and regional spats. But this most recent crisis hits at a major national economic piece for Ukraine. Whether Kiev bends its own national will to continue its further entwinement with Moscow remains to be seen.

Read more: Drought, Fire and Grain in Russia | STRATFOR

Drought, Fire and Grain in Russia is republished with permission of STRATFOR.

Drought, Fire and Grain in Russia | STRATFOR

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