Newsletter September 2010
Global Fund Exchange is
an asset management
business specializing in a
diversified global macro
approach to investing in
dynamic opportunities
across all sectors of the
New 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”
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SPOTLIGHT ON: COMMODITIES SURGE
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 over
the 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 well
as 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. China
controls 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 agricultural
commodities. In fact, analysts expect losses over the next 12 month period.
Despite this overall unfavorable outlook, Goldman Sachs did take special
exception to corn, cotton, Arabica and raw sugar when it raised its 3-month
outlook for these particular commodities.
Corn and cotton prices in particular have responded to a confluence of global
events. Flooding has devastated cotton crops in Pakistan, one of the world’s top
five cotton producers. In conjunction with increased demand from China, some
estimates foresee global cotton prices increasing by as much as 15% in
2010/2011.
An unimpressive U.S. harvest has likewise spurred a jump in corn prices. Corn
has risen to its highest trading levels since 2008, with a 40% rally since July 2010.
GLOBAL FUND EXCHANGE LTD.

RENEWABLE ENERGY NEWS
Cellulosic Ethanol Producers & ‘Big Oil’
Companies Sign Joint Ventures in Brazil
2
Regulators Approve World’s Largest Solar
Thermal Plant in California Desert
S-to-N Transfer Project Source: ChinaEnvironmentalLaw.com

Two major partnerships have taken shape between global

oil conglomerates and smaller cellulosic biofuel companies
in Brazil, including a $12 billion joint venture between Shell
and Brazilian ethanol producer Cosan, and an $11 million
deal between Petrobas and KL Energy Corporation to
expand Brazilian operations.

Besides providing a major boost to the Brazilian cellulosic

ethanol industry, these deals will allow the smaller
companies to access broader markets and sources of
capital, and provide evidence of Big Oil’s continued interest
in “next-generation” biofuels, which many see as the wave
Blythe Solar Power Project Source: California Energy Commission
of the future.

Unlike corn-based ethanol, which has been criticized for

Energy regulators in California have granted a license for the
competing with food crops for land space and its large
world’s largest solar thermal power plant in the Mojave
carbon footprint, cellulosic ethanol can be made from just
Desert. The 1,000 MW solar complex, called the Blythe Solar
about any crop or plant matter that has a high
Power Project, will cover 9.3 square miles in the Southern
concentration of cellulose. This means discarded waste
California desert.
crops, 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 has
helped cellulosic ethanol production more economical, and
therefore more practical as a major-scale substitution for
gasoline-based liquid fuels.
South Korea Expands Off-shore Wind
Efforts with 1,000 New Turbines
As part of a major new venture into off-shore wind, South
Korea announced the launch of a $7.8bn offshore wind
turbine 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 be
built over the next ten years. Located nearly 30 km off
shore, these turbines would generate roughly as much
power as four nuclear reactors.
South Korea’s new energy plans also encompass the launch
of a domestic electric vehicle market, increased solar power
installations and construction of new nuclear power plants.
By 2030, South Korea aims to build eleven new reactors to
add to the nearly twenty currently in operation. Eight
reactors are already under construction.
The plant will use long rows of parabolic troughs to reflect
sunlight on liquid-filled tubes which lead to a central power
block. The super-heated liquid is used to create steam which
drives 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 Robert
Weisenmiller of the California Energy Commission. At peak
output, the Blythe plant will supply enough electricity to
power 800,000 homes.
By the end of this year, the Commission will make decisions on
a number of solar projects that together would produce
another 2,829 MW of electricity. In comparison, the total
amount of installed solar capacity in the United States last year
was a mere 481 MW, a fraction of what could be coming on
the 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.

TRADITIONAL ENERGY NEWS
China’s Clean Energy Future Depends on Coal
Price of coal important in Chinese clean energy development
The success or failure of China’s $736 billion plan to invest in
solar, wind, biofuel and nuclear energy is likely to depend on
one 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 new
coal-fired power plant every week. Switching away from such a
plentiful albeit highly polluting resource in favor of clean energy
technologies will be difficult for the economic giant.
Also added to the equation are new technology developments
that make coal combustion processes cleaner. Called
supercritical plants, these new generators produce
approximately 15% less carbon dioxide than conventional plants
at a cost of about $500-$600 per kW less than in developed
OECD nations.
China has overtaken the U.S. as the world’s top greenhouse gas
emittor, and it faces tremendous pressure from the
international 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 investment
it needs for long term success, especially as coal becomes
cleaner.
“The government must gradually lift fossil fuel prices while
granting incentives to non-fossil fuels to establish a long-term
price signal,” said Wang Yi, deputy head of Policy and
Management at the China Academy of Science. Without
changes in tariff structures, there would be little incentive for
private 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 to
lose money,” said Lin Boqiang, head of Center of Research on
Energy Economics at Xiamen University. “The private sector
can’t afford waiting around for 5 to 10 years operating at a loss.”
3
With 32 New Plants, U.S. Coal Industry
Experiences Largest Growth in 20 Years
The U.S. coal industry has experienced its largest expansion in
over twenty years. Since 2008, thirty-two new coal-fired
power plants have been built or are currently under
construction in the United States.
All together, these coal plants will generate approximately
17,900 MW of electricity - enough to power 15.6 million
homes, or roughly the combined number of homes in
California and Arizona. They will also emit about 125 million
tons 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 tragic
coal mine accident in West Virginia. However, this public
sentiment has not translated into legislation which would
dissuade the coal industry from expanding. On the contrary,
the failure of U.S. lawmakers to enact tough carbon emissions
legislation 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 is
betting 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 the
atmosphere. New investments in traditional coal plants, on
the 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 southern
neighbor Indonesia as important source of thermal coal.
Desperate for foreign investment to help achieve major
infrastructure overhauls, Indonesia is a willing partner and has
recently signed blockbuster deals with its energy-hungry
partners. Indonesian production levels are predicted to rise
nearly 90% to 480 million tons by 2020.
Indonesia has set a target of attracting $160 billion in foreign
investment over the next few years. China and India have
agreed to finance billions of dollars worth of Indonesian
infrastructure projects- including railways, road, ports and
bridges – in exchange for coal.
The nature of the agreements is similar to the controversial
“minerals-for-infrastructure” deals China has entered across
Africa to secure access to that continent’s resources.
 4
CARBON NEWS Insufficient Water Storage Poses Risk to
Global Food Security
Japan to Mandate CO2 Trading Scheme for
High-Emitting Companies
According to a report obtained by Reuters, Japan is planning
to institute a mandatory carbon trading program in 2013.
Reviving a climate protection law that had previously been
scrapped earlier this year, the legislation would require the
country’s largest emitting companies and industries to comply
with carbon emissions quotas. Any emissions above the set
levels would require purchases of carbon credits from either
domestic or overseas reductions projects.

Japan is the world’s fifth-largest emitter of carbon dioxide. In
an effort to reduce emissions and become a leader in the clean
energy industry, Japan has increased its focus on clean energy
technologies and climate change mitigation measures.
Earlier this spring, Toyko launched its own carbon trading
initiative, becoming the first Asian metropolis to do so. This
cap-and-trade system is operated separately from the
proposal national scheme. Under the first phase of the
program, which runs until 2014, participating organizations
must trim carbon emissions by 6%.
WATER NEWS
Water Scarcity Threatens Chinese Crops
Energy regulator says UK needs energy reform Source: Daily Mail
Source: stock.XCHNG
According to a report by the International Water Management
Institute (IWMI), the world’s food security and economic
growth prospects are in jeopardy due to insufficient water
storage capacity.
Changing climate and rainfall patterns have hit many of the
world’s agricultural production regions hard, especially in
regions of Africa and Asia. Despite advances in irrigation
technology, it is estimated that 66% of Asian agriculture is
dependent on rainfall, and in Sub-Saharan Africa, that
percentage is as high as 94%.

China is faced with a daunting food challenge that has been
getting worse as the population expands. The nation
possesses only 7% of global arable land, but must feed 22% of
the world’s people. Its per capita water supplies are only 25%
of the world’s average levels. China’s northern regions hold
18% of total water supplies and 65% of the nation’s arable
land, but the climate in those areas has become drier over the
years.
Chinese scientists warn that rising temperatures could
accelerate evapo-transpiration and limit freshwater supplies
for agriculture.
By the end of 2015, China’s population is expected to reach
1.39 billion, requiring a 4 million ton increase in annual grain
supply over the next decade, but according to the Nature
article, water limitations may reduce rice yields by 4 to 14%,
wheat by 2 to 20% and corn by 0 to 23% by the middle of this
century. By 2050, total crop yields may be reduced by as
much as 13%.
Experts are urging policy makers to help farmers improve
storage systems and develop better water management skills.
“For millions of people dependent on rain-fed agriculture,
reliable access to water can make all the difference between
chronic hunger and steady progress toward food security,”
said hydrologist Matthew McCartney.
“Just as modern consumers diversify their financial holdings to
reduce risk, smallholder farmers need a wide array of ‘water
accounts’ to provide a buffer against climate change impacts.”
The report warns against over-dependence on one source of
water, and encourages governments in vulnerable regions to
consider storage solutions big and small, from large-scale
dams to local ponds, tanks and reservoirs.
“Even small amounts of stored water, by enabling crops and
livestock to survive dry periods, can produce large gains in
agricultural productivity and in the wellbeing of rural people,”
said McCartney.

China’s agriculture minister acknowledges the nation faces a

“formidable task” in meeting food demand in the face of
growing resource scarcity.
 5

CLIMATE POLICY NEWS U.N. Climate Talks – Progress on $100bn “Green Fund”
Looking ahead to U.N. climate talks in Cancun, Mexico this winter, environment
ministers and senior officials from over 50 nations have made headway on a
“green fund” which would aid developing nations coping with climate change
and the shift away from fossil fuels. U.N. climate chief Christiana Figueres calls
this fund a “golden key” to the negotiations and an important way to reassure
poor nations that wealthy countries are serious about global warming
mitigation. The Fund aims to raise $100 billion a year in climate aid by 2020.

Although there is little hope of securing a binding legal treaty in Cancun,

negotiators are optimistic about this “Green Fund” proposal. However,
Mexico’s Foreign Minister Patricia Espinoza warned that the climate aid fund is
only one part of a broader climate package which needs attention.
Source: Julian Rotela Unresolved issues remain, including methods for clean energy technology
sharing and mechanisms to protect vulnerable forest land.

U.S. climate envoy Todd Stern concurred. “We are not going to move on the Green Fund, and the $100 billion, if issues central to the
Copenhagen Accord, including mitigation and transparency, don’t also move.” Stern reiterated President Obama’s commitment to
reducing U.S. greenhouse gas emissions by 2020, despite the Senate’s lack of progress in passing comprehensive climate legislation.
The U.S. is the world’s only major developed nation without a legal cap on greenhouse gas emissions.

SOURCES
We regularly gather information from the following reputable news sources, including but not limited to:
RenewableEnergyWorld.com EnergyandCapital.com
Forbes.com: Energy News New Energy Finance
Green Inc. – The New York Times Streetwise Reports: The Energy Report
New Energy World Network Thomson Reuters
Scientific American: Energy REChargeNews.com
SustainableBusiness.com Climate Change Business Journal
GREENBUZZ WSJ.com: Environmental Capital
New Carbon Finance Carbon Credit Capital

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