Chinese walker

Welcome to the International Year of Biodiversity. Throughout 2010, countless initiatives will promote the protection of biodiversity and encourage businesses, governments and individuals to take action to reduce the constant loss of biological diversity worldwide. And not before time.

Biodiversity has long been the Cinderella, the overlooked topic, among environmental issues, with even the chief executives of some of the world%26rsquo;s biggest corporations comfortably confident it has little, if anything, to do with their day-to-day preoccupations %26ndash; except, of course, where their operations directly impact rainforests, temperate wetlands or coral reefs, as in the case of a food company using palm oil whose production has involved the clearance of virgin forest.

Most business leaders assume that the protection of species and genetic diversity is a matter for governments. And they are not wrong in making that assumption. But, as the evidence of biodiversity erosion mounts and the sense of government failure in many parts of the world begins to press in, the risk grows that business will be called to account.

The International Year of Biodiversity will focus on corporations and their supply chains as agents of biodiversity destruction. But it will also, and perhaps more importantly, treat them as one of the few agents of change with the capacity to come up with innovative new solutions to a challenge that has undermined so many past civilisations. So it is worth reviewing why biodiversity is a legitimate concern both for corporations and those who regulate them and why it is unlikely to remain the Cinderella for much longer.

The evidence suggests that biodiversity is declining severely across the board. Forests, for example, have been shrinking at the rate of 60,000 square kilometres a year since 2000; average hard coral cover in the Caribbean has declined from 50% of the sea floor to 10% within the last three decades; and 35% of mangroves have disappeared in the last 20 years. A survey of 3,000 wild species from 1970 to 2000 showed a consistent decline of 40% in average species abundance, with a 50% reduction of inland water species and a 30% decline in inland and marine species.

Were there such a thing as the Board of Earth Inc., it would be facing a reduction in biodiversity and related forms of natural capital at a pace 1,000 times greater than background rates typical of the planet%26rsquo;s past. Even a world that allowed the sub-prime version of capitalism to run riot ought to be more than a little concerned when faced with such trends. Indeed, there is an increasingly urgent imperative to mainstream biodiversity into the policies, plans and budgets of both the public and private sectors.

Although there have been positive private-sector contributions, the response from the business world to these trends and calls to action, over time, has been decidedly mixed. Industries with large footprints, such as oil and gas and mining, were early movers on the biodiversity agenda, due to a visibly direct impact on landscapes and their need to secure a licence to operate. As a consequence, companies like Shell have invested in biodiversity assessments and, more recently, biodiversity offsets.

Likewise, the relationship between the food-production sector and biodiversity came into focus in a high-profile way with campaigns against McDonald%26rsquo;s for purchasing beef raised on former rain forest land and, more recently, feeding chickens with soya grown on deforested Amazon terrain. These and other cases have helped spur the development of better agricultural-management practices to reduce environmental impacts, though they are not spreading nearly fast enough.

In the run-up to last December%26rsquo;s climate change conference in Copenhagen, some government and business leaders acknowledged the ways in which the climate-change agenda could drive a re-evaluation of the services that natural habitats play in regulating carbon cycles and building ecological and economic resilience. However, while sustainability experts agree that biodiversity conservation is a top priority %26ndash; as seen most recently in a 2009 survey from consultancies SustainAbility and Globescan of nearly 1,700 experts across multiple sectors, with 82% agreeing that it is very or somewhat urgent %26ndash; generally business does not appear to rank it as a significant concern.

More specifically, of the 50 leading businesses reporting on sustainability in 2006, we found that only three made an explicit mention of biodiversity as a financially significant concern. The US health-care company Johnson %26amp; Johnson is a notable exception, having committed to enhancing biodiversity conservation across all of its facilities by this year and having worked with Harvard University to make the case for the dependence of human health on biodiversity.

We see some cause for optimism in initiatives like the Corporate Ecosystem Services Review, which was launched by Geneva-based business coalition the World Business Council on Sustainable Development (WBCSD) and the US think tank World Resources Institute (WRI) in 2008 to provide business managers with a means of identifying and managing risks and opportunities arising from dependence and impact on ecosystems. A variety of tools also has been developed in recent years, the most recent being WBCSD%26rsquo;s Ecosystem Valuation Initiative, which enables the quantification of ecosystem risks and opportunities in order to further embed biodiversity values into existing financial and business-planning tools. This tool is being road-tested by 10 to 15 WBCSD member companies, with results due to be reported during the year ahead.

In the longer term, we are hopeful that a new breed of scientists, innovators, entrepreneurs and investors will emerge to drive forward new technologies, new business models and, crucially, a new market paradigm. Consider, for example, US biologist Craig Venter%26rsquo;s trawling of the oceans for new genes for such applications as hydrogen production and synthetic biology, made even more interesting by his US$600-million (4.1 billion yuan) deal with ExxonMobil on algal biofuels. And then there is Janine Benyus%26rsquo;s work on biomimicry, which is worth a chapter in its own right as a source of novel, potentially revolutionary, ideas on materials, products, processes and management systems.

So while the biodiversity glass may seem half empty to some %26ndash; and in danger of draining at an even faster rate as the world%26rsquo;s population pushes towards nine billion by mid-century %26ndash; we choose to see it as still, more or less, half full.

John Elkington is co-founder of SustainAbility and of Volans. Jennifer Biringer is director of client services at SustainAbility and was previously manager of WWF%26rsquo;s North America Forest %26amp; Trade Network.

Homepage image by Dorn Dada

Welcome to the International Year of Biodiversity. Throughout 2010, countless initiatives will promote the protection of biodiversity and encourage businesses, governments and individuals to take action to reduce the constant loss of biological diversity worldwide. And not before time.

Biodiversity has long been the Cinderella, the overlooked topic, among environmental issues, with even the chief executives of some of the world%26rsquo;s biggest corporations comfortably confident it has little, if anything, to do with their day-to-day preoccupations %26ndash; except, of course, where their operations directly impact rainforests, temperate wetlands or coral reefs, as in the case of a food company using palm oil whose production has involved the clearance of virgin forest.

Most business leaders assume that the protection of species and genetic diversity is a matter for governments. And they are not wrong in making that assumption. But, as the evidence of biodiversity erosion mounts and the sense of government failure in many parts of the world begins to press in, the risk grows that business will be called to account.

The International Year of Biodiversity will focus on corporations and their supply chains as agents of biodiversity destruction. But it will also, and perhaps more importantly, treat them as one of the few agents of change with the capacity to come up with innovative new solutions to a challenge that has undermined so many past civilisations. So it is worth reviewing why biodiversity is a legitimate concern both for corporations and those who regulate them and why it is unlikely to remain the Cinderella for much longer.

The evidence suggests that biodiversity is declining severely across the board. Forests, for example, have been shrinking at the rate of 60,000 square kilometres a year since 2000; average hard coral cover in the Caribbean has declined from 50% of the sea floor to 10% within the last three decades; and 35% of mangroves have disappeared in the last 20 years. A survey of 3,000 wild species from 1970 to 2000 showed a consistent decline of 40% in average species abundance, with a 50% reduction of inland water species and a 30% decline in inland and marine species.

Were there such a thing as the Board of Earth Inc., it would be facing a reduction in biodiversity and related forms of natural capital at a pace 1,000 times greater than background rates typical of the planet%26rsquo;s past. Even a world that allowed the sub-prime version of capitalism to run riot ought to be more than a little concerned when faced with such trends. Indeed, there is an increasingly urgent imperative to mainstream biodiversity into the policies, plans and budgets of both the public and private sectors.

Although there have been positive private-sector contributions, the response from the business world to these trends and calls to action, over time, has been decidedly mixed. Industries with large footprints, such as oil and gas and mining, were early movers on the biodiversity agenda, due to a visibly direct impact on landscapes and their need to secure a licence to operate. As a consequence, companies like Shell have invested in biodiversity assessments and, more recently, biodiversity offsets.

Likewise, the relationship between the food-production sector and biodiversity came into focus in a high-profile way with campaigns against McDonald%26rsquo;s for purchasing beef raised on former rain forest land and, more recently, feeding chickens with soya grown on deforested Amazon terrain. These and other cases have helped spur the development of better agricultural-management practices to reduce environmental impacts, though they are not spreading nearly fast enough.

In the run-up to last December%26rsquo;s climate change conference in Copenhagen, some government and business leaders acknowledged the ways in which the climate-change agenda could drive a re-evaluation of the services that natural habitats play in regulating carbon cycles and building ecological and economic resilience. However, while sustainability experts agree that biodiversity conservation is a top priority %26ndash; as seen most recently in a 2009 survey from consultancies SustainAbility and Globescan of nearly 1,700 experts across multiple sectors, with 82% agreeing that it is very or somewhat urgent %26ndash; generally business does not appear to rank it as a significant concern.

More specifically, of the 50 leading businesses reporting on sustainability in 2006, we found that only three made an explicit mention of biodiversity as a financially significant concern. The US health-care company Johnson %26amp; Johnson is a notable exception, having committed to enhancing biodiversity conservation across all of its facilities by this year and having worked with Harvard University to make the case for the dependence of human health on biodiversity.

We see some cause for optimism in initiatives like the Corporate Ecosystem Services Review, which was launched by Geneva-based business coalition the World Business Council on Sustainable Development (WBCSD) and the US think tank World Resources Institute (WRI) in 2008 to provide business managers with a means of identifying and managing risks and opportunities arising from dependence and impact on ecosystems. A variety of tools also has been developed in recent years, the most recent being WBCSD%26rsquo;s Ecosystem Valuation Initiative, which enables the quantification of ecosystem risks and opportunities in order to further embed biodiversity values into existing financial and business-planning tools. This tool is being road-tested by 10 to 15 WBCSD member companies, with results due to be reported during the year ahead.

In the longer term, we are hopeful that a new breed of scientists, innovators, entrepreneurs and investors will emerge to drive forward new technologies, new business models and, crucially, a new market paradigm. Consider, for example, US biologist Craig Venter%26rsquo;s trawling of the oceans for new genes for such applications as hydrogen production and synthetic biology, made even more interesting by his US$600-million (4.1 billion yuan) deal with ExxonMobil on algal biofuels. And then there is Janine Benyus%26rsquo;s work on biomimicry, which is worth a chapter in its own right as a source of novel, potentially revolutionary, ideas on materials, products, processes and management systems.

So while the biodiversity glass may seem half empty to some %26ndash; and in danger of draining at an even faster rate as the world%26rsquo;s population pushes towards nine billion by mid-century %26ndash; we choose to see it as still, more or less, half full.

John Elkington is co-founder of SustainAbility and of Volans. Jennifer Biringer is director of client services at SustainAbility and was previously manager of WWF%26rsquo;s North America Forest %26amp; Trade Network.

Homepage image by Dorn Dada

Hans-Martin Schulz, a German geologist, is co-founder of Gas Shales in Europe, a project funded by the oil and gas industry to explore the potential for development in Europe. %26ldquo;We are making the first steps in research,%26rdquo; he says. %26ldquo;It%26rsquo;s hard to estimate, at this point, what will happen.%26rdquo;

National and international energy policies will dictate how much gas is extracted, but there is no doubt that countries from Poland to China want to get in on the act. On November 17, 2009, US president Barack Obama and China%26rsquo;s president Hu Jintao launched the US-China Shale Gas Resource Initiative, which aims to use experience from the US to assess China%26rsquo;s shale gas potential.

But gas has its critics. It is about 30% less carbon intensive than oil and 50% less than coal, but it still emits carbon, which makes it less desirable than renewable energy resources. Fracturing the rock requires large quantities of water laced with chemicals, which critics fear could leak into groundwater and aquifers. Shale developments have been blamed for contaminating wells and the death of livestock exposed to potassium chloride in the water used to fracture the rock; this has led regulators to consider buffer zones around reservoirs and aquifers.

There has been no outcry in places such as the American states of Texas and Louisiana, where lawmakers have long supported the oil and gas industry. Indeed, Louisiana is offering tax incentives for people to install fuelling equipment that will allow vehicles to run on compressed natural gas. But in the north-eastern states, where the mood is less welcoming, Chesapeake Energy recently abandoned plans to drill in the New York watershed, which supplies unfiltered water to nine million people. %26ldquo;Why go through the brain damage of that, when we have so many other opportunities?%26rdquo; says Aubrey McClendon, its chief executive.

The Riverkeeper, a New York environmental group, has called for a permanent ban on drilling in ecologically sensitive areas such as the state%26rsquo;s Catskills region. But local governments are torn, given the number of jobs shale developments create at a time of high unemployment. A study by IHS Global Insight reported that gas contributed $385 billion to the US economy in 2008 and more than $180 billion in labour income alone; by comparison, the coal industry contributed $79.9 billion. More than 30 US states boasted at least 10,000 jobs directly or indirectly attributable to the gas industry.

At the end of 2008, the US department of energy (DoE) says domestic proven gas reserves rose by 3% to reach their highest level since the US Energy Information Administration (EIA) first reported them in 1977. Discoveries of 29.5 trillion cubic feet (835.3 billion cubic metres) of gas during 2008 represented the sixth consecutive annual increase, with reserves from shale reservoirs up 51% over 2007.

%26ldquo;It is very significant,%26rdquo; says Richard Newell of the EIA. Under most scenarios of future energy and climate legislation, US natural-gas production will increase during the next 20 years. But further ahead, the picture becomes less clear. By 2050, if the United States built more nuclear and wind-generating capacity and managed to capture and store the carbon emitted from coal-fired power stations, then it would be cheaper to use those technologies than to burn more gas and capture its carbon emissions, Newell says. %26ldquo;The size of the role natural gas would play depends on the availability of those other options.%26rdquo;

In its favour, he notes, gas-fired power stations can be built faster and more cheaply than coal equivalents and offer a better fit with renewable sources because they are easier to turn on and off to supplement wind and solar when the wind drops and the sun doesn%26rsquo;t shine. %26ldquo;Price is the main impediment,%26rdquo; Newell says.

And natural gas prices are unpredictable. In recent months, when gas fell below US$3 per million British thermal units (mBtu) %26ndash; a seven-and-a-half-year low %26ndash; that hardly seemed a cause for concern. But as recently as 2008, US gas prices reached a record US$13.69 per mBtu. Even at US$3.20 per mBtu, however, developing shale gas is profitable.

%26ldquo;Every square inch of my district has natural gas under it,%26rdquo; says Tim Murphy, a US congressman, referring to Pennsylvania%26rsquo;s Marcellus Shale, which runs from New York to Tennessee. %26ldquo;It%26rsquo;s going to have an impact on the whole nation.%26rdquo; T Boone Pickens, the 81-year-old oilman who has become a spokesman for the natural-gas industry, told the US congress in October that the United States has more natural gas than all the oil in Saudi Arabia. If the country converted 6.5 million of its heavy trucks to run on that gas, it could reduce its oil imports from OPEC producers by 2.5 million barrels a day.

To make that happen, Murphy says the United States must create incentives for public gas refuelling stations, or in-home gas refuelling, and plug-in vehicles. This can be funded, he argues, from the additional revenues the government will receive from gas producers if they have incentives to increase output. %26ldquo;It%26rsquo;s a solution that grows upon itself.%26rdquo;

The biggest believers are in the Haynesville Shale formation of Louisiana, where last year gas projects produced US$3.9 billion in household earnings and accounted for 33,000 new jobs, according to Loren C Scott %26amp; Associates, an economic consultancy. It estimates state and local tax revenues increased by at least $153.3 million in 2008 as a result. %26ldquo;It%26rsquo;s going to turn this parish upside down over the next five to 10 years,%26rsquo;%26rsquo; says Tommy Craig, of the Community Bank of Louisiana. Deposits are already up 25% from late 2007.

Mike Smith is one of the few spending his windfall. Whereas others have run only to a new pick-up truck, he does not have a wife or children, so the money is his to spend. He has bought a couple of large-screen televisions and invested some of his payout, buying stock in Ford Motor Company when it hit $2 a share %26ndash; %26ldquo;I have a bunch of it,%26rdquo; he says. But after years of thrift, even he has mostly held on to the money, using it for necessities such as medical bills. He was able to pay upfront to have a cancerous growth removed from the side of his nose, rather than cover the costs in instalments.

Other big winners from the shale rush remain cautious about spending their signing bonuses, despite the promise of royalty cheques once production begins. The Marshburn family, who own some 160 hectares, including a share in the most productive Haynesville well to date, are one example. Mike Marshburn, a 59-year-old former rodeo star in a black cowboy hat and a shiny silver buckle he won as a rider in the 1970s, has already banked his bonus but continues to work on the gas fields as a contract welder, while raising bucking bulls on the side.

His wife, Celia, a retired schoolteacher, lifts up her boots to reveal holes in the soles. And their daughter, Mila, 25, is working her way through 14-hour days in nursing school, despite her family%26rsquo;s sudden wealth. %26ldquo;I just tell my friends, %26lsquo;Hey, that%26rsquo;s my parents%26rsquo; money. I%26rsquo;m going to make my own way.%26rsquo;%26rdquo; Her mother wants to create a beach on the lake their home overlooks, while her father has his eye on a new bull. But they are biding their time. %26ldquo;If these royalty cheques are big enough, I might retire,%26rdquo; Mike says.

Smith%26rsquo;s bonus will carry him through retirement, regardless of how big his royalty cheques turn out to be. His contract guarantees him 20 to 25% of what the company receives for gas under his land, and production is due to begin within months. He has a twinkle in his blue eyes when he talks of the dreams he can now afford to live out %26ndash; hunting bears in Alaska; golfing at the Masters in Augusta, Georgia; seeing the vast expanses of Wyoming and Montana; building a new home amid the pine trees on his acreage. %26ldquo;I%26rsquo;m more or less a homebody,%26rdquo; he says. %26ldquo;I think it%26rsquo;s time I get out.%26rdquo;

In the meantime, he is training his nephew to take over the business so that he can retire next year. And on the weekends, he still heads out of town, to hunt on his land, among the pine trees and the well pads.

Shale oil next?

US energy companies may be able to use technologies they acquired in the hunt for shale gas to tap oil trapped in dense rock formations.

Oil is often harder to extract, given its viscosity and bigger molecules, so engineers are tweaking the process. %26ldquo;We believe this is going to be game-changing technology,%26rdquo; said Mark Papa, chairman of EOG Resources. %26ldquo;We believe there is enough oil in rock across the US and Canada to be of significant impact.%26rdquo;

While increasing the size of the world%26rsquo;s third-largest oil production base would be difficult, success could slow the decline in US oil output that has continued since the 1970s. Papa believes the process will prove economic with oil prices at US$45 to $50 a barrel, compared with around $80 today.

While nobody knows how much oil might be freed by the new techniques, Edward van den Heuvel, commercial opportunity manager for Shell Chemicals, said that on average about a third of the oil in a field is recovered. With two-thirds of the oil left in the ground, it makes sense to revisit reserves once believed to be trapped in impermeable rock.

The biggest success so far has been in the Bakken Formation of Montana and North Dakota, where there are an estimated 3.65 billion barrels of recoverable oil. Bill Albrecht, vice-president of Occidental Petroleum, the biggest US independent, says: %26ldquo;There is a huge resource here.%26rdquo; But the technique needs refining before it will win widespread adoption. %26ldquo;Relative to gas, it%26rsquo;s still an emerging technology,%26rdquo; he admits.

Sheila McNulty is the Financial Times%26rsquo;s US energy correspondent.

http://www.ft.com/home/uk

Copyright The Financial Times Limited 2010

Homepage image from Chesapeake Energy

After their father died 15 years ago, Mike Smith%26rsquo;s six siblings wanted nothing to do with the tract of land the old man had gradually acquired from his income as a pipeline welder. The land, 365 acres %26ndash; 148 hectares — of it, lay in a quiet and sparsely populated corner of Louisiana: nothing but pine trees for miles around. In a county so poor that about a fifth of the population lives below the poverty line, the bequest wasn%26rsquo;t good for much.

But for Smith, a tall, slim man of 61 with a kindly face, DeSoto parish was home. %26ldquo;That%26rsquo;s where my roots are. I wanted the land,%26rdquo; he says. Smith paid US$300 an acre (less than half a hectare) %26ndash;$109,500 in total %26ndash; to his siblings. And while he kept his home in Shreveport, 65 kilometres to the north, he travelled down to DeSoto regularly to walk his acres, or hunt squirrel and deer. His plan was to sell the trees for lumber one day, and use the income to fund his retirement. Until then, he would pass the years frugally, making a living as a property valuer and sharing his 50-year-old house with two dogs and a cat.

All the while, the DeSoto county seat, Mansfield, home to 5,500 people, withered. With only coal and timber to support it, the parish could not even repair its roads. Across from the courthouse are telltale signs of the desperation that began to claw at the area %26ndash; the dusty, vacant windows of the hardware shop and cinema, and beyond them the Community Bank of Louisiana. It opened its doors in 1901 but is now so run down that the visitor struggles to make out what colour the wallpaper would once have been. The phones are from another age and an old standard lamp in an upstairs office blinks fitfully into life and then goes dark again.

%26ldquo;When I came in, the town was dead. There was no sign of economic growth here,%26rdquo; remembers Curtis McCoy, mayor for the past seven years.

All that changed in 2008, when oil and gas companies began knocking on doors, offering locals a couple of hundred dollars an acre if they would lease their land for prospecting. Some, like Jim May, executive director of the DeSoto Chamber of Commerce, jumped at the offer and signed a three-year lease on his 100 acres for a total of $25,000. Nobody had shown any interest in the land in decades, he reasoned. Six months later, the gold rush was at its height and prices leapt to $25,000 or even $30,000 an acre. %26ldquo;I lost $2.5 million,%26rdquo; says May with a wistful smile.

%26ldquo;People went to bed one night and woke up the next morning to find themselves rich,%26rdquo; says McCoy. That included Mike Smith, whose land was so sought after that in May 2008, PetroHawk Energy, a small, independent oil and gas company, handed him a $1.4-million signing bonus in return for permission to drill for natural gas on his late father%26rsquo;s property. %26ldquo;It changed my whole life,%26rdquo; he says. %26ldquo;I don%26rsquo;t have to cut my trees anymore.%26rdquo;

Smith is sitting behind the wheel of a new gold Cadillac, parked outside this year%26rsquo;s Haynesville Shale Expo in Shreveport, an event that has attracted 5,000 people, most of them landowners who missed the leasing frenzy and are eager to see whether they still have time to cash in. It was Smith%26rsquo;s dream since he was a boy to own a new Cadillac, like the one his father always made sure his mother drove. He paid $52,000 cash for the car. %26ldquo;That was the first investment. It kind of hurt a little bit,%26rdquo; he smiles. A small wooden cross dangles from the rear-view mirror.

. . .

The prize that drew companies such as PetroHawk to Smith%26rsquo;s impoverished corner of Louisiana is known as shale gas. Smith%26rsquo;s acres sit on top of the Haynesville Shale, named after the town near which the prospect was discovered %26ndash; a seam of black rock between 150 and 300 feet thick (45 to 90 metres thick) that lies hundreds of metres underground and extends across 3,400 square miles (8,800 square kilometers) of Louisiana and Texas. Trapped inside this rock are vast quantities of natural gas %26ndash; estimated at between 112 and 245 trillion cubic feet (roughly between three and seven trillion cubic metres). At the upper end of this range, Haynesville gas could meet the energy needs of the United States for about 12 years.

This isn%26rsquo;t the most extensive prospect of its kind in the United States; that distinction belongs to the Marcellus Shale in Pennsylvania and neighbouring states, which is reckoned to cover 65,000 square miles (nearly 170,000 square kilometres), an area larger than Greece. But based on the wells drilled so far, the Haynesville may well turn out to be one of the most productive. %26ldquo;It was the Haynesville that turned the tide on how big shale could be for US supply,%26rdquo; says Jeff Fisher, senior vice-president of production at another US company, Chesapeake Energy.

Indeed, the impact is expected to extend well beyond America%26rsquo;s borders. Industry consultants at PFC Energy in Washington, DC, believe that developing supplies trapped in shale deposits could more than quadruple the world%26rsquo;s known gas reserves. %26ldquo;This is a transformational event,%26rdquo; says its chairman, Robin West. His consultancy puts global reserves of natural gas from %26ldquo;unconventional%26rdquo; sources such as shale beds at 3,250 trillion cubic feet (92 trillion cubic metres), a total based on 1997 geological estimates that he believes will rise as the techniques available to extract the gas improve. By comparison, global reserves of natural gas from %26ldquo;conventional%26rdquo; sources total 620 trillion cubic feet (17.5 trillion cubic metres). Not all of these shale reserves will ever be tapped, but the technology to do so is available and, for the first time, companies are putting it to use.

To extract gas from shale involves drilling down, sometimes thousands of metres, and then sideways as much as 4,500 feet (1,370 metres). Once a well has been drilled, water with fine grains of sand is pumped through at high pressure; this fractures the shale and leaves behind the grains of sand, which prop open the fissures in the rock and allow the gas to escape.

Using this technique, Devon Energy, an Oklahoma-based oil and gas independent, sank a well last autumn in the Texas portion of the Haynesville shale (until then thought to be a low point in the %26ldquo;play%26rdquo;) that produced a flow rate of more than 30 million cubic feet (850,000 cubic metres) of gas per day, the highest ever from that area. This result led others to redraw the borders of the gas field, suggesting it was even more extensive than originally believed. %26ldquo;No one, us included, knows how that play is going to evolve,%26rdquo; says Larry Nichols, Devon%26rsquo;s chief executive. %26ldquo;We did not anticipate it would grow this much. Now we realise there are more opportunities for onshore growth than we ever thought would be possible.%26rdquo;

This realisation marks a volte-face for America%26rsquo;s oil and gas companies. By the 1970s, the majors had decided that onshore reserves of oil and gas in the United States had been tapped, so they sold much of their acreage in order to focus on offshore and international exploration. This left the independent explorers, which drill 90% of onshore wells in the country, to pursue what was left. %26ldquo;For years we have known that the United States holds vast quantities of so-called tight gas or shale gas %26ndash; natural gas locked in formations denser than concrete,%26rdquo; Rex Tillerson, ExxonMobil%26rsquo;s chief executive, said in October. %26ldquo;But we did not have the technology to extract this so-called tight gas in a cost-effective way. Until now.%26rdquo;

Credit for that breakthrough goes to George Mitchell, who at 90 is among the last of the original wildcatters still alive. His breed of oilmen spent their lives searching for the next Spindletop %26ndash; the Texas oil well that in 1901 spouted a thick, black geyser, marking the birth of the US oil industry. Duke R Ligon was senior vice-president at Devon Energy when, in 2002, Mitchell was preparing to sell his company to Devon and retire a billionaire. Few people realised it at the time, but Mitchell had already laid the groundwork for the shale boom by pioneering an effective and economic way to extract the gas. %26ldquo;You had to laugh in the negotiations because, according to him, everything was Spindletop,%26rdquo; Ligon recalls. He pauses, then adds: %26ldquo;He happened to be right.%26rdquo;

The technology and expertise developed by Mitchell Energy and refined by Devon has transformed the industry. In the past three years, estimates of US gas reserves have grown from 30 to 100 years%26rsquo; supply at today%26rsquo;s rates of consumption. %26ldquo;We did all the work,%26rdquo; Mitchell says. %26ldquo;The majors didn%26rsquo;t do it; the independents did it. Now the majors are angling all around.%26rdquo;

Exxon, the biggest of them all, has built up positions in the Marcellus Shale and other fields across Oklahoma, Arkansas and Texas, and in December it took over XTO Energy, a US independent, in a $41-billion deal that will further increase its exposure to onshore US natural gas. Exxon is also looking at making shale an international proposition and has holdings in Canada, Germany, Hungary and Poland.

And all the while competitors from around the world are lining up, hoping to learn from the pioneering US independents and take that expertise with them wherever they can.

NEXT: What lies ahead?

Sheila McNulty is the Financial Times%26rsquo;s US energy correspondent.

Copyright The Financial Times Limited 2010

http://www.ft.com/home/uk

Homepage image from US Energy Information Administration

Editors’ message

Until recently, carbon capture and storage (CCS) was a phrase largely reserved for detailed discussions in university laboratories or the research divisions of energy giants. That is not the case today. The technology, which captures carbon dioxide produced by fossil-fuel combustion and stores it in deep geological formations, such as oil fields, now occupies a prominent position in climate-change policymaking and the public debate around cutting carbon.

Held up by its advocates as a way of reducing carbon emissions while maintaining a secure energy supply, CCS has gained significant traction with the world%26rsquo;s governments. The United States, United Kingdom, Canada and Australia are among the countries to have pledged large sums of public money to high-profile demonstration projects in the last two years. CCS is considered to be particularly important development for China, where around 70% of energy needs are still met by coal. A commercial-scale %26quot;clean coal%26quot; project is already under way in the city of Tianjin, in north China, but researchers, such as Stanford University%26rsquo;s He Gang, argue more is needed to promote widespread adoption.

The technology%26rsquo;s enormous expense %26ndash; the cost of one CCS plant is currently estimated at around US$1.5 billion (10.7 billion yuan) %26ndash; still stands in the way of rapid deployment. And it has been criticised by some for being a %26ldquo;plaster%26rdquo; for global ills rather than an attempt to deal with the root cause. But more and more policymakers, non-governmental organisations and academics are backing it as one of the many solutions required to cut carbon dioxide output, saying it is an advanced technology with a ready skills base %26ndash; injecting carbon dioxide underground is an established practice in the oil and gas industry.

CCS is attracting huge global attention. And this week, chinadialogue will look at some of the key issues surrounding its development. Logan West kicks off the series with an explanation of the process%26rsquo;s storage aspects, while Li Jia and Liang Xi analyse the financial stumbling blocks and possible solutions. Later in the week, the Natural Resources Defense Council presents a detailed account of CCS development in China and the global cooperation needed to promote it. As always, we are keen to hear your views, so do please leave a comment %26ndash; and get involved in the conversation.

Carbon capture and storage (CCS) is a classic relocation-style response, like landfill or water diversion, that is steadily picking up steam. In fact, the International Energy Agency forecasts that CCS will contribute over 10 gigatonnes of carbon-dioxide emissions reductions in 2050, compared to 11 gigatonnes for renewables.

Why the optimism? The concept is simple, the technology exists, industry is proven to have the capacity and CCS is an adaptation, rather than overthrow, of the existing system. That said, CCS lacks neither flaws %26ndash; energy inefficiency, high costs %26ndash; nor detractors. While the topic heats up, details of the process itself often get lost in the debate. But an understanding of carbon-dioxide storage is essential to continuing the discussion.

For the non-geologist majority, storage can be difficult to conceptualise. Where does the carbon dioxide actually go? How does it stay there? What happens if it escapes? The storage process presents the riskiest and most uncertain part of any CCS project. Not only can carbon-dioxide release be hazardous, but its escape also undermines the whole process and wastes a lot of time and money doing so.

So how does storage work? It is important to understand that the carbon dioxide being stored is not like the carbon dioxide people exhale every day. The hot, high-pressure conditions of the kilometre-deep storage zones force carbon dioxide into a supercritical state with a liquid-like density, leading it to %26ldquo;flow%26rdquo;, which restricts its buoyancy.

This carbon dioxide is pumped into what geologists call a reservoir. Beneath our feet are layers of rocks, typically stacked one on top of the other. Reservoirs are layers in which fluids like water %26ndash; called aquifers %26ndash; and oil or gases accumulate. The key characteristic of reservoirs is that the rocks contain a lot of interconnected, open pore space, which fluids can move through and fill. The injected carbon dioxide %26ldquo;plume%26rdquo; does exactly this.

There are four main mechanisms for keeping the carbon dioxide plume where it is. The single most important factor is the cap-rock, an impermeable layer above the reservoir that holds in the plume the same way that a bottle cap shuts in the carbonation in a bottle of soda. It is essential that cap-rocks, among other traits, are spread over the whole area of the plume %26ndash; up to 100 square kilometres %26ndash; and are free of escape pathways such as leaky faults. The cap-rock and other unique geological structures are the frontline for containing carbon dioxide.

As the plume permeates through the pore spaces, the carbon dioxide becomes trapped as some channels are too tight for it to squeeze through. Then, as the gas interacts with the water in the reservoir, some of it dissolves. Once dissolved, the carbon dioxide loses all buoyancy and cannot move on its own. Eventually, a share of the dissolved substance reacts with the rocks to form minerals, solidifying the carbon dioxide in the subsurface, where it will stay for millions of years.

There is plenty of evidence indicating that these trapping mechanisms have been, are and ought to be successful. Naturally occurring carbon dioxide accumulations have been trapped in the subsurface worldwide for millions of years. Meanwhile, ongoing international demonstration projects are successfully conducting CCS. This has led the Intergovernmental Panel on Climate Change (IPCC) to state that, when done right, 99% of the carbon dioxide stored is likely to be retained 1,000 years after injection %26ndash; time enough to find emission-free energy.

Still, there are a great number of unknowns. In geology, no two locations will ever be exactly the same. Thus, unlike capture technology, there is no %26ldquo;one size fits all%26rdquo; blueprint for carbon dioxide storage. And, while tools help us image the subsurface, they can only provide a sketch of the reality. Regardless of how thoroughly a site is examined, predicting the movement and reaction of carbon dioxide in the subsurface still involves a lot of guesswork. Experience and data do, however, lower the uncertainty and that is why oil fields make likely first-generation storage targets. Their geology is well understood and the carbon dioxide can sometimes be used to push out previously unrecoverable reserves.

The uncertainty can be managed if regulators and project operators work together to ensure that storage is carried out with the highest precautions and attention to efficacy. The key to successful storage is picking the safest site, analysing potential locations to identify one that will not only trap the carbon dioxide but also has the space to hold it all and allows the gas to be pumped in as fast as it arrives from the source.

To back up such research, collected data should be used to develop models of the reservoir that can simulate what the carbon dioxide is likely to do. Monitoring tools should then be put in place to track what it actually does and to test for leakage. Models and monitoring will function in tandem, with an ongoing assessment of the possible risks and plans for fixing leakage should it occur. Regulators should carefully review all preparation work and data before awarding permits for storage sites. They should also consult with local communities. This makes data transparency essential.

Even with all the precautions, carbon dioxide can still leak and the side effects can be serious. While normally non-toxic, heavy concentrations of carbon dioxide in the air can be deadly to humans and plant life. Such serious side effects are only caused by the rapid release of large volumes of carbon dioxide, which is unlikely to happen. However, more plausible, slow seepage of the gas from storage reservoirs can still be hazardous. Carbon dioxide that escapes into shallow aquifers nearer to the surface will react with the water to form a weak acid that can render groundwater non-potable or unusable for agriculture and industry. This acid could even leach toxic metals from the rocks or soils, which would worsen the health and environmental effects. Even carbon dioxide escaping harmlessly back into the atmosphere still contributes to greenhouse-gas emissions.

This raises the following question: is storage feasible? Technically, yes. Economically, yes; storage costs vary depending on the site but typically account for only 5% of the total project. But what about those estimates suggesting China can hold as much as 2,300 gigatonnes of carbon dioxide %26ndash; or 100 years%26rsquo; worth of emissions at the country%26rsquo;s current rate? Don%26rsquo;t let these estimates instill false optimism. They are theoretical figures. So much is still unknown that the true capacity is hard to predict. Geological data in China is still limited and little is actually known about the saline aquifers that show the greatest potential.

Where there is data, it is proprietary knowledge of oil companies, which are reluctant to share it freely. Similarly, some spots good for carbon dioxide storage may lead to conflicts of interest if they possess other important resources. Furthermore, China%26rsquo;s reservoirs tend to be very complex, with abundant faulting that potentially compromises safe containment. Even at top-priority oil reservoirs, issues exist due to the number of old exploration wells that need to be located and plugged to prevent carbon dioxide from escaping.

Finally, just because a site makes geological sense, does not necessarily mean it is practically viable. It does not make economic sense to pump carbon dioxide from Shanghai in the east of China to Xinjiang province in the west, just because there is a good reservoir there. Nor does it yet make sense to pump carbon dioxide directly under Beijing or other heavily populated regions. The uncertainties are still too high to justify taking the risk that the gas might leak and, at the very least, damage water resources.

Still, China may well possess many gigatonnes of realistic storage space %26ndash; enough to play a significant role %26ndash; and this is where discussion can move back to the big picture of costs, policy and beyond.

Logan West is a researcher at the Tsinghua-BP Clean Energy Research and Education Centre in Beijing.

Homepage image by %26Oslash;yvind Hagen for Norway’s Statoil shows the Sleipner CCS facility in the North Sea.

Over the last two decades, awareness has grown that carbon capture and storage (CCS) could be an important technology in the fight to reduce greenhouse gas emissions; more than 20 large-scale demonstration projects are now in the pipeline. According a 2009 report from the International Energy Agency, CCS in the power and industrial sectors is likely to represent 10% of total emissions reductions by 2030.

As most major economies have already made a commitment to controlling greenhouse gas emissions, ideally no new fossil-fuel power plants, oil-refinery and steel plants or cement kilns would be permitted unless they were built with full-scale CCS facilities. Widespread deployment of large-scale CCS is, however, facing two major challenges: a lack of experience in building and operating commercial-scale integrated CCS projects and insufficient financial incentives to provide a fair return for investors. Before these challenges can be addressed, new fossil-fuel combustion plants in the next decade should be designed and built using the carbon capture ready (CCR) approach in order to ease retrofitting of CCS in the future.

Some stakeholders are concerned that CCS technologies are not yet proven because of a lack of industrial projects. This view is not entirely correct. More than 100 industrial CCS projects are being developed and about 20 are currently in operation, including the Statoil-Sleipner one million-tonne per year storage project in Norway, the 30 megawatt Vatternfall-Schwarze Pumpe pilot plant in Germany and the Huaneng-Gaobeidian 3000-tonne per year post-combustion capture pilot in China. A few projects have been running for more than 10 years.

The real issue is a lack of large-scale schemes. According to the United Kingdom%26rsquo;s Stern Review, capturing carbon dioxide from fossil-fuel power stations is essential to delivering steep cuts in emissions. But no existing CCS project is yet capturing carbon dioxide from power stations at a rate of more than one million tonnes per year.

The European Union hopes to have at least 10 demonstration projects up and running by 2015 and is preparing a knowledge-sharing framework for CCS, though the timetable appears to be slipping. The US energy secretary Steven Chu has announced a similarly ambitious target: the United States could have 10 to 12 commercial demonstration projects operational by 2016 and ready for a wider commercial deployment by 2019. The Australian government, meanwhile, is providing 100 million Australian dollars (US$90 million) per year for a Global Carbon Capture and Storage Institute (GCCSI) to support demonstration projects worldwide. And, while the Chinese government has not yet aggressively supported CCS demonstration projects, large state-owned energy companies such as Huaneng Group, GreenGen and Shenhua have proposed a number of large-scale schemes. Several bilateral and multilateral initiatives have also been established in order to accelerate the sharing of risk, funding and knowledge, including the Carbon Sequestration Leadership Forum, the FutureGen Alliance, and the UK-EU-China Near Zero Emissions Coal (NZEC) initiative plus the GCCSI.

Examples of three types of capture technology %26ndash; post-combustion, pre-combustion, and separation from industrial process %26ndash; are in commercial use for non-CCS applications. A fourth, oxy-fuel, is still in the pilot demonstration phase. However, more research and demonstration are needed to make %26ldquo;capture%26rdquo; economically feasible and technically proven at the scale, and under the conditions, required for CCS-relevant applications.

Once the carbon dioxide is captured, it has to be transported to a suitable and secure storage site %26ndash; a pipeline is the most economic way to do this %26ndash; and can then be injected into deep geological formations for storage. The oil and gas industry has experience injecting large quantities of carbon dioxide into saline formations and oil and gas fields and the technology is reasonably mature. Thus most CCS technologies are ready to deploy and have established suppliers. The priorities in their development are achieving cost reductions and demonstrating full-system integration.

So what are the costs? According to a study by energy consultancy P%26ouml;yry for the UK government, the abatement cost for carbon capture in 2015 is likely to be US$41 (280 yuan) to US$57 (389 yuan) per tonne of carbon dioxide for capturing from coal or natural-gas power stations, and the cost for storing and monitoring carbon dioxide in saline aquifer US$1.60 (10.9 yuan) to US$3.20 (21.8 yuan) per tonne of carbon dioxide. A special report on CCS from the Intergovernmental Panel on Climate Change suggests the cost of transportation is US$1 (6.8 yuan) to US$6 (41 yuan) per tonne for a 250 kilometre pipeline carrying five-million tonnes per year but the actual number is sensitive to location and land cost.

According to a study by consultant McKinsey %26amp; Company published in 2008, the total cost of initial CCS demonstration projects between 2012 and 2015 is likely be around US$84 (574 yuan) to US$127 (867 yuan) per tonne of carbon dioxide and reduce to US$49 (335 yuan) to US$70 (478 yuan) per tonne abated shortly after 2020. However, if a discount rate is applied to reflect the uncertainties in CCS investment, the cost goes up by US$13 (89 yuan) to US$15 (102 yuan) per tonne.

CCS in developing countries may have a cost advantage. The NZEC project and China-EU collaboration, COACH, suggest the full CCS costs could be US$35 (239 yuan) to US$42 (287 yuan) per tonne of carbon dioxide abated in large scale projects. However, this advantage may be much reduced in 2020 as labour costs, capital costs and currency value tend to rise faster in developing countries. An established CCS methodology in the Clean Development Mechanism (CDM) could potentially provide a substantial amount of financial support to kick-start early CCS demonstration projects in the developing world. However, support solely from CDM is not enough. Since carbon abatement costs in demonstration projects are much higher than the current market price of certified emissions reductions (CER), additional financial incentives from the public sector are likely to be the main driver for CCS demonstration projects around the world in the next decade.

The vast majority of global stakeholders share a consensus that CCS is an important technology for reducing greenhouse gas emissions. However, among the lay public, renewable and efficient appliances are perceived to be slightly more positive than CCS. The lack of awareness and information among policymakers and the general population has become a barrier in deploying CCS at scale.

The energy penalty is one limitation of CCS. Capturing and compressing carbon dioxide may increase the fuel needs of coal-fired power plants by more than 25%. Interestingly, most stakeholder consultations carried out in major developed economies have concluded that development of CCS will enhance energy security because a number of people in developed countries believe coal plants will not be permitted in the absence of CCS in the near future. However, Chinese stakeholders tend to frame CCS technologies as a threat to national energy security because they believe they could result in a higher import rate for coal. Some are also concerned about operational safety issues and coal-mining accidents.

Before CCS becomes economically feasible, power stations will continue to be built and emit carbon dioxide into the atmosphere. According to an IEA estimate, coal-fired generation is likely to grow by 2.5 times in China and 3.5 times in India during between 2007 and 2030. Modifications to make new plants carbon-capture ready are important for easing the retrofit of CCS. Developers of capture-ready plants should take responsibility for ensuring that all known factors in their control that would prevent installation and operation of carbon-dioxide capture have been identified and eliminated.

For pulverised-coal power plants, the carbon-capture ready investment is modest; less than 1% of the original fixed-capital expense, according to IEA estimates. However, it could reduce the possibility of early closure by 7% to 10% and increase the possibility of retrofitting by 5% to 7%, according to a 2009 study by the UK-China Chinese Advanced Power Plants Carbon Capture Option (CAPPCCO). A survey of 103 power plants in China by CAPPCO indicated nearly half of Chinese coal-fired power plants, none of which were built to be capture ready, would be unviable for retrofit.

The success of CCS will depend on a series of factors being realised. First, sufficient financial and political supports, plus explicit early-mover benefits, are needed to create an acceptable investment environment for demonstration projects. Second, such projects must prove the reliability and safety of CCS technologies and find efficient financial and operational models. Third, substantial cost reductions need to be achieved through technological innovation and the carbon price must become stable and high enough to justify CCS investment. And fourth, a more effective communication framework is necessary to improve the understanding of CCS among policymakers, energy entrepreneurs and the lay public.

Finally, once CCS becomes economically feasible, it should be possible to implement the technologies in every new fossil fuel plant and to retrofit some existing plants %26ndash; with priority for those that were built to be carbon capture ready.

Li Jia is chief executive of LinksChina Investment Advisory Limited, founder of CaptureReady.com and a PhD candidate in mechanical engineering at Imperial College, London. Xi Liang is a research associate in the Electricity Policy Research Group at the University of Cambridge.

Hompage image from Vattenfall shows its Schwarze Pumpe oxyfuel pilot plant in Spremberg, Germany.

While it is evident that China needs and has the necessary technical capability %26ndash; and sufficient storage capacity %26ndash; to carry out carbon capture and storage, significant barriers exist for its wide and timely deployment. The most important of these are the high capital costs and the considerable amount of energy currently required for carbon capture. These two barriers are interrelated; cutting the energy penalty will reduce the total cost of CCS.

Currently, the energy penalty for a new post-combustion coal power plant can be as high as 31% and, for a new integrated gasification combined cycle (IGCC) plant, 16%, as explained by Edward Rubin of Carnegie Mellon University. In China, the addition of CCS will require the burning of roughly 25% more coal in order to generate the same quantity of electricity. This is a steep initial price for the first CCS plants, which is nonetheless widely expected to come down subsequently. In addition, it is important to remember that in meeting carbon-reduction targets will rely first and foremost on improving energy efficiency and utilising renewable energy and other lower-cost opportunities, only using CCS deployment to supplement these efforts.

Technological progress has the potential to slash the energy penalty, and many research-and-development efforts are underway inside and outside China aimed at fashioning more efficient and cheaper capture processes. Based on the historical cost trends of other emerging energy technologies such as wind and solar power, there is reason to be optimistic. Solar photovoltaics, windmills and gas turbines have undergone constant cost reductions as installed capacities have increased. For this reason, research-and-development and large-scale demonstration projects will all help lower CCS costs.

International expertise is stronger than that of China in three technical areas: subsurface geological engineering; long-term monitoring and verification; and long-distance carbon dioxide transportation infrastructure. Given the United States%26rsquo; extensive carbon dioxide-enhanced oil recovery (EOR) experience %26ndash; the world%26rsquo;s first such project was launched in the southern state of Texas nearly four decades ago %26ndash; the United States is well-positioned to play an important role in developing CCS in China.

International collaboration may also take place in joint technology research and development, such as the US-China Clean Energy Research Center that was announced during US president Barack Obama%26rsquo;s visit to China late last year. China has already begun its own CCS research, with notable work conducted by Tsinghua University, Zhejiang University, several institutes in the Chinese Academy of Sciences and research institutes of China National Petroleum Corporation and the Huaneng Group. Chinese companies, such as the Huaneng Group and the ENN Group, have developed proprietary coal gasification technologies and are already collaborating with Australia and the United States.

The international community could also provide recommendations to China on developing a regulatory system to ensure the safety and effectiveness of CCS projects. It is crucial that the initial demonstration projects are conducted properly in terms of site characterisation, risk assessment, environmental-impact assessment and ongoing operations, because sub-standard work at the beginning could call the technology as a whole into question and slow down its deployment.

Since China does not yet have a comprehensive regulatory system in this area, early demonstration projects will, in particular, need to learn from the experience and best practice that industrialised countries are developing. The European Union and the United States have already launched efforts to share their regulatory experiences with China. This is also an area where international non-governmental organisations (NGOs) can make a substantial contribution, exemplified by the collaboration between the World Resources Institute and Tsinghua University.

But knowledge-sharing alone is not enough. Increased funding is also needed to jump-start a CCS industry in China. The first few large-scale demonstration projects will be intrinsically expensive and %26ldquo;risky%26rdquo; for any single developer and there is still widespread public concern in China about the technology. Therefore, international funding will be critical in helping to initiate a number of demonstration projects that experiment with different capture technologies and geological formations and benefit all parties involved technically, politically and economically in a carbon-constrained world.

More substantial funding from both the Chinese government and international sources is essential to the deployment and improvement of CCS technologies, and thus reduction of the costs involved. Three main areas are in need of major financial support. The first is large, integrated projects to test commercial-scale technologies, gain experience, identify regulatory issues, and train human resources. The second is research into offshore basins for carbon sequestration to meet the storage needs of China%26rsquo;s heavily industrialised eastern and southern coastal regions, which lack sufficient onshore storage capacity. And the third is detailed, subsurface geological assessments of China%26rsquo;s major onshore sedimentary basins to refine current methodologies and produce more accurate estimates. To develop a CCS industry in China that is also capable of exporting technology and expertise, further policy and economic drivers are needed, such as direct regulation, carbon taxes and emissions-control subsidies.

China will need a wide portfolio of mitigation measures, including CCS, to reduce its carbon footprint. There are many %26ldquo;low-hanging fruit%26rdquo; opportunities that exist for CCS in China, but whether these opportunities are grasped will depend on the extent to which governments, international institutions and corporations engage in meaningful and prompt financing, capacity building and technology and knowledge transfer. This collaboration will not only benefit China but will also be of value to cooperating countries and, ultimately, the wider world.

An earlier version of this article was published by the Natural Resources Defense Council, as %26ldquo;Identifying near-term opportunities for carbon capture and sequestration (CCS) in China%26rdquo;. It is a summary of a full report, co-authored by Jingjing Qian, George Peridas, Jason Chen and Yueming Qiu, Julio Friedmann, Xiaochun Li, Ning Wei, S Ming Sung, Mike Fowler, Deborah Seligsohn, Yue Liu, Sarah Forbes, Dongjie Zhang and Lifeng Zhao.

Homepage image from US Department of Energy’s Office of Fossil Energy

Jane Goodall, grey in complexion but resplendent in a red shawl, is sitting on the sofa in a dimly lit room in west London. The scientist-turned-environmentalist has just arrived from Bournemouth on England%26rsquo;s south coast, had a rotten journey, has a hacking cough, but accepts it all stoically, rejecting the suggestion that the heating be turned up.

She is here with her talisman, a stuffed monkey called Mr H, given to her by the blind magician Gary Haun (%26ldquo;the Amazing Haundini%26rdquo;), who thought it was a chimp. Goodall, who has a childlike quality, sees a metaphorical significance in a blind magician who is able to pull the wool over the eyes of the sighted. The letter H, standing for Hope, also attracts her.

The world seems to divide into people who are besotted with Goodall and people who have barely heard of her. She is more prominent in the United States, where the Jane Goodall Institute (JGI) is headquartered, than in the United Kingdom, despite being born here in 1934; after half a lifetime spent documenting the lives of chimpanzees in the Gombe Stream National Park overlooking Lake Tanganyika in the far west of Tanzania, she is now living with her sister Judy in their old family home in Bournemouth.

Our meeting takes place at a flat that belongs to Mary Lewis, a JGI employee with a cut-glass English accent who appears to run Goodall%26rsquo;s life as if it were a military operation. The trigger is a book Goodall has written with two fellow environmentalists: a collection of stories of survival called Hope for Animals and Their World, the written-by-committee feel of which must of course be forgiven because of its subject matter.

Even I, an intermittent eco-worrier, was moved by the battle to save the California condor, and I feel doubly guilty for criticising the book because at the end of the interview she insists on signing it for me: %26ldquo;For Stephen. %26shy;Together we can make this a better world for all. Thank you for helping.%26rdquo; Can is underlined, all is both underlined and capitalised.

These days, in her mid-70s, Goodall is more shaman than scientist. She has set aside a planned companion volume to her seminal study The Chimpanzees of Gombe, and instead tours the world preaching the need for sustainability, harmony and respect for the natural world (this makes me worry about the size of her carbon footprint).

It was in 1986 that, at a conference on chimps, she realised the extent of the crisis affecting them across Africa and determined, overnight it seems, on a life as an environmental evangelist. One journalist who has followed her career likens her to a %26ldquo;peripatetic Mother Teresa%26rdquo;, and it%26rsquo;s a good description: she combines stateliness with a kind of holiness, her religion a predominantly green one.

The message of her new book, with its stories about black-footed ferrets, American crocodiles and whooping cranes, is surprisingly upbeat. %26ldquo;My job seems to have increasingly become giving people hope, so that instead of doing nothing and sinking into depression, they take action,%26rdquo; she tells me. %26ldquo;It%26rsquo;s very clear to me that unless we get a critical mass of people involved in trying to create a better world for our great-grandchildren, we%26rsquo;d better stop having children altogether.%26rdquo;

Goodall has chosen to focus on the heroes fighting %26ndash; and occasionally winning %26ndash; individual battles, in the hope of attracting others to participate in a war she does not yet accept is lost. %26ldquo;I%26rsquo;ve seen areas totally despoiled that have been brought back to life. Animals that were almost gone have, with captive breeding or protection in the wild, been given another chance. If we stop now, everything%26rsquo;s going to go. So we have to keep on doing our best for as long as we can, and if we%26rsquo;re going to die, let%26rsquo;s die fighting.%26rdquo; The apocalypse is conjured up in a croaky and curiously detached monotone.

Do governments understand the scale of the crisis? Goodall argues that many are still in hock to %26ldquo;dark forces%26rdquo; %26ndash; vested interests such as the fossil-fuel industry and agribusiness. Politicians, she says, should stop parroting the myth of limitless expansion. %26ldquo;Unlimited economic growth on a planet of finite resources is not possible; it doesn%26rsquo;t make sense. I thought this financial %26shy;crisis would help people realise that, but it seems very much like, %26lsquo;Oh, let’s get back to business as usual.%26rsquo; %26rdquo;

Much of her evangelising is directed at the young. Her institute %26ndash; set up to protect chimps and their habitats %26shy;almost 10 years before that Damascene moment in 1986 %26ndash; has a dynamic youth wing called Roots and Shoots, which started in 1991 when 16 young Tanzanians met on the porch of her home in Dar es Salaam to discuss environmental issues affecting their lives.

Twenty years later, there are groups in 114 countries, with hundreds of thousands of youngsters involved in community projects. After a slow start, it has taken off in the United Kingdom in the past couple of years, with 700 groups now participating.

But apart from the headquarters in the US city of Arlington, Virginia — which has 20-plus staff — most of the JGIs that coordinate these projects are shoestring operations, and the institute has been hit hard by the credit crunch. %26ldquo;We%26rsquo;re in a financial hole in the US because of the downturn,%26rdquo; Goodall admits. %26ldquo;Money that should have come in has been cut.%26rdquo;

The organisation had just held a meeting in Belgium to discuss how to dig itself out, and one priority is to recruit an executive director. Is that recognition of a time when someone will need to take over from her? %26ldquo;Of course,%26rdquo; Goodall says. %26ldquo;It will probably be a collection of four people taking over from me.%26rdquo; Despite the holiness, she is not guilty of false modesty.

The institute today is not just concerned with her beloved chimps. %26ldquo;To me, it was obvious to grow from wild chimps to saving their forest to seeing about their conditions in captivity to working with local people and kids,%26rdquo; she says. %26ldquo;You can kill yourself saving forests and chimps, but if new generations aren%26rsquo;t going to be better stewards there%26rsquo;s no point. That%26rsquo;s why I%26rsquo;m so passionate about Roots %26amp; Shoots.%26rdquo;

Until the 1986 conference on chimpanzees, she had assumed she would spend her life studying chimps. %26ldquo;It was wonderful out in the forest collecting data and %26shy;analysing it, giving a few lectures, writing books.%26rdquo; In her 1999 book, Reason for Hope: A Spiritual Journey, she says that as a Bible-reading teenager, she %26ldquo;fantasised about becoming a martyr%26rdquo;. In a way, she has achieved that ambition, sacrificing the paradise of Gombe for a succession of airport lounges.

When I ask if she is still a Christian, she gives a somewhat %26shy;ambiguous %26shy;answer. %26ldquo;I suppose so; I was raised as a Christian.%26rdquo; She says she sees no contradiction between evolution and a belief in God. Nor does she blame the Bible and the idea in Genesis that man has dominion over plants and animals for our exploitation of the natural world (she says %26ldquo;dominion%26rdquo; is a mistranslation; what is meant is %26ldquo;stewardship%26rdquo;). These might seem academic points, but perhaps they are a key to understanding her transition from scientist to eco-evangelist %26ndash; and the resonance of her message in the more spiritually aware US.

%26ldquo;I realised that my experience in the forest, my understanding of the chimpanzees, had given me a new perspective,%26rdquo; she writes in Reason for Hope. %26ldquo;I was %26shy;utterly convinced there was a great spiritual power that we call God, Allah or Brahma, although I knew, equally %26shy;certainly, that my finite mind could never comprehend its form or nature.%26rdquo;

This year is significant for Goodall and her institute, marking 50 years since she began studying chimps at Gombe. As well as the new book, there will be a BBC documentary in the spring and a German-made film, Jane%26rsquo;s Journey, to be premiered at the Cannes Film Festival, in which Angelina Jolie has a walk-on part. It is indeed a remarkable journey, from a middle-class home in Bournemouth to secretarial work in London and then, thanks to the patronage of paleontologist Louis Leakey, to Gombe and beyond.

%26ldquo;I loved animals as a child, read the Tarzan books, and decided at the age of 11 that I would go to Africa, live with animals and write books about them,%26rdquo; she says. %26ldquo;Everybody laughed at me except my amazing mother, who said, %26lsquo;If you work hard and really want something and never give up, you will find a way.%26rsquo; %26rdquo;

In 1957, after earning the money for the boat fare by working as a waitress and a secretary, Goodall went on an extended visit to a school friend in Kenya. Someone suggested she get in touch with Leakey, a formidable figure who was then curator of the Coryndon museum of natural history in Nairobi. He barked at her down the telephone when she called, but she kept her nerve, got an appointment to see him, was given an administrative job and, in 1960, was given the chance to move to Gombe to start collecting data on chimps.

Leakey also dispatched Dian Fossey to Rwanda to study gorillas and Birute Galdikas to Borneo to observe orangutans; the three women were patronisingly known as Leakey%26rsquo;s angels or Leakey%26rsquo;s trimates, but each made significant contributions to primatology.

What did Leakey see in Goodall that made him choose her for Gombe? %26ldquo;I think he was amazed that a young girl straight out from England with no university degree knew so much,%26rdquo; she says. %26ldquo;I’d spent hours in the Natural History Museum in London, and could answer most of his questions.%26rdquo;

Goodall had planned to spend only a year in Africa but was there more than 30. She still has a home in Dar es Salaam, and makes the long trek to %26shy;Gombe when she can. She learned her science in the field, but Leakey was keen for her to get academic training and, in the mid-60s, she did a PhD at Cambridge in ethology, the study of animal behavior. She needed the qualification to counter critics who attacked her approach as unscientific and anthropomorphic %26ndash; she gave the chimps she studied names, and prided herself on getting to know them as individuals.

%26ldquo;I was told at Cambridge I shouldn%26rsquo;t have named the chimps and that they should have had numbers,%26rdquo; she says. %26ldquo;I wasn%26rsquo;t allowed to talk about them having personalities, and certainly not about them thinking or having %26shy;emotions. But then I thought back to my childhood teacher who taught me that this wasn%26rsquo;t true %26ndash; my dog.%26rdquo;

The scale of Goodall%26rsquo;s observational data eventually silenced her critics. She was the first scientist to observe an animal, her favourite chimp David Greybeard, not just using a tool (a stem of grass poked into a termites%26rsquo; nest to dig out the insects) but fashioning it for that purpose. When she telegraphed a report of what she had seen to Leakey, he replied: %26ldquo;Ah! Now we must redefine man, redefine tool, or accept chimpanzees as human.%26rdquo;

We haven%26rsquo;t quite accepted chimps as human, but the work showed that the distance from one to the other was far less than previously thought. In his introduction to a revised edition of Goodall%26rsquo;s most famous book, In the Shadow of Man, the biologist Stephen Jay Gould called her work %26ldquo;one of the western world%26rsquo;s great scientific achievements%26rdquo;.

In 1964, she married the Dutch-born wildlife photographer Hugo van Lawick, and their son (also called Hugo, but known as Grub) was born three years later. In her books there are several sweet pictures of Grub growing up at Gombe, but the relationship of mother and son has not always been smooth. At one point he was engaged in commercial fishing, of which she as a committed vegetarian disapproved, but is now developing an eco-tourist project in Tanzania and they are getting on much better. Goodall and van Lawick divorced in 1974 and she married Derek Bryceson, director of national parks in Tanzania, who died of cancer in 1980.

Is she one of those naturalists, as Fossey supposedly was in her dark %26shy;final years, who prefers animals to %26shy;people? %26ldquo;I%26rsquo;m not one of those people who says let me go and live with chimps forever or dogs forever,%26rdquo; she says. %26ldquo;I certainly prefer a lot of animals to a lot of people, but then I prefer some people to some animals too.%26rdquo;

And does she miss the chimps? %26ldquo;All the chimps I knew so well have gone now,%26rdquo; she says sadly. %26ldquo;Fifi, the last of the real old-timers, died four years ago. It%26rsquo;s not the same as it was.%26rdquo; But she still enjoys returning to Gombe. %26ldquo;When I get up on to my peak where I sat for so long, I can get back into the skin I had and remember just what it felt like %26ndash; the excitement of never quite knowing what you%26rsquo;d see and what you’d find.%26rdquo;

Hope for Animals and Their World is published by Icon Books.

www.guardian.co.uk/

Copyright Guardian News and Media Limited 2010

Homepage image from Jane Goodall’s Wild Chimpanzees

Residents in Shanghai%26rsquo;s Baoshan district have, for years, endured the ghastly smells produced by Shanghai Richina Leather and other tanneries owned by its multinational parent company, Richina Group. Yet there is almost nothing in the Chinese media about this corporation and few would recognise the name of its boss, financier Yan Ciliang

Yan Ciliang, or Richard Yan as he is known in English, is the founder of the Richina Group and legal representative of all its subsidiaries. Born in China, educated at Harvard, and now a citizen of New Zealand, Yan is vice-chair of the board of directors of the China Leather Association.

At first glance, Yan%26rsquo;s life looks like a classic success story. In 1981, he became the first Chinese secondary-school student to win a Rotary Scholarship to study English at Auckland Grammar School in the New Zealand capital, and he went on to attend Auckland University. In 1985, he worked at Westpac Bank in Sydney, Australia, which later funded his MBA at the US%26rsquo;s prestigious Harvard Business School. Then, in 1992, the American Ziff family became the principal investors in a US$52.5 million (358 million yuan) investment fund and, the following year, Yan and Harvard classmate Susanna Foels founded Richina Capital Partners to manage that fund. Thus was born the Richina Group.

To date, the group%26rsquo;s subsidiaries occupy four main fields. One is Yan%26rsquo;s original line of work: finance. Richina%26rsquo;s financial business is concentrated in its wholly-owned Chinese holding company, Richina Pacific (China) Investments. This company provides a wide range of financial and business services for multinationals headquartered in Shanghai. Its own parent company, Richina Pacific, de-listed from the New Zealand stock exchange in a 2008 restructuring that left many former shareholders unhappy. The firm%26rsquo;s registered office is now in Bermuda with its operational headquarters in Malaysia.

Richina is also invested in tourism, including in the Blue Zoo Beijing and the Jinjiang Inn, a hotel in central Shanghai. The company also runs restaurants, shops and hotel-style apartments and owns car parks and a taxi fleet in Shanghai. Richina%26rsquo;s construction portfolio includes the wholly-owned subsidiary Mainzeal, a major New Zealand property and construction firm.

The group%26rsquo;s interest in leather and associated products is run by Richina Industries, which oversees Shanghai Richina Leather and the Shanghai Leather Company, processing leather, manufacturing leather footwear, clothing, sporting goods, luggage, furnishings and car upholstery and leather chemical products.

On February 27, 2003, New Zealand%26rsquo;s second largest daily newspaper, The Dominion Post, reported that the Richina Group owed its profits that year largely to the Chinese market. According to the report, Richina Pacific had turned a loss of NZ$15.3 million (73.9 million yuan) to a profit of NZ$8 million (38.6 million yuan) in a single year. A significant return from Shanghai Richina Leather, a focal point for the group, was credited with the turnaround.

One name on the list of Richina Group executives is symptomatic of Yan%26rsquo;s highly placed connections. Jenny Shipley, the independent chair of the Mainzeal board, formerly independent director of Richina Pacific and chair of Richina Leather, was once prime minister of New Zealand. In July of 1999, Shipley paid a working visit to China at the invitation of Jiang Zemin.

In May 2007, Yan Ciliang generously funded the Peking University New Zealand Centre, co-founded by Auckland Peking universities. The opening ceremony was attended by New Zealand%26rsquo;s foreign minister, Winston Peters, with a distinguished list of ambassadors and officials.

According to a reliable source, the Richina group is about to reorganise its Chinese operations, relocating its leather production to a new facility in Liaoning and capitalising on the property value of its Shanghai Leather portfolio for residential and commercial development. The relocation will finally end the long nightmare of Richina%26rsquo;s Shanghai neighbours, according to Richina Industries president and chief executive Bob Moore. %26ldquo;By October 2010, we will have built a dedicated leather-tanning plant to take on the production halted in Shanghai due to odours,%26rdquo; he said.

Yan has never responded in person to questions on Richina%26rsquo;s constant environmental violations. Asked what Yan thinks of the company%26rsquo;s environmental record, Bob Moore replies carefully: %26ldquo;Yan Ciliang is the investor and we are his managers. All the responsibility is ours. Yan certainly wants Richina Leather to reach world-class environmental standards and we will work hard to achieve that goal.%26rdquo;

Xu Shuda is a reporter based in Shanghai.

Homepage image from Qinghemen Archives shows Yan Ciliang (middle), founder of the Richina Group.

Shenzhen Special Economic Zone, Administration Of The Use Of Technological Achievements As Capital Contributions For Equity Shares Procedures

Article 1　These Procedures are formulated in accordance with the provisions of State laws and regulations in order to promote the optimal combination of technological achievements with other key elements of production, to adjust the relationship between the rights and obligations of the investor of technology and the other shareholders, and to protect the interests of companies’ creditors and of the public.

Article 2　These Procedures apply to the use of technological achievements as capital contribution for equity shares when setting up limited liability companies and share limited companies (hereafter referred to as “companies”).
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