Sunday, May 4, 2008

Smarter electric grid could be key to saving power

By BRIAN BERGSTEIN (May 4, 3:38 AM EDT)

MILTON, Ontario (AP) -- The glowing amber dot on a light switch in the entryway of George Tsapoitis' house offers a clue about the future of electricity.

A few times this summer, when millions of air conditioners strain the Toronto region's power grid, that pencil-tip-sized amber dot will blink. It will be asking Tsapoitis to turn the switch off - unless he's already programmed his house to make that move for him.

This is the beginning of a new way of thinking about electricity, and the biggest change in how we get power since wires began veining the landscape a century ago.

For all the engineering genius behind the electric grid, that vast network ferrying energy from power plants through transmission lines isn't particularly smart when it meets our homes. We flip a switch or plug something in and generally get as much power as we're willing to pay for.

But these days the environmental consequences and unfriendly economics of energy appear unsustainable. As a result, power providers and technology companies are making the electric grid smarter.

It will stop being merely a passive supplier of juice. Instead, power companies will be able to cue us, like those amber lights in Tsapoitis' house, to make choices about when and how we consume power. And most likely, we'll have our computers and appliances carry out those decisions for us.

Done right, the smarter grid should save consumers money in the long run by reducing the need for new power plants, which we pay off in our monthly electric bills. However, if people fail to react properly to conservation signals, their bills could spike.

And certainly a smart grid that can encourage us to conserve will feel different. Envision your kitchen appliances in silent communication with their power source: The fridge bumps its temperature up a degree on one day, and the dishwasher kicks on a bit later on another.

Smart-grid technologies have gotten small tests throughout North America, as utilities and regulators scout how to coax people to reduce their demand for power. But there's little doubt it's coming. The utility Xcel Energy Inc. plans to soon begin a $100 million smart grid project reaching 100,000 homes in Boulder, Colo.

In Milton, an exurb where dense subdivisions encroach on farm fields, a test with the Tsapoitis family and 200 other households reveals what will be possible - and how much more work needs to happen.

Tsapoitis uses his computer to visit an online control panel that configures his home's energy consumption. He chooses its temperature and which lights should be on or off at certain times of the day. He can set rules for different kinds of days, so the house might be warmer and darker on summer weekdays when his family is out.

The family can override those changes manually, whether it's by turning on the porch light or raising the thermostat to ward off a Canadian chill. But the system guards against waste. If midnight comes and no one has remembered to lower the thermostat and turn off the porch light, those steps just happen.

These little tweaks add up nicely for another person testing the Milton system, Marian Rakusan. He's saved at least $300 on utility bills since the program began in September. Tsapoitis and his wife, Lisa, aren't certain of their savings but say their 2,400-square-foot home has lower energy bills than a friend's 1,800-square-footer.

This alone is not revolutionary, because programmable thermostats and other "smart home" controls let people craft similar resource-saving plans. The big change here is the combination of these controls with that blinking amber light on the switch - where the grid talks back.

Milton's local gas and electricity retailer, Direct Energy, will set those amber dots blinking in an emergency. It might happen a few times in a summer month. Maybe there will be congestion in Ontario's overtaxed transmission network. Perhaps a power plant will be down for maintenance. Or rapacious air conditioners will overwhelm electric capacity.

Whatever the cause, at that moment, this section of the grid needs a reduction in demand, fast, or else outages loom.

People in Milton's test are expected to configure a "brownout" setting on their computers, indicating how their homes should respond in such a situation. In this test, Direct Energy also will enforce conservation remotely. It can raise the set temperature in a participant's home by 2 degrees Celsius in the summer (nearly 4 degrees Fahrenheit), reducing its air conditioning load. The company also has permission to shut off the testers' hot-water heaters and electric pool pumps for four hours at time during these power emergencies.

Tsapoitis shrugs at that aspect of the arrangement. It's better than rolling blackouts. Rakusan, however, says he's not sure he likes the idea of the power company tweaking his home's settings.

Indeed, it appears unlikely that broad swaths of the public will accept remote control from the power company. California officials recently had to back away from a proposal to require remote-controlled thermostats in new buildings.

So a more likely scenario is that consumers will get powerful economic incentives to make those decisions themselves.

Typically we pay a flat rate for electricity, even if sometimes it falls below the actual costs of supplying power at a given moment. In a growing number of places, rates move slightly higher in hours that typically are busiest.

An advanced notion of this will be tested this summer in 1,100 homes served by Baltimore Gas & Electric. Pricing plans will vary, but generally the households will pay the cheapest, "off-peak" rates most of the time. Some testers will pay higher rates every weekday afternoon. And all of them will be subject to "critical peak" periods of even higher charges, declared on as many as 12 weekday afternoons with stress on the grid.

The Maryland utility will have its own version of Milton's amber dots. Most of the homes will get 3-inch-high orbs that will glow different colors to indicate the price of electricity: red instead of their usual green, for example, during critical peak periods.

Even this will probably be a primitive step.

Eventually, the smart grid will let rates fluctuate even more dynamically, depending on conditions. That already happens in wholesale electricity markets, in which power suppliers buy energy from power producers. Now that would extend to the retail level - our homes. The price of electricity would dip when demand is softest, typically at night or on mild days, and rise in periods of strain.

There's only one problem. "Consumers are not sitting at home waiting for the latest signal from the power grid," says Rob Pratt, a scientist with the Department of Energy's Pacific Northwest National Laboratory. "To get the kind of widespread response that we'd really like to have, keeping it automatic is real important."

In other words, appliances designed to interact with the smarter electric grid will adjust themselves.

Pratt's lab has already built and tested controllers that can make it happen. And over the next decade, Pratt expects homes to get appliance controls with a sliding scale. At one end people could choose something like "maximize my ease and comfort." At the other, "save me the maximum amount of money." The highest-conservation settings might lead dishwashers to start only when electricity prices are at their lowest, or when wind power has kicked on.

When Pratt and colleagues tested aspects of this in 112 homes in Washington state, they determined the average household's electricity bills would drop 10 percent.

It says a lot that conservation would be encouraged by the very companies that make money off the use of electricity. But they have no real choice.

Electricity use per home rose 23 percent from 1981 to 2001, according to the Department of Energy. Blame increases in electronics and appliances, and our decreasing tolerance for sweating through the summers. The Census Bureau says 46 percent of single-family homes completed in the U.S. in 1975 had air conditioning. In 2006 that was 89 percent.

Meanwhile, meeting that demand is getting trickier. Raw materials that fuel power plants are soaring in price and being eyed more skeptically by regulators concerned about air quality and greenhouse gases. And that's even before the next U.S. president, as seems likely, supports caps on carbon emissions.

"We just can't keep building more coal plants," says Roy Palmer, head of regulatory affairs at Xcel Energy.

So until some bountiful and clean power source can be delivered cheaply, electric utilities are pressured to extend the generating capacity we already have.

The effects of well-chosen reductions in usage - an idea known as "demand response" - can be huge. A mere 5 percent improvement in U.S. electric efficiency would prevent 90 large coal-fired power plants from having to be built over the next 20 years, according to Jon Wellinghoff, a member of the Federal Energy Regulatory Commission who advocates demand response.

Demand response isn't new, but it's existed in low-tech form. Utilities in capacity crunches would call companies and request that they do something to help, like idling an assembly line for a few hours. In some states, residents can get rebates if they let the utility trigger radio transmitters on their air conditioners that cycle the chillers off for a few minutes in strained summer hours.

Now though, technology can do demand response in a more sophisticated way.

Companies such as EnerNOC Inc. have built software and sensor networks that can remotely dim lights or raise refrigerator temperatures inside businesses, in an instant. For homes, upgraded electric meters can offer near-real-time feedback on energy use. And new generations of appliances and thermostats can coordinate with each other and electric meters over in-home wireless networks.

The key hurdle is figuring out how to pay for it all.

The equipment in Milton's tests costs more than $1,000 per house. That will come down with larger-scale efforts, and utilities will save money as networked meters free them from sending out human meter readers each month. But for bigger smart-grid investments, energy companies generally want regulators to let them recoup the costs through higher electric rates. That can get thorny.

Tsapoitis hopes some kind of smarter system sticks after his test ends in Milton this fall. When asked why he signed up, he said it might keep his 4-year-old son, Brogan, from worrying about global warming and other environmental threats. He pointed to a tattoo running down his arm that spells out Brogan's name in an Old English font.

"That," he said, "is what we do it for."

Monday, April 14, 2008

Europe's EPA Advises Suspending Biofuel Targets : Gas 2.0

Today the European Environment Agency’s (EEA) Scientific Committee recommended suspending the EUs target for 10% biofuel usage by 2020, due to concerns that first-generation biofuels (those made from food crops) are environmentally unsound.

Back in 2003, the EU established a Biofuel Directive aimed at replacing 2% of vehicle fuel by 2005, and 5.75% by 2010. The 2005 goal wasn’t met, and despite uncertainty that the EU could even reach the 2010 targets, an ambitious goal of replacing 10% of total fuel usage by 2020 was put in place last year.

Now the EEA isn’t sure that’s such a good idea, and recommended the target be suspended until a new, comprehensive scientific study on the environmental risks and benefits of biofuels can be completed. The EEA expressed the following concerns:

* Producing biodiesel or ethanol out of plant material is not the most efficient or environmentally friendly use of biomass when compared to heat or electricity generation.
* Biomass is a finite resource, and using it should be matched with energy efficiency improvements in automobiles (and residential areas).
* The EEA estimated that the land required to meet the 10% target exceeds the amount of arable land available, even with substantial input by second-generation (non-food) feedstocks. Increasing land use will increase pressure on soil, water, and biodiversity.
* Meeting the target would require importing large amounts of biofuels, which could contribute to the accelerating destruction of rain forests in less developed countries.

Europe has been struggling with biofuel policies for some time now. Mandating biofuel targets without having sustainability filters in place may boost industry, but it won’t protect the land. The US is also struggling with biofuel policies and their impacts. See the related links for more:

Saturday, April 5, 2008

Investor puts his money into the rainforest

Investor puts his money into the rainforest

* 18:38 27 March 2008
It is either a visionary piece of capitalism or throwing money into the wind. A venture capitalist today made a huge environmental bet – that one day the environment services that sustainable forests provide will be worth big money.

The Iwokrama reserve in Guyana is a 371,000 hectare chunk of tropical forest – roughly the size of Majorca – and is a successful experiment in sustainable forest management.

Hylton Murray-Philipson, director of the UK-based financiers Canopy Capital, has signed a deal with Iwokrama guaranteeing a "meaningful" contribution to their running costs for five years, a deal which may be renewed.

In return for these funds, Canopy Capital is given "ownership" of the forest's ecosystems services and a claim on any profits that might one day be made from them.
Zero deforestation

The value of the deal is undisclosed, but it is unprecedented. Murray-Philipson describes it as "creating wealth that is worth having".

Iwokrama is home to the same level of biodiversity as the neighbouring Brazilian Amazon but, unlike the Amazon, it is not disappearing. According to the UN Food and Agriculture Organization, between 2000 and 2005 the rate of deforestation in Guyana was 0%.

Logging in Guyana is selective, with only 35 of more than 1000 tree species logged commercially. The Iwokrama reserve itself operates a low level of logging equivalent of one tree per hectare each year on just half of its total surface.

Guyana's pristine forests as yet have no financial value. But they seed rain that irrigates farmlands as far away as the American Midwest, house thousands of species of plants and animals, including many rare ones, and store tonnes of carbon.
Unknown value

In November 2007, Guyana's president put his forests up for adoption in exchange for development aid. "What else has Guyana got to offer the global economy?" asks Murray-Philipson.

The trouble is, because of Guyana's excellent track record in forest conservation, no-one else seems to think the forests have any value.

"Let's not be idiots about these ecosystem services," says Niki Mardas of the Global Canopy Programme, "humans are getting a free ride." Mardas's organisation is a partner in the Canopy Capital deal and will receive 20% of any returns on the firm's investment.

Murray-Philipson reckons the forests are worth about $20 per hectare, although he admits he may never see a penny of return on his investment. He says the price tag is considerably less than what some companies are considering paying to store carbon under the sea.
'Winds of change'

Worked out in terms of carbon storage – the only ecosystem service to have some sort of value at the moment – it comes to $0.20 per tonne. Meanwhile, he notes that oil giant BP is looking at spending $50 to $60 a tonne on pumping carbon into disused oil fields in the North Sea.

"The winds of change have to blow through the canopy," Murray-Philipson says. "If I am wrong, we have a write-off, but at least we have tried to do something to change the paradigm of how man relates to nature."

"Rewarding people for good management is intrinsically more palatable than REDD [Reduced Emissions from Deforestation and Degradation] which rewards people for addressing a situation out of control," says Duncan MacQueen, a forestry expert at the Institute for Environment and Development in London, referring to a UN programme that was launched at the climate change summit in Bali, Indonesia, last December.

REDD aims to pay countries to reduce deforestation. The details need to be ironed out and the final agreement is not expected until 2009, but it looks unlikely that REDD will reward countries, like Guyana, that have a long-standing record for conserving their forests.

Friday, March 7, 2008

Clean-tech VC investing tops $3 billion, but 'funding gap' looms

The numbers are in on clean-tech investing in 2007 and, once again, the direction is way up.

Dow Jones VentureSource on Friday said that venture capitalists plowed a record $3 billion last year in clean-tech companies, a 43 percent jump from the year before. The number of deals rose from 173 in 2006 to 221 last year.

"Our data shows that 59 percent of all U.S. investment in the sector is going toward companies in the product development phase, which suggests that funding for clean technologies is likely to continue as these companies continue to develop and start generating revenues," said Jessica Canning, director of global research, in a statement.

The median deal size in the U.S went up slightly to $8 million, which is a bit higher than all industries.

The biggest raising last year was $200 million for Project Better Place, the Shai Agassi-led company to set up a network of services stations with batteries for electric cars.

U.S.-based firms caught the lion's share of the money, with 83 percent of the global total. The total in the U.S. was $2.52 billion in 2007, a 79 percent increase.

Europe, led by Spain and Germany, saw a 27 percent increase to $360 million in venture capital. China, meanwhile, saw venture investing fall nearly 70 percent to $129 million, although four venture-backed companies went public.

So is this outpouring of venture dollars all good news for energy and environment entrepreneurs? Not entirely.

There is ongoing concern that certain areas within clean tech, notably solar and biofuels, are becoming an over-heated financial bubble that cannot sustain the influx of new companies.

This is a typical pattern of large investment waves, which are often followed by consolidation among companies and company failures.

More specific to clean tech is a funding gap, sometimes referred to as the "Valley of Death."

Unlike software or medical devices, energy-related companies require large amounts of capital to prove out their technology as cost-effective. A biofuels plant, for example, can cost more than $100 million--beyond the funding venture capitalists are able to do. Project financiers typically back only well proven technologies, as a report by Ernst & Young noted. Click here for PDF.

Ernst & Young recommends looking to government sources of money, reducing technology risk, and using debt selectively for financing.

Despite this funding challenge and regulatory hurdles, Dow Jones VentureSource sees significant potential. Both consumers and businesses are interested in buying eco-conscious products and, because the energy business is so big, gaining a small amount of market share from incumbents can be very profitable.

"The biggest factor driving investment in clean tech today is the huge consumer outcry for change," contends Canning from Dow Jones VentureSource, who projects more favorable policies for renewable energy after the fall national election.

Posted by Martin LaMonica

Saturday, February 9, 2008

Uma revolução no domínio da luz



Novas células solares abrem caminho para a era da energia farta, barata e renovável

Rafael Corrêa

A energia solar é uma das grandes esperanças para livrar o mundo da poluição causada pelas usinas termelétricas ao produzir eletricidade, mas por enquanto ela é uma alternativa cara, usada principalmente em pequenas comunidades com projetos subsidiados por governos. A partir de agora, está mais próximo o dia em que se poderá utilizar a energia do Sol para produzir eletricidade em larga escala. A empresa americana Spectrolab, uma subsidiária da Boeing, anunciou a criação de uma célula fotovoltaica capaz de transformar em eletricidade 40,7% dos raios solares que incidem sobre ela. Nas células convencionais usadas hoje nas usinas, esse aproveitamento é de apenas 22%. Isso significa que a nova célula é duas vezes mais eficiente. A novidade é o primeiro passo de uma revolução no setor energético. Usinas equipadas com a nova célula gerarão eletricidade ao preço de 8 a 10 centavos de dólar por quilowatt/hora, praticamente o mesmo que se paga hoje pela força gerada por termelétricas. "Considerando a evolução da pesquisa em energia solar, a invenção da nova célula é o equivalente a correr 1 milha (1.609 metros) em menos de quatro minutos", disse a VEJA Larry Kazmerski, diretor do Centro Nacional para Fotovoltaicos do Departamento de Energia americano, referindo-se ao recorde esportivo alcançado pelo inglês Roger Bannister em 1954 e que se acreditava inatingível.

As células fotovoltaicas produzem eletricidade absorvendo a energia da luz na forma de fótons e transformando-a em corrente elétrica. As células convencionais são feitas de silício, o mesmo material usado nos chips de computador. O grande achado da nova célula é utilizar diferentes tipos de material, em camadas sobrepostas. Cada camada absorve a energia de uma determinada cor do espectro da luz solar. Dessa maneira, a supercélula aproveita mais de cada raio que incide sobre ela com relação à célula convencional. A tecnologia é semelhante à usada para alimentar as baterias das sondas espaciais Mars Rovers, que há três anos pesquisam o solo marciano.

Se toda a energia que o Sol despeja sobre a Terra fosse aproveitada por células fotovoltaicas, bastaria uma hora de exposição para gerar a eletricidade consumida no mundo em um ano inteiro. Atualmente, apenas 0,01% da eletricidade usada no planeta vem do Sol. A produção de energia solar cresce à razão de 25% ao ano, mas essa expansão é praticamente restrita a três países, Alemanha, Estados Unidos e Japão. A nova célula pode ser o impulso que faltava para disseminar o uso dessa energia. O início de sua produção está previsto para 2008, e os primeiros lotes serão utilizados por companhias envolvidas em projetos de geração de eletricidade em larga escala. Um deles será instalado na província de Victoria, na Austrália, e terá a capacidade de gerar 154 megawatts de eletricidade, o suficiente para abastecer 45.000 casas. Para produzir a mesma quantidade de energia, uma usina termelétrica lança na atmosfera 400.000 toneladas de dióxido de carbono, o equivalente às emissões de 80.000 carros ao longo de um ano. "A célula supereficiente é uma tecnologia inovadora que abre caminho para toda uma nova geração de usinas solares", diz Kazmerski. "Em pouco tempo veremos células ainda mais potentes, capazes de converter 50% da energia solar em eletricidade", completa ele.

Friday, February 8, 2008

Taking the Web 2.0 route to green tech

When Benjamin Brown, the CEO of Web start-up MakeMeSustainable.com, hands you his business card, it's got "green" written all over it.

Rather than bleached white, it's the color of a supermarket bag and has a green fingerprint printed on the back.

MakeMeSustainable.com lets people see their energy usage and savings over time--as well as what their friends are doing.
(Credit: MakeMeSustainable.com)

Brown's not the only Web entrepreneur going with the recycled paper look. A growing number of tech and media entrepreneurs are trying to enter the booming green-tech industry via the Web.

Over the past five years, many IT professionals have made the jump to energy-related companies. Former Microsoftie Martin Tobias, for example, was CEO of biodiesel company Imperium Renewables, while the head of ethanol maker Range Fuels, Mitch Mandich, is a former Apple executive.

These IT veterans made the move either because there are more job opportunities, or because they want to work in an environmentally oriented field. Although they may lack technical know-how in energy, they contribute the speed and entrepreneurial culture of high-tech start-ups, the thinking goes.

By contrast, people like Brown feel that tapping social networking on the Web is the best way to build a business with an environmental slant.

"There's a lot of noise and a lot of great clean technologies are going to be created," Brown says. "The reason I wanted to go towards the Web is because, in the end, it's the individual consumer who will be driving those concepts and ideas."

MakeMeSustainable.com is sort of like Weight Watchers for carbon-conscious consumers. It allows people to evaluate their individual carbon footprint and track it over time while teaming with others.

The company, which spent two and half years building the software, is in the process of raising a Series A round of venture capital, said Brown, who is 25.
green Web sites

Over the past few years, there's been an explosion in green-themed Web media. Many sites act as hubs for environmentally aware people, providing news links and tips. There are sites to locate suppliers of green products or even to find a date with like-minded greenies.

The green Web reflects growing awareness of environmental issues. With the growth of social-networking sites, getting the word out online is a natural, particularly for younger people for whom socializing online is second nature. MakeMeSustainable released a Facebook application in December.

For people with software skills, green Web businesses are a tech-related career path that dovetails with their personal goals.

"The people who have Web 2.0 in their DNA, let's call it, are very alert and sensitive to this," said Andy Zaleta, a partner at recruiting firm Battalia Winston. "There's a social awareness created by the younger generation online."

There are many sites, which are counting on advertising revenue, that aggregate environmental news and tips. A few are emerging that emphasize social networking. A site called Carbonrally, offers teams of people regular challenges, such as using PC energy-management software. Teams can compete as they track the impact of their changes.

Brown said that eco-oriented consumers are getting to the point where they want hard numbers to back up their good intentions.

"Who the hell knows what is eco or green and people are getting tired of greenwashing," he said. "There's so much information out there, what we're seeking to be is a trusted quantitative source."
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February 6, 2008 10:50 AM PST
Taking the Web 2.0 route to green tech
Posted by Martin LaMonica

Thursday, February 7, 2008

Carbon Trading May Reward Indonesians for Saving Rainforest

By Jim Efstathiou Jr.

Feb. 7 (Bloomberg) -- Carbon trading markets may be used for the first time to help villages in Indonesia preserve trees, part of the global effort to stop deforestation that is speeding climate change.

Under a plan to be announced today to save the 1.9 million- acre Ulu Masen forest in Indonesia's Aceh province, about $26 million in revenue from the sale of carbon credits will go to villages that stop logging. The proposal hinges on the sale of credits to companies and individuals seeking to offset emissions and burnish their environmental reputations. The credits typically cost $4 to $8 per ton of pollution reductions.

There is no international agreement to reward developing countries for halting the burning of forests that accounts for 20 percent of global warming emissions, said John-O Niles, chief science and policy officer for Carbon Conservation, a project sponsor. The Ulu Masen plan to reduce emissions by 100 million tons over 30 years may help convince critics that saving forests can help slow the planet's warming, Niles said.

``There is for the global community and for the atmosphere a lot of value to maintaining the forests,'' Halldor Thorgeirsson, head of emissions trading at the UN Framework Convention on Climate Change, said in an interview. ``It's important that value is somehow transferred to the people that make decisions on the ground.''

The preservation plan for Ulu Masen will reduce emissions equivalent to Mexico's annual greenhouse-gas output, Niles said. It is the first project for avoiding deforestation to meet standards set by the Arlington, Virginia-based Climate, Community & Biodiversity Alliance to assure tradable carbon credits.

Energy Conversion

Trees store carbon dioxide, which is used in the conversion of light energy to chemical energy. Deforestation is the third largest source of carbon emissions after fossil fuel use and industrial operations, according to the UN.

Reducing emissions by saving forests was a priority at climate-change talks in December on the Indonesian island of Bali. The World Bank has launched funds to help developing countries monitor emissions reductions and market them, said Werner Kornexl, a senior technical specialist at the Washington- based bank.

``What we want to do in this partnership is set the stage for bigger market demand,'' Kornexl said in an interview. ``There is broad interest for this.''

Interest in credits from projects like Ulu Masen depends on standards that ``ensure the action is real,'' said Elliot Diringer, director of international strategies at the Pew Center on Global Climate Change, based in Arlington, Virginia.

`Stronger Action'

``It's a huge source of emissions and there's a willingness on the part of the tropical forest countries to undertake stronger action,'' Diringer said in an interview.

The Ulu Masen project was certified by the Climate, Community & Biodiversity Alliance, which includes non- governmental organizations such as The Nature Conservancy and the Rainforest Alliance and companies such as Intel Corp. and Weyerhaeuser Co. The designation means the project is ``extremely likely'' to produce credits beginning in 2009, Niles said.

Sponsors expect to reduce logging by 85 percent at Ulu Masen, which will generate credits representing 3.3 million tons of carbon a year, Niles said. At a projected price of $5 a ton, credits will generate $16.5 million.

Local villages will receive payments once they demonstrate trees haven't been logged, said Joanna Durbin, director of the alliance. Progress will be monitored on the ground by forest wardens and from the air through satellite images. Payments are projected to reach $26 million over the first five years.

Investor Risk

``The payments are based on results,'' Durbin said in an interview.

Certification to alliance standards also guarantees community and biodiversity benefits, such as maintaining wildlife habitats and clean water supplies, said Duncan Marsh, director of international climate policy at the Arlington-based Nature Conservancy. The forest is home to Sumatran elephants, clouded leopards, Sumatran tigers and Sumatran orangutans.

``Community and biodiversity aspects are an important attraction to investors,'' Marsh said.

Investors will also focus on risk, Marsh said. Credits for halting deforestation may not be used by companies to meet pollution targets under the European Union's greenhouse gas program or by countries under the Kyoto Protocol, an international accord to limit global warming gases.

`No Guarantee'

``If investments they make now do become eligible for credits in a future compliance regime, then the credits would be worth a lot more,'' Marsh said. ``There is no guarantee that will happen and those credits may continue to have the value they do on the voluntary market.''

Carbon credits from wind farms and solar power stations eligible in Europe's program and under the Kyoto pact traded at 14.25 euros ($21.09) Feb. 5 on the Nord Pool ASA exchange in Lysaker, Norway. There is little trade in credits from projects such as Ulu Masen, said Jason Patrick, director for greenhouse- gas services for the credit broker, Evolution Markets.

``There's a slow evolution from avoided deforestation as something that never happens to something that could be part of a future compliance system,'' Patrick said. There is ``speculative activity in avoided deforestation projects today with the expectation that there will be some sort of compliance value down the road.''

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net .
Last Updated: February 7, 2008 00:17 EST