(Jakarta environmental issues crown eco management) | A scathing new report out today outlines just how risky some of the world's largest coal export projects are. Funnily enough, they're not the risks environmentalists care about - the fact that they're going to be built inside the great barrier reef for instance. No, what the report is concerned with are the risks to the billions in investment at stake if the projects go sideways. If I had my money on the line (which I might if US Ex Im Bank President Fred Hochberg uses US taxpayer dollars to subsidize this boondoggle ) I'd pay attention because the report doesn't come from just anyone, but from financial industry heavyweights Tom Sanzillo (former New York State Comptroller) and Tim Buckley (former head of Australasian equity research at Citigroup). | huffingtonpost

Before we get into the risks outlined in the report let's start with the project as the developer (GVK) sees it: India has 300 million people without electricity, the country is facing a supply crunch of epic proportions), and the government is hell bent on building a massive pipeline of projects. GVK is well suited to help fuel this pipeline and alleviate the supply crunch by developing one of the world's largest integrated coal mine, rail, and export project in nearby Australia. Seems pretty cut and dry, what exactly has these analysts so worried? Leverage, leverage, leverage. It turns out GVK is trying to pull a fast one on Australian investors by getting them to pony up the cash for the project to cover the holes in their own balance sheets - which are enormous. Check out the graph below comparing the projects costs ($10 billion) with the current market capitalization of GVK ($243 million). That combined with net deb t of ~$2.7 Billion and GVK faces a whopping 1,149% debt to market ratio. For the financially illiterate - it's a financial crisis waiting to happen.

News watch: environmental scam, scam alert

Normally this kind of analysis drives me crazy because the 'rational' market rarely prices in such risk. Instead institutions like the Ex Im Bank provide a rubber stamp and average citizens are on the hook for crazy financial decisions. Turns out GVK is the exception to the rule. Check out how much their stock price has tanked in the past year. For those counting that's 80% below the Indian market index.

One of the biggest reasons for the crash is likely the fact that despite claiming to be a "leading global infrastructure owner, manager and operator" GVKPIL (a shell company created to hide the company's debt - more on that later) has no experience operating any business outside of India. Worse, it has never successfully built and operated a coal mine - ever. That's right, the company planning to develop the world's largest vertically integrated coal export project smack dab in the middle of the Great Barrier Reef has no experience doing anything like this. This should turn out well. But there's a coal supercycle, never ending demand shall save this from catastrophe right? Not quite. Under existing financial assumptions, the Alpha Project's cost of coal production is likely to render the project uneconomic. The Newcastle FOB thermal coal price is currently around US$88/t, 30% below the peak seen in 2008. This leaves little headroom to move against a largely debt-funded US$10bn project proposal with a cash cost of production estimated to be at least US$70/t. Why does this matter? Because GVK is claiming production costs of US$55/t. Add to that Australian mining history which suggests capital cost blowouts of over 20% are likely, and you have a lot of lost cash.

It's ironic because the first time I wrote about this project I was disgusted that the US Export Import Bank would be involved with a project whose environmental impact would be so large Australia's federal environment minister Toney Burke called its review a 'shambolic joke.' Now I'm disgusted any self respecting investor would give this proposal the time of day. After this report finds its way to Aurizon I'm guessing they'll personally thank Tom Sanzillo and Tim Buckley for saving them billions.

There are about nine million dairy cows in the United States, and every day each of those cows squirts out about 6.5 gallons of milk and poops about 24 gallons of manure. We drink the milk; the manure decomposes. And when it does, some very bad things happen. Nitrous oxide and methane float up to the heavens like the souls of road kill. According to the Intergovernmental Panel on Climate Change, "nitrous oxide warms the atmosphere 310 times more than carbon dioxide, methane does so 21 times more."

Dairy cows actually produce about 280 litres of methane per day most of it through burps. | Crown capital eco management poop power Poop power infographic

Of course, it doesn't have to be this way. In many places, all that dung is used to generate electricity. Machines called digesters use anaerobic digestion to extract the gas from manure and burn it to power generators. They basically work like a giant cow stomach. | On this corner: environmental scam watch

Dairy farmers use the electricity to power their farms, the solid waste is used for cow bedding, and the liquid waste can be used as fertilizer. All that helps the farmer's bottom line and reduces greenhouse gas emissions. It's not new technology, but like anything involving environmental hazards and government agencies, there are economic and bureaucratic obstacles to overcome. Especially in the state that produces the most milk in the U.S. Now you are probably thinking of Wisconsin (1.27 million dairy cows) but you, my dear cheese-loving friend, are mistaken. California is number one when it comes to milk with 1.8 million dairy cows in the state.

But as a result of regulatory hurdles, pollution issues and inadequate financial incentives, most dairy farmers in California abandoned their digesters years ago. Now a number of companies hope to reverse that trend with a new generation of digesters. The state is also doing its part. It has introduced a new permit process that aims to reduce the red tape that plagued past renewable energy projects. If digesters were put in use in all of the California's dairy farms, the state's 1.8 million dairy cows could generate up to 1,971 gigawatt hours of electricity each year-enough to cover about .7% of California's electricity. By comparison 11.6% of California's electricity was generated by all renewable energy which includes solar, geothermal, small hydroelectric and biomass.

Google Community | Chinese Premier Li Keqiang is wrapping up his visit to Germany and says China wants to work with the European Union to build up trust and cooperation. China and Germany have pledged to strengthen extensive economic cooperation as the two sides signed 17 deals on manufacturing, investment, agriculture and energy saving.

The Chinese Premier says the visit to Germany shows the new Chinese leadership highly values its relation with the European Union. He says the common interests between China and Europe are far greater than the differences. That comment comes as Li Keqiang once again reiterated China's opposition to the EU's pursuit of anti-dumping cases them.

"We decisively disapprove of this decision. This decision will not only endanger jobs in China and the development of the affected sectors, it will also endanger the European sector in that area."

Meng Hong, an expert on German studies with China Renmin University, says consultation is the best way-out.

"Actually, not only Germany but also other European companies in related industries are protesting against double tariffs imposed on solar products made in China. If sanctions are put on Chinese solar companies, development of certain industries in Europe might be affected. All of us are hoping to find an appropriate way out through compromise and consultation rather than intensifying the problem."

Earlier, Germany officially told the European Commission it did not back the imposition of import duties averaging at around 47 percent on Chinese solar panels. The Chinese Premier says they want to work with European countries to promote cooperation.

An example of that's perhaps the free trade agreement signed during Li Keqiang's visit to Switzerland, making them the first European country to do so.

Feng Zhongping, the director of the European Studies with China Institute of Contemporary International Relations, says the deal serves as a model for the cooperation with the rest of Europe.

"The free trade agreement will boost bilateral trade and investment, especially the cooperation in financial field. China is Switzerland's largest economic partner in Asia, and the FTA will cut down restrictions on trade including tariff, so the deal is a key move. "

Germany now, is the Premier's last leg of his first ever overseas tour since taking office.
Along with Switzerland, it also included visits to India and Pakistan.

As far as Europe is concerned, the Chinese Premier says they want to see a strong Europe and that China's development will only present more opportunities to not just European but the global economy.