Archive for June, 2012

Great news re gas

It was good to read a really uplifting EIA report : Golden Rules for a Golden Age of Gas.

In this period of economic gloom it was great see that we have a real and new engine for growth ready on our door step. It is gas, gas from shale, coalbeds and other unconventional sources.

Yes, I know, it is still a fossil fuel. But let us agree that gas is so much better than coal. We would not have had the increase in CO2 emissions in Europe had it not been for the fact that gas is too expensive relative to coal. All the discussion about taxing coal would not have been necessary and Europe would have seen real effects of all its efforts to generate sustainable energy and increase energy efficiency.

Fracking (the method used to extract shale gas) can be detrimental to the environment. So let us find ways to ensure that those effects are minimized. The Golden Rules as established by the EIA are the following:

Measure, disclose and engage
Watch where you drill
Isolate wells and prevent leaks
Treat water responsibly
Eliminate venting, minimise flaring and other emissions
Be ready to think big
Ensure a consistently high level of environmental performance

The Economist came out in support of these Golden Rules. It stated But the risks from shale gas can be managed. Properly concreted well-shafts do not leak; regurgitants can be collected and made safe; preventing gas venting and flaring would limit methane emissions to acceptable levels; and the risk of tremors, which commonly occur as a result of conventional oil-and-gas activities, can be contained by careful monitoring.

As to the 6th rule Be Ready Think Big. I liked the fact that this rules suggest to stimulate economies of scale in order to be able to develop an infrastructure that minimizes its impact on the envoironment.

Let us embrace the opportunities shale gas is offering. Use it to reduce coal based Green House Gas emissions and let us build an economy build on wind, water, solar AND gas. If we than also invest in Carbon Capture and Storage the dream of a carbon neutral economy might become true.

Felix Gruijters

With the elections approaching in The Netherlands, the Dutch Green Party (Groen Links) and D66 need to offer more than just a repeat of the old same. The article offers everything a good left wing supporter stands for, more employment and lower pollution. So, decrease the tax on labour AND increase the tax on pollution.

The Extended Society

Environmental and Energy Policy is flawed in many countries. Nothing illustrates this better than Vince Cable’s “Green Investment Bank” or France’s 612.5 million euro attempt to create 10,000 jobs building windmills (that is 61,250 euro a job!).

We want employment, so why do we tax labour? Taxing something means that less of it is used (QED). The surest way to increase employment is by decreasing income tax and other taxes on labour.

The government will still have liabilities and needs to get funds from somewhere. Instead of taxing good inputs such as labour and capital, we should be taxing “bad” externalities such as pollutants.

Harvard Economist N. Gregory Mankiw is in favour of an emissions tax as he suggests a $15 tax per metric ton of CO2 can give an extra tax rebate of $3660 for every worker. Working or creating work will pay more. Prof. Martin Feldstein who emphasizes…

View original post 328 more words

Commercial real estate; upgrading and sustainability

Inertia or innovation?

These are difficult times for owners of commercial real estate in The Netherlands. A market in over supply and slow (or negative) economic growth do not inspire confidence. It is markets like these where innovation is most needed but where managers are reluctant to spend. Inertia, waiting for the trend to change, is also a choice, and one easily made.

Low interest rates have caused the bubble

The fact is that interest rates are very low and have been low for a long time now. Recent research by Christian Hott and Terhi Jokipii (economists at respectively Zurich insurance and The Swiss National Bank) shows how low interest rates are a main reason for the property bubble. Low long term interest rates indicate that a recovery of the economy is not yet to be expected so it is not likely that economic growth pushes prices back to top of the bubble. Waiting, inertia, is not an option.

Invest or pull down

So what to do? The answer is clear. For real estate to retain its value it will have to be upgraded. Keeping real estate without investing in it will open the owner up to the risk of lower rents and, worse, no rent income at all.

The trend is sustainability, also for commercial real estate

If real estate has to be upgraded, what kind of up grade makes most sense? The major trend in companies would appear to be sustainability. Companies with a good ESG score are considered better run and a sounder investment. So developing and executing a sustainability programme makes economic sense. This is relevant for the owners of commercial real estate as well as for companies when choosing what property to rent.

Provada lucheon meeting on sustainability

During a luncheon conference at the Provada, the annual real estate conference/exhibition in The Netherlands it was correctly stated that in order for offices to retain their value and remain attractive in a over supplies market, the upgrade to very energy efficient (or even energy neutral) is a must.

The offices which will not be upgraded will only fetch a lower rent and will in several years be pulled down. There surely is a market for these cheap (but nasty) offices, but it will only be for a short while.

Commercial real estate: sustainability upgrade

Inertia or innovation?

These are difficult times for owners of commercial real estate in The Netherlands. A market in over supply and slow (or negative) economic growth do not inspire confidence. It is markets like these where innovation is most needed but where managers are reluctant to spend. Inertia, waiting for the trend to change, is also a choice, and one easily made.

Low interest has caused the bubble

The fact is that interest rates are very low and have been low for a long time now. Recent research by Christian Hott and Terhi Jokipii (economists at respectively Zurich insurance and The Swiss National Bank) shows how low interest rates are a main reason for the property bubble. Low long term interest rates indicate that a recovery of the economy is not yet to be expected so it is not likely that economic growth pushes prices back to top of the bubble. Waiting, inertia, is not an option.

Invest or pull down

So what to do? The answer is clear. For real estate to retain its value it will have to be upgraded. Keeping real estate without investing in it will open the owner up to the risk of lower rents and, worse, no rent income at all.

The trend is sustainability, also for commercial real estate

If real estate has to be upgraded, what kind of up grade makes most sense? The major trend in companies would appear to be sustainability. Companies with a good ESG score are considered better run and a sounder investment. So developing and executing a sustainability programme makes economic sense. This is relevant for the owners of commercial real estate as well as for companies when choosing what property to rent.

Provada lucheon meeting on sustainability

During a luncheon conference at the Provada, the annual real estate conference/exhibition in The Netherlands it was correctly stated that in order for offices to retain their value and remain attractive in a over supplies market, the upgrade to very energy efficient (or even energy neutral) is a must.

The offices which will not be upgraded will only fetch a lower rent and will in several years be pulled down. There surely is a market for these cheap (but nasty) offices, but it will only be for a short while.



%d bloggers like this: