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[Top News] from [REUTERS]

[Green Business]
Alex Lawler
LONDON
Thu Jan 28, 2010 1:41pm EST
Oil demand has peaked in developed world: IEA

LONDON (Reuters) - Oil use in rich industrialized countries will never return to 2006 and 2007 levels because of more fuel efficiency and the use of alternatives, the chief economist of the International Energy Agency said on Thursday.

The bold prediction, while made previously by some analysts, is significant because the IEA advises 28 countries on energy policy and its oil demand forecasts are closely watched by traders and policymakers.

"When we look at the OECD countries -- the U.S., Europe and Japan -- I think the level of demand that we have seen in 2006 and 2007, we will never see again," Fatih Birol told Reuters in a telephone interview.

"There may be some zig zags up and down but as a trend I think it will be a downward trend in terms of oil consumption."

Flat or declining OECD demand may ease any strain on oil prices caused by ever-growing consumption in emerging economies. The Organization for Economic Cooperation and Development (OECD) countries will account for 53 percent of world demand in 2010, according to the IEA.

In its January 15 monthly Oil Market Report, the IEA forecast OECD demand would average 45.48 million barrels per day (bpd) in 2010, unchanged from 2009. World demand is forecast at 86.33 million bpd, up from 84.89 million in 2009.

Birol said the economic crisis had played a role in curbing OECD demand but the main reasons were more efficient cars and the increasing use of electricity and gas instead of oil in areas outside transport.

"It did play a role. The recession had a one-off effect," said Birol, who spoke to Reuters from the sidelines of the Davos conference of business leaders. "But the main factors are structural."

CHINA OFFSETS DECLINE

BP Plc Chief Executive Tony Hayward, also in Davos, said on Thursday demand for gasoline would not return to the rate of three years ago in established markets.

"None of us will sell more gasoline than we sold in 2007," he said, referring to developed markets. "That's, however, being offset by very strong ... markets of the East and particularly China."

In China, 13 million cars were sold last year, he said.

Interest in peak demand has grown following the surge in oil prices to a record high near $150 a barrel in 2008, a decline in world demand because of the economic crisis and efforts to combat climate change.

Reuters reported a year ago, citing analysts including the former chief economist at BP Plc, that oil demand may never return to growth in the United States, Europe and parts of Asia.

While non-OECD demand is expected to keep world oil use on a growing trend, some believe global consumption could reach a high point in the next decades as a result of policies to tackle climate change.

Saudi Arabia, which as the world's largest oil exporter has a lot to lose from a decline in oil demand, is worried about future consumption, its lead climate negotiator told Reuters earlier this month.

Muhammed al-Sabban, head of the Saudi delegation to UN talks on climate change, said the possibility that oil demand might peak this decade was a "serious problem" for Saudi Arabia.

Birol did not give any timeframe for any peak global oil demand, but said a move toward more efficient vehicles in developing markets could dampen the expected emerging country growth.

"If there is a transformation in the transport sector, it may also slow down the growth substantially."

"Advanced-car technologies ... are very strong pushed in many countries."

(Editing by Christopher Johnson)


[Green Business]
Poornima Gupta
SAN FRANCISCO
Thu Jan 28, 2010 2:45pm EST
Venture capitalist bullish on green startups

SAN FRANCISCO (Reuters) - The U.S. recession and slow global economy have created big opportunities for investments in promising green startups, an area that at one time had lofty valuations, Silicon Valley venture capitalist Steve Westly said.

Westly, a former California state controller and eBay Inc executive, said he is seeing some "great quality of deals."

"Two years ago when we were investing, there was huge competition and people had bid the market higher," Westly said in an interview this week. "Because of the recession, we think entrepreneurs' expectations have moved back to reality."

He said: "It's a terrible time to raise money, but we think this is a great buying opportunity."

Westly, founder of Menlo Park, California-based Westly Group, is currently in the process of assessing business plans of green startups.

Westly Group closed its second fund, exceeding $127 million, in December and has already invested about half of that money in diverse green technology companies, including light emitting diode (LED) fixtures startup Lunera, solar cell maker Solexel and smart grid company Eka Systems.

The fund's investors include pension funds, strategic investors and high net worth families, with the principles committing over 20 percent of the capital of the fund.

Westly is especially excited about the potential of California startup Lunera, which makes ultra-thin LED lighting units for offices.

The commercial market for LED lights is huge, he said, adding that Lunera is growing rapidly.

Looking forward, Westly said he expects many more investors to come into the green space in 2010.

Green technology "is not a bubble and is not going away," he said. "It has the potential to become one of the largest sectors."

"The only thing that held the industry back is a lack of IPOs," he added.

After a first round of initial public offerings, mainly by solar companies, in 2006 and 2007, the market for green IPOs has been slow.

The financial market turmoil following the collapse of Lehman Bros. in the latter half of 2008 virtually shut down the IPO market.

The appetite for IPOs has picked up since mid-September this year and the sector saw the successful debut of lithium- ion battery maker A123 Systems Inc.

Already a few green technology companies have filed registration statements for IPOs, including solar firm Solyndra Inc and biofuel firm Codexis Inc.

Westly says some widely expected high-profile green IPOs, such as Silver Spring Networks, would ignite the market this year.

He also expects a lot of activity in the electric and plug-in hybrid vehicle sector, including lithium-ion batteries.

And: "The area I am most intrigued with is green building materials," he said. "It's not very sexy and is a blue-collar space that most people overlook."

Silicon Valley is finding high-tech ways to make age-old materials, such as energy-efficient ways to make concrete, windows that insulate better than walls, and wood substitutes.

Although the field is new, the green building materials sector is gaining attention and growing fast.

Some surveys and studies estimate that the green building materials market is expected to reach as high as $500 billion in the next decade.

"The dollar amounts are huge and the opportunity is great," Westly said.

(Reporting by Poornima Gupta, editing by Gerald E. McCormick)