French President Calls For Nuclear Energy Carbon Credits

Generally speaking, nuclear energy has been the red headed stepchild of climate change cap-and-trade.  Ignored completely by the Kyoto Protocol and related schemes, the sector has never been eligible for creating valuable carbon credits and therefore misses the multi-billion dollar carbon finance boat.  French President Nicolas Sarkozy currently wants to change this and expand the carbon credit market to include nuclear energy also.

President Sarkozy would like to improve the financing options for nuclear energy and make it more widespread.  Climate change mitigation proponents and cap-and-trade advocates have traditionally been divided over the subject of nuclear energy, due to the long half-lives of radioactive fuel materials and the dilemma of how to dispose of them safely over time.

Nuclear power supporters, like President Sarkozy, argue that these are outdated arguments. There is little risk of a future Chernobyl or Three Mile Island recurrence, they say, using modern technology; it is time for a changed perception towards nuclear power.

I am not qualified to speak on the merits of either side, surely.  But I can say that if nuclear power is allowed to participate in the future carbon market, it will have a definite impact on prices and project market characteristics.  So with that in mind, here is a recent public article from the Wall Street Journal on President Sarkozy's recent statements and views on this important subject.  You can find the original at http://online.wsj.com.

Cheers -- Jon

Wall Street Journal Online

8 March 2010

Sarkozy Urges Easier Financing for Nuclear Energy

By Adam Mitchell & Geraldine Amiel

PARIS—French President Nicolas Sarkozy on Monday urged the World Bank and other international institutions to help ease financing for civil nuclear-power projects around the world.

In a speech at an international conference in Paris on the theme of access to nuclear power, Mr. Sarkozy said he proposes to "eliminate the ostracism of nuclear energy in international financing."

"I do not understand why international financial institutions and development banks do not finance civil nuclear energy projects," Mr. Sarkozy said. "The current situation means that countries are condemned to rely on more costly energy that causes greater pollution."

The French president said he would propose to change that situation. "The World Bank, the EBRD [European Bank for Reconstruction and Development] and the other development banks must make a wholehearted commitment to finance such projects," he said. Mr. Sarkozy also called for nuclear power to be included in carbon-credits systems.

"Outdated ideology means that a country developing civil nuclear energy cannot obtain carbon credits," he said. "And yet, these credits are used to finance all other forms of decarbonized energy."

Mr. Sarkozy said carbon dioxide credits should "be used to finance all forms of decarbonized energy under the new global architecture after 2013."

Nuclear power is the main source of electricity in France and the country has a fleet of 58 reactors, which it is in the process of expanding. Mr. Sarkozy wants France to export the country's nuclear technology as widely as possible and has long spoken in favor of boosting access to civil nuclear power around the world.

Separately, Mr. Sarkozy said he wants to boost nuclear expertise through expanding training opportunities. "I have decided to step up our efforts by creating an International Nuclear Energy Institute that will include an International Nuclear Energy School," Mr. Sarkozy said.

The institute will be an "integral part," Mr. Sarkozy said, of an international network of specialized centers of excellence that is now taking shape, that will see the first center being set up in Jordan.

Ukraine Dismisses Tymoshenko Government, Sovereign Debt Risk Falls & Stock Markets Rise In Response

Yesterday was another roller coaster day in Ukrainian politics, and it was a difficult day for Ukraine's former Prime Minister Yulia Tymoshenko. Despite her best political maneuvering efforts, she lost a no confidence vote in Parliament.  As a result she has been dismissed from her post and is reported to be heading off on an indefinite vacation.

This is not the death knell for Ms. Tymoshenko's political future by any extent, she will remain a powerful figure in local politics... for one thing, national campaigning is a highly expensive competitive sport in Ukraine; there is only a small set of rich players who can afford the game. One only needs to look at the current President Victor Yanukovych's 5 year career arc to see how a resurrection theoretically could be possible.

A charismatic, photogenic and highly recognizable international personality, most of the former Prime Minister's popularity problems at home stem from serious perceived shortcomings in her economic policies and business sector leadership. Case in point: after the announcement of her dismissal, almost all Ukrainian stocks responded with positive gains on the day (http://ux.com.ua/en), while international economists and analysts widely predicted positive outlooks on her country's debt and default risk profiles.

If Ms. Tymoshenko plans to try for a Yanukovych-style comeback in future years, she could do well to listen to her economic and business critics, and learn from this experience to build a more functional business platform into her political agenda. Charismatic speeches and being a a popular personality are great assets for a politician, and they can make someone a media darling overseas, but among the home town voters the economy needs to work too. One cannot ignore this core fact and focus primarily on witty soundbites and biting criticisms of one's opponents, looking the part and talking rhetoric -- a country of Ukraine's size and importance requires effective top-down leadership and a working economy.

If President Yanukovych and the coalition in power achieve large economic improvements during her absence, Ms. Tymoshenko may face an uphill battle back into power. She will need to convince future voters and financial contributors that the next version of "Yulia" is a better business prospect... not a step backwards to her crisis enhancing populism of 2007-2009.

The Wall Street Journal had the following to say about Ms. Tymoshenko's dismissal, in an article entitled "Ukraine Debt Risk Falls As Tymoshenko Loses Vote" published shortly after the no confidence vote occured (below).  Best regards -- Jon


Ukraine Debt Risk Falls As Tymoshenko Loses Vote
MARCH 3, 2010, 11:41 A.M. ET

By William Mauldin 
   Of DOW JONES NEWSWIRES 

MOSCOW (Dow Jones)--Risks to Ukrainian bondholders fell Wednesday as Prime Minister Yulia Tymoshenko's government lost a vote of confidence in parliament, paving the way for President Viktor Yanukovych to assemble a coalition to repair the country's finances.

The cost of insuring Ukrainian sovereign debt against default for five years fell to the lowest level since October 2008. Credit-default swaps with five-year protection fell 55 basis points to 834 basis points, showing that "investors think Ukraine is much less risky now," said Tatyana Chub, a trader at BG Capital in Kiev.

The hryvnia strengthened 0.6% against the U.S. dollar, and the yield on Ukraine's bond maturing in 2016 fell to 8.95%, from 9.005% Tuesday, Chub said.

Following the no-confidence vote and the collapse of the ruling coalition Tuesday, Yanukovych's allies in parliament can now begin the process of creating a new government with the goal of renewing a $16.4 billion lending program from the International Monetary Fund, which would help repay $6 billion in debt due this year.

"The collapse of Ukraine's government earlier today may paradoxically be a positive development, but a lot of progress still needs to be made before access to IMF funding is unfrozen," Capital Economics said. "While it is possible that the government can scrape through this year without external financing, Ukraine will remain particularly vulnerable to swings in global investor risk appetite for some time to come," it added.

Ukraine needs political stability to help revive the economy after a 15% drop in gross domestic product last year.

Public Statement of Victor Yanukovych... President Elect of Ukraine

Greetings to all -- on February 14, the Central Election Committee of Ukraine officially recognized Victor Yanukovych as the winner of the country's February 7 presidential elections.  Here is Mr. Yanukovych's first official international statement to the West.  It is apparent that the new President understands and appreciates initial Western misgivings about the outcome of the recent elections... and what it could mean for Western interactions with Ukraine.  In the statement below he seeks to address these concerns and to lay a platform for future Western investor and country engagement.

UKRAINE WILL BE A BRIDGE BETWEEN EAST AND WEST

We are a nation with a European identity, but we have historic cultural and economic ties to Russia as well. We can benefit from both.

Opinion Europe: By Victor Yanukovych

The Wall Street Journal, NY, NY, Wed, Feb 17, 2010 

Over the past month, Ukraine has demonstrated twice that it cherishes the values of democracy and the belief that it is important for people to vote. Ukraine's presidential election was validated by all of the major international observer groups as free, fair and transparent, which attested to the Ukrainian people's resolve for a democratic election. The people of Ukraine desired change and their voices were heard. Now we have the great responsibility to help our fellow countrymen, who have cast votes for me hoping for a better life.

This election was defined by a financial and economic crisis that has devastated our country. Before the global economic crisis, Ukraine was one of Europe's top emerging markets, and economic prosperity did not seem beyond our reach in the near term. Now all that has changed, and the people demanded change in the way our Government works in Ukraine.

We must still put an end to the political turmoil that has crippled Ukraine and held our country hostage for so long. I will work ardently to do this as president. The only way that this can be accomplished is for the top political forces and their leaders, immediately after the presidential election results have been declared and certified, to avoid confrontation and unite for the sake of saving our country. We are a nation capable of great things but we will accomplish none of them if we continue to bicker among ourselves and ignore the enormous challenges that we must confront.

Let me say here, a Yanukovych presidency is committed to the integration of European values in Ukraine. Ukraine should make use of its geopolitical advantages and become a bridge between Russia and the West. Developing a good relationship with the West and bridging the gap to Russia will help Ukraine. We should not be forced to make the false choice between the benefits of the East and those of the West. As president I will endeavor to build a bridge between both, not a one-way street in either direction. We are a nation with a European identity, but we have historic cultural and economic ties to Russia as well. The re-establishment of relations with the Russian Federation is consistent with our European ambitions. We will rebuild relations with Moscow as a strategic economic partner. There is no reason that good relations with all of our neighbors cannot be achieved.

If we hope to become a bridge between two important spheres we cannot merely talk and make promises; we must deliver concrete policies and achieve real progress. If we hope to join the European Union we must secure political stability and establish ourselves as an economically viable nation. We must be pragmatic and focused to achieve EU membership. We must create transparent policies that allow our economy to thrive and demonstrate that Ukraine will add value to the EU as a new member state.

I am committed to conducting a policy that would strengthen our links with respected international financial institutions, and increase our standing in the world economic community. My election program, "Ukraine for the People," is a deep and comprehensive plan that clearly specifies how to achieve social and economic progress. It is not an easy task. We will be confronted with the same conflicts as Europe and Washington have faced—how to stimulate our economy to create jobs while not decreasing the social protections needed by our citizens. We must defeat corruption, which has become rampant over the last several years and has damaged our ability to attract foreign investment.

If we hope to join the EU and raise the standard of living of Ukrainians to that of other European nations, we must restore our economy from within. There are three fundamental objectives the Ukrainian economy must achieve in order to thrive: First, we must create jobs; second, we must stabilize prices so people can afford the necessities that they need to live; and third, we must ensure our citizens receive adequate wages and pensions. Giving our citizens a basic economic foundation is a critical first step to restoring the broken bond between the people and the government of Ukraine.

And so that is my agenda—to restore economic vitality and calm the political turbulence that has plagued our nation; to enable Ukraine to take advantage of its natural positioning as a thriving bridge between Russia and the West; and finally, to prepare a free and open Ukraine, economically and politically, to join the European Union when the time comes.

Ukraine is a beautiful country with hard-working and virtuous people who ask only for a chance at a better life. I know that if we can come together, we will achieve great things. As president, I plan to give Ukrainians the nation they deserve—a Ukraine for the people.

(Best regards from Kiev -- Jon)