Eskom Gets $365 Million African Development Bank Plants Loan

(Updates with minister’s comments from fourth paragraph.)

June 1 (Bloomberg) -- Eskom Holdings Ltd., South Africa’s state power utility, received a $365 million loan from the African Development Bank to help fund wind and solar plants, Public Enterprises Minister Malusi Gigaba said.

The plants will each produce 100 megawatts of power and help South Africa meet its commitment to providing more clean energy, he told lawmakers in Cape Town today.

Eskom currently has 40,000 megawatts of capacity, more than 80 percent of which comes from coal-fired plants. The utility, which supplies about 95 percent of South Africa’s electricity, was given a $3.75 billion World Bank loan in April last year to fund expansion on condition it introduces renewable energy projects.

“Eskom has incorporated renewable energy projects into its build program,” for which is seeking to tap additional sources of funding, Gigaba said. “Eskom has submitted a $250 million loan application to the World Bank for funding from the Clean Technology Fund, the final outcome of which is expected later this year.”

Johannesburg-based Eskom supplies power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP Billiton Ltd.’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, will spend about 76 billion rand ($11.2 billion) in the year through March 2012 on an expansion plan aimed at preventing a repetition of power blackouts that hit mines, factories and cities in 2008.

Eskom won’t be able to guarantee security of supply until its new Medupi plant begins producing power in late 2012, and will have to rely on private companies to meet any shortfall, according to Gigaba.

Since April last year, Eskom has signed contracts with five independent power producers to supply it with about 373 megawatts of power, and it has also agreed to buy 200 megawatts of electricity from municipalities for this winter, he said.

Why Germany said no to nuclear power

Angela Merkel's decision to phase out nuclear power stations is a cynical exercise in realpolitik, says Daniel Johnson.

'Politics is the art of the possible," said Bismarck, the first German Chancellor. His present-day successor, Angela Merkel, knows perfectly well that her decision to phase out all nuclear power stations by 2022 makes no scientific or economic sense. In fact, she said so herself as recently as two months ago, when she promised that Germany would not let itself be rushed into abandoning nuclear power by the Fukushima accident in Japan. "I am against shutting down our nuclear power plants only to have atomic power imported into Germany from other countries," she told the Bundestag in March. "That won't happen on my watch."

Well, as so often happens to politicians, she has been forced to eat her words by political necessity. An irrational fear of nuclear energy runs deep in Germany, and electoral defeats for Chancellor Merkel's conservative coalition at the hands of the Greens have convinced her that it is no longer politically possible to hold the line. As Bismarck might also have said: saying no to nuclear technology may be unreal, but in Germany it is realpolitik.

The nuclear debate in Germany has always been about much more than the relative merits of different forms of power generation. The enduring influence of romanticism, the love of forests and the worship of nature all contribute to the highly charged atmosphere in which the issue is discussed. The Nazis knew how to tap into this nature mysticism, yet they also secretly pursued nuclear weapons – despite publicly dismissing the "Jewish" physics on which the technology was based.

Unlike Japan, Germany surrendered before atom bombs could be used against its cities, but during the Cold War the nation was divided by the Berlin Wall and Germans knew that their country was a potential nuclear battleground. American, British and French forces on German soil were equipped with nuclear weapons to deter a Warsaw Pact invasion. While Konrad Adenauer, West Germany's postwar leader, was desperate to join this nuclear club, his Nato allies only permitted Germany to possess nuclear power, on which the resurgent German economy rapidly became dependent for cheap energy.

At first, nuclear power was seen as peaceful, in contrast to nuclear weapons. But as anti-Americanism emerged on the German Left as a by-product of the 1968 student rebellions, so too did resistance to nuclear power as a symbol of capitalism, which was now equated with militarism.

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In the mid-1970s, so-called citizens' initiatives began to organise protests at nuclear plants. Their symbol, a laughing sun with the sloganAtomkraft? Nein Danke ("Nuclear power? No thanks!"), appeared on stickers and T-shirts everywhere. Anti-nuclear protest was suddenly cool.

Hence by the late 1970s, German public opinion was turning against nuclear power. Belatedly, the far-Left leaders of the student movement capitalised on this popular cause to create the Greens, the world's first major environmentalist political party. The terrorism of the Baader Meinhof gang had turned out to be a dead end, but the politics of anti-nuclear protest had a lasting appeal to middle-class Germans. In the propaganda of the Greens, Nato Cruise and Pershing missiles stationed in Germany were indistinguishable from the plants that produced cheap electricity.

Then came Chernobyl. The meltdown of an antiquated Soviet reactor in 1986 caused such hysteria in Germany that the nuclear industry has never recovered, despite the fact that fears of radioactive clouds proved greatly exaggerated. Green politics gained new momentum: "Red-Green" coalitions of Social Democrats and Greens began to be formed in the German states and eventually, in 1998, Greens took office at federal level, too.

By this time climate change had taken over as the fashionable new cause for environmentalists, bringing with it the problem of how, without fossil fuels or nuclear power, energy supplies could be maintained. Despite its promise to close down all nuclear plants, the coalition of Social Democrats and Greens had no alternative policy, because "renewables" simply could not provide sufficient cheap, reliable energy. After Merkel took over in 2005 as leader of a coalition with the Social Democrats, she quietly reversed plans to phase out nuclear power. Even today, domestic nuclear plants supply about a quarter of all electricity in Germany.

Now, however, she has taken an irreversible decision to distance her Christian Democrats from a political association that is far more toxic than any nuclear fallout. In doing so, she has succumbed yet again to the hypocrisy that surrounds this issue in Germany.

Take Iran. For decades, German industry has assisted Iran's "peaceful" pursuit of nuclear power, even though it has been obvious that the Islamic Republic's aim was to develop nuclear weapons. The computers that ran the Iranian nuclear facilities until they were sabotaged by the Stuxnet virus were supplied by Siemens. At international conferences, Germany adopts a high-minded stance on nuclear proliferation as well as nuclear power, but in practice German exports take priority over the security of Israel and other neighbours of Iran.

Or take France. In public, President Sarkozy and Chancellor Merkel are diametrically opposed on the nuclear power issue. But in reality, her decision to get out of the nuclear power business means that France will be supplying a growing proportion of German energy needs over coming decades. Most Germans are either unaware of the fact that much of their energy is imported from French, Swiss or Polish nuclear plants, or they just don't care, as long as the reactors are sited far from their own back yards. Germany has become a nation of nuclear nimbys.

So should it matter to us if Germany chooses to impose unnecessary costs on its own industrial and domestic energy consumption? Germany is the largest economy in Europe and the European Union has a habit of imposing German prejudices on the rest of its member states. Enemies of nuclear energy will be emboldened to pressurise other governments, including our own, to follow the German lead.

Ironically, not all Greens share the conclusion the German government drew from Fukushima. Our own George Monbiot, a Green fundamentalist if ever there was one, has been persuaded to drop his opposition to nuclear power by the facts of the case. This is his logic: if an ageing nuclear plant, incompetently managed and with obsolete safeguards, is hit by one of the worst earthquakes in recent history, yet hardly anybody is killed, then we must conclude that nuclear power has a lot to be said for it.

Logic, however, had little to do with yesterday's announcement: realpolitik dictated the decision. The grandchildren of the Nazis, born long after the war, have made the fatal mistake of identifying evil with a particular technology, rather than with the human beings who make use of it.

Germany is one of the most admirable countries in the world, but Germans, like other nationalities, are not immune to irrational attitudes. Decent Germans have reason to worry about the fact that, according to a recent poll, nearly half of their compatriots express anti-Semitic opinions, such as that Israel is conducting a war of extermination against Palestinians, or that "Jews try to take advantage of having been victims during the Nazi era".

But Germans have no reason to fear nuclear power. Mrs Merkel's appeasement of nuclear hysteria is disturbing far beyond Germany's borders because it represents a capitulation to irrationalism by the leader of a nation that once led the world in science and technology. The land of Leibniz and Humboldt, of Goethe and Gauss, is now indulging the fantasies of cynical scaremongers.

Daniel Johnson is Editor of 'Standpoint'

Carbon capture schemes could create 5,000 Scottish jobs

18 May 2011 Last updated at 02:55

More than 5,000 Scottish jobs could be created if three proposed carbon capture and storage (CCS) schemes go ahead, according to a new study.

Scottish Enterprise has looked at the potential economic impact of CCS projects at Longannet, Peterhead and Hunterston.

The research also suggests CCS developments could boost Scotland's economy by more than£3bn.

The findings are being presented at an energy conference in Aberdeen.

CCS is a process involving the capture of CO2 (carbon dioxide) from power plants and other industrial sources for safe storage in sites such as depleted oil and gas fields.

The proposed CCS facilities at Longannet in Fife, Peterhead in Aberdeenshire and Hunterston in Ayrshire, if fully developed, would test and demonstrate the technical and commercial aspects of CCS technology.

The Scottish Enterprise study found that up to 4,600 jobs could be created during the construction phase of the projects to 2020, with a further 454 operational jobs supported when the sites were up and running.

Another key finding of the research, published at the All Energy conference, was that the CCS projects could boost the Scottish economy by £2.75bn, generating an additional £535m per year during their operational lifetime.

Hunterston would benefit most from jobs during construction, as the project is linked to a controversial plan to build a new coal-burning power station.

However, it would be worth less than half of the £270m annual economic value of Longannet.

'Immediate benefits'

Adrian Gillespie, from Scottish Enterprise, said: "CCS is acknowledged as having an important role to play in supporting Scotland's ambitious emission reduction targets, however, to become commercially viable, demonstration projects such as the three proposed Scottish projects are critical.

"The far-reaching impacts revealed in this study underline the potential of carbon capture and storage, not only in long term economic and environmental terms but also in the shorter term, delivering significant immediate benefits for the Scottish economy."

He added: "We want to see a number of CCS demonstration projects developed in Scotland and are working with our partners in industry, in the UK Government and in Europe to help make that happen."

Scotland is recognised as having a competitive advantage in CCS and the potential to become a global leader in the field.

It has been estimated, in separate research, that CCS could support up to 13,000 new jobs by 2025, including exporting Scottish-based skills and technology across the world.

The three Scottish based demonstration projects are still all in the running to secure EU funding from the New Entrants' Reserve programme, which has been developed to support low carbon demonstration projects across Europe.

LNG market growth to double value of Australia's resources sector to $70bn in 3 years

Crispin Murray, head of equities with BT Investment Management, said the nation's $35 billion investment will skyrocket to $70 billion as liquefied natural gas exports ramp up to China and to other emerging markets. He described it as "a unique period"."It's a huge uplift," Mr Murray said following an investor breakfast in Brisbane.

"You want to strike while the opportunity is there. The world needs new sources of energy."

Queensland would be a "big beneficiary" of the boom as work continued to remove export bottlenecks, such as the port expansion in Gladstone.

The flow-on effects will cascade through numerous industries contracting for parts of the work, including engineering firms, service and maintenance companies and logistics operators, he said.

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For investors, key opportunities will be found in companies surfing the wave propelling China, India, Brazil and other emerging economies.

New energies such as LNG will also offer huge upside potential.

"We're comfortable that China can keep growing," Mr Murray said.

He pointed to China's social housing program which has envisaged construction of a staggering 35 million new apartments over the next five years. Even if that target is unattainable, he said the nation's insatiable hunger for coking coal and iron ore will remain unchanged.

India also offered investors vast possibilities and was "an important source of growth", Mr Murray said. He likened the country to where China was 10 years ago, although not as resource intensive and held back by infrastructure limitations.

While India benefited from being the world's largest democracy, he said protracted tendering made it harder to carry out projects than in a one-party state such as China.

Much like the "two speed economy" at play in Australia, Mr Murray said there was a similar dynamic in the world economy pitting emerging nations against the more developed old guard.

Events such as Europe's debt woes, the US housing market slump and Japan's devastation from earthquakes and tsunami are having a greater impact on equities because of globalisation, he said.

These calamities have created uncertainty and "extra volatility", deterring more people from investing. But at the same time, they have created opportunities since some equities are undervalued, Mr Murray said.

Japan LNG imports surge, supporting global prices

LONDON -(MarketWatch)- Japan's imports of liquefied natural gas surged 23% in April compared with the same month in 2010, after the March earthquake and tsunami shut down several of the country's nuclear reactors, according to data published late Monday by ship tracking service Waterborne.

Analysts said this elevated demand will continue this year and next, absorbing all of the surplus LNG supply that consumers had hoped would keep down prices in the other big LNG market--Europe.

"While a year ago some market commentators talked of the global glut of LNG, we believe the focus for investors should be on the impending global LNG shortage," Bernstein Research said in a note to clients.

The surge in Japanese LNG demand was "driven primarily by the shutdown of a significant amount of Japan's nuclear generating capacity," the report from Waterborne said. To replace the lost nuclear energy, Japan had little choice but to turn to oil- or natural gas-burning power plants fuelled by seaborne imports.

Japan imported 6.65 million metric tons of LNG in April, an increase of 1.247 million tons on April 2010, Waterborne said. Most of the extra supply came from Russia and Qatar, Waterborne said in a report.

"Based on recent announcements from the Japanese government to shut down a number of nuclear plants that could be at risk for a major earthquake or tsunami, Waterborne projects that LNG imports to Japan are likely to continue to rise in 2011," the report said.

This means Japan is likely to absorb all of the world's surplus LNG supply this year, analysts at Barclays Capital said in a report. In 2012, LNG demand growth may exceed that of supply, leading to even tighter markets, it said.

North America is unlikely to be affected by this, because thanks to the boom in shale gas production it doesn't need to import LNG, Barclays said. However, Europe will probably see LNG imports drop later this year, it said.

This will be a dramatic reversal because Europe had been the chief beneficiary of abundant LNG supplies for the last couple of years, notably from the world's largest LNG producer, Qatar.

Now Qatar is promising extra LNG supplies to Japan, drawing supply away from Europe, said Robert Johnston, director of Energy and Natural Resources at Eurasia Group. "This diversion could tighten up U.K. markets this summer as the incremental Qatari cargoes heading to Japan probably would have otherwise ended up in the U.K. market," he said.

The U.K.'s largest gas supplier, Centrica PLC (CNA.LN), has already warned that prices are rising, "in the wake of the natural disaster and subsequent nuclear issues in Japan and unrest in North Africa and the Middle East."

"In the U.K., the forward wholesale prices of gas and power for delivery in winter 2011-2012 are currently around 25% higher than prices last winter," the company said earlier this month.

Higher U.K. prices will also have a knock-on effect in Europe. "The U.K.'s LNG import terminals have acted as a gateway for gas to reach Continental markets," Barclays said.

Barclays expects the U.K. benchmark gas price, the National Balance Point, to rise 38% in 2011 compared with 2010, and increase by another 17% in 2012. The NBP is closely correlated to the main European gas benchmarks in the Netherlands and Belgium. 

Japan Energy impact

Winds of Change

Will Nuke Phase-Out Make Offshore Farms Attractive?

By Stefan Schultz

REUTERS

A station and wind energy plants at the offshore wind energy park Alpha Ventus in the North Sea.

Sudden fears about nuclear power are causing Germany's government to hasten efforts toward green energy. An unpublished plan calls for a major boost in support for offshore wind farms, but the plan's financing arrangement would mean that any profits enjoyed by companies and banks would come at consumers' expense.

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In the wake of the ongoing nuclear crisis in Japan, Germany's federal government is working on a new plan for increasing energy efficiency and for the use of renewable energies, with a particular focus on offshore wind farms.

According to information obtained by SPIEGEL ONLINE, under the plan massive turbines will be erected far away from the coastlines, where the wind blows more consistently than it does on land, and where the turbines' enormous rotor blades won't bother the inhabitants. The plan aims to decrease the country's dependence on energy derived from coal and nuclear power plants. But the wind-energy industry has recently gone through some hard times. In 2008, a record number of wind turbines, with a capacity of 11 gigawatts, were installed in Europe. But, after that, a dramatic decline in demand ensued. Investors lost all hope that the industry would see further growth. Although the German Environment Ministry and the wind sector had proclaimed it the energy market of the future, the offshore sector made headlines for technical problems and financial scandals.
Now, suddenly, a gold-rush-like feverishness to support wind energy appears to be taking shape. The accident at Japan's Fukushima I nuclear power plant has triggered an aggressive debate in Germany about phasing-out nuclear energy. Politicians and lobbyists are scrambling to come up with the best plan for rapidly expanding the use of renewable energies.
The federal government hopes to increase the amount of energy coming from renewable sources, as a percentage of all energy generated, from 17 percent to 40 percent, and it foresees most of this increase coming from huge offshore wind farms. By the end of the current decade, government officials hope to have wind turbines on the high seas generating 10,000 megawatts per year -- enough to cover about one-eighth of peak demand in Germany. "Offshore (wind energy) is the technology that runs up against the least political resistance," says Thomas Goppel, a former state environment minister for Bavaria.
A Financial Injection for Wind Energy
Still, the government has to make up for some major failures. In recent years, very little progress has been made with wind farms at sea. "The expansion of offshore wind energy is massively behind schedule," says Hermann Albers, president of the German Wind Energy Association (BWE).
But now those projects that have already been planned are going to be fast-tracked. According to a draft paper outlining the main points of the project made available to SPIEGEL ONLINE, the government is planning the following measures to accomplish this goal:

• a financing package, including venture capital, from Germany's KfW state development bank,
• optimized planning of the power lines connecting the deep-sea wind farms with the mainland, and
• shorter, but therefore higher, feed-in tariffs for the energy fed into the power grid from the wind farms.

None of these measures are new. Germany's ruling coalition only plans to back the list of measures it included in the energy plan it proposed in September 2010. At that time, one element in the plan involved promoting the construction of 10 offshore wind farms with €5 billion ($7.1 billion) in low-interest loans made available from the KfW. Some thought was also given to a unique program for financing special ships that would be crucial for erecting wind farms on the open sea.
There was also already discussion of shorter, and therefore higher, feed-in tariffs for offshore wind energy. According to information obtained by SPIEGEL ONLINE, the government plans to raise the feed-in tariff paid to the operators of offshore wind farms from €0.15 to €0.18 per kilowatt hour (kWh). In return for this higher rate, the subsidy's duration will be pared down from 14 months to nine months. The energy industry, at least, is adamant about this last point.
This would entail the second increase in subsidies for offshore wind energy within just a few years' time. For their electricity, wind farm operators would receive more than three times the going rate for energy on spot markets.
Risky Investments
Those who argue for these increased subsidies believe it will encourage banks to help finance capital-intensive offshore projects. The management consulting firm KPMG estimates that profits for the operators of offshore wind farms would rise from about 7 percent today to up to 12 percent.
But although this would be a boon for investors, it would only mean additional costs for consumers over the long term. The electricity lobby argues that the money companies would get upfront from the higher subsidy rate would leave the total cost to the government and taxpayers unchanged due to its shorter duration. But the money for these wind-energy subsidies comes from surcharges on the utility bills of German households, known as a Renewable Energy Act (EEG) assessment. Since that money would be taken out of consumer pockets and put into company pockets earlier, the latter would reap the benefits of having that capital on hand.
Likewise, the guarantee of higher profits does not reduce the massive risks investors assume in setting up an offshore wind farm. "Building a wind farm often gobbles up more than a billion euros," Albers says. For investors, insecure terms are often the rule. The technology has yet to be proven. In recent years, major electric utility companies, such as E.on, RWE and Vattenfall, and smaller builders of wind-turbine facilities have been forced to suffer a number of setbacks.
One of the major problems for Germany companies trying to set up offshore wind farms is that they have to be located so far from the coastline. In order to protect fragile wetland ecosystems and keep the tourism industry from mounting any protests, the federal government requires a buffer zone of at least 30 kilometers (19 miles) from the shoreline, which is considerably larger than those required by other EU member states. In these regions, the seafloor can lie up to 40 meters (131 feet) below the surface.
Connection Problems
Wind-farm builders are currently erecting towers on the swelling sea that are 150 meters tall and weigh several thousand tons. To do so, they first had to develop ships that could position highly sensitive rotors and nacelles weighing tons with extreme precision while withstanding waves several meters high themselves. Storms and cold weather have often caused the work to be interrupted. Projects such as the Bard I wind farm in the North Sea have seen their estimated finish date pushed back several times.
What's more, the manufacturers of offshore wind farms often have a hard time getting a guarantee that their facility will be connected to the power grid soon after it has been completed. In fact, they are often stuck in a Catch-22 situation: Although operators of the power grid are legally obligated to connect the wind farms, they often won't guarantee a connection until the wind-farm projects have secured their financing. And the banks often want to see a connection guarantee before they agree to extend any financing.
"The government has made an effort to come to grips with this problem," Albers says. "But, so far, with only modest success." For example, although Baltic 1, Germany's first wind farm in the Baltic Sea, was completed in the fall of 2010, it wasn't able to secure a connection to the power grid until January 2011.
Boon for Some, Bust for Others
In the short term, at least, low-interest loans from the KfW and higher subsidies are hardly going to solve these kinds of problems. For this reason, Albers is skeptical about the government's new announcements. "The government is trying to sell the expansion of offshore wind energy as a miracle solution for its nuclear phase-out," he says. "But it is still going to be a few years before the technology can deliver significant amounts of energy. If you want to have a rapid expansion of green energy, it would be more efficient to have new land-based wind farms. There are still several regions that would be suitable for onshore projects, particularly in southern Germany."

Even so, the banks that have often balked at loaning money for offshore wind farms can look forward to an investment boom. Small and medium-sized companies and public utility companies, on the other hand, might be hurting for cash. Such a lack of funding caused the financing plan for Bard I, Germany's largest wind farm, to be put on ice since the summer of 2010. In 2008, consortia made up of more than 100 public utility companies guaranteed HypoVereinsbank, the project's primary lender, that they would take over the costs of the 400-megawatt giant wind farm. Since the summer of 2010, however, a financing decision on the €1.5 billion ($2.13 billion) project has been pushed back several times.
Given recent events in Japan, there are now rumors that HypoVereinsbank might void its current contracts with the public utility companies and sell the Bard project to the highest bidder, now that it suddenly might be attractive again. Boris Palmer, head of the supervisory board of one of the consortia of public utility companies, would neither confirm nor deny the rumors. Instead, he simply says: "We continue to assume that existing contracts will be honored."
Translated from the German by Josh Ward

Game Changer for Carbon Capture

The idea of carbon capture isn't new. But add the word "economical" to the phrase carbon capture and the ears of investors will no doubt perk up.

ENLARGE PHOTO

Photo: Cindy Wilson/Telegraph-Journal

Scott Walton, president of Enovex, holds material that is used in the carbon capture system for coal. Walton and his partners are finalists in the Breakthru competition and the winner will be announced next week.

Building the world's first economical carbon capture system is exactly what Scott Walton and his colleagues are attempting to do. The idea behind carbon capture and storage (the latter is also referred to as sequestration in industry parlance) is to mitigate the effects of fossil fuel emissions by capturing the carbon dioxide from fossil fuel power plants and storing it so that it never enters, and therefore never pollutes, the atmosphere.

A typical coal plant emits one million tons of carbon dioxide every year. Carbon capture technology can remove 90 per cent of the CO2 found in flue gases but the problem with the systems that exist today, Walton says, is that they force coal plants to consume an extraordinary amount of additional fuel just to capture the carbon dioxide. And then there's the issue of cost.

"So if you have a coal plant that's outputting one megawatt of energy," Walton says, "today's systems would force that plant to consume an additional 70 per cent of fuel, on top of what they're using to produce the one megawatt. If you look at it from a cost perspective, it's very intense for coal-plant owners."

In addition, existing systems cost a lot to buy and implement in the first place. Walton estimates they can cost up to 40 per cent of the value of the coal plant as a whole.

"A typical 800 MW plant is roughly $1 billion to build and assemble," he says.

"Carbon capture systems would be an incremental $400 million to buy and install. It's extremely expensive for an operator."

Walton's company, Enovex Corp., plans to change that with the world's first "hybrid membrane-adsorbent system." The system is based on the chemical absorption process, or chemical scrubbers and strippers, and the company is one of six finalists in the New Brunswick Innovation Fund's Breakthru business competition. A winner will be announced March 16.

"Ours is a mechanical-based separation system that uses two unique components: One is a membrane material and the other piece is what's called 'adsorbent' material," Walton explains. "Basically we're developing new materials that have never been built before that separate CO2 from other flat gases. It's an entirely new process and if we're able to hit the target we say we're going to hit, it'll completely change the game for carbon capture."

In the end, he says, the annual cost to coal plants using his system should be less than the taxes those plants pay on their carbon emissions.

Key to the company's success is the fact that governments all over the world are implementing carbon-capture regulations. Coal is the most abundant, albeit dirtiest, source of energy on the planet but it's also the cheapest source, Walton says.

"So there's a lot of hard-pressing variables and yet we don't have an economical carbon-capture system to implement," he says. "Over the next few years, a lot more countries will adopt these regulations and won't have an economical solution. We're hoping by the time the regulations are implemented, we will have proven this system and have an economical solution they can implement.

"There's an extraordinary opportunity to hit this market first and if you look at the target for this, between the U.S., China and India, there's close to 1,500 coal plants. Right now, China's building two to three a week, so it's not like coal is dying away."

Walton, 24, founded the company and later brought in partners Jon Wopling, vice-president of business development, and Srikanth Narayanan, chief technology officer. Narayanan, 35, has a master's in chemical engineering and has worked in plants around the world. Wopling, a 43-year-old U.K. native, has 25 years experience in business development. Walton studied business and went into this after working for Bell and deciding he wanted to be his own boss.

Once they were comfortable with their design, the team approached UNB for some additional expertise. They're now working with two scientists who've commercialized clean-energy technologies in the past.

The company put together initial capital last year, and secured a partnership from a supplier for core material used in their system. And, they've secured a Regina coal plant where they'll test their pilot prototype this year.

Their plan is to prove the system works and then license it. "That's just being realistic in terms of what our management competencies are. We're very small and these projects can be in the hundreds of millions of dollars. We want to become a company that commercializes clean-energy technologies.

"For us, the excitement would be commercializing the technologies, maintaining a small size and working with different university labs to extract technologies and take them to market."