As if European industry wasn’t in a weak position already, the German decision – triggered by the 2011 Fukushima nuclear plant disaster in Japan – to move away from nuclear power towards renewables, such as solar, wind and biomass power, is starting to put upward pressure on prices. The surcharge for renewable energy is to rise to 5.5 cents per kilowatt hour (kWh) in 2013 from 3.6 in 2012. For an average three-person household using 3,500 kWh a year, the 47 percent increase amounts to an extra €185 on the annual electricity bill.
Chancellor Angela Merkel’s government’s plans to phase out of nuclear energy by 2022 is looking increasingly reckless – and unpopular with the German public. French electricity, which is 80% derived by nuclear power, already much cheaper than what German households are paying.
German electricity prices already some of the highest in the EU
As the American space upstart SpaceX gets ready to resupply the International Space Station under a commercial agreement with NASA later on today, the established players in the international space launch market are starting to take notice of SpaceX’s low-cost strategy and what it will mean to the future satellite launching business. SpaceX’s Falcon 9 rocket will start to compete for commercial business in the coming years and will probably seek to undercut current players on price.
The current commercial space-launch leader, Arianespace with over 50% of the satellite launch market, is currently working on an upgrade to its Ariane 5 rocket which would give the vehicle a 20 percent boost in payload-carrying power and a re-ignitable upper stage. There are, however, different views of the rocket’s future from its two major owners i.e. the French and German governments. The French government is conscious of the future competition from SpaceX and other upstarts and wants to skip the current Ariane 5 upgrade altogether and concentrate on a new more cost effective version to be called Ariane 6. The German Aerospace Center wants to continue the Ariane 5 upgrade instead, which has already commenced, and potentially team up with NASA to work on the Orion deep-space crew transport spacecraft. The French and Italians are sceptical to Orion and want to work on a European low-earth orbit spacecraft instead. There could also be an option to work on the Ariane 5 upgrade and development of Ariane 6 concurrently, but that would require an increased budget.
Arianespace currently needs 120 million Euros in government support annually in order to be commercially viable. Final policies and budgets will be agreed on during a November conference of European Space Agency members.
Arianespace’s Ariane5 rocket takes off
Interesting piece by Australian military intelligence officer Dominic Skerritt at the always excellent website LowyInterpreter.org, which is run by the Lowy Institute in Sydney, Australia.
This graph shows how US-China trade is becoming less important for the Chinese economy as domestic demand and trade with other countries increases.
US-China trade decreasing as % of total Chinese foreign trade
Dominic points out that Chinese leadership is concerned about its exposure to US debt. Once the trust in the US dollar slips away, will the US still be able to run large deficits or will we see a Greece-style collapse?
As if to confirm the global economic tilt towards the Asia-Pacific region, the US news service Bloomberg reports that Australia’s economy is set to overtake Spain’s this quarter to become the 12th biggest in the world.
However, given that global resource prices – especially iron ore – are coming back down, it remains to be seen whether Australia can continue to grow at the current level of 3.7% per year.
Research & development spending as percentage of GDP is going up in Germany and might soon catch up with the US, according to this article in the Economist. Spending in Japan is going down while the UK is still lagging behind.
This link to Booz & Co annual report on corporate R&D provides some interesting reading on R&D strategic advantage.
Germany has passed China and Saudi Arabia to declare the largest trade surplus in the world, some $200 Billion in current account surplus this year. A big reason for the rise is increasing industrial exports to China, but a decrease in imports from the Asian giant. A strength in industrial products such as automobiles and heavy industry are big reasons for the successful exports, while an emphasis on producing rather than consuming seem to keep imports down.
Global trade balances – surplus countries in blue, deficit countries in red, the darker the color, the larger the imbalance
Swedish giant retailer Ikea has signed a deal to open up to 25 stores in India. The protected Indian retail market is notoriously difficult to access because of laws protecting domestic smaller retailers. The deal involves Ikea sourcing as much as 30% of its purchases locally. It’s still unclear whether the famous Swedish meatballs will be made in India for the Indian stores, or indeed whether vegetarian balls will be sold in lieu of meatballs in this nation where the majority consider themselves to be vegetarians.