Volume 8 Issue 35 - Energy Special Issue by Turk of America

INDEX PUBLISHER TurkofAmerica, Inc.

CO-FOUNDER & GENERAL MANAGER Ömer Güneﬂ – omer@turkofamerica.com CO-FOUNDER & MANAGING EDITOR Cemil Özyurt – cemil@turkofamerica.com

8 MURAT YALCINTAS: GREEN REVOLUTION AND COOPERATION POSSIBILITIES Along with the rest of the world, the energy needs of growing Turkey are increasing, as well. The monetary value of energy use is approximately $65 billion for the country. The projects

GENERAL COORDINATOR Tolga Ürkmezgil

initiated in the last few years are expected to bear their first

ART DIRECTOR Sinem Ertaﬂ

results from 2012 on.

EDITOR Patricia Russo, DEPUTY PHOTO EDITOR Necdet Köseda¤ SENIOR ASSOCIATE PHOTO EDITOR Ayhan Kay

16 WIND ENERGY IS COMING ON STRONG IN TURKEY

Among the 76 countries that generate wind energy on a

WRITER-REPORTERS Ayﬂe Önal Zambo¤lu, Ali Ç›nar, Demet Cabbar, Duygu Uçkun, Maureen Ertürk, Melda Akansel. CONTRIBUTORS Burcu Gündo¤an, Halim Özyurt

megawatts, according to World Wind Energy Association (WWEA) reports, and produces 1% of its total energy from wind.

20 WILL ECO IMPERIALISM SAVE THE WORLD?

ADVISING COMMITTEE Ali Günertem, Egemen Ba¤›ﬂ, Ekmel Anda, Ferhan Geylan, G. Lincoln McCurdy, Hakk› Akbulak, Mahmut Topal, Mehmet Çelebi, Osman (Oz) Bengür, U¤ur Terzio¤lu. MAIN OFFICE TURKOFAMERICA, Inc. 445 Park Avenue, Suite 936 New York, NY 10022 Tel: +1 (212) 836 4723 Fax: +1 (917) 322 2105 info@ turkofamerica. com www.turkofamerica.com

commercial basis, Turkey ranks 25th, with around 600

Dr. Gurcan Gullen: “It is unfortunate that the developed world is trying to dictate developing countries what kind of energy they can use due to climate change concerns. Some call this eco imperialism; sounds pretty fitting to me.”

26 HOW TO EXPAND YOUR COMPANY Created with support from NYSERDA, the 61-page Clean Tech Asset Guide is a ‘one-stop’ directory with listings of assets including university and academic research programs,

REPRESENTATIVES IN THE U.S.

specialized facilities, support organizations, and funding

CALIFORNIA (Los Angeles): Barbaros Tapan btapan@ turkofamerica. com Tel: +1 (213) 924 8027

programs.

34 WORLD ENERGY OUTLOOK

CALIFORNIA A (San Fransisco): Ayﬂe Önal Zambo¤lu – aozamboglu@ turkofamerica. com Tel: +1 (650) 938 1764 CONNECTICUT Ali Ç›nar – acinar@turkofamerica.com Tel: +1 (203) 722 4339 MASSACHUSETTS Mustafa Aykaç – maykac@turkofamerica.com Tel: +1 (857) 205 8318

According to Fatih Birol, Chief Economist of the International Energy Agency, some global strategic challenges are the security of energy supplies, the threat of environmental

damage caused by energy use, uneven access of the world’s population to modern energy, and investment in energysupply infrastructure.

NEW YORK (Rochester) Ersoy Yildiz – eyildiz@turkofamerica.com Tel: +1 (585) 414 4300

42 CLEAN TECHNOLOGY PRACTICES MAKE A DIFFERENCE BThe town of Greenburgh’s PV system will generate approximately 6,840 kWh of electricity annually. The

EUROPE: Yasin Ya¤c› – yyagci@turkofamerica.com Tel: +31 (624) 66 92 23

estimated annual output of the Farm & Granary system is 4,900 kWh.

TURKEY GENERAL CO OORDINATOR Nuri Özyurt – nozyurt@turkofamerica.com MARKETING & SALES P›nar Özçelik- turkiye@ turkofamerica. com SUBSCRIPTION & DISTRIBUTION Hüsrev Gerede Cad. Soydan Apt. 102/4 Teﬂvikiye Istanbul, Turkey Tel:+ 90 212 282 37 11

58 THE GLOBAL PHARMACEUTICAL MARKET EXCEEDS $825 BILLION

U.S. market growth in 2009 is now expected to be 4.5 - 5.5 percent, and 3 - 5 percent in 2010. Despite economic conditions significantly affecting some markets – notably Russia, Turkey, South Korea and Mexico – the seven pharmerging countries are expected in aggregate to grow by 12 - 14 percent in 2010

PRINT: ‹maj ‹ç ve D›fl Ticaret A.fi. ‹maj Center Macun Mahallesi 3. Cadde No:2 (A Girifli) ‹stanbul Yolu 6. Km. Yenimahalle - Ankara - Turkey Telefon: + 90 (312) 397 91 40 Fax: + 90 (312) 397 41 52 E-Mail: info@imajas.com.tr TURKOFAMERICA is a member of Independent Press Association. TURKOFAMERICA is a member of Turkish American Chamber of Commerce Industry. Cover Photo: Dieter Hawlan, www.istockphoto.com

62 THE FUTURE OF THE BIOMEDICAL INDUSTRIES IS IN NEW YORK STATE There are 1,473 biotechnology companies in the United States, of which 371 are publicly held. In 2008 the revenues

of the publicly traded global biotechnology industry increased by 12%, from US $80.3 billion in 2007 to US$89.7 billion.

FROM EDITOR

Turkey’s B›ggest Trump Card ›n the 21st Century By Cemil Ozyurt cemil@turkofamerica.com

Clopment or that are developing have certain

ountries that have taken steps toward deve-

characteristics that differentiate them from other countries. Japan is a country of islands with limited natural resources, and Korea a peninsula with the same lack of resources, and they have developed their strengths in technology. Italy has its fashion and design, Germany its heavy industry and engineering, Saudi Arabia its oil, Turkmenistan its natural gas, and the USA its production and consumption power. These countries stand out.

Turkey would, meanwhile, keep producing textile materials, spare parts, and steel and iron; however, in order to strike and rise up to the upper level, it would inevitably have to adjust its energy policies in the right direction.

So what does Turkey possess in order to make the necessary attempt for development in the 21st century? Turkey is a country of textiles, but this is not sufficient to give it special status in the region. As a matter of fact, countries that have been lately accepted to the EU, along with some developing countries such as Jordan, Egypt, and Pakistan, have shaken Turkey’s throne in this sector. Also, although auto-parts, iron-steel, or natural stone sectors all provide employment in great levels and are important for exports, Turkey cannot become special by relying only on these, because the technology necessary for automotive parts, and the raw materials for the steel and iron are provided from abroad. As for becoming a country of natural stones or marble, there is no need to have a special quality. Selling the stones that are readyly available in nature won’t make Turkey special. Currently, the biggest trump card Turkey has, which would also enable it to excel in the 21st century, is energy. Especially since renewable energy is now gaining more importance and countries around the world are implementing policies that would decrease oil dependency, alternative resources are being given priority. Turkey has a great potential with regards to alternative energy resources. As a matter of fact, in the energy plan for the

years 2010 through 2014, increasing the usage of natural resources is among the first things on the list. If the strategic plan can be implemented as desired, 30% of the energy Turkey produces will be coming from recyclables. In addition to the energy it would provide, Turkey is also a key country where pipelines that directly affect the world’s energy map pass through. The Blue Stream (Mavi Ak›m) project that transports natural gas from Russia to Turkey through the passageway under Black Sea; the Baku-Tblisi-Ceyhan pipline that carries the oil of Azerbajan and Kazakstan to the world; the Bosphorous and the Dardanelle Straits through which 4% of the oil used in the world get transported; the Baku-Tblisi-Erzurum pipline that is planned to be used to carry natural gas from Azerbajan, Turkmenistan and Kazakstan to the world; the NABUCCO pipeline that carries natural gas from the Caspian to Europe through Bulgaria, Romania, Macedonia, and Austria are all projects that have increased the impact Turkey has on the world’s energy policies. As EU countries have turned to NABUCCO in order to avoid Russia’s Gazprom, Turkey has served as a bridge between the two continents and become the key country in NABUCCO. There are plans to build natural gas pipelines between Turkey, Greece, and Italy, which would transport natural gas from Iran and Iraq to Europe, another project Turkey plans to bring into life in the future. All of these routes and projects put Turkey in the forefront due to its geography. If Turkey can rise as a powerful country in the world in the 21st century, energy will be the strength behind this. Turkey would, meanwhile, keep producing textile materials, spare parts, and steel and iron; however, in order to strike and rise up to the upper level, it would inevitably have to adjust its energy policies in the right direction. TurkofAmerica • 07

GREEN REVOLUTION AND COOPERATION POSSIBILITIES

ENERGY AND GREEN BUSINESS ARE TURKEY’S PROMISING SECTORS WITH A GROWTH POTENTIAL By Murat Yalç›ntaﬂ, President of the Istanbul Chamber of Commerce

08 • TurkofAmerica

Amerce, one of the most important organizations

s the President of the Istanbul Chamber of Com-

representing the Turkish business community, I feel great happiness to address you once again in this issue of the magazine TURKOFAMERICA. On these pages, I will try to cover the options to increase the possibility f cooperation between our countries. The visit President Obama paid to Turkey within his first months of taking office was a turning point in the relations between Turkey and the United States. From our point of view, the most important shift in the discourse was the words the President used in defining the relationship between the countries, words that added a new dimension to this relationship. He did not stress a single area like “strategic partnership,” which is more commonly associated with military issues. Instead, he used the expression “model partnership” which shows that the two countries now understand each other much better and will henceforth cooperate in many more areas than they did in the past. For us, first and foremost among these is cooperation in commerce and technology. By this, I do not mean activities confined to buying and selling only. What I mean is cooperation in key and niche sectors with high added-value and large scale technology and know-how transfer. I believe that cooperation on this scale is very meaningful and important, especially at the time of continuing global crisis. Keeping in mind the contraction in global output, especially in the developed economies; the dramatic situation in conventional sectors such as automotive, textiles, and finance; and the loss of jobs which is expected to reach 25 million at the end of 2010; we suggest energy and related green business as the promising sectors with a growth potential.

BY 2030 ENERGY NEEDS WILL HAVE INCREASED BY 120% According to World Bank data, unless we take a step forward in energy efficiency, by 2030, overall energy needs will have increased by 120 per cent and the primary sources of supply will remain the conventional (fossil fuel-based) sources of oil, natural gas and coal. The threat posed by the use of fossil fuels for environment and health, expressed in monetary terms, is over $5 trillion. Moreover, this forms the chain consisting of rising carbon dioxide emission values, global warming and a threat to life itself.

Along with the rest of the world, the energy needs of growing Turkey are increasing, as well. The monetary value of energy use is approximately $65 billion for the country. The projects initiated in the last few years are expected to bear their first results from 2012 on. Currently, of the total annual demand of app. 200 billion kWh, the private sector is able to meet less than 20%. Energy market experts claim that in order to meet the expected supply shortage, an additional investment in 2530 GW is necessary in the coming decade, which corresponds to an investment of $35 billion. And it is estimated that until 2020, a total investment of $130 billion has to be made in the entire energy sector, of which $105 billion would go to electricity alone. The share of the private sector here is expected to be an investment of $3-4 billion a year.

TURKEY: ENERGY CORRIDOR As you may be know, Turkey is now being characterized as an “energy corridor” thank to its geographical position and the nature of its neighboring countries. It holds a key position in transporting the oil and natural gas from the countries of the region, starting with Russia and Azerbaijan, but also including those of Central Asia, of Iran and Iraq, of Egypt, Syria, and Qatar to Europe. Pipeline projects kicked off with the Baku-Ceyhan pipeline in the 1990’s continued with the Blue Stream. Among the projects that are now either to be imminently signed or under construction are Samsun-Ceyhan, Blue Stream 2, South Stream, and the Southern European Gas Ring. Taking up NABUCCO alone, we see that it provides jobs to 5,000 people, involves TurkofAmerica • 09

GREEN REVOLUTION AND COOPERATION POSSIBILITIES

an investment of 4.5-5 billion and brings in tax revenue of 400-450 million to Turkey alone, thus proving that such projects act as a stimulus to the economy even at the stage of construction. The construction of these projects is undertaken by gigantic consortia formed by local and international partners and financed by international organizations and thus offers considerable opportunities to our American friends. While these sources of energy will be the primary sources until 2030, the star of the future will definitely be renewable energy sources. “GREEN REVOLUTION” Industry is undergoing a revolution that nobody can afford to ignore any longer. The business world labels this the “green revolution”: an economy based on energy sources that are clean, renewable, safe, economical and sustainable rather than those based on carbon is on the agenda of all countries. Energy and reduction of carbon emissions top the agenda at fora such as the United Nations, the G-20, or the EU Summits; banks design credit lines for such investments; taxation penalties are envisaged for giants of the world economy that display a lack of concern for this area. While being in a key position in the supply of conventional energy sources, as I already pointed out, our country offers a considerable potential in the area of renewable sources, as well, which attracts the attention of local and international investors. In our domestic production; natural gas ranks first in terms of installed power, followed by hydraulic sources of an installed power of approximately 14,000 MW. A glance at the totality of projects that are at the licensing or investment stages shows that hydroelectric and wind power stations are going to challenge the rule of fossil fuels. And when we look at the medium-term objectives of the firms in the sector, we see that, over time, they are planning to increase the share of renewable sources in their power generation. This is best indicated by the credit demands which are dominated by the projects on hydraulic as well as wind centrals. RENEWABLE ENERGY LAW Renewable sources are supported through laws and incentives in Turkey as in the rest of the world. In particular, the investment incentives and the purchase guarantees that the government provides through the Renewable Energy Law, enacted in 2007, instills confidence in banks and facilitates the extension of credit to firms that plan to invest in this area. Many banks provide financing for such projects, either by lending from their own resources or through intermediation for international financial organizations such as the European Bank for Reconstruction and Development, the World Bank, the Council of Europe Development Bank, the French Development Agency, the German Development Fund, and the International Finance Corporation (IFC). The most significant among these is the credit line resulting from the agreement between the World Bank and the Ministry of Energy. Alongside the ordinary criteria taken into consideration in the financing of a project, this requires an additional condition of strict compliance with environmental requirements. Looking at the profile of companies that have entered this industry, we see, on the one hand, the energy groups of the top companies in Turkish industry and, on the other, small scale firms that have specifically been started for this industry and are at the beginning of the journey. One even comes up on enterprising individuals in the co10 • TurkofAmerica

untryside who generate their own power through a system they have installed by their own means on a brook that flows through their plot of land. These tiny success stories make us happy by revealing the consciousness in the grassroots. INNOVATIVE TECHNOLOGIES As you are all aware, the world of science strives to generate innovative technologies aiming at a smaller consumption of resources in the provision of our needs for living and producing, technologies that will make it possible for us to harm the environment to a lesser degree. While the world of science had been working on this for decades, the business community has only recently grasped the importance of this and realized that without sustainable development, momentary profits and economic growth will not take us anywhere. Thus emerged green business. It is the name given to economic activities that pay attention to environmental concerns, sustainable growth and social well-being in the process of the growth of the economy. Hence, green business is a new business model and a new industry that insists on concepts such as clean technology, low carbon footprints, energy efficiency, renewable resources, eco-innovation and recycling. GREEN MARKET GROWTH Experts estimate the value of this “green market” at ?1,000 billion. And by 2020, it is expected to reach ?2,200 billion. The United Nations Environment Program defines this market as the totality of environmental products and services, efficiency, recycling and sustainable transportation. “Green collar” workers will form the employment base of this market, in contrast to the blue and white collar workers of the past. The industry currently employs 2.3 million, directly or indirectly. By 2030, thanks to investments totaling $630 billion, the industry is expected to create 20 million new jobs. When the renewable energy industry is taken up together with areas of energy efficiency, the United States alone is expected to employ 37 million people in this whole sphere in 2030. Hence, “green jobs” rise as a sphere full of promises against the projected loss of 25 million jobs I mentioned before. “SUPPORTING WORTHY CAUSES” Let us also look at the consumption side of the issue: as you are aware, one of the strongest-felt effects of the economic stagnation that we are going through is the shift in consumption patterns. Precisely for this reason, the current financial crisis is an extremely important opportunity to shift to a low-carbon economy. The economic and ecological preferences of consumers for products and services function as the most important factor in greening the economy. In a survey conducted with 6,000 consumers from ten countries, 68% of the consumers responded that, even in times of crisis, they remain committed to brands “supporting worthy causes” and that they are willing to pay more for these products. On this list of “worthy causes”, concern for the environment ranks first, at 88%. As long as consumers display this kind of awareness, producers are sure to shift their production accordingly. Besides the situation of the economy, investment opportunities, incentives, and consumers’ preferences. legislation is another factor in deciding to go into the sector. In Turkey, the Renewable Energy Law was enacted in 2005 and the Geothermal Law and the Energy Efficiency Law in 2007. In the wake of this, a National Energy Efficiency

Movement (EN-VER) was started with a view to increase the awareness of the public concerning energy efficiency issues. In order to have the public sector lead this movement, the decision was made to begin implementing efficient energy use practices in premises belonging to public institutions, municipalities and professional organizations. As a first step, people were informed about the beneficial impact of simply changing the type of light bulbs used. ENERGY PERFORMANCE OF BUILDINGS Within the same context, regulations that are of great interest to the bustling construction industry were brought into effect. The Regulation on Increasing of Efficiency in Energy Use and the Regulation on the Energy Performance of Buildings introduce significant innovations for Turkey. Here are some of these innovations: 1. Buildings that do not comply with the Regulation on the Energy Performance of Buildings will not be accorded a permit. 2. Each building will have an “Energy Identification Document”. 3. “Energy Managers” will be employed for production facilities and buildings, 4. The sale of inefficient products that consume too much energy will not be authorized, 5. Projects seeking efficiency increase in industry will be supported, 6. Use of in-house renewable energy sources will be promoted. 7. “Energy Efficiency Consultancy” firms, a new business area, will provide engineering and consultancy services to the industry. These accredited firms will provide services of measurement for purposes of certification and recommendations for renovation in existing buildings and industrial facilities. This standard establishes important opportunities for job creation especially in engineering and R&D. Even limiting ourselves to the regulations I have just mentioned, it is clear that many new business areas will emerge in sub-sectors that serve the construction sector. Let me cite a few simple examples: The first has to do with insulation: in order to see the potential of this industry, currently wielding a turnover of $3 billion, it is sufficient to remember that, in our country, buildings that have adequate insulation amount to a mere 10% of the existing building stock. At present, a vast amount of investment is needed for the insulation of small dwellings and the largest commercial buildings alike. The second example relates to lighting equipment. Through a directive that has come into force recently, the European Union is moving towards eliminating the sale of traditional light bulbs and encouraging the use of compact fluorescents, halogens and LED lighting. Although there will be no legal enforcement in Turkey until this area officially comes within the harmonization process, this shift will affect hundreds of thousands of homes and workplaces as consumers’ awareness increases in our country as well. As I have tried to explain in these few pages, there is a huge space for cooperation between Turkish and American businesses in investment in renewable energy, know-how transfer in this area, research and development, trading of green products, etc. Finally, I would like to congratulate TURKOFAMERICA for having devoted a special issue to energy, the most important item on the world agenda today. I do hope that this new and important sphere will create lasting occasions of cooperation between our countries. TurkofAmerica • 11

GLOBAL ENERGY ACTOR

TURKEY: An Ind›spensable Country ›n the Global Energy Equat›on

Dr. Steven Chu, US Secretary of Energy (behind), and Mr. Taner Yildiz, Minister of Energy and Natural Resources, Turkey, during the 2009 EBC Meeting in Paris on Wednesday, 14th October 2009; Photo: Alastair Miller / © OECD/IEA (2009)

By Tamer Çerçi *

Becoming Europe’s fourth largest gas artery with the NABUCCO Project, Turkey has gained the status of an

Tinitiative following the disintegration of the Easurkey led the Black Sea Economic Cooperation

tern Bloc following the end of the Cold War at the beginning of the 1990s. This initiative was stimulated by the vision of the development of political and economic relations with Russia. Turkey started occupying a significant place in the global energy equation with the implementation of the Blue Stream in 2005, envisaging the gas procurement from Russia, and the Baku-Tbilisi-Ceyhan (BTC) pipeline project in 2006. Although the cost of the Blue Stream and the dragging on of the BTC project were questioned from time to time, both projects were completed. As a partner of the NABUCCO Project, Turkey has now become an indispensable part of the global energy equation.

important regional as well as global energy actor with the implementation of regional energy projects.

Because with the NABUCCO Project, Turkey is to become an international energy corridor for the second time after the BTC. Ass. Prof. Dr. Osman Nuri Aras, expert from the Turkasia Strategic Research Centre (TASAM), claims that with the NABUCCO Project, Turkey will become Europe's fourth largest energy artery. Taking into consideration the regional energy projects together with BTC and NABUCCO, it could be

12 • TurkofAmerica

seen that Turkey has become a significant energy actor in the region as well as in the world. TURKEY: THE FOURTH ENERGY ARTERY Ass. Prof. Osman Nuri Aras, a TASAM expert, emphasises that for the second time Turkey has become an international “energy corridor” after the Baku-Tbilisi-Ceyhan project, since a big part of the NABUCCO pipeline is going to go through Turkey and because it will meet five percent of EU's natural gas demand. Aras, pointing out that with the completion of the project Turkey is to generate 400-450 million Euros in tax revenues, elaborates further: “By mediating EU’s access to energy resources with the NABUCCO pipeline, Turkey has strengthened its political position. One of the important aspects of Turkey’s energy strategy is the contribution to Europe's energy safety and becoming the fourth main gas artery of Europe. In line with this target, with the first concrete step of the implementation of the TurkeyGreece Natural Gas Interconnector in 2007, NABUCCO will present Turkey with the means to strengthen this target as well as to make significant contributions to the increase of Europe's energy safety by diversifying energy sources and transportation lines. Turkey will also get significant economic gains during the investment process as well as the 25-year

operation period of NABUCCO. It is expected that at least 5,000 people will be employed during the construction of the pipeline with investments of 4.5-5 billion Euros. The country’s economy will also be revived. According to the agreement, the criteria for the distribution of tax revenues will be based on the length of the pipeline passing through the respective countries. That means that approximately 60 percent of the tax revenues, i.e., the biggest part, to be obtained after the completion of the pipeline will remain in Turkey. In this case, the annual tax income Turkey is going to generate from the pipeline would be 400-450 million Euros.” TURKEY MAY BECOME ONE OF THE TOP 5 COUNTRIES Dr. Fatih Birol, the Chief Economist of the International Atomic Agency, says that developments in energy that would shape the future 40-50 years of Turkey are underway and according to Birol, that is why Turkey needs to make the most of the next five years. Dr. Birol, pointing out that in the near future energy consumption in China and India will increase, Iran will become an important country in energy, and that the EU is trending towards renewable energy, adds the following: “NABUCCO and the Blue Stream with Russia are both very important projects. The buyer of both projects is Europe. Thanks to this, Turkey may become a bridge in energy and control the valve. This is as important for Turkey as becoming an EU member. Turkey may therefore become one of the top five countries in the world in energy transportation.”

drawing attention, Turkey has been entering into energy deals with neighboring countries since the 1990’s. According to BOTAﬁ data, Turkey has accomplished significant energy transportation projects with a number of countries including Greece, Italy, Turkmenistan, Egypt, Iraq and Russia. Some of these projects are: Turkey-GreeceItaly Natural Gas Pipeline, Transcaspian Turkmenistan-Turkey-Europe Natural Gas Pipeline, Egypt-Turkey Natural Gas Pipeline and IraqTurkey Natural Gas Pipeline. TURKEY-GREECE-ITALY NATURAL GAS PIPELINE In the scope of the EU Commission's INOGATE Program (Interstate Oil and Gas Transport to Europe), a project named the South Europe Gas Ring Project was developed for the transportation via Turkey and Greece of the gas supplied by the Caspian Basin, Middle East, South Mediterranean countries and other international sources. According to the project, the section of the Turkey-Greece Natural Gas Pipeline within the Turkish territory starts from the existing Karacabey Pig Station and ends in Ipsala/Kipi. . The line includes a 17 km-long off-shore section beneath the Marmara Sea and will be approximately 300 km long, of which 209 km is within the territory of Turkey. The authorities of Italy and Greece signed an agreement in Athens regarding the Adriatic crossing on January 31, 2007. The Intergovernmental Agreement of the Turkey-Greece-Italy Natural Gas Pipeline (ITGI) was signed on July 26, 2006, in Rome. Within the scope of the project, 3.6 Bcma and 8 Bcma of gas will be transported via Turkey to Greece and Italy, respectively. The pipeline is planned to become operational in 2012.

WOULD THERE BE ENOUGH GAS? The most discussed topic regarding the NABUCCO project is whether there is enough gas to be transported to Europe. It has been mentioned that Azerbaijan, Turkmenistan, Uzbekistan, Iran and Iraq could be included in the project as gas suppliers. Recently Qatar has also announced that it looks favorably on becoming a supplier in the project. The US objection to Iran becoming a gas supplier, due to political tensions, has prompted the alternative of transporting Iraqi gas to Europe. Another point worth mentioning here is that Turkey is reducing its energy dependency on Russia. Experts are pointing out that Turkey may reduce its dependency on Russia by getting an additional 8 billion cubic metres of Azeri gas. At this point, it is being mentioned that Europe wants Turkey to be part of the project not as a gas buyer but as a transporter only. INTERNATIONAL ENERGY PROJECTS Taner Y›ld›z, the Minister for Energy and Natural Resources, pointing out that Turkey has strengthened its geopolitical position with robust and sustainable policies carried out in the scope of NABUCCO as well as Blue Stream, and saying that “Energy related items are at the same time the guarantee for peace”, adds the following: “While the USA was listening to the negative comments of Austria three years ago, now Austria and Turkey have become two of the most important partners of NABUCCO. The world is globalizing. But the energy sector is globalizing faster. Terms and concepts such as petrol and gas that could be assembled under a common denominator are bringing together in the international arena countries that have different opinions. There are countries that fit this definition. There might be a war but the energy trade continues. That is why energy related items are at the same time the guarantee of peace.” Although actually international agreements concluded recently are

Dr. Fatih Birol, the Chief Economist of the International Atomic Agency.

TurkofAmerica • 13

GLOBAL ENERGY ACTOR

TRANSCASPIAN TURKMENISTAN-TURKEY-EUROPE NATURAL GAS PIPELINE The aim of the Transcaspian Turkmenistan-Turkey-Europe Natural Gas Pipeline Project is to transport natural gas produced in Southern parts of Turkmenistan via the Caspian Sea to Turkey and then to Europe. A Framework Agreement was signed by the Presidents of the Republic of Turkey and Turkmenistan on October 29, 1998, for the implementation of the Transcaspian Turkmenistan-Turkey-Europe Natural Gas Pipeline Project. A Natural Gas Sale and Purchase Agreement valid for 30 years was signed on May 21, 1999, between BOTAﬁ and Turkmenistan for the use of hydrocarbon resources of Turkmenistan, in which 16 billion Bcma of Turkmen gas would be supplied to Turkey. EGYPT-TURKEY NATURAL GAS PIPELINE The Egypt-Turkey Natural Gas Pipeline Project was developed for the purpose of diversifying the supply sources and to meet some of the gas demand by importing natural gas from Egypt. Within the scope of the project, a Framework Agreement was signed in Cairo on March 17, 2004, for the import of natural gas from Egypt and the transportation of gas to Europe through Turkey. According to the agreement, Egypt will export 2-4 billion m? of natural gas to Turkey and 2-6 billion m? of gas to European markets via Turkey. A Memorandum of Understanding was signed on 16 February 2006 for the continuation of the cooperation and collaboration between the two countries in

14 • TurkofAmerica

natural gas supply. Under this MoU, working groups were formed with the participation of Syria and studies were initiated for the feasibility of the project. IRAQ-TURKEY NATURAL GAS PIPELINE The Iraq-Turkey Natural Gas Pipeline Project was developed for the purpose of transporting gas produced in Iraq to Turkey. The project was initiated with the agreements that were signed by the Ministry of Energy and Natural Resources of Turkey and the Iraqi Petroleum Minister. A new study for the revival of the project, taking into account the developments in Iraq and the needs of the European market, was initiated by TPAO, TEKFEN and BOTAﬁ. If the conditions permit, the target of the project is to transport Iraqi gas to Turkey and subsequently to Europe via Turkey. NATURAL GAS UNDERGROUND STORAGE PROJECTS BOTAﬁ is carrying out various storage projects to ensure the regulation and distribution of the natural gas system. One of these projects, the Northern Marmara Region and De¤irmenköy Natural Gas Underground Storage Project, was inaugurated on July 20th, 2007. The second project is the Salt Lake Natural Gas Storage Project. With World Bank credit support received, the tendering offers for the construction of the facilities are underway. * Press counsellor of Istanbul Chamber of Commerce.

DISTRIBUTION AND CONNECTION LINES UNDER CONSTRUCTION Eskipazar-Karabük and Zonguldak- Çaycuma-Bart›n Natural Gas Pipeline - In the scope of the project, signed on April 13, 2007, natural gas is planned to be supplied to Karabük, Zonguldak and Bart›n provinces, Eskipazar district of Karabük province, Gökçebey, Devrek and Çaycuma districts of Zonguldak province and Filyos town in 2009. Diyarbak›r-Batman-Siirt Natural Gas Pipeline- The provisional acceptance of the contract covering the Land Survey and Expropriation/Engineering Works of the project was completed on June 06, 2007. The preparations for the tendering of the project are still ongoing and the project is planned to be completed in 2010. Hatay Natural Gas Pipeline- The tender for the construction is planned to be launched following the completion of the project's Land Survey and Expropriation/Engineering works. Mu¤la Natural Gas Pipeline- The project’s land survey and Expropriation/Engineering works have been completed. The tendering is expected to take place this year. I¤d›r Natural Gas Pipeline- The project’s land survey and expropriation and engineering works have been completed. The tendering is expected to take place this year. Related to this project, the works for the completion of Hanak and Sivas Compressor Stations and Türkgözü Metering Station are ongoing.

The NABUCCO Project and Its Advantages The Turkey-Bulgaria-Romania-Hungary-Austria Natural Gas Pipeline NABUCCO Line), which is envisaged to transport Caspian and Middle Eastern gas to European markets, will supply natural gas to the countries on its route in the first phase. The target for the following years is to reach the Western European market to meet their demands through Austria, which is a gas hub of the European natural gas transportation system. The total capacity of the nearly 3,300 km pipeline will be 25.5-31 Bcma and the line is scheduled to become operational in 2013. The total length of the line will be: Total NABUCCO Line (excluding feeding lines): 2,841 km. Total NABUCCO Line (including feeding lines): 3,282 km. The gas to be produced in Azerbaijan, Turkmenistan and other Transcaspian sources as well as Iran will be transported with the line. The natural gas from Iraq and Egypt through Syria and from other neighboring sources is planned to be transported in the long term. The Legal Working Group, established for the development of the legal framework of the project such as the Joint Venture Agreement, Intergovernmental Agreement, Operational Agreement and Host Government Agreement, is continuing its work. The project’s Intergovernmental Agreement was signed in Ankara on July 13, 2009.

Natural gas and LNG transportations by year (Mcum) YEAR

NATURAL GAS

LNG

TOTAL

2000

10,080.00

4,742.00

14,822.00

2001

11,046.00

5,322.00

16,368.00

2002

12,272.00

5,352.00

17,624.00

2003

16,195.00

4,993.00

21,188.00

2004

17,903.00

4,271.00

22,174.00

2005

22,147.00

4,881.00

27,028.00

2006

25,339.00

5,402.00

30,741.00

2007

30,583.00

5,867.00

36,450.00

2008

32,200.00

5,593.00

37,793.00

2009 (*)

15,831.00

3,343.00

19,174.00

Source: Botaﬂ * As of July

TurkofAmerica • 15

WIND ENERGY

WIND ENERGY IS COMING ON STRONG IN TURKEY

By Muge Mengu Hale

Ahelping the world to overcome its energy and fi-

s one of the most ancient energy sources, wind is

Among the 76 countries that generate wind energy on a commercial basis, Turkey ranks 25th, with around 600 megawatts, according to World Wind Energy Association (WWEA) reports, and produces 1% of its total energy from wind.

nancial crises. Turkey is one of the many countries turning to this source. With the progress in wind technology, wind power generation costs have fallen in half in a decade. Wind energy is considered low-risk for investors with no fuel costs and stable costs of electricity generation. Most governments encourage wind investments with incentives such as feed-in tariffs. As a result, the global wind energy sector has expanded fast at 29% last year. The world today generates a total of 120 gigawatts of energy from wind, almost 1.5% of yearly global energy consumption. At the end of the next decade, this amount can rise up to 12% of the energy market with supportive government policies and innovative energy companies. Developed countries have long put wind in their energy agenda and set goals to expand their wind consumption. The USA is the leader of the race, and this year has 25 gigawatts of wind power capacity. The top five countries, the USA, China, India, Germany and Spain, cumulatively generate three-fourths of the world’s wind energy. One of pioneer countries, Denmark, has already exploited its capacity in building new wind parks, and generates one-fifth of its energy consumption from wind. Turkey ranks 25th with around 600 megawatts among 76 countries that generate wind energy on a commercial basis, according to World Wind Energy Association (WWEA) reports and produces 1% of its total energy from wind. THE BEST WIND SUPPLIES Turkey has one of the best wind supplies in Europe after Ireland and England according to European Parliament’s wind index. “The same turbine can produce twice as much electricity when built in ‹zmir, Turkey then anywhere in Germany” says Prof. Dr. Tanay S›dk› Uyar, VP of WWEA and Associate Professor of Renewable Energy at Marmara University, who first mapped Turkey’s wind atlas in the late 90’s. “Wind is the cheapest energy source for Turkey. It is four times cheaper than conventional energy sources when external costs are added,” he says. Wind turbines are rising fast on the western and southern coasts, in the cities of Canakkale, ‹zmir, Mugla, Bal›kesir, and Hatay. Currently, there are 17 operating and 77 licensed wind parks. It took only a few years for Turkey to become one of the world’s most dynamic world wind markets. Turkey’s wind power

16 • TurkofAmerica

capacity jumped from 20 megawatts in 2005 to around 600 megawatts in 2009. Upon the completion of the ongoing projects, “the capacity will soon add up to 700 megawatts,” says Tolga Bilgin, President of Turkish Wind and Solar Energy Investors Association (RESSIAD) and VP of Bilgin Energy Holdings. “Until 2001, all energy investments were done with Build-OperateTransfer model, and the state bought all the energy plants in 20 years. We planned the first wind parks in this system,” says Bilgin. But in the first half of the 2000’s, there was an economic crisis in Turkey, and when Electricity Market Law in 2001 liberalized energy markets, it took a while for the system to settle. The state also stopped purchase guarantees. The law was a blow to the progress of the wind power market, according to Bilgin. “Wind’s initial investment is expensive. Building 1 megawatt of wind energy costs 1,300,000 Euros. In order to find investors or financers, the government’s purchase guarantee is influential” he explains. Without the incentive, the wind investment stayed limited in the first half of the 2000’s. Despite the lack of government incentives, Bilgin’s company built Turkey’s first private sector 30 megawatt wind park with GE turbines in 2006. “Band›rma wind power plant increased the total capacity in Turkey by 150% from 20 megawatts to 50 megawatts. The success of Band›rma showed other energy companies that wind parks could operate successfully without the purchase guarantees. It paved the way for many other projects. During this period, 3356 megawatts of wind energy got licensed, out of which 567 megawatts are currently in working capacity”. Currently, Bilgin Energy is constructing four more wind parks, Maz›-3, Alia¤a, Zeytineli and Soma, which will together generate 320 megawatts of wind energy when completed.

ENERGY DEMAND HAS BEEN GROWING With the amendments to the renewable energy law in 2005, the government started to offer feed-in tariffs for renewable energy sources: ten-year purchase guarantee of 5.5 Euro ct/kWh for electricity generated from wind energy. Although this price is lower than those of Turkey’s European counterparts and there are no other incentives, which has been criticized by experts such as Professor Uyar, Bilgin thinks this price is not bad for the wind power market. “This guarantee convinces the financers” says Bilgin. “After a wind power plant is built, there are no fuel costs involved, and the operation becomes low-cost. Energy companies can sell the electricity on the open market for 7.5 Euro cents/ kWh.” Since Turkey’s energy demand has been growing by around 8%, despite the effects of the global recession, Bilgin is optimistic that the markets will demand more energy in the near future and believes in the future of the wind park projects for investors. “Wind parks with the capacity factor of 40% would pay off in 5-6 years and start turning a profit,” says Bilgin. Bilgin also initiated the first carbon emission trade in the European volunteer markets and got credit for his eco-friendly energy wind park investment. “Each wind park project saves 70,000 to 100,000 tons of CO2 and we got certificates for not polluting the atmosphere” says Bilgin. Bilgin explains a number of Turkish energy companies got credits to finance their wind park projects with this method. 500MW POWER PROJECTS The progress in wind power market has also attracted global investment. “Since the world is focusing on wind power, and Turkey’s potential is high, foreign investors are showing interest,” he says. One current example is the US renewable energy developer Renewable Energy Systems (RES), which entered the Turkish wind power market with the

Tolga Bilgin, President of Turkish Wind and Solar Energy Investors Association (RESSIAD) and VP of Bilgin Energy Holdings.

TurkofAmerica • 17

WIND ENERGY

acquisition of a 500MW portfolio of power projects worth ?750m.

less and cannot be used up.

After 2010, the wind power capacity will gain another strong momentum. Currently, the market is expecting the independent regulatory body, EPDK, to evaluate the wind power plant applications of November 2007. After a few years of not accepting any projects, there was a record 756 applications totaling to 78, 000 megawatts of energy. These projects are still being evaluated and the licensing process is estimated to be finalizede by 2010.

Another advantage of wind as a renewable energy resource is that it is domestic. Turkey has long term agreements to buy natural gas from Iran and Russia. Turning to renewable energy to ease Turkey’s dependency on natural gas is one of the goals according to the Medium-Term Program (2010-2012) prepared by the State Planning Organization. The government target is 20, 000 megawatts of wind energy for 2023.

“78, 000 megawatts of energy is twice the total energy supply of Turkey today. The eligible applications are around 32, 000 megawatts” says Bilgin. The grid infrastructure will allow only some extent of energy into electricity systems. Moreover, some projects which are planned for the same areas will be eliminated. “After all projects are licensed, Turkey can generate 12, 000 megawatts of wind energy by 2013. It is still a big investment for Turkey” says Bilgin. He also warns that some of these projects were completed in a rush, “The wind measurements are the most important and time consuming part of wind power plant planning” he says. Wind should be observed for at least 2 years. “Sometimes even two hills on the same land have different wind measurements.” he says. Wind parks are built in a relatively short time, one or two years; however they need meticulous planning. “It took us almost ten years to plan Band›rma Wind Park. Because of the high number of applications in 2007, the system got blocked. The market authority, EPDK, should be very careful and impartial with the evaluations, otherwise it can cost Turkey 4 to 5 years of progress in wind,” he says. TURKEY SHOULD CHOOSE WIND OVER NUCLEAR OR THERMAL A nuclear power engineer, Dr. Tanay S›dk› Uyar, VP of WWEA and Associate Professor of Renewable Energy at Marmara University, is a public critiic of any nuclear and thermal energy investments. He voices Turkey’s renewable energy potential in national and international platforms. “Turkey can produce twice as much of its energy demand from the sun and wind,” says Uyar. Compared to conventional energy sources such as fossil fuels, coal or natural gas, wind is clean, green and renewable; wind energy does not pollute the air; it doesn’t produce atmospheric emissions that cause global warming. Wind is also renewable, which means it is end-

18 • TurkofAmerica

NUCLEAR ENERGY PLANTS Uyar agrees that Turkey has the potential to increase its wind capacity. He also warns against government plans for new nuclear energy plants. Ironically, the Medium-Term Plan also targets giving a start to building nuclear plants until 2012. “Developed countries have long abandoned nuclear plants. These outdated technologies should not be imported to Turkey” says Uyar. “The USA ranks in the first place in wind today. The USA has not allowed any new nuclear plants since 1976, and now is in the process of dismantling some of the older ones. Recently, it also regulated the licensing of thermal plants and disapproved of 100 projects. Turkey should not import these technologies because they generate more social and external costs. Sun and wind are the answers,’’ he says. Uyar is also the coordinator of the nationwide green NGO called TÜRÇEP, where regional organizations share information on health hazards and environmental effects of conventional energy resources. Support for thermal energy policies alarms Greenpeace as well. Hilal Atici from GreenpeaceAkdeniz is concerned about the government’s plans to build new thermal power plants. Turkey’s carbon emissions increased by 136% between 1996 and 2007 but since there is no requirement for Turkey in Kyoto Protocol, the government has no clear vision to lower its carbon prints. “The government should encourage green energy over thermal and nuclear. Greenpeace is demanding the yearly carbon emission growth to decrease by 25 percent” says Atici. Greenpeace also has an internet petition against government plans of to build 47 new coal-based thermal plants. Greenpeace recently declared an alternative energy scenario for Turkey called the Energy ®evolution, showing how Turkey can develop with renewable energy.

Türkiye’deki Rüzgar Santralları Wind Projects in Türkiye ùirket

Mevkii

Company

Location

Üretime Geçiú Kurulu Güç Tarihi (MW) Comm. Date

Installed Cap. (MW)

Türbin imalatçısı

Türbin adet ve kapasitesi

Turbine manufacturer

Turbine capacity

Alize A.ù.

øzmir-Çeúme

1998

1,50

Enercon

3 adet 500 kW

Güçbirli÷i A.ù.

øzmir-Çeúme

1998

7,20

Vestas

12 adet 600 kW 17 adet 600 kW

Bores A.ù.

Çanakkale-Bozcaada

2000

10,20

Enercon

Sunjüt A.ù.

østanbul-Hadımköy

2003

1,20

Enercon

Yapısan A.ù.

Balıkesir-Bandırma

I/2006

30,00

2 adet 600 kW 20 adet 1.500 kW

Ertürk A.ù.

østanbul-Silivri

II/2006

0,85

Vestas

1 adet 850 kW

Mare A.ù.

øzmir-Çeúme

I/2007

39,20

Enercon

49 adet 800 kW

Deniz A.ù.

Manisa-Akhisar

I/2007

10,80

Vestas

6 adet 1.800 kW

Anemon A.ù.

Çanakkale-øntepe

I/2007

30,40

Enercon

38 adet 800 kW

Do÷al A.ù.

Çanakkale-Gelibolu

II/2007

14,90

Enercon

13 adet 800 kW + 5 adet 900 kW

Deniz A.ù.

ønnores A.ù.

Hatay-Samanda÷

I/2008

30,00

Vestas

Manisa-Sayalar

I/2008

30,60

Enercon

15 adet 2.000 kW 38 adet 800 kW

øzmir-Alia÷a

I/2008

42,50

Nordex

17 adet 2.500 kW

Lodos A.ù.

østanbul-Gaziosmanpaúa

I/2008

24,00

Enercon

12 adet 2.000 kW

Ertürk A.ù.

østanbul-Çatalca

I/2008

60,00

Vestas

20 adet 3.000 kW

Baki A.ù.

Balıkesir-ùamlı

II/2008

90,00

Vestas

Dares A.ù.

Mu÷la-Datça

II/2008

10,00

Enercon

27 adet 800 kW + 8 adet 900 kW

2.100 kW

38 adet 3.000 kW

øùLETMEDEKø KAPASøTE TOPLAMI 433,35 CAPACITY UNDER OPERATION Ayen A.ù.

Aydın-Didim

I/2009

31,50

Suzlon

Ezse Ltd. ùti.

Hatay-Samanda÷

II/2009

35,10

Nordex

900 kW

Ezse Ltd. ùti.

Hatay-Samanda÷

II/2009

22,50

Nordex

2.500 kW

Rotor A.ù.

Osmaniye-Bahçe

II/2009

135,00

Mazı-3 Res Elk. Ür. A.ù.

øzmir - Çeúme

II/2009

22,50

Nordex

Kores A.ù.

øzmir-Çeúme

II/2009

15,00

Nordex

2.500 kW

Soma A.ù.

Manisa-Soma

II/2009

140,80

Enercon

176 adet 800 kW

17 adet 800 kW ve 6 adet 900 kW

øNùA HALøNDEKø KAPASøTE TOPLAMI

54 adet 2.500 kW 9 adet 2500 kW

402,40

CAPACITY UNDER CONSTRUCTION Alize A.ù.

Balıkesir-Susurluk

19,00

Enercon

Borasco A.ù.

Balıkesir-Bandırma

45,00

Vestas

Alize A.ù.

Tekirda÷-ùarköy

28,80

Enercon

14 adet 2000 kW ve 1 adet 800 kW

Alize A.ù.

Balıkesir-Havran

16,00

Enercon

8 adet 2000 kW

Alize A.ù.

Çanakkale-Ezine

20,80

Enercon

10 adet 2000 kW ve 1 adet 800 kW

Belen A.ù.

Hatay-Belen

30,00

Vestas

Alize A.ù.

Manisa-Kırka÷aç

25,60

Enercon

32 adet 800 kW

Boreas A.ù.

Edirne-Enez

15,00

Nordex

6 adet 2.500 kW

Doruk A.ù.

øzmir-Alia÷a

30,00

Enercon

15 adet 2.000 kW

15 adet 3000 kW

10 adet 3000 kW

Yapısan ønú. Elk. San.Tic. A.ù.

øzmir-Alia÷a

90,00

Nordex

36 adet 2500 kW

Do÷al A.ù.

øzmir-Alia÷a

30,00

Enercon

15 adet 2000 kW 15 adet 2000 kW

Do÷al A.ù.

øzmir-Foça

30,00

Enercon

Poyraz A.ù.

Balıkesir-Kepsut

54,90

Enercon

61 adet 900 kW

Bilgin Elektrik Üretim A.ù.

Manisa-Soma-Kırka÷aç

90,00

Nordex

36 adet 2500 kW

Bares Elektrik Üretim A.ù.

Balıkesir-Kepsut

142,50

Nordex

57 adet 2500 kW

TÜRBøN TEDARøK SÖZLEùMESø øMZALI PROJE TOPLAMI 667,60 PROJECTS WITH A TURBINE SUPPLY CONTRACT GENEL TOPLAM

1.503,35 MW

TurkofAmerica • 19

A BRIEF OUTLOOK TO AMERICAN ENERGY INDUSTRY

W›ll Eco Imper›al›sm Save the World? from Bosphorus University (B.S., 1990) and Boston College (Ph.D., 1996). I studied oil markets for my dissertation and moved to Houston after graduation. I have worked as an energy economist since 1996, first at the University of Houston and now at the University of Texas at Austin (although I am based in Houston). The Center for Energy Economics is part of the Bureau of Economic Geology, the largest research unit within UTAustin. We focus on energy value chain economics, policy and regulation. We undertake research relevant to industry participants and provide training. As part of our work, I travelled to Nigeria, Angola, Ghana, India, Bangladesh and Mexico among others; and trained hundreds of energy sector professionals from about 40 countries. What areas are you studying and focusing on? Our workload depends on our project pipeline. Currently, I am working on renewables portfolio standards in Texas and elsewhere in the U.S. (and the federal RPS proposal). But over the last few years, I worked on many other projects. Here are some examples: economics of CO2-EOR value chain in Texas, impact of capand-trade legislation on the Texas economy, performance of national oil companies, implementation challenges associated with Gas Master Plan in Nigeria, economics of developing a secondary gas market in Ghana, institutional challenges of newly established energy sector regulators around the world, and global coal industry trends and their impacts on South Asian economies.

By Ali Ç›nar

Pkeen on spending large sums of money on reneresident Obama administration and Congress are

wables, smart grid and energy efficiency. There are federal loan guarantees, production tax credits, investment tax credits, and some state incentives to support these technologies. Dr. Gurcan Gullen, Senior Energy Economist at the Center for Energy Economics, University of Texas at Austin, says that it is not clear that all of this support will help establish some of these technologies, but when there is “free” money from the government, companies are lining up to get their share. Gullen emphazies that the biggest challenge to energy sector reform is the political apparatus. Dr. Gullen talked to TURKOFAMERICA about energy policy, energy investment opportunities and the challenges and changes in energy sector reforms.

Could you tell us about yourself? I am an energy economist with degrees in economics

Can you littlle bit tell us about the electricity market design in the US and how will impact on community’s liffe? I studied electricity markets in many jurisdictions but I know the Texas electricity market the best. The restructuring law in Texas passed in 1999 (Guide to Electric Power in Texas we produced was used as a resource during legislative deliberations); and the competitive retail market started in 2002. We have produced reports on its progress. Texas has one of the most successful competitive electricity markets in the world. There are many reasons for this success but one is central: the legislation that restructured the market was developed with input from all key stakeholders. As a result, it was much less of a political bill than those seen in other places. For example, in California, they wanted to have benefits of competition but did not want to make it easier to build generation or transmission and they continued to protect retail customers with price caps much lower than wholesale market prices. This kind of political trickery does not pay: does anyone remember the governor of California at the time of energy crisis? He used to have presidential ambitions. Today, the California government is bankrupt. Texas is a business friendly state with constrained go-

vernment: our legislature meets only every other year and only for about five months. Given that electricity is a political commodity, it helps to keep politicians away while the competitive market gets on its feet. In many countries, restructured markets fail or do not live up to their potential because tendency of politicians to interfere is high especially during election times; they often hold on to state utilities with their inherent inefficiencies; regulatory agencies that are supposed to be independent are not (often, governments control their budget); investment decisions are often too lucrative to be left to the market. The Turkish electricity market suffers from similar shortcomings. What are the energy investment opportunities in the U.S.? Which energy areas could be interestting for Turkish investors? Clearly, the current administration and Congress are keen on spending large sums of money on renewables, smart grid (e.g., installing smart meters) and energy efficiency. There are federal loan guarantees, production tax credits, investment tax credits, and some state incentives to support these technologies. It is not clear that all of this support will help establish some of these technologies, but when there is “free” money from the government, companies are lining up to get their share. There is excitement about smart grid but most politicians will not support charging customers real time prices (e.g., $1 per kWh at peak summer afternoon hours and 8 cents per kWh at night when demand is very low); without this kind of pricing, we will not get the benefits of so called smart grids. There is also some support (or at least promise of support) for carbon capture and sequestration. Unfortunately, nuclear energy that could provide some of the cheapest electricity in the longrun with almost no emissions does not get any attention. The industry has high capital costs upfront and needs to improve its fuel recycling practices; it could have benefited from some of the loan guarantees.

What are the challenges and changes in energy sector reforms? The biggest challenge to energy sector reform is the political apparatus. I already discussed elsewhere some of the missing links between policy decisions and realities of the energy industry. Technologies get supported because some politicians believe they will get investment in their jurisdiction so that their constituencies can get jobs and raise the tax base. In such an environment, fundamental economics of energy projects and markets are often ignored. Worse, with the policies they pass, politicians create a large number of unintended consequences: take the case of corn ethanol. It uses too much land, water and fertilizers; as a result of support given to the industry in 2005 and 2007, depletion of water reservoirs in the Midwest has been alarming; fertilizer run-off to the Mississippi River created the largest dead zone in the Gulf of Mexico; and allocation of land to corn raised prices of corn, soy and other commodities, which raised feed costs for animal farmers, which all contributed to food cost inflation. But, most importantly, corn ethanol is not more efficient than gasoline and it does not necessarily reduce emissions. The only reason to support corn ethanol is to support farming interests, and at that, not necessarily small farmers but large companies such as ADM; helping the country become energy independent is just empty rhetoric. It is the same perverted system around the world. Energy sectors around the world are always distorted by irrational, politically (interest group) driven policies that, on average, end up increasing the cost of energy to consumers. There is large amount of rent associated with this very large industry; it is just too tempting for politicians to allow markets to decide who gets what portion of the rent. How do o you see Turkey’s energy policy and how Turkey is strong in the Turkic world? Like any other country with limited natural resources, Turkey needs to diversify its energy sources to increase reliability, reduce costs and miTurkofAmerica • 21

A BRIEF OUTLOOK TO AMERICAN ENERGY INDUSTRY

nimize environmental impact. In addition to importing oil and natural gas, exploration and development of local resources should be encouraged. From that perspective, a modern petroleum law that recognizes Turkeyâ&#x20AC;&#x2122;s current resource potential (limited) and includes fiscal terms that encourage risk taking investors to explore for oil and gas seems desirable. As for imports, diversification of import sources (as large a number of producing countries as commercially feasible) is a general principle to follow. From this perspective, I am not sure if Nabucco is a pipeline that makes commercial sense; the risk-reward equation has to make sense. Could Nabucco be a bargaining chip between Europe and Russia? Renewable resources such as wind and solar, and geothermal should of course be pursued; but everyone needs to be realistic: at current technology and cost structure, these alternatives cannot provide the energy an industrialized, growing economy needs in a reliable manner. Nuclear and coal should not be forgotten. The challenge is to create a stable and transparent framework, mostly based on market signals, that can allow the development of energy projects where and when they make the most sense (balancing economics, environment and security dimensions). Ad hoc decisions do not make policy. What is the future for the specialty of economic geology especially projects that you work with Bureau of Economic Geology? Carbon capture and sequestration is an important area; but also unconventional oil and gas resources. The world has plenty of coal and is not going to stop using it just because Al Gore wants it to. Look at how the cap and trade provisions in the Waxman Markey bill have been watered down to garner the support of representatives from coal states. China, India, South Africa and Australia will continue to use coal; Kevin Rudd, who, like Obama, promised carbon regulation during his election campaign has postponed any such bill, having realized how much Australia depends on coal-fired generation and coal exports. So, making carbon capture and storage in geologic formations for long periods of time technologically feasible and economically viable is a key challenge. The world is not running out of oil and gas. In fact, we are finding more all the time. We just need to make sure that resources are economi-

22 â&#x20AC;˘ TurkofAmerica

cally and technologically recoverable. Few years back, natural gas prices soared and everyone thought that the U.S. would need LNG imports to meet the rising demand in the face of declining production; new import facilities were built but then producers in the U.S. started producing unconventional natural gas resources such as shale gas from the Barnett Shale (an area heavily researched by BEG scientists). Estimates for shale gas, tight gas, coal bed methane in the U.S. are huge; similarly for shale oil. But, environmental regulations at the state and federal levels block most development. There is plenty of conventional resources offshore but again environmental opposition is blocking development. There is also gas hydrates. The resource base is immense: one estimate is 200,000 trillion cubic feet. Just recently, there were major discoveries offshore Texas in the Gulf of Mexico (again BEG researchers are involved). Japanese have successfully produced natural gas from hydrates in Canada but in small quantities. The technology needs to be scaled up; but the potential is there. After climate and energy, what do you think is the most importa ant environmental issue facing the nation? Climate change is not ranked high in my list of issues; in fact it is pretty far down. Millions of people dying today in developing countries is a much more significant problem than the uncertain cost moving people inland in distant future if sea level rises enough. Depending on whose statistics one looks at, there are anywhere from a billion to billion and a half people without access to electricity in the world. Many more have limited, unreliable service. Not to mention the lack of access to modern fuels such as propane (or LPG). Millions die in developing countries (especially in Africa and South Asia) due to maladies that could be prevented with development based on reliable energy. Switching to propane cookers from charcoal could save many who die from lung diseases. Electric pumps could help clean water and prevent deaths due to water borne illnesses. It is unfortunate that the developed world is trying to dictate developing countries what kind of energy they can use due to climate change concerns. Some call this eco imperialism; sounds pretty fitting to me.

JEANENE MITCHELL

POTENTIAL INTEREST TO TURKISH INVESTORS:

DISTRIBUTED GENERATION TECHNOLOGIES By Ali Ç›nar Upon graduating from Georgetown University, Jeanene Mitchell moved to Istanbul as a Fulbright fellow to conduct research on legal issues relating to the sea and navigation in the Straits.

One area of potential interest to Turkish investors is that of distributed generation technologies, which are increasingly being deployed in cities.

Sre years after that as a research assistant on mahe said that she was fortunate to stay for two mo-

rine law and policy for Professor Nilufer Oral at Istanbul Bilgi University. “I absolutely loved the three years that I lived in Turkey, and consider Istanbul to be my second home,” she said. In 2005, she left for New York to pursue a master’s degree in international energy management and policy at Columbia University. During that time, she was honored to serve as President of Turkish Initiative, a graduate student organization at Columbia dedicated to promoting informed discussion on Turkish history, culture, and politics. Most recently, she worked as a researcher at the Columbia University Center for Energy, Marine Transportation and Public Policy (CEMTPP) on urban energy and marine transportation issues, as well as energy governance in the Black Sea and Caspian regions, under the guidance of Professor Stephen Hammer and CEMTPP Director Albert Bressand. She talked to TURKOFAMERICA about Urban Energy developments

24 • TurkofAmerica

in the US and urban energy issues that could be interesting for Turkish investors. Could you tell us about yourself? I am a 29-year old PhD student with a passion for Turkish culture, language, history, and contemporary politics… not to mention baklava! I am originally from Tacoma, Washington, but have spent the past eleven years living in Washington DC, Istanbul, and New York City. What areas are you currently studying and focusing on? I am just starting my PhD in Near and Middle Eastern Studies, with a focus on Turkish Studies, at the University of Washington. My research interests include Turkey’s relationship with the EU and other Turkic countries, and Turkey’s role in helping to establish energy governance and sustainability principles within the Black Sea and Caspian regions. I am also very interested in Turkey-Azerbaijan relations, after having the chance to spend a month in Baku this past summer.

Can you tell us about the Columbia University Center for Energy, Marine Transportation and Public Policy’s (CEMTPP) Globa al Energy Governance Program? What is the relevance of this program for Turkey’s energy policy? The Global Energy Governance Program at CEMTPP aims to bring together the different perspectives of energy producer, consumer, and transit countries on the issue of energy governance. Since there is not yet a common understanding of the concept, we define an effective energy governance regime as a combination of common rules, market structures, formal and informal institutions, and political relationships which facilitate mutually-beneficial, multilateral energy and investment relations over the long term. We are beginning our program with a focus on Eurasia, the Caspian Sea, and the Black Sea regions because they collectively comprise such a strategically important area for energy production and transport. Yet geopolitical and market changes in this part of the world have led to a fragmented approach to energy governance. As I discuss in my forthcoming article in Azerbaijan Focus, everyone loses from the incongruent rules and norms, the lack of consensus on market structures, unconstructive competition, and tense political relationships which currently characterize energy relations in these regions. We saw this all too clearly earlier this year, when the gas pricing disputes between Russia and Ukraine resulted in gas flows being shut off to significant parts of Europe. How do you see Turkey’s role in the region? Turkey is clearly a critical player in this milieu, as one of the most important energy transit countries for oil and gas pipelines supplying Europe and international markets further afield. Especially as Europe seeks greater security of energy supply in the aftermath of the Russia-Ukraine disputes, Turkey is seen by Europe as a trustworthy and dependable partner. The signing of the Nabucco pipeline agreement further solidifies Turkey’s pivotal role in the region. Yet Turkey’s aspirations to be an energy hub rather than just a transit country bring additional levels of complexity from a technical, political, and governance perspective. The establishment of trustful, cooperative political and economic relations among regional players, as well as common notions of energy market rules and pricing, could greatly facilitate Turkey’s progression towards becoming an energy hub. It could also avert tensions such as those that recently arose over gas prices between Turkey and Azerbaijan, in spite of a long history of close relations between the two countries. For this reason, Turkey has much to gain from improved energy governance in the region. The insights emerging from CEMTPP’s Global Energy Governance program and our scenarios work in the region will therefore be of interest to Turkish policymakers and other Turkish stakeholders in the energy industry. What are the Urban Energy developments in the US?? Since most of the energy in the world is consumed in cities, it makes a lot of sense to understand developments in energy policy, markets, and technologies at the city scale. CEMTPP has developed a cuttingedge Urban Energy Program, led by Dr. Stephen Hammer, to do just that. While the decentralized nature of energy markets and policy within the U.S. makes it somewhat difficult to generalize about urban energy issues in the U.S., I can say that city governments are generally becoming much more interested in playing an active role in shaping their energy futures, seeking to pursue climate change miti-

gation and adaptation strategies, and thinking about energy efficiency and security of supply. Which areas of opportunity related to urban energy issues could be interesting for Turkish investo ors? One area of potential interest to Turkish investors is that of distributed generation technologies, which are increasingly being deployed in cities. This includes renewables like solar photovoltaic, solar thermal and small wind, but a technology to watch is combined heat and power (CHP). CHP systems usually operate at the building scale, and are ideal for dense urban environments. They simultaneously generate heat and electricity at or near the point where the energy will be consumed, and are dramatically more efficient than conventional, largescale central station power plants. As a result, they can save money on fuel costs and reduces greenhouse gas emissions. The Mayor of New York City has even set a target of 800 MW of CHP deployment by the year 2030. While the regulatory and market situation is different in each city, and can in some cases complicate deployment, demand for CHP should nonetheless be on investors’ radar, as demand for greater energy efficiency in urban environments will continue to grow commensurate with rising electricity prices and climate change concerns. For more information, a 2007 study published by CEMTPP on the viability of CHP in New York City is available at www.cemtpp.org. How was your experience in working with the “Marine Transportation 2030” Scenarios group att CEMTPP? How do you see the future of marine transportation in the Black Sea? Working with the “Marine Transportation 2030” scenarios group to envision the future of the marine transportation industry was a singular experience, because it reconciled a group of prominent thinkers and professionals in the maritime industry and asked them to think plausibly about how the industry will evolve to the year 2030. After two years of research, we are in the process of completing a book with the conclusions and policy implications of our findings. I am currently co-authoring a chapter on the Black Sea with Professor Nilufer Oral of Istanbul Bilgi University. The future of marine transportation in the Black Sea will be shaped by the balance struck between the tripartite forces of economic volatility, environmental sustainability, and the quest for safety and security. After climate and energy, what do you think is the most important issue facing the world? The continued existence of extreme poverty in the world, and the fact that there is a continually-growing global gap between the rich and the poor, is one of the most important issues facing the world. Not surprisingly, there is actually a significant energy and climate dimension to this issue as well. The poor are disproportionately affected by the weather incidents brought about by climate change, from floods to droughts, both because they tend to live in areas with inferior or limited infrastructure, and because they often have more agrarian lifestyles. In developing countries, the poor are also the people for whom access to electricity for simple things like refrigerating medicines, pumping water or lighting even a single light bulb would allow for needed vaccinations, eliminate the need for a two-hour walk to a well and enable a child to study in the evening, respectively. We are privileged to live the lives that we do, and I think that bestows us with a responsibility to give some of our time, resources, and/or intellectual capacity to solving the problems of those who do not enjoy the same luxuries, opportunities, or fulfillment of basic needs as we do. TurkofAmerica • 25

HOW TO EXPAND YOUR COMPANY

The Clean Tech Asset Gu›de for Compan›es ›n the Expand›ng Clean Tech Sector ces available in this growing field,” said Francis J. Murray Jr., President and CEO of NYSERDA. “This guide will serve as an essential tool to help connect the extraordinary wealth of talent in Central New York with investors and support systems to help them build the clean energy economy envisioned by Governor David Paterson.” “Entrepreneurs in Central Upstate New York are fortunate to be able to work shoulder-to-shoulder with some of the world’s top experts in renewable and clean energy sectors, right here in this region,” said Linda Hartsock, Executive Director of The Clean Tech Center. “The resource guide demonstrates that this region has built a well-connected infrastructure and working partnership to support green innovation. NYSERDA is the catalyst for building an innovation ecosystem across New York State, connecting clusters of entrepreneurial activity through its new clean energy incubator program. NYSERDA is truly the model for strategic green business development.” Created with support from NYSERDA, the 61-page Clean Tech Asset Guide is a ‘one-stop’ directory with listings of assets including university and academic research programs, specialized facilities, support organizations, and funding programs. In addition, the guide lists research and development resources, business development resources, funding programs, and market leaders, including associations and organizations.

Created with support from NYSERDA, the 61-page Clean Tech Asset Guide is a ‘onestop’ directory with listings of assets including university and academic research programs, specialized facilities, support organizations, and funding programs. 26 • TurkofAmerica

Athe New York State Energy Research and DeveSyracuse-based business incubator funded by

lopment Authority (NYSERDA) today released the first comprehensive directory created to connect emerging clean technology companies with resources in Central New York that can help develop, grow, and retain businesses in this growing sector.

The Clean Tech Asset Guide was published by the Clean Tech Center, a program of the Greater Syracuse Chamber of Commerce located at the Tech Garden in downtown Syracuse. The Center was established with $1.5 million from NYSERDA to create a facility for the support, incubation and acceleration of new clean energy technology companies. “While Upstate New York has been emerging as a vibrant hub of clean energy businesses, until now there has been no full accounting of all the resour-

In addition to the Tech Garden in Syracuse, NYSERDA has funded incubators at the University at Buffalo, Rochester Institute of Technology, and the Polytechnic Institute of New York University in Brooklyn. NYSERDA funds are used to assist companies throughout the incubation process and to develop a financially self-sustaining program that will strengthen the clean tech economy in Central New York. Collaborators with the Clean Tech Center include leading New York State colleges and universities, investors, utilities, technology and industry associations, and government agencies that are included in the resource guide.

To download the resource guide, visit http://www.thecleantechcenter.com/ Cleantech/CleanTechManual_12_09.pdf

MARKET LEADERS OF CLEAN TECH IN NEW YORK STATE Organizations NYSERDA New York State Energy Research and Development Authority (NYSERDA) is a public benefit corporation created in 1975 under Article 8, Title 9 of the State Public Authorities Law through the reconstitution of the New York State Atomic and Space Development Authority. NYSERDA’s earliest efforts focused solely on research and development with the goal of reducing the state’s petroleum consumption. Subsequent research and development projects focused on topics including environmental effects of energy consumption, development of renewable resources, and advancement of innovative technologies. http://www.nyserda.org/ National Grid Is a wholly owned subsidiary of National Grid, an international, London-based company whose core business is the delivery of electricity and natural gas. National Grid has a strong commitment to clean tech and is a smart grid leader. http://www.nationalgridus.com/ Carrier Corporation From the time its founder invented the basics of modern air conditioning in 1902, Carrier has been the world leader in air conditioning, heating and refrigeration systems. A wholly-owned subsidiary of United Technologies Corporation, Carrier is built upon a legacy of innovation and commitment. Through market-leading products and solutions, it is constantly striving to help people live more comfortable, healthy and productive lives. http://www.corp.carrier.com/ www/v/index.jsp?vgnextoid= 9d087afdef677010VgnVCM100000cb890b80RCRD Corning Since its earliest days, Corning Incorporated, the world leader in specialty glass and ceramics, has worked closely with customers to understand their problems, explore possible solutions, and then bring those solutions to life through world-class scientific and manufacturing capabilities. http://www.corning.com/index.aspx NYSTAR NYSTAR supports technology development, innovation and commercialization leading to economic growth in New York State. http://www.nystar.state.ny.us/ IBM IBM helped pioneer information technology over the years, and it stands today at the forefront of a worldwide industry that is revolutionizing the way in which enterprises, organizations and people operate and thrive, particularly in regard to intelligent building design and systems integration. http://www.ibm.com/us/en/

Siemens Siemens AG (NYSE: SI) is a global powerhouse in electronics and electrical engineering, and operates in the industry, energy and healthcare sectors. http://www.usa.siemens.com/entry/en/ King & King King & King, Architects LLP has a rich history in the upstate New York area. Founded in 1868, it is the oldest architectural firm in New York State and the fifth oldest in the country. In the Syracuse area, some notable buildings include Crouse College, Bird Library, and Manley Field House, all on the Syracuse University campus; Onondaga County Courthouse. http://www.kingarch.com/ Greater Syracuse Chamber of Commerce and Convention and Visitors Bureau The Greater Syracuse Chamber of Commerce is the largest business organization in Central New York. The Chamber is an icon in the Syracuse business community, leading the way in everything from government relations and lobbying to creating economic growth in the region. http://www.syracusechamber.com/ S Department of Energy (DOE) US The Department of Energy’s overarching mission is to advance the national, economic, and energy security of the United States; to promote scientific and technological innovation in support of that mission; and to ensure the environmental cleanup of the national nuclear weapons complex. http://www.energy.gov/ Environmental Protection Agency The EPA leads the nation’s environmental science, research, education and assessment efforts. The mission of the Environmental Protection Agency is to protect human health and the environment. Since 1970, the EPA has been working for a cleaner, healthier environment for the American people. http://www.epa.gov/ n Metropolitan Development Association The MDA is a private, not-for-profit corporation, representing the business leadership of Syracuse and Central New York. Membership of the MDA is comprised of the chief executive officers of the largest corporations and institutions in the region with acknowledged leadership in manufacturing, finance, distribution, bio-technology, real estate, construction, medical technology, education and law. http://www.mda-cny.com/ Tate Access Floors, Inc. Tate is the largest raised access floor manufacturer in North America, allowing Tate to service large and small projects simultaneously. As the leading authority on underfloor service distribution, Tate leverages its 45 years of experience in the industry to provide technical support and education to the design and construction community. http://www.tateaccessfloors.com/ TurkofAmerica • 27

HOW TO EXPAND YOUR COMPANY

O’Brien & Gere O’Brien & Gere is an employee-owned engineering and project delivery company with over 850 scientists, engineers, construction, and operation personnel located in 30 offices across the U.S. With a 60-year history of applying technology and innovation, O’Brien & Gere is a leader in providing total capital & facilities, energy, environmental, and water solutions. http://www.obg.com/ Environmental Finance Center at Syracuse University The Environmental Finance Center at Syracuse University is tasked by the EPA with facilitating the development of sustainable communities. It connects motivated local government officials and private organizations with technical assistance, assessment tools, and funding offered by a large network of collaborators and resources. It also provides professional training and community outreach to engage, educate, and enable the public to make changes toward improved environmental infrastructure and quality of life. http://efc.syracusecoe.org/ Air Innovations Air Innovations designs and manufactures specialized air conditioning systems and environmental control equipment for a variety of industries that are installed worldwide. The company, established in 1986, is known for its expertise in applications that require precise control of temperature, humidity, pressure and filtration. Air Innovations’ capabilities range from concept development to prototyping and testing, from made-in-the-USA manufacturing to regulatory submissions and international distribution. http://www.airinnovations.com/ C&S Companiies Full-service, project delivery specialists—the C&S team includes more than 400 professionals and tradespeople engaged in making built environments stronger, natural environments richer, and all environments more sustainable. Its mission is to advance quality of life in an ever-changing world. http://www.cscos.com/ CDH Energy Provides energy system and technology analysis, using both field monitoring and energy simulation skills to assess technologies, verify savings, assess markets, or determine application feasibility. Applications include: building system design options analysis, energy savings project feasibility studies, product assessment and technology research and demonstration. http://www.cdhenergy.com/ Arup Is an independent firm of designers, planners, engineers, consultants and technical specialists offering a broad range of professional services. http://www.arup.com/ 28 • TurkofAmerica

Northeast Natural Homes The essence of Northeast is designing, teaching, and building in Nature’s Image. It is a nature-inspired ecological design & building firm with origins in the sciences of ecology and biology, and the built environment. The company draws inspiration from the Haudenosaunee Confederacy and its living decision-making principle-to always deliberate for the Seventh Generation to follow. http://www.ngbc.us/ Sensis Founded in 1985, Sensis Corporation is a global provider of air defense, air traffic control, airline and airport operations management, and data integration and distribution. The company serves a global client base and is actively involved in industry organizations and working groups worldwide, helping to address critical issues and develop innovative, real-world solutions. http://www.sensis.com/ SRC As a not-for-profit, research and development company that develops unique, creative solutions for nationally significant challenges in defense, environmental, and intelligence, SRC is committed to redefining possible.™ http://www.syrres.com/ Fulton Boiler Fulton is a global manufacturer of steam, hot water and thermal fluid heat transfer systems. Fulton products include steam boilers, hot water boilers, thermal fluid heaters, temperature control units, custom engineered systems, boiler rooms and a full range of ancillary equipment. http://www.fulton.com/ Syracuse Universitty From its founding in 1870, Syracuse University has been the embodiment of Scholarship in Action— education that transcends traditional boundaries through a combination of innovative thinking, daring choices and entrepreneurial attitude. http://www.syr.edu/ National Councils U.S. Green Building Council The mission of the U.S. Green Building Council New York Upstate Chapter is to provide an unparalleled opportunity to accelerate change and help shape the future of green building practices in the Chapter Region. http://www.greenupstateny.org/

ENERGY HUB

Turkey S›ts at the Corner Stone of the EU’s Energy D›vers›f›cat›on Strategy By Altan Ergün

Otion of the global shortage of petroleum and na-

ver the last decade we have developed a realiza-

tural gas. Keeping up with the demands of population growth and economic expansion is becoming an extremely important resource game. The competition for a variety of natural resources is increasing. On top of that, about 80% of the world’s oil reserves lie in politically unstable regions. We are seeing foreign and military policies being shaped over the issues of access and control of energy resources. World governments see acquisition, control, protection, and stable flow of natural resources as a fundamental and complex national security requirement, over which they give strong signals of not being hesitant to fight if needed.

Turkey is on its way to becoming a transit country for 10% of global oil exports and up to 15% of global gas deliveries.

In this major strategic issue, not only the Middle East, but Central Asia as well, which stretches from the Ural Mountains to China’s western borders, with vast reserves of oil and natural gas resources, has also received a level of global strategic thinking, in which the major forces of the world would like to secure and protect the flow of oil to its allies. Turkey, in this complex strategic board, is located close to more than 70% of the world’s known gas and oil reserves, especially those in the Middle East and the Caspian basin. As one would expect, this puts Turkey in the position of transit country between producing and consuming countries. In this growingly important role, major pipelines have been built, and others are in planning stages. Blue Stream: The Blue Stream’s gas pipeline from Russia goes under the Black Sea, resurfacing in the Turkish port of Samsun. Russia eventually has the aim of increasing its capacity to 32 billion cubic meters in an effort to halt the Nabucco pipeline, which is a key project to diversify the European energy supply away from Russia through a route that will carry Central Asian and eventually Iranian gas. The extension of the Blue Stream gas pipeline to Ceyhan and all the way to Israel is also under consideration. BTC Pipeline: BTC is a pipeline that extends from the Azeri Chirag-DeepWater Gunashli (ACG) field through Azerbaijan and Georgia to a terminal at Ceyhan. It has a capacity of 1 million barrels per day, which equates to 1.5% of the world’s oil supply. In June of 2006, Kazakhstan officially joined the BTC pipeline project. Eventually more of the crude oil supply is expected to be tied up in this pipeline. Turkish Straits: The straits are of particular importance as around 4% of the world’s oil consumption is shipped through the Turkish straits.

30 • TurkofAmerica

Trans Anatolian (Samsun-Ceyhan): Due to heavy traffic in the straits, there is a growing importance to develop alternative routes. Hence, a pipeline has been built from Samsun to Ceyhan. Baku-Tblisi-Erzurum (BTE) Natural Gas Pipeline: Its main purpose is to transport gas from the Shah-Deniz field in the Azerbaijan sector of the Caspian Sea across the Georgia-Turkey border. This pipeline will be further developed in various stages in the TransCaspian Natural Gas Project, which will integrate one of the world’s largest gas reserves in Turkmenistan and Kazakhstan with the world markets. NABUCCO Pipeline: An important milestone for Turkey becoming a global energy hub is the NABUCCO Pipeline project. NABUCCO is designed to transport gas via Turkey through Bulgaria, Romania, and Hungary to Austria. NABUCCO is vitally important for the European Union’s diversification strategies away from Russian supplies. NABUCCO places Turkey as a main route of energy supplies, along with Norway, Russia, and Algeria. Southern Europe Gas Project: One of the further diversification steps of Europe’s energy efforts is the ring that interconnects Turkey, Greece and Italy’s gas pipeline networks. The major step of this development was the Turkey-Greece Interconnector. Links to Iraq and Iran: Turkey is also interested in the development of Iraqi and Iranian natural gas reserves and the integration of gas from both countries into the gas system with a parallel pipeline to the already existing Kirkuk-Ceyhan oil pipeline. Turkey is on its way to becoming a transit country for 10% of global oil exports and up to 15% of global gas deliveries. With these developments, the country will collect transit fees and will be a hub for storage, trading and refinery developments. This role will cause an eventual build-up of business, investment and human capital stock which will place energy as vital part of economic value creation. We can conclude by stating the ever increasing role of Turkey as global energy hub. Turkey sits at the corner stone of the energy diversification strategy for the EU, which puts the country in a position of leverage in further accession talks. Politicians should support rule of law, transparency, and policies that are investor friendly. It is vitally important to carry excellent relationships with producing and consuming countries and be seen as a factor for balance, stability and trust in the region. * Altan Ergun President of Arsila Group

COMMUNITY NEWS

Turk›sh Amer›cans Have F›nanc›ally Supported Nearly 100 Cand›dates Nat›onw›de cycle in which it participated, (2007-2008) TC-USA PAC was able to contribute over $135,000 to federal, state and local candidates. For this election cycle, as of January 1, 2010, over $92,500 has been contributed to federal, state and local candidates.

In the first election cycle in which it participated, (2007-2008) TC-USA PAC was able to contribute over $135,000 to federal, state and local candidates.

Ttee (TC-USA PAC) is a bipartisan organization suphe Turkish Coalition USA Political Action Commit-

porting political candidates who endorse a strong US-Turkish relationship and encouraging Turkish Americans to participate in the US political process, disclosed a 2009-2010 annual report. The report says that the Turkish-American community has only just begun to participate in the American political process en masse. Nonetheless, they are making an impact already. In the first election

Since 2007, the total amount fundraised by the Turkish-American community in the United States has reached the $1,000,000 mark, not including contributions to the recent Presidential election campaigns. Over $1,050,000 has been raised by Turkish Americans for both the Democratic and Republican Parties and congressional, state and local candidates during this time. Turkish-Americans have financially supported nearly 100 candidates nationwide. These activities have put the Turkish-American community on the map.

The Emp›re State Bu›ld›ng’s Campa›gn Ad Des›gned by Turk›sh Art›st

The campaign launched on January 20th and is running broadly in and around New York City: in regional magazines such as Time Out and the New York Post, on billboards in New York City.

he Empire State Building launched a campaign last January that aims to entice tourists to visit the Big Apple landmark, with the tagline: “The Real Magic, The Real New York.” The campaign, by New York-based agency Avrett Free Ginsberg, highlights the “emotions, experiences and human connections” of visitors to the Empire State Building's Observatory, according to the tourist attraction. Ads, running in regional publications like Time Out New York and the New York Post, show real consumers taking in the view from the observatory floor. Yucel Erdogan, Group Creative Director and the photographer at Avrett Free Ginsberg, said it is rare to be both the director and the photographer but he did the artwork/photography as well as come up with the campaign concept for other major campaigns, such as the Tumi Luggage campaign. The campaign launched on January 20th and is running broadly in and around New York City: in regional magazines such as Time Out and the New York Post, on billboards in New York City, and outdoor displays in the Midtown Tunnel, Bruckner Expressway and the New Jersey Turnpike as well as on taxi cabs. Erdogan came to the U.S. on February 5th, 1988 on a Turkish Education Scholarship, to get a Masters in Communication Design at Pratt Institute in Brooklyn, New York. While he was in school, he worked freelance for design firms and advertising agencies. In 1999, he got an assignment to design an international ad campaign for the makeup company Max Factor. He was hired as a full time art director in advertising at LMPM. During his eight years

there he shot TV advertising and print campaigns in Japan, Greece and South Africa. At LMPM his work won the agency numerous major campaigns: St. Regis, Tumi, Dewars 12, Bacardi Flavors, Fortuneoff, NY Design Show, Carrera vs Carrera, Sally Hansen, Empire State Building and two real estate campaigns, Peter Marino, and 110 Warren Street. Erdogan have just started a new chapter in his career. He left AFG right before the new year, and he is heading his own creative shop, Reason-Y. TurkofAmerica • 31

PARTNERSHIP

Clean Energy Partnersh›p between Turkey and the U.S. portant role as Turkey prepares to make key decisions about the development of its energy sectors.” The project includes training for Turkish officials in Argonne’s energy planning and modeling tools to support long-range energy supply and demand projections while improving and diversifying energy use, developing renewable energy and reducing carbon emissions. Argonne has worked with Turkey over the last 18 years on a series of complex energy and power modeling issues funded by the World Bank and the United Nations Development Program. “Turkey has significant energy potential that has yet to be realized,” said Argonne’s Guenter Conzelmann. “Our training and models will help the Turkish government make decisions that will address their future energy supply needs, develop sustainable energy strategies and mitigate potential power shortages while reducing vulnerabilities and promoting economic growth.”

A memorandum of agreement between Turkey and the USTDA outlines a clean energy partnership that will advance key objectives of the Obama administration by reducing carbon emissions and developing advanced renewable energy technologies.

32 • TurkofAmerica

he U.S. Department of Energy’s (DOE) Argonne National Laboratory will play a key role in a Clean Energy Partnership recently announced between Turkey’s Ministry of Energy and Natural Resources (MENR) and the U.S. Trade and Development Agency (USTDA). “We have enjoyed a longstanding partnership with Argonne National Laboratory and we look forward to working with them again as we address critical issues related to future energy use and developing clean energy technologies,” said Budak Dilli, General Director for Energy Affairs at MENR. “Their expertise will be instrumental in helping us understand our future energy supply and demand situation while realizing the environmental and economic implications of our energy policy decisions.” A memorandum of agreement between Turkey and the USTDA outlines a clean energy partnership that will advance key objectives of the Obama administration by reducing carbon emissions and developing advanced renewable energy technologies. “Our Clean Energy Partnership with MENR highlights how USTDA’s program provides access to U.S. technology and global best practices in meeting overseas development challenges,” said USTDA Acting Director Leocadia I. Zak. “We are pleased that the experts at Argonne National Laboratory will play an im-

Conzelmann heads Argonne’s Center for Energy, Environmental and Economic Systems Analysis (CEEESA), which develops models to analyze energy, environmental and economic issues. The models created by CEEESA are used to inform decision makers about large-scale energy deployments and address today's energy and environmental problems. CEEESA has trained more than 1,300 experts from more than 90 countries. CEEESA works with power companies, consulting agencies and governments around the world, including the U.S. Department of Energy, the U.S. State Department, the U.S. Agency for International Development (USAID), the World Bank, the International Atomic Energy Agency (IAEA), the USTDA and various state agencies. Argonne National Laboratory seeks solutions to pressing national problems in science and technology. The nation's first national laboratory, Argonne conducts leading-edge basic and applied scientific research in virtually every scientific discipline. Argonne researchers work closely with researchers from hundreds of companies, universities, and federal, state and municipal agencies to help them solve their specific problems, advance America 's scientific leadership and prepare the nation for a better future. With employees from more than 60 nations, Argonne is managed by UChicago Argonne, LLC for the U.S. Department of Energy's Office of Science.

WORLD ENERGY OUTLOOK

World Energy Outlook w›th Numbers Re a gas glut in the next four to five years, which euters - Fatih Birol predicts that the world will se-

he says would have huge implications for gas exporters such as Gazprom.

According to Fatih

Birol says that 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 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. Birol examines the world energy outlook with graphics and charts as follows.

Birol, Chief Economist of the International ▼

World Primary Energy Demand Gas grows fastest in absolute terms & non-hydro renewables fastest in terms of percentage, but oil remains the dominant fuel.

▼

Share of International Trade (%) Energy trade between regions more than doubles between now and 2030, most of it in the form of oil

▼

Energy Agency,

Developing Asia Oil and Gas Imports Developing Asia will become more dependent on oil & gas imports, from fewer countries –mainly the Middle East and Russia. OK, by CO, you mean carbon monoxide, right, not just carbon?

some global strategic challenges are the security of energy supplies, the threat of environmental damage caused by energy use, uneven access of the world’s population to modern energy, and investment in energy-supply infrastructure.

34 • TurkofAmerica

▼

Energy-Related CO Emissions CO2 World emissions increase by 1.8 % per year to 38 billion tons in 2030 –70% above 2000 levels.

Map of Global Energy PovertyMap Poverty 1.6 billion people have no access to electricity, 80% of them in South Asia and sub-Saharan Africa.

▼

World Primary Energy Demand and CO and CO2 Emissions Emissions increase faster than demand over the next 30 years, because the share of fossil fuels in the energy mix grows

World Energy Investment 2001-2030 Total investment: 16 trillion dollars

▼

Per Capita COPer CO22 Emissions Per Capita CO2 Emissions (Is this what he’s trying to say?) Per capita emissions rise quickly in developing countries, but remain much higher in the OECD & transition economies.

Energy Investment by Region 2001 2030 Almost half of the global energy investment will be needed in developing countries.

TurkofAmerica • 35

FROM EUROPE

EU’S GREATEST PROBLEM:

GREECE By Prof. Dr. Faruk Sen President, TAVAK (Turkish-German Educational and Scientific Research Foundation)

According to experts on the subject, this debt reached nearly 350 billion euro. Greece needs 53 billion euro for the year 2010.

Hwith the help of then President of France Valery

aving received EU membership in the year 1982

Giscard d’Esteing, Greece lived through a serious golden age between the years 1981 and 2005. Along with the regional and social development funds, the EU also gave agricultural funds in the amount of 104 billion euro to Greece during these years. While Turkey was borrowing from the IMF and other international institutions, Greece stood firmly on its feet with these grants. With the help of the EU, living standards in Greece were in much better condition in comparison to those in Germany, France, and England. On Mondays, stores open in the afternoon in Greece. They used to close again in the afternoon on Wednesdays and they used to take off Friday afternoons off. Government employees used to have the same hours. Especially given the framework of the EU’s efforts to accept Spain and Portugal as full members, ‘father Papandreu’ had requested a Mediterrenean fund in serious amounts and he benefitted from this fund the most. In the EU, which has consisted of 27 countries since 2008, we see that the source is diminishing gradually. First, Hungary and Romania began to present economic problems for the EU and they ended up having to agree with the IMF. Not being able to transfer much money to Bulgaria, one of the new members, Germany invested greatly in Turkish transporation companies and transporters in order to provide more opportunities to the Bulgarian transporter fleet, and, because of this, many owners of transporter fleets had to start a business in Bulgaria. At the end of the year 2009, we see that Greece’s foreign debt exceeded the limit of 295 billion euro. According to experts on the subject, this debt reached nearly 350 billion euro. Greece needs 53 billion euro for the year 2010.

The Difficult Task of the EU If Greece were a business, it would have been seriously considered to be bankrupt. However, as it is hard for countries to go bankrupt, especially since the European Central Bank (ECB) does not allow such a thing, the President of the ECB, Jean Claude Trichet, sought, through a new summit, for opportunities to help the euro country Greece. Accordingly, by following a plan for the next 10 years, the 27 EU countries will try to eliminate the concerns of the investers, which are due to the weak countries in the euro zone. After Greece, Spain, Portugal, and

36 • TurkofAmerica

Ireland rank among the countries that are problematic. According to recent developments, Italy’s condition is also becoming difficult, day by day. Greece implemented certain discretions. Under these, it increased the retirement age from 61 to 63. Beginning in 2011, for every five government employees who leave, one new person will be hired. Short term benefits of stocks will be taxed. The salaries of the Greek prime minister and other ministers will be frozen. The same sanctions are being applied to the salaries of other workers. Greek society, who had been used to conveniences, responded to these regulations by holding a 24-hour strike. The task of saving Greece from this situation has been left to the EU, and especially to countries like Germany and France. Greece owes German banks nearly 30 billion euro. Greece’s inability to rise out of this crisis is bringing serious problems into the euro zone and demonstrating that the euro’s value is compromised relative to dollar and is decreasing day by day. In spite of this, Greece continues its spendings on war planes and defense nonstop. In order to ensure France’s support under these circumstances, it was announced that the Greek army would buy 6 war ships from France in the following years. EU funds have not bee marked by any serious increase over the past few years. However, the number of countries that request a share from these funds has increased to 27. While 6 countries still pay more to the fund than they receive from it, the other 21 countries are trying to get as much as possible from the EU. Despite all of its problems, Greece is in a condition to be saved by the EU in the year 2010. In addition, the major countries of the EU will provide Greece with certain assurances. We can take into account that in 2011 Spain and Portugal will also knock on the door of the Union with the same problems. The EU, in which Turkey has been trying to become a full member for the past 50 years, has entered into a phase of economic decline. Although Greece, with its population of ten million, has been the country that has benefitted the most from the EU funds, it has not able to prevent the decline. If there were a chance for an EU member to be removed from the Union, the country that would have left first would have probably been Greece. As a country that does not have an economic policy regarding production, Greece will most likely knock on EU’s door to be ‘saved’ in 2020.

GREEN INVESTMENT IN BUFFALO

Buffalo Green Belt TBuffalo, New York, is a renewable energy and techhe Buffalo Green Belt development, in the city of

The Buffalo Green Belt boasts a strong work force, along the Lake Erie shoreline, the largest number of wind turbines on the Great Lakes, shovel ready land and progressive companies and industries.

nology corridor. The growing green economy, in the western New York area, takes advantage of its position as a Great Lakes transportation hub, as well as its industrial infrastructure and educated work force.

The city of Buffalo, New York is excited to announce its new initiative, the Buffalo Green Belt. "With a highlyskilled workforce, excellent location advantages, improved permits and licensing processes, strong incentives, and business assistance experts ready to help you move your project forward, the city of Buffalo is set to be your business development partner. Talk to us whether you are looking to expand your business, start a new one, or relocate your business to Buffalo, and we will work with you to meet your business goals," says Byron W. Brown, Mayor of Buffalo. The Buffalo Green Belt boasts a strong work force, along the Lake Erie shoreline, the largest number of wind turbines on the Great Lakes, shovel ready land and progressive companies and industries.

WHAT’S HAPPENING NOW IN THE BUFFALO GREEN BELT RiverWright At 110 million gallons per year, RiverWright, LLC will be one of the largest capacity ethanol plants in the country. The project will restore the existing historic grain elevators on the Buffalo River with state-of-the- art grain handling equipment to store 10.1 million bushels of biomass. Strategically located near marine, rail and major highway infrastructure, RiverWright has the ability to move massive amounts of biomass fuels by ship, rail or truck to the highest population centers in the eastern United States. Niagara River Greenway Running directly through the Buffalo Green Belt is the Niagara River Greenway, with its over 40 miles of parks, shoreline, and beautiful landscapes from Lake Erie to Lake Ontario. The Niagara River Greenway is a world class destination, with beautiful scenery, parks, trails and highways; the Greenway protects, regenerates and promotes significant natural, cultural, recreational, scenic and heritage resources. Cities of the Greenway spark revitalization, reinvestment and renewal, including reuse of brownfields and support of downtown development. Honeyw well Inventor of the world’s first biodegradable soap product, Honeywell’s Buffalo lab is working to create a new, green, alternative for automotive air conditioner fluid. Geared for reduced fuel consumption, energy efficiency, and lower operating cost, this next generation of automotive air-conditioning coolant will provide a non-greenhouse gas contributing solution that is compatible with existing automotive components. Steelwinds Comprised of 8 state-of-the-art 2.5 megawatt Clipper Liberty wind turbines, Steel Winds has transformed the Lake Erie shoreline from forgotten steel plant land into a progressive energy landscape. Steel Winds generates over 50 million kilowatt hours of clean, renewable energy each year, as well as bringing economic benefits to western New York

40 • TurkofAmerica

WIND ENERGY

The Fastest Grow›ng Source of Electr›c›ty en in Europe, where conventional energy costs are higher than those in the United States. With large untapped wind energy resources throughout the country and declining wind energy costs, the United States is now moving forward into the 21st century with an aggressive initiative to accelerate the progress of wind technology and further reduce its costs, to create new jobs, and to improve environmental quality. Wind Powering America will expedite the movement of wind technology into the mainstream of the U.S. electric sector. The United States has experienced 4 years of strong growth. In 2008, the United States led the world in wind capacity additions and in cumulative capacity. The United States lags behind other countries in terms of the percentage of electricity produced by wind. Wind represents just 1.9% of the United States' electricity supply, while that percentage is as high as 20% in Denmark, 12% in Spain, 11% in Portugal, 9% in Ireland, and 7% in Germany. U.S. wind power installed capacity now exceeds 35,159 MW, which is enough to serve 9.7 million average households. Texas is firmly established as the leader in wind power development, followed by Iowa and California. The DOE has said wind power could generate 20% of US electricity by 2030.

The United States has experienced 4 years of strong

Wtricity generation in the world through the

ind has been the fastest growing source of elec-

1990s. However, the majority of this growth has be-

According to Lester R. Brown, an American environmentalist and founder of the Worldwatch Institute, wind-generated electricity cost 38¢ per kilowatt-hour when the wind industry began in California in the early 1980s. Since then it has dropped to 4¢ or below at the best wind sites and some U.S. long-term supply contracts have been signed for 3¢ per kilowatthour. By 2010, wind farms at prime sites may be generating electricity at 2¢ per kilowatt-hour, making it one of the world’s most economical sources of electricity.

growth. In 2008, the United States led the world in wind capacity additions and in cumulative capacity.

Here are some of the largest wind farms in the United States, as of October 2009: Wind farm Installed d capacity (MW) Altamont Pass Wind Farm 576 Capricorn Ridge Wind Farm 662 Fowler Ridge Wind Farm 750 Horse Hollow Wind Energy Center 736 Roscoe Wind Farm 781 San Gorgonia Pass Wind Farm 619 Sweetwater Wind Farm 585 Tehachapi Pass Wind Farm 690

State California Texas Indiana Texas Texas California Texas California TurkofAmerica • 41

SUCCESS STORIES OF CLEAN TECH

Clean Technology Pract›ces Make A D›fference NYSERDA has introduced an innovative program to make PV systems and to encourage new PV installations through qualified system installers. THE SYSTEM The 5.6kW PV system, comprised of 34 PV modules, was installed on a south-facing, sloped, standingseam roof of the Town Hall, occupying approximately 479 square feet on the roof. Through a data acquisition system, a lobby display monitor provides real-time data on performance of the PV system. THE SAVINGS The Town of Greenburgh’s PV system will generate approximately 6,840 kWh of electricity annually (roughly the equivalent of the use of an average to large house). Emissions of CO2, the primary greenhouse gas, will be reduced by an estimated 7,460 pounds a year.

Tfor the town of Greenburgh, population approximahe Town Hall functions as the center of government

The town of Greenburgh’s PV system will generate approximately 6,840 kWh of electricity annually. The estimated annual output of the Farm & Granary system is 4,900 kWh.

tely 86,000, the largest town in Westchester County (the first county north of New York City). Greenburgh has been an Energy $mart Community since February 2003 and actively conducts outreach to educate its residents and businesses about energy conservation/efficiency and renewable energy. Town officials sought to install this 5.6 kW photovoltaic system primarily as a demonstration system to increase public awareness of the need for and benefits of renewable energy. The Town Hall’s central location, high visibility and large number of visitors made it an ideal setting for this purpose. A monitor in the lobby displays real-time data about the system’s performance. The Town also benefits from the electricity produced by the system and the fact that it helps reduce the Town Hall’s peak demand. In order to first reduce the building’s energy consumption, in early 2006 the Town Hall completed an energy-efficiency retrofit, installing new high-efficiency lighting and occupancy sensors. “We hope that our solar demonstration project at Greenburgh Town Hall will encourage residents and businesses throughout the town to explore solar power and other energy alternatives, as well as to save energy,” said Town Supervisor Paul Feiner. “We must reduce our use of fossil fuels and end our reliance on foreign oil. The town hopes to lead the way.” THE BACKGROUND Solar-electric power is generated from the conversion of sunlight into electricity through a photovoltaic (PV) or solar cell. Photovoltaics provide power naturally and reliably. While the initial system cost can be considerable,

42 • TurkofAmerica

Photovoltaics provide power naturally and reliably. While the initial system cost can be considerable, NYSERDA has introduced an innovative program to make PV systems and to encourage new PV installations through qualified system installers. THE STORY For Michael Siegel and Barbara Caldwell, harvesting solar energy just makes sense. At Farm & Granary, their 14 acre farm nestled between the Shawangunk Ridge and the Catskill Mountains in the Rondout Valley, they take the best of what is old and marry it to the best of what is new. Their certified organic heirloom vegetables and eggs represent a new direction in agriculture. Crops on their farm are intensively grown in raised beds and in high tunnels which extend the season in which Michael and Barbara bring great tasting sweet potatoes, yellow Brandywine tomatoes, and varieties of beets to market. Knowing that assistance was needed to accomplish their goals, Michael and Barbara contacted NYSERDA, which provided the needed assistance to make the photovoltaic dream a reality. THE SYSTEM The system is comprised of 30 photovoltaic modules, 140 watts each. The DC (direct current) power produced by the solarmodules is converted into AC (alternating current) for use by Farm & Granary. The total AC rated power of the system is 3.5kW. The total installed system costs are approximately $34,200 and the NYSERDA incentive is $16,800. THE SAVINGS The estimated annual output of the Farm & Granary system is 4,900 kWh. This system should reduce the amount of energy purchased by about 85%. Emissions of CO2 will be reduced by 5,350 pounds annually. Source: www.powernaturally.org

NEWS FROM THE ENERGY WORLD

BDG Adv›ses On An Energy Acqu›s›t›on Deal ›n Turkey

Bconcentrates on providing in-house services to

DG Financial Advisory Services Company, which

domestic and international companies, has recently advised on and completed an acquisition deal in the energy sector in Turkey. The deal involved the acquisition of Ka-Metal, located in Bursa by Istanbul-based Bozlu Holding.

BDG Financial Advisory Services

Ka-Metal, established in 1998, has been involved in the manufacturing of metal parts for the automotive sector. Since 2000, it has developed a business in solar energy, particularly related to solar tracking systems in production facilities located in Bursa. The company, with experience and technical know-how in project design and implementation, is a major producer of mechanical and electrical elements of solar tracking systems in Turkey. Moreover, it holds patents for

manufacturing 6 types of solar tracking systems. As part of its business development strategy, Bozlu Holding has acquired the company to enter into the solar energy field. The new company operations will continue in existing production facilities under the name of Solar Energy Technology and Metal Industry Corp. (SOLENTEK) with the objective of becoming a major player in the solar energy sector in the country and region. BDG Financial Advisory Services Ltd., was founded by Bayram Tuncer, Durmus Cavdar and Ahmet Gözitök in 2000, in Istanbul, Turkey. The managing partners and members of the company have been active professionally in the management of major private and public sector institutions.

Compay has recently advised on and completed an acquisition deal in the energy sector in Turkey. NYSERDA will provide nearly $300 million for renewable energy projects under the Renewable

$300 M›ll›on for Renewable Energy Projects

GNew York State Energy Research and Developovernor David A. Paterson announced that the

ment Authority (NYSERDA), in conjunction with the Public Service Commission (PSC), will provide nearly $300 million for renewable energy projects under the Renewable Portfolio Standard Program (RPS), which will help accelerate the development of New York’s clean energy economy. With these awards, New York continues to invest in clean energy to achieve Governor Paterson’s goal of meeting 45 percent of the state’s energy needs through energy efficiency and renewable energy by 2015. The projects supported by today’s $96 million award will add more than 142 megawatts of renewable capacity and produce nearly 578,656 megawatt hours per year of clean renewable energy, enough clean energy to supply approximately 85,000 homes. Pro-

ject developers estimate that these projects will also provide more than $91 million in in-state benefits over the next three years through new jobs, increased property tax revenues, royalty payments to landowners, and other economic activity. New York is nationally recognized for its investments in clean renewable energy technologies. Including projects from this latest solicitation, 33 renewable projects have been selected under the RPS program, representing more than 1,300 megawatts of renewable capacity. Of the 33 projects selected to date, 27 have successfully entered operation, one facility is under construction, and the five are under development. These include 13 wind farms, 17 hydroelectric plant upgrades, two power plants displacing coal with biomass, and one power plant that will use 100 percent clean renewable biomass.

Portfolio Standard Program (RPS).

W›nd Turb›ne Product›on Assembly Plant Com›ng to Nevada

TGeneration Systems, and American Nevada Group

he U.S. Renewable Energy Group, A-Power Energy

announced the development and construction of a new production and assembly plant in Nevada that will supply wind energy turbines for renewable energy projects throughout North and South America. The facility will be about 320,000 square feet with an annual production capacity of 1,100 MW of wind energy turbines annually, enough to power 330,000 homes. The facility is expected to employ about 1,000 Nevada workers and create even more jobs during the construction process. ANC will identify potential sites for the facility and will develop the facility for the group. The United States Renewable Energy Group is

a U.S.-based private equity firm that mobilizes and facilitates the participation of international financing and investment in large-scale renewable energy projects within the United States. SPG is a renewable energy industry alliance based in Shenyang, China. SPG's member companies range from power equipment makers to engineering service providers, including A-Power. A-Power. through its China-based operating subsidiaries, is the largest provider of distributed power generation systems in China, focusing on energy-efficient and environmentally friendly projects of 25 MW to 400 MW. TurkofAmerica • 43

ENERGY DIPLOMACY

Energy D›plomacy of Turkey: Cooperat›on w›th East and West cash flow that would be resulted from natural gas.

By Assistant Prof. Goknur Akcadag*

“Cooperation with East and West: The attempts of Turkey to establish a balance in numerous fronts instead of a dependent allegiance result from both her geography and geopolitics”

44 • TurkofAmerica

Tavoiding to confront with both Western and Eastern

he multi-dimensional strategies of Turkey, firmly

countries, especially reveals itself in the energy policies. Assessing all the different aspects one may suggest that Turkey takes steps among the USA, Russia and EU within a balanced policy looking after her own interests as the energy policies builds up in parallel to the political approaches in the short and long run determining the power balance thus the signed agreements are of international importance politically. On the other hand it is not likely to comprehend just through the opinions published in the press what the reactions from the USA would be in the future for her own plans in the region against the policies of Turkey, which Turkey considers they are the balanced ones. Turkey rejoins against the negative attitudes on her EU membership by her energy policies while the USA and Russia take steps to protect their interests over the countries they influence. The establishment of the EU was technically dependent on the union of coal and steel. The course in the coming days will prove whether the energy basin and transit route between the East and West would create petrol-natural gas cooperation as much as their interests overlap. Here it is the important that how much of this cash flow would be controlled by Turkey not how much of the petrol and natural gas flowing through this pipe line would be consumed by her. The USA does not need the Middle Eastern petrol directly. Even though America provides most of her petrol need from the Southern American countries the main reason behind her interest for the petrol drilled in this region is that she holds the reins of cash flow using petrol as a tool. It would be reasonable to evaluate that Turkey might be a power to control the

One may suggest that Turkey aims to recover some missed chances during the course of history in the coming years reaching in the Middle East and later to the axis of Afghanistan and Pakistan over Iran and Caucasia, energy and commerce arenas of the Central Asia and heading towards the new Silk Road destination. Several experts claims, considering the Mediterranean-Middle East-Europe, Turkey and the USA and Turkey-Russia relations in the light of Braudel’s opinions, that Turkey in 2010 must adopt a policy to recover missed chances, attempt for new acquisitions, protect her own interests and build up a stronger negotiation base. Ed Crooks in his article published in Financial Times says “we can accuse of none of the country in the Russia’s influence sphere as they demand that their options remain open” and points out that Turkey uses her strong leverage against Europe. “Only partnership not friendship prevails when vital interests matter”. In this article it is stressed that Turkey, before which was laid obstacles not to be a member of the EU, takes steps implementing different initiatives in order to gain strength. On the other hand in an article, written by Tar›k Ramazan of the Islamic Research Institute of Oxford University, difficulties Turkey faces during the membership procedure is assessed. It reads out “Turkey is part of Europe. The thing holds her at bay from Europe is fear”. It will be seen whether the idea ‘cowards die many times before their deaths’ is true or not and what energy bids and a Turkey with stronger position will change. The Turkey’s plan for future is based on being a transit country in the energy network as it imports the 92 per cent of petrol and 97 of natural gas. WHAT TURKEY PERSUES? Another remarkable comment published in the magazine “The Middle East” in England in August-September 2009 cover. In the article by Mustafa Karkouti headlined “What Turkey Pursues?” he claims that Turkey is about noticing her potential to be a newly discovered regional power not only in the Middle East but also both in Caucasia and the Balkans for the first time. He emphasizes that Turkey gets an open support from the USA for her new foreign policy, which makes the issue more interesting. Another comment that stressed the power of Turkey in the past came from Yevgeni Satanovski, the President of Russia Middle Eastern Institute. His article published in Izvestia was headlined “Return of Bab›ali”. (Moscow, 21.1.2010). The author points to positive and impartial approach of Turkey, taking her own interests into con-

sideration in a pragmatic way, for the Russia’s regional including conflicts in Chechnya, Abkhazia and Southern Ossetia. PIPELINES WILL BRING LONG-TERM MUTUAL DEPENDENCE Expert Ian Lesser of German Marshall Fund says about the issue: “Turkey has transformed her ideas dates back to the Ottoman era about Russia into a remarkably interesting relations that have considerable trade and energy features. Besides this causes long-termed questions to be asked for the tough choices and pressures Turkey may face in case the relations of West to Russia may transform into more competitive structure” (Risks and Advantages of Proposal Turkey Offered Russia, 12/01, Reuters). Wolfango Piccoli of Eurasia says about the issue: “Until one year ago the close relations between Turkey and Russia had been worrisome for the West. But in the end Europe could find out that Turkey imports the 65 per cent of gas she needs from Russia”. Russia is for now keeping silent towards Armenia-Turkey rapprochement as she has some economic interests (for example common petroleum and natural gas projects with Turkey and Azerbaijan and partnerships in military and technical fields) because Russia has proved her own talent to break the agreements scores of times at a critical step. She is able to keep the parties dependent on her instigating the conflict whenever she likes thus creating a favorable situation for herself. It is difficult to find out how energy policies and regional conflicts are accommodated. It is seen in the background that Ashkhabad and Baku extends their energy relations with other neighboring countries. The Devletabad-Serahs-Hangeran natural gas pipeline was opened during the visit of Iranian President Mahmoud Ahmedinejad to Turkmenistan. Iran will buy 8-20 billion cubic meter natural gas per year from Turkmenistan. The Turkmenistan-Uzbekistan-Kazakhstan-China natural gas pipeline, whose projected capacity is 60 billion cubic meter, started to operate on December, 2008. The Russian President Vladimir Putin explained that there was no any disapproval against flowing of the Turkmen natural gas into China in addition to Russia since a new energy network had been established in the Caspian Region. The details of such system have been cleared more after Azerbaijan wended towards Iran.

hern Corridor” and foreseeing to transport the Caspian natural gas to Europe have been significant factor. The energy maneuvers on an enormous geography from Trans-Caucasia to Central Asia are hereby in question. The time is approaching to take serious steps to determine the course of the events in the Caspian Region in coming years. (S. Tarasov, Regnum,10.1.2010). As of the end of 2009 the trade volume between Russia and Turkey increased 49 per cent reaching a record amount of 33,8 billion USD. Ankara allowed the Southern Stream natural gas pipeline to flow through her territorial waters. The capacity of new natural gas pipeline project increased from 31 million cubic meters to 63 million cubic meters per year. Apart from that the parties have been going on to discuss about the Southern Stream II Project. Energy has a pivotal role in shaping Turkey’s regional role as the country, a major consumer of energy in its own, is also key to linking oil and gas producers in Russia, Caspian, Central Asia and the Middle East with energy-hungry markets in Europe. Yet, Turks are not content for being a simple “bridge” over which energy flows only; they aspire to become a regional hub extracting greater value for the criss-crossing oil, gas pipelines and power interconnections. This is an exceptional and unique role Turkey could play as a regional energy hub, rather than a bridge. This is what Washington and Brussels should be supporting wholeheartedly. Unlike the West, Russia seems to have adjusted much earlier to this new geopolitical game. * SUNY- Binghamton University- Fernand Braudel Center former scholar, Y›ld›z Technical Uni., Department of Humanities and Social Sciences-‹stanbul / ‹nonu Uni. Department of History, Turkey.

Pipeline does not only mean natural gas. Pipeline creates long-run mutual dependency between countries. Therefore it manifests itself definitely in cooperation as well as in the geopolitical positions of the countries. So Alexandros Petersen, the Director of the Eurasia Energy Centre of Atlantic Council, maintains that some events having symbolic importance exist. “West is losing its initiative to set up alternative destinations for the Caspian Sea natural gas reserves”. Establishment a multi-axial policy is accompanied by a backstage diplomacy having the intrigue character. As concluded by John Robertson, an American expert on energy security, Turkey assured the transition of Turkmen natural gas profitless over Azerbaijan by fixing her own price as it was foreseen in the Nabucco Project. Moreover Turkey, which attempted to bypass it, tries to acquire the Turkmen natural gas passing through Iran and ship it to Europe. Consequently implementing the “Zurich Scenario” foreseeing to postpone the agreement on the transition of Azeri natural gas through Turkey and setting up diplomatic relations between Ankara and Yerevan has increased the appeal of alternative natural gas shipment destinations, both towards Iran that is to east, to Russia that is to west over Russia and to north that is to Russia, for Azerbaijan. Some events occurred, but not noticed by everybody, around the pipelines included in the “SoutTurkofAmerica • 45

BIOTOURISM

BIOTUOURISM – NEW FACE OF TREND the influx of thousands of tourists all over the world to the region, the texture of life has changed at times beyond recognition. Today, it is very hard to find a traditional, true cave-dwelling in any of the major towns of Cappadocia, which is not already transformed into a pension house or a modernized summer residence. Most of these new built houses hardly respect to the old characteristics of the local, vernacular architecture. Building forms of former times, which had been different as one travels from one Cappadocian village to the next, are increasingly replaced with standard construction and decor elements without paying attention authentic ways of doing things, using local materials, and of course the centuries long traditions of masonry so unique to the region as a whole. The result is a rapid loss of the particular historical character of different Cappadocian towns and villages.

By Nergis Canefe

One area of potential interest to Turkish investors is that of distributed generation technologies, which are increasingly being deployed in cities.

46 • TurkofAmerica

Cthe center of Anatolia, although when we speak of

appadocia is the ancient name of a large region in

Cappadocia today we refer specifically to the valleys of Göreme and Urgup, with their natural pinnacles and rock churches. A long, long time ago a series of eruptions from the cones of Mt. Erciyes and Mt Hasan covered the area in a thick layer of volcanic ash which solidified to form the soft tufa that characterises the surface strata. Both these volcanic mountains are still extant and dominate the landscape. The signature of the region, the 'fairy chimney' is formed when a cap of resilient stone protects the column of softer material beneath it while the surrounding tufa is removed. The area is now a warren of caves, underground cities, rock churches and chambers and it's almost certain that there are more such sites waiting to be rediscovered. All that said, Cappadocia has gone under an enormous transformation during the last 40 years. As a wellknown historical site, it combines the rare beauties of nature, culture and human creativity. However, with

I first arrived in Akkoy, Cappadocia as an international law professor from Canada with my young family in the late summer of 2008. The village is located 11 kms north-east of Urgup, and the winding roads that lead to the Cave House we were going to stay at were intriguingly obscure and yet welcoming. At the time, I already knew that many of the local cave dwellers of traditional Cappadocian rock-villages have been either moved to new, subsidized houses provided and planned for the local population, or, villagers themselves deserted their ancient dwellings and ways of life and moved to nearby towns for a better life and jobs. There were indeed three ‘emptied’ stone and rock villages on our way to Akkoy, each more eerie than the other with hardly a handful of people still remaining in these surreally beautiful clusters of ancient houses, graveyards and arches. Since the 1970s, rapid urbanization, modernization and the extensive growth of the tourism market as well as the allure of new building materials caused dramatic changes in these villages, and for the most part, led to their decay and total deterioration. Yet, Akkoy was strikingly different. The immediately observable decay of traditional, vernacular cultural wealth and the disappearance of unique Cappadocian building styles were not applicable to this village. It was, truly, like an open air museum. What is more, it had real people living and farming in it. Unbeknownst to me at the time, this was the beginning of a long journey for me, and my dealings in Akkoy. Fast forwarding a year, I am now a property owner in the village, and a business partner for Mehmet Gulec, the owner and founder of the Akkoy Evleri we originally stayed at as a family. I have an incredibly talented team of masons turning my own cave home, Uvercinka, into a Museum House and a Children’s Library to be opened in summer 2010 as a philanthropic enterprise. I named it Uvercinka, suitable for a region

known for its love of pigeons (guvercin in Turkish). My house is particularly designed as a family residence, fully furnished for long-term stay. It will offer a perfect escape for artists, writers, musicians who wish to hold workshops, master-classes or run writing and creative arts sessions. I also began making freskos on the cave walls of Akkoy Evleri , the Cave Hotel, and we are starting a winery business together with Mehmet. But why would I take the risk and invest time, energy, love, compassion, and cash, to this esoteric, ancient mountain village removed from all else except the timeless routines of communal village life, crop cycles, silent and mostly empty cave houses, and quiet roads leading to sleeping wine yards up on distant valleys? As I made several new visits to the village between August 2008 and now, I learnt that akkoy is a very ancient settlement that hosted Hittites, Asurians, Seljuks and Ottomans in its long history. The village's unique vernacular architectural style is readily observable in the stone houses carved into the volcanic rock formations. The village as it stands was given its final shape during the 1920s and 1930s by local craftsmen who created a spectacular vista of terraced streets and cubic stone houses fully equipped with cave storage rooms, sun roofs, open kitchens and multiple chambers. Once populated by hundreds of people and beaming with activities and trade, today Akköy has become one of the three adjacent ancient mountains villages in the vicinity inhabited mostly by the elderly. The first wave of labour migrations from the village was to Germany during the 1960s, followed by the second and third waves to Turkish cities and again abroad. Today, the remaining population of 80 to 100 people are proud of their ancient settlement and protects and look after their village for future generations. The civil architecture of the village is preserved untouched. The unmatched beauty of the rows of sandstone houses carved by local masons is a sight to be enjoyed on its own. The villagers also continue to till the land and engage in animal husbandry and horticulture keeping to seasonal routines, which allow visitors to engage in biotourism activities first hand. The village has a unique graveyard that keeps to the Hittite tradition of collecting and preserving the bones in a pile in order to open space for new burrials. The guests to the village are truly welcome to spend time with the villagers, visit their households, the communal coffeehouse, and join them in their yearly activities.

traditionally decorated and the cotton covers, carpets, kilims, wooden furniture, etc. are locally produced. However, each room also includes private stone shower and w/c, some rooms even a jacuzzi, constant hot water, comforting wooden floors, and a must for an international academic, internet service. What is more, in Akköy, this summer myself and my young boys enjoyed natural life and tasted the fresh organic food from our own garden and the fields and wineyards laced around the village. In the kitchen, the food is prepared fresh every day, entirely from locally grown ingredients and depending on what is available in each season. The cooks are villagers themselves who prepare standard regional favorites as well as special treats for holidays. The village and its immediate environs allows for direct participation in organic farming, as well as seasonal activities as the villagers harvest the produce from the fields and orchards. The villagers are also expert collectors of mountain produce, such as select mushrooms, herbs and berries and the visitors in our hotel are most welcome to join in these communal activities. The harvest is then processed for the year, as grapes are squeezed into extract and dried to paste, wheat and other grains and processed through traditional means to make pesah (dry/yeastless bread) for the winter months, jams and preserves are boiled, and fruit and vegetables are lined up to be dried under the sun. There are also activities for those who suffer from specific ailments such as romatism and arthiritis that the villagers themselves are accustomed to for many centuries. The best cure for any chronical pain caused by rheumatism, arthritis, fybromyalgia, skin disorders, digestion problems, respiratory disorders and more is the natural waters and hot-water pools available in the area. The village itself imposes nothing on the visitor or guests as there are NO shops to sell anything, or no merchants at your doorsteps. The idea is for one to rest, enjoy the air, the sun, the quiet, and the history and life style that comes with the village itself. However, on the weekly market in the nearby town of Urgup, we also saw many different kinds of merchants, farmers from the mountains who come to sell their fresh fruit and vegetables, herbs, as well as unique samples of ironware and textile. Since its restoration and opening in 2003, Akkoy Evleri Akkoy Evleri hosted many unique guests from all corners of the world including archeologists, nature lovers, architects, diplomats, engineers, doctors, students, teachers, photographers, professional mountaineers, artists, and more. They arrive from many different and unrelated locations, including Japan, Korea, many states in Africa, all over Europe, Canada and the United States of America, as well as Australia. In

That is why; part of our yearly routine of moving from Canada to Turkey now includes a family stay at Akkoy. Both Uvercinka and Akkoy Evleri Cave Hotel's commanding location give the visitor the full view of the ancient village of Akköy as well as the surrounding valleys and mountains with three other rock and stone villages in sight, fertile fields, and the unique landscape of Cappadocia. The whole place is marked by its serenity, comforting hospitality, the unique and the magical features of the village. The area around the village offers superb opportunities for historical site-seeing, photography and nature hikes, and of course, biotourism. In terms of accommodation, the quality of the cave rooms make you feel cool in the summer and warm in the winter. Volcanic rock called "tuffa" is perfect insulation material. It keeps the temperature between 17 - 20 degrees Celsius throughout the year. All rooms at Uvercinka as well as at the Akkoy Evleri are different from each other in their size, shape and qualities, but they each have the signature curves, texture, cupboards, fireplaces, arches and decorations characteristic of the village’s local civil architecture. All rooms are TurkofAmerica • 47

BIOTOURISM

that, I take comfort and justify my rather unusual decision to spend part of my life in a distant mountain village in Cappadocia, where I am the only urban person and a non-local, while feeling truly at home in our new home, Uvercinka. BIOTOURISM CALENDAR OF AKKOY DECEMBER/ JANUARY / FEBRUARY /MARCH These long months of the winter come with plenty of sunshine and white snow to the valleys and hills surrounding the village. For those who may be tempted, there is plenty of small game for hunting in the environs of the village, as well as the possibility of nature walks with special winter shoes used by the villagers. In the evenings, it is a delight to gather around the wood stoves and fireplaces in your room and the hotel’s central areas and restaurant, to eat barbecued potatoes and local vegetables. The local village café is a welcoming spot for long evening chats, drinking tea and coffee and sharpening your back-gammon and other Middle Eastern game skills with the villagers. The nights are crisp and quiet, with an early morning sunrise always welcoming you to the new day. APRIL With the arrival of spring, the outlook of the village changes entirely. The stone houses and pavestone pathways are now laced with the spring bloom of apricot, plum and almond trees. The fields are filled with the buds of narcissus, anomone and other rare mountain bulbous flowers. The villagers engage in communal clearing of the fields and pruning of the fruit orchards as well as tending of the wineries. Our guests are welcome to work along the villagers, as well as enjoy guided tours of the spring brooks, rare plants in the valleys and mountains, as

well as bird watching and other calm activities to enjoy the spring weather and sunshine in full. MAY The best gift of the month of May is the early crop of fruits that nature gives us. Plum, apricot and almond trees have special green fruits that the villagers, especially the children, really enjoy. This is also the time for communal mushroom picking activities in the mountains. This ancient habit equips the villagers with a much appreciated delicacy for their local cooking practices. Our guests are welcome to join us in learning the different kinds of edible mushrooms growing in our mountain village as well as the myriad recipes used to enjoy their rare taste to the fullest. JUNE While the work in the agricultural fields had slowed down in April and May, june is the month when the bulk of the work for organic farming takes place in the village. The fields need regular tending, watering and upkeep until the harvest time. June is also a special month of festivities. At the third week of the month, there is the annual Rice Festival of the village, whereby the whole community goes upto the mountain tops, eats, dances and plays traditional instruments to celebrate the summer and the upcoming harvest. Our guests are most welcome to take part in these ancient festivities and enjoy first hand the beauty of communal traditions of Asia Minor. JULY In this month, fruits and vegetables ripen and are ready for harvesting. Our guests are welcome to join us in collecting the gifts of nature in the many fields we have in the environs of our village, down in the valley, up on the mountains tops and along the brooks running through the village itself. AUGUST /SEPTEMBER This is the Harvest Time, when all the hard work of the year comes to fruition. The villagers are now in the fields, collecting the goods and gifts of nature, working hard in teams, when entire families and several generations work side by side. All the harvest then gets carried into cave storages. Big wood fires are built to boil the fruits and grapes to produce the precious extracts and to make yearly preserves and jams. Nuts such as walnuts are harvested for yearly consumption, broken and stored in cotton bags. The local delicacies of sun-dried apricots are bagged for winter months and fruit and vegetable composts are prepared. This is practically the best season to join the villagers in their agricultural activities as the autumn season slowly sets in. OCTOBER/NOVEMBER Preparations for the long winter season starts. In the households, villagers make yeastless bread and special baked goods for storage. Wood is collected from the valleys for the long months ahead. Seeds are brought to the fields and the villagers make the preparations for next year’s crop by tilling and turning the soil before putting the seeds in. This is a wonderous time when the light turns orange, and long nature tours and walks in the area allows the enjoyment of the crisp mountain air and the changing colors of the local trees for our visitors. Our visitors are also most welcome to join the villagers in their winter preparation activities.

For contact: www.akkoyevleri.com or email: akkoyevleri@gmail.com. 48 • TurkofAmerica

“Fast and reliable accounting, tax and audit” Dr. NEVZAT YILMAZ, YMM OZAN BACAK, CPA

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AN ENERGY INVESTMENT OPPORTUNITY IN CENTRAL ASIA

A Potent›al Dest›nat›on for Turk›sh-Amer›can Energy Contractors

Kwater resources of which are located in its own ter-

yrgyzstan is the only country in Central Asia, the

By Burçak Akduman *

Expected reserves of 70 main coal deposits in the Kyrgyz Republic are estimated at more than 2.2 billion tons while inplace reserves are 1,317 million tons.

ritory almost entirely, and this is its hydrological peculiarity and advantages, as well as one of its main assets. The water reserves are estimated at approximately 2,458 km3, 1,745 km3 of which are lake waters and 650 km3 in glaciers. The total surface river flow is 50 km3 and groundwater resources make up 13km3. The Kyrgyz Republic is a country, the greatest part of which is surrounded by mountains, with a population of 5.3 million people, and an area of 200,000 km2. It is located in the eastern part of Central Asia and shares borders with China, Kazakhstan, Tajikistan and Uzbekistan. Mountains occupy 94% of the territory of Kyrgyzstan. Energy is the basic sector of Kyrgyz economy, providing the domestic needs of the national economy and population with electricity and heat energy. The wellbeing of the Kyrgyz people and successful economic development of the country largely depends on a stable and reliable operation of the energy sector. Expected reserves of 70 main coal deposits in the Kyrgyz Republic are estimated at more than 2.2 billion tons while in-place reserves are 1,317 million tons. According to forecasts, undiscovered reserves of oil and gas resources make up about 289 million tons of fuel oil equivalent. Fifteen oil and gas fields are being exploited in the south of the country with recoverable

50 • TurkofAmerica

reserves of industrial oil totaling 11.6 million tons and 4.9 billion cubic meters of natural gas. The main source of energy in the country is water resources, the energy potential of which is estimated at 142.5 billion kW-hrs of possible generation of power per year, only 10% of which is currently used. The water and power potential of our republic is ranked third among the CIS countries after Russia and Tajikistan. Development of Kyrgyzstan's water and power potential is the main target strategy for the energy development program of the republic. On the whole, the power system operates 18 power stations with a total installed capacity of 3,666 MW, of which the power installed in hydraulic power plants (HPPs) is 2,950 MW and there are two thermal power plants (TPPs) with an installed capacity of 716 MW. The cascade of the Toktogul hydropower plants, with a powerful water basin that is the Toktogul reservoir with the capacity of 19.5 billion cubic meters of water, makes up the basis of power generation in hydro-power plants and provides Kyrgyzstan and the neighboring states of the Central Asian region, not only with electricity but also with irrigation water for irrigation of the most important crops. A UNIFIED ENERGY SYSTEM When designing and creating a unified energy system for Central Asia, the cascade of Toktogul HPPs was planned to work in the irrigation regime. And this means maximum discharges of water from the cascade of Toktogul HPPs in vegetation seasons, in spring and summer, in exchange for fuel resources for TPPs in the winter. By now, this technological scheme has been violated due to lack of power in Kyrgyzstan, which resulted in a change in the mode of operation of the cascade from an irrigational one into a power mode. Consequently, the water discharge is intensified not only in spring and summer, but in winter too, in order to meet Kyrgyzstan’s domestic needs in electricity. This affects noticeably the volumetric capacity of the water reservoir.

In this context, water resources cannot be considered separate from issues of energy, since the main hydro-systems of interstate importance in the basins of the Naryn-Syr Darya and Amu Darya rivers not only regulate the flow of water in these rivers, but also generate the lion's share of electric power in the joint power system in Central Asia. Due to the fact that the volume of the existing hydro-systems of interstate importance allow the regulation of the flow of transboundary rivers, there is no need to build basins for irrigation purposes only. For these purposes, there are a sufficient number of existing hydro-systems of interstate importance. Only new generating stations are necessary, operating in parallel with the united energy system of Central Asia, through which discharges of water could be regulated effectively for the benefit of the entire region, respecting the environment. In Kyrgyzstan, only on the Naryn River and on its tributaries, 22 hydropower stations can be built with an annual power output of about 30 billion kilowatt-hours. KAMBARATA HPP-2 In 2007, Kyrgyz President Kurmanbek Bakiyev made a strategic decision to resume construction of Kambarata HPP-2 with the capacity of 360 MW and to allocate funds from the budget for this purpose. The start of putting into operation of the first aggregate of this power plant is expected in the first six months of 2010, while a unique large-scale explosion on the construction of the dam is going to be implemented in December 2009. However, the greatest efficiency of Kambarata HPP-2 is going to be achieved in the presence of a reservoir at Kambarata HPP-1. For this reason, at present, the Government of the Kyrgyz Republic is working on practical implementation of the project of construction of Kambarata-1 with the capacity of 1,900 MW. Construction of Kambarata HPPs will make it possible to use the Toktogul hydropower site, both in energy and in irrigation mode in the interests of all Central Asian republics with the possibility to export electricity up to 9 billion kWh annually. For the purpose of ensuring connection of Kambarata HPPs to the power system and serving out power, construction of 500/220 kV “Datka” power substation and 220 kV networks in the south of the republic is planned. To improve reliability of the main electrical power networks of the republic and to increase the capacity of transmission lines to the north of the republic, it is planned to build a 500 kV transmission line entitled “Datka-Kemin”, that is going to be 410 km long, and 500 kV “Kemin” substations. In order to solve the problem of improvement of reliability and sustainable power supply to consumers in the south of Kyrgyzstan, to use its own power network, and to improve interaction between the energy systems of neighboring countries in 2010-2011, it is planned to build transmission lines of 110 kV entitled “Aygultash-Samat”, which are going to be 140 km long. EXPORTING ELECTRICITY An issue for electricity export to South Asia in the international project CASA-1000 is being worked on too. In order to develop the Central Asian and the South Asian Regional Electricity Market ("CASAREM"), a Memorandum of Understanding between Kyrgyzstan, Tajikistan, Pakistan and Afghanistan was signed on 16 November 2007 in Kabul. In accordance with the project, upon completion of the transmission line 500 kV "DatkaKhudjand (Tajikistan)", it will be possible to export electricity from Kyrgyzstan in the amount of up to 2 billion kWh starting from 2013. TurkofAmerica • 51

AN ENERGY INVESTMENT OPPORTUNITY IN CENTRAL ASIA

Development of the power industry should be the top priority in the formation of the fuel-energy complex in the country, taking into consideration great importance of meeting the demand for power at the energy market in Central Asia. The share of the power industry accounts for about 5% of the GDP, 16% of industrial production volume, and 10% of state budget revenues. Production of the electric power industry plays an important role in ensuring the development of the republic's economy, covering the republic industries and population’s needs in energy, and generating hard currency from its export. Development and efficient operation of the fuel-energy complex of the republic depends, to a great extent, on solving problems, providing an agreed mutually beneficial cooperation of Central Asian countries with respect to formation of a balanced, rationally functioning energy market in the region. This will allow the optimization of the routine work of hydroelectric and thermal power plants, oil refineries and coal mines, to ensure the efficient use of generating capacities of plants, both in a daily and annual mode. Activities are conducted to strengthen the country’s energy independence through development of generating sources. The development priorities in the short-term period are to increase electricity output through rehabilitation of the existing power generating facilities. First of all, that means reconstruction of Bishkek TPP-1 by bringing its electrical capacity to 400 MW, reconstruction of Uch-Kurgan HPP and At-Bashy HPP, by attracting investments. Further development of the hydropower capacity of the Naryn River is going to take place as well. Currently, a study is being undertaken to assess options for development of hydro potential in the upper reaches of the Naryn River as well as technical and economic characteristics of first-priority HPPs. KARA-KECHE THERMAL POWER PLANT Strengthening of the basic capacities of the power system is also expected through construction of Kara-Keche thermal power plant of over 600 MW, in the coal fields of Kara-Keche. Work on the formation and development of the electric energy and power market is underway. A significant amount of work on development of commercial electric power accounting systems has been completed, ensuring the formation of a power and electricity wholesale market. Industrial structures of the energy sector have been reformed on the func-

tional basis for the purpose of adapting them to market methods of management. In addition, incorporation and partial privatization of enterprises have been conducted. In order to develop the energy sector, the state paid sufficient attention to building and improving the legal framework in the fuel-energy complex. Research on new mechanisms that combine primarily state and legislative regulation with market methods of economic stimulation were conducted constantly. Over the past few years, the management structure and the fuel-energy complex facility regulation in the Kyrgyz Republic have been significantly modified, and principal laws regulating the energy industry have been adopted. In turn, analysis of legal and regulatory framework allows us to conclude that Kyrgyzstan has one of the most liberal legislations in the field of energy among the countries of Central Asia, and it has the necessary legal framework to attract direct foreign investments into the energy industry. The Ministry of Energy attaches great importance to the issue of energy conservation and use of renewable energy sources. Some steps have been taken already to increase the production of energy-saving lamps and light-emitting diode (LED) bulbs, to master production of electronic electricity supply meters, as well as natural gas, water and heating meters. "Short-term strategies and priorities for the development of the energy industry for 2009-2012" have been instituted, as well as the Program of "Energy conservation in the Kyrgyz Republic for 2009-2015" and the Program of Small Waterpower Engineering Development in the Kyrgyz Republic. These documents, as well as the adopted National Energy Program of the Kyrgyz Republic for 2008-2010, the Development Strategy of Fuel-Energy Sector until 2025, the Law of the Kyrgyz Republic "On Renewable Energy”, and Regulations on procedure of construction, acceptance and technological connection of small hydro power plants to the electrical networks, make up a strong legal and regulatory basis of development of energy conservation and renewable energy sources. WATER-ENERGY RESOURCES An important issue is protecting Kyrgyzstan`s interests in the framework of rational use of the water-energy resources of Central Asia. At the meeting of presidents of Central Asian States that took place on 28 April 2009, President Kurmanbek Bakiyev raised issues of working out mutually acceptable solutions in the fields of securing water-energy resources in Central Asia, conservation of the area of formation of the largest rivers, which are the Syr Darya and the Amu Darya, reduction of glaciers, reforming of the International Fund for Saving the Aral Sea, compensation for services on water accumulation, and creation of multilateral commissions on integrated water resources management. In these issues, the main efforts of the Ministry are targeted at the development of a new long-term draft agreement on using water-energy resources in the Central Asian region with reflection of issues of balanced use of water-energy resources, creation of a financial mechanism to regulate using of water-energy resources, development of coordinated pricing rules, and distribution of costs and revenues with an equal benefit for all participants. Hydropower engineering development in Central Asia representing a single water-energy system can have a positive impact on the environment, maintaining a healthy natural environment for future generations. * Burcak Akduman is advisory board member of TurkofAmerica.

52 • TurkofAmerica

ESBAS

A NEW IDENTITY FOR IZMIR – INOVIZ BUILDING BRIDGES FOR SUSTAINABLE SCIENCE AND TECHNOLOGY Theme: Izm›r for Health Tsity, 9 Eylül University and Izmir Institute of Tech-

Education activities in INOVERSITY, which is a virtual creation, will be performed with the support of the three universities’ physical and human resources bases and also within the framework of the “memorandum of understanding‘’ that has been signed by the three universities.

Human resources, physical infrastructure, and research results in this field have more than sufficient capacity to lead the Biomedical Technologies Industry and Production Sector, which is now beginning to develop in Izmir.

In an R&D Center to be created at Aegean Free Zone Development and Operating Co-ESBAS and other local / foreign sector stakeholders, within the scope of ‹NOVACITY, the devices that universities cannot supply because of the financial difficulties will be provided. Both researchers from Izmir and other parts of Turkey as well as American scientists coming from TASSA will be free to use them.

he three major universities in Izmir (Ege Univer-

nology) are acknowledged as the national and international authorities in Biomedical Technologies, subjects including but not limited to Bioengineering, Bio-mechanics, and Materials Sciences.

Save the date: 1st Izmir Global

For this reason and with these resources, the creation of clusters and excellence centers will assure the leadership of Izmir in this area. The project consists of three stages that depend on industrial and academic partnership: & INOVERSITY Education Network

Health Conference May 24-25, 2010 Aegean Free Zone Gaziemir, Izmir, TURKEY

& INOVACITY R&D Region & INOVATECH Science and Technology Park An international Graduate Program will be activated in the Biomedical Technologies field with the support of The Scientific and Technology Research Council of Turkey-TUBITAK, the Turkish American Scientists and Scholars Association-TASSA, qualified EU universities and three national universities within the scope of INOVERSITY. This program is going to award post graduate (M. Sc.), doctorate (Ph. D) and post doctorate (Post Doc) degrees in an exchange program model. This education will be carried out with the support of three universities, Turkish academicians who are the members of TASSA and currently living in USA, highly placed officials of TUBITAK, and a supervising coordination committee. Our goal is to train qualified employees and encourage R&D operations to make the region a leader in the biomedical technologies field.

56 • TurkofAmerica

INOVATECH will pave the way for commercializing research results. Izmir and its surrounding area is becoming a more appealing location for Biomedical Technologies. In this concept, the basis for creating national and international new technologies and unique products will be completed. Ege University Science and Technology Centre-EBILTEM is the coordinator of the EU CIP Program. International cooperation will be coordinated with Enterprise Europe Network. R&D and promotion support for reaching international markets and attracting foreign investment will be developed. The enterprise will be made stronger by the coordination and cooperation of ESBAS and American medical product firms. With this unique approach, individuals who gain necessary skills will become creative, innovative, solution oriented, positive people with a global vision. • Izmir is an ideal environment to work at for R&D scientists from both Turkish and foreign countries, • The great wealth of Izmir’s infrastructure and human resources will be attractive for local and foreign investments, • A cluster in Biomedical Sector will be initiated.

PHARMACEUTICAL & HEALTCARE INDUSTRIES IN THE USA

The Global Pharmaceut›cal Market Exceeds $825 B›ll›on

one percentage point, partly due to the stronger demand being experienced in 2009. “Overall, market growth is expected to remain at historically low levels, but stronger-than-expected demand in the U.S. is lifting both our short- and longerterm forecasts,” said Murray Aitken, senior vice president, Healthcare Insight, IMS. “The economic climate will continue to be a dampening influence in most mature markets, particularly in those countries with rising budget deficits and publicly funded healthcare systems. In the U.S., pricing flexibility and inventory management actions are contributing to much higher growth than anticipated earlier this year, and are the main reasons for the upward adjustment to our five-year forecast.” In its latest analysis, IMS identifies the following key market dynamics: • Growth prospects in the U.S. market improve. Near-term growth prospects in the U.S. have strengthened in recent months, reflecting both sustained levels of price increases and changing inventory stocking patterns. Pharmacy chains are more tightly managing their inventory levels based on expectations of patient demand, which has led to greater purchasing volatility than in previous years. This also has played a role in unusually high sales growth in the first quarter of 2009 relative to forecast expectations. U.S. market growth in 2009 is now expected to be 4.5 - 5.5 percent, and 3 - 5 percent in 2010.

58 • TurkofAmerica

Iintelligence to the pharmaceutical and healthcare

MS Health, the world’s leading provider of market

industries, reported annual U.S. prescription sales growth of 1.3 percent in 2008, to $291 billion. Dispensed prescription volume in the U.S. grew at a 0.9 percent pace. IMS Health also reported that the value of the global pharmaceutical market in 2010 is expected to grow 4 - 6 percent on a constant-dollar basis, exceeding $825 billion, driven by stronger near-term growth in the U.S. market. The forecast, the leading annual industry indicator of market dynamics, predicts global pharmaceutical market sales to grow at a 4 - 7 percent compound annual growth rate through 2013, and takes into account the impact of the global macroeconomy, the changing mix of innovative and mature products, and the rising influence of healthcare access and funding on market demand. Global pharmaceutical market value is expected to expand to $975+ billion by 2013. In its latest forecast, the company raised its expectations for five-year pharmaceutical market growth by

• Economic downturn affects markets to varying degrees. Growth has slowed in countries where there is high out-of-pocket spending on pharmaceuticals and steep declines in macroeconomic activity, especially in Russia, Mexico and South Korea. At the same time, growth has been less affected to date in countries where drugs are largely funded publicly, such as in Germany, Japan and Spain. However, new cost-containment measures expected to be introduced during the forecast period likely will impact the pace of growth in these markets. In the U.S., pharmaceutical manufacturers’ efforts to expand access to and awareness of patient assistance programs, as well as co-pay subsidies for patients in need, are limiting the impact of the economic downturn to some extent. • Impact of the innovation/patent loss imbalance dampens growth prospects. Consistent with the trend over the past several years, the next five are expected to reflect a significant imbalance between new product introductions and patent losses. This is the primary factor limiting global pharmaceutical market growth to the mid-single digits through 2013.

During the next five years, products that currently generate an unprecedented $137 billion in sales are expected to face generic competition, including Lipitor®, Plavix®, and Seretide®.

two markets. • Healthcare access and funding under intensifying pressure. The economic climate has heightened concerns by payers about healthcare funding, and intensified their efforts to limit access to non-generic drugs. During the next five years, markets will be impacted by numerous payer actions, including the imposition of price cuts on existing drugs, the raising of standards required to achieve reimbursement for innovative therapies, and the use of economic incentives for prescribers and pharmacists to drive a shift to generic alternatives. Evidence of the value that medicines bring to healthcare systems will be required to achieve access and funding in both developed and emerging markets.

• Pharmerging markets in aggregate sustain strong growth. Despite economic conditions significantly affecting some markets – notably Russia, Turkey, South Korea and Mexico – the seven pharmerging countries are expected in aggregate to grow by 12 - 14 percent in 2010, and 13 - 16 percent over the next five years. China’s pharmaceutical market is expected to continue to grow at a 20+ percent pace annually, and contribute 21 percent of overall global growth through 2013. Russia and Turkey may be impacted significantly by new measures intended to reduce the level of healthcare spending in those

GROWTH IN GLOBAL BIOTECHOLOGY, 2007-08 (US$m) Public company data Revenues R&D expense Net income (loss) Number of employees Number of companies Public companies Public and private companies

2008 89,648 31,745 (1,443) 200,760

2007 80,344 26,881 (3,055) 201,690

Change 12% 18% -53% -0.5%

776 4,717

815 4,799

-5% -2

Source: Ernst & Young

TOP CORPORATIONS BY U.S. SALES US$ IN BILLIONS RANK 1 PFIZER 2 GLAXOSMITHKLINE 3 ASTRAZENECA CORP 4 JOHNSON & JOHNSON 5 MERCK & CO 6 AMGEN CORPORATION 7 HOFFMAN-LAROCHE 8 NOVARTIS 9 LILLY 10 SANOFI AVENTIS 11 ABBOTT 12 TEVA PHARM USA 13 BRISTOL-MYERS 14 TAKEDA 15 WYETH CORP Total US Prescription-bound market

2008 20.5 18.4 16.3 16.0 15.5 13.4 13.1 12.4 11.4 11.0 10.0 9.2 8.0 8.0 7.6 291.5

2007 23.6 20.7 15.5 16.3 17.6 14.3 12.4 13.9 10.3 10.9 9.7 7.9 6.9 7.7 8.6 287.6

2006 26.8 22.2 14.7 16.1 16.7 14.5 10.4 13.9 9.2 11.0 9.5 7.4 6.4 7.2 8.2 276.5

2005 27.3 20.2 12.7 16.0 15.4 11.9 8.2 12.9 8.7 11.2 8.7 5.7 8.3 6.6 8.1 253.9

2004 31.1 19.1 11.5 16.7 15.3 9.6 6.2 11.5 8.2 10.2 8.0 4.7 9.1 6.2 8.1 239.9

Asia-Pacific

Source: IMS National Sales Perspectives™

GLOBAL BIOTECHNOLOGY AT A GLANCE IN 2008 (US$m) Public Company Data Revenues R&D expense Net income (loss) Number of employees Number of companies Public companies Public and private companies

Global

Europe

Canada

89,648 31,745 (1,443) 200,760

66,127 25,270 417 128,200

16,515 5,171 (702) 49,060

2,041 703 (1,143) 7,970

776 4,717

371 1,754

178 1,836

72 358

4,965 601 (14) 15,530 155 769

Source: Ernst & Young

TurkofAmerica • 59

BIOTECHNOLOGY INDUSTRY

B›otech Industry Facts robust in both the US and Europe. The total value of M&A transactions involving US biotechs was more than US$28.5 billion — a record high not counting megadeals in prior years, such as the 2007 acquisition of MedImmune by AstraZeneca. Though absent any megadeals in 2008, the US totals were boosted by three large transactions valued at more than US$5 billion each: Millennium Pharmaceuticals’ acquisition by Takeda Pharmaceuticals, ImClone Systems’ purchase by Eli Lilly, and the acquisition of Applied Biosystems by Invitrogen (since renamed Life Technologies). In Europe, M&A transactions totaled US$5.0 billion (€3.4 billion). The potential value of strategic alliances involving US biotech companies reached an all-time high of almost US$30 billion, while the potential value of alliances involving European companies was US$13 billion (€8.8 billion).

Bthe U.S. that has produced some 160 drugs and iotechnology is a $89 billion a year industry in

There are 1,473

vaccines. According to Erns & Young report, in 2008 the revenues of the publicly traded global biotechnology industry increased by 12%, from US $80.3 billion in 2007 to US$89.7 billion.

biotechnology companies in the United States, of which 371 are publicly held. In 2008 the revenues of the publicly traded global biotechnology industry increased by 12%, from US $80.3 billion in 2007 to US$89.7 billion.

According to the same report, in Europe, the revenues of publicly traded companies increased by 26%. This growth rate was boosted by the impact of fluctuations in the exchange rate — when stated in euros, revenues grew by 17%. In Canada, revenues of publicly traded biotech companies decreased 9%, from US $2.2 billion in 2007 to US $2 billion in 2008, mainly due to the acquisitions of four significant Canadian firms — Arius, Aspreva, Axcan and Draxis — by foreign companies. If 2007 revenues were adjusted to exclude those four companies, the industry’s revenues would have increased by 26% instead of falling. In the Asia-Pacific region, revenues grew by an impressive 25%, led by strong growth in Australia, where the sector benefited from strong sales of CSL’s Gardasil. Indeed, in each region, a few mature companies had a disproportionate impact on top-line growth, highlighting that biotech remains an industry of haves and have-nots. DEAL ACTIVITY Deal activity remained strong in 2008, driven both by long-term trends such as big pharma’s need to reinvent itself because of looming patent expirations and by the immediate challenges created by the current funding environment. M&A activity was

60 • TurkofAmerica

INDUSTRY FACTS Biotechnology is responsible for hundreds of medical diagnostic tests that keep the blood supply safe from the AIDS virus and detect other conditions early enough to be successfully treated. Home pregnancy tests are also biotechnology diagnostic products. Consumers already are enjoying food items grown with the help of biotechnology, such as papayas, soybeans and corn. Hundreds of biopesticides and other agricultural products also are being used to improve our food supply and to reduce our dependence on conventional chemical pesticides. Environmental biotechnology products make it possible to clean up hazardous waste more efficiently by harnessing pollution-eating microbes without the use of caustic chemicals. Industrial biotechnology applications have led to cleaner processes that produce less waste and use less energy and water in such industrial sectors as chemicals, pulp and paper, textiles, food, energy, and metals and minerals. For example, most laundry detergents produced in the United States contain biotechnology-based enzymes. DNA fingerprinting, a biotech process, has dramatically improved criminal investigation and forensic medicine, as well as afforded significant advances in anthropology and wildlife management.

Source: Biotechnology Industry Organization

US BIOTECHNOLOGY AT A GLANCE (US$b) Public Companies

Industry Total

2008

2007

Change

2008

2007

Change

Product sales

$54.1

$49.9

8.4%

$57.0

$52.7

8.0%

Revenues

66.1

61.0

8.4%

70.1

64.9

8.0%

R&D expense

25.3

21.0

20.5%

30.4

26.1

16.8%

Net income (loss)

0.4

(0.1)

-430.7%

(3.7)

(4.2)

-11.2%

$343.8

$369.2

-6.9%

—

8.6

15.9

-46.3%

13.0

21.4

-39.2%

Financial

Industry Market capitalization Total financings Number of IPOs

—

-95.5%

Number of companies

371

395

-6.1%

1,754

1,758

-0.2%

Number of employees

128,200

131,300

-2.4%

190,400

192,600

-1.1%

Source: Ernst& Young

BIOTECHNOLOGY LEADERS IN TOTAL REVENUE IN THE US MARKET (Trailing Twelve Months) Amgen Inc.

$14.6 B

Gilead Sciences, Inc.

$7.0 B

Genzyme Corporation

$4.5 B

Biogen Idec Inc.

$4.4 B

Life Technologies Corporation

$3.3 B

Celgene Corporation

$2.7 B

Talecris Biotherapeutics Holding

$1.5 B

Charles River Laboratories Inte

$1.2 B

Qiagen N.V.

$1.0 B

Amylin Pharmaceuticals, Inc.

$758.4 M

Source: Yahoo Finance, Marc 2010

SELECTED 2008 US BIOTECH M&As Company Takeda Life Technologies Eli Lilly

Location

Acquired company

Location

Value (US$m)

Japan

Millennium

New England

8,800

San Diego

Applied Biosystems

SF Bay Area

6,700

Other (Indiana)

ImClone

New York State

6,500

Kinetic Concepts

Texas

LifeCell

New Jersey

1,700

GlaxoSmithKline

Sirtris

New England

720

ViroPharma

PA/Delaware

Valley

New York State

618

Hologic

New England

Third Wave Tech.

Midwest

580

J&J

New Jersey

Omrix

New York State

438

Galderma Pharma

Switzerland

CollaGenex

PA/Delaware Valley

420

France

Tercica

SF Bay Area

404

Switzerland

Protez

PA/Delaware Valley

400

Israel

CoGenesys

Mid-Atlantic

400

LA/Orange County

Dow Pharmaceutical Sci.

SF Bay Area

277

Ipsen Novartis Teva Valeant

Lev

TurkofAmerica • 61

THE FUTURE OF BIOMEDICAL

The Future of the B›omed›cal Industr›es ›s ›n New York State

The Cyberstates 2009 report shows that New York State remained the third largest cyberstate, employing 304,200 with a total payroll of $25.9 billion.

Dresearch and biotechnology companies remain a espite the deep recession, pharmaceutical

potent economic force throughout New York and the industry has strong potential for continued longterm growth.

According to a survey in the July 2006 issue of Business Facilities Magazine, New York State is ranked first in the nation for biotech growth. This sci62 • TurkofAmerica

ence represents a formidable force in the 21st century and New York State is at the forefront of cuttingedge research and developments. As a one of the world leaders in the biomedical industries, New York State remains the destination of choice for many high profile biotech, pharmaceutical and medical manufacturing companies, such as Pfizer, Bristol-Myers Squibb, Sanofi, Johnson &

Johnson, Bausch & Lomb, Bayer, Welch Allyn, J&J's Ortho-Clinical Diagnostics, Celltech, Wyeth, Genecor, and Albany Molecular Research. In addition, the Cyberstates 2009 report - which details national and state trends in high-tech employment, wages, and other key economic factors for all 50 states, the District of Columbia, and Puerto Rico - shows that New York State remained the third largest cyberstate, employing 304,200 with a total payroll of $25.9 billion. New York's high-tech industry experienced a net gain of 2,700 jobs in 2007, the most current year for which state data are available. New York State ranks the second in the nation for academic research and development expenditures at nearly $3.5 billion, and in 2005 ranked second in the number of science and engineering doctorates awarded, with 2419. In 2005, New York State was ranked third nationwide for the number of grant awards provided to its research institutions, a total of 4898 with a value of $2.72 billion, according to the National Institute of Health. New York State is a preeminent center for health care and medical research and plays a key role in the international medical technology industry. With a high concentration of hospitals, medical research institutions, and leading surgeons and physicians who pioneer new practices and procedures, New York State serves as a major base for clinical trials of medical technology products. New York State is home to many of the world's preeminent surgeons, physicians, scientists and a skilled, high-tech workforce. According to a study commissioned by the Biotechnology Industry Organization in 2004, New York State had more than 33,000 biological scientists in the workforce, the second highest in the US. BIOMEDICAL RESOURCES New York State has an abundance of science and technology resources available to serve its burgeoning Biomedical community. A list of statewide and regional resources, including trade associations, research and development centers, academic and research institutions follows. ASSOCIATIONS New York Biotechnology Association (NYBA) Biotechnology Industry Association (BIO) Health Care Industries Association AMDeC Foundation, Inc. SUPPORTING RESEARCH NYSTAR List of Biomedical-related Centers for Advanced Technology (CATs): Center for Biotechnology - SUNY Stony Brook Center for Biotechnology - Cornell University The Center for Automation Technologies at Rensselaer Polytechnic Institute The Center for Electronic Imaging Systems at the University of Rochester The Center for Ultrafast Photonic Materials and Applications at CUNY

OTHER REGIONAL RESOURCES Capital Region SUNY Albany - Biotechnology Incubator New York State Health Department's Wadsworth Center Albany Medical Center Central New York/Mohawk Valley SUNY Upstate Medical University Finger Lakes University of Rochester Rochester Institute of Technology (RIT) Long Island Cold Spring Harbor Laboratory Brookhaven National Laboratory Millennium Technology Center LI High Technology Incubator - Stony Brook Broad Hollow Bioscience Park at SUNY Farmingdale North Shore-Long Island Jewish Health System (North Shore-LIJ) Biotechnology Incubator Mid-Hudson The Landview at Eastmark - Tarrytown Ardsley Park - Tarrytown New York Medical College IBM Thomas J. Watson Research Center New York City Audubon Biomedical Science and Technology Park Columbia University Medical Center Memorial Sloan-Kettering Cancer Center Rockefeller University SUNY Downstate Medical University Structural Biology Center - City College of New York Weill Medical College of Cornell University North Country Clarkson University Southern Tier Boyce Thompson Institute for Plant Research Cornell's Nanobiotechnology Center Cornell Genomics Initiative New York State Agricultural Experiment Station Western New York Roswell Park Cancer Institute SUNY Buffalo Gov's Center of Excellence in Bioinformatics in Buffalo CONTACT New York State Industry Specialist Jeff Janiszewski , Industry Director Telephone: (518) 292-5247 E-mail: jjaniszewski@empire.state.ny.us

TurkofAmerica â&#x20AC;˘ 63

ECONOMIC IMPACT

Econom›c Impact of the B›opharmaceut›cal Sector on New York State* harmaceutical job supported 3.7 other jobs in the economy in 2006, as compared to 2.2 jobs in 1996. During that same time period, the industry was responsible for numerous breakthroughs, including the FDA approval of more than 400 new medicines. From 1999 to 2007, items in the development pipeline in the U.S. grew from 1,756 to 2,742 for a compound annual growth rate of 5.7%. However, the number of new entity approvals granted annually fell over that time period, from 47 in 1997 to 27 in 2006. In 1996, New York ranked third nationally in direct biopharmaceutical employment, behind California and New Jersey, and had risen to second place by 2006. However, New York State ranked 4th in 2006 in total biopharmaceutical employment, with New Jersey and Pennsylvania passing ahead of New York. This indicates that those two states have a greater clustering effect from direct employment than New York. However, the biopharmaceutical sector in New York should be seen as a growth area, with untapped potential given the balance of research resources and growth opportunities.

An analysis of the impact of the biopharmaceutical sector on the economy of New York, using data primarily from 2006, indicates that the biopharmaceutical industry generated $29.1 billion in total output.

harmaceutical research and biotechnology companies remain an economic force throughout New York, and a new study shows the industry has strong potential for continued long-term growth. An analysis of the impact of the biopharmaceutical sector on the economy of New York, using data primarily from 2006, indicates that the biopharmaceutical industry generated $29.1 billion in total output, of which $16.0 billion was generated from direct employment. New York State is responsible for 6.8% of all direct biopharmaceutical output nationally. The biopharmaceutical industry paid $3.8 billion in wages to direct employees in 2006. In 2008, New York was second in the nation with 5,053 clinical trial sites in the state. Additionally, New York shows its broad medical strength with high numbers of trials being performed for all 9 conditions studied. The top regions in the state for total employment are New York City, Long Island and Westchester. The regions that have the best “clustering” effect are Long Island, Rochester and Westchester. Between 1996 and 2006, nationally, employment in the biopharmaceutical sector grew twice as fast as all other sectors combined, 3.1% versus 1.4% compound annual growth rates. Additionally, each direct biop-

64 • TurkofAmerica

The biopharmaceutical sector in NY is responsible for 55,446 direct jobs, 38,590 indirect jobs, and 36,428 induced jobs, of which 16,885 of the total are union jobs. In comparison to other states in the U.S., New York ranks second in direct biopharmaceutical jobs, behind California, and fourth in total employment due to the biopharmaceutical industry, behind California, New Jersey, and Pennsylvania. The analysis indicates that direct employment in the biopharmaceutical industry is responsible for $16.0 billion in economic output, indirect employment for $8.1 billion, and induced employment for $5.0 billion, for a total output of $29.1 billion. New York ranks fourth in total output, behind California, New Jersey and Pennsylvania. The average direct output per direct biopharmaceutical employee in New York is $288,182, compared to $155,443 for all other sectors. In total, New York State is responsible for 6.8% of the nation’s direct biopharmaceutical output. Regions in New York with the highest amount of “clustering” are Long Island, Rochester, and Westchester. The three regions with the lowest amount of clustering are New York City, Ithaca and Binghamton.

* Report Prepared by Archstone Consulting LLC, February 2009