Some synapse-freaking numbers for you: Buffett spent $26.6bn yesterday, but he already owned 22.5% of Burlington, so the company is now valued at $34bn, plus Buffett has taken on $10bn of the company’s debt. And Berkshire Hathaway, Buffett’s holding company, still has $20bn to play with, and play with it he will. 

It’s a turnaround for Buffett, who was slagging off rail in the middle part of this decade – now, while acknowledging that rail requires constant injections of capital to keep it rolling, Buffett is putting his faith in rail being a growing sector. And away from the pell-mell of the stock markets and debate over whether the economy is going to pick up enough to warrant this investment, the most interesting part of this deal is what it says about America’s environmentally-conscious future.

On the one hand, Buffett is putting his faith in coal with this deal. Burlington hauls enough coal to power one in every ten American homes – it’s their second-largest revenue generator after consumer products. Buffett is keen to point out that coal from the American West, which Burlington serves, is “more competitive, it’s lower-sulfur coal than in the East”, and while he admits that “over time, coal is going to diminish somewhat”, he’s still gone into this deal because he knows America will be running on coal for many years to come. He plays up his green credentials, citing his use of wind power, but he also runs 11 coal-fired power stations through MidAmerican Energy. If the Oracle says coal is profitable, then it’s profitable.

On the other hand, his faith in rail implies a lack of faith in road haulage. With oil prices set to rise, it makes sense for Buffett to invest in the most fuel-efficient means of transportation – he said yesterday that one gallon of diesel can haul a ton of goods for 471 miles with BNSF trains. Lower fuel costs mean lower haulage prices, which means a competitive advantage. Indeed, if oil prices continue to rise, “long haul trucking could be a dinosaur”, as Scott Edward Anderson told Fox News yesterday – Anderson, of Greenskeptic.com, said that a likely scenario is of long-haul rail linking with short-haul hybrid vehicles. Buffett, along with his investment in Chinese auto and electric car battery manufacturer BYD, is clearly shoring up Berkshire for a post-carbon future. Buffett is only following larger trends, but the sums of money he’s spending are so large and his influence so strong, that he himself is accelerating these changes in American energy habits. 

Though of course it could be that the main reason for Buffett buying up the railway is that it’s because he knows about the impending removal of global borders, and is therefore planning to better do business in what were formerly known as Canada and Mexico. Yeah, that’s probably it. 

Photo: Art Comments

Just like any 21st-century squabble worth its salt, the attempted thunder-theft of Nissan by GM yesterday was addressed on Twitter – “Nissan Leaf = 367 mpg, no tailpipe, and no gas required. Oh yeah, and it’ll be affordable too!”, read Nissan Electric Vehicles’ feed after the announcement. Oh, snap. Nissan hasn’t said just how affordable it’ll be, but estimates are currently between $15,000 and $25,000, which is considerably less than the projected $40,000 the Volt will cost. GM is saying the Volt will cost 40 cents to recharge, while Nissan are going for the figure of $13 a month – impossible to properly compare though, as they’re based on American and Japanese energy prices respectively, and anyway, there’s already debate over the veracity of the energy prices GM’s used. The pricing estimates don’t include the price of leasing the battery to owners, which Nissan is planning on doing; it looks like GM will not be leasing batteries to customers as Nissan will, thus raising the price of the Volt as it comes with a battery thrown in (though obviously then has risk of replacement costs).

The mpg predictions are also debateable, considering they’re attempting to place a gallon-based value onto an engine that doesn’t do gallons of anything. One can expect the Nissan though, with its trim chassis, to trump the Volt, which is chunkily styled like something out of a Hollywood vision of the future, and shows that GM just can’t kick its hatred of little cars.

The comparison water gets muddied all the more by the fact that the Volt is a hybrid with a wee little petrol engine as well, while the Leaf is all-electric – the Leaf’s zero-emissions distance is better, but the Volt can go further if you count in the contribution of its petrol engine. The Volt’s engine can also be filled with E85 biofuel though, a detail that hasn’t been particularly trumpeted, and was heard by some eavesdropping folks at The Auto Channel – it can therefore make a slightly better claim to be a truly non-petrol car. In short – it’s bloody difficult to quantify just how green these cars are.

And of course the green-ness of these vehicles is also affected by where they get their electricity from, like a coal-fired power station. And then there’s the strain on the grid – the Leaf battery can accept an 80% charge in 30 minutes from a special charger, but that involves a heavy load on the grid. A hypothetical future situation is one where commuters are charging their cars en masse on the way home from swift-charging power points, creating a massive drain on the grid.

So while the manufacturers are likely to carry on bickering about whose car is better, we’ll just have to wait for some clearer pricing information before trying to begin making a comparison about which is better value.

Senate Majority Leader Harry Reid said there were enough votes to pass the motion, and that it would be done and dusted by the time the Senate breaks up for the holidays. Even if it wasn’t passed, the scheme is likely to still be over its $1bn budget – while $664,000-worth of cash has been called in by car dealers, it’s thought that lots of dealers haven’t got round to doing their paperwork yet, and that there’s a massive backlog. The scheme was designed to run until November, but it’s burned through its budget in just one month; it’s so popular that some manufacturers are struggling to keep supplies going to dealers, potentially inhibiting the stimulus element of the program.

The US scheme is rather different to the schemes run in the UK and elsewhere. Its focus is on clearing out old fuel-inefficient motors and replacing them with greener cars (the Prius is happily sitting fourth in the list of most popular new buys through the scheme). The old gas-guzzlers are then killed off by having a sodium-silicate solution poured into their engines and run round their workings, which clogs it up and makes it redundant.

While the increased sales of new cars act as a stimulus to the famously crocked Big Three, the new cars don’t have to be US-built, just as cars in the UK scheme don’t all have to be from the UK. It’s less a direct stimulus for certain domestic companies than it is a more general Keynesian fillip to the economy, getting everyone spending to kickstart everything in the automotive chain – dealerships, scrapyards, manufacturers, credit agencies and so on. The worry is that the value isn’t being passed onto the customer – manufacturers are being accused of raising their prices to soften the blow of having to contribute to the scheme.

Applause for the admirably blunt and crude approach to getting inefficient cars off the road, and image of the gas-guzzler becoming asphyxiated with silicate is compelling. (There’s no such provision in the UK scheme, but then again it’s a much more serious problem in the US). But isn’t this propping up a dangerously unsustainable level of car manufacture?

This piece in the Economist is right to point out that the scheme keeps consumers from getting too attached to avoiding consumption – as well as acting as a direct stimulus for automotive spending, it also has the hazy, indirect effect of creating a quietly infectious sense of spending money being a good and achievable thing to do. The offers screaming from the forecourts remind you that even though there’s a recession on, you can probably afford a car, so you can probably afford a lot of things, so you’ll spend money. Which is all good news for a society running on consumption.

Trouble is that this isn’t encouraging the kind of ruthless downsizing that the bloated auto industry needs. We saw Pontiac disappear earlier this year, but what about Buick? What about Saturn? What about Seat? What about the chassis that’s used across two or more manufacturers and sold as a different car each time? The trouble is, as we’ve seen before, is that ever-growing demand over the last half-century, has led to a vast and powerfully unionised workforce that need placating. As the demand slows, thanks to higher petrol prices and a decreasing customer base, the companies’ inefficiencies become more and more apparent; consumers are also generally still wary during the recession. And for America, the growth in Asian markets isn’t going to translate into sales of the cars the US currently manufactures. This boost may prove a fillip to American cars and American spending habits in the short term, but it dangerously encourages the ever-expansionist tendencies of the auto industry, and is just setting itself up for a bigger fall when the Treasury stops propping it up.

The conclusion seemed to be that all of our previous worst case scenarios needed to be… well… made worse. As Lord Stern, once the government’s chief climate change advisor, put it; “I think it’s very important that we understand the magnitude of the risk we are running… Inaction is inexcusable.”

So, in a truly bathetic twist, only a few days after the conference finished, Shell announced that they “…do not expect material amounts of investment in [solar and wind] going forward.” This message was echoed by EDF and E.ON when they helpfully declared that the UK’s renewable targets were unrealistic. And since then BT, Sun Microsystems and Centrica, amongst others have all revised their grand green plans.

Even companies with more genuine intentions have been scuppered: Tidal power gurus, Pelamis, were working on one of the world’s largest wave-energy converter projects for a Portuguese energy firm. But, the scheme now looks like a beached whale since the Australian company providing capital for the venture, went in to administration in early March.

Lord Browne, former BP head-honcho, summed up the current renewable energy situation, in a speech made at Cardiff University last week; “…the market will need a new strategic direction and a new framework of rules, laid down by government.”

So, until the Government coughs up some truly lucrative financial incentives, renewable energy will remain a luxury side-project for the big players.

Cue centralised financial action! Gordon Brown loves a hand-out doesn’t he? And, since the UK is looking particularly anaemic in these difficult times perhaps it’d be worth investing in an area with huge potential growth?!  

Indeed, he is on record pledging that 10% of the rather large financial stimulus package would “…go to environmentally important technologies and potentially jobs in the green industries.” 

How dismally predictable then, that the New Economics Foundation should reveal that in the recent “bank-bonanza super giveaway”, sorry, “stimulus package”, a paltry £105m was set aside for new green development.

That’s just 0.0083% of the UK’s GDP, when 20% of our GDP was given to banks alone. If that doesn’t sound pathetic enough, compare the £105m in new investment for one of the key issues facing the world today, to the £775m paid to RBS staff in bonuses. Yep, it’s that pathetic.

We’ve always known that you can’t rely on corporate enterprise to invest money on risky projects (well, unless they’re a bank). And companies of every shape and size have a fairly terrible track record of putting socially responsible projects before profit. Unfortunately, it seems you can’t rely on democratic leaders either, no matter how high the stakes.