Commodities

Canada proposes sharp cut in oil and gas sector emissions by 2030

Published

2 weeks ago

November 5, 2024

By Nia Williams and David Ljunggren

(Reuters) -The Canadian government released draft regulations on Monday that would cap emissions of greenhouse gases from the oil and gas sector at 35% below 2019 levels by 2030, drawing condemnation from the industry that said it will force a production cut.

Oil and gas is Canada’s highest-polluting industry and its emissions continue to rise, undercutting progress in many other parts of the economy. Ottawa will likely fall short of its commitment to reduce emissions by 40-45% from 2005 levels by 2030 unless the oil and gas sector intensifies efforts to decarbonize.

Federal Environment Minister Steven Guilbeault said the sector’s profits hit C$66.6 billion ($47.95 billion) in 2022 and the government wants to motivate producers to invest those profits in decarbonization.

“This goes after pollution, not production,” Guilbeault told a news conference. “We’ve worked carefully to develop what is technically feasible for the sector, to keep industry accountable to their own promise to be carbon neutral by 2050.”

Canada is the world’s fourth-largest oil producer and sixth-largest producer.

Ottawa said oil and gas production is still expected to grow 16% from 2019 levels by 2030-2032 even with the emissions cap in place, and there would only be a 0.1% reduction in Canadian GDP as a result.

The regulations will create a cap-and-trade system designed to recognize better-performing companies and incentivize higher-polluting firms to make their production processes cleaner.

Producers will be required to start reporting their emissions from 2026, and the first three-year compliance period will run from 2030 to 2032. The government said it will develop penalties for producers that do not comply.

Most of the emissions reductions are expected to come from cutting methane pollution and a proposed oil sands carbon capture project, federal Natural Resources Minister Jonathan Wilkinson said.

Prime Minister Justin Trudeau’s Liberal government previously said it wanted the oil and gas industry to cut emissions by up to 38% from 2019 levels by 2030. Wilkinson said Ottawa settled on a 35% reduction after lengthy consultations to determine what was technically achievable for producers.

“If you start to go beyond what is achievable, you are moving this from an emissions cap to a production cap,” he told Reuters in an interview.

Canada faces a federal election within the next year, which polls suggest Trudeau’s Liberals will lose to the opposition Conservatives, led by Pierre Poilievre.

The Conservatives called the emissions cap an attack on the energy sector at a time of weak economic growth in Canada and said they would scrap the proposed policy if elected.

“Trudeau plans to crush the energy sector, putting hundreds of thousands of jobs at risk at the worst possible time,” the Conservatives said in a statement.

INDUSTRY OPPOSITION

Oil and gas industry associations also pushed back against the cap, arguing it will kill jobs and cut tax revenue.

The Canadian Association of Petroleum Producers said it would likely deter investment in Canadian oil and natural gas projects, while the government of Alberta, Canada’s main fossil fuel-producing province, said the cap would require a production cut of one million barrels per day by 2030.

“An emissions cap, which will act as a cap on domestic production of natural gas, will harm Canadian families and businesses by raising prices on energy,” Francois Poirier, CEO of pipeline company TC Energy (NYSE:), said in a statement.

Climate advocates welcomed the draft regulations, although some urged the government to close what they described as a loophole allowing producers to pay into a decarbonization program or buy greenhouse gas offset credits to cover up to 20% of their emissions.

“The rules must take effect sooner than the proposed 2030 timeline, and align with Canada’s climate goal of a 40-45% emissions reduction by 2030,” Environmental Defence said in a statement.

Formal consultations on the regulations will run from Nov. 9 until Jan. 8 of next year. The final version will be published in 2025.

($1 = 1.3890 Canadian dollars)

Commodities

Gold prices rise, set for strong weekly gains on Russia-Ukraine jitters

Published

1 hour ago

November 22, 2024

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Commodities

Oil heads for weekly gains as Ukraine war intensifies

Published

1 hour ago

November 22, 2024

By Robert Harvey and Enes Tunagur

(Reuters) – Oil prices held steady on Friday, on track for a weekly rise of 5%, as the Ukraine war intensified and Chinese imports were set to increase in November.

futures climbed 33 cents, or 0.44%, to $74.56 a barrel by 1008 GMT. U.S. West Texas Intermediate crude futures rose 27 cents, or 0.39%, to $70.37 per barrel.

Both contracts are set for gains of 5% this week, the strongest weekly rise since late September, as Moscow steps up its Ukraine offensive after Britain and the United States allowed Kyiv to strike Russia with their weapons.

Putin said on Thursday Russia had fired a ballistic missile at Ukraine and warned of a global conflict, raising the risk of oil supply disruption by one of the world’s largest producers.

Ukraine has used drones to target Russian oil infrastructure, for instance in June, when it used long-range attack drones to strike four Russian refineries.

“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said PVM analyst John Evans.

The world’s top crude importer, China, announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over U.S. President-elect Donald Trump’s threats to impose tariffs.

China’s imports are set to rebound in November after sharp price cuts boosted demand for Iraqi and Saudi oil, offsetting a drop in Iranian supply, according to analysts, traders and ship tracking data.

Oil prices briefly dipped after data showed euro zone business activity took a surprisingly sharp turn for the worse this month as the bloc’s dominant services industry contracted and manufacturing sank deeper into recession.

Goldman Sachs said in a note that it expects Brent to stay in a $70 to $85 range, but added that prices could reach the top end of that if Iranian output is impacted by Trump’s possible tightening of sanctions.

Commodities

Oil prices rise as Russia-Ukraine tensions offset US inventory build

Published

1 day ago

November 21, 2024

Investing.com– Oil prices rose in Asian trade on Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, although a build in U.S. inventories limited overall gains.

Prices advanced this week as the use of long-range U.S. weapons by Ukraine against Russia ramped up tensions between the two countries, sparking concerns that oil supplies from Moscow could be disrupted.

Oil also benefited from some bargain buying after dropping to more than one-month lows last week. Still, overall gains were limited by concerns over slowing demand, especially as U.S. inventories grew more than expected.

expiring in January rose 0.4% to $73.07 a barrel, while rose 0.4% to $68.79 a barrel by 22:04 ET (03:04 GMT).

Russia-Ukraine tensions underpin oil

Rising tensions between Russia and Ukraine were a key point of support for oil markets, especially after the U.S. authorized Kyiv to use long-range missiles against Russia.

Moscow responded to this by lowering its threshold for nuclear retaliation, and warned of a dire escalation in the war.

Ukraine on Wednesday fired a fresh volley of Western-made missiles into Russia, potentially drawing more severe retaliation from Moscow. A key point of anxiety for oil markets is Ukraine’s continued targeting of Russia’s energy infrastructure, which could potentially disrupt oil supplies.

US inventories grow more than expected, gasoline stockpiles rise

Data from the U.S. Energy Information Administration showed on Wednesday that U.S. grew 0.5 million barrels in the week to November 15, more than expectations for a build of 0.4 mb.

The build, while minimal, was a third straight week of builds.

More worrying for oil markets was a nearly 2.1 mb build in , which spurred some concerns that U.S. fuel demand was cooling as the winter season approached.

Oil prices remained skittish on the prospect of increased supply and softening demand in the coming year, which some analysts expect to cause a supply glut.

Reuters reported that the Organization of Petroleum Exporting Countries and allies (OPEC+) was planning to further postpone increases in oil production when it meets on December 1.