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Commodities

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

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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.

© Reuters. FILE PHOTO: A view of an oil pump jack near Longview, Alberta, Canada March 15, 2024.  REUTERS/Todd Korol/File Photo

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

Oil prices ease on surplus concerns, dollar strength

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By Nicole Jao

NEW YORK (Reuters) -Oil prices edged lower on Monday in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened dollar.

futures settled down 31 cents, or 0.43%, at $72.63 a barrel. U.S. West Texas Intermediate crude futures fell 22 cents, or 0.32%, to $69.24 a barrel.

Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of $70.50 a barrel, down from this year’s average of $79.64, they said in a December report.

Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.

The U.S. dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.

“With the U.S. dollar changing from weaker to stronger, oil prices have given up earlier gains,” UBS analyst Giovanni Staunovo said.

A stronger dollar makes oil more expensive for holders of other currencies.

On Friday, U.S. data that showed cooling inflation helped alleviate concerns after the Federal Reserve interest rate cut last week.

“With the Fed sending mixed signals and some of these economic data points not being all that robust, the market is listless,” said John Kilduff, partner at Again Capital in New York.

Brent futures fell by around 2.1% last week, while WTI futures lost 2.6%, on concerns about global economic growth and oil demand after the U.S. central bank signalled caution over further easing of monetary policy.

Research from Asia’s top refiner Sinopec (OTC:) pointing to China’s oil consumption peaking in 2027 also weighed on prices.

© Reuters. FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. REUTERS/Angus Mordant//File Photo

U.S. President-elect Donald Trump on Friday urged the European Union to increase U.S. oil and gas imports or face tariffs on the bloc’s exports.

Trump also threatened to reassert U.S. control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.

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Gold prices edge up, remains pressured by strong dollar after hawkish Fed

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Investing.com– Gold prices edged higher on Tuesday, extending their tepid performance as investors still remained cautious with the rising dollar following the U.S. Federal Reserve’s hawkish tilt.

Traders also refrained from placing large bets ahead of a shortened trading week due to the Christmas holiday.

inched up 0.2% to $2,616.95 per ounce, while expiring in February ticked up 0.2% to $2,633.89 an ounce.

The yellow metal had inched up 0.3% on Monday, after losing more than 1% in the previous week, reflecting uncertainty about the metal’s outlook.

Bullion under pressure on Fed rate outlook

Gold prices had hit a one-month low on Wednesday, as the Fed meeting indicated that rates will remain higher for a longer period after Wednesday’s cut. 

Prices have failed to fully recover from it and have seen subdued moves as investors still assessed the implications of the Fed’s rate outlook. 

Higher interest rates put downward pressure on gold as, as the opportunity cost of holding gold increases, making it more attractive compared to interest-bearing assets like bonds.

Traders are now expecting only two quarter-point reductions in 2025 amid continued economic resilience and still-elevated inflation. This compares to expectations of four rate cuts before the Fed meeting.

Strong dollar creates downward pressure on gold, other metals

The Fed’s hawkish shift provided renewed strength to the U.S. dollar, as higher interest rates make the greenback more attractive due to increased returns on dollar-denominated assets.

The  rose 0.1% in Asia hours on Tuesday and hovered near a two-year high it reached last week.

A stronger dollar often weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.

Other precious metals were largely muted. inched up 1.2% to $960.15 an ounce, while gained 0.3% to $30.265 an ounce.

Copper subdued on strong dollar, seasonal factors

Among industrial metals, copper prices were subdued and moved within tight ranges on Tuesday as a strong greenback weighed on the red metal.

Analysts attributed the weakness in copper to seasonal sluggishness as industrial production and construction projects often slow down as businesses and projects prepare for year-end closures and holidays.

Benchmark on the London Metal Exchange were largely unchanged at $8,954.50 a ton, while one-month were 0.5% higher at $4.1045 a pound.

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Commodities

Oil prices rise; supply, demand concerns in focus for 2025

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Investing.com– Oil prices rose Tuesday, but stuck to a tight trading range as traders remained uncertain over a potential supply glut and softening demand in the coming year.

At 11:58 ET (17:58 GMT),  rose 1.1% to $73.44 a barrel, and rose 1.2% to $70.03 a barrel. 

Trading volumes were thin ahead of the Christmas holiday, while strength in the dollar also weighed on oil prices after the Federal Reserve signaled a slower pace of rate cuts in 2025. 

Oil nurses losses in 2024 as demand jitters weigh 

and WTI prices were down about 5% so far in 2024, with persistent concerns over slowing demand in China being a key point of pressure.

Chinese oil imports steadily dropped this year as the world’s largest oil importer struggled with slowing economic growth. While the country did outline plans to ramp up fiscal spending and stimulus measures in the coming year, markets were still holding out for more clarity on the planned measures. 

Increased electric vehicle adoption in China also undermined fuel demand in the country. 

Both the OPEC and the IEA have forecast slower demand growth in 2025 due to slowing demand in China. The country is also expected to face increased economic headwinds from a renewed trade war with the U.S. under Donald Trump. 

Supply uncertainty spurs caution; US inventory data awaited 

Oil markets were on edge over a potential supply glut in 2025. While the OPEC recently agreed to extend its ongoing supply cuts until at least mid-2025, production elsewhere could potentially increase.

US oil production remained close to record highs, and could potentially increase in the coming year, especially as Trump vowed to ramp up domestic energy production. 

US inventory data, from the , is due later Tuesday and is set to offer more cues on oil production and supply. 

(Peter Nurse contributed to this article.)

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