2024-11-04 21:01

Industry condemns cap, says it will cut production Cap-and-trade system to incentivize cleaner production Conservatives call cap an attack on energy sector Nov 4 (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 natural gas 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 (TRP.TO) , opens new tab, 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) Sign up here. https://www.reuters.com/sustainability/climate-energy/canada-wants-energy-sector-cut-emissions-by-up-35-below-2019-levels-2024-11-04/

2024-11-04 20:26

NEW YORK, Nov 4 (Reuters) - The U.S. dollar slipped on Monday as investors pulled out of Trump trades, which have benefited in recent weeks from speculation that Republican former President Donald Trump is more likely to win the presidential election on Tuesday against Democratic Vice President Kamala Harris. “The Trump trade is unwinding," said Karl Schamotta, chief market strategist at Corpay in Toronto. "We've seen a big pullback in the likelihood of a Republican sweep as implied by prediction markets and polling.” Harris has gained in some polls though overall they show a tight race. Harris has also experienced improving momentum on election gambling sites and has a slight lead on PredictIt , opens new tab, while Polymarket , opens new tab continues to show Trump as favorite. Trump's policies on tariffs and immigration are seen as likely stoking inflation, which would send longer-dated U.S. Treasury yields and the dollar higher. At the same time, “tariffs and just sheer uncertainty is expected to harm the outlook for other currencies,” Schamotta said. The currency market is likely to see bigger moves after the election if the party of the new president also controls Congress. "A Red Wave (favoring Republicans) would kick-start a sizeable USD rally. It would rekindle memories of US Exceptionalism, anchored by tariffs, tax cuts, deregulation and negative impacts on the outlook for EZ and China," analysts at TD Securities said in a note. "A Blue Wave (favoring Democrats) is the worst outcome for the USD as markets unwind Trump trades and hedges. The second order effect is that a Blue Wave could start to undermine the USD, as the potential for higher taxes and more regulation starts to see US equities underperform the rest of world," they added. The dollar index was last down 0.05% at 103.89. The euro gained 0.41% to $1.0878. The greenback weakened 0.54% to 152.16 Japanese yen . The one-week implied volatility options for euro/dollar were at the highest since March 2023. The offshore Chinese yuan also gained 0.42% to 7.11 per dollar per dollar while the Mexican peso strengthened 0.79% to 20.129. These currencies had weakened in recent weeks on expectations they would be hurt by new tariffs under a Trump presidency. Implied volatility for the yuan is at a record high, while that for dollar/Mexican peso is at the highest since April 2020. Bitcoin also fell 2.08% to $67,758. Trump is viewed by analysts as enacting more favorable policies for cryptocurrencies than Harris. The Federal Reserve is expected to cut rates by 25 basis points at the conclusion of its two-day meeting on Thursday, and investors will focus on any clues that the U.S. central bank could skip a cut in December. October’s jobs report showed that employers added far fewer jobs than economists had expected, which has raised questions over the degree of softness in the labor market. Recent hurricanes and labor strikes were partially responsible for the weak report. It came after much stronger than expected jobs gains in September, which led investors to price for fewer Fed rate cuts. Traders are now pricing 82% odds that the Fed will also cut in December, according to the CME Group’s Fed Watch Tool. The Bank of England meets on Thursday and is expected to cut by 25 basis points, while the Riksbank is seen easing by 50 basis points and the Norges Bank is expected to stay on hold. The BoE's decision has been complicated by a sharp selloff in gilts following the Labour government's budget last week, which also dragged the pound lower. The pound was last up 0.2% at $1.2952. The Reserve Bank of Australia is expected to hold rates steady at its meeting on Tuesday. The Aussie strengthened 0.43% to $0.6587. Sign up here. https://www.reuters.com/markets/currencies/dollar-slips-traders-unwind-trump-trades-2024-11-04/

2024-11-04 19:58

Canadian dollar gains 0.4% against the greenback Touches its strongest level since Oct. 25 at 1.3876 Price of US oil settles 2.85% higher Ten-year yield eases 3.9 basis points TORONTO, Nov 4 (Reuters) - The Canadian dollar strengthened to a 10-day high against its U.S. counterpart on Monday as oil prices rose and investors reassessed the likely outcome of Tuesday's U.S. presidential and congressional elections. The loonie was trading 0.4% higher at 1.3895 per U.S. dollar, or 71.97 U.S. cents, after touching its strongest intraday level since Oct. 25 at 1.3876. "The Canadian dollar is outperforming the (U.S.) dollar in line with a recalibration of odds on a Republican sweep in tomorrow's U.S. election," said Karl Schamotta, chief market strategist at Corpay. Republican former President Donald Trump, who is in a neck-and-neck race with Democratic Vice President Kamala Harris for the presidency, has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States. Analysts say that tariffs and other proposed measures could boost U.S. inflation, reducing prospects of Federal Reserve interest rate cuts. The U.S. central bank will announce its latest interest rate decision at the end of a two-day policy meeting on Thursday. The U.S. dollar fell against a basket of major currencies as investors exited from positions that have benefited from speculation Trump is more likely to win the White House. Speculators have raised their bearish bets on the Canadian dollar to the highest level since mid-August, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Oct. 29, net short positions had increased to 167,499 contracts from 140,631 in the prior week. The BC Maritime Employers Association said it would lock out workers on Monday at the Port of Vancouver in Western Canada after a negotiating deadline passed, potentially disrupting exports of coal, potash and beef. The price of oil , one of Canada's major exports, settled 2.85% higher at $71.47 a barrel on a decision by the OPEC+ producers group to delay plans to increase output by a month. Canadian bond yields were mixed across a flatter curve, with the 10-year down 3.9 basis points at 3.250%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-climbs-10-day-high-us-election-recalibration-2024-11-04/

2024-11-04 19:49

NEW YORK, Nov 4 (Reuters) - Constellation Energy will continue to pursue deals to develop data centers on the sites of its U.S. power plants, days after federal regulators dealt a blow to the so-called co-located arrangements, company executives said on Monday. The Federal Energy Regulatory Commission on Friday rejected an agreement to increase the power capacity of an Amazon data center connected directly to Talen Energy's (TLN.O) , opens new tab nuclear power plant in Pennsylvania in a decision seen as chilling similar deals. Constellation said it is seeking guidance from regulators after FERC's decision about co-location, which had become a promising prospect for Big Tech's plans to quickly access large amounts of power for its AI expansion instead of waiting for years to connect to the grid. "We will pursue this regular clarity while simultaneously pursuing commercial strategies for co-location that are permitted under our existing rules," Constellation CEO Joseph Dominguez said on a company earnings call. Dominguez outlined what future co-located agreements would look like, including that nuclear energy directly fueling data centers be required to switch over to powering the grid in times of supply emergencies and that backup power for the centers could be sold back to the regional market. "There are multiple regulatory and commercial pathways to resolve the co-location issues, and we will work quickly with customers and other stakeholders to put these in place." Constellation (CEG.O) , opens new tab, which is the largest operator of U.S. nuclear power plants, had backed Talen in the regulatory battle. Shares of the nuclear power operators had shot up this year partly on the prospect of developing co-located data centers. Constellation stock was down about 10% on Monday. The FERC fight was brought by electric utilities Exelon and American Electric Power, which opposed the Talen-Amazon data center interconnection agreement, saying that it threatened to raise power bills for everyday customers and erode grid reliability. Talen's Susquehanna nuclear-powered data center campus, sold to Amazon this year, would have the capacity of 960 megawatts, or enough electricity for all of the homes in Philadelphia. In a 2-1 vote, FERC shot down Talen's request to expand the capacity of data center beyond 300 megawatts. The vote followed a FERC technical conference to discuss broader concerns about co-locating data centers. Diverting that electricity, which currently flows from the nuclear plant to the broader grid, could unfairly shift costs to the public and worsen a supply-demand imbalance in the PJM Interconnection regional power market, the majority of voting commissioners said. Talen Energy, in a statement posted to its website on Sunday, said it would consider various methods to quickly power up data centers. "The data center economy will require an all-of-the-above approach to satisfy the increased demand, including co-location," the company said. Sign up here. https://www.reuters.com/business/energy/constellation-pursuing-data-centers-power-plants-despite-regulatory-setback-2024-11-04/

2024-11-04 19:37

WINNIPEG, Manitoba, Nov 4 (Reuters) - The BC Maritime Employers Association said it would lock out workers on Monday at Canada's Port of Vancouver after a negotiating deadline passed, potentially disrupting exports of coal, potash and beef. The association, which includes private-sector waterfront employers, said strike activity had already impacted waterfront operations and it would lock out foremen and other members of International Longshore and Warehouse Union Local 514 at the country's largest port starting at 4:30 Pacific time (0030 GMT). The union had issued a 72-hour strike notice of limited job action for 8 a.m. Pacific time. But workers started scheduled shifts, while refusing overtime, according to a union spokesperson. The workers are also refusing to participate with "technological change implementation" connected to automation. A 13-day strike last year disrupted more than C$6 billion ($4.32 billion) in trade at the British Columbia ports of Vancouver and Prince Rupert. The employers association said last week the potential lockout of more than 700 foremen was preventative as the unit representing them had issued a strike notice for Monday. The two sides were in protracted talks over a labor deal and have been negotiating with the help of a federal mediator. The Employers Association said over the weekend it had presented its final offer. The situation has alarmed export-reliant Canadian industries and regions. The provincial government of resource-rich and landlocked Saskatchewan on Friday urged the federal government to try to resolve the dispute. While bulk-grain shipments are excluded from the disruption, according to Canada's labor code, exports of coal, potash, forestry products and products shipped in containers such as pulse crops and meats could be affected. The B.C. ports dispute is occurring at the same time as a strike at the Port of Montreal, which affects about 40% of its container flow and 15% of total port freight. Longshore foremen supervise other longshore workers and manage loading operations in port facilities. In U.S. ports they can be referred to as "walking bosses," various subclasses of "boss," and various forms of "foreman." ($1 = 1.3896 Canadian dollars) Sign up here. https://www.reuters.com/world/americas/vancouver-port-shuts-out-foremen-strike-begins-2024-11-04/

2024-11-04 19:26

BUENOS AIRES, Nov 4 (Reuters) - Argentine officials celebrated the formal kick off of a major natural gas pipeline on Monday, a project that will provide supply from the country's booming shale development to both homes and businesses as well as eventually allowing for exports. The start of operations for the Northern Natural Gas Pipeline, originating in western Neuquen province, will put an end to imports from neighboring Bolivia while moving supply to population centers in northern provinces. Neuquen is home to the massive Vaca Muerta shale formation, Argentina's main hope for additional domestic oil and gas production that could end the need for costly foreign supplies. The newly-inaugurated project cost $710 million, with $540 million financed by the World Bank and the Development Bank of Latin America and the Caribbean. The government in a statement touted the possibility of future natural gas exports to buyers in Bolivia, Chile and Brazil, marking a reversal in longstanding Argentine energy flows. The project involved the reversal in the direction of gas moving on the Northern Natural Gas Pipeline, in addition to the construction of the La Carlota-Tio Pujio pipeline. Sign up here. https://www.reuters.com/markets/commodities/new-gas-pipeline-argentina-promises-more-domestic-supply-2024-11-04/