2024-03-21 11:39

LONDON, March 21 (Reuters) - Britain has launched a consultation on how it should apply a new carbon import levy on some products from 2027 to help to protect businesses against cheaper imports from countries with less strict climate policies. Britain, which has a target of reaching net zero emissions by 2050, launched an emissions trading system (ETS) in 2021 to charge power plants, factories and airlines for each tonne of carbon dioxide they emit as part of efforts to meet that goal. The planned carbon border adjustment mechanism (CBAM) will apply to imports of carbon-intensive products in the iron and steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement sectors. In documents published on Thursday, the government proposed seven rates of taxes for each sector, with the sectors to be kept under review. The methodology used to set fees will depend on the amount of carbon emitted in the production of the imported good and any gap between the carbon price applied in the country of origin and the carbon price faced by UK producers. Other regions and countries, such as the European Union and China, operate such systems, but prices within the schemes vary and many countries have no carbon pricing at all. Britain's benchmark ETS carbon contract currently trades around 36 pounds ($46) per metric ton, while contracts in China's ETS trade around 84 yuan ($11.67) a ton. Britain proposed using the average auction price of permits in its ETS over the preceding quarter as a reference price for the levy. “Using a quarterly reference ... would allow for the UK CBAM rate to track the changes in the UK ETS price throughout the year, whilst balancing the need to give importers certainty on the price they will pay,” the document said. It proposes the first CBAM accounting period should run from Jan 1, 2027, to Dec. 31, 2027, and that from 2028 accounting periods should become quarterly. The consultation will be open until June 13 and seeks views specifically from tax advisers, professional bodies, importers and businesses from Britain and overseas, it said. ($1 = 0.7833 pounds) ($1 = 7.1986 Chinese yuan renminbi) The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/world/uk/britain-seeks-views-2027-carbon-border-tax-2024-03-21/

2024-03-21 11:38

OSLO, March 21 (Reuters) - A Norwegian appeals court put on hold an injunction that could have halted the development of two oilfields operated by Aker BP (AKRBP.OL) , opens new tab, environmental group Greenpeace said on Thursday, in a win for the government and energy companies. In January, Oslo District Court granted a surprise victory to environmentalists by invalidating the approvals of two offshore projects, Yggdrasil and Tyrving, in addition to Equinor's (EQNR.OL) , opens new tab Breidablikk, due to an insufficient assessment of their environmental impact by authorities. The lower court also imposed a temporary injunction for issuing any new permits needed to continue development of the two projects operated by Aker BP. "The court of appeals has stopped the enforcement of the ban to issue the new permits (for the fields' development) until its written elaborations," Greenpeace Norway head Frode Pleym told Reuters. Aker BP was not immediately available for comment. The appeals court will hold an emergency hearing on the ban itself in April, while a date for a hearing on the main question of whether the fields were legally approved has not yet been set yet, Greenpeace said. The Norwegian Ministry of Energy did not immediately respond to a request for comment. Greenpeace said it hoped the government would not rush to approve the permits needed until the court rules on the injunction itself. Greenpeace and its partner Nature and Youth, which brought the case to the courts, argued that the government failed to consider the impact on global climate from the use of oil and gas produced from the three new developments. They cited a 2022 ruling of Norway's Supreme Court which said future projects should assess impact from the expected petroleum use, not only from its production stage. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/norway-court-pauses-ban-two-oilfield-developments-greenpeace-says-2024-03-21/

2024-03-21 11:30

ORLANDO, Florida, March 20 (Reuters) - Fed policymakers on Wednesday kept their 2024 U.S. interest rate projection unchanged, but the floor for rates once cuts start is moving higher. In their quarterly Summary of Economic Projections, officials raised the median outlook for 2025 and 2026, and more importantly, increased their longer-run median interest rate outlook above 2.5% for the first time in five years. The median 2025 and 2026 rate views were raised by three tenths of one percent to 2.9% and 3.1%, respectively, and the longer-run rate was lifted by one tenth of a percentage point to 2.6%. As the Fed maintained its long-run inflation projection at its 2% target, this implies a slight increase in what policymakers deem to be the neutral real rate of interest, or 'R-star', to 0.6% from 0.5%. These were small changes, particularly to the longer run projection, but they could be significant. Collectively, they show the Fed recognizes that policy needs to be tighter for longer in the post-pandemic world to get inflation back down to target and keep it there. Seven Fed officials now see a neutral rate of 2.9% or higher, compared with four in December. Another way of looking at it, with growth consistently surprising on the upside, the post-pandemic U.S. economy is much less responsive to interest rate hikes than it was before March 2020. These are hardly new revelations - rates futures markets have for some time priced in a higher terminal rate than that implied in the SEP projections - but the highest neutral rate outlook since 2018 is a marker. The question now is whether that gap between the market-based and Fed view for the terminal rate, the policy rate once the easing cycle ends, begins to converge. "We're on a higher glide path," said Gregory Daco, chief economist at EY. "There's a more consistent view between the market and the Fed on ending the easing cycle at a level that is higher than what had been consistent with previous cycles." BABY STEPS Fed Chair Jerome Powell downplayed the new neutral rate projection, calling the move "modest" and noting that the long-term horizon is shrouded in huge uncertainty. In addition structural factors like demographics, productivity trends and cross-border capital flows help determine 'R-star', and the pace of change in these can be glacial. But Powell did say his "instinct" is that interest rates will not return to pre-pandemic low levels. Again, this is not a particularly revelatory position but it does chime with what the bond and rates markets have been signaling recently. Breakeven inflation rates on 10- and 30-year inflation-linked Treasury bonds are hovering around 2.3% and drifting closer to 2.5%, a sign that bond traders are not fully convinced the Fed will get inflation back down to target. Interest rate futures currently imply a terminal rate of 3.7% by the end of 2026, a good bit higher than the Fed's projected 3.1% over the same time horizon, never mind the long-run neutral view of 2.6%. With growth running hotter than nearly all forecasts and inflation proving stickier than Fed officials would like, it's more likely that any convergence will see the Fed's rate view drift towards the market's rather than the other way around. "There is still a clear difference between the market and the Fed in terms of where the terminal rate will land," says Charlie Ripley, senior investment strategist at Allianz Investment Management. "The main implication (of this) is that a policy rate set lower than the natural rate for a longer period of time could bring on unintended price instability or unwanted inflation." The first step to closing that gap was taken on Wednesday. It may not be the last. (The opinions expressed here are those of the author, a columnist for Reuters.) Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/fed-lifts-neutral-view-more-come-mcgeever-2024-03-21/

2024-03-21 11:14

Norges Bank maintains policy rate at 4.50% Plans 'autumn' cut, most likely September Core inflation seen at 4.1% this year vs target 2.0% Ups 2024 economic growth forecast OSLO, March 21 (Reuters) - Norway's central bank kept its benchmark interest rate unchanged at a 16-year high of 4.50% on Thursday, as unanimously expected by analysts, and signalled it plans a single cut to the cost of borrowing this year, fewer than anticipated by most economists. "The rate path we're presenting today indicates... an autumn rate cut, most likely in September," Governor Ida Wolden Bache told a press conference. A second rate reduction could follow by the end of March 2025, she later said. The Norwegian crown strengthened to 11.51 against the euro by 1050 GMT, from 11.53 just before the announcement. The forward rate curve for the years 2024 to 2026 was largely unchanged from levels seen in December, Norges Bank's monetary policy report showed, with a rate of 4.25% at the end of the current year. Analysts in the Reuters poll on average have forecast that Norges Bank will cut the cost of borrowing twice in the second half of 2024, to 4.0% by year-end. "In its assessment of the interest rate outlook, the committee was concerned with the possibility that if the policy rate is lowered prematurely, inflation could remain high, among other things, because the crown might then weaken," Norges Bank said. "On the other hand, an overly tight monetary policy could restrain the economy more than needed." STRONGER GROWTH Economic developments may still delay the first rate cut to December this year, brokers Nordea Markets said. "We still hold our view for a first rate cut in December as we believe that the (currency) will remain under pressure, in part due to later rate cuts abroad than markets currently anticipate," Nordea wrote in a note to clients. The central bank raised its forecast for economic growth, predicting mainland GDP growth in 2024 of 0.5%, up from a 0.1% expansion seen in December. The 2025 estimate was maintained at 1.2%. Norges Bank expects core consumer prices to rise by 4.1% this year, less than the 4.8% seen in December. Core inflation stood at 4.9% year-on-year in February, an 18-month low, but still exceeding the central bank's goal of 2.0%. Norway's decision to keep rates steady came shortly after the Swiss National Bank cut its main interest rate by 25 basis points to 1.50% in a surprise move which made it the first major central bank to dial back tighter monetary policy. The U.S. Federal Reserve on Wednesday said it remained on track for three rate cuts later this year, but trimmed the number of cuts expected in 2025 from four to three for a slightly shallower pace of easing. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/markets/rates-bonds/norway-keeps-interest-rate-hold-eyes-autumn-cut-2024-03-21/

2024-03-21 11:08

NEW YORK, March 21 (Reuters) - ETFS Capital asked shareholders of WisdomTree (WT.N) , opens new tab to abstain from re-electing some board members of the U.S. asset manager, saying its stock could surge at least 70% if it were run better, according to a letter seen by Reuters. The London-based investment firm is ratcheting up pressure on New York-based WisdomTree, valued at $1.4 billion, after the company last month rejected ETFS Capital's suggestion to consider strategic alternatives, including possibly selling parts or all of the asset manager. "The intrinsic value is $15.50 per share," ETFS Capital's chairman Graham Tuckwell wrote in the March 21 letter, adding the value gap exists even after the stock price already surged 32% since the start of the year. WisdomTree's stock closed at $8.91 on Wednesday. ETFS Capital, which owns 10% of WisdomTree's outstanding shares, criticized how the company allocates capital, its high costs and that it attempted to evolve from an exchange traded funds business into decentralized finance, or DeFi, relying on blockchain technology. For months the firm tried to engage privately with WisdomTree and in February it proposed the board hire an investment bank to review alternatives, return capital to shareholders and replace certain executives, the letter said. The company last month responded to ETFS Capital's private letter with a public statement in which it rejected the suggestions. Now ETFS Capital is appealing to shareholders to support a "withhold campaign" where they abstain from voting for board members who are running unopposed for re-election. "As a referendum on the company's failed diversification strategy and its refusal to unlock value through a strategic review process, we intend to withhold our votes from members of the board at the upcoming shareholder meeting. We invite other shareholders to do the same," the letter said. WisdomTree was not immediately available for comment. Last year ETFS Capital won a boardroom challenge when investors elected two of its candidates to WisdomTree's board. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/business/finance/etfs-capital-criticizes-wisdomtree-strategy-launches-withhold-campaign-vs-board-2024-03-21/

2024-03-21 11:01

PARIS, March 21 (Reuters) - French Finance Minister Bruno Le Maire on Thursday set an end of month deadline for New Caledonia to back a state bailout deal for the French territory's nickel industry, ruling out an improved offer. The French government has been holding talks to salvage the South Pacific territory's loss-making nickel industry and has drawn up a deal to continue providing support. "I'm calling for the nickel pact to be signed by the end of March ... as it was drafted," Le Maire told journalists. "Let there be no ambiguities, there is no question of changes." New Caledonia President Louis Mapou has criticised the deal as being insufficient, but has nonetheless put it to the territory's congress for a vote on March 28. Under the proposed deal, the French state would in particular subsidise energy prices alongside local authorities up to 200 million euros a year and invest in electricity production benefiting local nickel plants. With local producers facing cheaper competition from Indonesia, the state aid would help lower their production costs and allow them to become profitable, Le Maire said. The nickel firms would also commit to supplying more of their output to Europe, Le Maire said, as the region tries to secure minerals such as nickel to make electric vehicle batteries. New Caledonia has three nickel processors - KNS, Prony Resources and SLN - that have been on the verge of collapse due to high costs, political tensions and weak international prices linked to Indonesian competition. Mining group Eramet (ERMT.PA) , opens new tab, the majority shareholder of SLN, this month reached an agreement with Paris to remove from its balance sheet hundreds of million of euros of debt related to SLN. Paris had been seeking to finalise a deal with the nickel companies and local authorities in January to overhaul the industry but an agreement has proved elusive, partly due to parallel negotiations over constitutional reform. France has offered loans to help avert the collapse of the nickel processing firms. But Eramet has refused to inject more funds into SLN while KNS co-owner Glencore (GLEN.L) , opens new tab last month suspended output at the KNS processing plant while it seeks a buyer for its stake. Get U.S. personal finance tips and insight straight to your inbox with the Reuters On the Money newsletter. Sign up here. https://www.reuters.com/markets/deals/france-sets-end-march-deadline-new-caledonia-nickel-deal-2024-03-21/