2023-11-27 11:22
SINGAPORE, Nov 27 (Reuters) - Fast growth in China's renewable energy sector to meet climate goals is being undermined by continued coal capacity expansion and a rapid rise in energy consumption, a report said on Monday. China's energy bureau said last week that total installed solar power capacity hit 536 gigawatts (GW) in October, up 47% from a year earlier, with wind capacity also rising 15.6% to 404GW. If this year's rate of renewables expansion is maintained, China is on track to bring emissions to a peak and start reducing them in coming years, the Centre for Research on Energy and Clean Air (CREA) and the Heinrich Böll Foundation (HBF) said in their annual progress report on China's climate actions. However, the country must redouble efforts on energy efficiency and transform its growth model to tackle rising energy consumption, which is still running ahead of "1.5 degree scenarios", the report said. China's efforts are "possibly the single most important factor in the global fight against climate change," according to CREA-HBF. China's carbon dioxide emissions, by far the highest in the world, rebounded in 2023 as a result of low hydropower output and the post-COVID revival of the country's economy, the report said. Demand for energy and materials from the rapid expansion of clean energy and electric vehicle manufacturing also offset the decline in emissions brought about by a slump in real estate, which has restrained cement and steel production, it added. China is "badly off track" when it comes to controlling coal-fired capacity and also meeting energy intensity targets for 2025, the report said. It has granted permits for 152GW of new coal power since the start of 2022, starting construction on 92GW, with total capacity on track to rise 23% by 2030. "It is entirely possible for emissions to fall while capacity increases, but the buildup of new coal power plants makes emissions peaking economically and politically more challenging to implement," the report said. https://www.reuters.com/sustainability/climate-energy/chinas-progress-renewables-meet-climate-goals-undermined-by-coal-expansion-2023-11-27/
2023-11-27 11:15
A look at the day ahead in U.S. and global markets from Mike Dolan Global markets took a sharp intake of breath on Monday after seeing Wall St's 'fear gauge' hit its lowest since before the pandemic hit late last week and as China major stock indexes continue to wane. As U.S. markets return in earnest from the long Thanksgiving weekend, Friday's shortened session threw up a remarkable milestone. The VIX index of implied volatility on the S&P500 (.SPX) plunged to its lowest close since just before the COVID-19 shock unfolded in 2020 - an extreme some fear will inspire demand for options hedging and reversion back toward historic mean. It ticked back up to regain a foothold above 13 today. But while the quirky Friday move may have been partly related to the holiday and a 30-day contract horizon falling around Christmas, evaporation of 'vol' is reflected elsewhere and reveals a bullish tilt into 2024 amid hopes that record flows to cash will reverse and buoy both stocks and bonds. Even with another $148 billion of new 2-, 5- and 7-year U.S. Treasury notes up for auction on Monday and Tuesday, equivalent bond market volatility measures (.MOVE) also dropped to their lowest since September 25. With Federal Reserve officials still holding the line that it's way to early to talk about interest rate cuts, Treasury yields have crept back up a notch - in part awaiting this week's PCE inflation report for October and a speech on Friday from Fed chief Jerome Powell. New home sales data is on Monday's slate. Ten-year Treasury yields hovered just under 4.50% first thing, about 10 basis points up from Wednesday's intraday low. Fed futures have pulled back to now price just 80bps of rate cuts by the end of next year - even though some banks still expect far more. Deutsche Bank on Monday said it expected a whopping 175bp of Fed rate cuts in 2024 as a mild recession there hits - leaving the policy rate at just 3.63% at yearend. Monday's stock opening looked to be in the red, however, with Asia and European bourses falling back. Early indications of retail around 'Black Friday' sales were upbeat, heaviest online and amid significant discounting. The dollar index (.DXY) was lower despite last weeks backup in yields, with U.S. crude oil prices on the slide again ahead of OPEC+'s re-scheduled meeting on Thursday. The final day of an agreed four-day pause in the fighting in Gaza got underway amid hopes for further hostage releases. As still-positive U.S. economic surprises indexes ebb and deeply negative euro zone equivalents improve somewhat, the surprise gap between the two blocs has fallen to its lowest since May. But nervousness about China's economy and the alarming underperformance of Chinese stock benchmarks (.CSI300) - now running at 21% year-to-date against MSCI's all-country indexes (.MIWD00000PUS) - continued to jar. Profit growth at China's industrial firms slowed again last month, with year-on-year gains of just 2.7% missing forecasts and suggesting more policy support measures are needed to help shore the world's second-largest economy. Property developers (.CSI000952) plunged 2.3%, failing to sustain recent gains on hopes of government support. Beijing police, meantime, are investigating suspected crimes committed by Zhongzhi Enterprise Group, a leading Chinese wealth manager, according to a social media post published by the Chaoyang Public Security Bureau on Saturday. And there was also some alarm at health developments and rising respiratory illnesses, despite official assurances. A spike such illnesses is due to peak in the coming weeks but is not as high as before the COVID-19 pandemic, a World Health Organisation official said - reiterating that no new or unusual pathogens had been found in the recent cases. But not all was in the red, even if for worrying reasons. Small cap Chinese stocks rose after the Beijing Stock Exchange de facto implemented a new policy that prevents major shareholders of companies listed on its bourse from selling stock, three sources told Reuters. Shares of Beijing Stock Exchange (.CSI899050) jumped 11% following a record 21% gain last week. Key developments that should provide more direction to U.S. markets later on Monday: * U.S. Oct new home sales, Dallas Fed Nov manufacturing survey * U.S. Treasury sells 2- and 5-year notes, 3- and 6-month bills * European Central Bank chief Christine Lagarde speaks in European Parliament * U.S. corporate earnings: Zscaler, Cerence, Anavex Life Sciences, UP Fintech, Ituran Location and Control, Smart Share Global https://www.reuters.com/markets/us/global-markets-view-usa-2023-11-27/
2023-11-27 11:13
Nov 27 (Reuters) - Germany's cabinet is expected to agree a supplementary 2023 budget this afternoon, a government spokesperson said on Monday. The cabinet will also try to present a 2024 budget by the end of the year, the spokesperson said, adding that if this did not work out, the plan was to agree a budget in January. The cabinet would base its reasoning for a renewed suspension of the country's debt brake on 2022 reasoning, the spokesperson added, speaking at a regular press conference in Berlin. Chancellor Olaf Scholz's government was forced to freeze most new spending commitments after the constitutional court blocked plans to repurpose unused pandemic funds towards green projects and industry subsidies, wiping billions from the federal budget. https://www.reuters.com/markets/europe/german-cabinet-agree-supplementary-budget-this-afternoon-spokesperson-2023-11-27/
2023-11-27 11:10
TORONTO, Nov 27 (Reuters) - Canada's big banks are likely to wrap up a challenging financial year with another quarter of declining profits and rising bad debt provisions amid a slowing economy. The big six banks have axed thousands of jobs this year as investment banking fees lagged and business south of the border weakened due to the U.S. regional banking crisis. While high interest rates have boosted the banks' lending margins, residential mortgages, auto loans and commercial real estate loans have slowed as consumers and businesses pulled back. The fallout from high borrowing costs on commercial real estate lending and auto loans as well as the renewal of nearly C$900 billion of residential mortgages starting next year will weigh on banks. "Investor focus would be on potential for expanding net interest margins to offset slowing loan growth and rising credit costs," BofA analyst Ebrahim Poonawala said. Provision for credit losses (PCLs), the money banks set aside to cover bad loans, is expected to grow at least 39% at National Bank and more than double at Bank of Montreal (BMO.TO), which acquired U.S lender Bank of the West earlier this year. Profits at the big six banks are expected to shrink an average 3% from a year ago as PCLs climb and revenue growth slows, KBW analyst Mike Rizvanovic projected. He lowered his forecast for fiscal year 2024 earnings. "We continue to see a challenging environment for the group heading into fiscal 2024," Rizvanovic said, noting that higher PCLs, a prolonged mortgage renewal cycle and the impact of high interest rates on consumer lending would curtail balance sheet growth. Banking stocks have lost between 1% and 10% so far this year, compared with a 3.7% rise in the benchmark Canada share index (.GSPTSE). MORE AREAS OF WORRY Refinancing of home loans is expected to bring a lot of pain to customers who took out cheaper mortgages during the pandemic. With interest rates forecast to remain high, renewal of the mortgages will squeeze household budgets. Banks are also rethinking lending to industries sensitive to high interest rates, from condo development to office space. "We want to make sure we have some kind of confidence when a project is going to go ahead," said Victoria Girardo, Canadian Western Bank's (CWB.TO) VP in real estate lending. In Toronto alone, developers have delayed launching nearly 14,000 condo units so far this year, according to Urbanation data, highlighting rising borrowing costs and economic uncertainty. Veritas Investment Research analyst Nigel D'Souza noted that real estate developers are facing liquidity pressures as many consumers are not able to close purchases that have been presold due in part to higher mortgage rates. "That is creating liquidity issues across the real estate developer space. And you're seeing either some developers facing bankruptcy or facing financing shortfalls. Those pressures will continue to build," he said. https://www.reuters.com/business/finance/canada-banks-quarterly-profits-seen-hit-by-rising-provisions-2023-11-27/
2023-11-27 11:09
FRANKFURT/DUESSELDORF, Nov 27 (Reuters) - Uniper has to pay 550 million euros ($600 million) to a European supplier of liquefied natural gas, the German state-owned utility said on Sunday, citing a ruling by an arbitration court over a contract concluded before the group's spin-off in 2016. The arbitration proceedings, under the rules of the International Chamber of Commerce, began in early 2021 and relate to the pricing provisions of a long-term LNG supply agreement with an undisclosed counterparty, Uniper said. Spun off from E.ON (EONGn.DE) in 2016, Uniper last year launched legal proceedings against Russia's Gazprom (GAZP.MM), its former main supplier of natural gas, which first cut and later suspended deliveries, causing Uniper to nearly collapse. The LNG contract in question expired in 2022, Uniper, one of Europe's biggest gas and LNG traders, said, adding that therefore no further financial fallout was to be expected. Thinly-traded shares in the group, which became Europe's most high-profile corporate victim during last year's energy crisis, were up 1.4% at 1058 GMT. Uniper said the fine "related to the retroactive re-pricing of the long-term agreement", without being more specific. Arbitration proceedings over gas supply contracts are not uncommon in the industry. Uniper, which was bailed out by Germany last year, said the payment would impact its annual results, adding it was currently analysing the decision and would review legal steps. It did not provide an updated fiscal outlook. Uniper in October confirmed that it expects adjusted earnings before interest and tax of 6 billion to 7 billion euros and adjusted net profit of 4 billion to 5 billion euros in 2023 thanks to lower-than-expected gas spot prices. ($1 = 0.9168 euros) https://www.reuters.com/business/energy/court-fines-germanys-uniper-600-million-over-lng-contract-pricing-2023-11-26/
2023-11-27 11:09
COP28 summit will be first global assessment of Paris Agreement Summit host UAE aims to increase its oil production capacity Oil and gas representatives to be present at Dubai talks Thunberg called Jaber's appointment 'completely ridiculous' Supporters say he is a realist DUBAI, Nov 23 (Reuters) - Sultan al-Jaber, the United Arab Emirates oil chief executive and leader of COP28 climate talks, has a formidable reputation for earnestly pursuing results. His position as leader of state energy giant ADNOC has alarmed environmental critics concerned over his commitment to maintaining a role for fossil fuels in the energy transition, but his supporters say he has an ability to get things done and straddle divides that will deliver climate action. When marathon deliberations in Egypt’s picturesque city of Aswan in October struggled to reach an agreement on a fund to help countries recover from damage caused by climate change, Jaber leapt in. In a virtual intervention, he told the 24-member U.N. committee debating the fund that billions of lives depended on getting a deal. Jaber's message to the delegates made very clear he would not accept failure. "You could say that he used the notion of the hard deadline to help bang heads," Avinash Persaud, negotiator for Barbados, who was a member of the technical committee and present at the meeting, told Reuters. The stakes were high. Climate funding has caused bitter divisions between developed countries held largely responsible for global warming and poorer countries that are the most vulnerable to its consequences. Another failure to agree on what is known as the "loss and damage" fund could derail discussions at COP28, which takes place from Nov. 30 to Dec. 12 in Dubai. After a year of extreme heat, droughts, wildfires and floods, the U.N. talks will be the first global assessment of progress since the landmark Paris Agreement in 2015. The October negotiations were supposedly the last chance to reach agreement on the fund, but a fifth extraordinary gathering took place in Abu Dhabi in November that agreed to make the World Bank the fund's interim home and encourage all countries to contribute. The UAE is among a handful of high per-capita income countries that are not obliged to contribute to U.N. climate funds, but face pressure from European states to do so. OIL RICHES AND BEYOND The UAE is a senior member of the Organization of the Petroleum Exporting Countries (OPEC) and its wealth is built on oil. It has plans to raise its production capacity to 5 million barrels per day (bpd) by 2027. Jaber, born in 1973 in Umm al Quwain, one of the lesser known emirates, stands out in the UAE for the number of high positions he holds. Nicknamed Dr. Sultan, he has a PhD in business and economics from Britain's Coventry University. He also studied in the United States. In 2006, he was put in charge of Masdar, the UAE’s renewable energy vehicle, and set off on a global fact-finding mission to assess obstacles and opportunities. As part of the tour, he met Olafur Ragnar Grimsson, who was then president of Iceland, which, drawing on ample geothermal reserves, has managed to more than meet its energy needs through renewable sources. "He told me he had this vision that he wanted to make Abu Dhabi a centre for a renewable energy transformation," Grimsson told Reuters. "On the face of it, it was almost an absurd proposition. But there was something in his eyes, and his enthusiasm that made me believe that he was serious." Masdar has investments in over 40 countries and is still chaired by Jaber, its founding CEO, who since 2016 has also been the CEO of ADNOC. NO MORE SILOS? Jaber's travels showed him the need to break down silos that separate various aspects of the renewables industry, such as research, technology and finance, to get results. Similarly, as the president of COP28, he has backed an inclusive approach, so oil and gas representatives, including OPEC Secretary General Haitham Al Ghais, will be in Dubai. Without the inclusion of fossil fuel leaders in the climate conversation, Jaber says there can be no orderly transition to a low carbon economy. The approach has alarmed climate activists. Greta Thunberg called Jaber's appointment as president-designate to COP28 in January "completely ridiculous", while former U.S. vice president Al Gore, a long time climate activist, has said fossil fuel interests have taken over the U.N. climate process. HOUSTON, WE HAVE A PROBLEM Those who have worked with Jaber have said he is as a realist who looks towards scientific data and factual evidence to guide his decision-making. Jaber says his experience as an oil boss adds to his ability to leverage solutions. Two months after being appointed COP28 leader, Jaber in March flew to Houston to the CERAWeek energy industry event where he urged the world's fossil fuel bosses to join the fight against climate change, borrowing a famous line from a U.S. astronaut aboard a damaged spacecraft during the Apollo 13 mission in 1970. "Houston, we have a problem," Jaber told the nearly 1,000 attendees, urging the industry to bring emissions under control. He has since worked to make more than 20 companies across the oil and gas sector and heavy industry agree to commit to curb emissions at COP28, after convening more than 60 top executives from the oil and gas, cement, aluminium and other heavy industries in Abu Dhabi this October. A final deal on the commitment is expected to be announced at COP28. BRIDGING THE DIVIDE Success at COP28, whose first task will be to formally make Jaber its president, will depend on achieving collaboration between the world' biggest carbon emitters China and the United States. Jaber has devoted himself to shuttle diplomacy between the two and drew on a personal rapport with both U.S. climate envoy John Kerry and Chinese counterpart Xie Zhenhua to help align around significant methane emission reduction commitments. The even bigger issue of ending the divisions over the continued role of hydrocarbons, however, has yet to be solved. Countries, such as the UAE, say coal, oil and natural gas must have a continued role, combined with technology to capture their emissions until new energy systems can sustain the world's needs. On the other side of the divide are countries that say phasing out fossil fuel is the only way to achieve the Paris goal of limiting global warming to well below 2 degrees Celsius (3.6 degrees Fahrenheit), while aiming for a cap of 1.5C. Jaber has maintained a phase down of fossil fuels is inevitable and essential, but as part of a comprehensive, thought-out energy transition plan that takes into account the circumstances of each country and region. "One size fits all will not work so we need to be flexible and agile," he told Reuters in October. "We should raise ambition and keep 1.5 as our north star so no-one loses sight." https://www.reuters.com/sustainability/climate-energy/sultan-al-jaber-uae-oil-boss-steering-cop28-2023-11-23/
