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Urgent action needed for UK to hit net zero goals: CCC

  • Market: Crude oil, Emissions, Natural gas
  • 18/07/24

The UK increased the rate at which it reduced greenhouse gas (GHG) emissions last year, but "urgent action" is needed for the country to meet its targets in 2030 and beyond, independent advisory body Climate Change Committee (CCC) said in its progress report published today.

The report assesses the UK's progress towards its net zero goals against policy set out by the previous Conservative government. The new Labour government, which has been in power since 5 July, has already set the scene for a stronger decarbonisation agenda, but it "will have to act fast to hit the country's commitments", the report says. The committee tracked progress on 28 key indicators. Of the 22 that have a benchmark or target, only five are assessed as being "on track".

The UK's GHG emissions last year stood at 393mn t/CO2 equivalent (CO2e), down on the year by 5.4pc, or 22mn t/CO2e, provisional data show. This estimate excludes contributions from international aviation and shipping, as these are not included in the UK's 2030 target of a 68pc cut in GHG emissions from a 1990 baseline. And last year's reduced emissions resulted primarily from a drop in gas demand, the CCC says. Combined gas demand in 2023 averaged 156mn m³/d, down from nearly 175mn m³/d a year earlier.

While progress has been made, the previous administration "signalled a slowing of pace and reversed or delayed key policies", the report says. The reduction in emissions last year is "roughly in line with the annual pace of change needed" to reach the 2030 target, but the average annual rate over the previous seven years is "insufficient", the committee says.

The new government has placed strong focus on decarbonising electricity in its first days in office, but this is "not enough on its own", CCC acting chief executive James Richardson said. The average annual rate of GHG reduction outside the electricity supply sector over the previous seven years was 6.3mn t/CO2e, but this will need to more than double until 2030 if the UK is to meet its targets, the CCC says.

In order to reach targets, "annual offshore wind installations must increase by at least three times, onshore wind installations will need to double and solar installations must increase by five times" by 2030. By comparison, oil and gas use should be "rapidly" reduced and the expansion of the production of fossil fuels should be limited, according to the report.

The CCC also recommended that about 10pc of UK homes will need to be heated by a heat pump by 2030, in comparison with about 1pc today. The committee criticised the exemption of 20pc of properties from the 2035 phase-out gas boiler plan, saying it is "unclear" how the exemption would reduce costs as fewer consumers would have to pay to maintain the distribution grid.

Gas-fired power generation in recent months has dropped on the back of high wind output and brisk power imports. Power-sector gas burn was 25mn m³/d in March-June, roughly half of the three-year average for the period. But if UK power demand increases with electrification, gas-fired power generation could maintain its role in the country's power mix, particularly if it is combined with carbon capture, use and storage technology, for which fast development and scale-up will need to happen this decade, the CCC says.

"Biases" towards the use of natural gas or hydrogen must be removed where electrification is the most economical decarbonisation solution in an industry sector. Power prices need to be reduced "to a level that incentivises industrial electrification".

Oil, gas industry to meet climate goals

The UK's oil and gas sector "is on track to meet its own climate goals and is not slowing down", offshore industries association OEUK said today in reaction to the CCC's report.

The UK needs a plan for reducing oil and gas demand and cutting its reliance on imports, according to OEUK chief executive David Whitehouse. "We should be prioritising our homegrown energy production," he said.

The sector reduced its emissions by 24pc in 2022 from 2018, meaning it met its target to reduce emissions by 10pc by 2025 early. The industry halved its flaring and venting and cut methane emissions by 45pc in 2022 compared with 2018, Whitehouse said.

OEUK plans to reduce emissions by a quarter by 2027 and by half by 2030 against 2018 levels. And it aims to achieve net zero by 2050.


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17/01/25

Canada's Trans Mountain investigating capacity increase

Canada's Trans Mountain investigating capacity increase

Calgary, 17 January (Argus) — The operator behind Trans Mountain's 890,000 b/d pipeline system in western Canada is looking into increasing its capacity as export congestion looms, while threatened US tariffs may prompt the country to re-examine its broader pipeline strategy. "We have started to identify and investigate opportunities that could improve the throughput efficiency of the system and increase capacity of the pipeline — ideally in the next four to five years," Trans Mountain told Argus on Friday. Federally-owned Trans Mountain would not say how much of an increase it was contemplating, but any plans would be subject to thorough regulatory reviews and approval before proceeding. The system connects producers in oil-rich Alberta to the docks at Burnaby, British Columbia, and its capacity was roughly tripled when the 590,000 b/d Trans Mountain Expansion (TMX) was placed into service in May 2024. The increased system has been a popular outlet for shippers, both for selling to US West coast refiners, but also for producers looking to bypass the US altogether and target Asian countries. Trans Mountain is expected to be full by 2028, chief executive Mark Maki told a parliamentary committee in October , as are other lines which have operators like Enbridge also looking to up egress capacity. The laying of new pipe may not necessarily be a big part of these increases as both are looking at making their systems more efficient. TMX is expected to cost about C$34bn ($24bn) after enduring regulatory delays, political and environmental resistance, court orders, wildfires, floods, Covid-19 measures, and rising labor costs caused by competing pipelines since being proposed in 2013. Other proposed export pipelines like Enbridge's 525,000 b/d Northern Gateway and TC Energy's 1.1mn b/d Energy East did not get past the approval stage under a federal Liberal government. Alberta premier Danielle Smith on 16 January called on Canada to "immediately start construction on the Northern Gateway and Energy East pipelines" to decrease the country's reliance on US customers in the wake of threatened tariffs by president-elect Donald Trump. Prime minister Justin Trudeau and all Canadian premiers, except Smith, have not ruled out the use of Canada's energy — most of which comes from Alberta — in retaliation to US tariffs. Smith has been labeled by some as not being part of a unified front for Canada, but she questions where the "Team Canada" approach has been in the past, citing suffocating regulations for the energy industry and decades of transfer payments made to Quebec, Ontario and the Maritime provinces at the expense of Alberta taxpayers. There is precedent for Smith's concerns, referencing a clash between Alberta and prime minister Pierre Trudeau, Justin's father, in 1973 when a federal tax was imposed on Canadian oil exported to the US amid the Arab oil embargo. Conflict peaked again in the early 1980s when the Trudeau government introduced its National Energy Program, which included price controls on domestic oil. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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IMF upgrades global growth outlook


17/01/25
News
17/01/25

IMF upgrades global growth outlook

Washington, 17 January (Argus) — The IMF is taking a slightly more upbeat view of the prospects for the global economy, revising upward its expectations for the US economy. But IMF officials are warning about the potential for higher inflation in the US if president-elect Donald Trump follows through with his threats to impose broad tariffs on all US imports from Canada, Mexico and China. "Higher tariffs or immigration curbs will play out like negative supply shocks, reducing output and adding to price pressures," IMF head of research Pierre-Olivier Gourinchas said. In an update to its World Economic Outlook released today, the IMF projected the global economy will grow by what it called a "stable, albeit lackluster rate" of 3.3pc this year and again by 3.3pc in 2026. The IMF's new 2025 outlook is 0.1 percentage points higher than its 3.2pc forecast in its October report. The IMF expects the US economy, spurred by continued strength in domestic demand, to grow by 2.7pc this year, a 0.5 percentage point increase from its forecast in October. China's economy is projected to grow by 4.6pc this year, up by 0.1 percentage point from the IMF's October forecast. The euro area is expected to grow by 1pc. Last year, the world economy grew by an estimated 3.2pc, compared with 3.3pc in 2023, the IMF said. IMF forecasts are used by many economists, including at the Paris-based energy watchdog IEA, to model oil demand projections. Global inflation is expected to decline to 4.2pc this year and 3.5pc in 2026, with pricing pressures easing in advanced economies more quickly than in emerging and developing economies. Gourinchas noted that while it is difficult to quantify the effects of the policy changes Trump has vowed to implement, "they are likely to push inflation higher in the near term" relative to the IMF's baseline. Looser fiscal policy or deregulation would stimulate demand and increase inflation, as spending and investment rise. "A combination of surging demand and shrinking supply would likely reignite US price pressures, though the effect on economic output in the near term would be ambiguous," Gourinchas said. IMF executive director Kristalina Georgieva and other economists have warned in recent years about the rising tide of protectionist measures implemented by the advanced economies, including the US and the EU. A recent IMF forecast scenario that involves a trade war between the US, Europe and China would reduce the global and US GDP annual growth forecast by 0.5 percentage points in 2025-30, with smaller effects in the eurozone and China. That scenario did not account for a possible trade war between the US and its immediate neighbors, which also has the potential to disrupt an integrated North American energy market. By David Ivanovich and Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Houthis signal Red Sea attacks pause after Gaza truce


17/01/25
News
17/01/25

Houthis signal Red Sea attacks pause after Gaza truce

Dubai, 17 January (Argus) — The Yemen-based Houthi militant group said it will monitor implementation of a temporary ceasefire between Israel and Gaza-based Hamas, raising the possibility of a reprieve for shipping in the Red Sea, but will remain prepared for military action if the deal is breached. "Our position regarding the situation in Gaza is linked to the position of our brothers in the Palestinian [armed] factions," Houthi leader Abdul-Malik al-Houthi said in a televised speech on 16 January. "We will continue to monitor the stages of implementation of the ceasefire agreement in Gaza, and any Israeli [violation], we will be directly ready to support militarily the Palestinian people." Al-Houthi's remarks suggest a halt in his Iran-backed group's campaign against shipping passing through the mouth of the Red Sea and against Israel directly. But with no clarity if he was referring to attacks on Israel or shipping lanes, shipping firms are likely to remain cautious about returning to the Red Sea. The Houthis began attacking commercial vessels with western and Israeli affiliations in the Red Sea and Gulf of Aden following an escalation of fighting between Hamas and Israel. Al-Houthi said his group have carried out 1,255 operations, including using ballistic missiles, drones and gunboats, since November 2023. But the risk of an attack in the Red Sea remains despite the ceasefire between Hamas and Israel, tanker owner Frontline said today. "We [are] all hopeful with the ceasefire, but… any ceasefire will be vulnerable with risk of [a] crew being caught if it breaks," Frontline chief executive Lars Barstad wrote on X. The possibility of an attack has compelled many ship operators to forego the Suez Canal in favor of longer voyages around the Cape of Good Hope in the last year, adding time and cost to movement of commodities. Transit of liquid and dry cargoes through the Suez Canal totaled 343mn t last year, less than half the 763mn t in 2023, according to data from Kpler. The ceasefire deal was announced late on Wednesday, 15 January, by Qatar and the US, two of the three countries that have been helping to mediate the negotiations between Israel and Hamas. Egypt is the third. Israel's security cabinet will meet today to sign off on the deal, and will send it for approval from the full government. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Australia rejects gas exploration permit near Sydney


17/01/25
News
17/01/25

Australia rejects gas exploration permit near Sydney

Sydney, 17 January (Argus) — Australia has refused further permits to two explorers for the controversial petroleum exploration permit 11 (PEP-11) in the offshore Sydney basin, citing public interest and financial stability concerns. The 4,500km² block near the NSW state cities of Sydney and Newcastle contains shale and conventional gas reserves. It was controlled by 85pc stakeholder Asset Energy, 100pc-owned by unlisted oil and gas explorer Advent Energy, and 15pc owner Australia-listed Bounty Oil and Gas. The Commonwealth-New South Wales (NSW) offshore oil joint authority refused the stakeholders' PEP-11 applications on 16 January, federal Labor industry minister Ed Husic said on 17 January. "The joint authority refused the applications for reasons of public interest, concerns about the applicants' estimate of the cost of works and their ability to raise the necessary capital to fund the proposed works," Husic added. The firms were initially refused an extension for PEP-11 in 2021, by then Coalition prime minister Scott Morrison. But Asset appealed this decision , alleging procedural unfairness. Electorates in the northern suburbs of Sydney were considered crucial in Australia's 2022 federal election, which Morrison and his Coalition ultimately lost. Gas exploration and production is politically unpopular in many parts of Australia, despite ongoing concerns about energy shortfalls. Bounty claimed PEP-11 contains potential gas resources of 4.7 trillion ft³ (133bn m³) but the region has not produced any commercial quantities to date. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Trump tariffs may move gas prices, not flows


16/01/25
News
16/01/25

Trump tariffs may move gas prices, not flows

New York, 16 January (Argus) — US president-elect Donald Trump's threat to impose 25pc tariffs on all imports from Canada would likely raise US natural gas prices if enacted, but not by enough to significantly alter flows across the border. As anxiety over US-imposed tariffs mounted over the past week, gas prices for February delivery on the Pacific coast of southern Canada began trading at a steeper discount to their US counterparts. The February price at Westcoast station 2, a key indicator of western Canadian gas prices, on Wednesday was at a $4.38/mmBtu discount to northwest US gas hub Northwest Sumas, compared with a $3.43/mmBtu discount a week earlier. The February price at Canadian benchmark NIT/AECO on Wednesday also moved to a $2.56/mmBtu discount to the US benchmark Henry Hub in Louisiana from a $2.22/mmBtu discount a week earlier. While other factors could be at play, the wider Canadian discounts line up with a shift in sentiment by Canadian oil and gas groups and politicians over the past week, as those groups coordinate to try and halt the threatened tariffs. "They're likely to come in on January 20th," Danielle Smith, premier of Alberta, a major oil and gas-producing Canadian province, said of the tariffs this week. The attitude is starkly different from a month earlier, when Michael Rose, chief executive of Tourmaline Oil, the largest Canadian gas producer, said at a Goldman Sachs energy conference that he thought there was a "low likelihood" that the tariffs would be imposed. "We'd agree with you," replied Goldman Sachs head of gas research Samantha Dart. But while US-Canadian gas price spreads would widen if gas were not exempted from Trump's tariffs, the western US would probably not reduce purchases of Canadian gas, because "there's nowhere else for them to get the supply," FactSet senior energy analyst Connor McLean said. Moreover, even with a 25pc price increase, Canadian gas is still highly competitive against US-sourced gas and alternative power generation sources like coal. This is also the case for the US' upper midcontinent and east coast, though gas buyers in those regions could also source gas from Appalachia, Oklahoma or the Rockies if there were spare pipeline capacity. The effect of tariffs on gas prices would also probably be dwarfed by more humdrum market dynamics, like the weather. Demand-boosting cold weather this month has quickly drawn down US gas inventories, which appear slated in the coming weeks to flip to a deficit to the five-year average for the first time in more than two years. Even colder weather early next week is also likely to trigger freeze-offs, which are production curtailments caused by extreme cold. Given those more pressing concerns, "tariffs do not come up" in meetings with other market participants, Appalachian gas producer Seneca Resources marketing manager Rob Lindroos told Argus . Approximately 99pc of US gas imports are from Canada via pipeline, with flows into the US averaging 8 Bcf/d (227mn m³/d) in 2023, according to the US Energy Information Administration. Those Canadian sales, accounting for nearly half of western Canada's production, provide crucial energy supplies to the US Pacific northwest and midcontinent, parts of which are far from US reservoirs. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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