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Demand for fossil fuels poised to drop as Canadians embrace electric vehicles, energy regulator predicts – The Globe and Mail

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The Canada Energy Regulator’s Energy Futures report projects a significant increase in power demand because of a shift toward heating Canadian homes and businesses with electricity, the widespread adoption of electric vehicles and the production of hydrogen using clean power.Darryl Dyck/The Globe and Mail

Canadians’ use of fossil fuels will fall by more than 40 per cent by 2050, according to a new report by the Canada Energy Regulator, driven largely by a move away from gasoline and diesel as consumers switch to electric vehicles and long-haul transport looks to hydrogen.

The regulator’s annual flagship Energy Futures report explores how new technologies and climate policy will affect Canadian energy consumption and production trends over the next 30 years. While it emphasizes Canada cannot meet its climate goals on it current path, critics say the CER needs to do more to outline how the country can reach net-zero emissions by 2050.

The report models two scenarios. The evolving policies scenario assumes that action to reduce greenhouse gas emissions will continue to increase at a pace similar to recent history, while the current policies scenario models limited action beyond policies that are in place today.


Total Canadian energy use,

evolving policies scenario

Per cent share in 2021 vs. 2050

Unabated fossil fuels

Low and non-emitting

the globe and mail

Source: canada energy regulator

Total Canadian energy use,

evolving policies scenario

Per cent share in 2021 vs. 2050

Unabated fossil fuels

Low and non-emitting

the globe and mail

Source: canada energy regulator

Total Canadian energy use, evolving policies scenario

Per cent share in 2021 vs. 2050

Unabated fossil fuels

Low and non-emitting

the globe and mail, Source: canada energy regulator


Fossil fuel demand by type,

evolving policies scenario

In petajoules

Natural

gas

RPPs and

NGLs

the globe and mail, Source: canada energy regulator

Fossil fuel demand by type,

evolving policies scenario

In petajoules

Natural

gas

RPPs and

NGLs

the globe and mail, Source: canada energy regulator

Fossil fuel demand by type, evolving policies scenario

In petajoules

Natural

gas

RPPs and

NGLs

the globe and mail, Source: canada energy regulator

Oil production remains relatively stable under the assumptions in the report, but grows more slowly than in the past decade. In the evolving policy scenario, production rises 16 per cent to a peak of 5.8 million barrels a day in 2032. It then declines, but remains resilient despite increasingly ambitious climate policies and relatively low assumed oil prices of US$40 a barrel by 2050.

In the other scenario, production in 2050 is only about four per cent below today’s levels.

But as more crude becomes available for export, Canada’s ability to get it to market will be tested. Pipeline systems – even with their planned expansions – and rail lines will be jammed with oil into the mid-2030s, exceeding capacity altogether under the current policy scenario.

Canadian oil output to peak seven years sooner than previously forecast, energy regulator says

While there’s more wiggle room under the evolving policy scenario, production will still take up more than 94 per cent of transport capacity until mid-2030.

“By historical standards, it’s extremely full. And so that doesn’t provide a lot of flexibility for upsets in the system for things like maintenance, or if production goes a little bit higher, or if there are any surprises in terms of capacity of existing pipeline systems,” said Darren Christie, the regulator’s chief economist.

The report doesn’t delve into world oil demand projections, but notes that Canadian production levels will hinge on global climate policies.

On the natural gas side, the evolving scenario has production gradually declining to 13.1 billion cubic feet per day by 2050, about 17 per cent lower than current levels. British Columbia will increase its share of production, overtaking Alberta as the top natural gas producer in 2028.

It’s not just fossil fuel demand that is set to decrease. Total energy demand in Canada will fall by more than 20 per cent by 2050 under the evolving policy scenario, with more than two-thirds of it met by low- and non-emitting sources (up from one-third today).

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Much of the heavy lifting on emissions reduction will be done by carbon capture, utilization and storage projects, which force CO2 emissions deep into the ground to keep them out of the atmosphere.

Under the evolving scenario, fossil fuel use where emissions are not captured is projected to fall by 62 per cent in the next 30 years. By 2050, roughly half of all natural gas usage is tied to carbon capture and storage projects.

Mr. Christie said the report signals the need for more changes to Canada’s energy mix to reduce emissions to zero by 2050, but environmental groups say it should have gone further.

The Climate Action Network, a coalition of 130 groups across Canada, argued the CER should have looked to the International Energy Agency’s Net Zero by 2050 road map, released in the spring. That report modelled scenarios that assume global oil demand has already peaked.

Nichole Dusyk, a senior analyst at the Pembina Institute think tank, agreed the CER should have included a third scenario to help guide Canada on its path to net zero.

“It shows us almost a cautionary tale in terms of where we’re headed and that we need to go somewhere different. Where it fails is it doesn’t show us the other path that we actually want to take,” she said in an interview.

She also said that the report doesn’t align with federal government policies, including a pledge to get Canada’s power grid to net-zero emissions by 2035.

The report did, however, include a deep dive into electricity. And, despite the drop in total energy demand under the evolving policy scenario, it projects a significant increase in power demand because of a shift toward heating Canadian homes and businesses with electricity, the widespread adoption of electric vehicles and the production of hydrogen using clean power.

Power generation also gets significantly less carbon-intensive, with 95 per cent of it coming from low- and non-emitting sources by 2050 – up from 82 per cent today.

At the same time, the report highlights the need for more cross-provincial power transmission, particularly in Western Canada.

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Asian shares, U.S. futures slide as traders fret about Ukraine, rate rises – Reuters

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An electronic stock quotation board is displayed inside a conference hall in Tokyo, Japan November 1, 2021. REUTERS/Issei Kato

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HONG KONG, Jan 25 (Reuters) – Asian shares and U.S. futures tumbled on Tuesday after a tumultuous Wall Street session, with investors nervous about the situation in Ukraine and eyeing the U.S. Federal Reserve amid worries about a move to tighter monetary policy globally.

NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as Western “hysteria” in response to its build-up of troops on the Ukraine border. read more

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) shed 1.2%, falling to its lowest in a month, and Japan’s Nikkei (.N225) skidded 2% to its lowest level since August.

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There were sharp declines around the region. Hong Kong (.HSI) lost 1.64% and Korea’s KOSPI (.KS11) fell 1.67%. The Australian benchmark (.AXJO) tumbled 2.73% to hit an eight-month low, hurt also by a high inflation print Tuesday morning that stoked fears of approaching rate hikes Down Under. AZN0236PW

Asian markets were being dragged lower by concerns about faster U.S. rate hikes, mounting tensions over Ukraine, rising inflation and higher oil prices, said Carlos Casanova, senior economist at UBP.

“But on the upside, valuations are becoming more attractive and earnings growth are still robust for some sectors. So I think we will see a tug of war in the market for this week,” he said.

U.S. futures also fell in Asian hours, Nasdaq futures (.NQc1) shed 1.2% and S&P500 futures lost 0.95%, after U.S. stock markets had recovered strongly late in the session to close higher, recouping steep losses made early in the day, as bargain-seeking investors snapped up shares.

The Dow Jones Industrial Average (.DJI) finished up 0.29%, the S&P 500 (.SPX) gained 0.28% and the Nasdaq Composite (.IXIC) added 0.63%.

Keeping traders on their toes, the Federal Reserve will begin its two-day meeting later on Tuesday, with investors starting to speculate that there is a small possibility that they will announce a surprise rate hike.

Investors are also anxiously looking out for any hints about the timing and pace of rate hikes expected later this year. Money markets are priced for a first rate hike in March, with three more quarter-point increases by year-end.

However, U.S. benchmark Treasuries were sitting out some of the speculation. Yields on benchmark 10 year notes were at 1.76%, steady on the day, having finished a choppy day of trading Monday near where they started.

Singapore’s central bank also tightened monetary policy on Tuesday in an out-of-cycle move. read more

Market nerves sent the dollar higher against most peers. The dollar index was at 95.922, hovering near a two-week high, having gained 0.29% overnight. FRX

The Aussie dollar gained briefly after the high inflation print, but failed to hold on to its gains and the risk friendly currency was still hovering near the one-month low hit the day before.

Oil prices were also elevated, further worrying stock investors. U.S. crude rose 0.5% to $83.73 per barrel and Brent crude was at $86.83, up 0.65%.

Gold held on to its recent gains as investors sought safety. The spot price was at $1,841 an ounce, flat on the day but near last week’s two-month high of $1,847.7.

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Reporting by Selena Li, Xie Yu and Alun John; editing by Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

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US shares rebound after Russia-Ukraine tensions hit markets – BBC News

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Ukrainian serviceman from the 25th Air Assault Battalion

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European markets dropped sharply on Monday as concerns about military tension between Russia and Ukraine and interest rate rises prompted sell-offs.

In London, the FTSE 100 fell more than 2.6%, while exchanges in Germany and France slid nearly 4%.

But shares in the US staged a rebound and closed in positive territory despite falling more than 2% earlier.

The swings came ahead of a meeting of the US central bank and amid warnings of a potential invasion in Ukraine.

Nato on Monday said it was putting forces on standby, after Russia deployed some 100,000 troops and heavy armour at the Ukrainian border. On Sunday, the situation prompted the US, the UK and Australia to order diplomats’ families to leave Kyiv.

“Ukraine clearly is a concern that’s weighing on the markets today,” said Darren Schuringa, chief executive officer of investment adviser ASYMmetric ETFs.

“This will continue to weigh on the markets for the foreseeable future until there’s some type of resolution and more clarity as to what the outcome looks like.”

Concerns about inflation, Covid and other issues have led to three weeks of consecutive declines on US markets.

The tech-heavy Nasdaq has fallen more than 10% from its previous high – a drop considered a market “correction” – and the broad-based S&P 500 is flirting with a similar decline.

Meanwhile, the price of Bitcoin, which hit a high of $69,000 in November, has almost halved since, dropping below $35,000 on Monday, before recovering ground to more than $36,000.

Monday saw moments of torrid selling piling onto January’s losses, with the Dow down more than 1,000 points – nearly 3% – at one point.

But the index, which includes many of America’s biggest companies, closed nearly 0.3% higher.

The Nasdaq reversed a more than 3% drop to end 0.6% higher, while the S&P 500 finished 0.3% up.

The swings come as investors wait for action by the US central bank, which has said it expects to respond to soaring US inflation by raising interest rates this year.

Such moves typically depress stock prices by making other kinds of investments more attractive.

Investors have also been also selling shares as they try to position themselves ahead of a wave of reports from companies about their end-of-year performance.

Last week, Netflix, one of the biggest names to share results so far, disappointed analysts with its forecast for the upcoming months, prompting shares to plunge more than 20%.

The declines were seen as a possible warning about other firms.

Walt Disney, which has been focusing on its streaming strategy to compete with Netflix, was among the biggest initial losers on the Dow on Monday, down more than 4% at one point, while Tesla, which reports this week, fell more than 6%.

Shares in both firms later recovered, with Disney ending flat and Tesla down about 1.5%.

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Stocks plunge into the red then rebound as uncertainty returns to markets – CBC News

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Stock markets plunged into the red before recovering to finish the day in positive territory on Monday, as fears over war in Ukraine and higher interest rates in the U.S. and Canada took investors on a wild ride.

Early in the afternoon, the Dow was off by more than 1,000 points, or about three per cent, and the tech-heavy Nasdaq was faring even worse as investors worried about the prospect of war in Ukraine.

“What really sparked the sell-off today is the fact that we seem to be marching inexorably towards a full-scale invasion of Ukraine by Russia,” Dennis Mitchell, CEO of Toronto-based investment firm Starlight Capital, said in an interview.

Canadian shares were not exempt from the sell-off, as the benchmark Canadian index was on track for its worst day in months, down more than 600 points, or three per cent at one point.

In the afternoon, however, the market changed direction and investors started buying up shares. All three major U.S. stock groupings, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq, finished the day in positive territory.

“The selling that you’re seeing today is usually a good indication that this is a good buying moment,” Mitchell said.

After falling nearly three per cent by midday, the TSX mounted a comeback of its own in the afternoon but fell short of reversing its losses, and closed the day down 50 points to 20,571.

Dianne Swonk, chief economist with Grant Thornton, said the pandemic has been a time of unprecedented volatility for almost two solid years now, and that can sometimes result in wild swings for stock prices.

“This is giving us a lot of turbulence out there,” she said in an interview, “and the problem is it it ups the uncertainty at a time when uncertainty is already high.”

Higher rates coming

Prior to Monday’s trading, the major event of the week was slated to be the Bank of Canada’s interest rate decision on Wednesday. Expectations are growing that central banks will soon have to raise their interest rates to keep a lid on inflation, which has run up to the highest level we’ve seen in decades lately.

All things being equal, higher interest rates are bad news for stocks because they raise the cost of borrowing. That gives companies and investors less of an incentive to borrow to invest.

Currently, the market is pricing in about a 60 per cent chance of a rate hike in Canada as soon as this week. If one doesn’t come this time around, it’s a near certainty to happen next time the bank meets in March, according to trading in investments known as swaps.

Swonk said some of the uncertainty comes from figuring out how central banks are going to try to find the right balance between keeping a lid on inflation but also not harming the economy that is still being hit by Omicron.

“They don’t want to put the flame out on the economy, but they certainly want to cool it off a bit,” Swonk said. “That’s left many people unsure of how fast rates will go up.”

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