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IEA’s urgent fossil fuel warning earns mixed reception from producers

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A stark appeal by the world’s top energy body to stop investment in new fossil fuel projects by next year has met a mixed reception from the world’s top producers – from guarded praise and pledges to cut back on coal to outright defiance.

The International Energy Agency said in its “Net Zero by 2050” report last week that investors should not fund new oil, gas and coal supply projects beyond this year if the world wants to reach net zero emissions by mid-century and meet the goals of the 2015 Paris Agreement on climate change.

Its findings aim to encourage ambitious climate targets from countries attending the United Nations’ Climate Change Conference (COP26) in November in Glasgow, Scotland but has yet to garner a full commitment from any country. (Graphic: IEA Net Zero)

G7

The world’s seven largest advanced economies agreed on Friday to stop international financing of coal projects that emit carbon by the end of this year and phase out such support for all fossil fuels.

The United States, Britain, Canada, France, Germany, Italy and Japan, plus the European Union, said in a joint statement: “international investments in unabated coal must stop now”.

UNITED KINGDOM

Alok Sharma, the UK minister presiding over the global climate talks in Scotland who requested the IEA publish its Net Zero report, stopped short of committing to the fossil fuel ban.

“I welcome this @IEA report, which sets a roadmap to #NetZero and shares many of the priorities of the UK”, Sharma tweeted, adding that the UK wanted to “consign coal power to history”.

The UK government reached a deal with North Sea industry players in March to allow new offshore oil licensing rounds in exchange for pledges to cut emissions.

Following the G7’s communique on climate, Sharma said: “We are acting abroad as we’re doing at home by agreeing to phase out international fossil fuel finance, starting with coal”.

NORWAY

Norwegian Prime Minister Erna Solberg described the IEA’s roadmap as simply one of “many reports”, telling the NTB news agency it would not change the petroleum policy of Western Europe’s biggest oil producing country.

Norway has offered tax breaks as an incentive for new higher-cost oil projects and is preparing new licenses for offshore exploration.

“If this roadmap becomes a reality … it may in the long run affect the companies’ interest in looking for new discoveries”, Norwegian Oil and Energy Minister Tina Bru told Reuters.

UNITED STATES

White House National Climate Advisor Gina McCarthy said the IEA advice deserved close scrutiny but that change would be gradual and fossil fuel projects remained in the pipeline.

“I think that’s one of the things that we have to think about and struggle with … I’m not suggesting this transformation is going to be quick”, she said, noting that hundreds of new U.S. natural gas units were planned.

U.S. climate envoy John Kerry also praised the report but also stopped short of any new commitments.

“New @IEA report is an important guide for how the energy sector​ can reach net-zero by 2050”, he tweeted. “It shows that we must ramp up existing technologies to rapidly decrease emissions by 2030”.

CANADA

Oil-rich Canada said it was committed to phasing out fossil fuel subsidies by 2025 and those plans remained on track.

“Our government has invested $53 billion in climate action since October 2020, and we’re eliminating coal-fired electricity emissions by 2030”, according to a statement by the office of the federal natural resources minister sent to Reuters.

“IEA members, including Canada, called for this independent analysis to be done. Now that it has been done, we need to consider all of it – not only the oil and gas portion, but also where new jobs will come from”.

EUROPEAN UNION

The European Union’s head of climate change policy, Frans Timmermans, said the bloc seeks to work harder to curb emissions through changes to its tax regime.

“It’s not by chance that we will propose amending the energy taxation regulation”, he said an interview with the Euractiv information website. “We need to get out of oil, gas, and coal. We need to have a fair taxation system that incentivises this”.

“That’s more or less the direction we will take. And I feel very supported in this by the IEA’s recent net zero report”.

JAPAN

Asia’s third-largest carbon emitter in 2019, after China and India, Japan said the report did not align with its policy.

Akihisa Matsuda, the deputy director of international affairs at Japan’s Ministry of Economy, Trade and Industry (METI), said the government has no plans to immediately stop oil, gas and coal investments. [L2N2N703B]

“The report provides one suggestion as to how the world can reduce greenhouse gas emissions to net zero by 2050, but it is not necessarily in line with the Japanese government’s policy”, he said.

OPEC

Oil producer club OPEC said the IEA’s recommendations on curbing fossil fuel emissions could lead to oil-price volatility if it is acted on. [L5N2N73LK]

“The claim that no new oil and gas investments are needed post-2021 stands in stark contrast with conclusions often expressed in other IEA reports and could be the source of potential instability in oil markets if followed by some investors”, OPEC’s report said.

 

(Reporting By Noah Browning, Dmitry Zdhannikov, Nerijus Adomaitis, Yuka Obayashi, Sonali Paul, David Ljunggren and Kate Abnett; Editing by Steve Orlofsky)

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Brazil’s Vale says output begins at Reid Brook nickel deposit in Canada

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Vale’s Voisey’s Bay nickel mine in Northern Labrador has started the production at its Reid Brook deposit, the Brazilian miner said in a securities filing on Tuesday.

Vale said the Canadian Reid Brook and Eastern Deeps mines are likely to produce 40,000 tonnes of nickel by 2025.

 

(Reporting by Carolina Mandl; editing by Jason Neely)

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EU, U.S. agree to talk on carbon border tariff

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The United States and European Union agreed on Tuesday to hold talks on the bloc’s planned carbon border tariff, possibly at the World Trade Organisation, EU chief executive Ursula von der Leyen said.

U.S. President Joe Biden met European Commission President von der Leyen and European Council President Charles Michel on Tuesday for a summit tackling issues from trade to the COVID-19 pandemic.

The leaders also discussed climate change policy, including the EU’s plan to impose carbon emissions costs on imports of goods, including steel and cement, which the Commission will propose next month.

“I explained the logic of our carbon border adjustment mechanism,” von der Leyen told a news conference after the summit.

“We discussed that we will exchange on it. And that WTO might facilitate this,” she said.

Brussels and Washington are keen to revitalise transatlantic cooperation on climate change, after four fractious years under former president Donald Trump.

On Tuesday, they outlined plans for a transatlantic alliance to develop green technologies and said they will coordinate diplomatic efforts to convince other big emitters to cut CO2 faster.

But the EU border levy could still cause friction. A draft of the proposal said it would apply to some U.S. goods sold into the EU, including steel, aluminium and fertilisers.

Brussels says the policy is needed to put EU firms on an equal footing with competitors in countries with weaker climate policies, and that countries with sufficiently ambitious emissions-cutting policies could be exempted from the fee.

The United States and EU are the world’s second- and third- biggest emitters of CO2, respectively, after China.

A draft of the EU-U.S. summit statement, seen by Reuters, repeated commitments the leaders made at the G7 summit at the weekend to “scale up efforts” to meet an overdue spending pledge of $100 billion a year by rich countries to help poorer countries cut carbon emissions and cope with global warming.

It did not include firm promises of cash. Canada and Germany both pledged billions in new climate finance on Sunday, and campaigners had called on Brussels and Washington to do the same.

The draft statement also stopped short of setting a date for the United States and EU to stop burning coal, the most polluting fossil fuel and the single biggest of greenhouse gas emissions.

Brussels and Washington said they will largely eliminate their CO2 emissions from electricity production by the 2030s.

 

(Reporting by Kate Abnett, additional reporting by Valerie Volcovici; Editing by Marguerita Choy, Andrew Heavens and Barbara Lewis)

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U.S. fine Air Canada $25.5 milliom over delayed refunds

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The U.S. Transportation Department said on Tuesday it was seeking a $25.5 million fine from Air Canada over the carrier’s failure to provide timely refunds requested by thousands of customers for flights to or from the United States.

The department said it filed a formal complaint with a U.S. administrative law judge over flights Air Canada canceled or significantly changed. The penalty is “intended to deter Air Canada and other carriers from committing similar violations in the future,” the department said, adding Air Canada continued its no-refund policy in violation of U.S. law for more than a year.

Air Canada said it believes the U.S. government’s position “has no merit.” It said it “will vigorously challenge the proceedings.”

Air Canada obtained a financial aid package this spring that gave the carrier access to up to C$5.9 billion ($4.84 billion) in funds through a loan program.

The carrier said it has been refunding nonrefundable tickets as part of the Canadian government’s financial package. Since April 13 eligible customers have been able to obtain refunds for previously issued nonrefundable tickets, it said.

The Transportation Department disclosed it is also “actively investigating the refund practices of other U.S. and foreign carriers flying to and from the United States” and said it will take “enforcement action” as appropriate.

The administration said the Air Canada penalty sought was over “extreme delays in providing the required refunds.”

Refund requests spiked during the COVID-19 pandemic.

Since March 2020, the Transportation Department has received over 6,000 complaints against Air Canada from consumers who said they were denied refunds for flights canceled or significantly changed. The department said the airline committed a minimum of 5,110 violations and passengers waited anywhere from five to 13 months to receive refunds.

Last month, a trade group told U.S. lawmakers that 11 U.S. airlines issued $12.84 billion in cash refunds to customers in 2020 as the coronavirus pandemic upended the travel industry.

In May, Democratic Senators Edward Markey and Richard Blumenthal called on carriers to issue cash refunds whether flights were canceled by the airline or traveler.

($1 = 1.2195 Canadian dollars)

(Reporting by David Shepardson in WashingtonAdditional reporting by Allison Lampert in MontrealEditing by Matthew Lewis)

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