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Zoom calls and online shopping: Life on Canadian farms in 2020 – CBC.ca

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Whether he’s in a field with his truck, tractor or combine, if Tom Senko has some spare time, he’s usually on his iPhone, which has become an essential part of farming, especially this summer during the pandemic.

With the device in his hand, the 50-year-old farmer from Humboldt, Sask, monitors the moisture and temperature of his fields, spends time marketing his crops to buyers, and keeps an eye on advance weather information, so he knows which parts of his land may receive rain and how much. 

The pandemic has sped up the adoption of technology in the agricultural industry as farmers spend more time with digital tools and programs and less time having face-to-face meetings. 

Just as most people have turned to online shopping this year because of the pandemic lockdown and spent much more of their work day on video calls, the same trends are happening on the farm.

Senko, who grows grain and oilseeds on about 4,000 hectares, ordered much of his seed and other supplies online this year, for the first time, and he also started using Zoom and other video conferencing programs to communicate with experts if he has a problem with a particular weed or pest.

Senko collects a variety of data about his crops, including yield trends, water use, and the temperature and humidity levels of his fields. (Don Somers/CBC News)

“I was really hesitant at first,” Senko said about video calling. “I thought, ‘Oh this is going to be a train wreck,’ but it’s been really good. I haven’t been Zoom-bombed yet.”

‘Complicated business’

Digital technology has played a growing role in agriculture in recent years, from using data to monitor the health of livestock to employing mobile apps to control the irrigation of fields or the temperature of a barn, among many examples.

Nutrien makes the kind of software used by farmers. The Calgary-based international fertilizer company says it has seen a noticeable rise in uptake of its data collection tools designed for farmers, such as tracking the amount of water being consumed on a farm or how much carbon is being emitted and how much sequestered.  

“Farmers need help to make a lot of decisions. This is a very complicated business, especially trying to balance productivity of their land and climate change,” said Nutrien chief executive Chuck Magro.

A bucket of freshly harvested grain on Senko’s farm. (Don Somers/CBC News)

Nutrien set a goal at the beginning of the year to reach $500 million in online sales in 2020, but easily blew through that target a few months into the pandemic. Beyond e-commerce, Magro says, the digital tools can improve efficiency and sustainability in the industry.

“It’s a great set of tools that I think are very timely and very important, because we have to work through how agriculture is going to contribute to improving climate change.” 

The pandemic has sped up the industry’s transition, though it hasn’t been without challenges. Access to high-speed internet is still unreliable in some parts of rural Canada, and the problem has been more apparent than ever this year.

“This year, it made you realize how important the internet is,” said Greg Stamp, a seed farmer in Enchant, Alta., about 200 kilometres southeast of Calgary. 

“Our rural internet just can’t keep up. It gets bogged down and sometimes is just unusable. We definitely noticed that. It’s a weakness in rural infrastructure.” 

WATCH | Innovation on the farm is more than just online shopping:

Nutrien CEO Chuck Magro says more farmers are buying product online because of the pandemic and they are also using more digital programs do improve efficiency and sustainability on the farm. 1:20

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EXCLUSIVE: Ford government to overhaul Blue Bin program – KitchenerToday.com

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The Ford government is changing who will be responsible for the Blue Box recycling program as well as expanding the items that can be put into the blue box itself.

CityNews has learned Ontario’s Environment Minister will announce today that producers of products and packaging will be fully responsible for the Blue Box program.

The Blue Box program is currently run by the Ontario Stewardship Council with the cost split among the municipalities. But the Ford government will shift to a new model where producers of the waste – businesses – will provide blue box collection and pay for the entire cost.

The government claims the move will result in an estimated savings of $135 million annually for municipalities.

Government officials say there should not be any interruption to the program during the transition, saying that those who have curbside blue box collection now will continue to have it under the new system. The government also says the Beer Store’s deposit return program can continue under the new producer responsibility model.

The transition is set to take effect at different times across the province.

The government is also set to announce that the list of materials accepted in the blue box will increase to include paper and plastic cups, wraps, foils, trays, bags and other single use items such as stir sticks, straws, cutlery and plates.

The Ford government will also expand blue box services to include apartment buildings, long-term care homes, schools and municipal parks in 2026.

The official announcement is scheduled for 9 a.m. Monday, and will be the first of a series of announcements as part of Waste Reduction Week.

Ontario is the birthplace of the blue-box.

The curbside recycling program was first introduced in Kitchener in 1981.

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Oil Majors Stuck Between A Rock And A Hard Place

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The past few years have been historic for as far as crude oil forecasts are concerned. Back in 2015 the view that crude oil demand could peak during the 2020s or 2030s was still met with disbelief (and some ridicule…). Economic growth had been pushing crude oil demand up ever year for decades already, so why would things become different, so the reasoning went. Today, however, essentially all major energy forecasters, including BP, Shell, Total, DNV-GL, the IEA and even OPEC, have come round and acknowledge Peak Oil Demand as a realistic possibility.

The strategic response of the Oil Majors to this possibility has differed. But so far, none seem to have won over the investment community. What could be the reason for this? And does this leave the Majors at risk of being cut-off from capital?

Crude Oil during the 20th century

As Admiral of the Royal British Navy, Winston Churchill took a decision that not only shocked his nation, but also defined the role crude oil would play in the global economy during the 20th century.

Great Britain had become the world’s leading nation thanks to its invention of the steam-engine, coupled with an abundance of coal in the country. This enabled the country to be the first to mechanize industry, which made it not only the world’s industrial heartland, but also its leading military power, as Britain’s mechanized industry was able to churn out warships that were much larger and more heavily armed than its rivals could produce. And by fitting them out with steam-engines, these British warships were also able to travel faster and further, independent from wind. In other words, thanks to the steam-engine and coal, Britain became “the empire on which the sun never sets”.

Nevertheless, in 1912 Winston Churchill decided that the British Navy’s future would be based on crude oil, when he ordered construction of the Queen Elizabeth class of super-dreadnoughts based on an internal combustion engine design. Many were outraged. Steam-engines needed coal, of which Britain had plenty. But Churchill’s internal combustion engines needed liquid fuels derived from crude oil, of which Britain had only a negligible amount. So what on earth was he thinking? But Churchill was convinced that warships which coupled the technology of the internal combustion engine with the physics of crude oil could be made larger, more heavily armed, faster, and with a greater range of operation, than any warship that utilized a coal fired steam-engine. The introduction of the internal combustion engine would therefore ensure that in the competition with France, Russia and Germany, the British Navy would remain superior.

Churchill turned out to be right. Judging by speed, range, ease of operation, reliability and economics, the internal combustion engine fueled by a crude oil derivative did indeed outperform all other transportation solutions. And, as it turned out, these advantages applied not only to (war)ships, but also planes, trains and automobiles. As a result of this superiority of the internal combustion engine, oil became the most important source of energy of the 20th century.

The implications for the strategy of oil companies was far-reaching. Since there was no technology that could compete with the internal combustion engine, growth of the global economy ensured growth in demand for crude oil. Oil companies could therefore simply focus on finding crude oil, producing, refining and marketing it. For as long as they could do this at a price point that was lower than that of their competitors, they would always find takers for their product. They would be able to sell all the oil they could lay their hands on, and at margins which guaranteed record profits and rates of return.

The Crude Oil Business during the 21st century

Over recent years, a number of trends have developed that call into question the future of the internal combustion engine and crude oil.

Primary among these trends is sustainability. The first generation that grew up in the internal combustion engine and crude oil era, the baby-boomer generation, did not know much about the impact on the environment of crude oil production, refining and burning in an internal combustion engine, as this body of knowledge developed only during the 1970s. The baby-boomer generation therefore became environmentally aware after they had firmly established a certain lifestyle. The descendants of the baby-boomers, the Millennial generation, was brought up with knowledge of the environmental implications of crude oil. Consequently, they became not only aware of the environmental issues associated with the internal combustion engine and crude oil, but also concerned about them. As this generation educated its descendants, the so-called Generation Z, in these concerns from the youngest of ages, this latter generation moved beyond environmental awareness and concern, to action. Generation Z consumers are considered the “green generation” because for them, environmental concern is a key factor in day-to-day consumption decisions. For the sake of the environment they are willing to make do with products that are sub-optimal from a convenience perspective but deemed sustainable, and they are willing to pay a premium for products that are deemed sustainable.  This trend would be irrelevant for the internal combustion engine and crude oil had it not been for a second trend, namely technological innovation. Over recent years a number of technologies that greatly appeal to the Generation Z, the consumers of the future, have developed to the point where it becomes possible to imagine that they bring forth solutions that can compete with the internal combustion engine and crude oil on power, range, ease of operation, reliability and economics. Chief among these technologies are the electric drivetrain, batteries and hydrogen, which have made electrification of transportation not only possible but likely.

The third trend of importance to the internal combustion engine and crude oil is ESG investment. On the one hand not fall foul with Generation Z, and on the other hand to leverage this generation’s sustainability preference for financial gain, investors around the world are making sustainability a key tenet of their investing strategy. The bottom line of this trend is that less money will be available for investment in crude oil projects, while that which remains available will most likely come at a premium. 

All this means that there is a real possibility the crude oil business will experience a structural change during the 21st century, as the internal combustion engine could lose its role as the “engine of the global economy” to the electric drivetrain.

Crude Oil Strategy during the 21st century

If the above scenario – the Energy Transition scenario – were indeed to play out, the Oil Majors would be forced to change their strategies in a fundamental manner. If, namely, crude oil loses the pivotal role it plays in the global economy, growth in demand for it would no longer be guaranteed. In such a market environment, the traditional “find it, produce it, refine and market it” strategy would no longer guarantee the growth in profits that the Oil Majors’ shareholders have come to expect.

This potentiality appears to have triggered strategic reviews at a number of the Oil Majors.

Shell was the first to adopt the Energy Transition scenario as the core for its future strategy, as evidenced by the fact that over the past years  it has announced a number of decisions that are natural responses to this scenario. For example, in 2016 it launched a New Energy division to leverage the opportunities that would result from the Energy Transition, such as in electricity generation, batteries, grid management and hydrogen. in 2018 it adopted methane emissions intensity targets for its assets, which has led it to divest from crude oil resources with high carbon intensity such as the Canadian tar sands. In 2019 the company adopted a new ambition to become the largest power company in the world during the 2030s. And most recently the company announced that it would accelerate it transformation in response to the Energy Transition. It adopted “net zero” emissions targets in April of 2020, and in September 2020 launched a major restructuring to free up funds for investment in the New Energy area.

BP too has changed it strategy its strategy in accordance with the Energy Transition scenario, but more recently than Shell. After the failure of the company’s “Beyond Petroleum” strategy launched in 2002, it spent most of the 2010s managing the implications of the Deepwater Horizon disaster. But since the appointment of a its new chief executive officer Bernard Looney in October 2019, things have changed. In February of 2020, in pretty much his first major announcement, Looney announced the new strategic direction of the company using the slogan “Reimagining energy, reinventing BP”, accompanied by a very specific “Net Zero” ambition. Shortly thereafter the company restructured in accordance with this strategy, implementing a new organization structure and leadership team during May and June of 2020. In August it then set out the details of its new strategy, explaining it to the international investment community during September. Further that month it also communicated its new “core beliefs” about the future of global energy demand, saying it assumes this will continue to grow (“at least for a period”), but in a manner different from before, with a “declining role of fossil fuels offset ‎by an increasing share of renewable energy and a growing role for electricity”. On this basis BP then signed its first major M&A deal to add to its New Energy portfolio, also during September.

Although Total has not made the major announcements around the Energy Transition of Shell and BP, it has not stood idly by. It has been speaking about “integrating climate change” in its strategy since 2017 already, and has made a number of significant investment accordingly. Today, of all the Oil Majors, the Total portfolio of New Energy businesses is probably the most advanced, covering renewable power generation, storage, electric vehicle charging, and, through its Carbon Neutrality Ventures arm, even a hydrogen fuel cell powered commercial vehicles developer.

Over in the United States, however, ExxonMobil and Chevron are taking the contrarian position, with both maintaining a market outlook that is best described as “steady she goes”. Based on this outlook, ExxonMobil believes that heavily investing in addition crude oil, natural gas and petrochemicals capacity now sets the company up for success it the future, especially as its European competitors are speaking about decreasing the share of fossil fuels in their future portfolios. Consequently, the company’s strategic plan targets well over US$ 30 Billion of investment annually over coming years – all in fossil fuels.

 

Chevron is positioning itself in between the European Oil Majors and ExxonMobil, adopting a wait-and-see strategic approach. Its current strategy prioritizes dividends payments and share buy-backs over investment, as long as it is not fully clear what the future of energy will look like. The company’s top goal is to distribute US$ 75 billion – US$ 80 billion in cash to shareholders over the next five years.

The Stock Market Response Interestingly, at the end of September, the share price of all the mentioned Oil Majors was down significantly on the year. Shell was down 58%, BP 53%, Total 45%, ExxonMobil 52% and Chevron 40%. Part of this is due to the crude oil price decline during the year, and the lingering impact of the COVID19 pandemic on global crude oil demand. But since this should affect all Oil Majors more or less equally, it is fair to assume that the divergence in their share prices movement is related to the differences in their strategies. Based on this assumption, it appears that none of the mentioned strategies has so far fully convinced the international investor community.

As to the reasons why this could be the case, different considerations are likely at play.

As to where global energy markets are heading, the ambition of consumers, governments and international organizations is clear: sustainability remains the trend, to which investment community is responding by prioritizing ESG investment. The “steady she goes” strategy of ExxonMobil does not address this, as a result of which the company finds itself under significant investor pressure at the moment.

On the other hand, what is not helping the case of the transitioning Oil Majors Shell, BP and Total is the fact that the speed at which they envisage to transition does not align with the 1.5°C global warming limit as outlined by the Paris Agreement. Additionally, smart investors are asking questions about the ability of these companies, which for over a century have focused on fossil fuels, to actually deliver on their transformation ambitions. And, even if one assumes they will be able to, there is no doubt that transforming an Oil Major is harder than starting up a new venture based on the Energy Transition scenario. So why would a smart investor bet her Energy Transition money on a “fossil trying to change”, that will have to deal with a company culture and practices that were developed for the fossil fuel era of the 20th century, when she could also put this money in a New Energy focused startup unhindered by such deadweight?

This probably explains why Chevron, with its focus on returning cash from existing operations to shareholders, has relatively outperformed its competitors so far this year.

The Way Forward 

This author firmly believes that the Oil Majors cannot succeed without the Energy Transition, and that the Energy Transition cannot succeed without the Crude Oil Majors.

As to the first point, the need for the Oil Majors to adopt the Energy Transition strategy, in the world before Covid-19, sustainability was what futurologists and trendwatchers call a macro trend. That is, a general movement in society toward a comprehensively different way of life. Sustainability fell into this category because it was in the process of changing consumer preferences; social taboos as with flight shaming; societal priorities, as evidenced by national commitments made under the UN Framework Convention on Climate Change; government rules and regulations such as bans on single-use plastics and internal combustion engines; and national development policies as exemplified by China’s Industrial Green Development Plan and Europe’s Green Deal. Historically, only cataclysmic events, such as a pandemic or global war, disrupt macro trends. So far, however, the Covid-19 pandemic has not disrupted sustainability. To the contrary, as evidenced by the calls to use the current crisis to accelerate the transition to a carbon neutral economy, it is likely to only accelerate the sustainability trend. Consequently, the pressure on the Crude Oil Majors to transition is likely to increase as well. Those that are transitioning are likely to eventually find themselves under pressure to transition faster. But those that are not transitioning might find themselves cut off from investment, financing and funding.

As to the second point, the dependency of the Energy Transition on the Oil Majors, firstly, this has to do with the nature of a transition. Despite the global ambition for a carbon-neutral economy, the dependency of the global economy on the various derivatives of crude oil will not disappear overnight. Since nothing could be more disruptive for the Energy Transition than a shortage of transportation fuels and plastics during the process, even in their current form the Crude Oil Majors will remain an essential component of the global economy.

Secondly, this has to do with the competencies and capabilities the Oil Majors have built up over the decades. According to the OECD, to meet the needs of the global economy, around $6.3 billion of investment in the global energy infrastructure is needed annually until 2030. This number rises to $6.9 billion if all investments are made compatible with global climate ambitions. Clearly, the scale of this necessary effort is huge, and it is hard to imagine how it could be achieved without leveraging the Oil Majors’ experience in delivering massive, technologically complex projects in the most inhospitable areas of the world, and seamlessly connecting the energy produced with consumers globally.

For the sake of Energy Transition, therefore, the Oil Majors should transition, in a balanced manner, but with a sense of urgency. If they do this while communicating well with their stakeholders, there is no reason to believe the global investment community will not overcome its current hesitancy and come to support their transition strategies.

In a separate, future article I will expand on my ideas about what a balanced transition strategy should look like for the Oil Majors.

By Andreas de Vries for Oilprice.com

 

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China’s economy accelerates as virus recovery gains strength

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China’s shaky economic recovery from the coronavirus pandemic is gaining strength as consumers return to shopping malls and auto dealerships while the United States and Europe endure painful contractions.

Growth in the world’s second-largest economy accelerated to 4.9 per cent over a year earlier in the three months ending in September, up from the previous quarter’s 3.2 per cent, official data showed Monday. Retail spending rebounded to above pre-virus levels for the first time and factory output rose, boosted by demand for exports of masks and other medical supplies.

Growth ‘still accelerating’

China is the only major economy that is expected to grow this year while activity in the United States, Europe and Japan shrinks.

The recovery is “broadening out and becoming less reliant” on government stimulus, Julian Evans-Pritchard of Capital Economics said in a report. He said growth is “still accelerating” heading into the present quarter.

Most Asian stock markets rose on the news of increased activity in China, the biggest trading partner for all of its neighbours. Japan’s Nikkei 225 index added 1.1 per cent while Hong Kong’s Hang Seng climbed 0.9 per cent. Markets in South Korea and Australia also rose.

China’s benchmark Shanghai Composite Index lost 0.7 per cent on expectations the relatively strong data will reduce the likelihood of additional stimulus that might boost share prices.

Warning on international economy

China, where the pandemic began in December, became the first major economy to return to growth after the ruling Communist Party declared the disease under control in March and began reopening factories, shops and offices.

The economy contracted by 6.8 per cent in the first quarter, its worst performance since at least the mid-1960s, before rebounding.

The economy “continued the steady recovery,” the National Bureau of Statistics said in a report. However, it warned, “the international environment is still complicated and severe.” It said China faces great pressure to prevent a resurgence of the virus.

 

A worker is seen on scaffoldings at a construction site of a residential compound in Beijing on Monday. (Tingshu Wang/Reuters)

 

Authorities have lifted curbs on travel and business but visitors to government and other public buildings still are checked for the virus’s telltale fever. Travellers arriving from abroad must be quarantined for two weeks.

Last week, more than 10 million people were tested for the virus in the eastern port of Qingdao after 12 cases were found there. That broke a two-month streak with no virus transmissions reported within China.

Industrial production rose 5.8 per cent over the same quarter last year, a marked improvement over the first half’s 1.3 per cent contraction. Chinese exporters are taking market share from foreign competitors that still are hampered by anti-virus controls.

Retail sales rose 0.9 per cent over a year earlier. That was up from a 7.2 per cent contraction in the first half as consumers, already anxious about a slowing economy and a tariff war with Washington, put off buying. Online commerce rose 15.3 per cent.

In a sign demand is accelerating, sales in September rose 3.3 per cent.

“China’s recovery in private consumption is gathering momentum,” said Stephen Innes of AxiCorp in a report.

Economists say China is likely to recover faster than other major economies due to the ruling party’s decision to impose the most intensive anti-disease measures in history. Those temporarily cut off most access to cities with a total of 60 million people.

The International Monetary Fund is forecasting China’s economic growth at 1.8 per cent this year while the U.S. economy is expected to shrink by 4.3 per cent. The IMF expects a 9.8 per cent contraction in France, 6 per cent in Germany and 5.3 per cent in Japan.

Private sector analysts say as much as 30 per cent of China’s urban workforce, or up to 130 million people, may have lost their jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.

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