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Cop 27: Impasse on fossil fuels despite last hour push

  • : Crude oil, Natural gas
  • 22/11/24

The final text from the UN Cop 27 climate summit fell short on efforts to reduce greenhouse gas (GHG) emissions, with no mention of additional curbs on fossil fuels, the largest contributors to global warming, although the issue was debated until the very last minutes of the conference.

This year's Cop was set against a backdrop of rising energy costs and concerns about energy security, with the summit designed to tackle the climate crisis — the third issue of the energy trilemma.

More than 80 countries supported phasing out unabated fossil fuels, EU executive vice-president and lead negotiator Frans Timmermans said. "Sadly, we don't see this reflected here [in the final text]", Timmermans said in his closing speech as the plenary wrapped up on 20 November.

The call for language around curbing fossil fuels did not seem to be one united effort, and the EU cautioned against including coal and gas in the same group, given how much more polluting coal is.

The inclusion of fossil fuels in the final text remained up for discussion until the final few hours of the conference — which ran over by almost two days, and was the second-longest Cop on record — delegates told Argus on the sidelines. Countries with varying degrees of ambition but supportive of phasing out fossil fuels — including Norway, Denmark, Finland, France, Germany, the UK, Colombia and several vulnerable and small island developing states — made "very strong statements", but they faced a battle even to uphold last year's Glasgow Climate Pact, ministers said. The text was "backsliding" from Glasgow's, even in the final hours of negotiations, Tuvalu's finance minister Seve Paeniu told Argus.

"Those of us who came to Egypt to keep 1.5° alive… have had to fight relentlessly to hold the line", UK lead negotiator and Cop 26 president Alok Sharma said in his closing speech on 20 November, in reference to the Paris Agreement's commitment to limit global warming to 1.5°C.

"Many parties, too many parties, are not ready to make more progress today in the fight against the climate crisis. There were too many attempts to even roll back what we agreed in Glasgow", Timmermans said on 20 November.

The final text treads very lightly on any language around fossil fuels, instead calling on parties "to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phase down of unabated coal power and phase out of inefficient fossil fuel subsidies". This is a repeat of the Cop 26 text and represents no increase in ambition on the topic.

Tough sell

Saudia Arabia was one of several countries that pushed against the use of language targeting fossil fuels in the final text, delegates said. "The convention needs to address emissions and not the origin of the emissions", a member of the Saudi delegation, speaking on behalf of the 22 countries in the Arab League, said on 20 November.

The inclusion of broader language on fossil fuels was destined to be tricky in Egypt. The country's oil minister Tarek el-Molla said last month that natural gas will continue to play a key role in the future energy mix, calling it "the cleanest hydrocarbon fuel" at a meeting of the Gas Exporting Countries Forum.

It could be an even tougher sell in the UAE, which will host Cop 28 next year and which holds some of the largest spare reserves of the Opec+ coalition. The country's president Mohammed bin Zayed al-Nahyan, speaking at the opening of Cop 27, said that the UAE will continue to supply oil and gas "for as long as the world needs it", stressing the country's role as a responsible supplier.

The global energy crisis was a clear undercurrent at Cop, largely framed in energy security terms. The final Cop 27 text referenced the "unprecedented global energy crisis" and the "urgency to rapidly transform energy systems to be more secure, reliable, and resilient, including by accelerating clean and just transitions to renewable energy during this critical decade of action". It also said that the "increasingly complex and challenging global geopolitical situation… should not be used as a pretext for backtracking, backsliding or deprioritising climate action".

Energy security pressures

But the energy crisis weakened developed countries' hands this year, as they sought to replace Russian fossil fuel supplies. Many developing countries concentrated on this, setting out their arguments for producing oil and gas, and noting European "hypocrisy" on fossil fuel use.

Germany, seeking to cut its dependency on Russian gas, has signalled its interest in working with Senegal to develop its gas resources. Timmermans, speaking at a Cop side event on 16 November, told economic advisor to the Namibian government James Mnyupe: "I don't want to prevent you from using your fossil fuels, and especially natural gas". But for imports, the EU has been clear that additional gas infrastructure must be pre-fitted so that it can carry hydrogen.

Scrutiny was directed in particular towards the EU — which has of late ramped up coal-fired power generation as it swerves from Russian gas imports — and ministers saw off criticism. The bloc is on track to reduce emissions by 57pc by 2030, from 1990 levels, Timmermans reiterated during Cop. The EU repeatedly said that the only way to bolster energy security and boost energy access in Africa was through renewables.

"Low-emission" fuels

But even the mention of enhancing a clean energy mix through renewable energy proved difficult to push through, which led to the last-minute addition of "low-emission" energy.

The elasticity of the language potentially keeps the door open for significant amounts of technology — nuclear, biomass, biofuels, carbon capture and storage (CCS), and even gas. The language is even pliable enough to keep the use of carbon offsets on the table — an option that factors heavily in corporate decarbonisation plans. UN secretary-general Antonio Guterres has cautioned against the lack of "rigour" in voluntary carbon market credits, while biomass and biofuels often attract concerns over indirect land use change and deforestation, and CCS remains an emerging technology.


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25/01/14

Canada's tariff response may be ‘unprecedented’: Ford

Canada's tariff response may be ‘unprecedented’: Ford

Calgary, 14 January (Argus) — Tariffs threatened by president-elect Donald Trump against Canada will hurt the province of Ontario the most, the premier of the country's most populated province said this week, so all options must be considered should retaliation be required. "We have to use all the tools possible," said Ontario premier Doug Ford in 13 January press conference, less than one week before Trump's inauguration and the potential imposition of 25pc tariffs on imports from Canada and Mexico. "We might have to do things that are unprecedented," which could include withholding shipments of minerals, Ford said. Ontario accounts for about 40pc of Canada's gross domestic product (GDP) and is known for its manufacturing, automotive and critical mineral industries. Ford's position runs in contrast to comments made earlier by Alberta premier Danielle Smith that cutting off Canadian energy flows to the US is a non-starter and would not happen . "Well, that's Danielle Smith, she's speaking for Alberta, she's not speaking for the country," Ford said. "I'm speaking for Ontario, that's going to get hurt a lot more. They aren't going to go after the oil, they're coming after Ontario." "I want to ship him more critical minerals, I want to ship him more energy, but make no mistake about it, if they're coming full-tilt at us I won't hesitate to pull out every single tool we have until they can feel the pain," Ford said. "But that's the last thing I want to do." Smith met with US president-elect Donald Trump at his Mar-a-Lago estate in Florida over the weekend, which was a welcome move by Ford, who said he has been working the phones calling American politicians daily. Even so, Canada's response needs to come from the federal government, which has so far been lacking, in Ford's view. "This is their jurisdiction," said Ford. "They need to come up with a strong plan. They need to be doing everything, every single day to make sure we avoid these tariffs." Premiers will meet with prime minister Justin Trudeau this week to strategize how to deal with potential tariffs. Trudeau said last week he planned to resign amid low polls and party infighting with a new leader to be chosen on 9 March. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US tariffs on Canada likely, oil cut-off not: Alberta


25/01/13
25/01/13

US tariffs on Canada likely, oil cut-off not: Alberta

Calgary, 13 January (Argus) — Tariffs threatened by the US against Canada will become a reality, according to the premier of oil-rich Alberta , but any retaliation will not entail cutting off energy exports. "They're likely to come in on January 20th," Alberta premier Danielle Smith said of the tariffs on Monday after she met with US president-elect Donald Trump at his Mar-a-Lago estate in Florida over the weekend. "I haven't seen anything that suggests that he's changing course." Trump in late-November said he plans to impose a 25pc tariff against all imports from Canada, citing inadequate border controls and a US trade deficit. Canada has since pledged to spend more money on border security while Smith reckons Canada would have a deficit if not for energy trade. "We actually buy more goods and services from the US than they buy from us," Smith said in an online interview with reporters. "We actually have $58bn in a trade deficit with the Americans when you take energy out." Smith wanted assurances the US is still interested in buying Canadian oil and gas, with her province being the heart of the country's energy sector. "Oil and gas is going to be key for being able to get a breakthrough, once the tariffs do come in, in getting them off," said Smith. Canadian foreign affairs minister Mélanie Joly said in a 12 January interview broadcast on CTV that the country could consider stopping the flow of Canadian energy in retaliation to tariffs. But Smith said that would not happen since the oil are owned by the province, not the federal government. "[The federal government] will have a national unity crisis on their hands at the same time as having a crisis with our US trade partners," said Smith. About 80pc of Canada's 5mn b/d of crude production is consumed by refineries in the US, with many in the Midcontinent having no practical alternative , according to the American Fuel and Petrochemical Manufacturers (AFPM). The region imported 2.7mn b/d of Canadian crude in October, the latest data point from the Energy Information Administration (EIA). "I hope cooler heads prevail," said Smith, adding that Trump seemed interested in buying more oil and gas. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico’s industrial output up 0.1pc in November


25/01/13
25/01/13

Mexico’s industrial output up 0.1pc in November

Mexico City, 13 January (Argus) — Mexico's industrial production edged up 0.1pc in November, as gains in autos and other manufacturing offset weaker construction, national statistics agency Inegi said. Mexican bank Banorte described the monthly increase as "rather small," noting it followed a 1.1pc decline in October and was largely driven by base comparison effects. The bank added that the overall industrial outlook remained "fragile." Manufacturing, which represents 63pc of Inegi's seasonally adjusted industrial activity indicator (IMAI), increased by 0.7pc in November, though it failed to fully recover from a 1.7pc drop in October. Transportation manufacturing, a key subsector accounting for 12pc of the sector, rose by 3.8pc after a steep 4.3pc decline the prior month. Despite recent volatility, Mexico's auto sector achieved record annual light vehicle production in 2024, reaching 3.99mn units. Yet, automaker association AMIA warned of potential challenges in 2025 because of economic uncertainty, which could affect investment and demand. Mining, which makes up 12pc of the IMAI, increased by 0.1pc in November following a 1.1pc decline in October. Growth was driven by a 41.4pc jump in mining-related services, while oil and gas output fell by 2.4pc, marking a fifth consecutive monthly decline for hydrocarbons. Construction, representing 19pc of the IMAI, contracted by 1.8pc in November after modest gains of 0.2pc in October and 1.1pc in September. As industry eyes potential policy shifts under US president-elect Donald Trump, Banorte projected a weak start to 2025 for Mexico's industrial output. But it expects momentum to build as government spending on priority infrastructure projects "moves more decisively." By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

AI may boom on gas power, then turn to nuclear


25/01/13
25/01/13

AI may boom on gas power, then turn to nuclear

New York, 13 January (Argus) — The first tranche of new US data centers coming on line this decade to run electricity-intensive artificial intelligence (AI) software will probably rely mostly on power generated by natural gas, while the nuclear renaissance hoped for by Big Tech comes later in the 2030s. Microsoft, Amazon, Facebook-parent Meta and Google-parent Alphabet want clean, reliable power as quickly as possible so they can be early movers in the development of AI, which is rapidly advancing and finding new user bases around the world. While these companies do not relish the optics of powering AI development with fossil fuels, gas-fired power is widely expected to fulfill most of the gap between current supply and future demand through at least 2030. Unlike wind and solar, gas can be relied upon for steady, baseload power, a necessary ingredient for always-on data centers. And crucially, unlike nuclear, gas-related infrastructure can be built out quickly. The most recent additions to the US nuclear fleet, Vogtle units 3 and 4 in Georgia, took 15 years to build and cost $30bn, double the expected time and cost. A few decommissioned nuclear reactors can be restarted, as Microsoft is paying to do with a unit of Three Mile Island in Pennsylvania. But this low-hanging fruit will be quickly exhausted. Questions around the meter While there is broad agreement that gas will power the AI data center boom through at least 2030, questions remain about what this rapid gas-fired power build-out will look like. Data center operators can secure power in two ways: wade through the long, arduous interconnection process through which new customers connect to the grid, or bypass the grid altogether and secure their own personal electricity supply through so-called "behind-the-meter" agreements. Many in the gas industry are betting tech companies' need for speed will force them to opt for the latter. "The data centers are not going to wait," Alan Armstrong, chief executive of Williams, the largest US gas pipeline company, told Argus in an interview. "They are going to go to states that allow you to go behind the meter." In this scenario, construction of an AI data center in a state like Louisiana, for instance, might accompany construction of a new intrastate pipeline connecting the state's prolific Haynesville gas field with a new gas-fired power plant. Intrastate pipelines bypass the federal oversight triggered by interstate pipeline construction, and new gas power plants only take 2-3 years to build, East Daley Analytics analyst Zachary Krause told Argus . Most of the incremental power needed to run AI data centers this decade will be generated by new gas plants, Krause said. Even ExxonMobil in December said it was in talks to provide "fully islanded" gas-fired power to AI data centers. It claimed it could even capture 90pc of the CO2 emissions from power generation, appeasing tech companies' climate ambitions. ExxonMobil's non-grid gas generation fleet is "independent of utility timelines, so they can be installed at a pace that other alternatives — including US nuclear — just can't match," ExxonMobil chief financial officer Kathy Mikells said. But connecting to the grid may offer better reliability and economics than behind-the-meter gas power. If an off-grid gas generator trips off line, for instance, an always-on data center without back-up generation depending on that facility would be in trouble. Grid connection also allows generators to sell excess power into the grid. For those reasons, most new data centers this decade will rely on the grid as their primary power source, Adam Robinson, research associate at consultancy Enverus, told Argus . Small modular future But if the 2020s become the decade of gas-powered AI, the 2030s may be when nuclear-powered AI gets its due. The long-awaited nuclear renaissance may come not from conventional reactors, but from next-generation small modular reactors (SMRs), which can theoretically be built much faster and cheaper. No US SMRs yet exist, but given the number of SMR start-ups with expected start dates before 2030, and money pouring into the sector from the likes of Google and Microsoft, at least one of these next-generation reactors should be operating by 2030, Adam Stein, director of nuclear energy innovation at research center Breakthrough Institute, told Argus . SMRs' smaller price tag relative to conventional 1 GW nuclear reactors may also accelerate their adoption, Stein said. "Not every utility needs a GW-scale plant of any kind, but they might need a 300 or 600MW plant," he said. "So the total addressable market is larger for SMRs." By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trudeau exit may spur Canadian energy growth


25/01/13
25/01/13

Trudeau exit may spur Canadian energy growth

Calgary, 13 January (Argus) — Canadian prime minister Justin Trudeau's place in federal politics is winding down after nine years of driving change in climate policy, but those environmental advances came at a cost for the world's fourth-largest oil producer, helping to stifle foreign investment in the country's oil and gas sector. Support for Trudeau fell nationwide over the past year, as inflation and rising housing costs fueled by a relaxed immigration policy and carbon taxes became too much for many to bear. Trudeau, seemingly immune to scandal and high-profile exits on his team, was dealt his biggest blow when his deputy prime minister and finance minister Chrystia Freeland resigned in December, citing his approach to the "aggressive economic nationalism" of US president-elect Donald Trump's threatened trade tariffs, prompting his 6 January decision to step down. Canadian crude producers still managed to lift output by 30pc during Trudeau's tenure since 2015, even as major foreign players abandoned the oil sands for friendlier jurisdictions and upstream projects and pipelines were either mothballed or cancelled outright. Provincial jurisdiction over resources prompted frequent fights between Trudeau and Albertan premiers who guarded their claim to energy and the right to explore and extract within their borders. "We could've done so much more," Alberta premier Danielle Smith said hours after Trudeau's announcement, lamenting missed opportunities for Canada's oil patch over the past decade, including the failed Energy East, Northern Gateway and Keystone XL export pipelines. A tanker ban, tighter regulation and an onerous project approval process were among the tools Trudeau used to try to rein in the oil and gas sector, saying in 2017 that Canada's oil sands needed to be "phased out" before naming a former Greenpeace director as his environment minister. Smith did give Trudeau a nod for his commitment to keeping midstream giant Enbridge's Line 5 pipeline from shutting down, and for helping to get the massive Trans Mountain Expansion (TMX) pipeline and Coastal GasLink export projects from Alberta to Canada's Pacific coast across the finish line. But while Smith welcomes Trudeau's resignation, Canada now faces a period of lame duck leadership before it holds federal elections, while cross-border tensions are rising. Your new best frenemy Its largest trading partner is quickly becoming its newest antagonist, with Trump threatening a 25pc tariff on all imports from Canada and Mexico. Unencumbered movement of oil is critical on both sides of the border, with 80pc of Canada's 5mn b/d of crude production aimed at refineries in the US. Many landlocked Canadian producers have no practical alternative, like refiners in the US midcontinent connected by pipeline. As political chaos unfolds in Ottawa, Trump has lobbed insults at Trudeau and made calls for the northern neighbour to become the US' "51st state", a taunt that has struck a nerve in Canada. "There isn't a snowball's chance in hell that Canada would become part of the US," Trudeau said on X on 7 January. "Trump's comments show a complete lack of understanding of what makes Canada a strong country," wrote minister of foreign affairs Melanie Joly. Trump will have spotted Canada's weakness months ago, with support for Trudeau tumbling to the benefit of the Conservative Party and its leader Pierre Poilievre. Recent polls indicate the centre-right party would win a majority of seats in the House of Commons if an election were held today. That is likely to happen in May, assuming opposition parties bring down the government when Parliament resumes in late March. Should Poilievre win, Trump will have a partner better aligned on more policies than Trudeau was, but the suggestion that Canada could become part of the US will get the same response. "We will never be the 51st state. Period," Poilievre said. His primary ambitions are to undo Trudeau's work, with the federal carbon tax being the first to go. Rescinding the tanker ban, killing proposed emissions caps and promoting pipeline construction are also on the agenda. Poilievre plans to "take back control" of Canada's resources through permitting and cutting taxes on pipeline and LNG projects to become less reliant on the US. "Canadians will give me a mandate to take the country in a completely opposite direction," Poilievre said on the Jordan B Peterson Podcast earlier this month, describing how vanquishing Trudeau's energy policy will "cause a massive resource boom in our country." The lengthy exchange touched on minimising government, artificial intelligence and immigration, and was shared by Trump's ally, Tesla chief executive Elon Musk, who called it a "great interview". Priming for another Pacific pipeline Canada's energy industry has returned to profit and received a much-needed boost from the federally owned 590,000 b/d TMX pipeline, but rising oil sands production means the newly commissioned system is destined to fill up soon. The prospect of an industry-friendly federal government reinvigorating a relatively dormant midstream sector is positive for investment in Canada, and the US could play an unintended role in deciding where any pipelines are proposed. Enbridge and the Alberta government are teaming up to find ways to expand pipeline capacity. Smith singled out the US as a customer she wants to enhance ties with amid looming tariff threats, but those threats may prompt a revival of pipeline projects to Canada's west coast to reduce dependence on the US market. Enbridge's Northern Gateway pipeline was approved in 2014, but a Liberal Party led by Trudeau came to power in 2015 with sweeping changes for the oil and gas sector, including a tanker ban on the country's Pacific coast, effectively killing the project. The C$7.9bn ($7.3bn) Northern Gateway was not in the interest of local communities, Trudeau said in late 2016, when he officially reversed the previous government's approval. The pipeline would have shipped 525,000 b/d of diluted bitumen westward and 193,000 b/d of imported condensate eastbound to the oil sands region for blending. Construction would have avoided large populations and was seen as the most practical option for getting more Canadian crude to Asia-Pacific. Its northern terminal may not have had the same tanker limitations as TMX faces at Vancouver, and could have seen reduced voyage times. Enbridge now has added support from the Alberta government by way of crude volumes the province collects as tax from some oil companies in lieu of cash payments. These in-kind barrels would be the first to backstop a major pipeline expansion by Enbridge, giving both the midstream company and other producers something to latch onto to advance a future project. This is a new approach for Alberta, after sacrificing C$1.5bn it paid in a last-ditch effort to keep the doomed 830,000 b/d Keystone XL project to the US alive. Outgoing US president Joe Biden revoked that troubled line's permit in 2021. Like Keystone XL, Northern Gateway is no more. Reviving such a project would still require significant stakeholder engagement along any route, and face substantially higher construction costs than a decade ago. The C$34bn TMX put into service in May 2024 was originally pegged at C$5.4bn in 2013, even less than Northern Gateway as TMX was the twinning of an existing system. This would be a big hurdle to clear, even if governments were to allay regulatory concerns. But with an unpredictable Trump returning to the White House, the prospect of shipping more Canadian crude west might soon hold a heightened appeal. By Brett Holmes Canadian oil production Canadian upstream investment Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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