It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Saturday, January 18, 2020
Sweeping generalizations’ on oil and gas investment breeds Western alienation EX SASK PREMIER BRAD WALL, CLIMATE CHANGE DENIER NOW SAYS OK CLIMATE CHANGE IS MAYBE HAPPENING BUT NO RUSH TO FIX IT
Brad Wall is calling on institutional investors to avoid “sweeping generalizations” about Canada’s energy sector, as a growing number of asset managers prioritize climate change.
The former Saskatchewan premier said blanket statements about energy and the fossil fuel divestment movement are peaking feelings of Western alienation. His comments come as Canadian energy producers face mounting pressure to disclose climate-related risk, and they race to cut their carbon footprints.
“I think it would be better for business if sweeping generalizations were replaced by a process that would identify those that have a lot more work to do and shouldn’t be targets for investment,” Wall told a lunch audience at the AltaCorp Capital Annual Investor Conference in Toronto on Thursday.
“But also, [highlight] the companies that are champions and world leaders and are contributing to the fight on climate change, even as oil and gas companies,”
He points to carbon capture efforts at Whitecap Resources (WCP.TO), the Calgary-based oil and gas firm where he’s held a board seat since July. The company estimates its carbon sequestration efforts offset all of its corporate emissions.
CCS IS NEITHER CLEAN NOR GREEN IT IS AN ALTERNATIVE METHOD OF FRACKING
“There is a broader story than just Whitecap,” Wall said. “We have to take every opportunity to tell those stories.”
Last July, Canadian Natural Resources (CNQ.TO)(CNQ), Canada’s largest oil and gas producer, announced it cut greenhouse-gas emissions by 29 per cent and methane emissions by 78 per cent since 2012. Earlier this month, Cenovus Energy (CVE.TO)(CVE) announced a plan to reduce per-barrel greenhouse gas emissions by 30 per cent by the end of 2030. Those figures do not include emissions from the consumption of each company’s oil by the consumer.
Meanwhile, fear of a warming planet has seen energy investments increasingly lumped into the sin stock category along with firearms and tobacco.
BlackRock (BLK), the world’s largest asset manager, recently said it would exit investments that “present a high sustainability-related risk.”
“Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself," BlackRock CEO Larry Fink wrote in his annual letter to CEOs. “In the near future — and sooner than most anticipate — there will be a significant reallocation of capital.”
In an interview with the BBC late last year, outgoing Bank of England governor Mark Carney urged financial institutions to justify their continued investment in fossil fuels. He warned “a substantial proportion of those assets are going to be worthless.” Carney’s next job will be with the United Nations as special envoy on climate change and finance.
Margaret Eve Childe, director of ESG (environmental, social, and governance) Research & Integration at Manulife Investment Management, sees quantifying environmental risk of individual investments becoming easier as more data becomes available.
“At Manulife, we do scenario analysis on the asset management side,” she said during a panel discussion on Wednesday organized by Reuters Breakingviews. “There is a lot of noise out there in the ESG world. It's challenging for portfolio managers to consider which ESG factors are material.”
For Wall, a more nuanced approach to Canadian energy investment on Bay Street would help ease the strained relations he sees between Ontario and the Western provinces.
“The alienation is real folks. Whether you think there is justification or not, it is real,” he said. “I happen to think there is justification for people to be frustrated.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
Huawei CFO lawyers say her alleged crimes no crime in Canada
VANCOUVER — Defence lawyers argue a senior executive of the Chinese tech giant Huawei should not be extradited to the U.S. because her actions would not be considered crimes under Canadian law.
The extradition hearing for Huawei chief financial officer Meng Wanzhou is scheduled to begin Monday. Meng, the daughter of the company's founder, faces charges of committing fraud to try and evade U.S. sanctions on Iran. Huawei is China's first global tech brand and Beijing views her case as a political move designed to prevent China's rise.
“This is a case of U.S. sanctions enforcement masquerading as Canadian fraud,” say defence documents released Friday.
Meng was arrested at the Vancouver airport in late 2018 at the request of the U.S. government. American prosecutors allege she made misrepresentations to foreign banks, including London-based HSBC, about Huawei’s relationship with its Iran-based affiliate Skycom.
Last week, the Canadian Department of Justice released documents supporting its case the allegations against Meng meet the extradition test of “double criminality” meaning if they had occurred Canada, they would be criminal under Canadian law.
Defence lawyers dispute that claim, arguing it’s not illegal in Canada to do business with Iran.
“Canada not only permits banks to do business with Iran-based entities, it encourages them to do to,” the documents say.
The documents point out the prosecution has argued Meng’s action have caused HSBC to be placed at risk of financial prejudice for offering banking service to Huawei and Skycom because of U.S. sanctions.
”Simply put, a bank in Canada would not be concerned that Huawei’s relationship with Skycom could trigger sanctions risk," the documents say.
Meng made a brief court appearance Friday where lawyers discussed additional court dates. The first stage of the extradition hearing dealing is expected to last five days.
Meng is free on bail of and is living in one of the two Vancouver mansions she owns.
Beijing detained former two Canadians, ex-diplomat Michael Kovrig and businessman Michael Spavor, in late 2018 in an apparent attempt to pressure Canada to release Meng. They have not had access to lawyers or their families.
Huawei is the biggest global supplier of network gear for phone and internet companies has become the target of U.S. security concerns because of its ties to the Chinese government.
Jim Morris, The Associated Press
Members of Congress visit Navy shipbuilder amid talk of cuts
BATH, Maine — The Democratic chairman and ranking Republican on a House Armed Services subcommittee toured Navy shipbuilder Bath Iron Works on Friday and offered assurances to shipbuilders amid reports of possible cuts.
Democratic Rep. Joe Courtney, of Connecticut, and GOP Rep. Rob Wittman, of Virginia, both members of the seapower and projection forces subcommittee, visited the shipyard at the invitation of Democratic Reps. Chellie Pingree and Jared Golden, both of Maine.
The tour came several weeks after a memo was leaked that outlined an initial Navy proposal to cut shipbuilding.
One proposal would reduce the number of Arleigh Burke-class destroyers planned for construction from 12 to seven over the next five years. Those destroyers are produced at two shipyards, Maine's Bath Iron Works, a General Dynamics subsidiary, and Ingalls Shipbuilding in Mississippi.
Courtney and Wittman made it clear that they are strongly opposed to such a cut of shipbuilding, Golden said afterward.
“The Navy requested and Congress approved a multiyear procurement. This new proposal in the memo would nullify a contract that’s already agreed to. That’s pretty much unheard of,” said Golden, who is also a member of the seapower subcommittee.
Congress will have the final say, and shipbuilders should be heartened that there is bipartisan support in Congress for increasing the size of the fleet, not reducing it, he said.
Reports that the Navy was considering shipbuilding cuts and accelerated retirements of ships came as a surprise to many last month.
The proposed cost cutting comes as the Navy works to modernize its ballistic missile submarine fleet, replacing aging current Ohio-class subs with new Columbia-class nuclear subs. That program is putting pressure on the shipbuilding budget.
The Associated Press
Delta and its pilots ask mediator for help in contract talks
ATLANTA — Delta Air Lines and its pilots want a federal mediator to step in after eight months of negotiations have failed to produce a contract agreement between the airline and the pilots’ union.
In a statement Friday, Delta said filing for federal mediation “allows both sides to have more productive conversations” to reach an agreement more quickly.
The chairman of the Air Line Pilots Association’s Delta group, Ryan Schnitzler, said in a message to his members that mediation might “motivate management to meaningfully engage at the table.”
Negotiations began in April. Federal law makes it difficult for airlines and unions to conduct lock-outs or strikes.
The union is seeking higher pay, better benefits and more hiring. Atlanta-based Delta relied on overtime to operate during the busy summer travel season last year.
The negotiations are being watched at other airlines and by Wall Street, which is looking for an indication of how much a new contract will increase Delta’s expenses. Delta reported Tuesday that it earned $4.8 billion last year, bringing its profit since the start of 2010 to about $34 billion.
The Associated Press
Alberta court approves Encana reorganization, that will see it move its headquarters to Denver from Calgary and change its name to Ovintiv Inc.
NATIONALIZE CANADA'S OIL INDUSTRY UNDER PUBLIC OWNERSHIP, WORKER AND CITIZEN CONTROL
CALGARY — Encana Corp. says an Alberta court has approved the oil and gas company's reorganization that will see it move its headquarters to Denver from Calgary and change its name to Ovintiv Inc.
The decision by the Court of Queen's Bench of Alberta follows Tuesday's vote that saw 90 per cent of shareholders approve the change, despite public criticism from Encana founder Gwyn Morgan and shareholder Letko, Brosseau & Associates Inc.
Encana announced the changes in October as part of a reorganization that includes a one-for-five share consolidation, also approved by shareholders.
The reorganization is expected to close around Jan. 24.
The Calgary-based company says a corporate domicile in the United States will expose it to increasingly larger pools of investment in U.S. index funds and passively managed accounts, as well as better align it with its U.S. peers.
Encana has said the changes will not affect how it runs its day-to-day activities in Canada.
This report by The Canadian Press was first published Jan. 17, 2020.
Companies in this story: (TSX:ECA)
The Canadian Press
Coffee’s Meteoric Rise Collapses Along With Brazil Shortage Fear
Fabiana Batista
Coffee’s Meteoric Rise Collapses Along With Brazil Shortage Fear
(Bloomberg) -- In just a few short weeks, coffee has gone from star performer to teetering on the edge of bear-market territory amid shifting perceptions on supplies in Brazil, the world’s top producer and exporter.
On Friday, arabica beans for March delivery capped a third straight weekly decline to settle at $1.1215 a pound on ICE Futures U.S. in New York. The price has dropped 19% from a December peak, just shy of the 20% threshold that defines a bear market.
In the first half of December, a bullish stampede prevailed with futures surging 50% in the prior two months. Brazilian cooperative Cooxupe, the top arabica shipper, said in mid-October that it was running out of beans for new orders, countering forecasts of ample supply that drove prices to 13-year lows. At the time, inventories at warehouses monitored by ICE tumbled to an 18-month low.
On Friday, ICE stockpiles capped their first back-to-back weekly gain since mid-August. Brazilian currency weakness this month boosted the appeal of exports priced in the greenback. Also this week, Brazil’s crop agency Conab reiterated that growers will collect another bumper harvest in 2020, albeit probably less than 2018’s record levels. Exports of green beans rose 15% to an all-time high in 2019, industry group CeCafe said.
“As the crop was smaller last year, the big export volume implies Brazil probably had ample inventories,” Nelson Carvalhaes, CeCafe president, said this week at a press briefing.
The Bezos, Musk and Branson billionaire space race is happening right now
Virgin Galactic Founder Sir Richard Branson demonstrates a spacewear system, designed for Virgin Galactic astronauts, at an event October 16, 2019 in Yonkers, New York. - At the event Virgin Galactic and Under Armour unveiled the worlds first exclusive spacewear system for private astronauts. (Photo by Don Emmert / AFP) (Photo by DON EMMERT/AFP via Getty Images)
With a presidential election, the Summer Olympic Games in Tokyo and yes, Ludwig van Beethoven’s 250th birthday celebration, 2020 promises to be a humdinger of a year.
But also happening in 2020—if all systems are go—will be the beginning of regular U.S. space tourism flights, either by Richard Branson’s Virgin Galactic (ticker: SPCE) or Jeff Bezos’ Blue Origin or both. Also possibly coming this year are tourist trips to the International Space Station (ISS) on a craft built by Elon Musk’s SpaceX. (Boeing has a spaceship too, but that company might be otherwise occupied.)
So apologies to Donald, the International Olympic Committee (IOC) and Ludwig van, but commercial space travel could end up being the biggest damn thing to happen this year. In fact, I think it’s the beginning of a real game-changer for humanity.
If you’ve been following the space biz, you know that the ‘go year’ has been pushed back a number of times, but Ann Kim, aerospace banker and managing director of Silicon Valley Bank, is feeling it. “These companies are close. They wanted to get humans into space in 2019, but were not as successful in delivering promises as originally thought. 2020 is a good year to see that inflection point.”
It has been a long time coming. In fact these three companies are more or less of the same vintage. Bezos founded Blue Origin (named after Earth, the blue planet, as the place of origin), in 2000. SpaceX, which has colonizing Mars as its ultimate mission, was founded in 2002. And Branson started Virgin Galactic two years after that.
While you may snort at all this silly space stuff, it’s worth noting that three of the most successful entrepreneurs of our lifetimes have been working on space travel for a collective 54 years now. Remember, once upon a time folks laughed at online bookstores, electric cars and branded air travel too.
Yes, there is a bit of a space race going on, although this time it’s not Russia v. the U.S., it’s Branson v. Bezos, who are battling in the suborbital space (pun intended), with Musk as a competitor longer term on more ambitious projects.
Some play down the competitive aspects of the business though. “It’s not a race at all,” future Virgin Galactic passenger Namira Salim told Yahoo Finance’s The Final Round, “we all say that in the industry.” I think it’s safe to say there is room for all three. (Space is a big place, right?)
It’s important to remember that intermittent space tourism has been around for a while. Between 2001 and 2009, seven space tourists traveled to the International Space Station on a Russian Soyuz spacecraft. Dennis Tito was the first, remember him? Also top Microsoft exec Charles Simonyi made the trip. And British singer Sarah Brightman signed up but later canceled. The trips were arranged by a U.S. company, Space Adventures, and cost, gulp, $20 million a pop. But the Russians terminated the program and despite talk of restarting it, haven’t. In any event the Soyuz trips were always one-offs, where Virgin Galactic and Blue Origin aim to be scheduled operations and the first steps to more extensive programs.
American multimillionaire Dennis Tito, 60, gestures shortly after his landing on the steppes, 80 kilometers (50 miles) northeast of Arkalyk, Kazakstan, Sunday, May 6, 2001. Others are unidentified. The Russian Soyuz capsule carrying the world's first paying space tourist landed successfully on Sunday, ending Tito's multimillion dollar cosmos adventure. (AP Photo/Mikhail Metzel)
Virgin Galactic has been a moonshot of a stock over the past month, up over 60%. Some of that might have to do with CEO George Whitesides telling CNBC recently that demand for tickets “keeps ticking up by a good chunk every month.” The company says it has sold tickets to more than 600 customers at around $250,000 per person. It froze ticket sales after a crash in 2014 killed one of its pilots. Virgin Galactic now says it may reopen sales later this year—and raise prices.
Yes, there is risk. “This is not as safe as airline travel,” says Jonathan McDowell, an astronomer and rocket expert at the Harvard-Smithsonian Center for Astrophysic. “Suborbital flight, [what Virgin Galactic and Blue Origin are doing now] can be made very safe. It will just take a lot more flights and experience to make it so. Whether orbital flight will ever be that safe is more of an open question.” Sir Richard says not to worry. He’ll be going up as Virgin Galactic’s first test-space-tourist astronaut.
‘They will make billions if not trillions in space’
Branson took his company public by merging with Social Capital Hedosophia Holdings Corp, a special purpose acquisition company (SPAC), or blank-check company, founded by Chamath Palihapitiya, a former Facebook executive (who has since somewhat famously soured on his former employer.) Palihapitiya still owns 49% of Virgin Galactic.
Blue Origin—its motto is, Gradatim Ferociter, Latin for "Step by Step, Ferociously.”—hasn’t pre-sold any tickets, but it too has indicated that the time is near to send passengers into space. The company just moved into a swank new 232,000-square-foot headquarters in Kent, Washington—near the Sea-Tac Airport—to house many of its 2,500 employees. Geek Wire reports, “Hundreds more are based elsewhere in the Kent area, south of Seattle, as well as at Blue Origin’s suborbital launch site in West Texas, the Florida rocket factory where Blue Origin’s New Glenn orbital-class rocket will be assembled, and at the site of its future BE-4 rocket engine factory in Alabama.”
Bezos, who loved space as a child, is incredibly passionate about space and Blue Origin, so much so that I pulled these two quotes from this 2018 interview to give you an idea. (The whole piece makes for good reading, btw.)
“I get increasing conviction with every passing year, that Blue Origin, the space company, is the most important work that I’m doing. And so there is a whole plan for Blue Origin.”
And:
“The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel. That is basically it. Blue Origin is expensive enough to be able to use that fortune. I am liquidating about $1 billion a year of Amazon stock to fund Blue Origin. And I plan to continue to do that for a long time.”
Serious!
Imagine if Blue Origin ends up being a bigger deal than Amazon? Could be.
Jeff Bezos speaks in front of a model of Blue Origin's Blue Moon lunar lander, Thursday, May 9, 2019, in Washington. (AP Photo/Patrick Semansky)
SpaceX is a different beast, not surprisingly playing at an Elon Musk, super-ambitious, Tesla-like level. With its Falcon rockets and Dragon spacecraft, SpaceX was the first private company to go into orbit. Dragon has gone to the ISS 18 times. A Falcon has orbited around the sun. And working with NASA, SpaceX is reportedly set to launch its first crewed Crew Dragon next month. Tourism to the ISS is on the agenda.
Who will launch the first U.S. space flight for tourists?
“I think that Virgin Galactic is the closest,” says Kim. “A lot of people are putting in their deposits. It seems to be the leader of the pack. Blue Origin is close behind. SpaceX has more longer term potential. I think all three can be very successful.”
Where is this all going? “Space tourism needs to be more than billionaires taking selfies in space,” says Tess Hatch, who once worked at SpaceX and is now a vice president at Bessemer Venture Partners, which has invested in the space business. “There needs to be business reasons to be in space.” Hatch says space tourism and the space economy need to catalyze business models, and cites business opportunities such as zero gravity research and pharmaceutical testing.
As for Bezos, Branson and Musk, Hatch says, “...these people made their billions in totally different industries and are now turning to space. They will make billions if not trillions in space.”
I must admit, I have mixed feelings about space being dominated by the likes of Bezos, Branson and Musk. On the one hand I can’t help but admire what they’ve done as entrepreneurs. I don’t think they’re ‘evil.’ And they are filling a breach voided by government’s abdication of having a consistent, strategic space program. So sure, go for it guys!
On the other hand, I worry about the inevitable lack of consensus that accompanies each of these three efforts. How much thinking about pure science, medicine or even art will be brought to bear in space endeavors controlled by billionaires. I guess I don’t blame them or fault them, none of that thinking is necessarily their purview or responsibility.
In a way it’s just another example of our economy and society being co-opted by the technocrat class. Amazon, Microsoft, Facebook, Tesla—those companies are all name-checked in this article. Fifty years ago, yes there were private defense contractors involved in the process, but NASA and DOD were the drivers. The amount of technological innovation and products that came from NASA is stunning and too long to list here. Now the script has been flipped. Will these tech moguls be so free with their IP? Who knows. Maybe they will be even more collaborative about fostering and sharing research and scientific breakthroughs.
One thing’s for sure, it looks like we are going to find out. Maybe starting this year. (Roll over Beethoven.)
This article was featured in a Saturday edition of the Morning Brief on December 14, 2019.
Commentary by Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer.
