NEWS OF THE DAY:
U.S. Wins International Backing for Global Minimum Tax
Paul Hannon, Kate Davidson, The Wall Street Journal, July 1, 2021
Officials from 130 countries agree to broad outlines of wider overhaul of rules for taxing international companies
The U.S. has won international backing for a global minimum rate of tax as part of a wider overhaul of the rules for taxing international companies, a major step toward securing a final agreement on a key element of the Biden administration’s domestic plans for revenue raising and spending.
Officials from 130 countries that met virtually agreed Thursday to the broad outlines of the overhaul, including all of the Group of 20 nations. It would be the most sweeping change in international taxation in a century. They include China and India, the large developing countries that had previously had reservations about the proposed overhaul.
‘This historic package will ensure that large multinational companies pay their fair share of tax everywhere.’
— OECD Secretary-General Mathias Cormann
Those governments now will seek to pass laws ensuring that companies headquartered in their countries pay a minimum tax rate of at least 15% in each of the nations in which they operate, reducing opportunities for tax avoidance.
The Organization for Economic Cooperation and Development, which guides the negotiations, estimates that governments lose revenues of between $100 billion and $240 billion to tax avoidance each year.
“After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere,” said OECD Secretary-General Mathias Cormann.
U.S. Treasury Secretary Janet Yellen called it “a historic day for economic diplomacy.”
“Today’s agreement by 130 countries representing more than 90% of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end,” she said.
OIL:
U.S. crude oil prices top $75 a barrel, the highest since 2018
Yun Li, CNBC, July 1, 2021
Oil prices broke above $75 a barrel on Thursday to a near three-year-high ahead of a decision from key producers on production policy for the second half of 2021.
U.S. West Texas Intermediate crude for August rose 3.2%, or $2.33, to $75.82 a barrel, hitting its highest level since October 2018. The international benchmark Brent crude for September climbed 2%, or $1.49, to $76.10 per barrel.
The WTI has climbed more than 50% on the year after starting 2021 at around $48.5 per barrel. Demand has increased as people take to the roads amid the economic reopening, and a rebound in goods transportation and air travel also have supported prices.
Gasoline prices are jumping on the back of a post-pandemic driving spree and $75 crude prices could mean even higher prices at the pump. The current average price for a gallon of unleaded gasoline is at $3.123 per gallon, compared to $2.179 per gallon a year ago, according to AAA.
The advance came ahead of a meeting among OPEC and non-OPEC partners, an energy alliance often referred to as OPEC+, who have been positive about improved market conditions and the outlook for fuel demand growth following a sharp rebound in oil prices this year.
OPEC+ will convene via videoconference at 2 p.m. London time.
Jeff Currie, global head of commodities research at Goldman Sachs, said on CNBC’s “Worldwide Exchange” that the expected OPEC production hike of 500,000 barrels per day might not be enough to keep prices down.
“During the month of June, we estimate that the market was in a 2.3 million barrel per day deficit… The bottom line, demand is surging as we head into the summer travel season, and that is against a nearly inelastic supply curve,” Currie said.
Just over a year ago, WTI futures plunged into negative territory for the first time on record as the coronavirus pandemic took hold, shutting down economies worldwide.
Bank of America recently said oil can climb all the way to $100 per barrel amid accelerating demand.
GAS:
U.S. natgas companies put hydrogen to the test
Stephanie Kelly, Scott DiSavino, Reuters, July 1, 2021
At least two dozen U.S. energy firms, including Dominion Energy Inc and Sempra Energy, have started producing hydrogen or testing its viability in natural gas pipes to take advantage of existing infrastructure as the world prioritizes lower-carbon fuels.
Nations worldwide are trying to reach net-zero carbon emissions by 2050, but that will rely heavily on technology – like hydrogen – that is in developmental stages. Utilities have a potential advantage if they find that clean-burning hydrogen can be successfully transported in existing gas pipes and power plants.
But governments need legislation and regulation to encourage energy companies to spend billions in order to reduce production costs for green hydrogen, analysts said, before it can displace fossil fuels. Almost all of the world’s hydrogen production is currently through fossil fuels, and large utilities are currently mostly testing blends of natural gas and hydrogen in their pipelines.
The companies experimenting with hydrogen are in early stages. Canada’s Enbridge Inc is blending up to 2% hydrogen into its natural gas distribution systems in Ontario, and just received approval to blend hydrogen in Quebec.
“We are looking to understand the potential either with the existing system or, as we’re continuing to modernize the gas pipeline system, to ensure that new construction is hydrogen-ready,” said Pete Sheffield, Enbridge’s chief sustainability officer.
Sempra’s Southern California Gas (SoCalGas) utility, which supplies gas to 22 million consumers, is working on pilot programs to test the fuel in its pipelines and see how a blend with natural gas affects the company’s pipes, as well as appliances and other equipment.
The first project would blend hydrogen in a mostly residential area that SoCalGas can isolate from the rest of its distribution system, said Jawaad Malik, chief environmental officer.
Virginia-based Dominion is testing a 5% hydrogen blend in a training facility in Utah and recently proposed a similar pilot in North Carolina, said Dominion spokesperson Aaron Ruby.
Hydrogen is only considered clean if it is produced using low- or no-carbon emitting energy sources like biomass, nuclear, renewables or fossil fuels paired with carbon capture technology.
“These types of proposals have not yet shown a path to a deeply decarbonized gas system,” said Julie McNamara, senior energy analyst for the Union of Concerned Scientists.
Almost every gas turbine used to produce power can burn fuels containing about 5% to 10% hydrogen, said Jeff Goldmeer, General Electric’s emergent technologies director for decarbonization. That would cut carbon dioxide emissions from natural gas from the power sector, which has been one of the fastest growing sources of demand for gas.
Roughly 36% of energy-related carbon emissions come from fossil fuel-fired electricity generation, according to the International Energy Agency (IEA).
A RISE IN PILOT PROGRAMS
To reach net-zero emissions by 2050, global hydrogen use needs to expand to more than 200 million tons in 2030 from less than 90 million tons in 2020, according to the IEA.
Reaching that goal will be difficult. Hydrogen production and transport costs more than natural gas, for now. Evercore ISI analysts said in a report this week that green hydrogen could become cost-competitive with less clean versions by 2030.
GE has more than 75 turbines worldwide that use or have used fuels containing hydrogen, which have produced more than 450 terawatt-hours (TWh) of power. U.S. utility-scale facilities generated about 4,009 TWh of electricity in 2020, according to U.S. federal data.
Technology will have to advance further to burn hydrogen as a viable fuel rather than just as a small percentage of a natural gas blend.
“Clean hydrogen will be constrained in supply for the foreseeable future,” said McNamara of the Union of Concerned Scientists. “Blending it at a low level into a gas pipeline that should be transitioned to electrification is just not the right pathway to be taken today.
MINING:
HighGold Mining continuing to advance a “great deposit” at Johnson Tract, Alaska
Giles Gwinnett, Proactive Investors, June 30, 2021
- Aiming to be a Top Tier gold explorer
- Working in highly favorable mining jurisdictions
- Johnson Tract asset is very high grade and akin to advanced-stage discovery
What HighGold Mining does:
HighGold Mining Inc (CVE:HIGH) (OTCMKTS:HGGOF) has two wholly-owned projects, which are found in the well-established mining jurisdictions of Alaska and Timmins, Ontario, while management has a track record of finding, growing, and advancing resources.
The company is a spin-out of the gold assets of Constantine Metal Resources and its shares began trading on Toronto’s Venture exchange in September 2019. Shares also began trading in January 2020 on the US over-the-counter market.
HighGold‘s flagship asset is the high-grade, polymetallic Johnson Tract gold project in southcentral Alaska, which was acquired as part of a lease agreement with CIRI, a native Alaskan firm. HighGold is targeting a potential multi-million-ounce, multi-deposit system.
in 2020, HighGold published an NI 43 101 maiden resource for Johnson Tract which positioned the property as among the highest-grade undeveloped gold projects in North America. Notably, it is open for expansion. The higher confidence Indicated resource was put at 2.1 million tons grading an impressive 10.9 grams per tonne (g/t) gold for 750,000 gold equivalent ounces.
The Inferred resource was pegged at 600,000 tons of 7.2 g/t for 134,000 gold equivalent ounces. Notably, nearly 80% of the total resource tonnage is in the Indicated category, including 85% of the total gold equivalent ounces.
Under the lease deal, HighGold must pay US$10 million over 10 years with a minimum of US$7.5 million payable in the first six years. Upon completing a feasibility study and a positive decision to construct a mine, CIRI has a one-time buy back-in right to a 25% participating interest.
Elsewhere, at the famous 100-plus million ounce Timmins gold mining camp in Canada, HighGold has a strategic footprint of 200 square kilometres (km) in an area along the Porcupine-Destor Fault, which has generated over 110 million ounces. The firm wants to apply new exploration ideas to a mature district.
Its main Munro Croesus property area in Timmins now spans 32 square kilometres, or 3,187 hectares, and includes the past-producing Croesus mine that yielded some of the highest-grade gold mined in Ontario.
The company’s Golden Mile property covers 8,600 hectares on the Pipestone Fault System and lies 9km from Newmont’s multi-million-ounce Hoyle Pond deposit, while its Golden Perimeter property covers around 12,000 hectares and played host to around 10,000 meters (m) of past drilling in the 1980s.
How is it doing:
It’s been a busy 2021 for HighGold so far. On June 23, it announced it had increased the size of its planned drill program at Johnson Tract (JT) to 20,000 meters (m), a 25% uptick from the previously planned 16,000m.
This will be the largest exploration effort in the flagship project’s history, the company noted.
The ultimate goal of the 2021 program will be to increase the JT deposit and make new discoveries within the Johnson district. There will also be an emphasis on definition drilling and metallurgical work as part of a future resource update. It said 50% -70% of its current efforts will be on the JT deposit area, and the remaining 30% -50% on other regional prospects.
HighGold will also target the Footwall copper zone with step-outs, the GAP target northeast of the JT deposit and the New 2020 VMS zone, which returned positive intercepts last year. Additionally, several prospect zones will be tested, including DC, Milkbone and Kona.
The expansion and ongoing exploration will be funded from the C$1.9 million it recently received from the exercise of 2,709,027 warrants held by key strategic shareholders.
In March this year, HighGold said it had reached a ‘turning point’ after drilling at its Northeast Offset (NEO) target at Johnson Tract, had shown the area to be a distinct mineralized zone separate from the JT deposit.
The NEO target lies between 500 and 800 meters to the northeast of the JT deposit. Two holes were sunk there, which showed, significantly new VMS-style mineralization in one, with highlights including 7.8 meters (m) at 6.1% zinc, 1.6% lead, 0.2% copper, 0.7 g/t gold and 36 g/t silver.
HighGold said it now recognized that the mineralization is far more widespread between the JT deposit and the NEO target within the prospective Dacite Tuff stratigraphy than had been previously understood.
Also in March, HighGold revealed it planned to systematically explore and generate multiple drill targets at its Munro-Croesus gold project in Timmins, Ontario, having consolidated its ground, such that its asset area now spans 32 square kilometres or 3,187 hectares.
And in June this year, the company said it had struck an exploration agreement with the Matachewan First Nation and Mattagami First Nation in the Timmins area in a bid to promote a “cooperative, collaborative and mutually respectful relationship” for HighGold’s exploration activities in areas where the two First Nations’ members exercise aboriginal rights.
Inflection points:
- More exploration results from Johnson Tract, Alaska
- Exploration at assets in Ontario
- Precious metals moves
What the boss says:
HighGold Mining’s CEO Darwin Green spoke to Proactive’s Steve Darling following news of the 25% increase to its planned drill program at the Johnson Tract project to 20,000 metres (m).
“We’ve got a great deposit, it’s open to expansion. We’re going to keep stepping out on that and growing that with an objective of generating an updated mineral resource at the end of this season’s drilling so that will probably come out early in 2022. But in concert with that, we will also be testing other prospects on the property. One of the really neat aspects about Johnson is that the deposit itself clearly sits within a very big, multi-kilometre scale system,” he said.
POLITICS:
Cheney bill would block royalty rate hikes
Heather Richards, James Marshall, E & E News, July 1, 2021
Wyoming Republican Rep. Liz Cheney wants to bar the White House from increasing royalty rates on federal minerals like oil, natural gas and coal.
H.R. 4219, introduced Tuesday, would freeze the current onshore royalty rate for producing fossil fuels from federal stores at 12.5% — a figure conservation groups have been pressing the Biden administration to hike.
The bill would disable the White House’s ability to do that by amending the Mineral Leasing Act, which has mandated since 1920 that the royalty rate on federal minerals be “not less than” 12.5%.
Cheney said the change would protect industries in Wyoming and elsewhere in the country. “Any move by the DOI to increase these rates would eliminate jobs, decrease energy production, lead to higher energy costs, and unnecessarily hurt our state’s economy,” she said in a statement.
Cheney’s bill comes as the White House is poised to release an interim report on the federal oil and gas program that could spell out a path for reforms.
President Biden had ordered Interior to consider if royalty rates on fossil fuel production should offset some of the climate damage caused by greenhouse gas emissions.
Rep. Katie Porter (D-Calif.), a senior Natural Resources lawmaker, has proposed a royalty rate increase, H.R. 1517, that would also hike fees and minimum bids paid to companies to access federal resources.
A bipartisan companion in the Senate was introduced earlier this year by Sens. Jacky Rosen (D-Nev.) and Chuck Grassley (R-Iowa) (E&E Daily, March 10).
The hyper focus on fossil fuels from this administration, however, has not much encompassed coal, though the lion’s share of coal produced in the U.S. comes from federal lands in Wyoming.
Environmentalists hoped the White House would pick up where the Obama administration left off in 2016 with a coal leasing moratorium and intent to study royalty rate increases.
But the Biden administration hasn’t shown the same scrutiny of the federal coal program. Coal leasing in the West has slowed. Some Wyoming mine operators intend to wind down coal production to cope with declining markets.
Cheney’s bill has the support of the Wyoming Mining Association, Western Energy Alliance and Petroleum Association of Wyoming.
CLIMATE CHANGE:
How youth respond to climate change news on social media
Andrew Freedman, Axios, July 1, 2021
Two large surveys indicate that millennials and members of Gen Z are more emotionally engaged with climate issues than older generations.
Why it matters: Younger people are growing up with the effects of global warming are visible all around them, from heat waves like the one this week to extreme precipitation events.
They are also behind the biggest mass movement this issue has ever seen.
Driving the news: A Pew Research Center survey conducted in April found that younger Americans are more likely to see content on climate change via social media, and tend to be more anxious about the future after viewing such climate content.
- Gen Z and millennials are also more likely than older Americans to be angry that not enough is being done to address climate change, but they’re still relatively optimistic about being able to reduce its effects.
- The poll consisted of 13,749 respondents and has a sampling error of plus or minus 1.4%.
Yes, but: A separate poll by Deloitte that sampled the views of 22,928 millennials and Gen Z youth in 45 countries found that 44% of millennials and 43% of Gen Z members said they feared the environment “had passed the point of no return,” and it was too late to address climate change.
- It may reflect the greater severity of climate change effects in developing nations.
Our thought bubble: The polling data is a window onto the global youth movement on climate. Simply put, young people are alarmed but motivated.