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Ontario is proceeding with a massive, multibillion-dollar refurbishment of four aging nuclear reactors at its Pickering power plant east of Toronto, according to two provincial government sources.

The decision will be formally unveiled by Ontario Energy Minister Todd Smith at the facility in Pickering on Tuesday, a senior government source said. This would mark the government’s latest major move to preserve and expand the province’s reactor fleet.

Another government official said the province has approved a $2-billion budget for Ontario Power Generation, the plant’s owner, to complete the necessary engineering and design work and order crucial components, which can require years to manufacture. The Globe and Mail is not naming the sources, because they were not authorized to speak publicly about the decision.

No full cost estimate for the project has been revealed. Refurbishments under way at OPG’s Darlington nuclear plant in Clarington, and at Bruce Power’s station in Tiverton, have cost between $2-billion and more than $3-billion a reactor.

Mr. Smith’s announcement had been expected. In 2022, the province asked OPG to study the feasibility of refurbishing the four Pickering “B” units, which entered service in the mid-1980s and had previously been passed over for refurbishment 15 years ago. Mr. Smith received OPG’s report last summer, but his ministry rebuffed a request from this newspaper to release it under the province’s freedom of information legislation.

The Pickering station, situated on the shore of Lake Ontario about 30 kilometres from downtown Toronto, generates about 15 per cent of Ontario’s power. It also includes the four 1970s-era Pickering “A” reactors, which are not currently being considered for refurbishment. Two have been dormant for decades after an aborted refurbishment, and the remaining two are scheduled to shut down permanently this year.

OPG’s current licence for Pickering B allows its reactors to operate only to the end of this year. OPG has applied to the Canadian Nuclear Safety Commission, which regulates the industry, for permission to operate them until late 2026. CNSC approval would also be required for a refurbishment.

Refurbishment involves replacing major components to extend reactors’ operating lives by 30 years, although the list of required upgrades varies from station to station. Subo Sinnathamby, OPG’s chief projects officer, told The Globe earlier this month that, if the project were approved, OPG would begin Pickering’s refurbishment in 2028, with the goal of returning its reactors to service by the mid-2030s. Previous refurbishments have unfolded over longer periods.

“It is a compressed timeline,” she acknowledged. But she added that this time OPG will benefit from the experience it and its contractors and suppliers gained during previous refurbishments.

Source: Theglobeandmail.com

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As domestic consumption of U.S. coal declines in the near term, we expect exports to account for a larger share of total U.S. coal consumption, according to our recently released Short-Term Energy Outlook (STEO). We expect U.S. coal consumption will total 482 million short tons (MMst) in 2024, 29% less than in 2019. We expect that exports will make up 19% of total demand in 2024 and 21% in 2025, up from a share of 14% in 2019 because of decreasing domestic consumption, especially from the electric power sector.

We expect that the U.S. electric power sector will consume 73% of U.S. coal in 2024 and 70% in 2025, down from 79% in 2019. In 2019, the U.S. electric power sector consumed 539 MMst of coal, while exports totaled 94 MMst. Coal consumption declined substantially across all sectors in the pandemic year of 2020 and then returned to pre-pandemic levels in 2021.

Despite the brief increase, total U.S. coal consumption has since continued to decline, dropping to 601 MMst in 2022 and 524 MMst in 2023, as consumption declined in the electric power sector. We expect that electric power consumption will decline to 352 MMst in 2024 and 322 MMst in 2025. We estimate U.S. exports increased to 100 MMst in 2023, based on January through October data. We expect exports fall to 91 MMst in 2024 and rise again to 95 MMst in 2025.

The pickup in exports reflects more demand for U.S. coal in foreign markets, especially in Asia where coal consumption was on track to hit record levels in 2023. This increase in demand for U.S. coal is primarily for thermal coal in Europe and Asia, where U.S. coal exporters have grabbed a small share of the growing market. Demand for U.S. coal increased following ongoing embargoes of Russia’s coal in several markets. Demand for U.S. metallurgical coal tends to remain steady in overseas markets given its high quality for blast furnace coking.

We expect total coal consumption to fall to 457 MMst in 2025 because of lower electric power consumption. We forecast that other sectors in the market for U.S. coal consumption will remain marginal or relatively stable.

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Tesla +24.6%, Toyota +2%. Model Y +52%, #1 bestseller by far; Model 3 is #2 bestseller. Toyota loses it, Camry sales -16%, RAV4 +1%.

By Wolf Richter for WOLF STREET.

Tesla’s share of all light vehicles sold in California in 2023 surged to 13.0%, behind only Toyota, whose share fell to 15.7% (from 17.3% in 2022), according to the California New Car Dealer Association, based on registrations data by Experian. Honda was #3 with a share of 9.7%. Toyota and Honda had ruled California before the arrival of Tesla.

Tesla’s sales in California jumped by 24.6% in 2023. Toyota’s sales edged up merely 2.0%. This is now the battle for #1 in California. It’s between these two automakers. No one else is even close. Back in 2019, Toyota’s share had been 17.2%, while Tesla’s share was just 3.8%. Toyota has essentially no EVs to sell; Tesla only has EVs. This represents a massive shift in the market, instigated by a newcomer and only automaker that manufactures vehicles in California.

Tesla’s Model Y and Model 3 were by far the #1 and #2 bestsellers in California in 2023 by registrations, far ahead of the next models in line: Model Y sales spiked by 52% to 132,636; Model 3 sales rose by 4.9% to 82,786.

Sales of the Toyota RAV4 dipped by 1% to 58,496. Sales of the Camry, the former #1 model in California, plunged by 17%, to 51,330. Those two have gotten totally crushed not only by the Model Y but also by the Model 3.

Toyota has completely dropped the ball with EVs. Toyota has no EV to speak of. A year ago, Toyota’s longtime anti-EV CEO Akio Toyoda was forced out and replaced by a new guy, Lexus boss Koji Sato, under whom Toyota is now trying to build an EV strategy, while he’s dousing the media with commentary about how EVs will never amount to much – to distract from Toyota’s fumble. Losing the #1 bestseller spot in California would be very embarrassing.

Toyota sales have also been on a down-trend in the entire US since the peak in 2015, and we discussed this here.

Total new vehicle sales in California rose by 11.9% to 1.775 million in 2023.

Sales of vehicles with internal combustion engines (ICE) of all types, including hybrids and plugin hybrids, rose by 5.2%, or by 69,298 vehicles. Since the peak in 2016, ICE vehicle sales have plunged by 30% (blue line).

EV sales jumped by 46.1%, or by 120,204 vehicles, to 389,000 (red line).

While sales of ICE vehicle sales have plunged by 600,000 since the recent peak in 2016, EV sales have soared by 340,000, multiplying by over 5:

Tesla is finally getting more EV competition – slowly but surely. Though Tesla’s sales jumped by 24.6%, its share fell to 60.5%. The share of all other EVs combined rose to 39.5%.

The Chevrolet Bolt was the #3 EV model in California, with the lowest-priced model at around $20,000 after federal tax credit, a very desirable price point at which there are not many new vehicles left to buy. But GM ended production of the Bolt in 2023, and now the wait is on for whenever GM will introduce its new Bolt.

None of the Japanese automakers that used to dominate the California market have anything on this list. Seven of the 12 models are by US automakers, including the top three:

Top EV Models in California, 2023
1
Tesla Model Y
132,636
2
Tesla Model 3
82,786
3
Chevrolet Bolt
19,041
4
Volkswagen ID.4
12,280
5
Ford Mustang Mach-E
11,311
6
Tesla Model X
10,448
7
Hyundai Ioniq 5
9,632
8
BMW i4
8,695
9
Rivian R1S
6,665
10
Tesla Model S
4,718
11
BMW iX
4,603
12
15 Kia EV6
4,148

The share of EVs in California – it jumped to 21.4% in 2023, up from 5.8% in 2020 — experienced two big accelerations: in 2018 when Model 3 production got scaled up; and in 2021, when the Model Y production reached scale:

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You’ll Have to Pay to Use the Highway. Blame EVs.

California and Big Oil are splitting after century-long affair

Michael Tanner: [00:00:14] What’s going on? Everybody? Welcome in to the Tuesday, January 30th, 2024 edition of the Daily Energy News Beat standup. Here are today’s top headlines. First up, you’ll have to pay to use the highway lane EV. Next up, wind turbine explodes after bursting into flames at the quiet Welsh farm, showering broken parts on the ground. We love a good little stew addition to a title there at the end. Next up over to our favorite state. California and Big Oil are splitting up after a century long affair. Next up, high electricity prices. Have Europe facing deindustrialization. Don’t let it happen here. And then finally European energy cancels wind project on offshore. Dad, Mark another nail in the coffin. For wind. And then stew will then quickly toss it over to me. I will cover what happened in the oil and gas markets today, mainly. We did see prices drop, about a percent and a half, due to a couple reasons. And we’re going to slowly start seeing earnings drop out. So we will cover all that and a bag of chips, guys. Stu, what do you got for us today? [00:01:22][68.6]

Stuart Turley: [00:01:23] Okay, let’s get ready to rumble here. Let’s start with this one. This is from Harvey, our, blaze, and he is cool. Get out of Bloomberg. You’ll have to pay to use the highway. Blame EV’s. This one is, there’s a, subheading here. If government succeed with their green plans, the fuel tax revenue they rely on will disappear. It’s time to devise an alternative system. This article, we are just absolutely does a great job going through. We’re going to go through some of the numbers here, but, insurance companies are going and no EV for you three, four times. And then, you know, the well soup Nazi of EVs now, the insurance companies. Yeah. So, and also the weight of the EVs is just unbelievable. And then they wave where through tires more. So here we go. The last five European economies, earned more than 150 billion. That’s 163 US from fuel levies, or about 2% of their total tax collection. I need to go look up, Michael. How much the U.S make in tech that off of the gas. And then you had Nikki Haley saying the other day, I will never raise the gas tax. And then she said the other day I’m going to tax gas. So they can get addicted to that, that tax thing. So how do you replace it? I don’t know, you gotta pay for the road somehow. [00:03:03][99.7]

Michael Tanner: [00:03:04] Yeah. No, you’re going to have to do it. I think it’s it’s super interesting. The the real is the real answer then is I. And this is what how the year brings up. Do you get a discount too. And what happens if you have different guesses between different cars. He brings that up where it’s like now will. The question is is the taxation based upon that? A there’s so many questions based on this. [00:03:26][22.0]

Stuart Turley: [00:03:26] And you charge, by the mile or do you charge, by the use of the road? Do you pay as you drive? [00:03:34][7.5]

Michael Tanner: [00:03:36] It’s all it’s one of the things that Uber struggled with. Remember when Uber went out? Some people might not remember this. I happened to do that because, you know, lo and behold, I was actually an Uber intern. I wasn’t an Uber driver. I actually interned at Uber one summer. They IPO and it got an interesting little look, but just they used to charge by the minute. But. Right. What happens was if you’re sitting in traffic, you’re racking up tolls and not easy. So what did they do in order to lower prices to get more people on the app, they switch to a mileage model, which lowers the price for me, the consumer. But who does it hurt? The driver. It hurts all this other stuff. If you ship that system to us and EVs and cars, you’re the one that gets, may take the drive through. [00:04:21][44.9]

Stuart Turley: [00:04:21] And then, I have here also has in here a different, line. And that is taxing electricity is another option. So if you put one of them bad, chargers in there, you’re going to be taxed a bunch. The other one, a different article I read on Sunday, said that the equivalent for charging your, charging your car $14 a gallon. So. Oops. [00:04:50][29.4]

Michael Tanner: [00:04:53] Oops. Okay. All right, let’s move to this wind farm. What’s next? [00:04:56][2.8]

Stuart Turley: [00:04:57] Miss Producer, can you bring this, picture up here? I really think the wind turbine explodes after bursting into flames on quiet Welsh farm, showering broken parts. This looks like my brother and I on. The farm when we were having potato gun fights, and we would put Emma in the, tire pumps and just blow each other up. Larry the cable guy learned from us because we bring each other up all the time. So let’s go into this, this portal thing. Nick and his wife, 61, 51, were stunned when they saw burning parts of the turbine farm more than 100ft to the ground. They’re not very friendly when they start blowing up. [00:05:41][44.1]

Michael Tanner: [00:05:41] No. And, you know, I mean, this unfortunately, is, you know, one of the it’s it there’s downsides. Everything. But having exploding, exploding engines on a farm is not good. And and I think the other issue is this is obviously catastrophic failure for the wind farm. So the question is you have to decommission the wind farm. Do you what actually then happens once these things, you know, once this thing explodes, really. Like what’s next. [00:06:12][30.6]

Stuart Turley: [00:06:13] You got to take the ones that are, er, repairable after so many years, which is anywhere between 3 and 8 years. And it’s in Texas. It’s over $480,000 just to take one down. Doesn’t include transportation, doesn’t include getting rid of stuff. That is just the cement problem. So here’s the farmers here. And the biggest problem that David Blackmon and Irina and, Tammy brought up on the podcast on Monday for the the energy realities is the fact that, you have, so many wind farms do not have the reclamation at the end in the price. So these monoliths to, the Green New Deal, nobody is going to pull them out. So, yeah. [00:07:06][53.4]

Michael Tanner: [00:07:07] No. And, it’s. [00:07:08][1.2]

Stuart Turley: [00:07:08] That’s gotten very high electricity prices have you’re facing deindustrialization. Don’t let it happen here. I didn’t write that one, Michael. I take credit for it. That’s what caught my eye on the article. So, after years of misguided energy policies, Europe’s electricity has become so expensive, the trade unions have started warning of the threat of deindustrialization. They’re a little late. And Germany has gotten rid of their oldest steel mills. They’ve gotten rid of, BASF, closed their fertilizer plant four months ago. It’s gone to China. Volkswagen. All of this is because of according to the European Commission, the industrial output in the euro area plummeted 5.8% in the 12 months preceding November 23rd. Capital goods production was down 8.7%, which is average more than a 3% GDP in wiped down in a single year by soaring imports. They it’s even worse. This this article in here is just, like, abysmal that this is happening to California right now. And New York people are bailing out of there like you wouldn’t believe. [00:08:31][82.5]

Michael Tanner: [00:08:32] Yeah. No, I mean, I think what this tells me and what this I think this shows, is that if we allow this to happen here in America, it’s only going to become more expensive. You think it’s expensive in Europe, guys, it’s going to be more expensive here due to the fact that a lot of the raw materials that we need for this come, you know, have to be shipped across seas. You know, we don’t have access to a lot of these raw minerals, you know, I mean, we know Europe shot themselves in the foot by blowing up, the Nord Stream. Excuse me. How Russia did that? Sorry. I don’t mean to me. [00:09:05][33.7]

Stuart Turley: [00:09:06] I got my own conspiracy theory on that. On I. [00:09:09][3.1]

Michael Tanner: [00:09:09] And I say that only as a joke in that we can see what happened again. The European Commission industrial output in the Europe area plummeted 5.8% in the 12 months ending November 2023. Capital goods production was down 8.7. That problem’s only going to be exacerbated here in America if we allow this to keep going. [00:09:29][19.4]

Stuart Turley: [00:09:29] Oh, absolutely. And Putin has increased his Russia’s doing actually quite well. So hey, let’s go to the last one here. European Energy Channel’s wind project. oh. I also, I skipped over the California and Big oil or splitting, but, so I’ll go back to that here and say European energy channels, wind project offshore cancel. So here we are. Let’s have a moment of silence for this wind project. Off of the coast. Okay. Thank you. They they can’t afford it. Here, where it is. We’ve tried to get the project to fly, among other things, and coexistence with nature, but we have to, note that the authorities and politicians have not much interest in this. So they’re only when they get their kick back as a politician, they don’t care if it actually gets installed. [00:10:24][54.9]

Michael Tanner: [00:10:27] They don’t. [00:10:27][0.2]

Stuart Turley: [00:10:27] Care. Listen to this one. Since our feasibility study permit has a height limit of 200m, and today’s offshore wind turbines have become 256m. It goes without saying. The project has no future. So I didn’t see how much they’ve already spent in it. But it’s a bunch. [00:10:46][18.3]

Michael Tanner: [00:10:47] Yeah, it’s I mean, it’s it’s unfortunate because if anything, offshore wind has held up the best economically relative to all of the others. And if we can’t even get a new project installed, what does that tell you about the long term. [00:11:02][14.9]

Stuart Turley: [00:11:03] Outlook of this stuff? The one that we talked about a little while ago was the one off the Great Lakes, that had for, was a 52, million, 82 million, 52 million for, for wind turbines and 27 of that, was already spent on permitting. And they never got any installed. Let’s go to California real quick. Big oil, California and Big Oil are splitting after their century long affair. I didn’t do that one either, but, let’s go here. If, Mr. Producer, if you can bring it in. California sees a four decade decline in crude production. You go to 1000 barrels per day, 1. [00:11:53][50.1]

Michael Tanner: [00:11:54] Million barrels a day. [00:11:54][0.8]

Stuart Turley: [00:11:55] 1.1 million barrels per day. And they have gone, over half. They’re now down under, 400, thousand barrels per day. Now for. [00:12:07][12.1]

Michael Tanner: [00:12:08] Hail. That’s all this time, California decreasing their crude oil production. You can’t read units. Yeah. But no. California has become as outright gone to war with the oil and gas business. And we saw this Chevron has come out written down their California assets. They did that last quarter, billions of dollars. They just wrote off because they realize they can’t do anything in the state they’ve gone. And I mean, they love this. If you showed this chart to Gavin Newsom, he’d love it. [00:12:39][30.6]

Stuart Turley: [00:12:39] Oh yeah. And here’s my prediction. And that is there are the I have talked to folks and Gavin Newsom is planning on buying his diesel and his gasoline from China. So, you know, I’m not ready to put that out there that I have it documented. But, hey, that’s a heck of a rumor, man. I’ll tell you what. So you have all. You think you’re getting $7 gas right now in in California tracks shipping in across the oceans, in China and prisons, even though he’s got cancer. You know, he’s going to be all happy. He’s also going to vote in 3 or 4 elections here. So let’s go to the I think I’ve been here. Did you. [00:13:21][42.6]

Michael Tanner: [00:13:22] Wait? Hey now though, like here in president, is the voting in the in the US election. But before we kick over and cover finance guys, we’ll go ahead and pay the bills here. The announced the news and analysis quote unquote, that you’ve just heard, is brought to you again by the world’s greatest website, energynewsbeat.com The best place for all of your energy and oil and gas news. Doing the team do a tremendous job keeping this website up to speed. Everything you need to know to be the tip of the spear when it comes to the energy business. You can hit the description below all the links to the articles. You can also check and email the show [email protected]. You can see that description as always for the timestamps dashboard.Energynewsbeat.com. [00:14:01][39.0]

[00:14:04] Let’s go ahead and flip over to finance. We did the S&P 500 up about three quarters of a percentage point Nasdaq up about 1.1 percentage point. 30 year yields fall about a quarter of a percentage point ten year yields fairly flat. same with that dollar index. We did see crude oil continue to tumble a little bit unfortunately after after what was a really nice Friday pop. You know, mainly the as again the the demand side of the equation specifically, what’s going on in China has has kind of flip flop. We heard on Friday that positive economic news and and when I mean positive hey they’re just going to do more stimulus. So maybe that’s not positive news but just interesting news from the fact that there’s going to be more money specifically in that Chinese economy. Well, now what we determined, what we found out today was that their property crisis, as we talked about last year, they have, you know, they’re going through their own mini version of, of 2008, but it’s really with property developers versus necessarily people getting into homes they can’t afford. The problem is Evergrande, the largest real estate holding company in, China, was ordered to liquidate certain assets today, you know. Yeah. Not good is not good. When a Hong Kong courts court ordered the liquidation of China, or of Evergrande, they, you know, they’re they’re called China Evergrande Group. They trade on the Hong Kong Stock Exchange, you know. Now what does this mean. You know it’s just a Hong Kong trading market. So it’s not necessarily this isn’t the Chinese government stepping in. [00:15:35][90.2]

Stuart Turley: [00:15:35] Hundred billion in debt. [00:15:36][1.6]

Michael Tanner: [00:15:38] It’s it’s something. Absolutely. It was crazy like. [00:15:41][3.0]

Stuart Turley: [00:15:41] Yeah bad management man. [00:15:43][1.8]

Michael Tanner: [00:15:44] Yeah. Really bad management bad. You know we always say good management good numbers bad management bad bad numbers. Summary. Most people are, fairly familiar with that. You know, we did see, you know, U.S. troops were also attacked near Jordan today, which why they’re there is another question for for all of us, but that that’s going to continue to, to teeter that geopolitical tension. But I think today really that that Evergrande sort of takes the case on that, you know really besides that to do as a as, as, as as we go look at what what happened today we are going to start seeing some earnings drop ring energy. They didn’t announce their their earnings today. mainly focused on on new production along with debt reduction. They did offer some guidance. And you. [00:16:30][46.6]

Stuart Turley: [00:16:30] Know this if they’re still on free cash flow right now. [00:16:33][2.4]

Michael Tanner: [00:16:34] Go. Yeah. Well, just to give you guys an idea, Ring Energy did about 19, thousand barrels of oil per day. About 70% of that or exceed had to BOE per day. 70% of that is oil. You know, they they went ahead and have basically added in three months of sales from their recent founders oil and gas acquisition, which was, which was awesome. And they did go ahead and reduce their debt by a whole whopping 3 million in the fourth quarter of 2023. While funding the final 11.9 final payment in December for the founders acquisition. So nothing like paying down a little bit of debt, but then taking more out to go pay down in acquisition, guidance. For for. 2024 is going to be about 18,085. 18,500 boe. About 70% oil. You know, they’re they’re they’re saying that mainly because there’s about a 2000 boe drop for about two days. For about ten days, which is was associated with that severe weather that we saw. So I think that’s the other interesting thing to point out. We’re going to have a little bit of, dip in production for a lot of these companies, mainly due to the fact that it’s been absolutely, that cold streak came and absolutely shut them down. Besides, that’s due not to terribly. Not too terribly. I’m crazy for them. They’re running about, a 37 to 42 million a quarter, mainly based on a two rig drilling program. One horizontal, one vertical. And they’re hoping to do 4 to 5 horizontals and 4 to 6 verticals within that first quarter. So a lot going on for ring. We also saw and we’re going to be seeing a lot of companies coming up. We got in. Everybody’s announcing it’s really that end of the, end of the end of February when we’re going to see the majority of all this stuff drop. So it’s just it’s going to be crazy. So, what else you got? That’s all I’ve got. [00:18:16][102.5]

Stuart Turley: [00:18:17] Oh, I heard Biden is, possibly going to be telling the Congress that we have boots on the ground over there. So, Matt, what a mess. [00:18:29][11.7]

Michael Tanner: [00:18:30] I also heard he had 187 IQ. Is that any rumors to that? I heard, Cree John Pierre, our favorite. Press secretary, when asked today about Biden’s mental fitness, said he has 178 IQ. [00:18:45][15.5]

Stuart Turley: [00:18:46] I have no idea how he could have that still, because when he look who I am, who I screen, every translated that is, where’s my diaper? [00:18:58][11.9]

Michael Tanner: [00:19:01] Wow. I’d like some ice cream. [00:19:02][1.3]

Stuart Turley: [00:19:03] Oh, I would too. I this is. [00:19:05][1.6]

Michael Tanner: [00:19:05] Let’s discuss all about it. It’s not the only thing we can chew right now. But that’s all right. Appreciate everybody for checking us out. We got it. [00:19:12][7.5]

Stuart Turley: [00:19:13] That means. See you guys tomorrow. [00:19:14][1.3]

Michael Tanner: [00:19:18] I guess there’s no better way to leave. That guy’s absolutely packed week. Thanks for checking us out here on this gorgeous. Tuesday, January 30th, 2024. Here Stuart Turley and Michael Tanner, We’ll see you tomorrow, folks. [00:19:18][0.0][1105.6]

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The actual actual increase in marketable Treasury securities is far higher than the “actual” increase announced in the “Marketable Borrowing Estimates.”

By Wolf Richter for WOLF STREET.

The Treasury Department’s Quarterly Refunding announcements, normally cause of a global yawn, have turned into a market-moving circus: Longer-term Treasury yields surged from August through October 2023 after the Treasury Department said in its Quarterly Refunding announcement at the beginning of August that it would issue a tsunami of longer-term Treasury notes and bonds. Then three months later, at the beginning of November, the Treasury Department attempted to undo some of the damage and said that it would shift the huge borrowing needs more to short-term Treasury bills, which caused longer-term yields to fall sharply.

And today, the Treasury Department announced in its “Marketable Borrowing Estimates” that – despite the fiscal deficit that has ballooned in recent months – it would have to borrow less in Q1 than it had forecast in the October announcement, and that it would have to borrow relatively little in Q2. And yields fell again. Everyone likes a good market manipulation scheme to push up bond prices and push down longer-term yields?

Today, in its announcement, the Treasury department said that:

In Q1, it plans to add $760 billion in new debt to outstanding marketable Treasury securities, which is a huge amount, but that’s $55 billion lower that the estimate announced in October for Q1 ($816 billion), assuming a balance in its checking account – the Treasury General Account, or TGA – at the end of Q1 of $750 billion.

It said the $55 billion reduction in borrowing needs was due to higher tax receipts than previously expected and a higher Q1 beginning balance in its TGA – which started Q1 at $766 billion (instead of the projected $750 billion).

In Q2, it plans to add $202 billion to outstanding marketable Treasury securities, assuming an ending balance of the TGA of $750. On April 15, income taxes and estimated quarterly taxes are due, so there are usually huge inflows of tax receipts.

On Wednesday, the Treasury Department will release the Quarterly Refunding details, including projections of the amounts of Treasury bills, notes, and bonds to be issued.

However, the actual actual increase…

The Treasury Department’s “actual” amounts of marketable securities added to the pile in Q3 and Q4 — the data released today, see screenshot — don’t quite match the actual increase in marketable securities.

The total Treasury securities outstanding ($34.1 trillion currently) come in two portions: marketable securities ($27.0 trillion currently), which all kinds of investors buy and trade; and non-marketable securities ($7.1 trillion currently), which are held by US government pension funds, the Social Security Trust fund, etc.  The Treasury department is talking about issuance of marketable securities.

So the Treasury department said today that it added $1.01 trillion (“actual”) in Q3 to marketable securities and $776 billion (“actual”) in Q4, or $1.786 trillion combined. We marked these “actuals” in red on the “Sources and Uses Reconciliation Table” released today (excerpt; total table here):

But over the same two quarters, marketable Treasury securities actually actually increased respectively by $1.35 trillion and $894 billion, or by $2,248 trillion combined (according to data published by the Treasury Department daily here).

Increase in Marketable Securities outstanding, billion $
Treasury Dept: “actual” increase
Actual actual increase
Over
Q3 2023
$1,010
$1,354
$344
Q4 2023
$776
$894
$118
Total
$1,786
$2,248
$462

In three months, we’ll know how much the expected addition of $760 billion for Q1 actually added to marketable securities in Q1. And in six months, we’ll know how much the expected addition of $202 billion for Q2 will have actually added to marketable securities in Q2. We’ll surely take a look.

$3.0 trillion in nine months?

If the estimate of $760 billion for Q1 is on target, and the increase in total marketable securities is actually $760 billion in Q1, marketable securities will have increased in by $3.0 trillion over the nine months from July 1 2023 through March 31 2024.

As of today, marketable Treasury securities — the actual actual amounts, released by the Treasury Department daily here — are $27.0 trillion, up from $24.7 trillion at the beginning of Q3 2023. And if the “Marketable Borrowing Estimates” estimates today for Q1 are on target, marketable securities will be at $27.8 trillion by March 31.

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The post Treasury Department Trying Very Hard to Push Down Yields with its Quarterly Refunding Announcements. So We Take a Look appeared first on Energy News Beat.

Energy News Beat

The Rooiwal and Pretoria West Power Stations, constructed almost 70 years ago when my grandfather moved to Pretoria, are now in need of attention. They were standing idle for almost 10 years and, finally, it appears that the mayor of Pretoria has recognized the urgency and is taking steps to revive these aging coal power stations.

Both plants would require investment to restart at a time when South Africa’s largest banks are limiting lending to coal projects in line with improving their climate credentials.

Rooiwal potentially has 10 years of life left, and “coal is the immediate and rational solution,” Sipho Stuurman, a Tshwane spokesman, said by text message.

“Pretoria West requires a complete overhaul in any event, so there we will look at gas/biomass/waste to energy solutions.”

I find it deeply concerning that our banks are employing ‘climate finance’ to hinder the revival of these power plants. There’s no way around it – this agenda is both racist and colonial, particularly if one considers that roughly two-thirds of South Africa’s youth are currently unemployed, with a majority of them being black. Imposing a decarbonisation agenda on a poor country is beyond callous and insensitive. Richer countries can afford decarbonisation, most of Africa cannot at this stage, because we are still developing and have various other trade-offs to consider.

It begs the question of how South Africa’s banks and business elites genuinely believe that prioritizing ‘saving the planet’ is a more acceptable tradeoff, despite the evident negative impact on the economy of the world’s most coal-dependent country, leading to an increase in poverty.

I’ve expressed this sentiment previously: South Africa grapples with a number of abandoned coal stations, and a pragmatic solution to address load shedding would involve dispatching an engineering team to assess and rectify the issues plaguing them. Depending on the status, they can be brought back within a 10 to 36 month period, and if the original supplier no longer has components then they can be reversed engineered. It is possible.

Coal has been the cornerstone of our industrial economy. South Africa’s industrialization has been deeply intertwined with coal usage, and existing supply chains are well-established. Because of its historical role, coal is simply the least constraint of all 8 major energy sources. Revitalizing these coal stations presents the most expeditious way to mitigate the ongoing problem of rolling blackouts.

It’s important to acknowledge that coal plants, like nuclear, can be operated beyond their original design life. Rather than making excuses, the government and politicians should commit, through legislation, to the restoration of these broken coal stations with the aim to overhaul the entire coal fleet. Only once energy security is established than there should be a thoughtful debate about the broader topic of decarbonization

The Pretoria government, both the DA and ANC administrations, knew that these stations were standing idle. They kept financing the sites, in excess of 10 years, with employees sitting and doing nothing, whilst being paid, at a cost in excess of R100 million per year to the city.

Imagine if our municipalities or Eskom just fixed the broken units?

Had they not walked away from King Coal, then South Africa would not have had loadshedding today.

The post Pretoria is going back to king coal – Hugo Kruger appeared first on Energy News Beat.

Energy News Beat

When Europe last year agreed that by 2035 all cars sold in the region would be zero-emissions (read: electric), the most obvious question in my mind was: Who would pay for that?

Because gasoline and diesel vehicles are a great business — not just for the obvious companies, say Volkswagen AG and Stellantis NV, which produce them, or, Shell Plc and TotalEnergies SE, which refine the fuels. But they’re also helpful for another sector that’s often overlooked: European governments, which over the last 50 years have turned internal combustion engines into tax machines.

Last year, the top five European economies1 earned more than €150 billion ($163 billion) from fuel levies, or about 2% of their total tax collection. That money funds a lot of hospitals, schools and the like. In the UK alone, gasoline and diesel duties are expected to raise £24.3 billion ($31 billion) in 2023-2024 — more than what the British government takes from alcohol and tobacco duties combined, or from capital gains tax.

If European governments succeed with their green plans, much of that income will disappear in 25 years. So planning for a replacement needs to start immediately, not only because of the large sums involved but also because of the complexity of any alternative.

Clearly, there are other costs for governments: For example, loss of revenue from registration taxes (which electric vehicles often don’t pay in Europe), plus the outright costs, in some countries, of direct EV subsidies and grants. There are, however, pluses too: less pollution from burning gasoline and diesel, which reduces health and climate-change adaptation costs.

But, to simplify the debate, allow me to focus exclusively on fuel taxes for the moment.

The history of fuel taxation goes back more than a century. In the UK, the first gasoline duty was introduced in 1908-1909. The aim was to finance the enormous expansion of paved roads and highways that new cars needed. Only after the twin oil crises of the 1970s did the priority shift to improving fuel efficiency, and only more recently has it morphed into the battle against climate change.

Whatever their final use, fuel taxes have today five distinctive advantages for governments: They establish a direct link between road usage and payment; they collect lots of money; they are simple and cheap to manage2; taxpayers largely accept them as fair; and finally, they are difficult to evade. The biggest pitfall is they’re regressive: Poor and rich pay the same (and because rich people typically drive newer, more efficient cars, that regressiveness is worse than at first sight).

So how to replace fuel taxes — and when exactly? The timing is crucial for two reasons. First, because tax incentives are still essential for the uptake of electric vehicles; and second, because as gasoline and diesel tax revenue starts to drop, any move to offset the shortfall by increasing fuel duty rates would be enormously regressive since wealthier households are adopting EV cars more quickly than poorer ones. Also, whatever replacement system is adopted should be revenue neutral: It shouldn’t raise more tax than the current system does today.

The transition period from the current fuel duty to whatever replacement is adopted is going to be complicated.

One option is to cast aside taxing driving completely and instead raise revenue for road maintenance and construction elsewhere, say via income taxes. An advantage is that income tax is more progressive. However, such a shift would have a pernicious effect: It would break the link between driving and taxes. Everyone, regardless of how much they use a car — if at all — would have to pay. Even a tax focused exclusively on the ownership of a car, rather than its use, wouldn’t work. Without putting a price on miles travelled, congestion would likely increase, and the incentive to use public transport or buy more efficient cars would disappear.

Thus, a replacement that taxes driving is needed. But that’s easier said than done. With the current fuel duty, taxing the amount of driving is a simple affair: Everyone fills up their car roughly the same way, at the gas station. The more one drives, the more fuel is consumed, the more tax is paid. With electric vehicles, the choices to refill — or charge — are larger, from the home driveway to ultra-fast chargers.

Taxing electricity is an option, but it would make the system more regressive: Typically, wealthier families have driveways in which to charge at home, and thus they can more readily take advantage of cheaper electricity rates or even install solar panels largely devoted to serve the EV. Perversely, those better off could end paying far less tax. Even putting that issue aside, houses would need electricity meters able to measure the consumption of their charging points.

The fairer option is to tax for the actual use of the road, a sort of pay-as-you-drive duty, not so different from the current highway tolls applied in some nations, but covering the whole of the road network. There are several ways to achieve this. One is a once-a-year measure of the total miles driven, with payment spread over the following year. That could be linked to the annual checkup most European countries mandate for cars. Garages would report the miles and the tax authority would issue the corresponding invoice.

Another option is to take advantage of ubiquitous GPS systems — basing taxation on how much, and where, one drives in real time. Of course, this would come with privacy issues. Both miles-driven tax systems could face much higher evasion than the current fuel duty, with tax dodgers manipulating their odometers or GPS systems. The cost for the government of the infrastructure needed to collect the taxes would be also much higher than the current one. Still, I think either system is doable with current technology.

Whatever the solution, one thing is clear: Governments need to start debating what will replace fuel duties. The longer the delay — and the longer electric vehicles remain largely untaxed — the more difficult it will be to introduce a new system.

The post You’ll Have to Pay to Use the Highway. Blame EVs. appeared first on Energy News Beat.