Global
G7 considers ways to toughen oil sanctions on Russia
G7 nations are discussing ways to toughen the price cap on Russian oil, or replace the mechanism with a full ban on handling Russian crude.
Our Take: The oil cap, while looking good on paper, has proven difficult to enforce, with Russia increasingly successful at evading the price restrictions by using its cover fleet of tankers. G7 countries have taken to sanctioning individual ships, in a whack-a-mole effort. In considering a full ban on handling Russian crude, western traders will be completely forced out of Russian transactions, which could have an impact on global supply. But demand and prices for crude are expected to continue to decline in 2025, so such a move may have only marginal impact on the global energy market. That said, the problem of unsafe tankers will likely grow, increasing risks for port operations at off-loading destinations, principally in China and India.
Read More: Bloomberg [paywall], Yahoo, S&P Global
Europe
Incoming President Trump tells EU to buy US oil and gas or face tariffs
Incoming US President Trump is warning the EU that it must commit to buying "large scale" amounts of US oil and gas or face tariffs, to address the trade imbalance.
Our Take: President Trump's statements are design to set expectations in advance of trade discussions with the EU. The US has a trade deficit with the EU, nearly $174 billion in the first nine months of 2024. On the face of it, boosting EU purchase of US LNG would be welcome on both sides of the Atlantic; it is cheaper and politically preferable to Russian LNG and would be good for the US economy. In 2024, Europe demand for US LNG weakened, dropping 22% from 2023 levels. However, future demand is uncertain as LNG prices are rising and alternative renewable sources of energy are becoming more available in Europe at competitive prices.
Read More: Financial Times [paywall], Reuters [paywall], Bruegel
Americas
No confidence vote planned to oust Trudeau
Trudeau ally Jagmeet Singh said he would present a formal no-confidence motion in the House of Commerce when it returns on January 27.
Our Take: This announcement by Singh, the leader of the New Democratic Party and a longtime coalition member for Trudeau's liberal government, could be the death knell for Trudeau's long-declining premiership. If all opposition parties back the motion – which is likely – Trudeau's government would be dissolved and a snap election would be called, in which Trudeau's liberal party would almost certainly be badly defeated by the center-right Conservatives. Alternately, Trudeau could step down, ceding leadership to another Liberal party member (potentially the popular foreign minister Mélanie Joly), which may persuade Singh and other opponents to avoid snap elections for now. Trudeau's popularity has plummeted over the last year amid anger over high prices and a housing crisis, and his leadership has suffered numerous blows in recent months as several cabinet members have resigned or pledged not to seek reelection.
Read More: Reuters [paywall], New York Times [paywall], Politico
Asia-Pacific
Cambodia to allow Japan to visit China-linked naval base
Cambodia's former Prime Minister Hun Sen announced that Japan's Maritime Self-Defense Force would be invited to visit the upgraded Ream Naval Base, amid US concerns over potential Chinese military use of the facility.
Our Take: Cambodia, viewed by some analysts as within China's sphere of influence in Southeast Asia, is attempting to balance its strategic ties between Beijing and Tokyo, following the path of other countries in the region, such as Thailand and Indonesia. Economically, Cambodia remains dependent on exports to markets like the US, EU, and Japan, making it imperative for Phnom Penh to diversify its partnerships and address domestic and international criticisms of its close ties to Beijing. Strategically, this decision helps Cambodia assert its sovereignty, navigate the complexities of regional geopolitics, and preserve flexibility amid US-China competition.
Read More: NHK, Reuters [paywall], Lowy Institute
Trade and Compliance
China sanctions Canadian institutions and individuals over issues related to Uyghurs and Tibet
In response to ongoing tensions with Ottawa, China sanctioned two Canadian organizations and 20 individuals involved in Uyghur and Tibetan issues, freezing their assets and banning their entry to the country.
Our Take: China's recent sanctions highlight escalating tensions between Beijing and Ottawa over alleged human rights violations in Xinjiang and Tibet. Beijing views foreign criticism as "interference in China's internal affairs," and aims to counter Western narratives. For Canada, these sanctions pose challenges for advocacy groups and could further strain already tense bilateral relations, exacerbated by trade disputes and election interference allegations. Highlighting the deepening fractures in China-West relations, particularly on issues of governance and human rights, key variables include US President-elect Donald Trump's upcoming return to the White House and Canada's 2025 federal election and uncertainty of the continuance of Canadian Prime Minister Justin Trudeau's tenure ahead of the 2025 federal election.
Read More: South China Morning Post [paywall], CBC
Energy Transition
Off-grid solar microgrids may offer faster solutions to power AI datacenters
A new report makes the case for solar microgrids as a faster, cost competitive and greener source of energy to power AI datacenters.
Our Take: AI data centers are shaping up to be strategic infrastructure for future economic competitiveness and security in the new economy. Creating policies and supply chains that encourage home-shoring will be a hot topic in 2025. AI datacenters will need huge amounts of energy and will need it fast, given how quickly the AI buildout is commencing. Off-grid solar microgrids can be constructed quickly at financially competitive project costs, per a report commissioned by the Chamber of Commerce, with technology available at speed and scale, while avoiding new CO2 emissions. Solar, however, does have its own supply chain challenges, likely to persist for the near future as domestic companies spin up to replace Chinese imports.
Read More: Offgridai, Politico, Utility Dive
ESG
Second bank in two weeks exits climate banking alliance
Wells Fargo became the most recent major bank to withdraw from the Net-Zero Banking Alliance, an international group of global banks committed to curbing greenhouse gas emissions.
Our Take: Wells Fargo is just the fifth bank to exit the 100-strong, UN-backed NZBA, but it represents a broader trend in the US as major companies and financial institutions back off from once-popular ESG commitments of all kinds amid rising political division. Republican policymakers at all levels have raised challenges to ESG-based corporate policies and initiatives in recent years, and political pressure is only set to increase under the new administration. In Europe, on the other hand, interest in ESG-based initiatives and alliances has remained strong.
Read More: Reuters [paywall], ESG Dive, ESG News
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