© Reuters. FILE PHOTO: French President Emmanuel Macron visits Institut Curie laboratory ahead of announcements on biomedical research in Saint-Cloud, France, May 16, 2023. REUTERS/Benoit Tessier/Pool

PARIS (Reuters) – Investments that France needs to finance its transition to a low-carbon economy are set to add 25 percentage points to its debt burden by 2040, a report from the government-funded France Strategie think-tank said on Monday.

France will need to make additional annual investments of about 67 billion euros ($74 billion) – more than 2% of economic output – by 2030 to meet its objectives for reducing its dependence on fossil fuels, France Strategie calculated.

The think-tank, which is part of the prime minister’s office, said the financial effort would weigh heavily on public finances partly because the investments imply lower potential growth, which would cut tax revenues.

As a result, the debt burden would rise by 10 percentage points by 2030 and 25 percentage points by 2040, which France Strategie suggested might need to be financed in part by a temporary tax on wealthy households.

President Emmanuel Macron’s government has hoped to chip away in the coming years at France’s national debt, which currently stands at slightly more that 111% of gross domestic product after surging during the COVID crisis.

The report said the financial burden of investing in Europe’s energy transition also posed a risk in terms of international economic competition, as other major economies such as the United States and China were less concerned about budgetary constraints.

About 100 experts in French and European research groups as well as public French institutions participated in the report, which was led by economist Jean Pisani-Ferry, who previously helped Macron draft his economic programme.

($1 = 0.9084 euros)

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Investing.com — Oil prices traded largely unchanged Monday, with traders cautious ahead of the resumption of U.S. debt ceiling negotiations while supply concerns add support. 

By 09:30 ET (13:30 GMT), futures traded 0.1% lower at $71.59 a barrel, while the contract fell 0.1% to $75.52 a barrel.

U.S. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet later this session to try and agree on a deal to raise the more than $31 trillion debt ceiling.

Concerns that a failure to come up with an acceptable compromise have weighed heavily on the market over the recent weeks, as this would result in the U.S. defaulting on its debt obligations, likely plunging the global economy into recession.

The U.S. Treasury has warned that the government could run out of money to pay its bills as soon as June 1.

That said, both crude benchmarks managed to post gains last week, ending four straight weeks of heavy declines, helped by the U.S. starting to refill its Strategic Petroleum Reserve as well as the supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province. 

Additionally, the latest data from showed the U.S. oil rig count fell by 11 over the last week, to its lowest count since June 2022.

“A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of the year,” said analysts at ING, in a note. 

“Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year.”

This brings the Organization of Petroleum Exporting Countries and allies, known as OPEC+, firmly into focus, with its next meeting in early July. 

The cartel surprised the market with an output cut at the last meeting, which came into effect at the start of this month. However, this has done little to support crude prices, implying the members may be looking at a further reduction in production.

The fact U.S. producers are not increasing in number will be good news for OPEC+, ING added, “as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers.”

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Investing.com – , subdued in recent weeks, are expected to remain lower amid all-time highs in shipments of liquefied to the bloc by U.S. exporters who have not found Asian buyers for new cargoes, RBC Capital Markets said in a note.

While the phenomenon means that gas supply in the European Union is safe for the summer, it was still too early to say if the EU will be able to avert price shocks during the winter from current storage levels, which are just about a quarter above the 2021-22 winter demand, the note said.

“The U.S. continues to export record amounts of LNG, allowing Europe to quickly fill up storage amid curtailed consumption by taking LNG market share given the lack of any real green shoots as yet from the Asian buyers club,” RBC said in its Global Gas & LNG Strategy. “All said, we expect near-term pressure on spot gas, but expect time spreads to widen as winter pricing remains relatively firm.”

With current gas storage sitting at around 65% full and market dynamics remaining in favor of European buyers, RBC said it sees the EU achieving 90% target sufficiency well ahead of the bloc’s November 1 target. 

“Our updated scenario analysis puts storage at 90% full in late July-early August. We think summer pricing will likely weaken further as we approach full storage, as sustained inflows (record US LNG + steady domestic volumes + Russian remnants) exceed still constrained demand and limited storage capacity,” RBC said.

Conversely, structural winter pricing, in anticipation of weather impacts, has and should hold up better, though there was no guarantee as yet that there wouldn’t be a supply deficit later or price spike, it said. 

“We think the spread between summer and winter contracts will continue to widen from the divergence we have seen appear in recent weeks,” RBC said. 

“Full storage might not necessarily mean crisis averted. Since the start of the Russia-Ukraine conflict, a key focus of European policymakers has been ensuring full storage ahead of winter. However, on an EU level, we see max storage capacity at ~25% of 2022 consumption, with wide variance across the bloc, while withdrawal rates also decline as storage levels deplete. While EU initiatives might equalize exposures between countries, the cumulative size of the exposure means entering winter with even 100% full storage might not guarantee sufficient protection against price shocks this winter.”

It also said that while U.S. LNG exports reached a record 8.1 million tonnes in April, surpassing the previous record set in March, with no new project start-ups until mid next year, there might be limited room for further material growth.

“What this means for the macro is that should the need arise later this year, the U.S. is unlikely to supply the market with incremental LNG as it did to some extent last year, which could result in another zero-sum game and possible pricing implications across Europe and Asia.”