Global discussions on energy, climate, and policy intensified this week, revealing sharp divisions over emissions targets and infrastructure preparedness. As the European Central Bank and international financial institutions proceeded cautiously amidst persistent trade volatility, governments and industries grappled with how to finance climate resilience, reform carbon frameworks, and safeguard clean energy progress under evolving geopolitical pressures. Below is a summary of the key developments across macroeconomic trends, carbon markets, renewables, and regulatory affairs.

Macroeconomics and Other Matters

Yannis Stournaras, a member of the ECB Governing Council, confirmed that interest rate reductions are likely to continue, citing ongoing inflation risks, trade tensions, and economic uncertainty. He stressed a cautious, data-driven approach, noting that tariffs introduced by the Trump administration are expected to exert a disinflationary effect on Europe.

In the United Kingdom, the government reaffirmed its support for the film industry in response to President Trump’s threat to impose a 100% tariff on foreign-produced films. This move could severely impact British studios, which regularly host major US productions. The UK government intends to publish an updated industrial strategy for the sector to mitigate potential consequences and sustain investment.

Carbon Markets

EU Climate Commissioner Wopke Hoekstra indicated that the bloc’s proposed 90% emissions reduction target for 2040 may incorporate “flexibilities” to garner broader political backing, while maintaining the scientific integrity of the objective. Discussions continue over how best to consider industrial competitiveness and disparities among member states.

Separately, the European Commission confirmed that the second emissions trading system (ETS2) covering buildings and road transport will commence in 2027 as legislated. No revisions will be considered before 2028, despite recent calls from ministers for a review amid concerns over price volatility.

Renewables and Biofuels

Experts have warned that the EU power grid will require upgrades amounting to a trillion dollars by 2050 to handle increasing demand and the integration of renewables. This follows last week’s blackout in Spain and Portugal, which exposed structural deficiencies in an ageing network strained by expanding wind and solar capacity. Investment in transmission and storage infrastructure has significantly lagged behind renewable deployment, and urgent action is now considered essential.

Separately, EU officials are drafting legislation to ban new Russian gas contracts by the end of 2025 and phase out existing agreements by 2027. This proposed measure is part of a broader roadmap to eliminate the EU’s dependency on Russian fossil fuel imports and is scheduled for presentation in June.

Gas and Biofuel Markets

In North America, hydrogen projects that depend on carbon capture are stalling due to high costs and limited offtake interest. Companies report that buyers are reluctant to commit at current price levels, particularly given the ongoing uncertainty around tariffs and eligibility for tax incentives such as the US 45Q and 45V schemes.

In Europe, the European Commission is finalising proposals to prohibit new Russian gas deals and phase out all existing imports by 2027. The legislation, targeting both pipeline and LNG imports, forms part of the EU’s wider strategy to decouple from Moscow and diversify its energy supply.

Corporate Sustainability and Regulation

A $1.6 trillion investor coalition led by ShareAction challenged HSBC at its annual general meeting to recommit to its net zero objectives, expressing concern over the bank’s decision to postpone its 2030 targets and remove the Chief Sustainability Officer from the executive committee. While HSBC reiterated its 2050 net zero goal, investors remain sceptical about the weakening of interim milestones.

Meanwhile, the United Nations Framework Convention on Climate Change urged nations to clarify their strategies for deploying climate adaptation funding across Asia. As financial institutions and investors increase their focus on resilience projects, the UN warned that a lack of strategic direction could hinder capital flows into high-risk regions.

In the United States, New York led a coalition of 17 states in filing a lawsuit against President Trump’s executive order suspending offshore and onshore wind projects. The states argue that the moratorium undermines binding climate targets and endangers hundreds of millions of dollars in clean energy investments.