This week's wrap-up covers significant global developments across macroeconomics, carbon markets, renewable energy, corporate sustainability initiatives, and regulatory shifts. Notably, central banks in Europe and the US remain poised to adjust interest rates amid persistent uncertainties. Meanwhile, the EU paused negotiations on crucial sustainability legislation, the renewable energy sector faced setbacks in France, and corporate finance demonstrated continued strength in green bond markets.

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Macroeconomics

ECB Indicates Potential Rate Cuts Amid Economic Uncertainty

European Central Bank (ECB) official François Villeroy de Galhau signalled potential interest rate cuts within the next six months, citing moderate inflation expectations despite external uncertainties. Villeroy noted that while the euro’s recent appreciation helped offset rising oil prices, ongoing geopolitical tensions, notably in the Middle East, could affect future monetary policy decisions. The ECB remains ready to respond if inflation expectations become destabilised.

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Fed’s Goolsbee Sees Room for Rate Cuts if Tariff Inflation Remains Low

Chicago Federal Reserve President Austan Goolsbee suggested interest rate cuts remain possible this year if inflation remains unaffected by tariffs. Although recent data show limited tariff-induced inflation, Goolsbee emphasised continued caution due to the uncertain economic impacts of trade policies and geopolitical tensions, particularly recent US strikes on Iranian nuclear facilities.

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Carbon Markets

EU Halts Negotiations on Anti-Greenwashing Law

The European Union suspended talks on proposed legislation aimed at combating misleading green claims by companies. The halt resulted from concerns about the regulatory burden on smaller businesses, with the European Commission considering withdrawing the proposal altogether. This pause highlights ongoing tension within the EU regarding balancing stringent environmental regulations with economic competitiveness.

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Renewables and Biofuels

Engie Warns French Renewables Ban Threatens €5 Billion Investment

Engie CEO Catherine MacGregor sharply criticised a proposed moratorium on new renewable projects under discussion in France, warning it could jeopardise up to €5 billion in planned wind and solar investments. Industry leaders and government officials alike warned that the moratorium risks undermining France’s climate goals, economic growth, and energy security.

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Spanish Utilities Accuse Grid Operator for April Blackout

Spain's electricity industry association Aelec blamed grid operator REE’s inadequate planning and management for the nationwide April blackout. Contrary to REE’s earlier conclusions attributing the incident to power plant failures, utilities argue that conventional plants operated within regulations, instead pointing to systemic management flaws in grid stability and interconnections with neighbouring countries.

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Subsidised Bio-LNG Confirmed Eligible Under FuelEU Maritime

The EU’s FuelEU Maritime Regulation confirmed that subsidised bio-LNG qualifies as an eligible marine fuel, enhancing its competitiveness and boosting demand. This clarification helps smaller sectors such as European biomethane remain viable as shipowners pursue mandated emissions reductions.

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Corporate Sustainability and ESG

Volkswagen Bank Issues First €1.5 Billion Green Bond

Volkswagen Bank successfully issued its inaugural green bond valued at €1.5 billion, drawing significant investor interest. Proceeds from this issuance, which attracted €6.6 billion in demand, will refinance loans for battery electric vehicles, underscoring growing investor appetite for sustainable finance and alignment with the automotive industry’s electrification goals.

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Environmental and Sustainability Regulation

Record Renewable Capacity Growth Still Below Global Targets

Despite achieving a record 740 gigawatts of renewable capacity globally in the past year, the world remains off track to meet its ambitious goal of tripling renewable energy by 2030, according to a REN21 report. Solar photovoltaic remains the only renewable technology currently aligned with global targets. Analysts highlighted ongoing barriers, including trade restrictions and scaled-back climate investments, that threaten progress towards climate goals.