Global economic and energy markets navigated a busy week marked by shifting trade policies, climate policy developments, and continued volatility in commodity markets. Eurozone growth data surprised to the upside, whilst US trade policy and sanctions deadlines continued to unsettle markets. Carbon market participants saw renewed focus on the expanded EU ETS, and the renewable energy sector faced both political headwinds and regulatory uncertainty.

Macroeconomics

French economy accelerates despite trade uncertainty

‍France’s economy grew by 0.3% in the second quarter, outperforming expectations of 0.1% growth. The expansion was driven by inventory building, whilst trade acted as a drag and domestic demand was flat. The growth figures arrived as the euro area grapples with wider economic stagnation and ongoing political instability in France, which is still recovering from a government collapse and budget gridlock earlier this year.

Trump trade deals raise questions over details and enforcement

‍US President Donald Trump announced trade agreements with the EU, Japan and other economies but provided few concrete details. While the deals included headline investment commitments exceeding $1 trillion, analysts cautioned that many terms remain under negotiation and that actual capital flows may fall short. Trump also shortened his deadline for Russia to agree to a ceasefire in Ukraine to 8 August, threatening additional sanctions and tariffs on Russian exports if no truce is reached.

‍ECB to factor climate risk into collateral framework

‍The European Central Bank will introduce a “climate factor” from mid-2026, adjusting the value of assets pledged as collateral according to their exposure to climate-related risks. The measure will apply to marketable assets issued by non-financial corporations and is intended to mitigate systemic financial risks from transition shocks.

Carbon Markets

EU urged to maintain ETS2 introduction amid price concerns

‍Germany’s environment ministry warned against any delay or weakening of the expanded EU Emissions Trading System (ETS2) covering the transport and heating sectors from 2027. Officials emphasised the need to dampen price volatility without undermining the carbon price signal. The European Commission is expected to call for additional climate action plans from member states by the autumn.

Argentina launches subnational carbon credit standard

‍The province of Córdoba has introduced Argentina’s first subnational carbon credit standard, focused on reducing methane emissions. The initiative forms part of a wider regional target to cut greenhouse gas emissions by 58% by 2030 and will be supported by local demand from an infrastructure compensation programme.

EUAs close the week with slight losses

‍European carbon allowance prices declined by 0.9% over the week, with late selling on Friday pushing markets lower before a brief rebound into the close. Traders noted reduced momentum ahead of the summer holiday period.

Renewables and Biofuels

Trump administration targets wind projects on federal land and waters

‍The US Interior Department has ordered a review of wind project approvals on federal lands and waters, a move seen as escalating the administration’s broader pushback against renewables. The review, which could halt development pipelines, adds further uncertainty for investors following earlier restrictions on offshore wind leasing and permitting.

‍US refiners challenge biofuels policy changes

‍The American Fuel & Petrochemical Manufacturers (AFPM) criticised record-high biofuel blending mandates and opposed a bill allowing year-round sales of E15 petrol. The group warned that proposed cuts to credits for foreign feedstock-based fuels could raise costs for refiners and reduce margins for renewable diesel producers.

Germany’s hydrogen acceleration law draws mixed feedback

‍The German Renewable Energy Federation welcomed the draft Hydrogen Acceleration Act but urged the reinstatement of a requirement that electrolysers use at least 80% renewable electricity. The law aims to simplify permitting and prioritise hydrogen projects as part of Germany’s broader green energy expansion.

Spain’s energy lobby seeks stronger returns on grid investment

‍Aelec, the Spanish power utilities association, has called for the proposed guaranteed return on electricity distribution investments to be raised to 7.5% from the regulator’s suggested 6.46% for the 2026–2031 period. The group warned that inadequate returns could drive capital away from Spain and undermine the energy transition.

European gas prices rise on geopolitical risks and weather

‍Benchmark European natural gas prices gained 3.7% on Tuesday after Trump advanced his deadline for Russia to accept a Ukraine ceasefire. Hot weather in Asia and Europe further boosted demand expectations, raising concerns over tight global LNG supply.

Germany’s energy consumption increases

‍Germany’s primary energy use rose by 2.3% in the first half of 2025 due to cooler weather and stronger economic activity. Natural gas and heating oil demand increased sharply, whilst coal use in power generation also rose to offset lower wind and hydro output.

World’s first ethanol-to-jet plant to start this quarter

‍LanzaJet expects its $200 million ethanol-to-jet fuel facility in Georgia to begin operations by the end of September. The plant will initially use Brazilian sugar-cane ethanol but plans to transition to US feedstocks to meet tax credit requirements.

Corporate Sustainability and Regulation

UK review calls for overhaul of water regulation

‍A government-commissioned review has recommended replacing England and Wales’ water regulator, Ofwat, with a single integrated body to better protect consumers and the environment. The sector faces rising pollution penalties and requires over £100 billion in investment over the next five years.

Trump’s EPA moves to repeal greenhouse gas endangerment finding

‍The US Environmental Protection Agency plans to rescind the legal determination that greenhouse gases pose a threat to public health. If finalised, the move would eliminate the legal basis for regulating emissions from vehicles, power stations and other sources. Environmental groups have warned of extensive legal challenges.