This week brought heightened uncertainty across central bank policy, climate finance, and global carbon regulation. Calls for deeper interest rate cuts in the United States were met with inflationary pressures and political volatility, while carbon markets contended with opposition to shipping levies and new offset standards. In Europe and Asia, investment in biofuels, hydrogen, and hydroelectric power advanced, even as regulatory inconsistencies and project delays tested implementation capacity. Meanwhile, financial institutions sharpened their focus on ESG and climate risk reporting amid continued pressure from investors and regulators.

Macroeconomics

Bessent Floats 50bp Rate Cut, Fed Nominee May Shift Composition

US Treasury Secretary Scott Bessent suggested the Federal Reserve should consider a 50bp rate cut in September, citing downward revisions to labour data and subdued inflation. He expressed confidence that Trump’s nominee to the Fed, Stephen Miran, will be confirmed in time for the September meeting, hinting at a broader reshuffle in the Fed’s leadership.

A new Forsa poll showed Germany’s far-right AfD overtaking the governing CDU/CSU bloc with 26% support, prompting fresh concerns across Europe about the rise of populist sentiment. Dissatisfaction with Chancellor Merz’s performance is widespread, with 67% of Germans stating they are unhappy with his leadership just 100 days into his tenure.

Norway’s $1.9 trillion sovereign wealth fund reduced equity stakes in ExxonMobil, Shell, BP, TotalEnergies, and Chevron in the first half of 2025. The fund’s report cited declining oil prices and shifting investment priorities.

Carbon Markets

US Rejects IMO Shipping Carbon Tax, Threatens Retaliation

The United States formally rejected the IMO’s Net Zero Framework for maritime emissions, describing the proposed $100–300/tCO₂e levy as “a global carbon tax on Americans.” The Trump administration warned of possible retaliation and urged other nations to oppose the agreement, scheduled for a final vote in October.

EUA Prices Dip Amid Speculation on Sanctions, Fuel Switching

EU carbon prices fell to €71.50 per tonne amid subdued auction activity and speculation about a potential lifting of gas sanctions ahead of a US–Russia summit. Traders pointed to weaker demand for allowances as gas returned to the top of the merit order for power generation.

Article 6 Credits Inch Closer to CORSIA Eligibility

The Article 6.4 Supervisory Body has requested clarifications from ICAO on integrating Paris Agreement credits into the CORSIA aviation offset scheme. If adopted, demand could exceed 1 billion units by the mid-2030s.

ICVCM Grants CCP Eligibility to Biochar, IFM Methodologies

Biochar and improved forest management (IFM) methodologies have been deemed eligible under the Core Carbon Principles. Although no CCP-labelled credits have yet been issued, the decision marks a milestone for durable carbon removal methods.

Renewables and Biofuels

India Approves Hydropower Plant Near Disputed China Border

India has approved a $929 million, 700 MW hydropower project in Arunachal Pradesh, a region also claimed by China. The decision follows Beijing’s announcement of a massive dam project on the same river system, escalating geopolitical tensions in the area.

RTFA Urges Ethanol SAF Mandate in the UK

The Renewable Transport Fuel Association (RTFA) is lobbying the UK government to permit ethanol-based SAF production under its SAF mandate, highlighting the potential for British bioethanol to address the gap left by HEFA limitations.

Vivergo Threatens Closure Without Government Support

UK bioethanol producer Vivergo has warned it will close its 416 million litre per year Saltend plant unless it receives financial support by 18 August. The facility has incurred nearly £10 million in losses since US ethanol imports became duty-free under a recent trade deal.

Indonesia Plans 2M Hectares for Sugarcane-Based Ethanol

Indonesia has allocated 2 million hectares in Merauke for sugarcane cultivation to supply its first domestic ethanol facility. The plant is expected to produce 300 million litres annually from 2027.

Largest EU Hydrogen Bank Winner Withdraws

Vattenfall and Copenhagen Infrastructure Partners have withdrawn their €246.6 million grant from the EU Hydrogen Bank after it became clear their 500 MW Zeevonk project could not meet the 2030 operational deadline due to pipeline delays. The withdrawal leaves more than 25% of the allocated funding untapped.

Norway’s Fixed Price Scheme May Spike Demand by 1 GW

Norway’s proposed fixed electricity price scheme could add up to 1 GW of domestic demand during peak winter days. Analysts warn that consumer incentives to conserve energy will weaken, increasing pressure on grid infrastructure and wholesale balancing costs.

Corporate Sustainability and Regulation

ICE Launches Climate Risk Data for Private Companies

Intercontinental Exchange (ICE) has expanded its climate risk platform with data for over five million private companies, incorporating both physical and transition risks. The offering includes Scope 1–3 emissions metrics and integrates Dun & Bradstreet’s global business data to enhance climate-related financial disclosures.

IASB to Embed Climate Risk into Profit & Loss Statements

The International Accounting Standards Board is developing new guidance to integrate climate risk into company profit and loss statements. The forthcoming examples, expected by October, aim to clarify how extreme weather and tariffs should affect impairments, provisions, and earnings.

Environmental and Climate Policy

Danske Bank Slashes Fossil Fuel Exposure by 85%

Danske Bank has reduced fossil fuel-related investments from around 2,000 firms to just 270, following the implementation of its new low-carbon transition policy. The bank emphasised that its revised methodology prioritises companies with credible decarbonisation plans, aligning with customer expectations and global climate goals.