Market Overview

This week underscored rising transatlantic tensions over trade and climate policy, with Trump suggesting flexibility on tariffs and the EU responding with calls to suspend aspects of the Green Deal. Solar output continues to surge across Europe, while the biofuel and carbon markets face regulatory uncertainty. Meanwhile, EU lawmakers moved to pause sustainability rules and climate targets amid backlash from industry and political pressure. Here’s what shaped Week 14.

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Carbon Markets

‍Italy’s government announced it will request an immediate suspension of EU Green Deal rules, citing concerns over industrial competitiveness following newly announced U.S. tariffs. The move increases pressure on Brussels to reassess its climate ambitions amid growing geopolitical and economic strain.

At the same time, discussions continue on integrating carbon removals into the EU and UK emissions trading systems (ETSs). As the net-zero timeline draws nearer, conference participants in Lisbon emphasised the importance of accounting for negative emissions, though they acknowledged that regulatory frameworks remain fragmented.

In the voluntary carbon markets, project developers expressed concern over restrictive methodology exclusions within CORSIA, the aviation sector’s emissions offsetting scheme. The current criteria could lead to a shortfall in eligible credits, potentially leaving airlines unable to meet climate obligations.

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Renewables and Biofuels

‍Solar output soared across Europe in Q1 2025, reaching a record 68 TWh — a 32% year-on-year increase. Germany led the continent, producing 12.5 TWh from solar, marking a 27% rise. Other significant gains were seen in the UK, France, Poland, and Spain, with continued capacity expansions expected to further boost solar generation into the summer.

EU member states are considering revisions to the 2025 gas storage targets, potentially allowing more flexibility around the current 1 November deadline. Proposals include shifting the 90% storage requirement to any point between 1 October and 1 December, and introducing exemptions in the event of adverse market conditions. Although negotiations are ongoing, the changes could also affect this year’s requirements if finalised in time.

Meanwhile, the Trump administration has encouraged oil and biofuel producers to collaborate on shaping future U.S. biofuel policy. Discussions have commenced around biofuel blending mandates, tax credits, and small refinery exemptions. This represents a rare alignment between oil and agri-fuel interests and may influence future decisions under the Renewable Fuel Standard.

The International Air Transport Association (IATA) also launched a global Sustainable Aviation Fuel (SAF) Registry to facilitate the tracking of SAF volumes, transactions, and environmental attributes. The tool aims to support compliance with climate targets and improve transparency, especially as SAF volumes remain limited.

LNG markets saw minimal direct impact from the latest U.S. trade tariffs, but concerns persist over potential indirect recessionary pressures. While LNG trade flows to Europe and Asia remain stable, broader economic uncertainty could dampen gas demand in the coming months.

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Macroeconomics and Trade

‍President Trump signalled potential tariff reductions in exchange for ‘phenomenal’ offers, particularly as economic turbulence hit U.S. markets this week. While defending his trade policies, Trump expressed openness to revising tariffs if strategic deals — including those related to TikTok or trade with China — materialise.

In the EU, Germany’s push to include the UK and Canada in joint defence spending plans met resistance from France. French officials have conditioned their support for such deals on unrelated issues such as fishing rights, stalling broader efforts to open the €150 billion Security Action For Europe (SAFE) defence fund to non-EU allies.

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Corporate Sustainability and Regulation

‍The European Parliament voted to delay sustainability reporting requirements by two years, granting lawmakers more time to negotiate exemptions for small and mid-sized enterprises. The decision reflects growing concerns over the administrative burden of green regulation and its effect on the competitiveness of European industry.

At the same time, the EU postponed implementation of its supply chain due diligence legislation to 2028 and proposed narrowing its scope. While business groups welcomed the move, critics argue the rollbacks undermine accountability and investor confidence.

In parallel, the EU is re-evaluating its 2040 climate goal, initially targeting a 90% reduction in emissions. Facing political resistance, the European Commission has delayed the formal announcement of the target until June or July, now placing greater emphasis on flexibility to garner broader member state support.

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Environmental and Sustainability Regulation

‍A U.S. district court ruled against an oil and gas lease sale in the Gulf of Mexico, citing insufficient analysis of climate impacts and risks to endangered whales. The ruling marks another legal victory for environmental groups, although final remedies are still under debate.

The Arctic reached a new record low in winter sea ice extent, highlighting the accelerating pace of climate change. With just 5.53 million square miles of ice coverage at its March peak, the findings reinforce long-term warming trends and their potential implications for sea levels and global weather patterns.