Market Overview

‍This week witnessed a dramatic shift in global trade tensions as President Trump paused his sweeping tariff increases, with the exception of China, which now faces duties of 125%. Financial markets rallied in response, while in Europe, Germany edged closer to new leadership as Friedrich Merz secured a coalition agreement. Meanwhile, decarbonisation policies encountered renewed political and economic resistance. From shipping carbon levies to carbon credit reforms, regulators and markets navigated shifting alliances and long-standing debates. Renewable energy generation, electric mobility, and biofuel integration continue to gain momentum, even amid rising geopolitical and fiscal uncertainties.

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Carbon Markets

‍The United States withdrew from global discussions on carbon charges for shipping, rejecting any emissions-based levies on its merchant fleet and warning of potential retaliatory action. The announcement dealt a setback to the International Maritime Organization’s ongoing negotiations in London, as other nations considered whether to proceed without U.S. involvement. While the U.S. merchant fleet is relatively modest, Washington’s position may influence other flag states.

In Germany, the incoming coalition has unveiled plans to permit the limited use of foreign carbon credits to help meet the country’s 2040 climate targets. The coalition has committed to allowing up to 3% of emissions reductions to be achieved through highly certified carbon projects in non-European nations. The initiative, which will also legalise carbon capture and storage (CCS) infrastructure, is intended to balance economic viability with climate ambition.

In the voluntary carbon market, the Science Based Targets initiative (SBTi) is poised to adopt a more “pragmatic” approach under new leadership, suggesting a possible shift in its treatment of carbon credits following last year’s controversies.

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Renewables and Biofuels

‍Ukraine is set to begin blending bioethanol into petrol from 1 May, in line with EU sustainability regulations. The first batch of E5 fuel is expected from Lithuania’s Orlen Lietuva refinery, with additional imports anticipated from Poland and Romania. While E10 is more prevalent across Europe, Ukrainian demand has prompted refiners to adapt their production accordingly.

In the United States, a coalition led by the American Petroleum Institute has recommended increasing biomass-based diesel mandates to 5.25 billion gallons for 2026, up from 3.35 billion gallons in 2025. The group also proposed a total biofuel mandate of 25 billion gallons. Although historically opposed, the oil and biofuel sectors are showing increasing alignment in shaping future federal policy.

Germany’s new coalition has pledged to accelerate the adoption of electric vehicles and convert surplus car manufacturing facilities into defence production sites. Incentives for electric vehicles, tax breaks for company EVs, and investment in hydrogen refuelling infrastructure are all part of the agreement, which also aims to reduce emissions penalties while balancing industrial strategy with climate commitments.

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Macroeconomics and Trade

‍President Trump’s decision to suspend global tariff increases, except those targeting China, triggered one of the strongest single-day rallies in equity markets in over a decade. The S&P 500 surged by 9.5%, while the Nasdaq 100 rose by 12%, as most new tariffs were rolled back to previous levels. However, China faces a 125% tariff as of 10 April. Trump has linked future trade talks to specific strategic concessions, including those relating to the TikTok divestment deadline.

In Germany, conservative leader Friedrich Merz finalised a coalition agreement with the SPD, bringing him closer to assuming the chancellorship. The accord prioritises economic stability, climate action, and trade diplomacy, including a medium-term push for a free trade agreement with the United States. The coalition also intends to uphold Germany’s industrial competitiveness amid rising global tensions.

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Corporate Sustainability and Regulation

‍A new study has found that most financial institutions have no intention of reducing their exposure to fossil fuels over the next decade, despite increasing investment in green assets. Notably, investors are placing greater emphasis on companies with credible carbon credit strategies, highlighting the growing importance of high-quality offsets within financial portfolios.

Week 15 underscored the ongoing balancing act between climate objectives and economic pragmatism. While tariff suspensions offered temporary relief, decarbonisation efforts — from shipping to CCS — continue to face policy complexity. Germany’s new government has signalled support for climate innovation while safeguarding industry, and Ukraine’s move towards EU-aligned biofuel standards reflects further convergence in energy policy. Meanwhile, fossil fuel financing remains robust, even as investor scrutiny of carbon credit integrity intensifies.