In Week 6 of 2025, the energy sector saw significant developments across carbon markets, renewable energy, and macroeconomic landscapes.

Carbon Markets

• European Commission Accelerates Sustainable Aviation Fuel Adoption: On 6 February 2025, the European Commission adopted a Delegated Regulation under the EU Emissions Trading System (EU ETS) to promote the use of sustainable aviation fuels (SAF). This initiative allocates 20 million EU ETS allowances, valued at approximately €1.6 billion, to bridge the cost gap between fossil kerosene and SAF for commercial airlines. The regulation aims to incentivise early adoption of high-performing alternative fuels, with airlines required to report SAF usage by 31 March 2025.
• UK’s Carbon Capture Strategy Faces Scrutiny: A report by the UK’s Public Accounts Committee has described the government’s £22 billion investment in carbon capture, utilisation, and storage (CCUS) as “high risk.” Lawmakers have raised concerns over the technology’s unproven scalability and the potential financial burden on consumers, urging a comprehensive assessment of the strategy’s affordability and effectiveness.

Renewables and Biofuels

• Declining Costs in Clean Energy Technologies: BloombergNEF’s latest analysis indicates that costs for clean energy technologies, including wind, solar, and battery storage, are projected to decline by 2-11% in 2025. This trend is largely driven by China’s overcapacity in clean tech manufacturing, which has led to global price reductions. Despite increasing protectionist measures, such as tariffs on Chinese imports, the overall decline in renewable energy costs is expected to persist, enhancing the competitiveness of clean energy solutions worldwide.
• Indonesia Advances B40 Biodiesel Implementation: Indonesia has established a task force to oversee the nationwide implementation of its B40 biodiesel mandate, which entails a 40% blend of palm oil-based biofuel with diesel. The initiative aims to reduce reliance on imported diesel and strengthen domestic energy security. Full implementation is anticipated by March 2025, with the task force ensuring compliance and addressing technical challenges.

Macro and Other

• Norway’s Sovereign Wealth Fund Upholds ESG Commitments Amid Backlash: Norway’s $1.8 trillion sovereign wealth fund has reaffirmed its commitment to environmental, social, and corporate governance (ESG) principles, despite opposition from U.S. conservative activists and policy shifts under President Donald Trump’s administration. The fund emphasises that ESG considerations are integral to long-term value creation and financial materiality, maintaining active engagement with portfolio companies, including major technology firms, on issues such as responsible AI use and online safety.
• German Conservatives Expand Lead Ahead of Snap Election: Recent polls indicate that Germany’s conservative bloc, led by the Christian Democratic Union (CDU), has increased its lead over the far-right Alternative for Germany (AfD) ahead of the snap election on 23 February. The CDU/CSU alliance has gained one percentage point, reaching 30% support, while the AfD has slipped to 20%. The election was triggered by the collapse of Chancellor Olaf Scholz’s coalition government, with key campaign issues including economic policy and immigration.
• U.S. Federal Funding Freezes Impact Infrastructure and Energy Projects: Executive orders from President Donald Trump have resulted in the suspension of tens of billions of dollars in congressionally approved spending for various projects across the United States. Affected initiatives range from clean energy and conservation efforts to transport infrastructure. Project managers and advocates warn that prolonged funding delays could adversely affect local economies and hinder progress in critical sectors.

As Week 6 draws to a close, the global energy landscape continues to evolve, shaped by policy shifts, market forces, and geopolitical dynamics. From the European Commission’s efforts to accelerate sustainable aviation fuel adoption to the UK’s high-stakes gamble on carbon capture and Indonesia’s ambitious biofuel expansion, these developments highlight the ongoing transition towards a low-carbon economy. Meanwhile, macroeconomic and regulatory challenges—from Germany’s shifting political landscape to the U.S. funding freezes—underscore the complexities businesses and policymakers must navigate.

As we move forward, staying informed and adaptable will be key to seizing opportunities and mitigating risks in this rapidly changing energy sector. Stay tuned for next week’s roundup as we continue to track the latest industry insights and market trends.