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ESG Economist - Synthetic fuel challenges for mobility
- Sustainability
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Fossil fuels have long been the backbone of our global economy, powering industries, transportation, and households. In 2023, they accounted for nearly 80% of the global energy supply, according to the IEA. However, as the world races to achieve net-zero emissions by 2050, our reliance on fossil fuels must drastically decrease. The solution seems simple: replace fossil fuels with alternatives that emit less or no carbon dioxide. But in reality, this transition is anything but straightforward. The path to more sustainable energy involves a complex landscape of alternative fuels, each with unique characteristics. Transitioning to these fuels also requires significant adjustments, such as changes to engines, infrastructure, and storage systems. Additionally, challenges like limited production capacity, high costs, and competition for green electricity and raw materials make the widespread adoption of alternative fuels even more difficult. In some cases, the technologies needed to produce these fuels at scale are still in development. Despite these obstacles, more sustainable fuels—in our report referred to as synthetic fuels—will play a vital role in the global journey toward a net-zero economy. This report dives into the world of these fuels, exploring if there is enough supply of affordable synthetic fuels for the hard to abate sectors in mobility namely shipping, aviation and trucking.
ECB rate cut cycle most likely over
- Macro economy
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Eurozone Q2 GDP Unchanged at 0.1%; we changed our ECB-view and now expect the ECB to Keep Rates on Hold at 2%
Japan - The Land of the Rising Yields
- Macro economy
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We expect drags from US tariffs to keep a lid on Japanese growth. Trade talks with the US are taking quite some time. The Bank of Japan (BoJ) recently lowered its inflation forecasts, but upside risks remain. We expect the BoJ to stay on a cautious, gradual hiking path. In its June meeting, the BoJ announced to slow its pace of tapering, as expected. High public debt and rising rates pose challenges, but there are risk-mitigating factors. Meanwhile, the Japanese government bond curve has steepened due to a higher term premium. We do not have indications for structural US debt outflows by Japanese investors, yet. We expect the yen to appreciate versus the US dollar in 2025-2026.
FX Weekly - New USD/CNY forecasts
- Macro economy
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Tariff de-escalation supports US dollar versus FX majors. This comes at a time when the dollar was already recovering. The recovery could continue, but we expect the long-term downtrend in the dollar to remain in place. We downgrade USD/CNY from 7.80 to 7.30 for end-2025.
ESG Economist - NZBA loosens climate ambitions
- Sustainability
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The Net Zero Banking Alliance (NZBA) provides guidance to banks on setting climate goals. Initially, the NZBA had a key principle that banks should aim to limit global warming to 1.5°C above pre-industrial levels by 2100 and work towards transitioning to a net-zero economy by 2050. Banks committed to structure their portfolios according to these guidelines. On April 15, the NZBA released version 3 of its key principles[1]. These principles still align with the Paris Agreement, but the requirement to specifically target 1.5°C has been removed. This change gives banks more flexibility in choosing their paths to reducing emissions. In this note, we consider the potential impact of this change on emission reduction efforts.
ESG Economist - Carbon price for shipping below transition cost
- Sustainability
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International shipping is responsible for about 2% of the world's greenhouse gas emissions. This means it plays a part in reaching net-zero emissions, which would help limit global warming to 1.5 degrees. The shipping industry follows various regulations and targets from organizations like the International Maritime Organization (IMO), the Poseidon Principles, and the European Commission's Fit for 55 initiative. Shipping was included in the Emissions Trading System (ETS) in 2024. During the IMO's Marine Environment Protection Committee meeting (MEPC 83) from April 7-11, policy measures were discussed to meet the emissions targets set in the IMO's 2023 strategy. This publication focuses on the results of this meeting and what they mean for the maritime shipping industry.
Global Monthly - The only certainty is uncertainty
- Macro economy
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US policy has been erratic, to put it mildly. Tariffs were announced, paused, and then focused on China, but with key exemptions. It is unclear what the Trump administration actually wants. This makes predicting outcomes even harder. With uncertainty the only real certainty, the global – especially the US – economy is the main casualty. But so, increasingly, is the US’s leadership of the global financial system. Spotlight: The US dollar is facing testing times, but the real test is still to come. Despite the pressures it is facing, we still see no viable alternative.
ESG Economist - Direct Air versus Direct Ocean CO2 Capture
- Sustainability
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Recently we published an ESG economist about the carbon cycle. There are different places to store carbon such as in the lithosphere, which is the crust and uppermost solid mantle (including fossil fuel reserves), in the soil, in plants, in the ocean and in the atmosphere. But to limit climate change we would need to limit the carbon stored in the atmosphere. According to the Global Carbon Budget there are only 65 Gt, 160 Gt and 305 Gt of carbon left for the 1.5°C, 1.7°C and 2.0°C pathways. This translates into a CO2 budget of 238 Gt CO2, 586 Gt CO2 and 1,117 Gt CO2 for the 1.5°C, 1.7°C and 2.0°C pathways, respectively. As there is only limited availability especially for the 1.5°C scenario, there is a need for technologies that remove carbon from the atmosphere and store it. In recent years we have published several notes on Carbon Capture Storage Utilisation and carbon sequestration geoengineering. In this publication we focus on two technologies, namely, direct air capture and the relatively novel technology direct ocean capture. Direct air capture removes CO2 from the atmosphere and direct ocean capture removes CO2 from the ocean. In the next sections, we compare these technologies and look at their pros and cons. We end with a conclusion.
Important dynamics in the carbon cycle
- Sustainability
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Carbon can be stored in the atmosphere, ocean, soil, vegetation and in the lithosphere. The carbon cycle is a closed system. To limit temperature increase also the amount of carbon stored in the atmosphere needs to be limited. Limiting the amount of carbon stored in the atmosphere means that it needs to be stored in one of the other sinks and this will have an impact on those sinks.
Tariffs risk recession - a forecast update
- Macro economy
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President Trump announced sweeping ‘reciprocal’ tariffs based on the size of the bilateral trade deficit. We expect both the US and the eurozone to slow sharply and only just skirt a recession, while the US will also have to deal with higher inflation. Monetary policy divergence is likely to re-emerge as a theme, with the ECB cutting rates further but the Fed remaining on hold. Fiscal stimulus should help drive a eurozone recovery in 2026, but growth improvement in the US next year will be more tepid.
