Net Zero

1. Cheaper money for Europe
2. OPEC’s drilling gambit
3. Crackdown on Russian gas
4. Unsteady DAC growth
5. Mineral deal’s labor problem

Jay Inslee’s advice for Dems, and Shell eyes a takeover of BP.

Fighting blackouts with cheaper money

Clean energy companies in Europe and the UK are about to get a much-needed boost in the form of cheaper borrowing, as central bank officials push interest rate cuts as an antidote to US President Donald Trump’s tariff campaign.

The European Central Bank is expected to cut interest rates by a quarter point in June, and likely again in September, while a similar cut by the Bank of England is expected as early as Thursday. Cheaper financing in Europe could help turn the tide for renewable energy companies that are facing an increasingly hostile political climate in the US and finding new projects increasingly constrained by a shortage of transmission capacity on Europe’s electric grid.

For renewable energy projects, which are more reliant on upfront cash than fossil fuels to build before they can deliver returns, the relatively high interest rates that most central banks adopted to combat post-pandemic inflation have been a major headache. Renewables have been growing steadily in Europe — up to nearly half of electricity supply in 2024 — but the rate of adoption has slowed down. High borrowing costs contribute directly to that slowdown, as projects get more expensive to build. They also contribute indirectly: As last week’s blackouts in Spain and Portugal vividly demonstrated, Europe’s electricity grid is not adequately prepared for the influx of variable wind and solar power it is increasingly being asked to manage. Analysts think that investment in Europe’s electric grid is short by at least $10 billion per year relative to what is needed to handle rising demand and more distributed generation sources. High interest rates are one of the key explanations for that investment gap.

OPEC’s drilling gambit

Oil prices plunged after the OPEC+ group of oil producers agreed to accelerate production hikes once again.

The decision to boost output by 411,000 barrels a day followed another substantial increase earlier this year, and will likely put further pressure on oil prices, which sit at near four-year lows over fears of weak economic growth globally. Prices could fall further still, with ING and Goldman Sachs slashing their forecasts for this year.

Saudi Arabia has seen its budget deficit nearly quadruple year-on-year in the first quarter. So if it seems counterintuitive for the kingdom to increase production as prices are falling, it’s because it is balancing more than its bottom line: The kingdom doesn’t want to continue holding back its own production when other OPEC members have been cheating on their own production quotas for years. And it likely wants to look like a good partner to US President Donald Trump — who has asked the group to help keep US energy prices low — ahead of his visit to the Gulf next week, where deals relating to AI, defense, and other critical industries will be on the table.

Crackdown on Russian gas

European lawmakers are stepping up efforts to excise Russian gas from the EU. A proposal due to be released on Tuesday will require European companies to stop buying Russian gas on the spot market by the end of this year, and to sever long-term contracts by 2027, according to the Financial Times. The EU also plans to require companies to disclose details of those contracts to security agencies. After the full-scale invasion of Ukraine, Europe moved quickly to phase out Russian energy imports, but the plan has stalled in recent months because of opposition in Germany, where a powerful industrial lobby is pushing for cheap energy, and among pro-Russian politicians in Hungary and Slovakia. Those voices still appear to be in the minority, however, with most EU leaders favoring a switch to US LNG.

Although the Trump administration is reportedly weighing its own new sanctions on Russia’s energy sector — and touting the recent drop in global oil prices as a pressure point on Vladimir Putin to accept a peace deal — European leaders have stepped up efforts to support Kyiv in recent months as US support has waned: Estonia’s foreign minister is in Washington today hoping to convince lawmakers in both parties to work with Europe to push Moscow “to the corner,” he told Semafor, arguing that Russia had shown itself to be unserious about US-sponsored peace talks.

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Carbon capture’s unsteady growth

US startups building direct air capture technology received 60% less from venture capital firms in the initial months of 2025 compared to the same period in 2024, Bloomberg reported.

While US investors appear to have turned against the high-cost technology — which removes carbon dioxide straight from the air rather than capturing emissions at their source or enhancing organic carbon sinks — deals in other forms of climate tech are still experiencing a boom, and more globally, the carbon capture industry is showing “recent signs of important progress,” a recent IEA review wrote.

Going forward, there will likely be a greater focus on advancing existing projects, which is likely to have an outsized impact as a majority of global carbon capture projects have now reached advanced development stages, the IEA said. However, for the direct air capture industry, a funding decline could pose a significant danger, as the industry relies on substantial investment to scale, Bloomberg wrote.

— Paige Bruton

Mineral deal’s labor problem

Even if the war in Ukraine were to end tomorrow, shortages of electricity and skilled laborers will still be major obstacles to developing new mines in Ukraine following the signing of a US-Ukraine mineral deal last week.

Matt Simpson is the CEO of Black Iron, a Canada-based mining firm that has been working on plans for a new iron ore mine in central Ukraine since the early 2010s. If any single mining project stands to benefit from a new wave of investment unlocked by the mineral deal, it’s Black Iron, which has already completed a decade’s worth of planning work and already had half a billion dollars in investment and an offtake deal with Anglo American lined up before the full-scale operation pulled the rug out.

Ukraine has many key ingredients for profitable mining, Simpson told Semafor, including a robust rail and port network. He found the Soviet-era iron ore estimates that came with his license to be largely accurate. And compared to the 2000s, Simpson said, the country has resolved much of the endemic corruption that used to spook investors. But without a durable peace deal, the mine — today, just a grassy field — can’t move forward: “We can’t afford to have a missile hit a $500 million investment.” Even then, the single biggest challenge will be access to labor, he said: Mines will have to compete for a tiny pool of talent with more urgent reconstruction projects like power plants, apartments, and hospitals. Ukraine’s cumbersome and outdated mining regulations don’t help. Suffice to say, it’s going to be a long time before the deal yields any concrete benefits for either country, apart from reestablishing a baseline of trust between their leaders.

New Energy

• Solar installer Sunrun said it has built one of the largest “virtual power plants” in the US by linking together the batteries in more than 56,000 California homes.
• US solar manufacturer First Solar is reeling from the impact of US tariffs on its factories in Southeast Asia.
• Democratic state attorneys general are suing the Trump administration over its moves to block the development of wind farms.

Fossil Fuels

• As BP’s share price craters, Shell is exploring options for a takeover bid.

Finance

• As the US drops its global climate finance commitments, China is picking up the slack, looking to seize the initiative on a key avenue for soft power.

• Saudi companies are bracing for deep cuts to government spending due to the dip in global oil prices.

Politics & Policy

• The Trump administration sued Hawaii, Michigan, New York, and Vermont, saying their state climate plans conflict with the federal government’s energy agenda.
• The White House released its budget proposal, which features at least $20 billion cuts to clean energy programs and would eliminate the Environmental Protection Agency’s environmental justice division.

EVs

• Congressional Republicans voted to strip California of the ability to set its own vehicle emissions standards. The rollback will face steeper odds of passing the Senate.
• In a bid to avoid tariffs, China’s EV makers are moving to sell more hybrids, rather than pure-play EVs, in Europe.

Jay Inslee, former governor of Washington. In a Washington Post column last week, Inslee argued that climate change is the key issue to winning Gen Z voters back to the Democratic party.

Dubai data center firm Khazna is considering investing in the US after the UAE committed to invest $1.4 trillion in the world’s largest economy over the next decade. “We can’t compete without a presence” in US artificial intelligence infrastructure, Khazna’s chief executive Hassan Alnaqbi said during an interview at the firm’s Dubai headquarters.

Khazna, which counts Abu Dhabi AI conglomerate G42 as a majority shareholder, designs, builds, and leases out data center space to so-called hyperscalers — firms like Amazon Web Services, Microsoft, and Oracle — in the UAE, and has plans to build data centers in Kenya, Saudi Arabia, Turkey, and parts of Europe, Semafor’s Kelsey Warner reported.