The International Monetary Fund (IMF) has warned the EU against loosening its fiscal rules in response to the energy crisis, reports the Financial Times. The warning comes as Italian prime minister Giorgia Meloni’s government argues that it needs to suspend its pact to bring down its deficit, the article notes. Reuters adds that Rodrigo Valdes, the IMF’s new fiscal affairs chief, says countries should skip fuel subsidies to help citizens with the oil shortage and the corresponding surge in energy prices and, instead, opt for targeted, temporary cash transfers that do not obscure higher prices. Relatedly, the EU’s climate commissioner Wopke Hoekstra tells the Financial Times that there is no financial “workaround” for the “mind-boggling” energy price rises in Europe. Hoekstra adds that the latest crisis shows the need to reduce fossil-fuel dependency through “green investment”, the article adds.

MORE ON EU

• Reuters reports that the EU is drafting a plan to tackle a “looming jet fuel supply crunch and maximise refinery output”. 
• Bloomberg covers calls from the UK car industry for the EU to adjust the proposed “Made in Europe” law, arguing it risks penalising British automakers.
• Euractiv reports that the EU is “eying” electricity tax cuts, taking aim at the levies that make up half of a typical European electricity bill, in response to the Iran war energy shock. 
• Reuters covers a proposal from the French government to cap retail margins at petrol stations. 
• Reuters reports that the EU has warned member countries that if the Iran war continues, energy markets will face “prolonged supply shock that would force cuts to fuel consumption”. 
• Reuters covers an inquiry by the Spanish Senate, which blames the government, the country’s grid operator and its energy watchdog for last year’s blackout in the country. [Carbon Brief covered the details of the blackout at the time.] 

Analysis covered by the Guardian has found that the world’s top 100 oil and gas companies have made “more than $30m every hour in profit” during the first month of the US-Israeli war in Iran. It continues that Saudi Aramco, Gazprom and ExxonMobil are some of the biggest “beneficiaries of the bonanza” meaning “key opponents of climate action continue to prosper”. The article adds that the conflict has pushed the price of oil to an average of $100 a barrel in March, leading to windfall profits of $23bn for oil and gas companies. It notes that the analysis by Global Witness, which uses data from Rystad Energy, found that oil and gas will take months to return to pre-war levels, with companies set to make $234bn by the end of the year, if oil prices continue at $100. 

MORE ON IRAN WAR

• Reuters covers research by Rystad, which finds that the Iran war could leave the Middle East with as much as $58bn in repair costs for energy-linked infrastructure.
• Bloomberg reports that oil prices have steadied due to signs that the US and Iran may extend a ceasefire and restart talks to end the war.
• Reuters reports that Japan is planning a financial framework worth £10bn to help Asian countries procure energy resources and bolster their supplies amid the disruption caused by the Iran war.
• The Financial Times reports that UK gas prices have dipped below pre-Iran war levels. 

The UK is extending its support scheme for energy-intensive firms from April next year, with around 3,000 additional manufacturers in sectors such as steel and pharmaceuticals to see their bills cut by up to 25%, reports BBC News. The Guardian reports that chancellor Rachel Reeves has announced the expansion of the “long-promised” British Industrial Competitiveness Scheme (BICS) to support UK businesses as they face soaring bills as a result of the Iran war. The Press Association notes that the scheme was first announced last summer, as part of a 10-year industrial strategy, but Reeves this week announced its expansion from 7,000 businesses to 10,000. The Times adds that the scheme will allow eligible manufacturers to have their costs cut by as much as £40 per megawatt-hour by exempting them from some green levies and capacity market costs

The Daily Telegraph covers warnings by business leaders that the package of support does not go far enough to prevent job losses. The Financial Times reports that the £600m BICS package will only “scratch the surface” of the help needed to protect industry, accounting to business groups. Sky News covers “fears government cash will come too late to save manufacturing jobs”, as manufacturers’ lobby group Make UK argues that support may be too late to manage the immediate threat of the latest energy price crisis. The Daily Telegraph covers warnings that more factories in the UK will close if action is not taken on energy prices. The Daily Express reports that hard-right Reform UK treasury spokesman Robert Jenrick has issued a “furious attack on Rachel Reeves over huge fuel price rise”. 

Relatedly, the Financial Times reports that the IMF has urged Reeves to resist pressure for blanket fiscal support for households and businesses hit by the energy shock, instead backing her efforts to curb the country’s deficit. BBC News covers comments by the governor of the Bank of England, who has warned that a big energy shock will push up prices.

MORE ON UK

• A BBC News feature by climate editor Justin Rowlatt looks at the argument promoted by some commentators that “cutting costs is the best way to cut carbon”.  
• The climate-sceptic Daily Mail reports that the Green party plans to spend more money on international aid than is currently spent on the UK’s defence budget. It adds that Green party leader Zack Polanski has told the publication that he backs an “alternative” review into defence, which focuses on threats to the climate.
• The Guardian reports that Drax, which operates the UK’s largest biomass-burning power plant, claimed a record £999m in subsidies in 2025. This story is also covered by the Daily Mail. 
• The Times reports that the UK’s first proposed “nationally significant” data centre would be powered by gas, “putting the government’s ambition to create an AI superpower on a collision course with its net-zero goals”.
• The Daily Mail covers the continuing attacks by US president Donald Trump on the UK’s energy strategy, as prime minister Keir Starmer says he “won’t yield” to Trump.
• BusinessGreen covers a new study by Cleantech for UK, which finds that maxing out oil and gas extraction in the North Sea would cost up to £80bn more than net-zero and only reduce imports by 2%. 

Russia is “ready to increase energy supplies to China” ahead of a visit by president Vladimir Putin to China, said Russian foreign minister Sergei Lavrov on Wednesday in Beijing, according to Reuters. Additionally, Chinese premier Li Qiang said that China is willing to enhance cooperation with Spain in areas such as “new energy vehicles” (NEVs) and energy storage, according to Chinese state news agency Xinhua. Li has “repeatedly” mentioned deepening cooperation in hydrogen energy, energy storage, NEVs, clean energy and carbon reduction during his recent meeting with leaders from Australia, Spain and the UAE, according to energy news outlet International Energy Net. A “He Yin” article – indicating the views of party leadership on foreign policy – by the Communist party-affiliated People’s Daily says that China will cooperate with other countries in the energy sector and “address the challenges of our time”. Reuters: “US treasury’s Bessent says China has been unreliable partner by hoarding oil during war.”

Meanwhile, Bloomberg reports that China’s petrochemical producers have cut operations to their “lowest seasonal level in three years” amid rising oil costs and “soft” export demand that squeezes margins. Guancha cites a Reuters report saying that China’s “abundant” oil reserves and an electricity grid dominated by coal and renewables “shield” the country from the impact of global energy supply shocks, making Chinese government bonds “safe-haven assets”. An editorial by the 21st Century Business Herald says that China’s advantages in clean energy are “systemic and strategic” and that countries will find it difficult to bypass “Made in China” when it comes to renewables deployment. China added 66.4 gigawatts (GW) of new energy storage capacity in 2025, up 51.9% year-on-year, accounting for 58.6% of the global total, according to Beijing-based Business Observation.

MORE ON CHINA

• China is considering limiting exports of the most advanced solar manufacturing equipment to the US, reports Reuters.
• The NEA has outlined key tasks to advance the country’s regional hydrogen energy pilot programs and accelerate its “green energy transition”, reports BJX News.
• Ideacarbon reports that China’s Ministry of Transport has issued guidelines on promoting the “green and low-carbon transformation” of the shipping sector.
• China’s leading steelmakers are coordinating responses to the EU’s CBAM, reports the Hong Kong-based South China Morning Post.
• The Economic Observer investigates how profit remittance requirements are placing pressure on power, coal and other energy companies.
• Caixin reports that northern China saw a “sharp resurgence in air pollution” in early 2026, partly due to a return to agricultural straw burning. Dialogue Earth says China has shifted from a “comprehensive” ban on straw burning to “balancing the needs” of the environment and farmers.

The Guardian covers new research that finds the critical Atlantic current system appears “significantly more likely to collapse than previously thought”. It adds that the research has found that climate models predicting the biggest slowdown are the most realistic, in a “very concerning” finding that could have “catastrophic consequences” for Europe, Africa and the Americas. The article continues: “The Atlantic meridional overturning circulation (AMOC) is a major part of the global climate system and was already known to be at its weakest for 1,600 years as a result of the climate crisis.” The Daily Mail reports that the research by scientists from the University of Bordeaux suggests that the AMOC is on track to weaken by 50% by the end of the century.

An editorial in the Guardian argues that, while UK prime minister Keir Starmer cannot be blamed for the crisis in the Middle East and the subsequent energy shock, he “has to reassure people that he is prepared for its long-term consequences”. It continues that, while the UK may be spared the worst of the energy shock, depending on the scale, the “public needs to be prepared for the possibility of significant disruption and encouraged to use energy more efficiently”. The Guardian notes that, while it is understandable that ministers do not want to trigger panic by “raising the spectre of shortages”, it would be “irresponsible to pretend that nothing has changed”. The article concludes: “There is a path between avoiding needless anxiety and indulging denial. It requires sober assessment of risks and conspicuous readiness to mitigate them.”

MORE COMMENT

• In the Daily Telegraph, director general of the British Chamber of Commerce, Shevaun Haviland, calls on the Labour government to do more to shield businesses from the energy shock. 
• In the Times, Ryan Bourne, an economist based at the climate-sceptic Cato Institute, argues that cutting the cost of living is not a Labour party priority. 
• In a letter in the Guardian, former Green party leader Caroline Lucas calls on the prime minister to be clearer on climate risks. 
• An editorial in the print edition of the climate-sceptic Daily Mail calls on UK chancellor Rachel Reeves to come up with a “workable plan before it’s too late” to protect drivers amidst the current energy crisis. 
• In the Radio Times, BAFTA albert’s head of climate content, Catherine Ellis, explores “why television has the power to inspire the action against climate change that we so urgently need”.

This edition of the Daily Briefing was written by Molly Lempriere, with contributions from Henry Zhang and Anika Patel. It was edited by Leo Hickman.

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