Crypto News: Brussels Edition: Combustion backfire

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.

The European Commission is racing against the clock to provide Germany with enough assurances to sign off on a deal that effectively bans new combustion-engine cars from 2035. Crucial deliberations among EU ambassadors, which were due to take place today, have now been delayed to give the two sides more time to strike a compromise. Germany made a highly unusual last-ditch attempt to force the bloc's executive to commit to an exemption so that cars running solely on e-fuels can also be sold after the cut-off. Otherwise it risks blowing up one of the key pillars of the EU's green deal. Talks between Frans Timmermans, the EU's climate chief, and Berlin are ongoing — and Commission President Ursula von der Leyen is due to meet Chancellor Olaf Scholz on Sunday — but there is widespread frustration that Germany would now object to a deal they signed up to last October. There are also fears it could have ramifications for other crucial climate legislation that's needed to pave the way for net-zero by 2050.

— John Ainger, Max Ramsay

Defense Exception | The EU is leaning toward easing strict debt-limit rules imposed on national governments if extra spending is earmarked for defense, according to draft conclusions we've seen that EU finance ministers will discuss on March 14. The move is part of the overhaul of the stability and growth pact, the bloc's rules that set limits on public spending.

Green Bonds | The EU's long-awaited green bond rules look set to lead to more stringent market standards that may command higher prices for companies who comply, according to analysts. The bloc is aiming for the provisional agreement it reached this week on the European Green Bond Standard to become the industry's gold standard.

Scholz's Warning | German Chancellor Olaf Scholz warned China not to arm Russia in its war against Ukraine and expressed disappointment that Beijing has dialed down its condemnation of the Kremlin's aggression. "My message to Beijing is clear: use your influence in Moscow to press for the withdrawal of Russian troops," Scholz said in a speech to the lower house of parliament in Berlin yesterday.

Going West | Ursula von der Leyen visits Canada and the US March 7-10, where she'll meet Prime Minister Justin Trudeau and President Joe Biden to discuss matters ranging from from trade to green initiatives to support of Ukraine. The US Inflation Reduction Act, in particular, has frayed relations with Europe, stoking fear that companies might relocate to benefit from subsidies.

Border Attack | Vladimir Putin called an attack in a village near the border with Ukraine "a terrorist act" hours after scrapping plans to travel to southern Russia over the episode. Ukraine dismissed allegations that its forces crossed the border into the Bryansk Region as a set-up aimed at building public support for Russia's invasion. Meanwhile, US Secretary of State Antony Blinken held a brief encounter with his Russian counterpart, Sergei Lavrov, on the sidelines of the Group of 20 meeting in India, their first in-person meeting since Russia's invasion of Ukraine a year ago.

Methane Risks | EU Energy Commissioner Kadri Simson has warned that the bloc risks falling behind on its climate goals if countries persist in diluting rules on cutting methane emissions in the energy sector. Member states agreed last year to reduce the frequency of site inspections from the commission's original proposal to tackle emissions. Parliament is due to vote on the rules later this month.

German Shortfall | German Finance Minister Christian Lindner is faced with a shortfall of €12 billion in his budget for next year, raising the prospect of a fight within the three-party ruling coalition over the allocation of funds. Lindner, who heads the business-friendly Free Democrats and portrays himself as a guardian of stable finances, insisted on restoring a constitutional limit on net borrowing starting this year, and again has limited room for maneuver in 2024.

Trade Talks | President Biden's trade chief said she's confident talks underway with the EU will resolve the bloc's concerns about the impact of climate subsidies in the Inflation Reduction Act, which the EU fears could put European manufacturers at an unfair disadvantage. Katherine Tai told Bloomberg TV they take the concerns "very seriously".

Emissions Record | Global CO2 emissions rose to a record last year as the combustion of fossil fuels continued to put the world on track for a dangerous level of global warming, according to data from the International Energy Agency. Yet a decline in industrial production in China and Europe meant an even worse outcome was avoided.

Euro-area inflation data slowed by less than anticipated in the year through February while underlying price pressures surged to a new record. It's core inflation that has become the European Central Bank's main battleground as interest-rate hiking enters a new phase of constricting the economy. Within hours of the euro-zone data, an account of the Feb. 2 ECB decision showed an intensified focus on core inflation. That specific term was cited 23 times in the write-up of the meeting — twice as frequently as in December — with what's likely to have been the dovish minority arguing against focusing on it excessively.

German Chancellor Olaf Scholz heads to Washington for bilateral talks with US President Biden

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