Georg Zachmann

OPEC+ decided today to increase oil production by 206,000 barrels per day from April 2026 - mentioning low oil stocks and economic growth - but avoiding any reference to Iran.
www.opec.org/pr-detail/16...

A graph of US data center construction, rising from $15B to $45B

US data center construction rose to a new record high in data released today, exceeding a $45B annualized rate (and this only includes the data center facilities, not the expensive computers within)

Growth has slowed slightly, but investment is still up 30% over the last year

The Trump family’s media group is weighing plans to spin off the Truth Social social media platform that is extensively used by Donald Trump, as it seeks to reposition itself as a major player in nuclear energy.

You can have no idea where this sentence is going as.ft.com/r/4860d9c4-7...

Canada

Michael Pahle, Darius Sultani, and I published a new Bruegel Policy Brief on the EU Climate Architecture.

The full paper explores several important aspects in quite some detail, so I thought I’d highlight a few key points here: 1/12

www.bruegel.org/policy-brief...

Defragmenting European Union climate policy Simplification without carbon price convergence risks deeper fragmentation, higher costs and weaker credibility for the EU’s climate target

Hence, simplicity & flexibility help lower decarbonization costs - without undermining the fight against climate change.

and here the full paper: www.bruegel.org/policy-brief... 12/12

We see this dynamic architecture as a high-level target model. It can serve as guidance for specific compliance policies. A clear pathway to an efficient system reduces uncertainty & lowers risk premia. 11/12

Concretely, we propose using the well-developed ETS as the host system, with a four-step approach to gradually integrate other compliance mechanisms (see Figure 5).
10/12

The way out from ever more complex fragmentation is a predictable paths for convergence over time. If credible, this will correct prices of mitigation resources, & discourage investments in inefficient arbitrage.
-> better use of mitigation resources
-> lower administrative costs 9/12

... But as compliance cost diverge, market participants use increasingly sophisticated ways to short-circuit diverging systems – causing policymakers to come up with increasingly complex, bureaucratic and hence costly policies to prevent arbitrage (see Figure 3). 8/12

This system is inefficient for two reasons:

First, resources might be inefficiently used in sectors with high compliance cost, even though they could have enabled more mitigation in sector they were drawn from.

Second, policymakers try to defend the initial fragmentation for various reasons...

This makes it increasingly attractive to shift resources used for mitigation, from sectors with low compliance cost, to sectors with high compliance cost. And there are a lot of resources that can be used for such “arbitrage” (see Figure 2). 6/12

There have been good economic, political and social reasons for introducing this complex fragmentation in the first place. But as decarbonisation in individual sectors proceeds at different speed, compliance cost diverges. 5/12

Greenhouse gas emissions in the EU face very different rules and prices, depending on who generates them (see Figure 1). 4/12

Making the system more cost-effective allows the EU to sustain ambition while lowering costs. To achieve this, we must
- move from increasing fragmentation of the current climate architecture
- toward simplifying the system and increasing its flexibility.

Lowering the cost of climate policies is becoming an important theme in EU political discourse. Often, though, it is used as a euphemism for lower ambition

Reneging on EU climate goals raises risk premia for low-carbon investments, & fuels a global dynamic of resignation in face of climate change.

Michael Pahle, Darius Sultani, and I published a new Bruegel Policy Brief on the EU Climate Architecture.

The full paper explores several important aspects in quite some detail, so I thought I’d highlight a few key points here: 1/12

The AI-Augmented Scientist The promise and pitfalls of using AI tools to boost my capabilities as a scientist

As a rare climate scientist working in Silicon Valley, I've been drinking from the AI firehose a lot more than my peers. I thought it would be helpful to lay out my experiences of both the promise and pitfalls of using AI to accelerate scientific research:

Defragmenting European Union climate policy Simplification without carbon price convergence risks deeper fragmentation, higher costs and weaker credibility for the EU’s climate target

🌳Defragmenting European Union climate policy

Simplification without carbon price convergence risks deeper fragmentation, higher costs and weaker credibility for the EU’s climate target

✒️Michael Pahle & Darius Sultani @pik-potsdam.bsky.social , @gzachmann.bsky.social
🔗 buff.ly/jPO2lLj
#EconSky

Defragmenting European Union climate policy Simplification without carbon price convergence risks deeper fragmentation, higher costs and weaker credibility for the EU’s climate target

www.bruegel.org/policy-brief...

This week, @aroth.bsky.social , @tagliapietra.bsky.social, and I prepared a new policy brief for the ongoing discussions regarding EU electricity governance. As it covers extensive ground, I would like to highlight a few points:

Our EU gas demand tracker was updated by @bmcwilliams.bsky.social

Rather than falling in line with EU energy strategies, EU gas demand crept back up to 90% of pre-crisis levels.

www.bruegel.org/dataset/euro... 1/3

For as long as I can remember, IT hardware followed a simple rule: wait a year, pay less. But after the COVID spike and almost three years of continuous price hikes since about 2023, that 'law' feels broken.

Should we prepare for the end of the King Dollar? A Conversation with Barry Eichengreen - Groupe d'études géopolitiques This interview was originally published in Grand Continent In the foreword of your book, you warn your reader that this is not yet another book about the history of money. And yet your work was very r...

Did this interview with Barry Eichengreen about his forthcoming book on the history of international currencies and what it tells us about the dollar (and the euro) today. geopolitique.eu/en/2026/02/2...

It was carbon prices, that prevented a surge in coal-based power generation in 2025 in the EU.

This was partly due to favourable switching economics; the combined cost of fuel and carbon permits for gas-fired power fell well below that of the more CO2-intensive coal.

3/3

The main culprit was the power sector.

2/3

Our EU gas demand tracker was updated by @bmcwilliams.bsky.social

Rather than falling in line with EU energy strategies, EU gas demand crept back up to 90% of pre-crisis levels.

www.bruegel.org/dataset/euro... 1/3

Key insight of a very useful thread on European energy prices.