Category: 3. Business

Welcome to Energy Source, coming to you today from a sweltering London, where a giant heatwave has descended on the city.

It’s been a hot news cycle as well, as the energy industry digests the news that Shell will not be bidding for BP — at least not before Christmas.

Meanwhile, a fragile truce remains in place in the Middle East, where hostilities between Israel and Iran seem to be on hold for now.

If you’d like to test your knowledge of how the oil market responded to previous Middle East crises, try your hand at the FT’s interactive “Draw your own chart” game. It’s harder than you think.

And in today’s Energy Source, my colleague Camilla Hodgson takes a look at the future of sodium-ion batteries — a potential rival to lithium-ion batteries — and whether they might be overhyped.

Thanks for reading, Leslie

Sodium battery hype doesn’t match reality, says new report

Demand for a new battery technology using sodium ions will grow slower than Chinese electric-vehicle battery maker CATL expects, with hype outpacing real-world deployment, according to new analysis.

The findings by research group Benchmark Mineral Intelligence, shared exclusively with the FT, found that forecasts by CATL about the growth of sodium-ion batteries were unrealistic.

The research finds that sodium-ion batteries, which make up less than 1 per cent of the global battery market today, will represent about 3 per cent of batteries in a decade in a base case scenario, and as much as 15.5 per cent in an “early adoption” scenario.

Sodium-ion batteries — which are made using sodium salt — are seen as a cheaper alternative to lithium-based batteries, and work better at very high and low temperatures. They have started to be used in some large, stationary energy storage systems, as well as in electric scooters in China.

However, they are typically less energy-dense relative to their size, which has held back their use in EVs, and have become less cost-competitive since the slump in lithium prices.

Demand was still “relatively small” for what was a “nascent technology”, said Benchmark.

In April, CATL launched a new range of sodium-ion batteries, which will start mass production by the end of the year. Founder and chief executive Robin Zeng has said he believes sodium-ion batteries could replace up to half of the market for lithium-iron phosphate batteries.

But Benchmark said on Tuesday that was unrealistic. Although sodium-ion batteries “have a place in the energy transition”, the technology was “not ready to go mass-market and the current positive sentiment is driven by hype”. 

According to Benchmark, Zeng’s forecast would represent about 1.8 terawatt hours of sodium-ion batteries deployed by 2035. That would require “an immediate breakthrough” in the technology’s performance and cost, and a rise in lithium prices, it said. 

By contrast, Benchmark’s most optimistic scenario is for demand to reach about 946 gigawatt hours by 2035, or just under 1 TWh, an estimate that also assumed rising lithium prices among other things. 

CATL and Chinese carmaker BYD are among the biggest manufacturers of sodium-ion batteries.

Fluctuating commodity prices have encouraged innovations in battery technology. Although lithium-iron phosphate batteries remain the dominant option, a range of alternatives, including sodium-ion and solid-state batteries, are also in development.

Sodium-ion supply chains need to scale up to bring down costs, and the technology should be directed into areas where it could “differentiate itself now that price isn’t compensating for weaker performance”, said Connor Watts, an analyst at price reporting agency Fastmarkets. 

That would include the energy storage market, where they would not be competing directly with lithium-based batteries on price. 

“Sodium’s continued improvement is inevitable, but it will take another few generational improvements before western consumers can be convinced to switch over,” said Watts. (Camilla Hodgson)

Power Points

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Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Kristina Shevory, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.

Anthony Harrison, financial services expert at Pinsent Masons, was commenting on a recent speech by FCA chief executive Nikhil Rathi. In his comments, Rathi emphasised the need for a financial ecosystem that is not only globally competitive but also rooted in trust, transparency, and innovation.

“Mr Rathi’s speech highlights the very delicate balance needed to ensure competitiveness and growth while maintaining integrity and high standards across UK financial services,” said Harrison.

The UK aspires to be the world’s most innovative full-service financial centres by 2035. Financial services contribute £214 billion gross value added (GVA) to the economy, with leading sectors such as banking, insurance, and fintech. However, there are a range of challenges faced by these sectors, including market interconnectedness amplifying shocks, diverging international standards, and increasing global competition.

To tackle these challenges, the FCA has advocated for ‘outcomes-based’ regulation to better support growth, innovation and accountability. So far, reforms have set out to streamline processes for capital raising, such as listing reforms enabling transactions and the launch of the private shares trading venue PISCES. Further upcoming changes include reducing securitisation frictions, reforming prospectus requirements, and simplifying investment advice to encourage long-term investments.

Rathi set out the FCA’s aim of fostering a more open approach with firms, grounded in trust and shared problem solving. For instance, initiatives like the FCA’s artificial intelligence (AI) lab allow firms to test innovations safely, with feedback shifting away from streamlining regulations to building confidence and scaling innovation responsibly. This approach aims to strike a balance between regulatory oversight and fostering industry competitiveness, according to the FCA chief.

The FCA has also acknowledged past criticisms of being overly risk-averse, outlining steps to address them. Changes include the introduction of the consumer duty and proactive measures against financial crime. The FCA has also proposed shifts such as retiring the mortgage charter and considering differentiation in wholesale and retail market regulation, setting a goal of giving long-term confidence to firms and consumers while balancing risk and growth.

Harrison said: “The FCA appears keen to challenge criticism that it has been too risk averse in the past by championing some bigger initiatives it has implemented in recent years, such as the consumer duty and various successful actions taken in the financial crime space. However, clearly there is more to be done with the government keen to see more growth and less burdensome regulation. Mr Rathi’s comments on retiring the mortgage charter and being open to clearer client classifications applicable to investment firms signal a desire on the regulator’s part to keep pushing forward that growth agenda.”

Additionally, data prioritisation through new proportional data requirements was noted by Rathi as well as emphasis on the importance of market integrity. Rathi said that compromising standards for competitiveness is not an acceptable approach. Future opportunities were also highlighted by the FCA chief, including the UK’s potential to lead in areas such as tokenisation, appealing to younger, tech-savvy investors.

Harrison said: “Leveraging data in a smart, efficient way will play a key part in ensuring the regulator’s growth objective. It is not a surprise that the ‘p’ word, ‘proportionate’, has been cited again by Mr Rathi, as it has been by other senior FCA figures in recent speeches. It speaks, again, to the balancing act that is needed but should not be taken to mean that the regulator will be easing off on data requests.”

“Context is everything, and in certain areas, Mr Rathi has made it clear that visibility matters. With visibility come the need for the right data being produced at the right time to meet regulator requests as they come up, especially in periods of market volatility,” he said.

That marks a shift from decades ago, when supermarkets would use inexpensive packaging and stripped-down branding to send the message that they were “passing the savings on to you,” Myers explained.

It has long been common for some name brands and private-label operators to share manufacturers for certain goods, meaning that many of their competing packages contain the same products. The difference is that while Nabisco or General Mills, for example, have to spend on marketing and store placement fees for their items, Aldi or Costco don’t.

But the bare-bones packaging associated with private-label goods is increasingly a thing of the past — sometimes replaced by approaches that name-brand competitors criticize. Last month, Mondelēz International sued Aldi, alleging trademark infringement. The snack-maker accused the discount supermarket of “blatantly” copying the packaging of Oreos, Wheat Thins, Nilla Wafers and Ritz crackers for its private-label alternatives.

But in other instances, even store brands that don’t resemble well-known rivals have enough shelf appeal to attract shoppers on their own merit. The result is eroding brand loyalty for major incumbents. In First Insight’s survey, 47% of shoppers said they tried a store brand specifically because it was a “dupe” of a name-brand product, and 84% said they now trust private labels’ quality at least as much as national brands’.

Price, of course, remains a key factor in private labels’ appeal.

During the worst of the post-pandemic run-up in inflation, consumer goods giants such as Procter & Gamble raised prices on customers. Faced with steeper costs from supply-chain snarls and labor shortages, many companies bet that shoppers would shell out more to stick with products they knew and liked. And for a few years, many of their better-heeled customers did just that. But the winds have shifted, and in recent years shoppers have been reprioritizing value.

“They’re saying, ‘What I’m paying for what I’m getting is not worth it,’” Petro said.

After an earlier series of price hikes on cereals, snack bars and pet food, General Mills said last week that its main focus now is on juicing sales volume. “To do that, we’ll invest further in consumer value,” its CEO assured investors.

Michael Swanson, chief agriculture economist at Wells Fargo’s Agri-Food Institute, said the grocery wars largely hinge on what shoppers pay attention to.

When you look at the raw sticker prices on store shelves, it’s easy to notice how sharply they’ve climbed. Grocery prices have risen more than 23% over the last five years — but households’ average spending power has outpaced it, he pointed out. In “real,” or inflation-adjusted, terms, groceries are broadly cheaper than they’ve been in years. (While it surely didn’t feel that way for many families, 2024’s Thanksgiving dinner was its most affordable in nearly 40 years, farm data showed.)

“Whenever you get a pay raise, that’s a good thing. Whenever you see your favorite food go up, that’s a bad thing,” Swanson said. “But we really are very bad at tracking the relative change of those two things.”

Still, Swanson doesn’t expect shoppers’ diminishing brand loyalty or hunt for low prices to push name-brand products off supermarket shelves anytime soon. In fact, grocery stores typically rely on branded products to set price points for customers, he said.

“The only reason you know that private label is a value is because you glance right next to it in the refrigerator section and that something else is 25 or 40% more expensive,” Swanson said.

Eurozone inflation edged up last month to the European Central Bank’s 2% target, confirming that the era of runaway prices is over and shifting policymaker focus to trade war-induced economic volatility.

Inflation in the 20 nations sharing the euro currency crept up to 2.0% in June from 1.9% a month earlier, in line with expectations in a Reuters poll of economists, as energy and industrial goods continued to pull down prices, offsetting quick services inflation.

Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations.

Anticipating this fall, the ECB has lowered interest rates from record highs by two full percentage points over the last year, and debate has turned to whether it needs to ease policy further to prevent inflation becoming too low given weak growth.

The development in services costs, which have been stubbornly high for years, is pivotal as it has raised fears that domestic inflation could get stuck above 2%.

Last month, services inflation edged up to 3.3% from 3.2%, as prices rose 0.7% on the month, supporting the argument of policy hawks that domestic inflation remains uncomfortably high, reducing the risk of undershooting.

Financial investors expect one more ECB rate cut to 1.75% towards the end of the year, then anticipate a period of steady rates before possible increases towards the end of 2026.

The outlook, however, is complicated by the fact that it depends on the outcome of a trade dispute between the EU and US President Donald Trump’s administration.

Indeed, the eurozone’s economy is barely growing, with full-year expansion expected at less than 1%, as industry struggles after a multi-year recession, with private consumption weak and investment low.

If US trade barriers stay, the EU is likely to retaliate and that is bound to be inflationary. Firms will then start rearranging value chains, which would add to increased production expenses.

Despite roiling financial markets and global supply chains, Donald Trump’s tariffs have also contributed to an easing of price pressures across the euro area.

The volatility of Trump’s policy-making has caused the euro to strengthen significantly against the dollar since the start of the year, thus lowering the price of imports into the single currency area.

Expectations that US duties could trigger a global recession have caused oil prices to fall. Cheap Chinese exports being redirected to Europe are also likely to aid the disinflationary process, according to analysts.

A team of more than 50 ERM leaders and experts were on the ground at London Climate Action Week (LCAW) 2025. The 2025 iteration was by far the largest in the gathering’s seven-year history, with over 45,000 participants. ERM organized more than 10 events, including several with partners like the World Business Council for Sustainable Development (WBCSD) and the Natural Climate Solutions Alliance (NSCA).

The week commenced with the launch of the WBCSD Business Breakthrough Barometer. To many people’s pleasant surprise, the Barometer reveals that 91 percent of 300 leading global businesses have maintained or increased investments in the clean energy and net zero transition vs 12 months ago, with 56 percent citing competitiveness as their primary reason for doing so. At least for this group of companies, backlash is not resulting in backslide.  

Our team captured several key takeaways from our LCAW discussions with business leaders, investors, policymakers, and representatives of civil society organizations. We share insights on how to get from volatility to value and more below.  

Navigate volatility

1. With global uncertainty and upheaval prominent, companies need clear action plans to avoid being blown off course. The ERM-convened Council on Sustainability Transformation launched a report in the lead up to LCAW exploring how companies can reframe and retool their approaches to sustainability during this time of change.
2. With the cost of inaction rising, companies need to quantify ‘do nothing’ options alongside other investment cases and take action that makes progress towards climate goals and generates business value simultaneously.
3. An event we held with WBCSD on industrial heat highlighted how companies are expanding investments in renewable heat despite economic incertitude. Companies are turning towards technological innovation and partnerships to drive progress even when policy support may be insufficient.

Adapt for each geography 

1. A one-size-fits-all-geographies approach no longer works as companies shift from goal setting to implementation, as implementation needs to be tailored to each operating environment.
2. Success depends on recognizing that the energy transition is place-based and emphasizing just transition. The effects of the transition will be felt most where activities occur (e.g., job creation or losses, local economic empowerment or displacement, enhanced adaptive capacity, etc.).
3. No transition plan will succeed without people. Corporate speakers at a just transition roundtable we hosted in partnership with WBCSD said companies must account for the people-related impacts of their transitions and engage people in transition solutions.
4. During an infrastructure-focused workshop hosted with WBCSD, participants stressed the importance of turning a local lens to physical risk mitigation and recognizing that direct (e.g., property damage) and indirect (e.g., supply chain disruptions) risks will vary by site and geography.

Creating value requires getting into the details  

1. Ana Toni, the CEO of COP30, said that businesses need to identify very specifically what they require to progress towards their climate goals. Doing this will enable ‘unlocks’ from policy makers, investors, and others in country plans (like Nationally Determined Contributions and National Adaptation Plans).
2. The complexity of implementing targets and plans within the current operating environment is forcing companies to get down to details. ERM held LCAW sessions on the electrification of industrial heat, long-duration energy storage, and climate markets, including removals and decarbonization in the manufacturing and pharmaceutical sectors.
3. Identifying how sustainability programs create enterprise value is essential. Whether growing market share, lowering operating costs, enhancing energy security, or lowering costs of capital, there are many opportunities to add value A blog ERM published before LCAW explores how companies can use financial quantification to help visualize the full benefits of their sustainability-related actions. There are hurdles as well. Companies participating in a financial quantification roundtable we co-hosted with WBCSD stressed that a lack of consistency in data quality and availability makes quantification difficult. 

Own your narrative 

1. Defining the narrative for your company’s climate action is critical. If you do not tell your story, someone else will. There is no room for greenhushing in a world where investors, policymakers, other businesses, and stakeholders demand to see evidence of tangible action linked to quantified outcomes.
2. Outputs on sustainability – however impressive the metrics – mean little until they are set in the context of what matters to stakeholders. Think about framing your story from the outside in, starting with the meaningful outcomes you can deliver.
3. Communication is an important vehicle for translating the financial quantification of sustainability into language that resonates within and beyond your organization. Tone matters—it is so important to be positive! Participants in an ERM/WBCSD session on quantification and communication stressed the need to avoid overemphasizing risk; human beings respond to inspiration.
4. Narrative consistency is key—there cannot be one message for employees and another for investors. Participants at an ERM roundtable on sustainability in a volatile world emphasized the importance of transparent and consistent stakeholder communication in building trust and credibility.

Seek opportunity 

1. Opportunities emerge during volatility. Companies we spoke with are keeping their eyes open for places where they can create value and build sustainability momentum at the same time. Companies and financial institutions in Asia, for example, are innovating and investing in response to market needs, while global participants at an ERM-supported session on energy storage highlighted the use of the technology as a solution that can generate significant financial opportunity and be a powerful force for decarbonization.
2. Carbon markets and water were high on the opportunity agenda at many of the sessions in which ERM participated. Companies are determining how to build business cases for these and other nature-related issues and integrate them into their sustainability strategies. As companies face pressure to achieve targets, participants underscored the importance of high-quality carbon credits. While concerns remain about greenwashing, logistical barriers, and the need for clearer standards and metrics, there was a consensus that demand stimulation, policy clarity, and technological innovation are crucial to scaling this key market.

Delivering in uncharted territory

Amidst the backdrop of an ever-changing world, a sense of what’s possible in the delivery of climate solutions that make commercial sense spread throughout the biggest LCAW ever. Themes like adaptation, value creation, narration, and opportunity identification emerged as strategies capable of helping companies forge ahead into uncharted territory. ERM was honored to contribute to the conversation.