Energy crisis trumps climate

The world is no longer focusing on climate change. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Global action against climate change faces another setback. With declining Russian gas supplies threatening European energy security, Group of Seven leaders are jettisoning a commitment to stop financing overseas fossil-fuel projects by the end of year, while insisting they will still stick to the pledges made at COP26 last year in Glasgow. Key reading: - [G-7 to Allow Fossil-Fuel Financing If Climate Pledges Are Kept]( - [Italy’s Supercar Concerns Set Up EU Clash Over Auto Emissions]( - [Cozy Wood-Burning Fireplace at G-7 Jars With Climate Goals]( - [Worst Drought in 70 Years Threatens Northern Italy’s Food, Power]( - Following our rolling coverage of the G-7 summit [here](. Germany, the host of this week’s G-7 summit, has been pushing for the change. French President Emmanuel Macron appeared to support the idea during a meeting yesterday with African nations, and Italian Prime Minister Mario Draghi has said Europe’s short-term needs require such investments. The move is in part understandable, given soaring prices that are fueling inflation and stretching household budgets. While people in Europe are currently sweltering through summer, and demand is spiking for cooling energy as a result, pretty soon the focus will shift to having enough energy supplies for the winter. Yet a reversal on fossil fuels makes it hard to imagine how the rest of the world will pay much heed to calls for stringent limits in the future. It would fly in the face of International Energy Agency entreaties that the world must not develop any oil and gas projects if it wants to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The impact is plain to see. Heat waves are sweeping across the US and Europe, with Italy facing one of its worst droughts in decades. Yet since Russia’s invasion of Ukraine, there is a feeling the drive to protect the environment, at least in the short term, has been relegated down the priorities. The cozy fire lit for aesthetic purposes in the Bavarian castle where the G-7 leaders were meeting — even as temperatures outside were near 30 degrees Celsius — spoke volumes. — [Karl Maier]( Boats on the exposed bed of the Po River in Calto, Italy, on June 17. Photographer: Francesca Volpi/Bloomberg Click [here]( to follow Bloomberg Politics on Facebook and share this newsletter with others. They can sign up [here](. Global Headlines War crime | Dozens are still missing after Russian missiles [struck]( a shopping mall in central Ukraine yesterday, killing at least 18 people. G-7 leaders condemned the “abominable” attack as a war crime, and said that those responsible, including Russian President Vladimir Putin, would be held accountable. The destroyed mall following a Russian missile attack in Kremenchuk. Source: Ukrainian State Emergency Service Covid shift | China cut [quarantine]( times for inbound travelers by half, the biggest shift in a Covid-19 policy that has left the world’s second-largest economy isolated. Visitors will now need to spend seven days in a quarantine facility, then monitor their health at home for a further three days, down from 14 days hotel quarantine in many parts of China currently. - Beijing and Shanghai have [contained]( Covid following a bruising four-month fight that saw millions of residents locked in their homes. - Hong Kong confirmed President Xi Jinping will visit the city this week, ending [speculation]( over the Chinese leader’s attendance at the 25th handover anniversary celebrations on July 1 amid surging coronavirus cases in the former British colony. - China named Wang Xiaohong minister of public security, handing a former colleague of Xi [control]( of a key portfolio before a twice-a-decade leadership congress. NATO focus | NATO leaders are set to [label]( China a “systemic challenge” when they meet in Madrid this week, highlighting concerns in areas like cybersecurity and disinformation plus control of critical infrastructure. The China reference will be made in the alliance’s new policy guidelines outlining priorities for the coming decade. - The leaders of Finland and Sweden are set to meet with Turkish President Recep Tayyip Erdogan today as they seek to convince him to [drop objections]( to their membership of NATO. Runaway food inflation may be [tamed]( soon — at least temporarily — as farm commodities tumble. Four months after Russia’s invasion of Ukraine upended trade flows and sent futures soaring, fear of grain shortages is giving way to optimism that key producers will reap harvests large enough to help replenish war-pinched reserves. Best of Bloomberg Opinion - [Who’s In, Out and in Peril at the Summits: Andreas Kluth]( - [The Decline of Fossil Fuels Will Be Expensive: Justin Fox]( - [Russia’s Oil Sanctions Caused Chaos. Gold Won’t: David Fickling]( Iran talks | Chief US and Iranian nuclear negotiators are heading to Qatar in an attempt to [revive]( the 2015 nuclear deal and end a standoff that has inflamed tensions in the oil-rich Persian Gulf. Both sides put the onus on the other to make concessions to reach an agreement, which would curb Iran’s atomic activities in return for the lifting of sanctions, including on oil exports. Explainers you can use - [What’s the ‘Special Debt’ China Uses to Spur Economy?]( - [A ‘Price Cap’ on Russian Oil -- What Would That Mean?]( - [Understanding Crypto Bridges and $1 Billion in Thefts]( Code crisis | Russia’s reliance on foreign software to run its factories, farms and oil fields is turning into one of the biggest [headaches]( for domestic industry as more global IT providers pull out of the market in response to the invasion of Ukraine. The computer programs are often baked directly into machinery and control high-precision processes, and many companies don’t give clients access to codes to manage their plants. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1 p.m. ET, with a second hour on Bloomberg Radio from 1 to 2 p.m. ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - More than 40 people were found dead in a semitrailer parked in San Antonio in Texas as temperatures soar, and the mayor suggested they were immigrants. Texas has seen a [surge in immigration]( over its border with Mexico in recent years, and smugglers sometimes use commercial trucks. - The House panel investigating last year’s insurrection at the US Capitol called a [surprise hearing]( for today to “present recently obtained evidence and receive witness testimony.” - Sri Lanka [abruptly restricted]( fuel supplies and told residents to stay home, raising the risk of more unrest as the government struggles to provide essential goods due to a crippling sovereign debt crisis that has rocked the country for months. - US Ambassador to Venezuela James Story is [visiting Caracas]( for the first time since March in an effort to boost talks between the government and the opposition, sources say. - South African politicians are [risking conflict]( between different local ethnic groups and races by encouraging xenophobia against migrants from other nations on the continent, the leader of the opposition said. And finally ... The three Baltic states’ position on NATO’s border with Russia has kept them in a heightened sense of alert following Moscow’s war in Georgia and its subsequent annexation of Crimea. [Ott Tammik](, [Milda Seputyte]( and [Aaron Eglitis]( lay out in [this story]( how the people of Estonia, Latvia and Lithuania have long and bitter memories of domination by Moscow that is driving them to the front line of the response to Putin’s invasion of Ukraine. Estonian soldiers during a NATO exercise on April 14. Photographer: Ben Birchall/PA Images/Getty Images Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022