In late September, the Commodity Futures Trading Commission (Commission or CFTC) approved final guidance regarding the listing of voluntary carbon credit (VCC) derivative contracts on CFTC-regulated designated contract markets (Final Guidance). Commission observers had anticipated issuance of the Final Guidance for several months, as it follows proposed guidance issued by CFTC in December 2023. The Final Guidance also follows the Biden Administration’s Joint Policy Statement on Voluntary Carbon Market Principles, discussed in our post earlier this year. The Final Guidance, while applicable to derivative (or futures) contracts, represents the first official action by a U.S. regulator to help validate the integrity of the VCCs underlying such contracts. In this vein, as the derivative contract and underlying VCC markets continue to expand and evolve, the Final Guidance may represent an integrity backstop of sorts for U.S. VCC market participants. Continue Reading CFTC Guidance: A Potential Integrity Backstop for Evolving Voluntary Carbon Market
DOE Announces up to $1.8 Billion in Funding in Next Phase of Regional Direct Air Capture Program
On October 10, the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED) hosted a webinar providing an overview of the recently issued Notice of Intent (NOI) to award up to $1.8 billion in funding for new mid- and large-scale commercial direct air capture (DAC) facilities. The NOI represents the start of the next phase of OCED’s Regional DAC Hubs program contemplated by the 2021 Bipartisan Infrastructure Law (BIL), which requires DOE to financially support the development of at least four regional DAC hubs. DOE estimates that a net-zero emissions economy will require annually removing and capturing at least 400 million metric tons of carbon dioxide (CO2) from the atmosphere and emissions sources. A critical step in reaching this benchmark will be accelerating the commercialization and scaling of promising DAC solutions which is the goal of this next phase of the Regional DAC Hubs program. The NOI promises publication of the funding opportunity announcement before the end of this year.Continue Reading DOE Announces up to $1.8 Billion in Funding in Next Phase of Regional Direct Air Capture Program
As Interest Grows, FERC Announces Technical Conference Regarding Co-Locating Data Centers
On August 2, the Federal Energy Regulatory Commission (FERC or Commission) issued a notice of a Commissioner-led technical conference this fall to discuss issues related to co-locating large loads, such as data centers, at generating facilities. A supplemental notice will be issued with the date and time of the technical conference, as well as further details regarding the agenda. As transformative developments in artificial intelligence drive increasing power demand for data centers, the August 2 notice signals that the Commission has begun to contemplate new policies regarding the use of facilities connected to the FERC-regulated transmission grid to meet this demand. The technical conference will be a significant opportunity for interested parties to highlight various benefits or concerns regarding such arrangements to the Commission.Continue Reading As Interest Grows, FERC Announces Technical Conference Regarding Co-Locating Data Centers
FERC Issues Order No. 1920 To Accelerate Regional Transmission Planning
On May 13, the Federal Energy Regulatory Commission (FERC or Commission) issued Order No. 1920, the Commission’s long-awaited final rule regarding regional electric transmission planning and cost allocation for future transmission projects on the nation’s interstate electric grid. Order No. 1920 revises key aspects of the Commission’s current regional transmission planning and cost allocation policies, largely adopted in 2011 in Order No. 1000, in an effort to help accelerate the buildout of transmission infrastructure needed to serve the country’s changing resource mix and growing energy demand projections.
The major reforms adopted by FERC in Order No. 1920 center around four key areas: (A) planning horizon; (B) developing planning scenarios; (C) selection of transmission solutions and (D) cost allocation, each discussed in more detail below. At a high level, the rule requires transmission providers to engage in long-term regional transmission planning at least 20 years in advance, use at least seven enumerated benefits for the evaluation and selection of long-term regional transmission facilities, and hold a six-month engagement period for relevant state entities before filing a cost allocation method for a chosen project with FERC. Yet, while the Commission’s overarching goal of Order No. 1920 appears to be the selection of efficient long-term regional transmission solutions by transmission providers, the rule makes no mention of National Interest Electric Transmission Corridors (National Interest Corridors), geographic areas designated by the Department of Energy (DOE) where transmission congestion or constraints have an adverse effect on consumers, and where, in certain circumstances, FERC has siting authority for transmission facilities under the Federal Power Act (FPA). Continue Reading FERC Issues Order No. 1920 To Accelerate Regional Transmission Planning
Biden Administration Publishes Voluntary Carbon Markets Joint Policy Statement and Principles
On May 28, the U.S. Secretaries of Treasury, Agriculture, and Energy, along with senior White House climate officials, issued the Voluntary Carbon Markets Joint Policy Statement and Principles (Policy Statement). The Policy Statement provides observations regarding the current state of voluntary carbon markets, followed by a set of guiding principles for responsible market participation. A White House Fact Sheet describes the Policy Statement as representing the U.S. government’s commitment to advancing the responsible development of voluntary carbon markets, “with clear incentives and guardrails.” Notably, the Fact Sheet states that, with such incentives and guardrails, voluntary carbon markets can drive significant progress toward the Administration’s goals of reaching global net-zero greenhouse gas (GHG) emissions by 2050 and limiting warming to 1.5 °C.Continue Reading Biden Administration Publishes Voluntary Carbon Markets Joint Policy Statement and Principles
SBTi Board Announces Role for Carbon Credits in Scope 3 Emissions Abatement; Staff Clarifies Review Remains On-going
On April 9, the Board of Trustees of the Science Based Targets initiative (SBTi), a climate action organization that has validated corporate decarbonization targets for more than 4,200 companies to-date, issued a statement announcing that environmental attribute certificates (EACs), including carbon credits generated by voluntary carbon projects, may be used to abate Scope 3 greenhouse gas (GHG) emissions. It is possible to view the Board’s statement, unprecedented for SBTi, as recognition of the practical challenges associated with achieving Scope 3 emissions abatement without utilizing EACs. Yet, the statement also drew swift criticism from some stakeholders and observers, who argue that it represents a departure from SBTi’s science-based approach to corporate climate action.
Following the criticism, on April 11, “the overwhelming majority” of SBTi’s staff, which felt “compelled to issue multiple clarifications” of the Board’s statement, published a remarkable public response. Thereafter, on April 12, the Board supplemented its April 9 statement to clarify that no changes to the SBTi standards had been finalized. However, the Board’s statement and staff’s response show that interested stakeholders will have opportunities to provide SBTi with critical input regarding the use of EACs in Scope 3 emissions abatement that could have a material effect on any related revisions to the SBTi standards. Continue Reading SBTi Board Announces Role for Carbon Credits in Scope 3 Emissions Abatement; Staff Clarifies Review Remains On-going
DOE Announces $100 Million in Funding to Accelerate Carbon Removal
On February 12, the U.S. Department of Energy (DOE)’s Office of Fossil Energy and Carbon Management (FECM) announced that it will award up to $100 million to support U.S. pilot projects and testing facilities demonstrating and scaling carbon dioxide removal (CDR) technologies. The funding will support projects and facilities that remove carbon dioxide (CO2) directly from the atmosphere and store it in geological, bio-based, or ocean reservoirs, or that convert the captured CO2 into value-added products. The funding is intended to support the development of a commercially viable U.S. CDR industry, in advancement of the goal of DOE’s Carbon Negative Shot of reducing the cost of capturing CO2 from the atmosphere and storing it at gigaton scales to less than $100 per net metric ton of CO2-equivalent by 2032. The funding is a significant opportunity for developers and investors in CDR ventures that are prepared to deploy a pilot project in an area of interest for DOE.Continue Reading DOE Announces $100 Million in Funding to Accelerate Carbon Removal
USDA Releases Carbon Markets Assessment, Setting Stage for Technical Assistance Program
As directed by the Consolidated Appropriations Act of 2023 (CAA) that was signed into law by President Biden on December 29, 2022, on October 23, the U.S. Department of Agriculture (USDA) released the report on its general assessment of the state of the U.S. compliance and voluntary carbon markets for the agricultural and forestry sectors. The report, titled Report to Congress: A General Assessment of the Role of Agriculture and Forestry in U.S. Carbon Markets (Report) provides a summary of the assessment’s findings with respect to the current supply and demand of agriculture and forestry carbon credits in the U.S., as well as the barriers to market entry faced by many agriculture and forestry landowners and operators. The Report also highlights the role that USDA could play in reducing such barriers, notably through a potential GHG Technical Assistance Provider and Third-Party Verification Program (Program). As participants in the voluntary carbon market search for greater certainty regarding the integrity of carbon credits being bought or sold, the Program may become a unique and valued resource for potential project developers and carbon credit buyers.Continue Reading USDA Releases Carbon Markets Assessment, Setting Stage for Technical Assistance Program
ICVCM Launches Core Carbon Principles for Voluntary Carbon Market
On March 30, the Integrity Council for Voluntary Carbon Markets (ICVCM), an independent governance body that aims to set and maintain a global standard for quality in the voluntary carbon market, announced the launch of its Core Carbon Principles. The Core Carbon Principles (CCPs) are intended to establish fundamental principles for high-quality carbon credits that create a verifiable climate impact, based on the latest science and best practice. On the same day, ICVCM also issued the Program-level Assessment Framework and the Assessment Procedures, both designed to assist carbon-crediting programs in verifying that such programs and the credits that they issue comply with the CCPs. Given the role that ICVCM has assumed in recent discussions concerning integrity in the voluntary carbon market (VCM), the CCPs and related Program-level Assessment Framework and Assessment Procedures are likely to draw significant attention from stakeholders at all stages of the VCM-supply chain. Continue Reading ICVCM Launches Core Carbon Principles for Voluntary Carbon Market
New York Remains Offshore Wind Pacesetter with Third Solicitation
On July 27, New York Governor Kathy Hochul announced the release of the state’s third competitive offshore wind solicitation (RFP), seeking to procure a minimum of 2,000 megawatts (MW) of new offshore wind generation capacity, as well as significant capital investment in New York’s bourgeoning offshore wind energy supply chain. New York’s Climate Leadership and Community Protection Act of 2019 established the goal of developing 9,000 MW of offshore wind capacity, the largest statutory goal to-date of any state in the country, by 2035. Combined with the 4,300 MW of offshore wind generation capacity procured through its prior two solicitations, the RFP will put the state more than two-thirds of the way towards reaching that target. Continue Reading New York Remains Offshore Wind Pacesetter with Third Solicitation