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
On December 1, the Department of Energy (DOE) and the Department of the Treasury (Treasury) published highly-anticipated proposed rules that will significantly impact China’s and other covered nations’ roles in the battery supply chain for electric vehicles (EVs) sold to U.S. consumers. The proposed DOE Interpretive Rules and proposed Treasury Regulations interpret the term “foreign entity of concern” (FEOC) in the same manner for purposes of the Battery Manufacturing and Recycling Grant program under the Bipartisan Infrastructure Law and the EV credit under section 30D of the Internal Revenue Code introduced by the Inflation Reduction Act (IRA). The proposed rules take a more nuanced approach than the proposed and final rules that appeared in the context of the CHIPS and Science Act over the past year (discussed here, here, and here), but nevertheless purport to adopt bright-line rules. As we have previously noted, adopting a different approach to such term in section 30D is justified to balance the IRA’s dual policy goals of onshoring and “friendshoring” the U.S. EV battery supply chain while making credits sufficiently available to accelerate the electrification of the U.S. consumer vehicle fleet.Continue Reading The Biden Administration Unveils the Long-Waited Guidance on “Foreign Entity of Concern”
The following interview originally appeared in the National Law Journal.
What you need to know
- One of the significant issues many of their multinational clients have is the growing divide between how they operate and what’s expected of them in the U.S. versus Europe.
- At the same time the legal field has experienced this anti-ESG backlash over the last year in the U.S., the EU has moved full speed ahead on many ESG initiatives with significant consequences for businesses, including the EU Taxonomy, the Sustainable Finance Disclosure Regulation, the Corporate Sustainability Reporting Directive, and the Corporate Sustainability Due Diligence Directive.
- There is also growing litigation risk because with so much more scrutiny, and so much more information in the public domain, there are a range of stakeholders and potential plaintiffs on ESG issues, from state officials to NGOs
The Biden administration has set clear policy goals to establish effective corporate net-zero strategies on the one hand, yet there has also been growing pushback against the climate aspect of ESG in many red states. How do you advise clients on climate regulation in this very fluid environment?
Jayni Hein: We are all witnessing this summer, yet again, record-breaking land and ocean temperatures and pervasive wildfire smoke. It’s undeniable that climate change is affecting how we live today and how businesses operate. How both the government and the private sector respond is critically important.Continue Reading Q&A: Navigating Climate and ESG Amid Regulatory Uncertainty
On August 16, 2022—one year ago today—President Biden signed the Inflation Reduction Act (“IRA”), the most significant clean energy and climate law in U.S. history. As we described in a series last summer, the IRA created durable tax credits and other fiscal programs to revitalize domestic manufacturing and incentivize clean energy solutions in nearly every sector of the economy. The IRA’s one year anniversary is a key opportunity to take stock of what the law has propelled and what is expected around the corner.Continue Reading The First Year of the Inflation Reduction Act
The Energy Strategy Coalition is a group of companies that operates in nearly every state and includes some of the nation’s largest investor-owned electric and gas utilities, public power authorities and generators of electricity from renewable, nuclear and gas-fired sources.
The EPA’s proposal of carbon pollution standards for existing coal-fired power plants and new…
Today, the Department of the Treasury and IRS made available for public inspection proposed regulations on the new clean vehicle credit under the Inflation Reduction Act of 2022, as codified in section 30D of the Internal Revenue Code. These proposed regulations will be published in the Federal Register on April 17, 2023, and the due date for comments will be 60 days after the publication (or Friday, June 16, 2023).Continue Reading Much-Anticipated Proposed Regulations on the 30D EV Tax Credit Have Finally Arrived—but Leave a Key Question Unresolved
Later this week the Department of the Treasury is expected to release guidance on the Inflation Reduction Act (IRA)’s EV tax credit under section 30D of the Internal Revenue Code. Highly consequential for the guidance and practical availability of the credit will be how Treasury interprets the term “foreign entity of concern.” This is because Section 30D(d)(7) excludes from credit eligibility vehicles that are:
- placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle . . . were extracted, processed, or recycled by a foreign entity of concern; or
- placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle . . . were manufactured or assembled by a foreign entity of concern.
Meanwhile, last week, Treasury and the Commerce Department released proposed regulations (here and here, respectively) that interpret “foreign entity of concern” for purposes of various incentive programs under the CHIPS & Science Act (CHIPS Act). Because the IRA’s definition of “foreign entity of concern” mirrors the CHIPS Act’s definition of “foreign entity of concern” interpreted by Commerce, and because Treasury cross-referenced Commerce’s interpretation of “foreign entity of concern” in Treasury’s CHIPS Act guidance, it is reasonable to wonder whether Treasury will adopt the same interpretation of “foreign entity of concern” for purposes of the EV credit exclusion in section 30D(d)(7).
If it does, there could be a dramatic diminution of vehicles eligible for the EV credits. Under Treasury’s proposed CHIPS Act regulations, a foreign entity of concern would include, inter alia, (i) any entity organized under the laws of China or having its principal place of business in China, and (ii) any entity organized outside of China 25% or more of whose voting interests are owned by the Chinese government (as in the case of foreign subsidiaries of Chinese state-owned entities (SOEs)). If that interpretation is used for purposes of section 30D, absent a nearly impossibly fast elimination of Chinese critical minerals and battery components from the EV supply chain, the number of vehicles eligible for the 30D EV credit will sharply decrease in 2024 and will be practically eliminated in 2025.
EV manufacturers and suppliers may wish to flag this concern to Treasury.Continue Reading Will Treasury Adopt the Same Interpretation of “Foreign Entity of Concern” for both the Section 48D Credit under the CHIPS Act and the Section 30D Credit under the Inflation Reduction Act?
On February 21, 2023, the Federal Highway Administration (“FHWA”) published a Notice of Waiver for Buy America requirements related to Electric Vehicle (“EV”) Chargers, 88 Fed. Reg. 10619. This waiver notice follows the Notice of Proposed Waiver published by FHWA on August 31, 2022. See 87 Fed. Reg. 53539. In response to a robust response from industry, the final waiver is narrower and more streamlined than the proposed waiver, bringing the number of phases from four to two, and simplifying the definition of an EV charger. The waiver applies starting March 23, 2023.Continue Reading FHWA Buy America Waiver for Electric Vehicle Chargers
The EU’s Green Deal Industrial Plan for the Net-Zero Age
The US Inflation Reduction Act (the IRA) has raised concerns in the EU about the potential impact on international investment – particularly the possibility that such investment will be pulled into the US, rather than directed to the EU and may encourage ‘green industries’ to relocate production to the US. The EU has been working on an appropriate response that would increase the attractiveness of the EU as a green investment destination without breaching either WTO rules or its own State Aid rules.Continue Reading The EU’s Green Deal Industrial Plan for the Net-Zero Age
Four federal agencies—the Environmental Protection Agency, the Department of Transportation, the Department of Energy, and the Department of Housing and Urban Development—have released a Blueprint for Transportation Decarbonization, an ambitious plan that outlines the principles the federal government will continue to use to pursue its stated goal of economy-wide net zero emissions by 2050. This “whole of government” mobilization will profoundly affect many investment decisions, collaborations, regulatory actions and policy disputes with material impacts across many business sectors.Continue Reading Biden Administration Releases Comprehensive Transportation Decarbonization Plan