The D.C. Circuit issued a decision in Vecinos para el Bienestar de la Comunidad Costera v. FERC, which faulted FERC for failing to consider whether the social cost of carbon (SCC) is a “generally accepted” analytical tool for assessing the significance of greenhouse gas impacts under NEPA. The decision is likely to result in
Not Broken, Simply Unfinished – What’s Next for the AJP?
In wrapping up our three-month long series on the ABCs of the AJP that commenced on Earth Day, we offer some final reflections on the progress and outlook for this monumental public policy initiative.
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Will the EU CBAM Cover More Than What You Think? Complex Goods, System Boundaries, and Circumvention Under the Commission’s CBAM Proposal
On July 14, the European Commission presented its legislative proposal for a Carbon Border Adjustment Mechanism (“CBAM”). This long-anticipated tool is intended to make importers pay for the greenhouse gas (“GHG”) emissions embedded in the covered goods that they market in the EU. A Covington webinar on the main elements of the proposal and related policy considerations is available here.
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X-Treme Weather and the Need for Climate Resiliency
This is the twenty-fourth in our series, “The ABCs of the AJP.”
In 2020 alone, the United States suffered 22 separate extreme weather and climate-related disasters that each caused at least $1 billion in damages, for a total of more than $100 billion in losses. That staggering statistic is not an anomaly, as climate change continues to result in more and more extreme weather events every year. For example, the Texas freeze that rocked the state earlier this year and killed more than one hundred people, also shut down the state’s significant petrochemical industry, disrupting supply chains nationwide, and caused an estimated $80 billion to $130 billion in direct and indirect economic losses. Hundreds of deaths are attributed to the unprecedented and record-breaking heat wave of the Pacific Northwest, and a British Columbia village where the highest temperature ever recorded in Canada was devastated by wildfire. Taking into account these and other weather-related tragedies, the losses become inestimable on a human scale.
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Tackling Transportation, Traffic, and Transit Troubles
This is the twentieth in our series, “The ABCs of the AJP.”
As discussed in an earlier post, the American Jobs Plan adopts an expansive definition of “infrastructure” to address systemic inequities and benefit society as a whole. However, the AJP also addresses what is typically called “core infrastructure” by proposing substantial investments to repair and modernize our nation’s roads, highways, bridges, airports, ports, and railways. As with other aspects of the AJP, the President’s investments seek to address climate and sustainability concerns and the creation of American jobs by, among other things, using sustainable and innovative building materials that are made in America.
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Readying for Resilience through Infrastructure
This is the 18th in our series, “The ABCs of the AJP.”
In August 2020, a wildfire broke out along Route 70 in Glenwood Canyon, a major thoroughfare across the Rocky Mountains in central Colorado. The fire quickly burned through vegetation on either side of the canyon, loosing rocks that shut down Route 70 for two weeks. As the fire spread, it temporarily shuttered the Shoshone Generating Station, a hydroelectric power station that controls water flow in the upper Colorado River, and forced residents of several communities to evacuate to Glenwood Springs, a nearby town of 10,000. By the time the fire was put out in December, it had burned over 30,000 acres and cost over $30 million to contain.
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FERC Policy on GHG Impact of Gas Pipelines on Climate Still in Flux
In two recent certificate orders issued on May 20, 2021, the Federal Energy Regulatory Commission (“FERC”) did not assess the significance of the greenhouse gas (“GHG”) emissions of natural gas pipeline projects in terms of their contribution to climate change. This seems to be a step back from a March, 2021 order, which indicated that FERC would consider the significance of natural gas emissions in the context of a certificate involving pipeline replacement facilities, but reflects an unusual last-minute compromise reached during an open meeting in order to gain sufficient votes to approve the certificates.
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The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know
The European Commission has published a proposal for a Corporate Sustainability Reporting Directive (2021/0104) (“CSRD”), which forms just one part of a comprehensive package of sustainable finance measures (see our blog here). The Commission has put forward these measures in response to demand for stronger and wider sustainability reporting standards, over and above what the EU Non-Financial Reporting Directive currently provides. The CSRD seeks to mandate sustainability reporting and assurance through the amendment of existing EU laws, including the Transparency Directive, the Accounting Directive, and the Audit Directive. More fundamentally, according to the Commission, it will move the EU one step closer to realizing its aim of having sustainability reporting be “on a par” with financial reporting, in terms of attached weight and importance. This is reflected in the change of terminology used in the CSRD proposal, from a focus on “non-financial” information reporting, to “sustainability”.
We cover below the background and detail, but in summary, these are the key elements of the CSRD proposal that corporates should be aware of:
- Scope: The CSRD reporting requirements will apply to all large EU companies and all listed companies, including listed small and medium-sized enterprises (“SMEs”). This is estimated to cover around 49,000 companies.
- Reporting: The so-called “double materiality” principle remains, but in-scope companies will now have to report according to mandatory sustainability standards. Simpler and “proportionate” standards will apply to listed SMEs.
- Audit: The CSRD will require, for the first time, a general EU-wide audit (assurance) requirement for sustainability information.
- Digitization: The sustainability information must be published in companies’ management reports — and not separately reported — and the information will need to be digitized or “tagged” so it can be incorporated into a planned European Single Access Point.
- Timing: If the proposal is adopted and standards can be agreed in line with current ambitious estimates, large in-scope companies must comply from financial years starting on or after 1 January 2023, publishing reports from 2024; whilst SMEs have to comply from 1 January 2026.
The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting
The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”). This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.
Sustainable Finance Package: Context and Comment
The Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law. Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.
Kids and a Sustainable Future
This is the eleventh in our series on the “ABCs of the AJP.”
America’s kids are the beneficiaries of many of the provisions of President Biden’s Jobs Plan, and several of the proposals would benefit them and their caretakers specifically. Children have become a focus point of discussions about climate change, because absent intervention they are poised to inherit a world that suffers from its negative effects without having contributed meaningfully to the emissions that bring it about. This has been a central narrative of the long-running Juliana litigation, for example. The Biden Administration has also recognized the intergenerational inequity of climate change in other policy initiatives, for example in its ongoing efforts to revise the social cost of greenhouse gases.
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