European Energy & Climate Policy

In March this year, the European Commission adopted the Delegated Act on a common rating scheme for data centers (“Delegated Act”) in the European Union (“EU”).  The Delegated Act implements the Energy Efficiency Directive (“EED”) and details the energy key performance indicators (“KPI”) that data center operators must report to the European database on data centers (“European database”), how to calculate them, and to what extent this information will be publicly disclosed. Continue Reading New Sustainability Reporting Requirements for Data Centers in the EU

The European Union has just adopted the  Right to Repair Directive (“R2RD”).  Once it enters into force, the R2RD will require manufacturers of many types of consumer goods to provide repairs beyond the liability period, among other requirements.  This blog post follows up on our previous blog post that discussed the different positions of the European Parliament and Council on the legislative proposal for the R2RD. Continue Reading The EU Adopts Right to Repair Directive

Yesterday, the European Parliament approved a new (recast) Urban Wastewater Treatment Directive (“UWWTD”) that will impose new additional costs on producers marketing pharmaceutical and cosmetic products in the European Economic Area by the end of 2027.  Some studies suggest that the costs that producers would have to collectively pay could be around €1 billion per Member State.  This is well above the figures published in the Commission’s impact assessment, which estimated the annual cost of implementing the various requirements of the UWWTD in all Member States at €3.8 billion, including €1.2 billion for micro-pollutants treatment.

The upcoming UWWTD lays down rules on the collection, treatment, and discharge of urban wastewater, and puts particular emphasis on the implementation of the polluter pays principle.  The Directive aims to address the environmental and health concerns resulting from the presence of micro-pollutants, other pollutants (e.g., heavy metals, PFAS), microplastics and antimicrobial resistant (“AMR”) bacteria in European waters.  It introduces new measures for the treatment of wastewater, including quaternary treatment for micro-pollutants, and makes producers of pharmaceutical and cosmetic producers pay for such treatment.Continue Reading New EU Wastewater Treatment Fees on Producers of Pharmaceutical and Cosmetic Products

On January 17, 2024, the European Parliament formally endorsed its provisional agreement with the Council on the Directive Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and Better Information (“Greenwashing Directive”).  The Council is now expected to endorse the provisional agreement after which the Directive will be published in the EU Official Journal and enter into force.

The Greenwashing Directive aims to contribute to the EU’s green transition by empowering consumers to make informed purchases using reliable sustainability information about products and traders.  To do so, the Directive amends Directive 2005/29 on Unfair Business-to-Consumer Practices (“Unfair Commercial Practices Directive”) by introducing specific rules on sustainability and environmental claims.  The Greenwashing Directive is intended to work in tandem with the proposed Directive on substantiation and communication of explicit environmental claims (the “Proposed Green Claims Directive”), which we reported on here. 

Companies should keep a close eye on the transposition of this Directive, as it will have a significant impact on how they communicate about their sustainability, environmental, and social or ethical efforts.  Covington can help companies with navigating these regulatory requirements while meeting their business objectives.Continue Reading EU Adopts New Rules on Greenwashing and Social Impact Claims

The European Parliament and Council are in negotiations to finalize the adoption of a proposal for a new Directive on the Right to Repair.  The proposed Directive aims to meet the product sustainability and circularity objectives by improving product durability, reusability, upgradeability, and repairability as outlined in the European Commission’s Circular Economy Action Plan 2020, a key component of the European Green Deal.*Continue Reading The Right To Repair Gains Momentum In The EU

The European Commission is currently holding a public consultation on a Draft Delegated Act (“DDA”) on a common rating scheme on the energy performance of data centers in the European Union and European Economic Area (“EU/EEA”).  The DDA will lay out the energy key performance indicators that operators and owners of data centers must report, the sustainability indicators that will be calculated per data center, and the aggregated data that will be made publicly available, in accordance with the new EU Energy Efficiency Directive (“EED”). 

The adoption of the DDA will introduce specific mandatory environmental and energy performance reporting requirements for data centers for the first time in the EU/EEA, and probably in the world.  These reporting requirements may be the first step for the EU to adopt mandatory environmental performance targets for data centers within the next decade.Continue Reading Upcoming Sustainability Reporting Requirements for Data Centers in the EU

In the early hours of December 14, 2023, the Council of the EU (“Council”) and the European Parliament (“Parliament”) reached a provisional political agreement on the Corporate Sustainability Due Diligence Directive (“CSDDD”). Described as a “historic breakthrough” by Lara Wolters, who has led this file for the Parliament, the CSDDD will require many companies in the EU and beyond to conduct environmental and human rights due diligence on their global operations and value chain, and oblige them to adopt a transition plan for climate change mitigation.

Given the CSDDD’s relevance for companies’ ongoing compliance planning on environmental and human rights matters, this blog aims to advise clients on the basic elements of the CSDDD agreement based on press releases from the Council, Parliament, and the European Commission (“Commission”), even if much uncertainty remains. Although a political agreement has been reached, the text of the agreement is not publicly available and a number of details of the legal text will need to be finalized in follow-up technical meetings. Covington will publish a more detailed alert on “how to prepare” for the CSDDD once the full text is available (likely in early 2024).Continue Reading Provisional Agreement on the EU’s Corporate Sustainability Due Diligence Directive (CSDDD): Key Elements of the Deal

On March 22, 2023, the European Commission (“Commission”) presented its proposal for a Directive on substantiation and communication of explicit environmental claims (“Proposed Green Claims Directive”).  The Proposed Green Claims Directive is intended to work in tandem with the Commission’s 2022 Proposal for a Directive empowering consumers for the green transition through better protection against unfair practices and better information (“Proposed Greenwashing Directive”).  Both Proposed Directives are intended to contribute to the EU’s green transition towards a circular, climate-neutral and clean economy by enabling consumers to make informed purchasing decisions based on reliable information about the sustainability of products and traders.  In particular, the Proposed Green Claims Directive would create a common methodology for substantiating green claims about the environmental footprint of products, services and companies and require companies making environmental claims to secure a certification of compliance from an independent national “verifier.”Continue Reading Greenwashing: EU Unveils Ambitious Proposal on Green Claims

As part of “A Green Deal Industrial Plan for the Net Zero Age” to respond to the US Inflation Reduction Act (IRA) (see our alert), the European Commission (the “Commission”) adopted on 9 March 2023 its Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (the “TCTF”). The text amends the Temporary Crisis Framework last amended on 28 October 2022 (see our blog). 

These are the three most important things you need to know about the TCTF:

  • To avoid that an investment would be located outside the European Economic Area (EEA), EU countries may support investments in the manufacturing of relevant equipment for the transition towards a net-zero economy, such as batteries, solar panels, wind turbines, heat pumps, carbon capture usage and storage (CCUS), as well as their key components and critical raw materials necessary for their production. They may even grant aid matching foreign subsidies to support those investments, provided that they are located in the poorer areas of the EU.
  • EU countries’ possibilities to grant aid for accelerating the rollout of renewable energy are extended to any renewable technologies, including hydropower, and no longer require a bidding process to select the aided projects that are considered as less mature.
  • The TCTF is not a subsidy program, and it is up to EU Member States to provide public funding.

Continue Reading The Commission adopts its Temporary Crisis and Transition Framework relaxing State aid rules as a response to the US Inflation Reduction Act

The European Union (“EU”) is coming closer to adopting mandatory rules for companies that use carbon credits.

  • First, the European Parliament and Council are considering for adoption a Commission for a Regulation on a Carbon Removal Certification Framework (“CRCF Regulation Proposal”).

These two regulatory initiatives are closely tied to each other.  In effect, the draft ESRS that the Commission is considering for adoption require subject entities to disclose GHG removals and GHG mitigation projects financed through carbon credits.

The EU’s aim of regulating carbon credits coincides with its push for carbon neutrality by 2050, and a related significant proliferation of companies publicly committing to achieve “net-zero” emissions by mid-century, which has triggered an uptick in strategic purchases of carbon credits in the voluntary carbon market (“VCM”). The CRCF Regulation Proposal and the upcoming ESRS will help to expand sustainable and verified carbon removals and encourage investment in technological innovation.   

Companies turning to the VCM to reach their net zero goals, and others active in the generation, trading, and use of carbon credits, will want to follow these initiatives closely.  Opportunities remain for companies to express views that may shape the final contours of these regulations.Continue Reading The EU’s Emerging Mandatory Disclosure and Certification Rules for Carbon Credits