European Energy & Climate Policy

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

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

The European Parliament and Council are about to adopt an agreed text on a Regulation on Batteries and Waste Batteries (“Sustainable Batteries Regulation” or “SBR”) that will impose a broad range of requirements on the safety, sustainability and circularity of batteries, including batteries that are part of devices (e.g., laptop batteries), industrial batteries (e.g., large stationary storage applications) and means of transport batteries (e.g., car batteries), as well as extended producer responsibility obligations (including waste take back) on producers marketing them.  The SBR is likely to be published in the official journal of the EU within the next couple of months and will repeal and replace the existing EU Directive on Batteries and Waste Batteries.

This post outlines the specific removability and replaceability requirements that the SBR will impose on portable batteries and light means of transport (“LMT”) batteries (e.g., batteries for electric bicycles) marketed in the EU/EEA as of around September/October 2026.  The new requirements will oblige producers of appliances to introduce design changes to their appliances and the batteries they incorporate.  Moreover, clarifying the details of such requirements is likely to create much controversy and debate among the European Commission, Member States and other stakeholders within the next two years.  In effect, the SBR leaves it to the Commission to adopt guidelines interpreting the different removability and replaceability requirements. 

The post also briefly mentions the political compromise that the European Parliament and Council reached on the removability and replaceability of electrical vehicle batteries and “starting, lighting and ignition” (“SLI”) batteries, and its emphasis on ensuring that such batteries be removable and replaceable by “independent professionals” (and not just authorized dealers).Continue Reading New Removability and Replaceability Requirements for Batteries Marketed in the European Union

Sustainability governs all policies and sectors of social and economic life. The goal of sustainable development is to meet the needs of today’s generations without compromising the self-sufficiency of future generations. Companies are called upon to innovate as economic conditions indicate a change in the direction of sustainability. Sustainability considerations and green developments have increasingly caught the attention of competition law’s enforcers. Competition authorities such as the European Commission (“Commission”), the Hellenic Competition Commission (“HCC”), the Dutch Competition Authority (“ACM”) and the German Competition Authority (“Bka”) have taken a positive stance towards accepting sustainability initiatives proposed by the private sector. How can companies balance both sustainability and competition law? In this blog post, we analyze recent developments that further explain the sustainability framework that companies have to navigate.Continue Reading Building a sustainability strategy – what companies can (not) do from a competition law perspective