European Energy & Climate Policy

The European Commission seeks stakeholders’ feedback until 18 November on its proposal to define cross-border projects in the field of renewable energy generation that would be eligible to receive EU funding under Connecting European Facility instrument.
Continue Reading European Commission Opens Public Consultation to Define Selection Criteria for Renewable Energy Projects Eligible of EU Funding

In December 2020, the UK PM set out an ambitious 10 Point Plan for a green industrial revolution, one of the key points of which was the production of 5 GW of low carbon hydrogen in the UK by 2030.  The Plan envisaged hydrogen playing a key role in decarbonising energy-intensive industries and heavy transport and replacing natural gas in domestic heating.

On 17 August the UK Government published its Hydrogen Strategy (together with a number of associated Consultations), which lays the foundations for the UK’s future hydrogen economy and sets out how the UK Government will support innovation and stimulate investment in low carbon hydrogen to meet its 5GW target.Continue Reading Hydrogen in The UK

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.
Continue Reading Will the EU CBAM Cover More Than What You Think? Complex Goods, System Boundaries, and Circumvention Under the Commission’s CBAM Proposal

The European Commission is currently discussing a draft of a proposal for a Carbon Border Adjustment Mechanism (“CBAM”) Regulation that it is expected to present on July 14, 2021.  A CBAM was already announced in the European Commission’s Communication for a Green Deal  and is intended to protect the EU’s domestic industry that is at risk of carbon leakage—to create a level playing field—and to serve as a policy tool to encourage third countries to reduce their greenhouse gas (“GHG”) emissions.
Continue Reading Twelve Things to Know About the Upcoming EU Carbon Border Adjustment Mechanism

As of July 3, single-use plastic products marketed in the EU/EEA must comply with the requirements and restrictions of Directive 2019/904 on the Reduction of the Impact of Certain Plastic Products on the Environment (“Single-Use Plastic Directive” –  “SUPD”).  To help Member States implement the SUPD into their national laws and apply its requirements, on May 31, 2021, the European Commission published its long-awaited Guidelines on the Scope of the SUPD.  The Guidelines take different and controversial approaches on the scope the SUPD and the nature of plastics and continue to leave important issues unanswered.
Continue Reading New EU Restrictions on Single-Use Plastic Products to Enter into Force

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.

Continue Reading The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know

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.Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

On April 21, 2021, the European Commission approved “in principle” a Delegated Regulation establishing the criteria under which different economic activities substantially contribute to climate change mitigation and adaptation under Regulation 2020/852 on the Establishment of a Framework to Facilitate Sustainable Investment (“Taxonomy Regulation”).  Among other things, the Delegated Regulation defines the climate mitigation and adaptation criteria that the manufacture of hydrogen must meet to be considered a “sustainable investment” in the European Union.
Continue Reading The European Commission Approves the EU Criteria on Sustainable Hydrogen Activities

In December 2020, the European Commission presented a proposal for a new Regulation on Batteries and Waste Batteries (see Covington’s webinar on the proposal).  The proposed Regulation seeks to achieve the objectives set out in the European Green Deal and subsequent strategies, such as the transition to a carbon neutral and circular economy and the growth of renewable energies and clean mobility.  The European Parliament and Council are currently considering the proposal for its adoption through the ordinary legislative procedure, which is not likely to be completed before mid-2022.
Continue Reading Upcoming EU Environmental and Human Rights Supply Chain Due Diligence Requirements for Rechargeable Industrial Batteries and E-Vehicle Batteries