International Trade & Supply Chains

The transportation sector constitutes the largest source of greenhouse gas emissions in the United States, and the Inflation Reduction Act (IRA) takes significant steps to transition the U.S. vehicle fleet to zero-emissions technology.  The proposed legislation takes a multi-faceted approach in doing so: it not only provides incentives for increased consumer use of electric vehicles, it also promotes domestic zero-emissions vehicle manufacturing. 

Continue Reading Inflation Reduction Act Shows Strong Support for the Electric Vehicle Sector and Domestic Supply Chains

Late on July 27, Sen. Joe Manchin and Senate Majority Leader Charles Schumer announced an agreement on the Inflation Reduction Act (IRA): a reconciliation package that implements prescription drug pricing reform, invests in Affordable Care Act health care subsidies, imposes a corporate minimum tax and improves tax enforcement, and—most relevant for this post—provides $369 billion to support energy production and reduce greenhouse gas emissions.

Continue Reading Overview of the Inflation Reduction Act

On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1]  The deadline to respond is July 21st.

Continue Reading Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses

On July 1, 2022, the U.S. Department of Commerce (“Commerce”) issued proposed rules implementing President Biden’s emergency declaration to provide temporary tariff relief on certain imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.[1] Commerce has provided the public with a 30-day period to comment on the proposed rules.

If enacted in their current form, the proposed rules would provide meaningful relief and increased tariff certainty to U.S. importers of solar cells and modules from these four Southeast Asian countries.  Specifically, under the proposed rules, Commerce will not impose tariffs during the emergency period established by President Biden on imports of solar cells and modules from those countries even if the products are found to be circumventing an existing antidumping (“AD”) or countervailing duty (“CVD”) order.  The proposed rules do not affect tariffs on imports that are already within the scope of existing AD/CVD orders on solar cells and modules from mainland China or Taiwan, including in-scope modules that incorporate cells from mainland China or Taiwan but are assembled in a different country.

While the proposed rules would represent a positive development for foreign manufacturers, U.S. importers, and U.S. consumers, including the U.S. solar project development industry, if promulgated in their current form, changes to the rules are possible.  It is therefore important for parties with a stake in Commerce’s pending circumvention inquiries to file comments by the August 1, 2022 deadline. 

Continue Reading Commerce Invites Comments on Proposed Rules Implementing Presidential Emergency Declaration on Solar Tariffs 

Presidential Action Triggered by Crisis in the U.S. Solar Industry

In recent months, the U.S. solar industry has been in the midst of an existential crisis, triggered by the threatened imposition of retroactive and future tariffs on a significant portion of U.S. imports. That crisis began on April 1, 2022, when the Department of Commerce (“Commerce”) initiated an inquiry to determine whether solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam are circumventing antidumping (“AD”) and countervailing duty (“CVD”) orders on solar cells from China. Solar cells from these countries generally accounted for approximately 80% of U.S. solar module imports in 2020.[1] If Commerce finds circumvention, solar cells and modules from the four target countries could not only be subject to combined AD/CVD tariffs approaching 250%, but Commerce’s regulations also allow for the agency to apply these tariffs retroactively to merchandise entering on or after April 1, 2022 (and potentially as far back as November 4, 2021). This threat of AD/CVD tariffs triggered a steep decrease in imports of solar cells and modules from Southeast Asia, and caused parts of the U.S. solar industry to come to a stand-still, furthering domestic reliance on coal.[2] Given this paralysis in the solar industry, lawmakers and others urged the President to provide relief from potential AD/CVD tariffs.[3]

Continue Reading President Acts to Prevent Import Tariffs on Solar Cells and Modules from Southeast Asia

Like many governments around the world, UK politics currently appear somewhat unstable. And the UK’s problems are a reflection of the world, where established views and beliefs are suddenly no longer the unassailable certainties they have seemed to be for decades.

Davos met this week for the first time in two years against this very unsettled backdrop.  A few thoughts and reflections on discussions there follow…

Continue Reading A Few Thoughts from Davos…

As the world struggles to adjust to the harsh new reality of Russia’s invasion of Ukraine, the most recent instalment of the Sixth IPCC Report slipped out almost unnoticed.  And that is worrying, since the assessment in this section of the Report is even starker than previous assessments – noting in particular that in order to avoid global temperatures increasing by greater than 1.5 degrees C above preindustrial levels, the world needs to halve its emissions this decade: a reduction that the world does not currently appear to be remotely on course to do.

However, whilst the IPCC Report and the Russian invasion of Ukraine are not linked, Russian aggression in Ukraine may serve as a catalyst to speed up the European energy transition and accelerate its retreat from dependency on Russian gas and exposure to volatile international oil markets, which could in turn deliver a more rapid reduction in European emissions.  In the process, perhaps setting the world on a path to achieving an outcome that currently seems unattainable.

Continue Reading The IPCC and The Ukraine Crisis

Last year, Covington predicted an increased focus on environmental enforcement under the Biden Administration.  Recent statements by key environmental leadership have confirmed this, further sharpened Administration priorities, and track renewed focus by DOJ more broadly on combating corporate malfeasance.  In the coming year, regulated entities should prepare for increased criminal enforcement, including consideration of conduct within their supply chains.  They should also expect increased scrutiny of their environmental compliance programs, including the potential for corporate monitorship if DOJ deems a company’s compliance program to be inadequate.

Continue Reading Environmental Enforcement in 2022: Renewed Focus on Criminal Conduct, Compliance

Last December, the European Commission published its legislative Package on Hydrogen and Decarbonized Markets (“Package”), which proposes new rules aiming to develop a hydrogen market in the EU. The new rules bring much awaited legal clarity to the concepts and role of blue and green hydrogen within the EU’s energy regulatory framework for the climate transition.

In effect, the Commission’s legislative Package is intended to promote the use of blue hydrogen until at least 2030 provided that it achieves the same decarbonization as green hydrogen (i.e., 70% GHG reduction).  However, the European Parliament and Council may amend both the proposed definition and conditions of blue hydrogen and the proposed regulative incentives during their consideration of the Package and its adoption through the legislative procedure that will now follow.  Moreover, the European Commission will be empowered to develop much of the methodologies implementing the definitions of blue and green hydrogen.  Companies intending to engage in blue and green hydrogen operations in the EU/EEA would be well advised to closely follow these developments.

Continue Reading New Definitions for Blue and Green Hydrogen: The European Commission’s Package on Hydrogen and Decarbonized Gas Markets

The UK Government recently announced that it is developing legislation that would make it illegal for large businesses operating in the UK to use certain commodities that have not been produced in line with local laws, and require in-scope companies to conduct due diligence to ensure that their supply chains are free from illegal deforestation and ecosystem change. A failure to comply could result in significant fines (the precise levels of fines are yet to be determined).
Continue Reading UK: new “world-leading” deforestation and ecosystem supply chain law