The European Commission (the “Commission”) formally adopted on 27 January 2022 its new Guidelines on State aid for climate, environmental protection and energy (CEEAG). The CEEAG replace the guidelines that were in force since 2014 (EEAG) and integrate the new objectives of the EU Green Deal of a reduction of 55% net greenhouse gas emissions compared to the 1990 levels by 2030 and of carbon neutrality by 2050. The Commission has estimated that achieving the new 2030 target would require EUR 390 billion of additional annual investment compared to the levels in 2011-2020, an investment that cannot be borne by the private sector alone, and would therefore require public investments.
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Italy Transposes into National Law the EU Single-Use Plastic Products Directive
Posted in European Energy & Climate Policy, Plastics
The Italian Legislative Decree 196/2021 (“Italian Decree”) implementing the Single-Use Plastic Directive (“SUPD”) will enter into force on January 14, 2022. The Italian Decree diverges from the SUPD on significant aspects: it provides a more flexible definition of plastic; delays the entry into force of the ban on prohibited SUPs; and exempts from such ban specific biodegradable and compostable materials. The Decree also imposes specific return obligations on waste plastic bottles.
While the Italian Decree provides companies with additional flexibilities to market their SUPs in Italy, companies should carefully assess the risks that may arise if EU Courts finally hold that the Decree is not compatible with EU law.…
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New Definitions for Blue and Green Hydrogen: The European Commission’s Package on Hydrogen and Decarbonized Gas Markets
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.…
ESG & Sustainability Reporting Developments: Climate Disclosure Prototypes
ESG and sustainability disclosure and reporting requirements for listed and non-listed companies are rapidly taking shape. As announced at COP26, there is now an International Sustainability Standards Board (“ISSB”) tasked with encouraging global uptake of ESG reporting standards. In the EU, the European Financial Reporting Advisory Group (“EFRAG”) is the body tasked with developing mandatory sustainability and ESG reporting standards under the EU’s Corporate Sustainability Reporting Directive (“CSRD”). Both the ISSB and EFRAG have each recently published ESG and sustainability disclosure and reporting “prototypes”. These prototypes are important pieces to an emergent reporting regime that is very likely to become critical commercially—if not mandatory—for many companies. There are also encouraging signs that what has until recently been a relatively disjointed set of standards, is beginning to come together under a more harmonized agenda and institutions.
This blog presents an overview of some of the detailed climate-related disclosure and reporting metrics covered by the ISSB and EFRAG climate prototypes, and highlights critical considerations for companies as more detailed and mandatory ESG and sustainability reporting frameworks begin to take shape.…
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European Commission Opens Public Consultation to Define Selection Criteria for Renewable Energy Projects Eligible of EU Funding
By Carole Maczkovics on
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.
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The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know
By Sinéad Oryszczuk on
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
By Paul Mertenskötter & Sinéad Oryszczuk on
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.…
Climate Change: The EU Moves Towards a Carbon Border Adjustment Mechanism
Posted in European Energy & Climate Policy
Last week, the European Commission took a major step to implement the climate aspects of its European Green Deal. It presented a proposal for a European Climate Law and two consultations on its announced Climate Pact and Carbon Border Adjustment Mechanism (“CBAM”).
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Environmental and Safety Requirements Affecting the Marketing of Electronic Devices and their Components in the European Union and European Economic Area
Electronic devices and their components marketed in the European Union and European Economic Area are subject to a morass of environmental and product safety requirements that is only likely to increase with the EU’s implementation of its Circular Economy Strategy in the near future. The requirements apply to all types of equipment, from sophisticated information technology equipment, to military equipment, aircraft components, electronic medical devices, household electronics, consumer devices, and industrial tools.
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New EU Requirements on Products Containing REACH Candidate List SVHCs
By Cándido García Molyneux on
Posted in European Energy & Climate Policy, REACH
The European Union has adopted a new obligation on suppliers of articles that contain substances listed in the REACH Candidate List of SVHCs in concentrations above 0,1% to submit a notification to the European Chemicals Agency (“ECHA”). The new requirement is intended to facilitate the recycling of products and was introduced by a new Directive amending the EU Waste Framework Directive.
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