In a series of prior blog posts, we previously highlighted the historic implications of the Inflation Reduction (IRA) for the U.S.’s international climate commitments, as well as for private companies navigating the energy transition.  Shortly after our series published, the Senate passed the IRA on Sunday August 7th with only minor modifications to the bill’s $369 billion in climate and clean energy spending.  Today, the House passed the IRA without any further changes, and soon hereafter President Biden is expected to sign it into law. 

However, this is only the beginning of the road; the IRA will have sweeping implications beyond the four corners of its pages.  In the coming months and years, we expect to see intense jockeying over agency rulemakings that will shape the IRA’s implementation, as well as determine its ultimate success as an energy policy.  

Continue Reading House Passes Inflation Reduction Act, Marks a New Era for Climate Policy

The Inflation Reduction Act (IRA) would make significant strides in limiting and cutting methane pollution. Methane has proven to be a significant part of the climate problem; the United Nations’ Environment Programme (UNEP) notes that over a 20-year period, methane is 80 times more potent at warming than carbon dioxide.  Studies by the National Oceanic and Atmospheric Administration (NOAA) further show that the rate of methane emissions is only worsening, with 2020 recording the largest annual increase since 1983.  By implementing a Methane Emissions Reduction Program, the IRA takes a significant step towards reducing methane-related warming.  This program implements a carrot-and-stick regulatory regime, whereby the Environmental Protection Agency (EPA) rewards methane reduction efforts with financial assistance, and penalizes excess methane waste with a set fee.

Continue Reading Methane Emissions Reduction Program: The Next Step in the United States’ Efforts to Tackle a Potent Greenhouse Gas

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.

Continue Reading The Commission adopts its new Climate, Energy and Environmental Aid Guidelines (CEEAG)

As the United Nations Climate Change Conference of the Parties (“COP”) in Glasgow has drawn to a close, with seemingly mixed messages and a somewhat ambiguous conclusion, it is worth reflecting on the overall trajectory of the climate issue, societal expectations, and the accomplishments that — with time — Glasgow is likely to represent.  COP26 highlighted the fragility of the planet, as well as the fragility of the global consensus-based United Nations approach to protecting it.  It highlighted the sweep of global climate-induced challenges and the scale of transformation needed to address them.  With rising temperatures has come a rising global focus on climate and a far greater set of emerging societal expectations for meaningful responses by government and the private sector.  Despite the risk that the global agreement forged in Glasgow is seen by climate activists as all talk and no action — what they referred to as “blah, blah, blah” — I believe that a number of features will endure as important accomplishments.

Continue Reading Report from Glasgow COP26: Assessing the United Nations Climate Conference

On 19 October, alongside a number of other important strategy documents (over 2,000 pages in total), the UK Government published its ‘Net-Zero Strategy’ (NZS) which will help achieve the UK’s interim five yearly carbon targets leading up to net-zero by 2050.

Continue Reading The UK’s Net Zero Strategy

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

The Federal Energy Regulatory Commission (FERC) has for the first time ruled on whether the greenhouse gases (GHG) emitted during the construction and operation of a proposed natural gas pipeline has a significant impact on climate change in determining whether to authorize a project as consistent with public convenience and necessity under Section 7 of the Natural Gas Act.  In earlier orders, FERC concluded that it was unable to assess the significance of a project’s GHG emissions or those emissions’ contribution to climate change.  In a recent order approving Northern Natural Gas Company’s proposal to replace a pipeline segment, FERC stated that is no longer the case and then assesses the significance of the project’s GHG emissions and their contribution to climate change.
Continue Reading FERC Assesses Impact of Pipeline Project’s GHG Emissions On Climate Change

On March 4, 2020, the European Commission delivered the first major climate piece of its European Green Deal: it proposed a “European Climate Law,” which takes the form of a Regulation and establishes a framework for the irreversible and gradual reduction of greenhouse gas emissions and the enhancement of removals in the European Union.  The proposal and the fact that it takes the form of a binding Regulation may have a significant impact on a wide variety of legislative and policy initiatives that the EU and its Member States may take within the next years.
Continue Reading Call Me By My Name: The Importance of the European Commission’s Proposed Climate Change Law

On November 13, 2018, the U.S. Environmental Protection Agency (EPA) launched its Cleaner Trucks Initiative (CTI), which will decrease nitrogen oxide (NOx) emissions by updating the existing NOx standard for heavy-duty trucks. EPA’s announcement comes just as the California Air Resources Board (CARB) updated its Heavy-Duty On-board Diagnostic (HD OBD) requirements and prepares to implement its own Phase 2 GHG regulation for heavy-duty vehicles and trailers.
Continue Reading EPA and CARB Begin Reexamining Heavy-Duty Vehicle Regulations