Energy Regulatory

Subscribe to Energy Regulatory via RSS

The package aims to deliver on the targets agreed in the European Climate Law and fundamentally transform the EU’s economy and society for a greener future.

By Paul A. Davies, Nicola Higgs, David Little, Elisabetta Righini, JP Sweny, and Michael D. Green

On 14 July 2021, the European Commission (the Commission) unveiled a long-awaited package of proposals that seeks to align the EU’s climate, energy, land use, transport, and taxation policies with the European Green Deal’s emissions reduction target of at least 55% by 2030, compared to 1990 levels. The European Climate Law, which enters into force this month, will enshrine this target into binding legislation.

This blog post outlines the key elements of the package, which aims to fulfil the Commission’s ambition for Europe to be the world’s first climate-neutral continent by 2050. The proposals are interconnected and aim to ensure responsibility is shared evenly across sectors, with measures providing additional financial support where necessary.

With increasing pressure to fight climate change, scientists, and leaders agree that carbon capture, use, and storage (CCUS) is a cost-effective solution to meet emissions goals made under the Paris Agreement. 

In his interview with Hart Energy, Latham partner JP Brisson discusses how aggressive efforts are needed to meet the net-zero goal, but oil and gas companies are making significant progress in deploying CCUS projects at scale.

Watch the video.

The program will include a multi-jurisdictional cap-and-invest program and aims to address environmental justice and equity concerns.

By Jean-Philippe Brisson, Joshua T. Bledsoe, Benjamin Einhouse, and Brian McCall

On December 21, 2020, the Governors of Massachusetts, Rhode Island, and Connecticut, as well as the Mayor of the District of Columbia, announced that their respective jurisdictions would establish the Transportation & Climate Initiative Program (TCI-P) and released a memorandum of understanding (MOU) describing the agreed-upon principles for adoption and implementation of the TCI-P. While not part of the MOU, the states of New York, New Jersey, Delaware, Maryland, Virginia, Vermont, Pennsylvania, and North Carolina released a statement signaling their desire to work with the states party to the MOU and the Transportation & Climate Initiative (TCI) in general. On March 1, 2021, the TCI released draft Model Rules for public review. Once finalized, the Model Rules are intended to be adapted for use by each TCI-P signatory jurisdiction via state-specific rulemaking processes.

The principles are intended to guide the industry’s engagement with policymakers concerning the ongoing economic transition away from carbon.

By Paul A. Davies, Jason C. Ewart, and Edward R. Kempson

The US Climate Finance Working Group, a group of leading financial services trade associations, has published “Financing a US Transition to a Sustainable Low-Carbon Economy” — a set of principles for how the financial services industry can play a role in addressing climate change.

The principles, not meant to be exhaustive, are intended to serve as a useful framework for the industry’s engagement with policymakers to find practical, market-based solutions to the challenges and opportunities related to climate risk and the ongoing economic transition away from carbon. The working group noted that while individual institutions can play a significant role in the global effort to address climate change, policy must provide a critical foundation for driving the transition.

Non-governmental organizations release new studies and reports on new developments in carbon capture, usage, and storage technology.

By Jean-Philippe Brisson, Christopher G. Cross, Paul J. Hunt, Eli M. Katz, Joshua T. Bledsoe, Benjamin W. Einhouse, and Taylor R. West

At the 25th annual Conference of Parties (COP 25) United Nations Climate Summit, held in December 2019 in Madrid, non-governmental organizations (NGOs) and other groups submitted reports and studies on the latest developments in environmental technology. Several organizations, including the Innovation for Cool Earth Forum, the Global CCS Institute, and the National Petroleum Council of the United States, submitted reports on the use and future development of carbon capture, use, and storage (CCUS) technologies.

Innovation for Cool Earth Forum

The Innovation for Cool Earth Forum (ICEF), an organization that organizes an annual conference hosted by Japan’s Prime Minister that brings international leaders together to tackle climate change, published a roadmap for Industrial Heat Decarbonization in December 2019 (the Roadmap).[i] The Roadmap outlines how the use of industrial heat must be changed to reduce global greenhouse gas (GHG) emissions, specifically discussing the issue of carbon dioxide (CO2) emissions. The Roadmap further notes that industrial heat is particularly important due to the fact that roughly 10% of all GHG emissions come from industrial heat production. The Roadmap discusses the use of heat in a variety of industries, including cement, iron, and steel, as well as chemical production. Generally, the Roadmap discusses solutions that include the use of low-carbon energy sources such as hydrogen combustion and biomass burning, and electrical sources such as resistance heating, microwaves, induction, and electric arc furnaces. Moreover, the Roadmap discusses the role of CCUS in reducing the carbon produced in the creation of industrial heat.

The public consultation on adjusting the GHG emission allowance auction process for 2021-2030 is open for comment until August 6.

By Joern Kassow and Alexander Wilhelm

In order to deepen cooperation in the energy sector and to build up a stronger Energy Union, the European Parliament and the Council revised Directive 2003/87/EC (ETS Directive) in March 2018 to implement the ambitious targets of the 2030 EU Climate and Energy Framework. The European Commission (EC) therefore plans to adjust the rules on auctioning greenhouse gas (GHG) emission allowances to maintain pace with these recent EU Emissions Trading System (EU ETS) developments. Prior to adopting a Delegated Regulation to amend Regulation (EU) No 1031/2010 (Auctioning Regulation), the EC is inviting comments on the draft until August 6, 2019.

EPA’s decision to forego financial requirements will likely face opposition by eNGOs.

By Claudia M. O’Brien and Stacey L. VanBelleghem

On July 2, 2019, the US Environmental Protection Agency (EPA) published its proposed decision not to impose new financial responsibility requirements on the Electric Power Generation, Transmission, and Distribution industry under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), following nearly a decade of litigation, stakeholder input, and EPA assessment.

Section 108(b) and EPA’s Path to This Decision

CERLCA imposes a joint and several liability scheme that holds certain entities (e.g., certain owners and operators, generators, arrangers, and transporters of hazardous substances) liable for the costs or damages associated with environmental remediation. Section 108(b) of CERCLA authorizes EPA[i] to develop regulations requiring owners or operators of certain “classes of facilities [to] establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.” Section 108(b)(2) identifies factors to consider to determine the level of financial assurances necessary in light of the level of risk. These factors include:  “the payment experience of the [Hazardous Substance Superfund], commercial insurers, courts settlements and judgments, and voluntary claims satisfaction.”

In a significant and potentially precedent-setting action, EPA terminates the Clean Power Plan, narrows the scope of required controls to the regulated unit, and axes previously available compliance options.

By Stacey L. VanBelleghem and Robert A. Wyman

On June 19, 2019, the US Environmental Protection Agency (EPA) released its final Affordable Clean Energy (ACE) Rule to replace the Obama Administration’s Clean Power Plan (CPP). Both rules would regulate carbon dioxide (CO2) emissions from existing electric generating units (EGUs) pursuant to Section 111(d) of the Clean Air Act (CAA).[i] EPA made few changes from its 2018 proposal (summarized in this prior Latham post), with the notable exception of EPA’s decision to proceed with a separate rulemaking to finalize its proposed revisions to New Source Review (NSR) rules for power plants.

EPA Rulemakings

EPA’s recent notice announcing the final ACE Rule identifies three actions, which EPA characterizes as “separate and distinct rulemakings.”

ECJ ruling provides EU Member States more flexibility in designing the promotion of renewable energies.

By Jörn Kassow, Alexander Wilhelm, and Apostolos Papadimitriou 

The European Court of Justice (ECJ) recently ruled that the German Renewable Energy Act of 2012 (Erneuerbare-Energien-Gesetz – EEG 2012) did not constitute State aid (C-405/16 P). The ECJ found that the support mechanism for renewable energies in practice financed by electricity consumers paying the so-called “EEG surcharge”, and the reductions for electricity-intensive companies related to the EEG surcharge, do not constitute State aid because they do not involve State resources.

The ECJ ruling on 28 March annulled a November 2014 decision by the European Commission (EC) that approved the German support mechanism for renewable energies as compatible State aid, and for the most part the reduction of the EEG surcharge for electricity-intensive undertakings. However, in that decision the EC had also ordered Germany to recover a limited part of the reductions that was deemed incompatible.

The Green Industry Guidance Catalogue attempts to provide consistent nationwide guidelines for green industries and projects.

By Paul A. Davies and R. Andrew Westgate

Background

On 6 March 2019, seven Chinese regulatory agencies issued the Green Industry Guidance Catalogue (the Catalogue) listing “green industries” that are eligible for funding with green bonds. The seven agencies include the National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology, Ministry of Natural Resources, Ministry of Ecology and Environment (MEE), Ministry of Housing and Urban-Rural Development, The People’s Bank of China, and the National Energy Board.

China’s environmental revolution not only entails implementing a robust, modern policy framework, but also a significant rearrangement of the economy itself — rendering the revolution a priority for both ecological and economic development reasons. As a result, in recent years, all provinces and directly-administered municipalities within China and departments within the Chinese government have introduced policies and measures to promote green industries. However, these policies and measures have been hampered by a lack of uniformity and the application of differing standards in different regions.