Goods imported into the UK from countries with a lower or no carbon price will face a levy by 2027.

By Paul A. Davies, Michael D. Green, and James Bee

On 18 December 2023, the UK government announced a proposal for a new carbon border adjustment mechanism (UK CBAM). The announcement follows extensive consultation earlier this year on possible measures to mitigate carbon leakage risks and aims to support the UK’s decarbonisation efforts.

The UK has made a number of decarbonisation commitments including reaching net zero by 2050. These commitments to decarbonise can be undermined by “carbon leakage”, in which production of goods and associated emissions move from a jurisdiction with more ambitious climate policies (which add costs to carbon-intensive processes) to another jurisdiction with less ambitious policies, resulting in an overall negative impact on the carbon intensity of the processes/goods themselves. The UK CBAM (or other form of carbon tax) seeks to address this issue by aiming to put a fair price on the carbon emitted during the production of certain carbon-intensive goods entering the UK.

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.

Latham lawyers discuss the business implications of the new legislation.

By Tommy P. Beaudreau, Marc T. Campopiano, Michael J. Gergen, Joshua T. Bledsoe, and Jennifer K. Roy

Senate Bill 100, signed into law by Governor Jerry Brown on September 10, 2018, aims to raise California’s already ambitious renewable energy standards by 2030, with an ultimate mandate of 100% clean energy by 2045. On the same day, Brown issued Executive Order B-55-18, which sets a target of

By Stacey VanBelleghem and Benjamin Lawless

On January 11, 2017, the National Academies of Sciences, Engineering and Medicine (NASEM) released a report, “Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxider,” recommending an updated framework for how the Federal government calculates the social cost of carbon (SCC) in regulatory rulemakings and other economically significant regulatory actions. The SCC is a cost-benefit analysis tool designed to estimate “the net damages incurred by society from a 1 metric ton increase in carbon dioxide emissions in a given year.”

Federal agencies first began engaging in ad hoc efforts to develop SCC estimates following the US Court of Appeals for the Ninth Circuit’s 2008 decision in Center for Biological Diversity v. National Highway Traffic Safety Administration. In 2010, the U.S. Interagency Working Group on Social Cost of Carbon (IWG) issued the first formal, government-wide SCC estimates. The US Government Accountability Office reports that SCC has been used in more than 150 regulatory actions since 2008.  The SCC has been revised in 2013,  2015 and 2016, to reflect new versions of the models upon which the estimates were based. The current SCC estimates a cost of $36 per ton of carbon dioxide for 2015, at a 3 percent average discount rate, with projected increases to $50/ton in 2030 and $69/ton in 2050.

By Paul Davies and Michael Green

France adopted an ambitious energy transition package in August 2015 that sets out various targets designed to achieve the gradual de-carbonisation and increased sustainability of its economy.

The package includes consumption reduction targets, energy production cuts and provisions for a long-term programming scheme for public authorities to manage the country’s energy mix.

The Objective

Consistent with the EU’s energy strategy, France’s objective is to:

  • reduce its energy consumption by 50 percent by 2050 (with reference to 2012 energy consumption levels)
  • achieve an intermediate target of an overall 20 percent reduction by 2030
  • reduce fossil fuels consumption by 30 percent by 2030

In parallel, and perhaps more controversially, France aims to significantly reduce its production of nuclear electricity. France currently sources 75 percent of its electricity from nuclear energy – the highest worldwide – and is targeting a one third reduction of its nuclear energy sourcing by 2025.

By Paul Davies and Andrew Westgate

China’s National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have ordered local authorities to stop construction of coal-fired power plants in 13 provinces where capacity already outstrips demand. A further 15 provinces will be required to delay construction of previously approved coal-fired power plants. These provinces include Shanxi and Inner Mongolia, home to much of China’s coal industry.

These orders reinforce China’s efforts to transition towards a lower-carbon economy – an economy no longer heavily dependent on coal power.

By Paul Davies and Michael Green

dsc20050604_133440_3421In December 2015, world leaders met to negotiate the Paris Agreement. Setting aside whether the Paris Agreement goes too far, not far enough or is just right, one cannot dispute that government commitments to limit an increase in the global average temperature to well below two degrees Celsius will almost certainly impact private equity funds. In particular, regulatory and investor demand are likely to change the way climate-related risks are assessed. As Blackrock notes, “…carbon-heavy industries are not immune from disruption, nor are asset prices from regulatory efforts to mitigate climate change risk. We believe investors should thoughtfully consider these dynamics in order to build sustainable portfolios and take advantage of investment opportunities as we move towards a low-carbon economy”.

The private equity sector is in general paying closer attention to Environment, Social and Governance (ESG) issues throughout the investment cycle, whether voluntarily (for example, KKR’s Green Solutions Platform) or in response to investor pressure. French private equity firms Apax Partners, Ardian, Eurazeo, LBO France and PAI Partners committing to reducing greenhouse gas emissions Private equity goes green across their portfolio companies is perhaps the most recent illustration of this shift in focus.

By Paul Davies and R. Andrew Westgate

This document is a translation of the recently released Tentative Measures for the Administration of Trading of Carbon Emissions Rights promulgated by the National Reform and Development Commission (“NDRC”) on December 10, 2014.  As discussed in a recent article by Latham & Watkins partner Paul Davies, this development represents the first details the NDRC has provided on how the national carbon market in China, currently the world’s second largest consumer of energy, will