The Airports National Policy Statement is ruled illegal as a result of government failure to take account of its Paris Agreement commitments.

By Paul A. Davies and Michael D. Green

In R (Plan B Earth and Others) v. Secretary of State for Transport and others, the Court of Appeal in England (the Court) heard an appeal in relation to a judicial review of the UK government’s Airports National Policy Statement (ANPS). The UK government had effectively provided its support for the construction of the third runway at Heathrow under the ANPS, which was the subject of appeal by a number of local authorities and environmental NGOs. In the first instance, these local authorities and NGOs were unsuccessful. However, the Court determined that, in making the ANPS, the Transport Minister had not taken into account the UK’s commitments in the UNFCCC Paris Agreement (the Paris Agreement). Therefore, the ANPS was considered illegal.

The legislation includes six key measures to cut greenhouse gas emissions and to reach carbon neutrality by 2050.

By Paul A. Davies and Michael D. Green

The French Parliament has adopted a new climate energy package to tackle the effects of climate change and boost France’s energy transition endeavors to reach carbon neutrality by 2050. As per Article 4.1 of the 2015 Paris Agreement, carbon neutrality is defined in the package as the balance, across the national territory, between anthropic emissions by sources and removal of greenhouse gases by sinks. Six key goals comprise this latest legislation.

The UK is the first major economy and G7 country to adopt the target following the CCC’s May 2019 recommendation.

By Paul A. Davies and Michael D. Green

Adoption of 2050 Net-Zero Target

UK Prime Minister Theresa May has confirmed that the UK government will adopt the Committee on Climate Change’s (CCC’s) recommended net-zero target by 2050, and will formalize that adoption through legislation. The new target supersedes the 80% greenhouse gas (GHG) reduction by 2050 target, contained in the Climate Change Act 2008. The Climate Change Act 2008 will be amended to incorporate the new net-zero target via statutory instrument, which has already been laid before Parliament.

The UK is the first major economy, and the first of the G7 group, to adopt a net-zero target, under which GHG emissions must be balanced by initiatives such as improved use of renewable energy, tree planting, carbon capture and storage technologies, and carbon offset schemes. The CCC’s recommended target is considered to be one of the toughest climate change targets in the world.

The Committee has recommended that the UK government take the lead in reaching net-zero, through social, financial, and policy change.

By Paul A. Davies and Michael D. Green

The Committee on Climate Change (CCC), a statutory body that advises the UK government on carbon budgets, has recommended that the UK government should commit to cutting greenhouse gases (GHGs) to net-zero by 2050 in an attempt to meet its commitments under the 2015 Paris Agreement. The Financial Times described the proposed goal as the “toughest binding target of any big economy.”[i] To meet this ambitious net-zero target, the UK government would need to employ technologies such as carbon capture, utilization, and storage to curtail the volume of GHGs entering the atmosphere. Chris Stark, chief executive of the CCC, remarked that the UK’s bid to reach net-zero will be a “powerful signal to other countries”[ii] to take action.

The Coal Commission’s phase-out proposal includes a €40 billion federal spending package for affected states.

By Jörn Kassow and Patrick Braasch

A German government-appointed body, known colloquially as the “Coal Commission”, has agreed to end coal-fired power generation by 2038. In an effort to meet Germany’s climate goals under the Paris Agreement, the Coal Commission proposes to gradually reduce Germany’s current coal power capacity of 42.6 GW to 30 GW by 2022 and 17 GW in 2030. A review is scheduled in 2032 to decide whether to bring forward the final phase-out from 2038 to 2035.

Coal-burning provided for 40% of Germany’s power mix in 2017, which is well above the EU-28 average of 21% in 2016, and was exceeded only by Bulgaria (45%), Greece (46%), the Czech Republic (54%), and Poland (81%). Coal-fired power plants accounted for 28% of Germany’s total CO2 emissions in 2016, while generating 70% of the energy sector’s total emissions in the same year. Germany will also close its last nuclear plants in 2022, which, as of 2017, still provided for 12% of the power mix. All considered, the country will see a fundamental change in its energy production landscape in the coming years.

Initiative will advance the UK’s Paris Agreement targets by serving as a “one-stop shop for world-leading climate science, and for capital.”

By Paul A. Davies and Michael D. Green

UK Chancellor, Philip Hammond, has announced plans to launch a Green Finance Institute (GFI), through funding from both the UK government and the City of London Corporation. The initiative aims to help the UK reach its climate targets under the Paris Agreement by developing and promoting investment in the green finance market, while bolstering the future of the UK’s financial services sector. According to the Chancellor, the establishment of the GFI will mean that “firms from across the world can access our one-stop-shop for world-leading climate science, and for capital.”

The move reflects recommendations from the Green Financial Taskforce that were published in a March 2018 report. In the report, the Green Financial Taskforce suggested establishing a specific institute with the purpose of promoting green finance in order to expedite and enhance sustainable finance in the UK.

The EU has agreed that one third of energy use should be from renewable sources and encourages the use of renewable electricity or biofuels sourced from waste rather than crops.

By Paul A. Davies and Michael D. Green

After 18 months of negotiations, the EU has increased its renewable energy target from 27% to 32% for the years 2020 to 2030. The European Parliament and Council will formally approve the agreement in the near future, so it can be set into EU law in the form of the EU Renewable Energy Directive (RED II).

The EU has agreed that by 2030, just under one third of energy use in the EU should be from renewable sources. The trade body for European energy utilities has described the deal as a “well-balanced compromise”. Miguel Arias Cañete, the climate and energy commissioner, noted that “the binding nature of the target will also provide additional certainty to the investors”.

Increased manufacturing offshoring and industrial activity may prevent China from reaching its commitments, despite a booming renewable energy sector.

By Paul A. Davies, Kimberly Leefatt, and R. Andrew Westgate

China’s carbon emissions increased by 4% in the first quarter of 2018 — marking the biggest hike in carbon emissions in the last seven years, according to an article published by China Economic Review. Increased industrial activity is due in large part to the government’s financial support of furnaces and kilns meant to stimulate the economy. However, industrial growth could prevent China from achieving its Paris Agreement targets, despite the country’s reduction in coal use and commitment to promoting renewable forms of energy.

Increasing Carbon Emissions

China is responsible for approximately 30% of global carbon emissions. In fact, China emits twice the amount of CO2 per dollar of gross domestic product compared with the United States, and more than in the European Union.

Measures aim to establish consistent criteria for sustainable investments, as well as clear market standards for investors.

By Paul A. Davies and Aaron E. Franklin

Overview

The European Commission (EC) has set out its first proposal for “concrete actions” to help the EU financial sector take the lead in establishing a greener economy and supporting the Paris Agreement. These legislative proposals, which were published on 24 May 2018, follow the release of the EC’s Action Plan on sustainable finance on 8 March 2018 (more information on the Action Plan is available in this Latham blog post).

If the changes are adopted, they would be implemented through a series of delegated acts to establish the environmental taxonomy, followed by a fitness check of EU legislation on public corporate reporting and amendments to non-binding guidelines on non-financial reporting. The EC would also adopt a prospectus for green bond issuances and would publish a comprehensive study on sustainability ratings and research. Finally, the EC would create ecolabels for financial products and explore possible measures to see how climate and environmental risks can be incorporated into banks’ risk management policies aligning with the EU taxonomy.