The Climate Report
In This Issue
U.S. Regulatory Developments
U.S. EPA plans to propose greenhouse gas standards for new and modified oil and natural gas production sources in the summer of 2015. The California Court of Appeal is considering whether the state's criteria for greenhouse gas emission offset projects meet a statutory requirement that they generate emission reductions that would not otherwise occur. California state officials have moved to dismiss a challenge to the state's low carbon fuel standard by out-of-state fuel producers and transporters. The Council on Environmental Quality is taking comment on new draft guidance on how federal agencies should consider the climate change impacts of proposed projects.
Climate Change Issues for Management
As the scope of U.S. EPA's greenhouse gas regulatory program expands, more public companies will need to consider the scope of climate change disclosures required under the U.S. Security and Exchange Commission's Regulation S-K. Energy companies and large banks are increasingly the target of shareholder resolutions related to climate change, carbon asset risk, and greenhouse gas emissions. Shareholders of BP and Shell will vote on such resolutions, filed by a coalition of more than 50 institutional investors, at annual meetings this spring, and more than 100 such resolutions have already been submitted for 2015, according to the investor group Ceres.
Renewable Energy and Carbon Markets
Federal investment tax credits, falling installation costs, and expanding third-party financing have supported unprecedented growth in U.S. solar power installations over the past few years. The residential solar sector is now outpacing other sectors, in large part due to the "third-party-owned" model, in which developers purchase, install, lease, and maintain rooftop systems in exchange for the homeowner's 20-year commitment to purchase the energy at a low, fixed rate. Debate continues over how customers should be compensated for feeding solar power back into the electricity grid, with utilities arguing that credits at the full retail rate shift some fixed costs to other customers.
Climate Change Litigation The statute under which former Governor Dave Heineman approved the Nebraska route of the Keystone XL pipeline survived review by the Nebraska Supreme Court. The same day, Congress took up consideration of legislation approving the pipeline. The U.S. Court of Appeals for the D.C. Circuit is considering how to implement the U.S. Supreme Court's partial invalidation of U.S. EPA's greenhouse gas "Tailoring Rule." The California Court of Appeal held that the environmental impact report for San Diego's 2050 Regional Transportation Plan/Sustainable Communities Strategy violated the state's Environmental Quality Act by not adequately considering climate change impacts.
Climate Change Regulation Beyond the U.S.
The 20th session of the Conference of the Parties of the United Nations Framework Convention on Climate Change wrapped up in December 2014 in Lima, Peru, with agreement on the draft elements of proposed international agreement to replace the 1997 Kyoto Protocol. China has announced plans to achieve "peak" carbon emissions by 2030 or earlier and to establish a nation carbon emissions trading market be 2016. Under the United Kingdom's Energy Savings Opportunity Scheme, large business entities must provide the UK's Environment Agency with the results of comprehensive audits of their energy usage by December 5, 2015.
