The Climate Report - Spring 2017
U.S. Regulatory Developments
On March 28, 2017, President Trump signed Executive Order 13783, "Promoting Energy Independence and Economic Growth," establishing goals to support development of domestic energy, keep electricity prices low, reduce regulatory burdens, and promote clean air and water through regulations based on best-available science. Federal agencies, including EPA, must evaluate existing programs for compliance with the EO by September 2017. A divided California Court of Appeal has held that the California Air Resources Board's auctions of greenhouse gas emission allowances are authorized by state law and do not amount to an unconstitutional tax.
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Climate Change Issues for Management
Environmental and climate-related shareholder resolutions have become prevalent in recent years, particularly as large institutional investors have devoted more attention to climate risks to their portfolios. The Securities and Exchange Commission has denied most requests from companies to exclude such resolutions under their proxy materials. However, proposed federal legislation would substantially raise the ownership stake necessary to submit proxy proposals. To promote "green finance," the China Securities Regulatory Commission is considering expanded emissions disclosure obligations for publicly listed companies.
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Renewable Energy and Carbon Markets
In the past, the market for building renewable power projects and for purchasing their output was largely driven by mandates and incentives from the federal and state governments, including state renewable portfolio standards and federal tax credits for wind and solar power. Recently, however, demand for renewable power from corporate America—driven by the growth of voluntary corporate sustainability goals—has emerged as a new and additional force driving the deployment of wind turbines and solar panels.
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Climate Change Litigation
Briefing before the U.S. Court of Appeals for the D.C. Circuit is complete in a case challenging the Department of Energy's approval of plans to export liquefied natural gas from terminals in Texas and Louisiana. The D.C. Circuit has ordered that petitions for review of U.S. EPA's Clean Power Plan be held in abeyance for 60 days while U.S. EPA considers the future of the CPP. The D.C. Circuit also indefinitely postponed oral argument on challenges to U.S. EPA's 2015 requirement that 36 states incorporate more stringent "startup, shutdown, or malfunction" provisions in their Clean Air Act state implementation plans, after the new Administration announced that it was assessing the future of the challenged rule.
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Climate Change Regulation Beyond the U.S.
The French government has proposed measures to align the country's corporate environmental reporting obligations with European Union rules. On climate change, the proposed ordinance would require the annual reports of covered companies to address the climate change consequences of the company's operations and of the use of the goods and services it produces. Companies would also have to detail their financial risks related to climate change impacts and measures implemented to reduce those risks.
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