The Climate Report

In This Issue

U.S. Regulatory Developments

California has amended its statutory greenhouse gas reduction program to add a targeted 40 percent reduction in such emissions over the decade from 2020 to 2030, and to favor direct emission reductions over emission credit trading. President Obama has established an interagency working group to recommend how climate change impacts should be considered in setting U.S. national security policy. In response to decisions by the U.S. Supreme Court and the U.S. Court of Appeals for the D.C. Circuit, U.S. EPA has proposed modifications to its permitting programs that address greenhouse gas emissions.

Climate Change Issues for Management

In Ohio, a range of business interests and Governor John Kasich support the lifting of a freeze on the state's renewable energy requirements for in-state utilities. According to the U.S. Energy Information Administration, energy-related CO2 emissions for the first six months of 2016 were the lowest since 1991. U.S. EPA has accused the Federal Energy Regulatory Commission of failing to undertake a proper analysis of climate change in its final environmental impact statement for the 160-mile TransCanada Corp. Leach Xpress pipeline.

Renewable Energy and Carbon Markets

The parties have agreed to settle a derivative lawsuit filed against SunEdison, Inc. in the Delaware Chancery Court on behalf of TerraForm Power, SunEdison's affiliated yieldco, by one of the yieldco's largest stockholders. The claim arose from alleged self-dealing by SunEdison in connection with an agreement under which TerraForm Power agreed to purchase residential solar assets that SunEdison was to acquire through a merger with Vivent Solar, Inc. The case is the latest cautionary tale on the importance of empowering a yieldco to maintain its independence in matters of corporate governance.

Climate Change Litigation

An en banc U.S. Court of Appeals for the D.C. Circuit heard seven hours of oral argument in a pending challenge to U.S. EPA's Clean Power Plan, which regulates greenhouse gas emissions from existing fossil fuel power plants. The Center for Biological Diversity has sued EPA in the U.S. District Court for the District of Columbia, alleging that the Clean Water Act requires EPA to address ocean acidification caused by greenhouse gas emissions. Environmental groups have challenged in the D.C. Circuit FERC's approval of the Southeast Market Pipelines Project, alleging that the Commission failed to consider climate change impacts. EPA has moved for summary judgment in Murray Energy's federal lawsuit alleging that EPA failed to consider the economic impact of climate change regulations on the coal industry.

Climate Change Regulation Beyond the U.S.

The European Union has collectively ratified the 2015 Paris Climate Agreement. When added to ratification documents previously submitted to the United Nations by China and the United States, 72 countries accounting for 56.75 percent of global greenhouse gas emissions will have ratified the agreement, exceeding the 55-nation/55-percent thresholds for the agreement to take effect. Representatives from about 200 countries met and agreed in Rwanda to amend the 1989 Montreal Protocol to significantly reduce emissions of refrigerants known as hydrofluorocarbons. France has announced that it will be the first country to issue national "green bonds" to finance environmental projects, starting in 2017.