Climate Policy Outlook: 4 stories to know this week
California makes it legally easier for communities to hold oil companies accountable for pollution; 14 banks back nuclear power at NYC Climate Week. Read More
Week of Oct. 7, 2024
Supreme Court allows the continuation of Biden’s climate rules to decrease toxic emissions
The Supreme Court upheld the Biden administration’s regulations aimed at reducing methane emissions from oil and gas facilities, which are crucial for tackling climate change. The regulations, finalized in March, are designed to cut methane emissions by up to 80 percent over the next 14 years. They faced challenges from Republican states and industry groups, who argue that the EPA overstepped its authority under the Clean Air Act.
The court also dismissed a request to block new mercury regulations for coal-fired power plants, which aim to further limit toxic emissions and have been shown to provide significant health benefits. Litigation on these matters will continue in lower courts, while a separate challenge regarding greenhouse gas emissions from coal and gas plants also remains pending. Read more at NBC.
Treasury Department promises hydrogen tax credits before 2025
The U.S. Treasury Department is set to finalize rules for the clean hydrogen tax credit and advanced manufacturing tax credits by the end of the year, according to Deputy Treasury Secretary Wally Adeyemo. While many rules from the Inflation Reduction Act (IRA) are completed, not all 18 tax credits will be finalized before President Joe Biden’s term ends.
A key concern is how hydrogen producers using electrolysis will manage indirect carbon emissions from electricity sourced from the grid. There are competing proposals on how to handle this, with industry advocates pushing for more flexible rules. The hydrogen credit has significant financial implications, potentially providing up to $3 per kilogram of hydrogen produced, which could subsidize emissions if not structured correctly.
Adeyemo believes the tax credit’s incentives will ensure compliance from companies. However, companies and environmental groups have threatened lawsuits if the rules do not meet their expectations.
In addition to hydrogen, there are still uncertainties regarding other tax credits, including those for low-carbon aviation fuel and electric vehicle charging equipment. Adeyemo noted that the Treasury has limited resources to address the numerous comments and rule-making tasks, which may lead to delays in finalizing other tax credits. Read more at Heatmap.
Europe moves closer to approving increased tariffs on Chinese EVs
European countries are poised to approve increased tariffs of up to 45 percent on electric cars imported from China, intended to protect local carmakers from cheaper, subsidized vehicles. The tariffs will range from 7.8 percent for Tesla cars to 35.3 percent for those from SAIC, in addition to the existing 10 percent tariff on all imported cars.
While countries such as France, Italy and Poland support the tariffs, Germany opposes them due to concerns about potential retaliation from China, given the heavy investments of German automakers there. Spain has also shifted its stance, calling for a compromise after a recent diplomatic visit to China.
The tariffs result from an EU investigation into Chinese government subsidies for electric vehicles. Although the EU is required to vote on the tariffs, officials are open to further negotiations with China that could lead to the tariffs being dropped if an agreement is reached.
The automotive sector is vital to the European economy, employing 13.8 million people and accounting for 7 percent of EU output, but is facing declining sales and increasing competition from China, which has seen a sevenfold increase in electric vehicle registrations over the past three years. Some analysts believe fears of a trade conflict are exaggerated, highlighting China’s reliance on the European market as the U.S. market tightens. Read more at the New York Times.
Duke Energy delays retiring coal plant in Indiana
Duke Energy proposed a three-year extension for the Gibson power plant in Indiana, allowing it to remain operational until 2038. This plan includes retrofitting the plant to run on natural gas or coal to meet projected electricity demand. While Duke argues that the extension provides necessary resources and flexibility, environmental advocates criticize it as an overreliance on fossil fuels, suggesting it undermines previous progress towards reducing emissions.
Indiana’s historical dependence on coal — ranking fourth nationally in coal-generated electricity — complicates the transition to renewable energy. Despite past commitments from Indiana utilities to phase out coal, Duke’s new plan raises concerns about backtracking.
Duke’s proposal includes retrofitting some units at Gibson for dual fuel use and converting other coal plants to natural gas. Although it incorporates plans for new wind and solar energy, much of this is slated for later years, leading to skepticism about the company’s commitment to emissions reduction. Duke maintains that its carbon reduction goals remain intact but acknowledges that progress will not be linear as it transitions away from coal. Read more at InsideClimate News.
Commissioner races take the spotlight as climate exacerbates insurance rates
There is a growing urgency around climate-related issues this election season as natural disasters increasingly disrupt the insurance market, particularly in states such as California, Florida and Louisiana.
State insurance commissioners, traditionally low-profile officials, are under scrutiny as voters become more aware of the connection between climate change and insurance costs. The average home insurance premium surged by 33 percent from 2020 to 2023, with disaster-prone areas experiencing even steeper increases. This has prompted heightened voter interest in insurance commissioner races, particularly in states such as North Carolina, where significant rate hikes have sparked public outrage.
Candidates are increasingly pressured to address these issues transparently, balancing the need for affordable insurance with the reality of rising risks due to climate change.
Economists suggest that a combination of factors — including increased construction in disaster-prone areas and inflation — are driving up insurance costs. The reinsurance market, which protects insurers from catastrophic losses, has also seen a rise in premiums, contributing to higher costs for consumers.
As voters grapple with the implications of rising insurance rates, candidates such as Natasha Marcus in North Carolina advocate for more transparency in the insurance process and greater investment in resilience measures. This evolving political landscape highlights the urgent need for insurance regulation that acknowledges and addresses the realities of climate change. Read more at Grist.
Week of Sept. 30, 2024
California emboldens local government action against oil companies
California Gov. Gavin Newsom signed in three new laws aimed at holding oil companies accountable and protecting communities from the harmful effects of oil drilling. The new legislation, celebrated by community advocates, is the result of over a decade of organizing against fossil fuel pollution, particularly in areas heavily populated by Black and Latino residents.
Key provisions include:
- Granting local governments the authority to restrict oil drilling
- accelerating the plugging of idle wells
- penalizing low-producing wells in sensitive areas such as the Baldwin Hills Conservancy.
These laws were passed despite strong opposition from the oil industry.
At the signing event, advocates emphasized the importance of these measures for public health, especially for children living near active oil sites. While this is seen as a significant step forward, community leaders said they remain committed to monitoring the implementation of these laws to ensure they effectively protect public health and the environment. Read more at InsideClimate News.
Fourteen banks publicly endorse nuclear energy production at NYC Climate Week
During Climate Week in New York City, international corporations and policymakers gathered to announce significant climate initiatives. Key highlights included:
- Nuclear energy support: Fourteen financial institutions, including Citigroup and Goldman Sachs, backed a United Nations initiative to triple global nuclear energy capacity by 2050. John Podesta, a senior adviser to President Biden, emphasized the role of nuclear energy in achieving a sustainable future.
- U.S. Green Banks Coalition: Over 40 U.S. green banks launched a national partnership to share strategies for accelerating the clean energy transition, leveraging funding from the Inflation Reduction Act. The coalition aims to enhance collaboration and support among green financial institutions.
- Innovative carbon removal projects:
- Frontier signed a groundbreaking deal with CarbonRun for river liming, committing $25.4 million to remove over 55,000 tons of CO2 by 2029.
- Climeworks partnered with British Airways to provide carbon removal services, marking a step toward integrating carbon removal into aviation’s climate strategy.
Harris unveils proposed ‘America Forward tax credit’ to renewable energy industry
Vice President Kamala Harris outlined her economic agenda, emphasizing the need for increased domestic mineral production and the creation of a mineral stockpile using wartime authority under the Defense Production Act to reduce reliance on China.
- Her plan includes an “America Forward tax credit” aimed at supporting industries that can help combat climate change, such as sustainable materials, clean energy manufacturing and semiconductors.
- The credits would also provide incentives for biotechnology, AI data centers and transportation sectors, with added benefits for investments in communities historically tied to fossil fuel production.
Harris called for permitting reform to expedite infrastructure approvals, sparking debate over potential weakening of environmental reviews. While the plan seeks to lower energy costs and boost production, it does not clarify the role of fossil fuels, despite Harris previously highlighting record oil production under the Biden administration. Read more at The Hill.
EU confronts the dominance of Chinese renewable energy tech with new hydrogen auction rules
The European Union has revised its hydrogen grant auction rules to reduce dependency on China for renewable energy components.
- The EU’s Hydrogen Bank will hold its second auction Dec. 3, offering up to $1.34 billion for new projects.
- New regulations will limit the use of Chinese-made parts to no more than 25 percent of a project’s production capacity, addressing concerns that previous grants favored cheaper Chinese components.
The move aligns with a report by former European Central Bank head Mario Draghi that cautioned against economic decline due to over-reliance on foreign industries. Draghi recommended focusing on sectors where the EU still has competitive advantages rather than heavily foreign-dominated areas such as solar panels. Read more at Reuters.
Week of Sept. 23, 2024
The IRA spurs $115 billion in clean energy manufacturing
The U.S. in August announced $2.4 billion in new clean energy manufacturing projects, including electric sports cars in Virginia and a facility in New Mexico, as part of a broader investment wave triggered by the Inflation Reduction Act (IRA). Enacted in August 2022, the IRA aims to establish a domestic clean-tech manufacturing base, reducing reliance on foreign imports, especially from China.
Since the IRA’s implementation, more than $115 billion has been pledged for U.S. manufacturing of solar, wind, battery and electric vehicle components, resulting in the creation of more than 42,000 jobs in 2023 alone. Experts highlight that while progress is being made, significant work remains to meet climate goals without imports.
Overall, the trend of new investments is positive, despite some challenges, with many projects set for completion in the coming years. Advocates believe these developments could lead to the U.S. emerging as a leader in the green transition on the New York Stock Exchange, now delayed amid opposition from various groups. This lawsuit serves as a cautionary tale for other companies about the importance of transparency in environmental claims, highlighting the potential business risks associated with misleading marketing. Read more at Canary Media.
Biden administration gives $3 billion to battery storage
U.S. Energy Secretary Jennifer Granholm announced Sept. 20 that new funding will support battery manufacturers in meeting the rising demand for U.S.-made electric vehicles. Since the Inflation Reduction Act was passed in August 2022, companies have pledged about $128 billion for clean energy projects, with $23.3 billion specifically for battery and storage initiatives. This funding is part of a strategy to reduce U.S. reliance on foreign imports, particularly critical minerals such as lithium, much of which is sourced from China.
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Granholm noted that due to these investments, the U.S. is on track to produce a quarter of the world’s lithium, significantly increasing its market share. The funding also aligns with the Biden administration’s goal of creating a domestic supply chain for batteries and critical minerals. Additionally, the U.S. is implementing trade measures, including increased tariffs on China-made EVs and related goods, to protect these investments.
This latest funding round is part of nearly $35 billion allocated for domestic critical mineral and battery supply chains, with a focus on supporting disadvantaged communities through the Justice40 Initiative, which aims to direct 40 percent of federal investments to marginalized areas. Read more at Utility Dive.
4 Ohio cities get $10 million from the IRA
Four major Ohio cities — Cincinnati, Cleveland, Columbus and Dayton — are collaborating on a new initiative funded by a $10 million grant from the Inflation Reduction Act to develop voluntary building performance standards and a resource hub. This project, the Ohio High Performance Building Hub, aims to assist commercial building owners in saving energy and reducing emissions, addressing the significant contribution of buildings to greenhouse gas emissions in the state.
The hub will provide technical guidance 421 million square feet of commercial space across these cities with financing solutions and training. With Ohio’s history of weakened energy efficiency measures, this initiative offers a fresh approach to improving existing buildings rather than focusing solely on new construction.
Unlike mandatory codes, the proposed standards are voluntary, designed to encourage participation through incentives rather than penalties. This approach aligns with local political dynamics, where imposing strict requirements has faced resistance.
The cities plan to adopt benchmarking policies to track energy use progress and expect to reduce energy consumption by 45 percent by 2050. Equity considerations are central to the initiative, ensuring that it supports historically underserved communities without adding further burdens. Outreach and education efforts will be key to the program’s success as the cities prepare to implement these new standards. Read more at Energy News Network.
SEC quietly disbands Climate & ESG Taskforce
The Securities and Exchange Commission (SEC) quietly disbanded within the last several months its Climate and ESG Task Force, a group formed in March 2021 to combat misleading environmental, social and governance (ESG) disclosures. Initially created under Acting SEC Chair Allison Lee and continued by Chair Gary Gensler, the task force was involved in several high-profile cases against companies such as Bank of New York Mellon and Goldman Sachs.
An SEC spokesperson stated that the group’s expertise has been integrated across the Enforcement Division, citing the effectiveness of their strategy. However, both the SEC and companies are increasingly distancing themselves from the term “ESG” amidst a backlash from conservative groups. The SEC also removed ESG from its examiners’ priorities and is unlikely to finalize pending ESG regulations before the next presidential administration begins in January.
While the task force’s last major enforcement action linked to ESG was a September 2023 settlement with Deutsche Bank for misleading investors, the agency’s commitment to addressing ESG-related fraud continues, as noted by Enforcement Division Director Gurbir Grewal. However, the task force’s work was downplayed, with related content removed from the SEC’s website in June, just before a major site revamp. Read more at Bloomberg Law.
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