In This Issue

U.S. Regulatory Development;

EPA has issued a proposed rule governing the Clean Energy Incentive Program, a voluntary program for states that wish to distribute emission allowances and emission reduction credits that can be used to achieve compliance with the Clean Power Plan, EPA's greenhouse gas program for power plants. California has released draft regulatory amendments to extend the state's greenhouse gas cap-and-trade program to 2030 and make other changes. EPA has issued a finding that greenhouse gas emissions from a range of aircraft engine types endanger public health and the environment, triggering a duty to establish U.S. carbon dioxide emission limits that are expected to be consistent with those of the International Civil Aviation Organization. Details

Climate Change Issues for Management

Stakeholders continue to debate the appropriate level of climate change disclosures to expect from public companies, with some members of Congress urging the Securities and Exchange Commission to apply more aggressively the Commission's 2010 Climate Risk Disclosure Guidance, and others seeking to block that guidance. The investor group Ceres has released a report asserting that U.S. insurance groups are heavily invested in fossil fuel assets, exposing the insurers' investors to risk due to increasing global efforts to reduce fossil fuel use, while missing out on favorable returns provided by clean energy investments. Details

Renewable Energy and Carbon Markets 

The Federal Energy Regulatory Commission issued a final rule eliminating exemptions for wind generators (and an option for solar generators to elect certain exemptions) from the requirement to provide reactive power. FERC found in Order No. 827 that the existing exemption was unjust, unreasonable, and unduly discriminatory and preferential. As a result, all newly interconnecting non-synchronous generators that have not yet executed a Facilities Study Agreement as of the effective date of the order will be required to provide reactive power at the high-side of the generator substation as a condition of interconnection when they execute such an agreement in the future. Details

Climate Change Litigation

The U.S. Court of Appeals for the 8th Circuit held that a Minnesota law limiting both the construction of in-state power plants that would increase carbon dioxide emissions and the importation of power from out-of-state plants having the same effect violated the Commerce Clause of the U.S. Constitution. The U.S. Court of Appeals for the D.C. Circuit has extended the briefing schedule for pending challenges to EPA's greenhouse gas rule for new power plants and rescheduled oral argument in challenges to EPA's rule for existing power plants. A California appeals court upheld the San Francisco Bay Area's regional plan to reduce auto and light truck greenhouse gas emissions by limiting where new housing and job expansions may take place. Details

Climate Change Regulation Beyond the U.S.

In the midst of uncertainty over the long-term impact of the United Kingdom's vote to leave the European Union on the UK's obligations under various EU-based climate change agreements, the UK has adopted its fifth "carbon budget" setting a cap on greenhouse gas emissions for 2028–32. France has adopted several decrees designed to transition national support for the renewable energy industry away from the existing system of feed-in tariffs and toward a compensatory fee regime. While political turmoil in Australia's Parliament makes new climate-related legislation unlikely, the federal government has launched a AUD 1 billion Clean Energy Innovation Fund to invest in emerging technologies that are unlikely to attract sufficient private sector capital. Details