In an extended Earth Day event, President Biden hosted the virtual Leaders Summit on Climate (“Summit”) on April 22 and 23, seeking to unite nations around the world in the goal of reducing global greenhouse gas (“GHG”) emissions. Forty international leaders attended the much-anticipated event, including China President Xi Jinping, Russia President Vladimir Putin and United Kingdom Prime Minister Boris Johnson. The Summit marks the United States’ return to the world stage as a leader in climate regulation. The following summarizes key announcements from the Summit.
Emissions Reduction Pledges
At the outset of the Summit, President Biden announced the United States’ emissions reduction pledge: to achieve a 50-52% reduction from 2005 levels in “economy-wide” net GHG emissions by 2030. This 2030 emissions target is the US’s “nationally determined contribution” (“NDC”), representing the United States’ voluntary emission reduction under the Paris Agreement.
In announcing this target, the Biden Administration urged other nations that had not yet made climate pledges to commit to emissions reduction targets, or for many other leading economies—such as the UK and members of the European Union—to reaffirm or strengthen existing climate policies. Following the call to action, several countries publicly announced bolder climate pledges prior to, and during, the Summit. The UK has committed to cut emissions by 78% by 2035 compared to 1990 levels,1 thereby strengthening the target in its sixth carbon budget2; Canada aims to reduce emissions by 40-45% below 2005 levels by 2030; Japan seeks to reduce emissions by 46% from 2013 levels by 2030; and Brazil has committed to achieve carbon neutrality (net-zero carbon dioxide emissions) by 2050. Some countries—notably, China, India and Russia—did not announce any new emissions reduction targets.
While the targets are clear, the United States’ path to meeting the emissions reduction goals still lacks detail. The Biden Administration has issued some relevant policies already, and future federal actions—including in the regulatory arena—are expected to enumerate specific mandates to achieve emissions reductions. For example, Executive Order 14008 on Tackling the Climate Crisis at Home and Abroad (“E.O. 14008”)—analyzed in a prior WilmerHale alert here—outlines a plan to achieve by 2035 a carbon pollution-free electricity sector. E.O. 14008 expressly prioritizes renewable energy development and directs the National Climate Task Force to identify methods to increase renewable energy production on public lands and offshore waters, including by doubling offshore wind generation by 2030. E.O. 14008 emphasizes the need for sustainable infrastructure to reduce climate pollution, and positions that goal as an opportunity to create new construction, manufacturing, engineering, and skilled-trades jobs. Similarly, the American Jobs Plan—summarized in a prior WilmerHale alert here—details investments in electric vehicles, infrastructure (including transmission lines for clean energy), and energy storage technology. Those federal actions, as well as others expected to come, will identify the path to achieving the US’s emissions reductions.
Financing Climate Change Action
Taking advantage of the Summit’s international stage, the Biden Administration released its Climate Finance Plan (the “Plan”)—an element of January’s E.O. 14008—which sets forth the “strategic orientation for the future of US climate finance that will guide the work of the relevant US government agencies.”3 Under the Plan, the United States commits to doubling its annual climate financing to developing countries, relative to the average level during fiscal years 2013-2016, in order to assist those countries in reducing or avoiding GHG emissions and adapting to climate change impacts. Agencies including the US Agency for International Development and the US International Development Finance Corporation are directed to prioritize climate in public investments. Agencies are also directed to mobilize private capital for climate projects through expanded partnerships, better inter-agency coordination and a focus on increased climate-related investments.
The Department of the Treasury will play a significant role under the Plan in facilitating public and private climate finance. Last week, Treasury Secretary Janet Yellen outlined Treasury’s commitment to direct public investment to promote the transition to net-zero emissions. Secretary Yellen also emphasized the need for significant private capital to achieve climate goals, and the related importance of providing reliable climate data to investors. To meet the latter goal, Secretary Yellen has tasked the Financial Stability Oversight Council—a group of experts within Treasury that identifies risks to the stability of the United States financial system—with managing and assessing the financial risks associated with climate change and sharing critical data with private investors and regulators.
The Plan also calls for scaling back the United States’ public investment in fossil fuel energy projects, describing such a reduction as a “necessary corollary” to boosting investments in climate-friendly activities. The Plan stops short of any firm commitments to end all international investments in carbon-intensive energy projects, citing potential national security or other reasons to support such projects on a limited basis. By contrast, South Korea announced at the Summit that it will stop financing overseas coal power plants. It remains to be seen if other major players in international finance will take as clear a stance against fossil fuel investments.
Additional Climate Initiatives
Although the Summit focused on international engagement by formalizing the United States’ renewed commitment to contribute to the goals of the Paris Agreement, the Administration has taken the opportunity presented by Earth Day to underscore the whole-of-government approach introduced in E.O. 14008.
In addition to Secretary Yellen’s announcements discussed above, Secretary Pete Buttigieg announced that the Department of Transportation (DOT) will rescind its interpretative statements made during the Trump Administration, using the preemptive requirement related fuel economy standards to also preempt vehicle emissions related to GHG standards or ZEV mandates. That DOT interpretive statement set the stage for the Trump Administration’s Environmental Protection Agency (EPA) to revoke California’s waiver under the Clean Air Act to set its own more stringent fuel emission standards. EPA has announced its intent to restore California’s authority. Both Secretary Buttigieg and Environmental Protection Agency Administrator Michael Regan also said last week that new substantive emissions standards are coming this summer.
The Biden Administration has also emphasized the nexus between climate change and national security. Speaking at the Summit, both Secretary of Defense Lloyd Austin and Director of National Intelligence Avril Haines emphasized that climate change is a national security issue and central to U.S. foreign policy. And the Central Intelligence Agency announced that its declassified World Factbook will now include country data on climate change and other environmental topics.
Businesses should closely monitor developments as the Biden Administration enumerates its policy agenda to meet the targets announced at the Summit—an agenda that likely will seek to induce changes across the economy to incent greater investment and development of climate-friendly energy products and technologies that are necessary to combat climate change.