On December 19, 2009, 188 of the 193 nations participating in the U.N. Climate Change Conference in Copenhagen, Denmark, agreed to “take note” of the Copenhagen Accord negotiated by more than two dozen countries, including the United States, China, India, Brazil and South Africa. While lacking binding provisions on emissions reductions, the Accord has been touted by some, including President Obama, as an important early step toward a global low-carbon economy, and U.N. Secretary General Ban Ki-Moon and others have already signaled an intent to achieve a legally binding agreement on climate change by the conclusion of the December 2010 U.N. conference in Mexico City.

The Accord expresses a shared commitment to combat climate change and a recognition that deep cuts in global emissions are required according to science, with a stated goal of reducing global greenhouse gas (GHG) emissions so that the increase in average global temperature is held below two degrees Celsius. Under the Accord, developed countries are to pledge economy-wide emissions targets for 2020, and developing countries are to pledge mitigation actions, by January 31, 2010. Importantly, the latter are to be subject to reporting and verification through “national communications with provisions for international consultations and analysis,” recognized as an important concession won from China by the U.S. that may increase Congressional willingness to enact national climate change legislation.

The Accord recognizes that different approaches to global climate change should be required of developed versus developing countries, and it includes a pledge of $100 billion in support to developing countries by 2020. The countries were in broad agreement in only a few areas, notably the importance of reducing emissions from deforestation and forest degradation, and enhancing greenhouse gas removal by forests through the use of positive incentives like the U.N.’s REDD-plus mechanism, which rewards countries for forest preservation and allows other countries to satisfy some of their own obligations by contributing to the preservation efforts of others.

While the Accord itself will have no direct impact on how business is conducted at home or abroad, it nonetheless sets the stage for commitments by the signatories, including the U.S., that could be backed up by enforceable legislation and regulations. Even though an ambitious and legally binding agreement was not reached in Copenhagen, however, businesses cannot simply put the issue of carbon management on the back burner. In June, the House passed climate change legislation and a companion bill has been proposed (although currently stalled) in the Senate. Also, as we have previously reported (Mandatory Greenhouse Gas Reporting Rules Finalized: First Step Toward Regulating Carbon Emissions and EPA Makes It Official: Greenhouse Gases Threaten Public Health and Welfare), the Minnesota legislature has mandated reporting of greenhouse gas emissions for certain facilities and the U.S. EPA has issued a final rule requiring mandatory reporting of GHG emissions from large sources (those that emit over 25,000 metric tons per year), with data collection requirements beginning on January 1, 2010. Businesses should now be measuring their carbon footprint and identifying potential reduction measures through energy efficiency and/or GHG abatement (including use of renewables) in order to be prepared for, and to take advantage of, opportunities in a carbon-constrained world which, despite the limited progress in Copenhagen, is still likely on its way.

Meanwhile, litigation over GHG emissions is moving forward through the courts. In three cases pending in the federal courts, plaintiffs have sued energy companies for public and private nuisance, trespass and negligence claims on the theory that the defendants' GHG emissions have contributed to global warming.

  • On September 21, 2009, in Connecticut v. Am. Elec. Power Co., the Second Circuit reversed a district court decision dismissing a lawsuit brought by eight states, the City of New York and several nonprofit land trusts against the nation's five largest electric power companies. The Second Circuit found that the claims did not involve nonjusticiable political questions.
  • On October 16, 2009, in Comer v. Murphy Oil USA, the Fifth Circuit reversed a district court ruling that coastal residents in Mississippi who were affected by Hurricane Katrina could not pursue a class action against a number of energy, oil refining and chemical manufacturing companies whose GHG emissions were alleged to have contributed to climate change and thereby increased the damage caused by the hurricane.
  • In a decision rendered after the Second Circuit decision but before the Fifth Circuit ruling, the District Court for the Northern District of California dismissed a nuisance claim against numerous oil and power companies for contributing to climate change in a way that threatened an Alaskan village due to vanishing sea ice and more powerful storms allegedly caused by global warming. The plaintiff in that case, Native Village of Kivalina v. ExxonMobil Corp., sought damages for the cost of moving the village to a less vulnerable location. The dismissal is now on appeal to the Ninth Circuit.

While the plaintiffs in these cases are a long way from prevailing on the merits, the conflicting law regarding GHG liability is likely to spawn more litigation, especially in the absence of definitive regulation at the state and federal levels. If Congress does not enact clear legislation in this area, the Supreme Court likely will be called upon to determine whether those who are particularly susceptible to the adverse effects of climate change can obtain relief in court.

Thus, while Copenhagen itself may represent only a minor step towards comprehensive carbon regulation, along with other developments taking place in this area, it likely indicates that more could be on its way soon.