Insights

The Climate Report - Winter 2018

Read the full Climate Report.

U.S. Regulatory and Litigation Developments

The U.S. Department of Interior has rescinded a set of climate change and environmental mitigation policy documents adopted during the Obama Administration for use in DOI's evaluation of the potential environmental impacts of projects on federal lands, and it reinstated a 2008 Bureau of Land Management instruction memorandum.

The California Air Resources Board approved the 2017 Final Scoping Plan Update, which outlines CARB's programs to achieve a 40 percent reduction in greenhouse gas emissions from 1990 levels by 2030. Among the strategies included in the Update are additional actions to promote renewable and low-carbon intensity energy sources.

U.S. EPA has extended the public comment period on the agency's proposal to rescind the Clean Power Plan and has issued an Advanced Notice of Proposed Rulemaking soliciting public input on a replacement rule to regulate greenhouse gas emissions from existing power plants.

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Clean Energy and Climate Change Issues for Management 

The U.S. Securities and Exchange Commission's Division of Corporation Finance recently released Staff Legal Bulletin No. 14I, which, among other things, addresses topics related to requests by public companies to exclude shareholder proposals from their proxy statements based on the "ordinary business" exception. Early experience with SLB 14I suggests that companies may face challenges using that exception to exclude proposals related to climate risk and environmental issues.

In an era of more frequent and severe weather-related disasters, property insurance will continue to be an important tool for companies to mitigate property and financial risk. As insurers seek to adjust to what may be the "new normal," companies must be vigilant in reviewing proposed renewal policies for changes that could translate into reduced protection.

Despite the prolonged downturn in the "yieldco" market, these renewable energy providers may still play a key role in renewable energy financing. First, institutional investors, notably insurance companies and pension funds, have filled the void left by abating investor interest in yieldcos. Second, yieldcos present acquisition opportunities for renewable energy companies.

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Developments Beyond the U.S.

Climate litigation is on the rise in Europe. Over the past few years, climate change litigation has gradually spread across the European Union, seeking to force governments to take action against climate change and strictly abide by their commitments. More recently, fossil fuel companies have also been sued for their alleged responsibility for climate change, but not yet successfully.

The United Kingdom's Department for Environment, Food and Rural Affairs has published its 25-year plan to improve the natural environment, with an emphasis on managing pressures on the environment by mitigating and adapting to climate change, minimizing waste, managing exposure to chemicals, and enhancing biosecurity. In particular, the plan's approach requires all policies, programs, and investment decisions to take into account the possible extent of climate change this century

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