Resilient LLP (formerly DeMarco Allan LLP)
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DT Vollmer

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Major US and Canadian Banks Exit NZBA

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The six largest US banks, JPMorgan, Goldman Sachs, Wells Fargo, Citi, Bank of America, and Morgan Stanley have each announced their departure from the Net-Zero Banking Alliance (NZBA), a group of leading global banks committed to aligning their lending, investment, and capital markets activities with net-zero greenhouse gas (GHG) emissions by 2050. In Canada, TD, BMO, and National Bank announced their withdrawal from the NZBA earlier today. RBC has also indicated that it is open to leaving the alliance. We anticipate significant changes in the NZBA and additional withdrawals over the coming days. Major US asset managers are also leaving other UN-convened climate coalitions, including the recently announced departure of BlackRock from the Net Zero Asset Managers initiative (NZAM), a multi-trillion dollar international group of asset managers committed to supporting the goal of net zero GHG emissions by 2050. Following BlackRock’s departure, a statement issued by NZAM on Monday indicates that it is suspending activities while the initiative undergoes review “to ensure NZAM remains fit for purpose in the new global context.” Both NZBA and NZAM are organizations under the umbrella of the Glasgow Financial Alliance for Net Zero (GFANZ), co-chaired by Michael Bloomberg and Mark Carney.    For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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U.S. Submits New NDC Setting Emission Reduction Target of 61-66% below 2005 levels by 2035

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The United States today submitted its updated Nationally Determined Contribution (“NDC”) under the Paris Agreement to the UN Climate Change secretariat. The updated NDC sets an economy-wide target of reducing net greenhouse gas (“GHG”) emissions by 61-66 percent below 2005 levels by 2035 (the “Target”). The Target increases ambition from the previous target of 50-52% below 2005 levels by 2030, and provides a pathway to achieve net-zero emissions by 2050 in line with the goals of the Paris Agreement. President-elect Donald Trump, who will take office on January 20, 2025, is widely expected to withdraw the U.S. from the Paris Agreement on the first day of his new administration. Many observers are consequently treating the new NDC as mostly symbolic. See our earlier analysis on U.S. withdrawal from the Paris Agreement here.   This bulletin briefly summarizes key details of the NDC and the Biden-Harris Administration’s Fact Sheet on the Target.   Net-zero by 2050. The Target aligns with President Joe Biden’s goal of a net zero GHG economy no later than 2050, with the 61-66% range on a “straight line or steeper trajectory to net zero emissions by 2050 for all greenhouse gases.”   Article 6. The NDC is very light on international cooperation through now-finalized rules of international carbon markets under Article 6 of the Paris Agreement. Notably, however, the new NDC omits language included in the last U.S. NDC, which indicated that the U.S. did “not intend to use voluntary cooperation using cooperative approaches referred to in Article 6.2 or the mechanism referred to in Article 6.4 in order to achieve its target.”   Methane and other emissions. The updated NDC does not set sub-targets for individual GHGs; however, as part of achieving the Target, it is anticipated that methane emissions will also be reduced by at least 35% from 2005 levels by 2035. The Inflation Reduction Act (“IRA”) provides…

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Canada Publishes Finalized Clean Electricity Regulations

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Canada’s Minister of Environment and Climate Change (the “Minister”) yesterday announced the finalization and publication today of the Clean Electricity Regulations (“CER”) in the Canada Gazette, Part II (see our earlier bulletin on the draft CER here). CER establishes significant annual emission limits (“AEL”) to reduce greenhouse gas (“GHG”) emissions from fossil fuel-generated electricity generation facilities in all provinces and territories across Canada starting in 2035. Requirements to reduce emissions under CER start in 2035 with a pathway to reaching net-zero in 2050. Environment and Climate Change Canada (“ECCC”) estimates that the CER would reduce approximately 181 megatonnes of cumulative GHG emissions between 2024 and 2050. The CER imposes significant registration, record keeping, and reporting obligations on covered electricity generation facilities.   This bulletin briefly summarizes the key provisions of CER and federal financial support to help decarbonize and expand Canada’s electricity system.   Scope. A “unit” is regulated under the CER if it meets all of the following three criteria: It has an electricity generation capacity of 25 megawatts (“MW”) or greater (or is a new unit located at a facility where the sum of all new electricity generation unit capacity is 25 MW or greater); It generates electricity using fossil fuel; and It is connected, directly or indirectly, to an “electricity system” that is subject to North American Electric Reliability Corporation (“NERC”) standards. A unit that has an electricity generation capacity of less than 25 MW is deemed to meet the first criteria if the unit’s commissioning date is on or after January 1, 2025 and the sum of the electricity generation capacity of all units, other than planned units, that are located at the facility where the unit is located and that also have commissioning dates on or after January 1, 2025 is at least 25 MW.   CER does not apply…

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World Bank Group Releases Template Article 6 LOA and Related Guidance

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Resilient LLP is pleased to share that the World Bank Group has today released guidance on Letters of Authorization and Acknowledgement as part of its Article 6 Approach Paper Series. The guidance includes a Letter of Authorization that provides a common template intended to be used for all authorizations to be granted under Articles 6.2 and 6.4 of the Paris Agreement. The Letter of Authorization is intended to be used with schedules that may be specified by each country and includes illustrative terms and conditions that are most likely to maximize investment and value for the country. It also allows each country to actively choose whether a project is intended to be authorized (subject to corresponding adjustments and a Letter of Authorization) or outside the scope of authorization (ideally subject to a Letter of Acknowledgement in order to increase certainty and corresponding investment value). A template Letter of Acknowledgement is also provided. This common template (with schedules) is intended to simplify the process for authorization, reduce transaction costs, and allow flexibility for bilateral arrangements. The guidance also includes a template Letter of Authorization developed by the Multilateral Investment Guarantee Agency (MIGA), which presents illustrative terms that are conducive to facilitating insurance for breach of a Letter of Authorization.   For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

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Ontario Court of Appeal Allows Appeal in Youth Climate Change Case

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The Court of Appeal for Ontario (ONCA) today released its unanimous decision (the Decision) on an appeal of the dismissal of a youth-led constitutional challenge of Ontario’s emissions target (see our earlier bulletin here). The ONCA allowed the appeal, determining that the Ontario Superior Court (ONSC) application judge erred in characterizing the case as a positive rights case and remitted it to the ONSC for reconsideration. The case is the first in Canada to consider whether a government’s approach to climate change can violate the Canadian Charter of Rights and Freedoms (the Charter). This bulletin briefly provides key background details of the case and the main findings of the Decision.   Background. The appellants, seven Ontario youths, some of whom are Indigenous, brought an application for (i) a declaration that Ontario’s 30% reduction of greenhouse gas (GHG) emissions target (the Target) under section 3(1) of the Cap and Trade Cancellation Act, 2018 (the CTCA) – implemented through Ontario’s “A Made-in-Ontario Environmental Plan” (the Plan) – and section 16 of the CTCA, repealing Ontario’s Cap-and-Trade system, were unconstitutional as they violated their rights under sections 7 and 15 of the Charter, and (ii) an order declaring their Charter rights have been violated and requiring Ontario to set a science-based emissions reduction target and to revise the Plan in accordance with international standards. The application judge dismissed the application. While the judge found the issue of the appellants’ sections 7 and 15 Charter rights justiciable, she characterized it as a positive rights claim and concluded that any deprivation of life or security of the person under section 7 was not contrary to fundamental justice, and that section 15 did not impose a positive duty on Ontario to act against climate change.   The Decision. The following is a brief overview of the ONCA’s main findings: The application judge erred in her analysis of the case as…

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