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Biden Releases Agency Climate Adaptation and Resilience Plans

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The Biden-Harris Administration recently announced climate adaptation and resilience plans for more than 20 federal agencies. The plans were developed by each agency and are available through the Whitehouse website. The agency plans focus on: Safeguarding federal investments by identifying programs and missions most at risk from climate change. Identifying leadership and accountability by identifying senior leadership and creating accountability structures to ensure top-down adaptation and resilience leadership. Developing a more resilient supply chain by updating supply chain policies and operations to create a more climate-resilient system. Enhancing protections for workers and communities by providing for implementing better support for workers vis-à-vis the impacts of climate change. Building a more equitable future by providing for actions that support President Biden’s environmental justice objectives. The Council on Environmental Quality and the Office of Management and Building are seeking public comments on the plans. Interested parties can submit comments online until November 6, 2021. 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. Democrats Unveil Border Carbon Adjustment Legislation

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U.S. Senator Chris Coons and House Representative Scott Peters, both Democrats, earlier this week unveiled the “Fair, Affordable, Innovative, and Resilient (FAIR) Transition and Competition Act” (the Act), which, if enacted, would establish a border carbon adjustment (BCA) to be imposed as a fee on imports, starting on January 1, 2024. This follows the recent release of climate and emissions reduction proposals by the European Commission which also include BCAs for imports into the European Union. This bulletin briefly outlines the key provisions of the Act. Sectors. The Act would apply to industrial facilities that produce the following products: Steel; Aluminum; Cement; Iron; and Any product which is composed of over 50 percent of any of the above products. Determination of domestic environmental cost incurred. The Act would empower the Secretary of the Treasury (the Secretary) to annually determine the domestic environmental cost incurred for each sector or the average cost to produce a covered fuel (natural gas, petroleum, and coal), to comply with federal, state, regional, or local law, regulation, policy or program which, inter alia, is designed to limit or reduce greenhouse gas (GHG) emissions, including cap-and-trade systems, carbon taxes, and fees. Border carbon adjustment. The Secretary would administer the BCA through regulation and guidance. The Secretary of State and the United Stated Trade Representative would engage with other countries to reduce global GHG emissions and ensure fairness in the application of the emissions-based tariffs. A fee would be applied to any covered good (either a covered fuel or product produced within a sector) to be determined based on the domestic environmental cost incurred multiplied by the production of GHG emissions of the product or the upstream GHG emissions of the covered fuel. The BCA would not apply to (i) countries on the Least Developed Countries list of the OECD and (ii) countries that…

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Canadian Net-Zero Emissions Accountability Act Passes Third Reading

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Bill C-12, the Canadian Net-Zero Emissions Accountability Act, (the NZ Bill) passed third reading in the House of Commons late yesterday evening. The NZ Bill was introduced last November, and if enacted will require national targets for the reduction of greenhouse gas (GHG) emissions on the pathway to net-zero emissions by 2050. This bulletin provides a brief overview of the NZ Bill and next steps:   Emissions reduction targets and plans. The NZ Bill provides for emissions reduction targets to be set by the Minister of Environment and Climate Change (the Minister) every five years, starting in 2030. The Minister must also establish an emissions reduction plan for each milestone year, indicating how Canada will meet the corresponding target. Each plan must also, inter alia, provide a description of relevant sectoral strategies, how international commitments are taken into account, and emissions reduction strategies for federal government operations; and provide projections of annual GHG emission reductions for each economic sector that Canada includes under the United Nations Framework Convention on Climate Change.  Net-Zero Advisory Board. The NZ Bill would establish the Advisory Board to provide independent advice to the Minister on achieving net-zero emissions by 2050 and each five-year milestone. The Advisory Board will provide advice on GHG emissions targets; GHG emissions reduction plan, including measure and sectoral strategies that the government could implement to achieve GHG emissions targets; and any other matter referred to it by the Minister. The Advisory Board is to be composed of members with expertise in, or knowledge of climate change science; Indigenous knowledge; relevant physical and social sciences; climate change and climate policy at the national, subnational, and international levels; energy supply and demands; and relevant technologies. Commissioner of the Environment and Sustainable Development. At least every five years, the Commissioner of the Environment and Sustainable Development will be required to examine and report on the government’s implementation of measures to…

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Network for Greening the Financial System Releases Updated Climate Risk Scenarios for the Financial System

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The Network for Greening the Financial System (NGFS) last week released an update to their climate scenarios which assist financial institutions with analysing climate-related risks to the economy and financial system (the Study). The NGFS is a group of 91 central banks (including the Bank of Canada, US Federal Reserve, and European Central Bank), supervisors, and observers that seek to share best practices and contribute to the development of climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. This bulletin provides a high-level summary of the Study’s key findings: Transition risks: Emission prices. The Study indicates that a price of $160/tonne CO2e will be required by 2030 to incentivise the transition to net zero by 2050. Energy investment. Greater investments in renewable energy and storage will be necessary to meet net zero goals by 2050, with substantially reduced investments in fossil fuel extraction. The Study suggests that, by 2050, renewables and biomass will account for 68% of global energy needs, with fossil fuels (coal, oil, and gas) providing close to 25%, down from approximately 80% in 2020. CO2 removal. The Study assumed low to medium availability of carbon removal technology and storage such as increasing forest cover, soil sequestration, and growing crops for bioenergy with carbon capture and storage (BECCS). The Study suggests that CO2 removal would help to accelerate decarbonization goals and lower warming outcomes but on a limited scale. Agriculture, forestry and land use. Changes in land use will be important for the pathway to net zero by 2050, including increasing forest cover and bioenergy cropland and reducing cropland for food production and pasture land. The Study notes that CO2 emissions are anticipated to decline more quickly than other greenhouse gases including N2O and CH4. Physical risks:…

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Shareholders Vote to Support Climate Action at ExxonMobil and Chevron

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Shareholders and investors at two of the largest oil companies in the U.S. have voted to support increased climate action during recent shareholder meetings.   Led by activist investors and hedge funds, shareholders at ExxonMobil’s annual shareholder meeting voted to replace at least two board members with individuals perceived to be supportive of firmer action on climate change and CO2 emissions reductions. Similarly, shareholders at Chevron voted 61% in support of a resolution to “substantially reduce” Scope 3 emissions from Chevron’s energy products, which account for over 90% of its carbon emissions. Management at both Exxon and Chevron unsuccessfully came out against the respective votes.    Hedge fund Engine No.1 was behind the vote to replace board members at Exxon with individuals more aligned with taking increased climate action. Engine No.1 was able to gain the backing of institutional investors (including BlackRock) that want firmer commitments to act on reducing emissions and taking climate change into account as part of a broader investment and carbon transition strategy.   These developments follow last month’s vote at ConocoPhillips, advanced by activist shareholder group Follow This, in favour of setting Scope 1, 2, and 3 emissions reduction targets, which 58% of shareholder supported. Please contact Lisa DeMarco at lisa@resilientllp.com should you wish to discuss the contents of this bulletin.

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