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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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SEC Adopts Climate-Related Disclosure Rules

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The U.S. Securities and Exchange Commission (SEC) today adopted final rules for the “Enhancement and Standardization of Climate-Related Disclosures for Investors” (the Rules). The Rules require registrants to disclose climate-related risks that have had, or are reasonably likely to have, a material impact on business strategy, results of operations, or financial condition, together with their associated actual or potential material impacts. The Rules do not require reporting on Scope 3 emissions or greenhouse gas (GHG) emissions originating in a registrant’s value chains or outside of its direct operations (as was proposed in earlier versions – see our earlier bulletin here). The Rules notably require more disclosure from registrants on capitalized costs, expenditures expensed, and losses related to material use of carbon credits. Disclosure requirements will be phased-in between 2025-2033, with compliance dates dependent on the type of registrant. The SEC also published a fact sheet alongside today’s release. This bulletin briefly summarizes key details of the Rules. Content of the disclosures. The Rules will require a registrant to disclose, among other things: Strategy. The Rules require disclosure of the following strategy-related climate risks and impacts: actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook; if, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk or has adopted a transition plan to manage material risks, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities; and specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk including the use, if any, of transition plans, scenario analysis, or internal carbon prices. Risk management. The Rules require disclosure of a registrant’s climate-related risk management, including: any oversight…

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U.S. and China Release Sunnylands Statement Ahead of COP 28

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The United States and China announced renewed commitment to enhance cooperation to address the climate crisis in the Sunnylands Statement released on November 14, 2023 (the Statement). Both countries indicated their commitment to the effective implementation of the UNFCCC and the Paris Agreement, including the Glasgow Climate Pact and the Sharm el-Sheikh Implementation Plan, and to further the effective and sustained implementation of the U.S.-China Joint Statement Addressing the Climate Crisis and the U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s. This bulletin provides key details of the new and renewed commitments in the Statement. COP 28. The countries indicated that the consensus Global Stocktake decision expected to come out of COP 28 should, among other things: reflect that substantially more ambition and implementation on action and support will be needed to achieve the Paris Agreement’s goals; send signals with respect to the energy transition (renewable energy, coal/oil/gas), carbon sinks including forests, non-CO2 greenhouse gases (GHGs) including methane, and low-carbon technologies; encourage economy-wide 2035 Nationally Determined Contributions (NDCs) covering all GHGs; note the expectation of developed countries that the $100B climate finance goal will be met in 2023; welcome the recommendations of the Transitional Committee with respect to establishing funding arrangements to address loss and damage, including the establishment of a fund; and emphasize the important role of international cooperation. 2035 NDCs. The U.S. and China both affirmed that their 2035 NDCs under the Paris Agreement will be economy-wide, include all GHGs, and reflect emission reductions aligned with the Paris Agreement temperature goals. Energy Transition. The Statement provides important commitments related to the energy transition, including: support for the G20 Leaders Declaration to pursue efforts to triple renewable energy capacity globally by 2030 and sufficiently accelerate renewable energy deployment through 2030 from 2020 levels to accelerate the…

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US EPA Releases Ambitious Proposed Rules for Federal Vehicle Emissions Standards

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The U.S. Environmental Protection Agency (EPA) yesterday announced new proposed federal vehicle emissions standards that are intended to accelerate the ongoing transition to cleaner vehicles and reduce emissions. The proposals would avoid nearly 10 billion tons of CO2 emissions through 2055, equivalent to more than twice the total U.S. CO2 emissions in 2022. The proposed regulations are designed to ensure that electric vehicles (EVs) make up as much as 67 per cent of new passenger vehicles sold in the U.S. by 2032. If implemented, we anticipate that the proposed regulations will have a significant impact on Canada’s economy given the high level of integration of automotive sectors and Canada’s rich supply of critical minerals essential to the production of EVs and EV batteries. This bulletin briefly summarizes the proposed rules: Light- and Medium-Duty Vehicles. The first set of proposed standards, the “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium Duty Vehicles”, builds on the EPA’s existing emissions standards for passenger cars and light trucks for model years (MYs) 2023 through 2026. The EPA projects that, with the new standards, EVs could account for 67% of new light-duty vehicle sales and 46% of new medium-duty vehicle sales in MY 2032. The proposed MY 2032 light-duty standards are projected to result in a 56% reduction in projected fleet average greenhouse gas emissions target levels compared to the existing MY 2026 standards. The proposed MY 2032 medium-duty vehicle standards would result in a 44% reduction compared to MY 2026 standards. Heavy-Duty Vehicles. The second set of proposed standards, the “Greenhouse Gas Standards for Heavy-Duty Vehicles – Phase 3”, would apply to heavy-duty vocational vehicles (such as delivery trucks, refuse haulers or dump trucks, public utility trucks, transit, shuttle, school buses) and trucks typically used to haul freight. These standards would complement the criteria pollutant standards…

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