Environment 2013: Climate Issues

Despite uncertainty over what additional action the United States might take regarding climate change, many businesses, financial institutions, U.S. states and other countries are moving forward to address climate issues in various ways. Nations around the world (including the United States) have previously agreed to negotiate a new legally binding international climate agreement by 2015 for the post-2020 period. Ahead of that timetable, several nations, including China, are setting up market-based emissions reduction programs to address carbon. Other new climate policies, markets, public- and private-finance mechanisms and programs to invest in low carbon technologies are launching, set for reform or expected to undergo major development in 2013. Businesses will also continue to integrate climate risk and reporting into their core business operations. The following is an overview of some key developments.

United States (Federal)

President Obama is likely to discuss potential climate change actions in his upcoming State of the Union address, particularly EPA's forthcoming proposal to regulate emissions from existing fossil fuel power plants under Sec. 111(d) of the Clean Air Act (CAA). Regardless of how aggressive the standard(s) are, or how flexible the compliance options may be for states, the proposed rule will stoke intense debate on the efficacy of employing existing regulatory authority under the Clean Air Act. For more information see our previous update Environment 2013: Clean Air Act Issues. The Obama administration is expected to continue clean fuels and energy technology procurement programs for the Department of Defense (DOD) and General Services Administration (GSA), as well as low carbon investment support internationally through the Export-Import Bank of the United States and the Overseas Private Investment Corporation (OPIC). The administration also continues efforts to implement sustainability and climate adaptation plans for federal agencies. The Obama administration will continue to pursue trade disputes with China and other countries over renewable energy technology imports, and may seek to negotiate bilateral investment treaties with one or more countries that focus on clean energy and low carbon technologies. New climate legislation may be drafted and debated through the Senate Environment and Public Works (EPW) Committee, although there is little chance such legislation will come up for a vote before the full Senate. Committee Chairwoman Barbara Boxer (D-Calif.) plans to hold multiple hearings on climate, and a group of senators and members of Congress has set up a new climate task force. Apart from a new climate bill, energy legislation - which may include measures such as energy efficiency, transmission for renewables and other low carbon provisions - is expected to emerge in some form in the Senate. Issues such as energy efficiency development and financing, establishment of a federal clean energy trust fund or other federal green bank, developing climate risks standards for insurance companies and public companies, additional clean technology research and development, and energy tax reform may all be added to energy bills in 2013. While potential passage is unlikely, creation of a clean energy standard or development...