By - Tim Rosado
On Earth Day 2023, what follows below is a summary rundown of some of the most significant recent developments directly or indirectly related to environmental policy in the United States and around the world, as well as developments expected in the near future.
Latest UN Climate Change Report
The United Nations (UN) Intergovernmental Panel on Climate Change (IPCC) released its Sixth Assessment Report (March 19) with important conclusions based on the most recent data and observations, among them:
Global warming will continue to increase in the near term (2021-2040) mainly due to increased cumulative CO2 emissions in nearly all considered scenarios. In the near term, global warming is more likely than not to reach the world warming target (i.e., limit warming to +1.5°C, +2.7°F) even under a very low greenhouse gas (GHG) emission scenario and is likely, or very likely, to exceed the global target under higher emissions scenarios.
Every world region is projected to increasingly experience concurrent and multiple changes in climatic impact-drivers. Heatwaves and droughts are projected to become more frequent. Due to relative sea level rise, current 1-in-100 year extreme sea level events are projected to occur at least annually in more than half of all tide gauge locations by 2100 under all considered scenarios.
Limiting warming at this point would not prevent continued changes in the climate system––sea level rise is unavoidable for centuries to millennia due to continuing deep ocean warming and ice sheet melt, and sea levels will remain elevated for thousands of years. That being the case, any “deep, rapid and sustained” GHG emissions reductions would limit further sea level rise acceleration and projected long-term sea level rise commitment.
All modeled pathways that limit warming to +1.5°C with no or limited overshoot, as well as those those that limit warming above the target to +2°C, would require rapid and deep and, in most cases, immediate GHG emissions reductions in all sectors during this decade.
Adaptation options feasible and effective today will become constrained and less effective with increasing global warming. With increasing global warming, losses and damages will increase and additional human and natural systems will reach adaptation limits.
The report also lists a multitude of options for policymakers to dramatically reduce emissions ranging from those clearly achievable (e.g., conversion to solar and wind power) to those that would likely present a significant challenge (e.g., adjusting worldwide diets).
G7 Ministers Meeting Outcomes
The G7 Ministers of Climate, Energy and the Environment met in Japan in April 2023 and issued a communiqué (April 16), an official statement, detailing the group's views on a long list of environmental matters. Most of the statement merely reiterates previously-expressed positions on environmental matters agreed to in international forums or advanced by individual G7 nations.
There were several notable outcomes, however:
A commitment to take actions to "expanding renewable energy globally and bringing down costs by strengthening capacity" including by collectively increasing offshore wind capacity of 150 GW by 2030 and double solar photovoltaics by more than 1 TW by 2030. Note: Current global offshore wind power generation currently totals between 50 GW and 60 GW, a small fraction of global wind-generated power (about 1 TW this year). Solar power generation currently stands about about 1 TW.
A commitment to end plastic pollution, though only "ambition" to reduce additional plastic pollution to zero by 2040.
Still no agreement on phasing out coal use by 2030, a matter of high importance to some G7 nations, or significantly scaling back natural gas despite an overall commitment to net zero emissions by 2050.
Long-term US Auto Emissions Standards Rule
The EPA released a proposed rule (April 12) for new long-term car and truck auto emissions standards at levels intended to accelerate the US manufacturing and purchase of electric vehicles (EVs).
Under the proposal, emissions standards for light-, medium-, and heavy-duty vehicles (i.e., most cars and trucks) will begin to increase for the 2027 model year. Current standards cover model years 2023-2026. As higher standards are phased in, EPA believes that manufacturers will be unable to meet the standards without a majority shift of production emphasis to electric vehicles.
EPA calculates that under the proposed new standards, EVs could account for 67% of light-duty vehicle sales and 46% of medium-duty vehicle sales by the 2032 model year. Greenhouse gas emissions will drop 56% compared to expected levels for the 2026 model year for light-duty vehicles, and 44% for medium-duty vehicles.
There is some concern about the significant challenges of converting the majority of US car and truck manufacturing to electric vehicles, and also attracting consumers to such products, in a relative short period of time. That being the case, an argument can be made that the only way to convert the US to a majority electric vehicle fleet is to push for change through a combination of aggressive laws, rules and incentives. Otherwise, the conversion may take too long to complete given global warming concerns.
The proposal will be open for public review and comment. There is no certainty on a time frame for finalizing higher standards, though the process is likely to extend into next year at a minimum.
EU Pollution Tax
The European Union formally approved (April 18) a plan to impose a “Carbon Border Adjustment Mechanism” (CBAM) on certain imports, as part of a broader plan of measures to reduce EU carbon emissions 55% by 2030.
The EU claims that the law will incentivize non-EU countries “to increase their climate ambition and ensure that EU and global climate efforts are not undermined by production being relocated from the EU to countries with less ambitious policies.”
The CBAM will apply to iron and steel, cement, aluminum, fertilizers and electricity, potentially to indirect emissions (i.e.,those that result from an organization's activities, but are actually emitted from sources owned by other entities), and downstream products such as screws and bolts and “similar articles” of iron and steel.
The EU-approved legislation must still be approved individually by member EU countries before being put into place.
EPA Rules on Industrial & Power Emissions
The EPA issued a proposed rule (April 6) that the agency claims will “significantly reduce” certain hazardous air pollutants from chemical plants, including the toxic chemicals ethylene oxide (EtO) and chloroprene, that are known or suspected to cause cancer and other problem health effects.
Under the proposal, chemical air regulations would be updated in a manner that would result in a 6,053 ton reduction in targeted emissions. The reduction will include a 58 ton-per-year reduction in ethylene oxide (EtO) and a reduction of 14 tons per year in chloroprene.
The rule also targets benzene, 1,3-butadiene, ethylene dichloride and vinyl chloride; as well as “emissions of smog-forming volatile organic compounds by more than 23,000 tons a year.” Facilities that make, store, use or emit the targeted chemicals will be required to monitor levels of targeted air pollutants entering the air at the fenceline of the facility.
The EPA also issued a proposed rule (April 5) intended to reduce “hazardous” air pollutants, such as Mercury, from coal power plants based on the latest advancements in pollution control technologies. The proposal updates rules that last received a significant update in 2012.
Specifically, EPA is proposing a 67% reduction in the emissions limit for filterable particulate matter (fPM) for existing coal-fired power plants to control emissions of nickel, arsenic, and other non-mercury hazardous air pollutant metals.
The rule is also proposing a 70% reduction in the emissions limit for mercury from existing lignite-fired sources, a limit applied to other types of coal-fired power plants. Mercury exposure at high levels can harm the brain, heart, kidneys, lungs, and immune system of people of all ages.
Both rules are subject to a public comment periods and it is unknown when the rules will be finalized.
Anti-ESG Legislation & Anti-Greenwashing Action
Congress passed legislation (March 2) attempting to force nullification of a Labor Department rule finalized in November pertaining to the use of environmental, social, and governance (ESG) factors in retirement plan investing. President Biden, however, vetoed the legislation (March 20). The House failed to overcome the veto with a vote of 219 to 200, with 15 members of the House not voting. A two-thirds majority was needed.
Labor's rule enables fiduciaries to consider ESG factors when making investment decisions. This is a significant shift from Trump Administration requirements, when fiduciaries were permitted to invest only based on financial considerations.
The rule also clarifies that the economic effects of ESG factors can be used in risk/return analysis if sponsors "reasonably" determine that those impacts are relevant. They may also consider participant investment preferences when developing a set of prudent investment options for participant-directed plans.
A lawsuit has been filed, however (February 1) against the rule. The lawsuit, which includes 25 state Attorneys General, argues that the rule undermines key protections for retirement savings and oversteps the department’s statutory authority under retirement law. In addition,13 states have enacted their own anti-ESG and related laws: Kentucky, Arizona, Idaho, Florida, Indiana, Louisiana, Minnesota, North Dakota, Oklahoma, Pennsylvania, South Carolina, Utah and West Virginia.
The Securities and Exchange Commission (SEC) is proposing new rules intended to address the practice of “greenwashing,” which is when an organization spends more time and money on marketing itself as environmentally friendly than on actually minimizing its environmental impact. From the context of the investing community, the SEC is concerned about companies selling investments under the environmental, social, and governance (ESG) label without investors having the ability to know if the investments actually advance ESG goals.
Among other things, the proposed SEC rules would require funds and advisers to provide more specific disclosures in fund prospectuses, annual reports, and adviser brochures based on the ESG strategies they pursue. Funds focused on the consideration of environmental factors generally would be required to disclose the greenhouse gas emissions associated with their portfolio investments. Funds claiming to achieve a specific ESG impact would be required to describe the specific impact(s) they seek to achieve and summarize their progress on achieving those impacts.
A recent Accenture report estimates that 93% of companies around the world are expected to miss net-zero emissions targets, though just 34% of Accenture2000 companies actually have such targets in the first place (these are companies that Accenture determined are the top 2,000 public and private companies in the world by revenue.)
International Biodiversity Protection Framework
An international biodiversity conference of the United Nations (COP-15) came to agreement in December on a world-wide biodiversity protection framework. The agreement includes 23 targets addressing the biodiversity crisis.
The overarching pledge, potentially the most important of the conference, is to protect 30% of land and oceans by 2030. Just 10% of lands and 17% of oceans are considered protected today. The hope is that with this pledge and any resulting actions, biodiversity protection will be enhanced worldwide.
Similar to the UN’s recent annual conference on climate change, a key sticking point of this conference session reportedly was the specifics on financing. Among the agreed-to measures is that participating countries committed to reform $500 billion in government subsidy programs considered to be harmful to nature, and that developing countries will receive an increase in financial support.
Under the framework, funding support for poorer countries would total at least $25 billion annually for poor countries by 2025, increasing gradually to $30 billion annually by 2030. A total of $200 billion per year annually is the goal for the entire world to spend on biodiversity protection from both public and private sources.
On April 20, the Biden Administration announced a pledge (April 20) for the US to provide $500 million over five years to reduce deforestation in the Amazon, and to double US funding support to the international Green Climate Fund, to $2 billion total. Both this commitment, and funding for the Amazon, are likely to face opposition in the Republican-led House in Congress.
Even with the European Union separately committing biodiversity resources of €7 billion through 2027, it is not clear how the world gets to $20 billion annually in support, much less $30 billion in the future. An estimated $10 billion per year currently flows to the developing world annually related to biodiversity protection. And, it is important to note that the goals and funding of the last biodiversity conference were not met. The next UN biodiversity conference will take place in 2024.
Waters of the United States (WOTUS)
A Federal District Court judge granted a preliminary injunction (April 12) against an EPA final rule (December 30) which provides what the EPA claims is a “durable definition” of “waters of the United States” (WOTUS), expanding EPA’s regulatory oversight to ephemeral and intermittent streams and wetlands on private property. A group of 24 Republican-led states sued the EPA and other Federal agencies claiming that the rule is, among other things, unconstitutional. The injunction will remain in effect until the District Court can formally issue a decision.
The rule restored protections to waters existing under a 2015 Obama Administration rule, which was generally removed under a separate Trump Administration rule that was subsequently revoked pursuant to a Federal District Court decision on a separate lawsuit. In 2021, the Biden Administration promised to restore Obama-era protections in an updated rule. It took more than a year for the EPA to issue its final rule in December.
In March (2023), Congress passed a resolution to nullify the EPA’s final rule, but President Biden vetoed the resolution. The House failed to overcome the veto (April 18).
Separately, the Supreme Court is considering a significant case on this matter–Sackett v. the United States–where the EPA asserted its jurisdiction over private property on the basis of the provisions of the Clean Water Act and WOTUS assertions. The Federal Government contends that wetlands on the property under the case are WOTUS, as they are near a tributary leading to a lake a few hundred feet away that contains federally-protected waters.
Oral arguments were heard in October 2022, and a decision will be issued sometime during this spring/summer. The Court’s decision could significantly impact the EPA’s final rule and future regulatory approach and will more likely than not determine the way-forward on the District Court’s injunction.
World-Wide Species Protection Negotiations
The Interior Department announced (November 28) new species protection agreements as part of discussions at the International Conference of the Parties (CoP19) to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
Among the agreements:
Inclusion on the CITES listing of 36 species of U.S. native turtles, which are under increasing demand from East Asia and Europe.
Inclusion of glass frogs in “Appendix II” of the CITES listing, helping ensure international trade does not represent a threat to wild populations. International demand for glass frogs in the exotic pet trade adds to other threats, including habitat loss and fragmentation, climate change, invasive species and diseases such as chytrid fungus. U.S. pet trade demand for glass frogs has increased exponentially, increasing from13 live individuals imported in 2016 to 5,744 individuals in 2021.
The U.S. and Mexico agreed on a way forward to curb illegal fishing of endangered totoaba, wanted particularly in East Asia for its swim bladder, and also ensure survival of the critically endangered vaquita, which now numbers 10 or fewer individual animals and is at imminent risk of extinction.
Monarch Butterfly Endangered Status
The International Union for the Conservation of Nature (IUCN), which produces the international “Red List” of threatened species, announced (July 21st) that it has added the Monarch Butterfly as an endangered species. The IUCN Red List includes 147,517 species, of which 41,459 are threatened with extinction.
IUCN cites both habitat destruction and climate change as the causes for the butterfly’s decline. The group believes that the population of monarch butterflies in North America has declined between 22% and 72% over the last 10 years.
The United States has not yet moved to designate the Monarch Butterfly as endangered under US law. However, the US Fish and Wildlife Service (USFWS) finalized a rule (February 27), proposed a year ago, listing the prostrate milkweed as endangered under the Endangered Species Act (ESA), a weed important to Monarchs. This final action comes 16 years after an initial petition to the agency requesting this action.
Along with this ESA designation, USFWS designated as “critical habitat,” 691 acres in south Texas that are important to the plant. This milkweed is especially important to large bees and wasps, and is a “host plant” for monarch butterflies, which recently saw a sharp decline in population near the US-Mexico border. All known Texas populations of prostrate milkweed are within 9 miles of the US‒Mexico border. USFWS says that border security-related construction of barriers, roads, and drag strips are potential threats of high magnitude to prostrate milkweed populations.
Pesticides and PFAS
The EPA announced (September 1) that it is proposing a rule to remove 12 per- and polyfluoroalkyl substances (PFAS) from its list of “inert” chemical substances approved for use in pesticides.
If the rule is finalized, it will prevent the 12 ingredients from being used in pesticide applications. While the chemicals are not currently used in any pesticide products, the EPA says that it is important to take this action if their use by a manufacturer is requested in the future.
USFWS finalized a rule (November 29) proposed to elevate the protection status of the Northern Long-Eared Bat from “threatened” to “endangered” under the Endangered Species Act.
This action is being taken primarily because of the effect of white-nose syndrome (WNS). USFWS says that data indicates that white-nose syndrome has caused estimated declines of 97% to 100% of affected northern long-eared bat populations.
The northern long-eared bat is found in 37 states in the eastern and north central United States. Such bats mostly spend the winter hibernating in caves and abandoned mines. During summer, they roost alone or in small colonies underneath bark or in cavities or crevices of both live and dead trees. They emerge at dusk to fly primarily through the understory of forested areas, feeding on insects
USFWS claims that efforts to address WNS have yielded advancements including identification of critical information about its impacts on North American bat species. The agency says it is using disease surveillance tools to monitor spread and impacts, and is testing biological, chemical, immunological, genetic and mechanical treatments in some states to improve bat survival.
Emperor Penguin Protection
The USFWS issued (October 25) Endangered Species Act (ESA) protection to Emperor Penguins. They will receive a “threatened” designation under the ESA. There are more than 2,400 species designated as threatened or “endangered” by USFWS.
A threatened species means any species likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range, while an endangered species elevates the concern that a species is in danger of actual extinction.
While USFWS says that Emperor Penguin populations “appear currently stable,” they have determined the species is in danger of extinction in the foreseeable future in a significant portion of its range due to ice melt caused by climate change. The agency claims that according to the “best available science,” by 2050 the global population size of Emperor Penguins will likely decrease by 26%-47% under low-high carbon emissions scenarios.
Offshore Wind Energy
The Department of the Interior announced the results of a nearly $4.4 billion lease sale (February 23) on six offshore wind leases off the coasts of New York and New Jersey covering more than 488,000 acres in the Atlantic Ocean between Cape May, N.J., and the end of Long Island. Offshore turbines could eventually provide enough energy to power nearly 2 million homes. Interior announced in December the results of its first offshore wind lease sale off of California's coast. The awards went to five companies bidding a combined $757 million for five lease areas. The areas have a potential to produce more than 4.6 gigawatts of offshore wind energy, enough to power over 1.5 million homes.
Lease awards were within two designated wind leasing areas. One area is the Humboldt Wind Energy Area in northern California, about 21 miles offshore of Eureka. Designated in 2018, this approximately 206 square mile area has the potential to generate up to 1.6 gigawatts (GW), enough to power approximately 560,000 homes. The second area is the Morro Bay Wind Energy Area comprising about 376 square miles of California’s central coast offshore. It has the potential to generate 2.9 GW of power, enough energy to supply more than 1 million homes.
Interior also announced (February 22) a proposal for the first wind energy auction in the Gulf of Mexico. The proposal includes a 102,480-acre area offshore to Lake Charles, Louisiana, and two areas offshore to Galveston, Texas (102,480 acres and 96,786 acres). The Department is seeking public comments on which, if any, of the two lease areas offshore Galveston should be offered for sale. The potential auction areas collectively have the potential to power almost 1.3 million homes using wind energy.
Finally, the Department of Energy released (March 29) a plan that it says will help accelerate the deployment of offshore wind energy in support of reaching the Administration's goals to deploy 30 gigawatts of offshore wind capacity by 2030, and also a pathway to 110 GW or more by 2050.
Lithium Mining at Thacker Pass
A Federal District Court judge in Oregon (9th Circuit) declined to block (February 27) a lithium mine at Thacker Pass, the second recent judicial decision on this matter. As a result, Thacker Pass will move forward to construct mining operations.
Thacker Pass -- received approval to move forward from the U.S. Bureau of Land Management in January 2021, and had originally planned to begin operations in 2023. The company now expects “Phase 1” mining operations to begin in 2026.
Thacker Pass, owned by Lithium Americas, is estimated to be the largest known lithium resource in the US. The company’s goal is to reach a total production capacity of 80,000 tonnes per annum of battery-quality lithium carbonate over two production phases. General Motors recently purchased $650 million in shares of Lithium Americas, to become the single largest company shareholder, with the company also planning to purchase all Phase 1 production in 2026.
Mining & Bristol Bay Alaska
The EPA Region issued a final determination (January 31) to prohibit mining discharge at Alaska's Pebble Deposit. Specifically, waters in Alaska's South Fork Koktuli River and North Fork Koktuli River watersheds cannot be used as disposal sites for the discharge of dredged or fill material for the construction and routine operation of a 2020 Pebble Limited Partnership mining plan, or for similar future plans. The Final Determination follows the EPA's Alaska region recommendation (December 1).
EPA says that scientific analysis supports a decision that mining the Pebble Deposit could result in unacceptable adverse effects on salmon fishery areas. The total economic value, including subsistence uses, of the Bristol Bay watershed’s salmon resources has been estimated to be more than $2.2 billion, an industry primarily benefiting Alaska Natives.
Oil & Gas Drilling Revival
The Interior Department completed oil and gas offshore lease sale 259 (March 29) which covers 313 tracts covering 1.6 million acres in the Gulf of Mexico.
The sale was required within statutory language of the 2022 Inflation Reduction Act. Language was included as a compromise with oil and gas interests in the Congress to help ensure passage of the legislation. That said, the sale may have occurred with, or without, statutory language. The sale generated nearly $264 million in revenue for the Federal Government. Exxon and Chevron were reportedly the largest buyers.
In Alaska, Interior announced approval of the Willow Project of ConocoPhillips. Interior claims that the approved project was 12% below than the company’s original project proposal to help protect caribou migration paths and yellow-billed loon nesting sites.
Following approval of the Willow Project, the Administration directed the Interior Department to remove about 2.8 million acres in the Arctic Ocean near the NPR-as “indefinitely off limits for future oil and gas leasing.” The area is considered important habitat for whales, seals, polar bears, as well as for local subsistence purposes. Interior believes this action will also ensure additional protection for Teshekpuk Lake by guarding any future Beaufort Sea oil and gas developments that would necessitate nearby pipeline infrastructure.
Some policy-related matters to look for in the coming months:
Congress is looking to force the Administration through budget debt limit negotiations to significantly scale back environment-related tax credits approved as part of the 2022 Inflation Reduction Act. The Administration is highly unlikely to agree to any scaling back in this area.
Some form of permitting reforms that will help speed up environmental review processes seem likely to be agreed to at some point and will be approved Congress, maybe as part of any budget debt limit deal. In general, reforms will speed up approvals of oil, gas, and mining and related projects.
A decision from the Supreme Court is expected in what likely will be a landmark decision (Sackett v. the United States) where the EPA is asserting jurisdiction over private property on the basis of the provisions of the Clean Water Act and Waters-of-the-United States (WOTUS). EPA contends that wetlands on private property in the case are WOTUS, as they are near a tributary leading to a lake a few hundred feet away that contains federally-protected waters.
Reporting indicates that the EPA is working to complete a proposed rule that will require substantial US power plant greenhouse gas emissions reductions. This is significant because the EPA has traditionally regulated pollution derived from power plants, not emissions focused on global warming. And, in addition, the Supreme Court had last year turned back an attempt of the EPA to regulate in this area.
The Securities and Exchange Commission (SEC) could issue a final rule on its proposed rule (March 2022) requiring public companies to disclose climate-related risks that could impact their business, the results of operations, and the company’s financial condition. Politico reported in February that the SEC is considering scaling back aspects of the proposal in any final rule.
The EPA could soon begin to take initial actions on neonicotinoid pesticides that the agency has already determined may be negatively affecting pollinators, like bees.
The Nuclear Regulatory Commission (NRC) could issue a license for a nuclear waste storage “temporary” facility in Lee County, New Mexico, given that the U.S. currently has no permanent facility. The first temporary facility was approved by the NRC in Texas in 2021. New Mexico, however, enacted state legislation that could prevent construction of the facility.