On 17 November 2021, in the wake of the Glasgow Climate Change Conference (COP26), the European Commission (“Commission”) presented its Proposal for a Regulation that aims to curb deforestation and forest degradation driven by European Union (“EU”) consumption and production (“Proposed Regulation”). The wider goal of the rule is to reduce greenhouse gas (“GHG”) emissions and global diversity loss, by minimising the consumption of products from supply chains associated with deforestation or forest degradation.

Already announced in 2019, the Proposed Regulation fits in the wider context of the European Green Deal, the Commission’s flagship initiative to transform the EU from a high- to a low-carbon economy. It follows similar initiatives in the United States (“U.S.”) and United Kingdom (“UK”), as discussed in more detail here.

The Proposed Regulation complements and expands on existing EU legislation, such as the EU Timber Regulation (“EUTR”) and the Forest law Enforcement, Governance and Trade Regulation (“FLEGT Regulation”), and would be complementary to the Commission’s legislative initiative on Sustainable Corporate Governance (“SCG”). Of note, it would integrate and improve the framework created by the EUTR, which would be repealed by the adoption of the Proposed Regulation.


Continue Reading The European Commission’s Proposed Ban on Products Driving Deforestation and Forest Degradation

On September 6, 2021, the International Chamber of Shipping (ICS) announced that it had proposed a global carbon levy on carbon emissions from ships for consideration by the International Maritime Organization (IMO) to “accelerate the uptake and deployment of zero-carbon fuels.”  The International Association of Dry Cargo Shipowners (INTERCARGO) co-sponsored the proposal.

ICS, which represents national shipowner associations and over 80% of the world merchant fleet,  explained in its announcement that the carbon levy “would be based on mandatory contributions by ships trading globally, exceeding 5,000 gross tonnage, for each tonne of CO2 emitted.”  Funds generated by the levy “would go into an ‘IMO Climate Fund’ which, as well as closing the price gap between zero-carbon and conventional fuels, would be used to deploy the bunkering infrastructure required in ports throughout the world to supply fuels such as hydrogen and ammonia, ensuring consistency in the industry’s green transition for both developed and developing economies.”

In this article, we review the developments leading up to this proposal and its prospects, and consider the implications for the shipping industry and supply chains more generally if a global maritime carbon levy were to be adopted by the IMO.


Continue Reading Is a Global Maritime Carbon Levy on the Horizon? Why Companies Should be Paying Attention to the IMO Proposals and Preparing for Potential Supply Chain Disruption

This November, the United Kingdom will host the 26th UN Climate Change Conference (COP26) in Glasgow, from October 31 to November 12, 2021.  As part of its preparations, the UK Parliament International Trade Committee recently launched an inquiry on COP26 and international trade.  The Committee will be accepting submissions until September 7, 2021 on the series of questions that make up its call for evidence.  One of those questions asks,

What discussions, if any, are planned to develop a multilateral approach to carbon pricing systems (including border adjustment mechanisms), green subsidies and investment funds, the curbing of fossil fuel subsidies, a circular economy and sustainable supply chains?

A multilateral approach on most of these issues seems very unlikely, notably border adjustment mechanisms.  As discussed in a previous post, the European Union is pursuing its Carbon Border Adjustment Mechanism unilaterally.  The United States and others may follow suit.  This post explores the possibility of reaching a multilateral agreement on curbing fossil fuel subsidies, which could have serious implications for producers and downstream purchasers.


Continue Reading Phasing Out Fossil Fuel Subsidies: Any Prospect for Meaningful Multilateral Action?

The European Commission’s recently released proposal for a Carbon Border Adjustment Mechanism (CBAM) forms a critical part of the European Union’s Fit for 55 Package, discussed in a previous blog.  The proposed EU CBAM will require importers of certain products into the EU to pay for the tons of carbon emissions embedded in those products in the form of CBAM certificates, the price of which would be tied to the price of emissions allowances under the EU Emissions Trading System (ETS).  The CBAM is expected to be phased in gradually from 2023 in the form of detailed emissions reporting requirements, transitioning to full implementation by 2026.  Although the EU CBAM has yet to be approved and details of the mechanism remain to be fleshed out via implementing acts, companies would benefit by evaluating their potential exposure now, not just to the EU CBAM but also to the measures that may be implemented in response by other countries, including the United States.

Continue Reading The EU CBAM: What the Proposed Regulation Covers, What Happens Next, and What Companies Should be Thinking About Now

Yesterday, the European Commission published the long-awaited “Fit for 55” Package designed to drive forward the EU’s objective to radically reduce dependence on fossil fuels. As European Commission President von der Leyen stated in the press conference, the “fossil fuel economy has reached its limits”. Consisting of over a dozen initiatives, including both new and revised proposals, it aims to ensure that the European Green Deal’s objective of reducing carbon emissions by at least 55% below 1990 levels is met by 2030, ahead of the 2050 climate neutrality objective.

 
Continue Reading The European Commission Proposes to Raise Climate Targets Across Sectors Under the Fit for 55 Package to Further Decarbonize the Economy

The Government of Canada intends to add certain Plastic Manufactured Items to the list of substances appearing on Schedule 1 of the Canadian Environmental Protection Act (CEPA), fulfilling the Trudeau Government’s commitment to act on plastic waste released into the Canadian environment.  Importantly, the listing functions as a regulatory mechanism and necessary first step for later enacting prohibitions on certain plastic wastes, but does not, in and of itself, prohibit the sale or use of any plastic consumer or industrial products.

The Proposed Order,[1] which is expected to become effective in 2021, amends Schedule 1 to list Plastic Manufactured Items as a class of materials considered by the Canadian Government to be toxic under CEPA, Canada’s primary environmental protection act.[2]  In support of the Proposed Order, the Canadian Government compiled a Science Assessment on Plastic Pollution,[3] which outlines the bases for the conclusions that plastic pollution is an ongoing problem that requires mitigation under CEPA, and that such pollution poses an actual or potential risk of harm to the environment and human or animal health.

The addition of Plastic Manufactured Items to Schedule 1 authorizes the Canadian Government to propose and implement policies, consistent with CEPA, that are designed to address and mitigate plastic pollution throughout the supply chain, including: manufacturing, transportation, commerce, consumption, and disposal.  Despite the Government’s actions, however, a significant amount of confusion regarding the scope and intent of future regulatory actions remains to be addressed; in the meantime, numerous industry associations have submitted comments expressing concerns over the method of regulatory action, the lack of specificity and corresponding consequences that may result from such activity, and potential commercial and international trade impacts.  The provinces of Alberta and Ontario have expressed some of these same concerns.[4]


Continue Reading Grasping at Straws: Regulatory and Trade Considerations Regarding Canada’s Proposed Single Use Plastics Policy