FERC, CFTC, and State Energy Law Developments
The compliance deadline for the Voluntary Carbon Market Disclosures Act (VCMDA) is quickly approaching, but the statutory language of the VCMDA leaves open for interpretation several key issues, including threshold applicability questions that potentially impacted companies will need to grapple with.
California Governor Gavin Newsom signed the Voluntary Carbon Market Disclosures Act (VCMDA) on October 7, imposing disclosure obligations on businesses that market, sell, or purchase voluntary carbon offsets in California and businesses that make net-zero or carbon-neutral claims, effective on January 1, 2024.
The Commodity Futures Trading Commission’s (CFTC’s) Division of Enforcement announced that it has established a new task force—the Environmental Fraud Task Force—to combat environmental fraud and misconduct in derivatives and relevant spot markets, including the carbon markets.
One week after the Commodity Futures Trading Commission’s (CFTC) Whistleblower Office issued an alert seeking tips on potential fraud and manipulation in the carbon markets, the CFTC chairman announced that the second voluntary carbon markets convening will be held on July 19.
In recent remarks, Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero proposed that the CFTC promote market resilience to climate-related risk by adopting an approach for environmental/climate-related products, such as carbon offsets, similar to the CFTC’s regulatory response to virtual currencies.
ESG. Net zero. Carbon sequestration. In 2023, all of these terms will continue to be widely referenced in mainstream media publications, corporate governance and shareholder materials, and regulatory filings and issuances. Although the terms are technically unrelated, at their core they reflect a growing social consciousness, both in the United States and abroad, concerning carbon dioxide (CO2) presence in the atmosphere and the impact of individual and corporate actions on greenhouse gas (GHG) emissions.
While no one has a crystal ball for what 2023 will hold for the energy industry, the seemingly widespread support for green technology and clean energy is expected to carry through this year. In our industry outlook, “The Trends—and Traps—That Will Shape 2023,” we highlight some of the major green energy tax credit trends.
On December 13, 2022, the Department of Energy’s Office of Fossil Energy and Carbon Management released a Funding Opportunity Announcement (FOA) to make available up to $1.236 billion of funding to promote the development of four Regional Direct Air Capture (DAC) Hubs. This FOA is intended to accelerate the commercialization of, and demonstrate the processing, transport, geologic storage, and conversion of carbon dioxide (CO2) captured from the atmosphere.
In an article published in Project Finance International, partners Levi McAllister and Pam Wu discuss some of the most relevant and pressing issues concerning carbon offsets and raise considerations as environmental, social, and governance (ESG), net-zero goals, and carbon sequestration issues continue into 2023.
On December 1, 2022, the Environmental Protection Agency (EPA) published its proposed “set” rule for the Renewable Fuel Standard (RFS) Program. In addition to setting the volume and percentage standards for renewable fuels for 2023 through 2025, EPA proposed several regulatory changes to the RFS Program, the most notable of which was its proposal to create a new program to govern the Renewable Identification Numbers (RINs) for renewable electricity, which are known as “eRINs.”