Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
Senior House Energy and Commerce Democrats have introduced an expanded version of last year’s CLEAN Future Act. While this legislation may not become law in its current form, it serves as a guidepost for policies we can expect to see over the next two years.
The bill sets an interim goal for 80% “clean” electricity by 2030 and 100% by 2035. To enforce this goal, the bill avoids a “carbon tax” system in favor of carbon credits utilities could trade if they fall under the carbon intensity threshold of 0.82 tons of carbon per MWH. Utilities producing power with emissions above this threshold would have to purchase credits for the overage.
This proposed system would include emissions from producing and transporting the energy to the utility in its formula. The likely effect would be to decrease demand for natural gas as the cost per MWH rises.
The bill would also spend $565 billion over 10 years on decarbonization efforts. This would include the creation of a national “green bank” that could lend $100 billion to companies developing new technologies to lower carbon.
The measure would also direct the SEC to require public companies expand climate change and ESG-related disclosures. This provision is in line with many statements made by incoming chair of the SEC, Allison Herren Lee. Lee has long advocated making these disclosures mandatory. While speaking at CERAWeek on Monday, Lee said she wants to work with other regulators to standardize climate risk disclosure guidelines for companies to ensure consistency with reporting internationally.
Several voluntary international bodies currently exist such as the Task Force on Climate-Related Financial Disclosure, the Sustainability Accounting Standards Board, and the Science-Based Target Initiatives. These guidelines are used by the EU. Lee’s statement indicates the possibility of mandatory reporting in the U.S., as is the case in the EU. This development could have major effects on the OFS sector.
The Council will continue to follow these developments closely and coordinate our ESG efforts to help Council members through this process. It’s critical that OFS companies are treated fairly in disclosure schemes. In addition, our members’ ESG work and innovative technologies should receive the recognition they deserve.
On the international trade front, the Office of the U.S. Trade Representative will consider carbon border adjustments to tackle climate change, according to this year’s newly released Trade Policy Agenda. These “adjustments” are essentially tariffs on countries that do not have a suitable climate mitigation strategy according to the administration. The Agenda emphasized collaborating with trade partners to maintain environmental protection standards and penalizing partners who fail to uphold environmental goals.
For more information on the Council’s advocacy efforts, contact SVP Government Affairs & Counsel Tim Tarpley.