December 2024 Energy Regulation Round Up

The Global Energy Regulation Roundup is dedicated to capturing and understanding emerging climate, energy, and reporting measures. Currently, international governments are increasingly establishing stricter policies on emissions reporting, trade, and energy. The purpose of this periodic report is to highlight approaching regulations and educate key stakeholders about their effects on a range of industries.

United States

US Treasury is Expected to Release Guidance on Tax Credits for Hydrogen Produced with Nuclear

The US Treasury Department plans to release guidance this week on accessing hydrogen production tax credits under the 2022 Inflation Reduction Act, which may allow hydrogen produced using nuclear power to qualify. The inclusion of existing nuclear plants in the program has been contentious, with environmentalists arguing that only hydrogen from new clean energy sources should receive subsidies. The draft guidance proposes tax credits ranging from 60 cents to $3 per kilogram based on the greenhouse gas emissions of the power source. Nuclear power producers, citing its carbon-free nature, have lobbied for inclusion, which could determine the commercial viability of hydrogen projects. The final guidance may include limits on the credits available to hydrogen derived from existing nuclear plants.

Major US Banks Abandon their Commitments to the Net-Zero Banking Alliance 

Several major US banks, including Morgan Stanley, Citi, and Bank of America, have exited the Net-zero Banking Alliance (NZBA), joining earlier departures by Wells Fargo and Goldman Sachs. These decisions reflect growing political and legal pressures, particularly from Republican policymakers opposing restrictions on fossil fuel financing and citing potential antitrust violations. While leaving the NZBA, the banks emphasize their continued commitment to climate goals, with Citi and Bank of America highlighting their independent net-zero strategies and client-focused approaches. Morgan Stanley, the latest to withdraw, reaffirmed its dedication to decarbonization by supporting clients in transitioning to lower-carbon business models and reporting on emissions targets. These departures occur amid broader industry challenges, including lawsuits against asset managers over climate-focused strategies, underscoring the difficult balance financial institutions face between climate ambitions and political opposition. Despite their withdrawal from the coalition, the banks insist that their commitment to achieving net-zero emissions remains unchanged.

Asia

China First Energy Law is Enacted 

China's first Energy Law, enacted after nearly two decades of preparation, provides a foundational framework to address fragmented energy management and accelerate the country's energy transition. It promotes new energy development, encourages investment in renewable technologies, and supports establishing an energy reserve system, with new energy now accounting for over 41 percent of installed capacity, 4.5 percent more than coal. Unlike Western energy frameworks with specific short-term goals, the law adopts a long-term institutional approach, leaving detailed implementation to future policies. While it boosts confidence in China's commitment to sustainability, challenges remain in regulatory coordination, oversight mechanisms, and creating a supportive market environment for renewable energy storage and distribution.

EMEA

The EU is Dumping Plastic Packaging by 2030

The European Union (EU) has adopted new regulations to ensure all packaging is recyclable by 2030. This follows the European Parliament’s agreement in April 2024 and the European Council’s recent approval. The new rules aim to reduce packaging waste by 5 percent by 2030, 10 percent by 2035, and 15 percent by 2040. Additionally, certain single-use plastic packaging will be banned by 2030. By 2030, all packaging must be designed for material recycling and sorted for recycling at scale by 2035. Further measures include requiring takeaway businesses to offer reusable packaging options and banning PFAS chemicals in food packaging above certain thresholds.

Qatar Threatens to Halt New LNG Contracts with EU over Strict Forced Labor Rules

Qatar has threatened to stop shipping liquefied natural gas (LNG) to the EU if the EU strictly enforces a new law requiring companies to check their supply chains for forced labor and environmental harm, with penalties up to 5 percent of global turnover. QatarEnergy’s CEO and Energy Minister, Saad al-Kaabi, stated that such penalties would be unacceptable, and that Qatar would not break existing LNG contracts but would avoid new ones if penalized. Qatar, a major LNG exporter, has supplied 12-14 percent of Europe’s LNG needs since Russia’s invasion of Ukraine. The new EU law, the Corporate Sustainability Due Diligence Directive, aims to ensure ethical and sustainable business practices.