January 2025 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.

North America: Canada Government Backs Direct Air Capture, and 24 US States Commit to Paris Climate Accord

Canada has introduced the world’s first government-backed Direct Air Capture (DAC) offset protocol, setting a global precedent for carbon removal regulation and positioning itself as a leader in climate innovation. This protocol aims to monetize carbon removal through the carbon credit market, ensuring stringent standards for permanence and transparency. It mandates that CO₂ be stored underground for at least 100 years and bans its use for enhanced oil recovery. This framework could pave the way for DAC’s integration into compliance carbon markets, driving significant investments and helping meet net zero targets by actively removing carbon from the atmosphere.

The US Climate Alliance, comprising 24 state governors, has reaffirmed its commitment to the Paris Agreement goals despite President Trump’s recent withdrawal from the accord. In a letter to the UN Climate Change Executive Secretary, the governors pledged to continue efforts to reduce greenhouse gas emissions by 50-52 percent by 2030 and 61-66 percent by 2035, building on the progress made under President Biden. They emphasized their constitutional authority to protect climate progress and outlined various state-level initiatives, including carbon markets and clean energy standards, to meet these targets. The Alliance will present this commitment at the upcoming COP30 in Brazil.

Europe: European Commission Unveils its “Competitive Compass”, and Switzerland Announces 65 Percent Reduction in Emissions by 2035

The European Commission has unveiled its “Competitiveness Compass,” a roadmap aimed at enhancing Europe’s productivity and global competitiveness. Key initiatives include simplifying sustainability reporting and due diligence regulations, particularly for smaller businesses, through an upcoming “Omnibus” package. The roadmap also introduces the EU’s Clean Industrial Deal to support industrial decarbonization and growth, with specific action plans for energy-intensive industries. Additionally, the plan addresses the trickle-down effect of regulations on smaller companies and proposes a new definition for small mid-cap companies to ease reporting burdens.

Switzerland plans to reduce greenhouse gas emissions by 65 percent from 1990 levels by 2035, an increase from the 50 percent target set in its 2017 Nationally Determined Contribution. The act also formalizes the country's commitment to achieving net zero emissions by 2050. This law includes initiatives to reduce energy consumption, and incentives to help migrate industry, buildings, and homes away from the use of fossil fuel-based power. This also includes a requirement for all companies to achieve net zero emissions by 2050. 

EMEA: A Climate Law That Took Over 20 Years to Pass is Now in Effect 

China has enacted a comprehensive new energy law, effective January 1, 2025, after nearly 20 years in development. This legislation consolidates existing policies and outlines China’s energy strategy, emphasizing renewable energy development while also promoting the efficient use of coal and domestic oil and gas exploration. It aims to enhance energy security, support market-based measures, and encourage technological innovation. The law also contains measures to shield China’s energy industries from geopolitical pressures, particularly from the US, while requiring media efforts to promote energy conservation and low-carbon development.