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Energy Law Analysis & Impact
1. THE LAWS OF ENERGY: PROTECTING YOUR BUSINESS
SARDAR LAW FIRM LLC Environmental groups argue that such a system The challenge for companies looking forward is to
NEW YORK, NEW YORK conflicts with the purpose of reducing greenhouse understand how these regulatory requirements
WWW.SARDARLAWFIRM.COM
gases, in effect, allowing companies to continue may affect them. Here is the Guide:
SARDAR@SARDARLAWFIRM.COM
polluting.
631.838.0178 1) Evaluate existing and proposed state and
federal climate change laws and regulations that
President Obama’s Stimulus Bill (American ASSESSING CLIMATE CHANGE may affect your business operations.
Recovery and Reinvestment Act of 2009, Pub. L. LEGISLATION AND ITS IMPACT ON YOUR
No. 111-5) provides several revenue-raising BUSINESS 2) Measure your GHG emissions or “Carbon
proposals, including new or increased taxes Footprint” in accordance with existing state and
Climate change legislation and cap-and-trade
targeted at the oil and gas sector, as well as energy- proposed federal GHG reporting requirements.
proposals have created significant concerns with
related spending proposals.
respect to potential risks that companies are facing. 3) Determine if your company will be required to
Many leading companies, however, are discovering incur costs to reduce GHG emissions or purchase
While the administration justifies these proposals
the potential for opportunities in a cap-and-trade carbon allowances or offsets.
on the grounds of climate change, many of the
environment. For companies with greenhouse gas
proposals appear to be at cross purposes with the 4) Determine what GHG emissions will not be
(“GHG”) emissions, identifying and evaluating these
goal of U.S. energy independence. This pamphlet regulated. For those emissions, evaluate whether
concerns and opportunities is a critical step in
briefly describes these controversial taxing reductions can be monetized and sold as carbon
preparing for future climate change legislation.
proposals and touches on some energy spending credits or retained to use for the companies own
proposals. Congress passed a 2010 Budget In the near future, Federal law will require compliance requirements with a reasonable rate of
Resolution on April 29, 2009 (Senate Concurrent companies to measure and report their greenhouse return on investment.
Resolution 13). The administration issued its gas emissions to the EPA. The House has passed a
“Greenbook” of Budget tax proposals (entitled climate change bill, and the Senate will be 5) Develop a form of Carbon Ledger so that the
“General Explanations of the Administration’s considering and voting on a climate change bill. If it company can develop a Carbon Accounting of its
Fiscal year 2010 Revenue Proposals”) on May 11, passes, emitters of greenhouse gases may be opportunities and liabilities, and analyze different
2009. The Greenbook offers further details on the required to reduce their greenhouse gas emissions. ways of managing those liabilities and taking
energy revenue-raising proposals, and adds one Almost half the states have adopted or are working advantage of its opportunities. A program to track
new revenue-raising proposal in the energy area. on adopting climate change legislation. Thus, and analyze these opportunities and liabilities on a
whatever Congress does, many states will impose weekly, monthly, or at least annual may need to be
their own restrictions on GHG emissions. developed. A carbon trading desk within the
CAP-AND-TRADE
company or outsourced to a carbon broker may be
The Budget proposes a 100% full action "cap-and- In a cap-and-trade program, companies may appropriate.
trade" system, commencing in 2012. The goal of purchase GHG or “carbon” permits, called
6) Engage management on climate change
this system is to reduce greenhouse gas (GHG) allowances or offsets to meet their regulatory
regulatory issues and present the companies GHG
emissions 14% over 2005 levels by 2020, and 83% requirements in lieu of reducing their emissions. In
emissions, Carbon opportunities and Carbon
by 2050. The "cap-and-trade" proposal has addition, under a cap-and-trade system, at the end
liabilities.
generated controversy. Business constituents, of each year, either carbon allowances or offsets
including oil and gas companies have lobbied must be turned in for every ton of GHGs emitted by 7) Develop a Climate Change Strategy to reduce
Congress to enable auctioning, thereby saving costs a facility during the prior year. Carbon liabilities and to develop and produce
by getting sellable permits for free. revenue or reduce costs using Carbon
opportunities.