In Brief: EU commission launches hydrogen auction; Toyota UK ads banned over ‘disregard on nature’

The latest ESG policy and regulatory news

The European Commission has launched its first auction of renewable hydrogen, through €800mn of emissions trading revenues. Bids are open until February 8 2024 and will be based on a price premium of a maximum €4.50 a kilogram of renewable hydrogen produced. The premium works as a mechanism to overcome the gap between renewable hydrogen’s production price and its market price, as non-renewable hydrogen is vastly cheaper to buy. The budget used to sponsor this auction is taken from the bloc’s Innovation Fund, which is financed by revenues from the EU Emissions Trading System.

The commission has also proposed forest-monitoring rules to enhance the governance and protect the biodiversity for European forests.

The European parliament has adopted new packaging rules, confirmed its position on net zero technology production, and established more stringent air-quality standards for trucks and buses. The new legislative proposals will now be discussed with the European Council before final rules can be set in place. However, the parliament has failed to come to an agreement to reduce the use of pesticides, leaving the commission’s proposal in limbo.

The parliament also adopted its demands for COP28. It is in favour of ending all direct and indirect fossil fuel subsidies globally by 2025 and of a global target of tripling renewable energy and doubling energy efficiency by 2030. The position is similar to the one the council announced earlier this month. However, the council stated it supports a global phase-out of fossil fuel subsidies “which do not address energy poverty or [a] just transition”.

The European Council and the EU parliament will start negotiations in the coming weeks on the strengthening of “right to repair” rules, after both institutions agreed on their separate positions this week. Similarly, the council and parliament will also start discussing their separate positions on a EU certification scheme for carbon removals.

The two EU institutions have also reached a provisional deal on electrical waste, which focuses on extended producer responsibility schemes. They also agreed a provisional agreement on waste shipment rules.

The EU contributed €28.5bn of public funds to climate finance initiatives in developing nations in 2022 with an additional €11.9bn of private finance mobilised through public interventions, according to figures approved by the council ahead of COP28.

Non-profit ShareAction has urged EU policymakers to mandate transition plans with clear emissions targets under the revision of the bloc’s insurance regime, known as Solvency II. The group argues that at present the agreed text only requires most European insurers to develop “prudential plans and targets” to address transition risks associated with climate change, rather than focus on an insurer’s full impact on people and planet.

The European Banking Authority has released the templates it will use to collect climate-related data from EU banks as part of the one-off, Fit-for-55 climate risk scenario analysis. A total of 110 selected EU banks will have to compile climate-related and financial data on credit risk, market and real estate risks.

The French authority for financial markets, AMF, has published a follow-up analysis on the taxonomy-aligned report of 31 non-financial companies. It found that the level of disclosure is “generally satisfactory”, although the information and data appear difficult to compare from one company to another. The regulator also said that not enough attention was given to climate adaptation objectives and that several companies argued that “legal uncertainties” hindered the extent to which their activities are aligned with the taxonomy.

A group of 15 countries, including Canada, Germany and the UK, have written a letter to the COP28 presidency urging a stop to the financing of new coal power projects, the Financial Times reports.

The UK Advertising Standards Authority has banned two advertisements depicting Toyota trucks driving through nature, after the watchdog said the adverts “condoned the use of vehicles in a manner that disregarded their impact on nature and the environment”.

The UK government is consulting on a new climate change agreement scheme, which will last for six years starting from 2025. The scheme, which is voluntary, provides a discount on the climate change levy paid to the government if carbon savings and energy-efficiency targets are met by the participating companies.

In his Autumn Statement, chancellor Jeremy Hunt has outlined a number of investment initiatives that should contribute to boosting the country’s green sectors. An overview of the announcement can be found here.

The UK and South Korea have signed new partnerships on energy security and the green transition. Agreements on civil nuclear energy and offshore wind energy were expanded during the UK state visit of South Korea’s president.

The EU, Germany and Denmark are being sued for at least €95mn under the energy charter treaty by Klesh Group, a Jersey-based oil-refining company, The Guardian reports. The lawsuit was triggered over a windfall tax, which the Klesh Group alleges undermines fossil fuel companies. The charter treaty has faced severe criticism as it could compromise climate action and provide financial compensation to the heaviest polluters. The EU has proposed to leave the treaty, while the UK favours a reform of the charter.

American consumer group PepsiCo has been sued by the state of New York for its alleged contribution to the plastic pollution of the state’s Buffalo River. According to a survey conducted by the state’s office, 17 per cent of the identifiable plastic waste collected in a sample belonged to PepsiCo.

Meanwhile, Canada has confirmed it will appeal a ruling that undid a government order to list manufactured plastics as toxic under the country’s Environmental Protection Act. Scrutiny on plastic pollution is increasing, with a global treaty on plastics currently being negotiated by the UN.

A Climate-Aligned Finance Act put forward by a Canadian senator has been discussed in a Senate banking committee hearing this week, according to press reports. Meanwhile, the country’s autumn economic statement mentioned, among other things, tax credits for carbon capture projects and the further development of a green taxonomy.

The US Environmental Protection Agency has announced $2bn in grants to support community-driven climate justice projects. The funding comes from the Inflation Reduction Act.