Heating Up: EU and China Tackle Climate Change

By Robyn Ma​
The Story

“We would fail our children and grandchildren, who [...] will be fighting wars over water and food”, said European Commission Vice-President Frans Timmermans on the EU’s ‘Fit for 55’ legislation. Published last week, the legislation aims for a 55% reduction in greenhouse gas emissions by 2030, compared to 1990 levels (NPR).

One proposal involves the EU emissions trading scheme (ETS), which caps the amount of gas that participating companies can omit. Companies exceeding their allowances may purchase additional credits, while others can sell surplus allowances. Under the proposal, the carbon pricing market will now extend to buildings and transport. Another proposal aims to reduce auto emissions by 100% by 2035, in favour of electric vehicles (Financial Times).

Some environmentalists and EU governments argue these proposals risk pushing low-income populations into energy poverty; many cannot afford the switch to clean energy. Although the Commission has earmarked “at least 50%” of revenue from the ETS to a ‘social climate fund’ to help those hardest hit, European governments, having witnessed France’s "gilets jaunes", may fear backlash (Edie; Financial Times).

China has also introduced their own ETS, aiming to achieve net zero emissions by 2060. Unlike the emission cap used by the EU, China’s policy is based on carbon intensity (amount of emissions per unit of power generation) (HFW.com). The plan will initially cover 40% of the nation’s carbon emissions, including 2,225 power plants and other companies included under the umbrella of 'Covered Entites' (Reuters).

What It Means For Businesses And Law Firms

Law firms play a crucial role in the fight against climate change across multiple industries. Car manufacturers, for example, will require the help of infrastructure and energy lawyers to navigate new regulatory landscapes. In China, lawyers may be involved in helping Covered Entities compile and submit required annual greenhouse gas emissions reports to avoid penalties and fines (HFW.com).

Furthermore, many law firms are rethinking their approach to sustainability. With a sector dedicated to ESG and energy and climate change, CMS has set its own goal to achieve net zero by 2025. Similarly, Clifford Chance has aligned its business operations with UN Sustainable Development Goals.

Climate change is “reshaping the world around us” and has permeated global trade (MSN), which means novel work for law firms. Saudi Arabia’s sovereign wealth fund, for example, will need legal support following its plans to develop its own ESG framework and a potential green bond sale (Reuters).

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