Climate Change Regulation

More good news from Texas: The legislature just passed a bill that will make it easier and faster to install solar and storage. Today solar permitting is absurdly slow. That's one reason why it costs 3x more to install solar on your roof in the US than it does in a country like Australia. In many cities, homeowners have to wait weeks for local officials to review paperwork, schedule inspections, and issue approvals. These delays increase costs and slow adoption. This new law changes that. It lets homeowners use licensed third-party reviewers to handle inspections and paperwork. Once the review is submitted, construction can begin immediately—and cities have just two business days to finalize the permit. This is a big deal for energy independence and resilience. It cuts red tape, reduces costs, and empowers more Texans to take control of their energy—all the more important in a state where millions lost power during Winter Storm Uri. The bill passed with overwhelming bipartisan support. And it shows what’s possible when lawmakers focus on practical solutions instead of political posturing. Let’s hope we see more of this across the country—especially from the US Senate in their vote on the "Big Beautiful Bill" next month.

📣 Breaking: Two big moves in Brussels on EU sustainability regulation: 1️⃣ EFRAG has officially been tasked with simplifying the ESRS (see the letter below). The Commission’s letter sets a tight timeline: advice due by 31 October 2025. The revised standards could apply from FY2026 and must apply by FY2027. What does simplification mean in practice? -Cut low-priority datapoints -Prioritise quantitative over narrative reporting -Provide clearer instructions on materiality to reduce over-reporting -Ensure interoperability with global standards This is a chance to course-correct some of the confusion and concerns that have surrounded CSRD implementation. 2️⃣ The European Parliament has just approved urgent procedure for the ‘stop-the-clock’ measure in the Omnibus Regulation. That means the final vote on the CSRD/CSDDD delays is scheduled for 3 April. If adopted, co-legislators can begin negotiating the final legal text. Why it matters: The decisions made in the coming weeks will define the direction of EU sustainability policy for the next several years. Simplification may be overdue, but if ambition is lost along the way, the cost will be much higher than administrative burden. #CSRD #CSDDD #EUGreenDeal #sustainabilityreporting #EFRAG #ESRS #sustainablefinance

The EU's #CarbonRemoval and #CarbonFarming regulation has been adopted. What is still missing? IETA's new position paper covers it all. 1) A clear timeline for implementation - how and when will the rules for certification bodies, certification schemes, the Union registry, and the methodologies be issued? 2) Design the CRCF registry to be compatible with the #EUETS registry to make potential future integration of permanent removals easier. 3) Make the best use of existing market infrastructure and best practices. 4) Make the CRCF units fungible with other EU policies (EU ETS, #CRSD). 5) Prevent any unnecessary administrative burden and regulatory duplication. 6) Provide project developers with clear information on the administrative processes to transfer to EU CRCF certification. 7) Facilitate demand! Bring forward clear proposals on the use cases. And clarify the role of CRCF units in the context of the ag ETS, #CORSIA (for EU-based airlines), corporate climate-related claims incl the #GreenClaims Directive. 8) Clarify the economic case for temporary crediting #carbonfarming. Check it out: https://lnkd.in/eHbqMNM6 -- Click the 🔔 on my profile to catch every insight I share. Knowledge drives meaningful #climateaction.

“The main change is the Treasury discarded a bright-line 5% test for starting construction of solar projects over 1.5 megawatts and all wind projects in favor of a less clear facts-and-circumstances approach of looking at the amount of physical work done by a factory on custom-made equipment for the project or at the project site.” “The new construction-start rules apply to wind and solar projects on which construction starts on or after September 2, giving developers a short window to try to tidy up any construction-start efforts they have currently underway. Developers starting construction of new solar or wind projects during the period September 2, 2025 through July 4, 2026 will have four years to finish after the year construction starts. Thus, a project on which construction starts in early 2026 will have until the end of 2030 to finish construction.” “Distributed solar developers will still be able to use the 5% test on projects with nameplate capacities of up to 1.5 megawatts. The capacity will be measured at each inverter string. Thus, a large project could qualify in theory, but the IRS will treat multiple inverter strings as a single project if they have "integrated operations." (Strings placed in service in separate tax years are not aggregated.)”

If I could rewrite the rules of the game, here’s where I’d start. If we agree that the only way to drive real sustainability at scale is to make more sustainable business also the better business — then we need policies that actually shift the incentives. Here are a few I’d vote in tomorrow: ----------------------------------------------------- 🧾 Tax what we want less of. → Emissions. Resource extraction. Single-use plastics. Real pricing that reflects the true cost – not token fees. 🟢 Signals of change: The EU is rolling out the Carbon Border Adjustment Mechanism (CBAM) to price imported emissions. Extended Producer Responsibility (EPR) rules on packaging are pushing reductions and recycling across sectors. ----------------------------------------------------- 🎁 Reward what we want more of. → Use taxes and subsidies to reward circular design, durability, repair, reuse and recycled content. 🟢 Signals of change: The Ecodesign for Sustainable Products Regulation (ESPR) sets performance standards, while countries like France and Sweden are testing VAT reductions for repairs. ----------------------------------------------------- 🔍 Transparency that matters. → Mandatory product-level footprinting — not just brand-level. If we can scan a barcode for ingredients, we can scan one for impact. 🟢 Signals of change: The Digital Product Passport (starting with textiles, electronics, and batteries) will drive item-level transparency and traceability. ----------------------------------------------------- 📉 Make it expensive to pretend. → A cost on inaction — and on greenwashing. 🟢 Signals of change: The Green Claims Directive will crack down on unsubstantiated sustainability claims — requiring evidence and penalties for misleading branding. ----------------------------------------------------- 🏛️ Regulators who listen → Not to entertain excuses or water things down with the help of lobbies — but to co-design smarter, tighter rules. 🟢 Signals of change: Many of the EU’s sustainability directives now include business consultation (and still — not enough SMEs, not enough retail voices). ----------------------------------------------------- Status right now? We’ve put the weight of transformation on consumers and business leaders — but left the economic logic mostly untouched. That’s not really a sustainability strategy. That’s a system, our system, pretending it’s someone else’s responsibility. #SystemsChange #SustainabilityPolicy #GreenDeal #CorporateSustainability #ESG #PolluterPays #NoMoreGreenwishing 

Major #SFDR Overhaul: EU sustainable finance rules completely restructured The European Commission just proposed a fundamental redesign of the Sustainable Finance Disclosure Regulation (SFDR). Here's what's changing: THE TRANSFORMATION FROM: Complex disclosure-heavy framework TO: Streamlined 3-category product system Impact: 25-50% cost reduction for financial firms NEW PRODUCT CATEGORIES Article 9 - Sustainable: Already sustainable investments | 70% threshold | Strictest exclusions (no fossils, high-carbon) Article 7 - Transition: Companies transitioning to sustainability | 70% threshold | Moderate exclusions plus fossil expansion limits Article 8 - ESG Basics: Broader ESG integration | 70% threshold | Light exclusions (weapons/tobacco/violations) BEFORE vs AFTER: KEY CHANGES Scope Before: Financial market participants + advisers After: Only product manufacturers/managers Entity Disclosures Before: Principal adverse impacts + remuneration policies required After: Completely eliminated (€56M annual savings) Product Framework Before: Articles 8 & 9 as vague quasi-labels After: Clear categories with specific criteria "Sustainable Investment" Before: Complex definition causing confusion After: Definition deleted; embedded in category criteria Disclosure Length Before: Lengthy templates, no limits After: Maximum 2 pages pre-contractual Marketing Rules Before: Must not contradict disclosures After: ONLY categorised products can use sustainability terms in names MAJOR DELETIONS ⇢Entity-level principal adverse impact disclosures ⇢Remuneration policy requirements ⇢"Sustainable investment" definition ⇢Entire Delegated Regulation 2022/1288 repealed NEW ANTI-GREENWASHING MEASURES ⇢Only categorised products can use ESG terms in names ⇢"Impact" term reserved for specific strategies ⇢Member States prohibited from adding requirements KEY ADDITIONS ⇢Fast-track: 15%+ EU Taxonomy-aligned = automatic qualification ⇢Formal data & estimates documentation requirements ⇢Clear fund-of-funds framework TIMELINE ⇢General application: 18 months after entry into force ⇢Insurance/pension products: 30 months (12-month grace period) WHAT DOES THIS MEAN ⇢For Asset Managers: Lower compliance costs, clearer rules, predictable supervision ⇢For Investors: Better comparability, reduced greenwashing, easier product matching ⇢For Markets: Efficient capital allocation, stronger single market, competitive advantage The EU is choosing clarity and enforceability over comprehensive complexity. This fundamental restructuring bets that simpler rules with stronger enforcement better serve both market integrity and the sustainable transition. #sustainablefinance #sfdr #esg #regulation #assetmanagement #greenfinance #compliance #europeanunion

Can we truly trust #carboncredit validation when auditors are paid by those they audit? #Carbonmarkets rely on third-party auditors to verify emission reductions - but the current model, where project developers hire and pay these auditors, creates a serious conflict of interest. Auditors must assess subjective factors like: (1) #Additionality - would the project have happened anyway? (2) #Leakage - are emissions simply shifting elsewhere? (3) #Permanence - will the impact truly last? These are complex, often qualitative judgments - and when an auditor’s paycheck depends on developer satisfaction, the risk of bias is real. 64% of Verra-certified auditors have been linked to projects with over-credited claims. It's time to rethink the system. (1) Create a global pool of independent auditors (2) Decouple verification from developer influence (3) Prioritize transparency and scientific rigor Credible carbon markets demand credible oversight. Without that, climate action loses trust - and impact. #CarbonMarkets #ClimateIntegrity #Sustainability #ClimateFinance #NetZero #CarbonCredits #ESG #Governance #Transparency #ClimateAction https://lnkd.in/dSNGncR9

Opportunities and Risks in SFDR 2.0 From compliance to coherence in sustainable finance The European Commission’s proposed revision of the Sustainable Finance Disclosure Regulation (#SFDR) is a welcome step forward. In particular, it introduces a dedicated category for #transitionfinance, long a missing piece of the EU #sustainablefinance framework. More broadly, it shifts SFDR from a disclosure-based regime, often criticised as confusing and prone to misleading sustainability claims, towards a product categorisation framework. This is more ambitious. But it also raises the stakes. Once regulation assigns meaning to product categories, it carries a dual responsibility: - First, to support informed decision-making by investors, through categories and additional disclosures that are understandable, consistently applied, and allow for meaningful comparison. - Second, given its stated objective of channelling capital towards the transition, to ensure a credible link between product design and real-economy effects. Otherwise, the framework risks not just failing to prevent #greenwashing, but institutionalising it. That risk is real. The proposal treats different investment approaches - including use-of-proceeds instruments, taxonomy-aligned investments, portfolio-level strategies and issuer engagement - as interchangeable for the purpose of meeting product eligibility thresholds. Yet these pathways are not consistently assessed in terms of their potential real-world effects. EU Climate Benchmarks (#CTB #PAB) illustrate the problem. They are granted gold-standard treatment in the proposal, while in practice promoting the compression of exposure to high-emitting assets, irrespective of their transition relevance or performance, and doing little to link capital allocation to firm-level emissions mitigation. Investment composition rules have an important role to play. Yet the central weakness of the proposal lies not in the stringency of thresholds and exclusions, whether too high or too low, but in the absence of a requirement for coherence between product objectives, investment strategies and their expected real-world effects. I develop this argument in: - a short op-ed published in FT Sustainable Views; - EDHEC Climate Institute's detailed contribution to the SFDR Have Your Say consultation. https://lnkd.in/d2nAy4jw

The #EU is taking bold steps to simplify sustainable finance regulations by overhauling its Sustainable Finance Disclosure Regulation (#SFDR). Very recently, agame-changing proposal was introduced, categorizing funds into three clear buckets: 1. Sustainable: Investments that are environmentally friendly. 2. Transition: Companies working towards sustainability goals. 3. ESG Collection: Investments incorporating Environmental, Social, and Governance factors. This initiative aims to tackle #greenwashing, enhance transparency, and make sustainable investments more accessible for investors. With regulatory changes expected to be finalized by mid-2025 and implementation in the years following, the ripple effects will likely extend beyond the EU. For the #GCC, this will have implications over the long run such as accelerated transition plans in high-emission sectors like energy and heavy industries and the need to adopt rigorous sustainability reporting frameworks to attract international capital. #Sustainability will no longer be optional! Regulatory changes in one region have the potential to shape global markets and practices, pushing businesses worldwide toward transparency, accountability, and measurable progress on #ESG goals. https://lnkd.in/d69b8Jmu

🗺️ Navigating the Future of Carbon Markets Carbon markets are at a critical juncture. With over 100 carbon crediting regulations now existing globally, the landscape is becoming increasingly complex. However, current regulations often remain fragmented and not net-zero aligned by default. A working paper from the University of Oxford, titled "Roadmap to Net-Zero Aligned Carbon Market Regulation," offers a comprehensive framework to help governments design and reform regulation that unlocks the full potential of carbon markets. Key Challenges Identified: ✴️ Existing regulations often treat emissions reductions and removals as fungible, failing to prioritize durable storage for residual emissions. ✴️ Many regulations endorse methodologies that lack robust environmental and social safeguards, including protections for Indigenous Peoples. ✴️ A lack of coherence between domestic regulations can increase risks for investors and deter investment. ✴️ Current frameworks often fail to distinguish between financing for ambitious mitigation projects versus substituting international climate finance obligations. 🏛️ The 6 Pillars of Net-Zero Aligned Regulation: The report proposes six universal pillars for effective regulation: ✳️ Efficient & Effective Financing: Situating carbon markets within a broader investment framework. ✳️ End-state of Net-Zero: Distinguishing between reduction and removal units to align with the Paris Agreement. ✳️ Ecosystem Integrity: Ensuring high-integrity MRV protocols and robust social safeguards. ✳️ Equitable Responsibilities & Outcomes: Ensuring fair benefit-sharing and meaningful consultation with local communities. ✳️ Enforcement & Oversight: Implementing independent oversight, transparency, and dispute resolution mechanisms. ✳️ Ease of Use: Reducing barriers to entry through interoperability and user-friendly systems. The roadmap offers tailored guidance for different jurisdictions: 1️⃣ Should focus on demand-side integrity, limiting reliance on international offsets for climate commitments, and prioritizing domestic reductions. 2️⃣ Can utilize the roadmap to differentiate between conditional and unconditional NDC projects and secure high-value finance for ambitious projects. 3️⃣ Have the opportunity to align industrial sectors with Paris goals by harmonizing domestic compliance markets with international schemes. #NetZero #CarbonMarkets #ClimatePolicy #Sustainability #ClimateFinance #Regulation #CCS #CDR #EnergyTransition