Climate Change Insights : Climate Change Law and Policy Lawyers & Attorneys : McKenna Long & Aldridge Law Firm : Climate Change Regulation, Green Strategies, Environmental Policy

In the Roadmap, the Commission confirms EU’s 2050 commitment to reduce greenhouse gas emissions by 80 to 95% compared to 1990 levels.(3) It also outlines five decarbonisation scenarios: (i) a high level of energy efficiency; (ii) diversification in the supply technologies; (iii) a high share of renewable energy sources in gross final consumption of energy; (iv) delayed Carbon Capture and Storage (‘CCS’); and (v) a low level of nuclear energy.(4)

In all decarbonisation scenarios, the Commission calls for “very significant energy savings”. More concretely, the Roadmap aims at a 32 to 41% energy efficiency increase by 2050 based on 2005-2006 levels.(5) This demanding energy efficiency target for 2050 can be contrasted with the pessimistic observations which Philip Lowe (Director-General for Energy at the European Commission) formulated at the Roundtable on “The Future of the European Energy Policy, Energy Efficiency and European Energy Independence” that took place on 14 September 2011 at the European Economic and Social Committee in Brussels.(6) Philip Lowe argued on that occasion that, although the EU was well on its way in achieving the 2020 greenhouse gas reduction target and renewable energy targets, it was still stagnating with respect to its 2020 20% energy efficiency objective. Philip Lowe underlined that Member States were very much opposed to the idea of having binding targets formally imposed upon them in the field of energy efficiency: they would instead mark a strong preference for indicative targets.(7) Philip Lowe also pointed out that only 4% of small companies and 20% of large corporations established in the Union would already have a policy on energy efficiency.

The Commission also calls for the share of renewable energy to reach 55% of the Union’s gross final consumption of energy by 2050.(8) As regards renewable electricity more specifically, the Commission, in two of its decarbonisation scenarios, calls for a share of 60-65% and of 97% of renewable energy sources in the gross final consumption of electricity to be reached by 2050.(9) The Roadmap insists on the essential role of renewable heating and cooling in the Union’s move towards decarbonisation: the Commission urges for energy consumption to be directed at “low carbon and locally produced energy sources (including heat pumps and storage heaters) and renewable energy (e.g., solar heating, geothermal, biogas, biomass)”.(10) In the transport sector, the Commission points to a mixture of alternative fuels as a necessary substitute for oil, biofuels remaining the most viable alternative to oil for aircrafts, long-distance road transport, and railways (when they cannot turn to electricity). The biofuels relied upon ought to be sustainable: they must help diminish demand for food production land and improve the level of net greenhouse gas savings.(11)

Stimulation of local production of renewable energy presupposes the emergence of smarter distribution grids with a view to accommodating variable generation from multiple sources of distribution (e.g., solar photovoltaic) and a growing demand for renewable energy.(12)

The Commission, in its Roadmap, is realistic about the fact that public support schemes, in particular in the form of energy subsidies, will still be needed after 2020 in order to further stimulate green technologies. These support schemes ought to be specific in their scope, foreseeable and proportionate. They should be suppressed once the underlying “market failures are resolved” and the maturation of these technologies arrived at.(13)

As regards the future of CCS, the Roadmap suggests that it is contingent on its acceptance by the public and on the adequacy of carbon prices. CCS, if deployed by 2020 and widely used by 2030, is expected to have a significant impact on the decarbonisation of many heavy industrial infrastructures. The combination of CCS and of biomass could result in “carbon negative values”.(14)

The Roadmap’s proposed energy system presupposes the achievement of a “fully integrated market” for 2014,(15) the definition of “2030 milestones” for the promotion of renewable energy sources, more consistency with a common approach to international energy policy, and a substantial increase in energy efficiency (amongst other factors).(16)

Philip Lowe at the fourth meeting of the Advisory Group on Energy Roadmap 2050 and the Commission as a whole through its Roadmap have announced that their next priority would be the elaboration of a 2030 energy policy framework.(17)

[17] Energy Roadmap 2050, p. 20. 

The Communication is titled "A renewed EU strategy 2011-14 for Corporate Social Responsibility" ('2011 CSR Communication.) The nature of this EU instrument makes it in essence legally non-binding. This does not mean that the Communication should be disregarded by Member States or the business community, as it does set the seeds for a new policy direction in the field of Corporate Social Responsibility (‘CSR’). The Commission has perceived the concept of CSR along with the concept of “corporate governance” as central to furthering the internal market.[1]

In 2001, the Commission already defined CSR as “a concept whereby companies decide voluntarily to contribute to a better society and cleaner environment”.[2] The corollary of CSR was that “companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.[3] Building on earlier CSR instruments at the EU and international levels, the Commission in its 2011 CSR Communication proposed a new approach to CSR which emphasizes companies’ need to set up a process for reflecting ethical, human rights, environmental, social and consumer considerations into their day-to-day business operations and corporate strategy. The new Communication insists that CSR capture human rights, employment practices, the fight against bribery as well as environmental questions (e.g., resource efficiency, biodiversity, pollution prevention and climate change). The bulk of the new approach centers around: (i) the importance attached to the integration of a “core business strategy” into any business model; (ii) the emphasis on “creating shared value”; and (iii) the express insertion of “human rights and ethical considerations” into the conceptual definition of CSR[4] (even though the scope of CSR at the EU level already covered human rights pursuant to the Commission’s 2001 Green Paper).[5]

The Commission, in its 2011 CSR Communication, also strives for greater corporate disclosure of environmental information, in particular that pertaining to climate change, with a view to better involving stakeholders and unfolding “material sustainability risks”. The latter transparency concern will lead the Commission to issue a legislative proposal[6] whose objective would be to provide a generic regulatory framework for the corporate disclosure of social and environmental information across all sectors.[7] The Commission had already initiated a Public Consultation on Disclosure of Non-Financial Information by Companies on 22 November 2010, a procedure which was closed on 28 January 2011. This consultation procedure involved not just Member States’ representatives but also private stakeholders such as social partners from national and international unions, professional federations and academics.[8] On the question of whether institutional investors ought to be bound by non-financial disclosure requirements,[9] most stakeholders involved responded that these investors “should disclose information on environmental, social and other aspects and explain how these considerations influence their investment decisions” subject to a proportionate and size-based approach.[10] Most of the stakeholders were also of the view that qualified external auditors should audit corporate disclosure of environmental information, a requirement which should also be tempered by a sized-based approach (e.g., exemption for SMEs).[11]  

The 2011 CSR Communication is overall discreet on the relation between CSR and climate change, which could arguably be explained for two main reasons.

First, the relation between the two had already been tackled in more detail in the “Energy Efficiency Plan 2011” Communication in which the Commission implicitly drew a direct link between CSR and one of the three principal pillars of the EU climate change policy.[12] Here, the Commission encouraged recourse by large companies to an energy management system such as that embodied in the EN 16001 standard, and invited the industry and energy-intensive sectors to enter into voluntary agreements for the implementation of energy efficiency processes and systems. Such agreements would be premised on concrete targets, clear methodologies and effective monitoring schemes.[13] The Energy Efficiency Plan 2011 especially targeted energy performance or ‘ecodesign’ measures as the way forward towards promoting “innovation in energy efficient European technologies”.[14]

Second, the 2011 CSR Communication is drafted, to some extent, on the basis of the renvoi technique: it encourages all large EU-based companies to ensure that, by 2014, they attend to the UN Global Compact, the OECD Guidelines for Multinational Enterprises or the ISO 26000 Guidance Standard on Social Responsibility when fashioning their CSR position. The 2011 OECD Guidelines do contain some language on climate change compliance strategy. They invite multinational enterprises to set up a “sound environmental management” system premised on three layers of good corporate governance: (i) effective and efficient gathering/assessment of information on the environmental impacts of business activities; (ii) setting out measurable objectives and, if applicable, targets for improved resource utilization and environmental performance; and (iii) periodic monitoring of progress towards completing these environmental objectives/targets. At a more substantive level, the OECD Guidelines encourage multinational companies to aim for higher standards of environmental performance, amongst others, through the development of strategies on biodiversity or resource efficiency or for GHG emissions reduction. The OECD through its 2011 Guidelines interprets the expression “sound environmental management” in the most extensive way: it covers “activities aimed at controlling both direct and indirect environmental impacts of enterprise activities over the long-term, and involving both pollution control and resource management elements”.[15]

There is scope for substantial improvement as regards companies’ adhesion to CSR codes of conduct and Member States’ adoption of CSR incentivizing programs. The Commission has indicated that the number of EU companies officially endorsing the ten UN global Compact CSR principles had increased from 600 (2006) to 1900 (2011). It has also reported that only 15 out of the 27 EU Member States had put in place some form of CSR policy framework.[16]  
 

The Supreme Court, however, previously had agreed to review political question doctrine and standing issues in the climate change context in AEP v. Connecticut, No. 10-174 (certiorari granted Dec. 6, 2010). A decision in that case is expected this year. The Comer decision also does not prevent plaintiffs from filing new climate change-related tort suits in the Fifth Circuit. The Comer trial court decision is persuasive authority only even in the Southern District of Mississippi.