United States

President Biden Announces Increased Tariffs on China-Made Electric Vehicles, Batteries, and Solar Cells

On May 14, 2024, President Biden announced tariff increases on certain goods made in China, including electric vehicles, batteries, critical minerals, semiconductors, and solar cells. The tariffs cover approximately $18 billion of imports in the clean energy and technology sectors. Notably, tariffs on Chinese-produced electric vehicles increase to 100 percent in 2024 (up from 25 percent) and the tariff rate for semiconductors and solar cells will increase to 50 percent.

Final Rules for Federal Contractor Emissions Reporting Expected by Mid-July

On May 31, 2024, the U.S. Department of Defense released a list of open regulatory matters related to the Federal Acquisition Regulation. The list includes a due date of July 17, 2024, for a draft final rule to implement Section 5(b)(i) of Executive Order 14030, which directed the Federal Acquisition Regulatory Council to consider requiring “major Federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets.”

U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) Release New Safe Harbor Election for Domestic Content Bonus Credits

On May 16, 2024, the Treasury and the IRS released Notice 2024-41 (the Notice), providing further guidance on domestic content bonus credit amounts applicable under Sections 45, 45Y, 48, and 48E of the Internal Revenue Code of 1986, as amended (the Code) pursuant to changes authorized by the Inflation Reduction Act of 2022 (IRA). The Notice modifies previously issued guidance under Notice 2023-38 (the Previous Guidance), previously discussed in our client alert on May 17, 2023, and provides for a new elective safe harbor for taxpayers claiming domestic content bonus credits. The Notice also expands and modifies the existing list in the Previous Guidance categorizing certain project components as “applicable project components” and “manufactured product components” for purposes of applying the domestic content requirements.

For more information on the New Elective Safe Harbor, please see our client alert.

Treasury and IRS Release Proposed Regulations for Clean Electricity Production and Investment Credits

On June 3, 2024, Treasury and the IRS published anticipated Proposed Regulations (the Proposed Regulations) providing rules and requirements for claiming clean electricity production tax credits (PTC) and clean electricity investment tax credits (ITC) under Code Sections 45Y and 48E, respectively (the Tech-Neutral Credits). Although the IRA extended the legacy PTC and ITC under Code Sections 45 and 48, respectively, for renewable energy technologies such as wind and solar, the legacy credits will sunset beginning in 2025 and will be replaced by the Tech-Neutral Credits on a go-forward basis. The Proposed Regulations provide guidance to taxpayers relating to i) procedural rules for claiming the Tech-Neutral Credits; ii) applicable definitions and examples for taxpayers claiming Tech-Neutral Credits; and iii) phase-out of the Tech-Neutral Credits, which may occur as early as 2033.

Treasury and IRS Release Update on Energy Community Bonus Credit Qualification Criteria for ITC and PTC Amounts

On June 7, 2024, Treasury and the IRS issued Notice 2024-48 (the Energy Community Guidance) providing relevant information for taxpayers for purposes of qualifying for energy community bonus credit amounts under Code Sections 45, 45Y, 48, and 48E. The Energy Community Guidance supplements Notice 2023-29 by providing Appendix 1 and Appendix 2, respectively, which incorporate statistical requirements for energy community bonus credit amounts. Appendix 1 provides an updated list of metropolitan statistical areas (MSA) and non-MSAs that qualify as energy communities based on calendar year 2023 state and county level data with respect to the Fossil Fuel Employment requirements and is applicable as of June 7, 2024. The MSAs and non-MSAs listed will be considered energy communities until Treasury and the IRS issue an updated list based on unemployment rates for 2024. Appendix 2 adds new census tracts for the coal closure category, supplementing existing qualifying energy communities identified in previously released guidance.

Workplace Violence Prevention Requirement to Become Effective for California Employers Starting in Early July

In 2023, California enacted Senate Bill 533 (SB 553) requiring employers to create and maintain a workplace violence prevention plan (WVPP) and train their employees on their WVPP. This law will affect nearly every California employer, with very limited exceptions (exceptions will mainly be places of employment where less than 10 employees are working at any given time and the location is not accessible by the public, and employees teleworking from a location of their choice outside the employer’s control). Employers will need to create, implement, and train employees on a worksite-specific WVPP in compliance with the July 1 deadline, and must continue to provide employee training on the WVPP on at least an annual basis.

For more information on the requirements of SB 553, please see our client alert.

Europe

European Securities and Markets Authority (ESMA) Publishes Final Guidelines on Fund Names Involving ESG-Related Terms

On May 14, 2024, the ESMA published final guidelines (Guidelines) on funds using ESG or sustainability-related terms in their names. Compared to an earlier draft, the Guidelines no longer require that funds fulfill a 50 percent sustainable investment threshold if they use the terms “sustainable” or “sustainability” (and similar variations) in their names. Instead, under the Guidelines, such funds are only obligated to invest “meaningfully” into sustainable investments. Additionally, ESMA softened the rules for funds using transition strategy-related names and removed certain fossil fuel-based exclusions.

The Guidelines will become applicable three months after they have been published on ESMA’s website in all EU official languages. New funds will have to comply with the Guidelines immediately, while pre-existing funds will have six months to become compliant.

European Central Bank May Impose Penalties for Insufficient Climate and Environmental Risk Assessments

On May 8, 2024, Frank Elderson, Member of the Executive Board of the European Central Bank (ECB) and Vice-Chair of the Supervisory Board of the ECB, reviewed European banks’ progress towards providing adequate materiality assessments focused on climate and environmental (C&E) risks in the ECB’s Supervision Blog. He warned that the ECB would “use all the tools at our disposal to enforce these deadlines by when banks should have adequately addressed C&E risks.” The ECB may impose periodic penalty payments on noncompliant banks of up to five percent of daily average turnover.

European Supervisory Authorities Publish Final Reports on Greenwashing in the Financial Sector

On June 4, 2024, European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and ESMA (together with EBA and EIOPA, ESAs) published their respective final reports on greenwashing in the financial sector. The reports respond to a 2022 call by the European Commission for input by the ESAs on the phenomenon of greenwashing and policy recommendations in their respective areas of competency and follow interim progress reports published by the ESAs in May 2023. The ESAs stated that only a few of the National Competent Agencies they supervise have identified specific complaints or potential cases of greenwashing within their sectors, with instances typically involving ambiguous or misleading marketing content or product information.

European Union (EU) Passes Revised Nature Restoration Law

On June 17, 2024, the European Council voted to pass the Nature Restoration Law, following the European Parliament’s approval of the law in February 2024. The law obligates EU Member States to jointly restore at least 20 percent of the EU’s land and sea areas by 2030 and sets forth specific requirements for different types of ecosystems, including agricultural land, forests, and urban ecosystems. The law was reduced in scope to protect agricultural concerns, for instance by introducing an “emergency brake” so targets affecting agriculture can be suspended for exceptional reasons if there is a threat to food security. The law will be enacted 20 days after being published in the EU Official Journal, which is expected to happen in July 2024.

White House Releases Policy Guidelines for Voluntary Carbon Markets

On May 28, 2024, the Biden Administration released the Voluntary Carbon Markets Joint Policy Statement and Principles. The document describes the current state of voluntary carbon markets (VCMs) and outlines voluntary principles that will guide how the U.S. government engages with VCMs. The principles include ensuring that carbon credits and the underlying projects that produce the credits represent real decarbonization, that credit-generating activities avoid environmental and social harm, and that market participants contribute to efforts that improve market integrity.

U.S. Department of Energy (DOE) Announces First Part of Definition of “Zero Emissions Building”

On June 6, 2024, the DOE announced the release of the first part of a national definition for what constitutes a Zero Emissions Building. The standardized definition is an effort to advance private and public sector efforts to decarbonize the building sector. The first part of the definition focuses on operational emissions from energy use in building operations. It requires that, at a minimum, a zero emissions building be: i) energy efficient; ii) free of onsite emissions from energy use; and iii) powered solely from clean energy. Implementation guidance that expands on the definition can be found here.

International Sustainability Standards Board (ISSB) Standards Continue to Gain Global Traction Among Investor Groups

In late-May 2024, a diverse collection of asset managers, industry associations, and stock exchanges encouraged regulators to adopt the ISSB standards (the Standards) for public and private companies. The Standards involve the disclosure of financially informed, climate-related risks including companies’ sustainability transition strategies and plans for carbon credit usage. Multiple countries, including Australia and Canada, have communicated plans to align with the ISSB Standards in future.

DOE Announces New Agency-Wide Strategy for Commercial Fusion Energy and $180 Million to Advance Commercial Fusion Energy

On June 6, 2024, the DOE announced a new, agency-wide fusion energy strategy to accelerate the viability of commercial fusion energy in partnership with the private sector. The strategy lays out three key approaches to developing the industry: i) closing research gaps; ii) ensuring fusion development is sustainable and equitable; and iii) building external partnerships. The DOE also announced $180 million in funding for new Fusion Innovation Research Engine Collaboratives. The funding aims to address science and technology challenges associated with commercial fusion to accelerate efforts towards a pilot-scale fusion energy demonstration. Per the Funding Opportunity Announcement, pre-applications are required and due July 9, 2024, at 5 p.m. ET.

United States

Eleventh Circuit Blocks Fearless Fund Grant Contest

On June 3, 2024, the U.S. Court of Appeals for the Eleventh Circuit (the Eleventh Circuit) granted a preliminary injunction preventing Fearless Fund, LLC (Fearless Fund) from issuing grants to Black women-owned businesses. The Eleventh Circuit found that Fearless Fund’s grant program was not “expressive conduct” protected by the First Amendment of the U.S. Constitution and that the program bars non-Black applicants from applying for the grant. The Eleventh Circuit’s holding is the latest development legal challenge to Fearless Fund’s programs.

For more information on the Fearless Fund lawsuit, please see our August 2023 update.

Wilson Sonsini Again Earns an “A” Grade on 2024 Climate Scorecard

On June 24, 2024, Wilson Sonsini once again received a top "A" grade from Law Students for Climate Accountability (LSCA)—a student-led organization that seeks to amplify the roles and responsibilities of the legal industry in our current climate crisis. The organization recently released its 2024 Law Firm Climate Change Scorecard, which chronicles the climate-related work of the Vault 100 top-ranked firms in the U.S., according to how much clean energy and fossil fuels work they have engaged in from 2019 to 2023. The scores are based on the litigation, transactional, and lobbying work each firm is doing—or not doing—on behalf of clients exacerbating or reducing climate change. The initiative calls on law firms to phase out work related to the development and consumption of fossil fuels and seeks to inform law students concerned about the climate crisis. For 2024, Wilson Sonsini was one of only a handful of law firms to receive an “A” grade.

Wilson Sonsini Partners with Nasdaq, KPMG, and BMO to Host a Virtual ESG Bootcamp

On June 26, 2024, Wilson Sonsini partner Amanda Urquiza and associate Robert Terenzi will join partners from Nasdaq, KPMG, and BMO to share best practices, case studies, and tips for companies to build their ESG foundation. Topics will include VC perspectives around findings, rulings, strategies for diversity, how ESG can create a competitive advantage for entrepreneurs, and how later stage winners are looking at ESG and pre-IPO ESG implications. Those interested in attending can register here.

Wilson Sonsini Participates at CCS/Decarbonization Project Development, Finance, and Investment

Wilson Sonsini partner Todd Glass will moderate a panel entitled CCS/CCUS Project Developers’ Perspectives on Today’s Opportunities as part of the CCS/Decarbonization conference to be held in Houston, Texas from July 23-25, 2024. Those interested in attending can register here.

Wilson Sonsini Sponsors Skills-Development Workshop for Cleantech Executives

In June, Wilson Sonsini sponsored Spring Lane Capital’s Developer U, a two-day workshop aimed at teaching CEOs and senior executives of cleantech companies skills and strategies to navigate the transition from technology development to commercial deployment. The event was held at Wilson Sonsini’s San Francisco office.

Wilson Sonsini Advises Meati Foods on $100 Million Series C-1 Financing

On May 8, 2024, the Colorado-based alternative protein company Meati Foods announced the completion of a $100 million financing round led by Grosvenor Food & AgTech. This round brings the company’s total raised to $365 million since its founding and represents the single largest investment in an alternative proteins company since the company’s prior Series C fundraising round in 2022. Wilson Sonsini advised Meati Foods on the transaction.

Wilson Sonsini Helps Elemental Excelerator Advance Development Financing

Wilson Sonsini worked with Elemental Excelerator, a nonprofit investor focused on scaling climate technology for deep community impact, to launch the Development Simple Agreement for Future Equity (D-SAFE), a new mechanism for streamlined funding of development for climate projects.