New Jersey Approves C-PACE Financing for Commercial Projects

Earlier this week (i.e., the week of October 7, 2024), the New Jersey Economic Development Authority (NJEDA) Board approved the creation of the Garden State Commercial Property Assessed Clean Energy (C-PACE) Program. The program will allow commercial property owners to access a new form of financing to undertake energy efficiency, water conservation, renewable energy, and resiliency upgrades.

Per the NJEDA, the “Garden State C-PACE program will serve as a catalyst for private investment into building decarbonization, renewable energy, and resiliency projects, helping to reduce energy costs and stimulate the economy.”

C-PACE enables an owner to invest in its buildings on a non-recourse basis, for 30 year funds tie to the ten year Treasury (not SOFR), with no mortgage or other security.

The Garden State C-PACE Program will allow property owners to repay investments from “Qualified Capital Providers” into eligible projects through a special assessment to a Participating Municipality, similar to the owner’s real property tax, sewer, or water bill. The Participating Municipality then remits the payment to the initial capital provider. This form of financing should result in lower-cost, longer-term financing, making it easier for projects to be cashflow-positive from the outset. Municipalities are required to opt-in prior to any project application.

C-PACE programs exist in more than 38 states and have proven to be an effective tool to attract private capital into the renewable energy, energy efficiency, and resiliency markets. To date, according to the non-profit entity PACE Nation, there have been 3,340 C-PACE projects throughout the United States, which have drawn a collective investment of $7.2 billion and have created more than 88,700 job-years.

Per the NJEDA, the Garden State C-PACE Program’s Participating Municipality, Qualified Capital Provider, and Qualified Technical Reviewer Intake forms are expected to launch soon, with the project application following shortly thereafter. For more information, including eligibility requirements and program guidelines, visit https://www.njeda.gov/c-pace/ or email Gardenstatecpace@njeda.gov

Green Spouts: New Jersey finally joins the host of other neighboring states and other states in the US which has approved of C-PACE. This program should help owners and tenants who are doing upgrades or new construction by providing cheaper and more long term financing to projects that can result in loan amounts of approximately 30% of the stabilized value of the project (not the cost of the project but the value of it).

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

$2.2B in Resiliency Grants Awarded to Upgrade the US Electric Grid – DOE

On August 6, 2024, the U.S. Department of Energy (DOE) announced the first 8 selections for the 2nd round of the Grid Resilience and Innovation Partnership (“GRIP”) funding specifically for the “Grid Innovation Program”, one of three GRIP funding mechanisms. T

Per the DOE, through the second round of GRIP funding, the Grid Innovation Program will support 8 projects across 18 states, totaling approximately $2.2 billion in federal investment. Selections for the remaining 2 funding mechanisms should be announced later this year.

Map of the United States of America highlighting the projects across 18 states for the second round of the Grid Innovation Program

The California Harnessing Advanced Reliable Grid Enhancing Technologies for Transmission (CHARGE 2T) project is a public-private partnership that is intended to drive large-scale expansion to transmission capacity and improvements to interconnection process to increase and accelerate equitable access to renewable energy across California. CHARGE 2T is supposed to reconductor more than 100 miles of transmission lines with advanced conductor technologies and deploy dynamic line ratings (DLR) to quickly and significantly increase the state’s system capacity to integrate more renewable energy onto the grid. CHARGE 2T also supports transmission interconnection reform through process improvements, an interconnection portal, workforce investment, and educational resource development.

  • Project: CHARGE 2T: California Harnessing Advanced Reliable Grid Enhancing Technologies for Transmission
  • Applicant/Selectee: California Energy Commission
  • Federal cost share: $600,561,319
  • Recipient cost share: $900,841,978
  • Project location: California
  • Project type: Transmission

Power Up New England is a combination of New England states, ISO New England, public utilities, and an emerging technology developer which is focusing on an integrated portfolio of replicable, grid-benefitting technologies across the region. The project is intended to include new and upgraded points of interconnection (POIs) for offshore wind and a long-duration energy storage system to increase electric reliability and resilience, diversify New England’s resource mix, accelerate the region’s clean energy transition, reduce energy burden on consumers, and deliver innovative models for further investments in New England and other regions.

  • Project: Power Up New England
  • Applicant/Selectee: Massachusetts Department of Energy Resources
  • Federal cost share: $389,345,755
  • Recipient cost share: $499,212,688
  • Project location: Massachusetts, Connecticut, Maine, Rhode Island, New Hampshire, Vermont
  • Project type: Transmission and Storage

The North Plains Connector Interregional Innovation (NPCII) project will build a 3,000 MW High-Voltage Direct Current Voltage Source Converter (HVDC-VSC) transmission line, bridging the Western and Eastern Interconnections. The core project, North Plains Connector, would be the first HVDC project to connect three regional control entities: the Western Electricity Coordinating Council (WECC), Midcontinent Independent System Operator (MISO), and Southwest Power Pool (SPP).

  • Project: North Plains Connector Interregional Innovation (NPCII)
  • Applicant/Selectee: Montana Department of Commerce
  • Federal cost share: $700,000,000
  • Recipient cost share: $2,899,540,962
  • Project location: Montana, North Dakota
  • Project type: Transmission

The New York Power Authority’s project Clean Path New York is an underground and underwater High-Voltage Direct Current (HVDC) transmission line that is intended to deliver 1,300 MW of renewable energy from upstate and western New York to New York City. The project, one of the largest transmission projects contracted by the State of New York in 50 years, establishes a public-private partnership between New York Power Authority, Invenergy, and EnergyRe that is intended to fortify the resilience of NYC’s electric grid which is serving 20 million people daily. The project is advertised to deliver enough zero-carbon electricity to power 15% of NYC’s annual consumption.

  • Project: Transforming the Empire State: Clean Path New York
  • Applicant/Selectee: New York Power Authority
  • Federal cost share: $30,000,000
  • Recipient cost share: $3,209,440,351
  • Project location: New York
  • Project type: Transmission

The North Carolina Department of Environmental Quality State Energy Office, in partnership with Duke Energy, will implement advanced transmission technology to meet growing electricity demand in eastern North Carolina and improve reliability. The North Carolina Innovative Transmission Rebuild project will reconstruct the Lee-Milburnie 230 kV transmission line, incorporating high-temperature, low-sag advanced conductors and monopole steel structures that will enhance resilience and reliability within the existing right-of-way.

  • Project: North Carolina Innovative Transmission Rebuild
  • Applicant/Selectee: North Carolina Department of Environmental Quality State Energy Office
  • Federal cost share: $57,099,386
  • Recipient cost share: $57,099,386
  • Project location: North Carolina
  • Project type: Transmission

The Tribal Energy Resilience and Sovereignty (TERAS) Project will assist 4 Tribes in Northern California—the Hoopa Valley, Yurok, Karuk, and Blue Lake Rancheria Tribes— in developing Tribe-owned and -operated nested microgrids. This system, per DOE, will transform an outage-prone area through the deployment of reliable, resilient, community-led energy systems. TERAS will utilize innovative technology, advance Tribal Energy Sovereignty, create durable and lasting change in disadvantaged and vulnerable communities, and develop a replicable public-private partnership model for equitable and community-driven grid modernization.

  • Project: Tribal Energy Resilience and Sovereignty (TERAS) Project
  • Applicant/Selectee: Redwood Coast Energy Authority
  • Federal cost share: $87,629,455
  • Recipient cost share: $88,971,068
  • Project location: California
  • Project type: Microgrids

The Utah Office of Energy Development’s Reliable Electric Lines: Infrastructure Expansion Framework (Project RELIEF) will install advanced conductor cables to significantly boost transmission capacity using existing rights-of-way, which will improve grid reliability for 700,000 utility customers across 4 states and 5 tribal nations and enable the integration of more than 500 MW of renewable energy.

  • Project: Reliable Electric Lines: Infrastructure Expansion Framework (Project RELIEF)
  • Applicant/Selectee: Utah Office of Energy Development
  • Federal cost share: $249,557,047
  • Recipient cost share: $252,030,385
  • Project location: Utah, Oregon, Wyoming, Idaho, Arizona, California
  • Project type: Transmission

The Virginia Department of Energy, along with its partners, will implement Battery Energy Storage System (BESS) technology at the Iron Mountain data center in Virginia, and has plans to deploy a combination of turbine, solar PV, and BESS technologies at the Grace Complex in South Carolina.

  • Project: Data Center Flexibility as a Grid Enhancing Technology
  • Applicant/Selectee: Virginia Department of Energy
  • Federal cost share: $85,433,351
  • Recipient cost share: $106,046,099
  • Project location: Virginia and South Carolina
  • Project type: Transmission & Distribution
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Projects To Date

Through the first and second rounds of GRIP funding, per the DOE, the GDO has announced $5.7 billion in funding for 65 selected projects.

Grid Resilience Utility and Industry Grants

APPLICANT/SELECTEE PROJECT FEDERAL COST SHARE RECIPIENT COST SHARE STATUS ROUND
Consumers Energy Sectionalization and Circuit Improvements to Mitigate Outage Impacts for Disadvantaged Communities $100,000,000 $100,310,996 Selected First
Electric Power Board of Chattanooga EPB Chattanooga Grid Resiliency Upgrades: Network Conversions & Microgrids $32,375,691 $32,375,691 Selected First
Entergy New Orleans, LLC (ENO) Line Hardening and Battery Microgrid in New Orleans, LA $54,828,178 $54,828,178 Selected First
Fort Pierce Utilities Authority Mitigating Impacts of Extreme Weather and Natural Disasters Through Increased Grid Resiliency $5,828,993 $2,907,882 Selected First
Hawaiian Electric Company Inc. Climate Adaption Resilience Program $95,313,716 $95,313,718 Selected First
Holy Cross Energy Wildfire Assessment and Resilience for Networks (WARN) $99,328,430 $45,762,816 Selected First
Jamestown Board of Public Utilities Jamestown Board of Public Utilities Microgrid $17,377,945 $5,792,648 Selected First
Kit Carson Electric Cooperative Building a Modern, Intelligent Distributed BESS for Resiliency in Northern New Mexico $15,430,118 $7,715,580 Selected First
Midwest Energy, Inc. Transmission Line Rebuild/Replacement for Wildlife Mitigation and Renewable Resource Access $96,942,707 $47,717,412 Selected First
Mora-San Miguel Electric Cooperative, Inc. Three-Part Wildfire Damage Mitigation Project $11,270,193 $3,756,731 Selected First
PacifiCorp PacifiCorp’s Equity-aware Enhancement of Grid Resiliency $99,633,723 $106,105,519 Selected First
PECO Energy Company (PECO) Creating a Resilient, Equitable, and Accessible Transformation in Energy for Greater Philadelphia (CREATE) $100,000,000 $156,761,176 Selected First
Southern Maryland Electric Cooperative SMECO ​​​​Transmission, Distribution, and Communications Resiliency Initiative $33,567,016 $15,642,000 Selected First
Sumter Electric Cooperative, Inc. d/b/a SECO Energy Improving Reliability Through Grid Hardening $52,857,560 $17,619,190 Selected First
Tri-County Electric Cooperative, Inc. (TCE) Tri-County Power Meter Squared & Green Tree $4,665,803 $2,332,903 Awarded First
Xcel Energy Services, Inc. Wildfire Mitigation and Extreme Weather Resilience for Xcel Energy $100,000,000 $142,020,463 Selected First

 

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Smart Grid Grants

APPLICANT/SELECTEE PROJECT FEDERAL COST SHARE RECIPIENT COST SHARE STATUS ROUND
Algonquin Power Fund America Inc. Enabling the Clean Energy Transition by Enhancing Grid Stability Using SmartValve Technology $42,905,918 $42,905,918 Withdrawn – 5/28/24 First
Allete Inc. Minnesota Power HVDC Terminal Expansion Capability $50,000,000 $54,116,574 Selected First
American Electric Power Service Corporation AEP Advance Distribution Management System and Distributed Energy Resource Management System (ADMS & DERMS) Initiative $27,849,763 $27,849,763 Selected First
Arkansas Valley Electric Cooperative Corporation Beyond AMI to True Grid Intelligence with Distribution Automation $18,304,363 $18,310,825 Selected First
Burlington Electric Department Building Grid-Edge Integration and Aggregation Network of Thermal Storage (GIANTS) $1,158,695 $1,160,000 Selected First
Central Maine Power Enhancing Utility Resilience in America’s Most Forested State $30,306,795 $30,306,795 Selected First
City of Lake Worth System Hardening and Reliability Improvement Program (SHRIP) $23,462,167 $23,462,167 Selected First
City of Naperville Distributed Energy Resource Management System Implementation & Integrations $1,116,174 $1,116,174 Awarded First
Commonwealth Edison Company Deployment of a Community-Oriented Interoperable Control Framework for Aggregating and Integrating Distributed Energy Resources and Other Grid-Edge Devices $50,000,000 $66,000,000 Selected First
CPS Energy Community Energy Resiliency Program $30,227,710 $30,227,710 Awarded First
DTE Electric Company Deploying Adaptive Networked Microgrids to Improve Grid Flexibility and Reliability Project $22,941,046 $22,941,046 Selected First
Duquesne Light Company Grid Visibility Program (GVP): Unlocking System-Wide Data to Build a More Resilient and Equitable Grid $19,724,715 $20,215,000 Selected First
Electric Power Research Institute Inc. Optimizing Interregional Transfer Capacity Using Advanced Power Flow Control $18,017,358 $18,017,358 Selected First
The Empire District Electric Company (d/b/a Liberty) Project DA: Distribution Automation Deployment in Missouri, Kansas, Arkansas, and Oklahoma $47,491,810 $47,491,810 Selected First
Florida Power & Light (FPL) Smart Grid Manhole and Vault Monitoring Project $30,363,088 $36,738,088 Selected First
Generac Grid Services Accelerating Building Thermal Electrification While Managing System Impacts $49,835,370 $52,939,597 Selected First
Liberty Utilities (CalPeco Electric), LLC Project Leapfrog $13,071,300 $13,071,300 Selected First
Los Angeles Department of Water and Power Expanding Distribution System Visibility and the Ability to Dispatch Distributed Energy Resources $48,000,000 $48,000,000 Selected First
Missoula Electric Cooperative, Inc. Strategic Distribution System Modernization for Resilience and Wildfire Safety $2,749,071 $2,749,070 Selected First
National Grid USA Service Company, Inc. The Future Grid Project $49,642,758 $89,371,000 Awarded First
Oklahoma Gas and Electric (OG&E) Adaptable Grid Project $50,000,000 $52,362,351 Selected First
PacifiCorp Resiliency Enhancement for Fire mitigation and Operational Risk Management $49,951,103 $53,186,717 Selected First
Pecan Street Inc. Seasonal Solar Congestion Management (SEASCOM) $7,989,987 $7,989,987 Awarded First
Portland General Electric Company Accelerating and Deploying Grid-Edge Computing $50,000,000 $58,402,842 Selected First
PPL Electric Utilities Corporation The Grid of the Future $49,500,000 $49,500,000 Selected First
Public Utility District 1 Of Snohomish County Snohomish County Public Utility District’s Secure Modern Automated and Reliable Technology Project (SnoSMART) $30,000,000 $30,000,000 Selected First
Rappahannock Electric Cooperative Enabling EV and DER Adoption through DERMS, AMI, and Fiber Integration $38,162,015 $38,162,015 Selected First
Rhode Island Energy Smart Grid for Smart Decarbonization: Deploying Advanced Technology for Smart Grid Investments $50,000,000 $235,047,477 Selected First
Sacramento Municipal Utility District Connected Clean PowerCity $50,000,000 $106,164,172 Selected First
Surry-Yadkin Electric Membership Corporation (SYEMC) Grid Deployment to Support Rural-Focused Resiliency at a Small-Scale Electric Co-op $7,486,808 $7,700,738 Selected First
Tri-State Generation and Transmission Association Cooperative Energy Ecosystem $26,798,344 $26,798,344 Selected First
UMS Group Advanced Solutions for Wildfire Mitigation $38,480,244 $38,480,244 Selected First
Union Electric Company (Ameren Missouri) Rural Modernization $47,130,781 $54,009,248 Selected First
Virginia Electric and Power Co. (Dominion Energy Virginia) Analytics and Control for Driving Capital Efficiency Project $33,654,095 $33,654,095 Selected First
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Grid Innovation Program

APPLICANT/SELECTEE PROJECT FEDERAL COST SHARE RECIPIENT COST SHARE STATUS ROUND
Alaska Energy Authority Railbelt Innovative Resiliency Project $206,500,000 $206,500,000 Awarded First
California Energy Commission CHARGE 2T: California Harnessing Advanced Reliable Grid Enhancing Technologies for Transmission $600,561,319 $900,841,978 Selected Second
City of Kaukauna Kaukauna Utilities Grid Resilience Project $3,012,462 $3,012,462 Selected First
Confederated Tribes of Warm Springs Reservation of Oregon Confederated Tribes of Warm Springs (CTWS) and Portland General Electric (PGE) Regional 500kV Transmission Innovative Partnership $250,000,000 $363,953,472 Selected First
Georgia Environmental Finance Authority Regional Grid Improvements to Address Reliability in Georgia with a Focus on Remote or Hard-to-Reach Communities $249,129,382 $258,010,362 Selected First
Hawai’i State Energy Office (HESO) and Hawai’i Department of Business, Economic Development, and Tourism Enabling High Penetration of Renewables with Synchronous Condenser Conversion Technology (SCCT) $1,675,000 $1,675,000 Selected First
Hawai’i State Energy Office (HESO) and Hawai’i Department of Business, Economic Development, and Tourism Utility Solar Grid Forming Technology (USGFT) $16,250,000 $16,250,000 Selected First
Louisiana Department of Natural Resources State of Louisiana: Louisiana Hubs for Energy Resilient Operations (HERO) Project $249,329,483 $249,329,483 Selected First
Massachusetts Department of Energy Resources Power Up New England $389,345,755 $499,212,688 Selected Second
Minnesota Department of Commerce Joint Targeted Interconnection Queue Transmission Study Process and Portfolio $464,000,000 $1,300,000,000 Selected First
Montana Department of
Commerce
North Plains Connector Interregional Innovation $700,000,000 $2,899,540,962 Selected Second
New York Power Authority Transforming the Empire State: Clean Path New York $30,000,000 $3,209,440,351 Selected Second
North Carolina Department of Environmental Quality and State Energy Office North Carolina Innovative Transmission Rebuild $57,099,386 $57,099,386 Selected Second
Redwood Coast Energy Authority Tribal Energy Resilience and Sovereignty (TERAS) Project $87,629,455 $88,971,068 Selected Second
Utah Office of Energy Development Reliable Electric Lines: Infrastructure Expansion Framework (Project RELIEF) $249,557,047 $252,030,385 Selected Second
Virginia Department of Energy Data Center Flexibility as a Grid Enhancing Technology $85,433,351 $106,046,099 Selected Second

Green Spouts: While some might espouse the theory that these grants are politically motivated in an election year,  the reality on the ground is that real dollars are being provided to multiple states and communities to help support their efforts in investing in and rebuilding the electric grid and in creating more resiliency in the grid which has for decades been ignored.  

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

$4.3B in Climate Pollution Reduction Grants Allocated by the EPA to 25 applicants in 30 States

On July 22, as part of the Biden-Harris Administration’s Investing in America agenda, the U.S. Environmental Protection Agency announced selected recipients of over $4.3 billion in Climate Pollution Reduction Grants to implement community-driven solutions that are intended to tackle the climate crisis, reduce air pollution, advance environmental justice, and accelerate America’s clean energy transition.

The 25 selected applicationshttps://www.epa.gov/inflation-reduction-act/general-competition-selected-applications-table will fund projects in 30 states, including one Tribe, that target reducing greenhouse gas pollution from 6 sectors: Transportation – $1.18B, electric power – $372M, Commercial and Residential Buildings – $1.06B, Industry – $636M, Agriculture/ natural and working lands – $931M, and Waste and Materials Management – $121M.

A large part of the funded projects are also intended to help 45 states and dozens of metro areasTribes and territories develop Climate Action Plans and, per the EPA, is the single largest effort to spur the development of concrete local climate action goals across the nation.

The grants will fund projects supporting the deployment of technologies and programs to reduce greenhouse gases across the country. The grants are intended to help businesses capitalize on new opportunities, spur economic growth and job creation in new and growing industries, and support development of training programs to prepare workers.

According to the EPA website, when estimates provided by all selected applicants are combined, the proposed projects would reduce greenhouse gas pollution by as much as 971 million metric tons of carbon dioxide equivalent by 2050, roughly the emissions from 5 million average homes’ energy use each year for over 25 years.

EPA expects to announce up to an additional $300 million in selections under the Climate Pollution Reduction Grants program for Tribes, Tribal consortia, and territories later this summer.

By way of example, Pennsylvania’s Department of Environmental Protection has been selected to receive a more than $396 million grant for their proposed RISE PA project which focuses on industrial GHG emissions in the industrial sector through a competitive grants program and incentives for small-, medium- and large-scale decarbonization projects across the state.

  • The Montana Forest, Community and Working Landscapes Climate Resiliency Project will fund measures that improve forest management and expand urban and community forests. The selected application will also assist efforts to mitigate wildfires and coal seam fires and support local initiatives to improve soil health and reduce pollution from agriculture.
  • The South Coast Air Quality Management District has been selected to receive nearly $500 million for transportation and freight decarbonization through incentives for electric charging equipment and zero-emission freight vehicles.
  • The Nebraska Department of Environment and Energy will fund measures to increase the adoption of climate-smart and precision agriculture and reduce agricultural waste from livestock. The selected application will also fund projects to improve energy efficiency in commercial and industrial facilities and low-income households as well as deploy solar and electrify irrigation wells.
  • The Clean Corridor Coalition’s proposal for ZE-MHDV Infrastructure along the I-95 Corridor project will deploy electric vehicle charging infrastructure for commercial zero-emission medium- and heavy-duty vehicles on the Interstate-95 freight corridor. This is a joint venture amongst the New Jersey Department of Environmental Protection, Connecticut Department of Energy and Environmental Protection, Delaware Department of Transportation, and Maryland Departments of the Environment and Transportation. The selected application will provide technical assistance for workforce development and corridor planning across New Jersey, Connecticut, Delaware, and Maryland.
  • The Accelerating Siting, Zoning, and Permitting of 60% Renewable Energy in Michigan grant will provide incentives and technical assistance to local and Tribal governments to accelerate the siting, zoning, and permitting of renewable energy. The selected application will help spur the adoption of renewable energy at the scale and pace needed to reach Michigan’s goal of 60 percent renewable energy by 2030.
  • The Atlantic Conservation Coalition is a regional approach focused on natural climate solutions to reduce greenhouse gas emissions. The selected application will fund efforts across North Carolina, South Carolina, Maryland, and Virginia to leverage the carbon sequestration power of natural and working lands, including coastal wetlands, peatlands, forests, and urban forestry. The Atlantic Conservation Coalition is a partnership amongst the North Carolina Department of Natural and Cultural Resources, South Carolina Office of Resilience, Maryland Department of the Environment, and Virginia Department of Environmental Quality.
  • The Accelerating Clean Energy Savings in Alaska’s Coastal Communities grant will provide advisory services and incentives to replace residential oil burning systems with energy-efficient heat pumps in 50 Alaskan communities.

The measures contained in the selected applications, developed with input from local communities, are expected to achieve substantial public health benefits such as reducing exposure to extreme heat, improving air quality, reducing energy burden for lower income Americans, improving climate resilience, and providing workforce and economic development opportunities, particularly in low-income and disadvantaged communities.

The EPA reported that they reviewed nearly 300 applications that were submitted by entities from across the country and requested a total of nearly $33 billion in funding.

Many of the proposed projects contained in the selected applications, as well as the $250 million in planning grant funding that EPA is providing under the CPRG program for development of Climate Action Plans by state, local, and Tribal governments across the country, will add to the Biden-Harris Administration’s federal actions and national climate strategies across various sectors which include: the U.S. National Blueprint for Transportation Decarbonization, the Administration’s efforts to achieve 100% clean electricity by 2035 and make zero emissions construction common practice by 2030, the Industrial Decarbonization Roadmap, the U.S. Buildings Decarbonization Blueprint, the climate-smart agriculture efforts and Nature Based Solutions Roadmap, the U.S. Methane Emissions Reduction Action Plan, the National Climate Resilience Program.

Green Spouts: While some might espouse the theory that these grants are politically motivated in an Election Year,  the reality on the ground is that real dollars are being provided to multiple states and communities to help support their efforts in the climate change mitigation and resiliency arenas.  The programs they in turn set up and fund will last for years into the future and should provide a good base to help various communities and stakeholders start to plan and implement strategies to help alleviate some of the impacts that climate change has already created and will create in the future.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

Vermont passes the first of its kind Climate Superfund Cost Recovery Program – Polluters to be held Strict Liability

As of July 1, 2024, Vermont’s Climate Superfund Recovery Program (the “CSRP”) has now officially taken effect.  After the Legislature passed the CSRP, Governor Phil Scott (R) did NOT veto it, rather he allowed it to become law without his signature.

The new law, which can be found at  https://legislature.vermont.gov/bill/status/2024/S.259, and requires the State Treasurer along with the Agency of Natural Resources, to report, by January 2026, on the costs to residents and the State from greenhouse gas emissions that occurred between January 1, 1995 and December 31, 2024. This comprehensive assessment is intended to include impacts on public health, natural resources, agriculture, economic development, and housing, using federal data to attribute emissions to specific fossil fuel companies.

The law creates a polluter-pays model, targeting companies involved in fossil fuel extraction or crude oil refining linked to over 1 billion metric tons of greenhouse gas emissions during the 1995 to 2024 specified period. Companies that have exceeded the 1 billion metric ton mark are required to pay for their pro rata share of climate adaption measures needed by the State.  The funds collected will then be specifically allocated to infrastructure improvements such as roads and bridge upgrades, storm water management and drainage systems, sewer treatment plant upgrades and retrofits and energy-efficient building enhancements.
The CSRP takes the position, much like the Federal Superfund laws, that the polluter in this case is strictly liable for its applicable share of costs incurred for climate change adaptation projects. Entities that are part of a controlled group are jointly and severally liable for the applicable costs.

 

The theory behind the approach to the CSRP is that the companies whom have specifically contributed to greenhouse gas impacts are the ones required to fund necessary upgrades to existing or necessary resiliency infrastructure and other “climate change adaptation projects” as defined under the CSRP.  The State Treasurer’s report is required to measure and provide a summary of various costs that have been incurred due to the greenhouse gases that were emitted during the relevant time period and costs that are projected to be incurred in the future within the State to abate the effects of covered greenhouse gas emissions from 1-1-95 through 12-31-25.

Green Spouts: The CSRP is the first of its kind state law that attempts to hold a polluter strictly liable for past acts that have created a negative impact on the State’s infrastructure and climate adaptability. The CSRP makes any entity or successor company that engaged in the trade or business of fossil fuel extraction or refining crude oil between 1-1-95 and 12-31-24 strictly liable for its share of costs incurred by the State.  The emitters are being held responsible for their respective portion of green house gas emissions above the 1 billion metric tons noted above.  Interestingly, Vermont is NOT alone here, as New York, Maryland and Massachusetts are considering similar legislation as well. Whether this type of State Superfund  strict liability law gets traction and passage by other states remains to be seen but it is surely an interesting development and one which bears watching, especially in light of the upcoming election.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

Sustainable Aviation Fuel (SAF) Tax Credits – New Treasury and IRS Guidance Announced –

Last week, the U.S. Department of the Treasury and Internal Revenue Service (IRS) released guidance on the Sustainable Aviation Fuel (SAF) Credit established by the Inflation Reduction Act (IRA).

Per the press release from Treasury, “…Sustainable aviation fuel is a key part of the Biden-Harris Administration’s efforts to transition the American economy to a clean energy future and rebuild the middle class from the bottom up to the middle out in rural America,” said U.S. Secretary of Agriculture Tom Vilsack. “Today’s announcement is an important stepping stone as it acknowledges the important role farmers can play in lowering greenhouse gas emissions and begins to reward them through that contribution in the production of new fuels. This is a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops produced using climate smart agricultural practices. USDA will continue to work with our federal agency partners to expand opportunities in the future for climate smart agriculture in producing sustainable aviation fuel.”

“The guidance released today reflects the latest data and science needed to help create new economic opportunities for America’s agricultural sector,” said U.S. Secretary of Energy Jennifer M. Granholm. “This interagency effort will help our climate goals take flight with cheaper, cleaner sustainable aviation fuel — ensuring America maintains an innovative edge on the global clean technology stage.”

The Treasury Department’s guidance provides important clarity around eligibility for the SAF Credit. The credit incentivizes the production of SAF that achieves a lifecycle greenhouse gas emissions reduction of at least 50% as compared with petroleum-based jet fuel. Producers of SAF are eligible for a tax credit of $1.25 to $1.75 per gallon. SAF that achieves a GHG emissions reduction of 50% is eligible for the $1.25 credit per gallon amount, and SAF that achieves a GHG emissions reduction of more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.

As part of the released guidance, the agencies comprising the SAF Interagency Working Group (IWG) jointly announced the “40B SAF-GREET 2024″ model. This model provides another methodology for SAF producers to determine the lifecycle GHG emissions rates of their production for the purposes of the SAF Credit.

The modified version of GREET incorporates new data, including updated modeling of key feedstocks and processes used in aviation fuel and indirect emissions. The modified GREET model also attempts to integrate key greenhouse gas emission reduction strategies such as carbon capture and storage, renewable natural gas, and renewable electricity.

The Notice incorporates a USDA pilot program to encourage the use of certain Climate Smart Agriculture (CSA) practices for SAF feedstocks. Incorporating CSA practices into the production of SAF will likely lower overall GHG emissions associated with SAF production and increase adoption of farming practices that are associated with other environmental benefits, such as improved water quality and soil health.

For corn ethanol-to-jet, the pilot provides a greenhouse gas reduction credit if a “bundle” of certain CSA practices (no-till, cover crop, and enhanced efficiency fertilizer) are used. It similarly would allow a greenhouse gas reduction credit for soybean-to-jet if the soybean feedstock is produced using a “bundle” of applicable CSA practices (no-till and cover crop). Per the announcement, this is a pilot program specific to the 40B credit, which is in effect for 2023 and 2024.

To credit CSA practices in the Clean Fuel Production Credit (45Z), which becomes available in 2025, the agencies have committed to do further work on modeling, data, and assumptions, as well as verification.  Lastly, a new 45Z-GREET will be developed for use with the 45Z tax credit.

Green Spouts: The focus on SAF and aviation fuel by the Administration and relevant agencies continues.  The new rules enable ethanol and soy-based biofuel to be eligible for tax credits under the IRA. Biorefineries can qualify for tax credits if their fuel is sourced from corn and soy farms that use certain “climate-smart” conservation practices. SAF is a large part of the airline industries’ plans to reduce GHG emissions.  Per the EPA, only 24.5 Million gallons of SAF were consumed in the US in 2023, leaving close to 3 Billion gallons a year more of additional production and consumption to meet the Administration’s 2030 domestic goal for SAF.

Aviation emissions (mostly from fuel sources) account for approximately 2% of global energy-related carbon dioxide emissions (or about 800 million metric tons of CO2.  The aviation industry is responsible for approximately 12% of CO2 emissions from all transportation.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

 

Sustainability and Real Estate – Thoughts from the I-Global Conference 3-26-24

We had the pleasure or participating in the I-Global LP and GP Conference yesterday in New York City.  In a fast moving, lots of ground covered panel headlined by Andrea Pinabell – RE Tech, Uma Moriarity – Center Square, John Forester – RMR Group, Hyon Rah – DWS and Randy Hoff – PWC which I had the honor of moderating, the discussion focused on Sustainability, ESG and Real Estate investment.

The panel covered how each of their organizations have set goals and targets for sustainability including some setting net zero 2024 goals (wow), operational efficiency and energy usage reduction goals, water and recycling goals, return on investment goals and how sustainability is used as part of the various lenses to evaluate and determine which assets to purchase and invest in and how resiliency and weather impacts like hurricanes, floods, and wild fires are relevant to decisions being made by investment committees on where to invest and where to divest assets.

We touched on the advent of Energy Star, the free tool from the EPA that has been around for decades and keeps getting better with more in depth features and analysis tools, and how it can be used to measure building performance within a market segment as well as across various market segments given that the data within the tool is normalized for weather and temperature.

The panel defined and discussed Scope 1 (the energy one consumes and the greenhouse gas (“ghg”) impact of it on site), Scope 2 (the energy one brings on site and the ghg impact from a utility) and Scope 3 (the ghg impact from one’s supply chain and one’s own travel) and why it is important to be measuring and monitoring these items, even though the final SEC Rules on Climate Disclosure did not include Scope 3 reporting, noting that the California Climate bills that were passed in 2023, do indeed include Scope 3 measuring and reporting.

We touched on the challenge of data integrity and data management when multiple geographies and product types are owned and operated but that these challenges can be met and how their organizations were indeed including sustainability features within their due diligence processes in purchasing properties and in developing them let alone operating them within their various portfolios.

Building performance on energy, water and waste within the 48 cities, 3 states and 2 counties requiring such monitoring, measuring and reporting was also reviewed as was the new Local Law 97 type mandates requiring greenhouse gas measuring and reporting and a fining regime for non-compliance in various cities like Boston, New York, Washington DC, Denver, San Francisco, etc. were continuing to appear and evolve and how such trends are being tracked by the Institute for Market Transformation (IMT) on line with an easy to see tool and map.

Lastly, we spoke of the various changes to the final rules in the SEC’s Rules on Climate Disclosure which are now the law, but which have been granted a temporary stay by the 5th Circuit, delaying their implementation but not impacting various public companies from complying anyway given the likelihood that the rules will be required at some point in the near future.

We also learned that the panelists were currently enjoying Columbia University’s Energy podcast, Monday Morning Quarterback, All In, How I Built This and the Energy Gang as their guilty pleasure ESG or other podcasts.

Green Spouts: The picture that was painted by the panelists, despite news headlines in certain business publications to the contrary, is that sustainability, weather incidents, resiliency and risk mitigation are topics that are agnostic to politics and political winds and that very large real estate companies are continuing to focus on and expand their ambit of goal setting, measuring, monitoring and acting on various energy, water, waste and social and governance issues where they believe they can obtain an appropriate return or where they are otherwise being required by law to report their results.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

5th National Climate Assessment Released by the White House along with more than $6B to strengthen Resiliency in the US

Earlier today, November 15, 2023, President Biden released the Fifth National Climate Assessment (“NCA5”). The NCA5 assesses changes in the climate, its national and regional impacts, and options for reducing present and future risk.  NCA5 showed that every region of the country is experiencing the impacts of climate change, but that ambitious climate action is underway in every region as well.

The report shows that climate change related extreme weather events still pose a rapidly intensifying threat – one that, according to the White House, costs the U.S. at least $150 billion each year, and that disproportionately affects underserved and overburdened communities.

In coordination with the release of NCA5, President Biden announced more than $6 Billion in investments to make communities more resilient to the impacts of climate change, including by strengthening America’s aging electric grid infrastructure, reducing flood risk to communities, supporting conservation efforts, and advancing environmental justice.

I. BOLSTERING AMERICA’S ELECTRIC GRID. The Department of Energy (DOE) announced over $3.9 billion of funding through the Bipartisan Infrastructure Law, to strengthen and modernize America’s electric grid in the face of more frequent and intense climate impacts. This funding opportunity, the second under the Grid Resilience and Innovation Partnerships program, focuses on projects that will modernize the electric grid to reduce impacts from extreme weather and natural disasters, increase capacity and unlock renewable energy resources, mitigate faults that lead to wildfires or other system disturbances, and deploy advanced technologies such as distributed energy resources and battery systems to provide essential grid services.

II. ADVANCING ENVIRONMENTAL JUSTICE. The Environmental Protection Agency (EPA) will soon make $2 billion of funding available through its Environmental and Climate Justice Community Change Grants program to support community-driven projects that deploy clean energy, strengthen climate resilience, and build community capacity to respond to environmental and climate justice challenges. This program, funded by the Inflation Reduction Act, will invest in multi-year partnerships between community-based organizations, local governments, institutes of higher education, and federally- recognized Tribes. EPA also will provide $200 million in technical assistance and capacity building support for communities and their partners as they work to access these critical federal resources.

III.REDUCING FLOOD RISK TO Federal Emergency Management Agency (FEMA) announced $300 million in a second round of funding through the Swift Current Initiative, funded by the Bipartisan Infrastructure Law, to help communities that have been impacted by catastrophic flooding during the 2022-2023 flood season become more resilient to future flood events. The Swift Current Initiative is focused on making mitigation assistance rapidly available for those who have suffered the effects of flooding disasters.

IV.  BOOSTING CLIMATE RESILIENCE. The Department of the Interior (DOI) will announce $100 million in funding from the Bipartisan Infrastructure Law for water infrastructure upgrades that advance drought resilience in the West. This includes $50 million in project awards to improve the reliability of water resources and support ecosystem health in Western states, along with an additional $50 million funding opportunity for water conservation projects and hydropower upgrades. DOI is also announcing a newly established Kapapahuliau Climate Resilience Program and $20 million in initial funding available through the Inflation Reduction Act to enhance the ability of the Native Hawaiian Community to navigate the effects of climate change in ways that maintain the integrity and identity of the Native Hawaiian people while also maintaining and enhancing their capacity for coping, adaptation and transformation.

    • The Department of Defense is launching a new Climate Resilience Portal at www.climate.mil. The creation of Climate.mil responds to requests from service members for a one-stop focal point for accessing authoritative and actionable climate change information. Phase 1 of Climate.mil will consist of key climate tools, reference documents and resources, and climate terms and definitions, while Phase 2 will be for internal DOD users and provide more detailed information and guidance to consider climate change factors and impacts in all relevant and applicable decisions.
    • In addition, the White House is publishing a synthesis of insights from the 13 roundtable discussions on climate resilience that the Administration hosted earlier this year as part of the White House Summit on Building Climate Resilient Communities.

This resource will help inform federal and non-federal actions, investments, and decisions to help build climate resilient communities from the local level on up.

V.  INVESTING IN CONSERVATION.  The Department of the Interior will announce $166 million from the Inflation Reduction Act to meet critical ecosystem resilience, restoration and environmental planning needs for the National Park Service over the next 9 years. These investments build on an initial $44 million allocated earlier this year for work in fiscal year 2023, and advance the America the Beautiful Initiative, the Administration’s goal to restore and conserve 30% of lands and waters by 2030. The Biden-Harris Administration will join the National Fish and Wildlife Foundation and public- and private-sector partners in announcing over $140 million in grants through the America the Beautiful Challenge. The 74 new grants will support landscape-scale conservation projects across 46 states, three U.S. Territories, and 21 Tribal Nations.

Green Spouts: While the picture that is painted by the NCA5 is far from rosey, GHG emissions continue to fall despite GDP and population gains in the US.  The report details the Administrations Investing in America’s actions to date with over $614 Billion to build manufacturing; over $392 Billion to upgrading the public infrastructure; and $8.8 Billion in home energy rebates to incent efficiency in the home.  The NCA5 detailed continued increases in the number and severity of climate impacts with extreme events costing over $150 Billion each year.  These sums are mind boggling but represent a massive opportunity to invest in our country’s infrastructure in a meaningful and cleaner way than in the past. Out of the new $6 Billion of funding announced today, approximately $3.9 Billion with be directed to strengthening and modernizing the electric grid; $2 Billion will fund Environmental and Climate Justice community grants and technical assistance; over $300 Million will be directed in second round funding through the Swift Current Initiative to focus on catastrophic flooding; another $100 Million to reduce drought impacts in the West together with over $20 Million to Native Hawaiian Community resilience programming. Again, a massive amount of money being directed to climate resiliency and community resiliency.  The time to plan and act is now before funds flow changes or regime changes reprioritizes where funds are being spent.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

New ASHRAE Standard 241 for Indoor Air Quality – increasing exterior fresh air or purifying existing indoor air!

The American Society of Heating, Refrigeration and Air Conditioning (ASHRAE) approved for publication of its highly anticipated airborne infection risk mitigation standard for buildings. For those not overly into HVAC, ASHRAE is the governing society responsible for developing building design as well as energy efficiency standards and guidelines for building

The new standard that was enacted, ASHRAE Standard 241, Control of Infectious Aerosols, establishes minimum requirements to reduce the risk of disease transmission by exposure to infectious aerosols in new buildings, existing buildings, and major renovations.

Infectious aerosols are tiny, exhaled particles that can carry disease-causing pathogens and are so small that they can remain in the air for long periods of time and be inhaled. As a building’s HVAC system is designed to recirculate and recondition air, the circulation of pathogens via the air is what the standard is focusing on. Use of this standard is designed to reduce exposure to SARS-COV-2 virus, which causes COVID-19, influenza viruses and other pathogens that cause major personal and economic damage every year.

According to ASHRAE, Standard 241 provides requirements for many aspects of air system design, installation, operation, and maintenance.

Important aspects of the new standard include:

  • Infection Risk Management Mode – Requirements of Standard 241 apply during an infection risk management mode (IRMM) that applies during identified periods of elevated risk of disease transmission. AHJs (Authorities Having Jurisdiction) can determine when the enhanced protections of Standard 241 will be required, but its use can also be at the discretion of the owner/operator at other times, for example, during influenza season. This aspect of Standard 241 introduces the concept of resilience – ability to respond to extreme circumstances outside normal conditions – into the realm of indoor air quality control design and operation.
  • Requirements for Equivalent Clean Airflow Rate – Other indoor air quality standards, including ASHRAE Standards 62.1, 62.2, specify outdoor airflow rate and filtration requirements to control normal indoor air contaminants. Historically, air flow rates and clean air from the outdoor air was intended to introduce cleaner air from the outside in order to keep the air in the building mixed with outdoor clean air.  Standard 241 breaks new ground by setting requirements for equivalent clean airflow rate, the flow rate of pathogen free air flow into occupied areas of a building that would have the same effect as the total of outdoor air, filtration of indoor air, and air disinfection by technologies such as germicidal ultraviolet light. This approach allows the user of the standard flexibility to select combinations of technologies to comply with the standard that best satisfy their economic constraints and energy use goals.
  • Requirements for Use of Filtration and Air Cleaning Technology – Dilution of indoor air contaminants by ventilation with outdoor air can be an energy intensive and expensive way to control indoor air quality. Standard 241 provides extensive requirements for use of filtration and air cleaning to effectively and safely achieve meet equivalent clean airflow requirements efficiently and cost effectively. These include testing requirements to establish performance and to demonstrate that operation does not degrade indoor air quality in other ways, for example by elevating ozone levels.
  • Planning and Commissioning – Standard 241 provides assessment and planning requirements culminating in the development of a building readiness plan, a concept carried over from the work of the ASHRAE Epidemic Task Force. It also describes procedures for commissioning systems to determine their installed performance.
  • “Standard 241 represents a significant step forward in prioritizing indoor air quality,” said 2022-23 ASHRAE President Farooq Mehboob, Fellow ASHRAE. “By implementing the requirements outlined in this standard, we can improve the health, well-being and productivity of building occupants. This standard empowers building owners, operators and professionals to take proactive measures in safeguarding indoor environments. It’s an essential tool for creating healthier indoor environments and promoting sustainable practices.”

The Standard 241 committee will continue and work on improving sections of the standard adding additional requirements, clarifying requirements and developing tools to help the public use the standard. Industry and consumer-friendly resources such as courses, podcasts, factsheets and information events will be introduced in the future.

Green Sprouts.  The likely impact to existing and new buildings from this new Standard will require more external air to be brought into the building (i.e., more exterior exchanges of air) or better cleaning of the existing air in the building. Purification of existing air in buildings has not been an area where many building owners have historically focused. The ability to use either or both methods (i.e., more outdoor air intake or purification of the indoor air) to help reduce the spread of disease will surely become the topic of conversation amongst property managers and engineers and will result in return on investment decisions at the property level to determine what works better and what costs more – increasing outdoor airflow and the need to condition that air or purifying that which is already in the building.

Given that COVID-19 is not likely to go away any time soon, Standard 241 which is going to drive technological investments in existing and new buildings and which provides alternative paths to address better air quality in our existing and new building stock should significantly help reduce the spread of disease within the built environment. Tenants should be watching carefully to see how their landlords’ intend to address this key issue and who is paying for it and how.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

California Jumps the Line ahead of the SEC and enacts two significant Climate Disclosure Bills

Last week, the California legislature passed and,  over the weekend (on October 9, 2023) Governor Newsom signed, two climate disclosure bills which focus on the financial risk of greenhouse gas emissions. Full text of the bills can be found at SB 261 and SB 253.

The bills will require that companies doing business in California will be required to state and certify their scope 1, 2 and 3 greenhouse gas emissions and to state and certify their climate related financial risks.

Given that many US companies and many EU and UK companies that do business in the US also transact in California, these laws will have a meaningful impact on many public and non-public companies alike irrespective of the pace or lack thereof from the SEC on its own set of federal climate disclosure obligations.

Bill 261 – Under SB 261, companies with annual revenues of more than $500 Million Dollars that do business in California will now be required to compile and issue a biennial climate-related financial risk report, with the first due date being January 1, 2026.

Bill Text – SB-261 Greenhouse gases: climate-related financial risk. (ca.gov)

Climate related financial risk” under SB 261 is defined as a “material risk of harm to immediate and long-term financial outcomes due to physical and transaction risks, including but not limited to, risks to corporate operations, provision of goods and services, supply chain, employee health and safety, capital and financial investments, institutional investments, financial standing of loan receipts and borrowers, shareholder value, consumer demand and financial markets and economic health.” Wow, that is a pretty wide ambit of what risks will fall within the definition of climate related financial risks!

SB 261 requires that the reports required under the Bill must be prepared in accordance with the Task Force on Climate Related Financial Disclosures (also referred to as TCFD) reporting framework. Reports that are prepared under the International Financial Reporting Standards -Sustainability Disclosure Standards (or ISSB) will also be acceptable. Failure to report under the Bill will be subject to an annual fine of up to $50,000 per year.

Bill 253 – SB 253, also known as the Climate Corporate Data Accountability Act, applies to companies that do business in California and have total annual revenues in excess of $1 Billion. The reporting requirements will not be applicable until January 2026, once the California Air Resources Board (CARB) has adopted implementing regulations, which must occur by January 1, 2025.
CARB’s implementing regulations will likely provide the key details of the reporting process, including the following:
Bill Text – SB-253 Climate Corporate Data Accountability Act. (ca.gov)

Scope 1 and Scope 2 Emissions. Beginning in January 2026, reporting entities must annually publicly disclose their scope 1 and scope 2 GHG emissions for the prior fiscal year. The bill defines Scope 1 emissions as “all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.” Scope 2 emissions are defined as “indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.” Most publicly traded companies have begun some level if not a very detailed level of Scope 1 and 2 tracking, with many actually already reporting these metrics.

Scope 3 Emissions. Beginning in 2027, reporting entities will also be required to annually disclose their scope 3 emissions for the prior fiscal year. Scope 3 emissions include “indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control,” which may include “purchased goods and services, business travel, employee commutes, and process and use of sold products.” Many in the industry are concerned about how they are going to get their supply chain to measure and report in a meaningful way data that will become the reporting entities’ Scope 3 emissions.

Annual Fees. Reporting entities will be required to pay an annual fee to CARB upon filing their annual disclosures. These fees are supposed to be used to fund CARB’s oversight of the program.

Administrative Penalties. Reporting entities that fail to timely file their annual disclosures will be subject to administrative penalties of up to $500,000 per reporting year. 

Reporting Standards. Reporting entities must measure and report their GHG emissions in conformance with the Greenhouse Gas Protocol, a set of reporting standards developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBC).  Reporting entities must also engage an independent third-party assurance provider to audit their scope 1 and 2 emissions beginning in 2026, and their scope 3 emissions beginning in 2030.

Green Sprouts – SB 253 and SB 261 make California the first state to require GHG emissions and climate risk reporting from large companies. The bills, which are now law, jump the SEC’s proposed climate disclosure rules which have not yet been finalized or released after two publicly disclosed delays in implementation.

Given the number of companies that “do business in California”, irrespective of when and how the SEC makes its climate disclosure rules final and if it does this fall, California has once again cemented its place of relevance in the climate change arena and has mandated movement in this space by larger companies doing business in California. It remains to be seen if other states follow their lead but surely New York, Washington, D.C., Massachusetts and others will take a very hard look at proceeding down this path.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

HUD – over $4B in lending capacity and $840M in grant funds under its Green and Resilient Retrofit Program

The U. S. Department of Housing and Urban Development (HUD) has announced more than $4 Billion in loan capacity and $840 Million in grant funding availability for investments in clean energy at multifamily properties that receive HUD assistance.

The funding is designed to encourage investment in a variety of clean energy projects with a stated goal to improve the quality and the resilience of those properties.

The Green and Resilient Retrofit Program (“GRRP”) was created as a part of the Inflation Reduction Act of 2022 to incentivize investments that reduce energy and utility costs and hope to reduce greenhouse gas emissions at the applicable properties.

HUD put forth 3 key goals for the GRRP:

1. to reduce energy and water use in HUD-assisted multifamily properties;

2. to make HUD-assisted multifamily properties more resilient to extreme weather events and natural disasters, and

3. to reduce greenhouse gas emissions from HUD-assisted multifamily properties.

HUD’s view is that by achieving the stated goals the properties will reduce utility bills and costs of operations, which in turn benefit their tenants. By reducing consumption, a natural outcome will be to also reduce greenhouse gas emissions HUD’s goal is to reduce greenhouse gas emissions by 50% across all participating properties and to reduce modeled energy consumption by at least 25% in each property.

Eligible properties are those receiving HUD assistance through Sections 8, 202, 811 and 236.

Awards are available for the following categories of properties:

Element Awards are for properties that are materially advanced in a recapitalization transaction that includes targeted utility efficiency, carbon emissions, reduction, renewable energy and/or climate resilience measures.

Leading Edge Awards are for properties with a significant capacity to execute a rehabilitation that will achieve an advanced green certification.

Comprehensive Awards are for properties, including those not yet developed, where the property owner is interested in improving the utility efficiency and resilience to climate hazards.

Green Sprouts – The Inflation Reduction Act is a rather amazing cluster of potential benefits and incentive programs for the built environment.  HUD has taken the baton and has proceeded to incentivize energy efficiency investments where they are lending money. $4 Billion in lending capacity and $840M  in grants are now available. Worthy of checking it out.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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