The European Commission is currently seeking public comment as part of its review of the Restriction of Hazardous Substances in Electrical and Electronic Equipment Directive (Directive 2011/65/EU) (the RoHS Directive).

The aim of the RoHS Directive is to reduce the risk to human and environmental health by restricting the use of certain hazardous substances in electronics which can be substituted by safer alternatives.

This initiative to review the RoHS Directive is part of the EU’s Circular Economy Action Plan, and contributes to the Chemicals Strategy for Sustainability and Zero Pollution Action Plan, which are key deliverables under the European Green Deal.

As part of the RoHS Directive’s evaluation process, the European Commission has identified a number of issues relating to the practical operation of the RoHS Directive which this initiative will aim to address. In particular, the evaluation process reported that the RoHS Directive contains:

  • complex and impractical provisions relating to exemptions to substance restrictions;
  • an unclear process for reviewing the list of restricted substances;
  • inconsistencies with existing EU Regulations (for example the REACH Regulation and Eco-design Directive);
  • difficulties in enforcement, notably in the context of e-commerce; and
  • unclear and outdated provisions to support the circular economy.

The European Commission has proposed the following preliminary options which it is seeking input on, in order to address the issues noted above:

  • introduce new ‘soft’ measures, including updates to online FAQs to explain the interactions between the RoHS Directive and other EU legislation;
  • revise the RoHS Directive in order to (i) clarify and improve the exemption process, (ii) clarify and improve the restricted substances trigger, (iii) ensure coherence with other EU legislation, and (iv) improve implementation and enforcement;
  • transform the RoHS Directive into an EU regulation; or
  • repeal the RoHS Directive and incorporate its provisions into existing legislation.

Whilst this consultation is open to all citizens, the European Commission has flagged the following groups as the main stakeholders for the initiative: Member State authorities, business associations and companies including SMEs, non-governmental/civil society organisations, academia, individuals, workers associations and trade unions.

Submissions must be made through the European Commission’s online portal by 2 June 2022 (the online portal is available here).

A new “Clean Hydrogen Bill” (SB 1075, Skinner) has been introduced in the California Legislature as a means of achieving the State’s goals for reducing greenhouse gas emissions and mitigating climate change. If passed, this bill would significantly increase the emphasis on “green hydrogen” as an alternative fuel in California’s economy, opening up material business opportunities for businesses engaged in the alternative energy sector.

SB 1075 would create the “California Clean Hydrogen Hub Fund” (“Hydrogen Fund”), making State subsidies available for “green hydrogen projects.”  Of note, “green hydrogen” is not produced from traditional fossil fuel feedstock sources. Instead, eligible production pathways include:

  • Green electrolytic hydrogen (e., hydrogen gas produced through electrolysis which does not include hydrogen gas manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock);
  • Steam methane reforming, autothermal reforming, methane pyrolysis, and other pathways that convert biogas, biomethane, ethanol, and other renewable gases and liquids to hydrogen;
  • Gasification, pyrolysis, thermochemical conversion, and other pathways that convert biomass, including the organic portion of municipal solid waste and certain organic waste feedstocks;
  • Waste or byproduct hydrogen recovered from nonfossil fuel industrial processes; and
  • Photochemical or photobiological water splitting.

The bill would revise the definition of an “eligible renewable energy resource” for the purposes of the California Renewables Portfolio Standard Program to include facilities that uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology (and meet certain other criteria).  However, a facility engaged in the combustion of municipal solid waste would not be considered an eligible renewable energy resource.

The California Infrastructure and Economic Development Bank (“Bank”) would subsidize new start-up technologies and projects by making loans, issuing bonds, and providing financial assistance for qualifying projects that “demonstrate and scale the production, processing, delivery, storage, and end use of clean hydrogen” and “advance progress toward a goal to produce or use 15,000 tons per day of clean hydrogen in California by 2030.”

The bill also requires:

  • the Bank to develop criteria, priorities, and guidelines for the provision of grants under the Hydrogen Fund in line with specified priorities and requirements of the federal Infrastructure Investment and Jobs Act;
  • the Governor to appoint (by April 1, 2023) a Clean Hydrogen Hub Director to coordinate efforts related to clean hydrogen production, processing, delivery, storage, and end use;
  • the State Air Resources Board (“State Board”) (by December 31, 2023), to identify the role of hydrogen, and particularly green hydrogen, in helping California achieve the goals of the act and the state’s other climate goals;
  • the State Board, in consultation with the California Energy Commission (“Energy Commission”) and Public Utilities Commission (“PUC)” (by June 1, 2024) to evaluate what steps are necessary to the efficient deployment, development, and use of hydrogen as an alternative fuel;
  • the Energy Commission, as part of the 2023 and 2025 editions of the State’s integrated energy policy report, to study and model potential growth for hydrogen and its role in decarbonizing, as defined, the electrical and transportation sectors of the economy, and helping to achieve specified goals;
  • the State Board, by June 1, 2024, in conjunction with the Energy Commission and the PUC, to jointly develop recommendations to the Legislature on definitions for different categories of hydrogen, and potential end uses for those categories of hydrogen and would authorize the use of the recommendations to the Legislature to inform the oversight and administration of their respective hydrogen programs and eligibility rules.
  • the State Board (by June 1, 2024) to (among other things):
    • jointly develop prohibitions against double counting (g., emission offsets) of environmental attributes associated with production, distribution, and use of hydrogen; and
    • calculate life-cycle carbon dioxide intensity values for hydrogen pathways that reflect the fuels, feedstocks, and production processes used for their production.

While the total amount of money to be allocated to the Hydrogen Fund is currently unclear, California hopes to include money received from federal appropriation. The bill explicitly states that the Legislature seeks to advance policies related to clean hydrogen in order to attract federal funding for a regional renewable energy focused clean hydrogen hub in California.

As further explained in the draft bill, the federal Infrastructure and Investment Jobs Act includes $8 billion to support at least four regional clean hydrogen hubs across the United States. The act requires the hubs to demonstrate a diversity of hydrogen end uses, including in electric power generation, industrial operations, residential heating, and transportation. The act allocates another $1 billion to support research, development, and deployment across multiple electrolysis technologies. The United States Department of Energy has subsequently identified nine regional clean hydrogen clusters, including California. California is the only state identified as a cluster itself, while the other eight include regions or combinations of states.

California views green hydrogen power deployment as a key component in meeting its decarbonization goals. The Bill’s proponents see developing green hydrogen at scale as a way to help decarbonize energy-intenstive industries, including cement and steel production, industry, thermal powerplants, agriculture, and the transportation sector, including light-, medium-, and heavy-duty vehicles, goods movement, rail, shipping, mining, and aviation, and accelerate progress towards the state’s climate, clean air, and clean energy goals.

We are tracking SB 1075 as it proceeds through the state’s legislative cycle. Stakeholders should also look for future updates as we analyze this bill’s significance for California businesses and their investors / lenders.

Last year, the European Commission published its proposal to expand the EU emissions trading scheme (“EU ETS”). The expansion of the EU ETS forms a central part of the Commission’s “Fit for 55” package, which seeks to revise EU climate, energy and transport-related legislation to align it with the wider 2030 and 2050 climate ambitions agreed by the Council and European Parliament. The package also introduces a number of new climate initiatives to help meet these goals. The proposal underwent a consultation period from July to November 2021, during which the Commission received feedback on the expansion. Since then, the proposal has been in the hands of the Council, which has deliberated the contents and suggested amendments numerous times. Recently, the EU Parliament’s Rapporteur, MEP Peter Liese, published his draft report on the proposed ETS expansion. This report is the first step in the long process to approval by the European Parliament. Further amendments to the proposal are currently being considered, with a vote on the final amendments expected to take place around June 2022.

So, how exactly is the proposal seeking to amend the EU ETS? The overall aim of the proposal is to ensure that emissions trading in the EU is aligned with the goal of reducing GHG emissions in the EU by 55% by 2030. To make this more achievable, the Commission’s proposal consists of a number of key elements.

Firstly, the Commission proposes that emissions from EU ETS sectors are to be reduced by 61% by 2030, compared to 2005 levels. To achieve this target, a steeper annual emissions reduction of 4.2% – rather than the 2.2% annual reduction under the current system – is required, along with a one-off reduction of the overall emissions cap by 117 million allowances. The Commission also proposes to strengthen the Market Stability Reserve (“MSR”), which addresses the surplus of allowances that has built up in the EU ETS, to enable a smoother and quicker intake of allowances to the reserve.

Secondly, the Commission has separately put forward a proposal for a Carbon Border Adjustment Mechanism (“CBAM”) which aims to reduce the risk of carbon leakage for a specific number of energy intensive industries (iron and steel, cement, fertiliser, aluminium and electricity generation), by putting a price on the carbon content of imports. We have been closely following the passage of the CBAM proposal, as most recently covered in our colleagues’ blogpost on 7 January 2022. To ensure a smooth transition from one system to the other, the free allocation of allowances will be gradually phased out as the CBAM is phased in for these industries. The aim is to reach no free allocations by the tenth year of the operation of the CBAM.

In relation to the aviation sector specifically, the Commission is proposing to cap the total number of aviation allowances in the ETS at current levels, and to then reduce allowances annually under the ETS linear reduction factor. The number of free allowances allocated to aircraft operators will also gradually reduce to reach full auctioning by 2027. The Commission is looking to expand the reach of the CORSIA (the Carbon Offsetting and Reduction Scheme for International Aviation) to cover all international flights. CO2 emissions from aviation have been included in the ETS since 2012, but only for flights between airports located in the EEA. The revised EU ETS seeks to apply CORSIA to EU-based airline emissions from flights to and from countries outside the EEA. When emissions from flights outside the EEA reach levels above 2019, they will have to be offset with corresponding carbon credits.

Another key element of the Commission’s proposal is the expansion of the ETS to cover maritime activities. The extension will cover CO2 emissions from all ships above 5000 gross tonnage, and will apply to: (i) all emissions from voyages within the EU, (ii) 50% of emissions from voyages starting or ending outside the EU, and (iii) all emissions that occur when ships are at berth in EU ports. The same rules as for the other sectors would apply to maritime emissions. The requirement to surrender allowances under the maritime ETS will be phased in gradually over the period 2023 to 2025, with 100% implementation from 2026. If the ETS administering authority finds that a shipping company has not complied with ETS requirements for two or more consecutive years, its ships could be denied entry to EU ports. From 2024 onwards, the Commission will publish and regularly update a list of shipping companies covered by the ETS and their respective administering authority.

Finally, the Commission is proposing to create a parallel ETS for road transport and buildings from 2025, with fuel suppliers (rather than households or car drivers) required to surrender allowances from 2026. Emissions from road transport and building sectors will be capped, with the cap reduced over time so that total GHG emissions for these sectors are reduced by 43% by 2030, compared to 2005 levels. The intention is to incentivise fuel suppliers to decarbonise their products, and to encourage consumers to switch to low carbon solutions. To address the likely risk that fuel suppliers will transfer some of their carbon costs to consumers, the Commission has proposed to create a Social Climate Fund.

The recently published EU Parliament’s Rapporteur report suggests a number of amendments to the Commission’s proposal. Notably, it suggests to advance the dates for including all maritime emissions into the existing EU ETS to 2025, along with suggested changes to the definitions, scope, phase-in periods and thresholds of the expansion. The report also suggests that the start-date of the new ETS for buildings and road transport is brought forward by 1 year, and that the proposed ETS should cover other fuels released for consumption, such as those used for process heating in smaller installations.

It will be interesting to see how the Commission, Council and Parliament negotiate the proposal and subsequent amendments in the coming months.

The European Commission’s proposal is available here.

During 2021, the U.S. Environmental Protection Agency (EPA) collected discharge data for PFAS as part of its Multi-Industry PFAS Study.  The purpose behind the study was to identify facilities producing or using PFAS, look at their wastewater characteristics, estimate PFAS in their discharges, and identify control practices and treatment options.  As part of the study, EPA collected data from various EPA data sets and obtained information from other federal agencies (the U.S. Department of Transportation, Federal Aviation Administration (FAA), U.S. Department of Health and Human Services, and the Food and Drug Administration), states and EPA regions, as well as information from industrial users.  After EPA collected its data, it categorically broke down the results of its study into the following groups:

  1. Organic chemicals, plastics, and synthetic fibers (OCPSF)
  2. Metal finishing
  3. Pulp, paper, and paperboard
  4. Textile mills
  5. Commercial airports

The information collected by EPA during its study will be used to further identify companies and facilities that manufacture, import, or process PFAS.

Continue Reading EPA PFAS testing targeted industry and will now look to public water systems

The European Commission recently opened a public consultation on the “sustainable consumption of goods – promoting repair and reuse”. The Commission is looking to amend the Sale of Goods Directive and possibly introduce a separate new legislative proposal on the right to repair. The initiative follows the New Consumer Agenda and the Circular Economy Action Plan, which aim to promote repair and more sustainable products. The initiative will encourage consumers to use consumer goods for a longer time by extending the useful life of goods, repairing defective goods, and by purchasing more second-hand and refurbished goods. It will also create synergies with other initiatives, including those on sustainable products, circular electronics, empowering consumers in the green transition, and product specific Ecodesign regulations.

The call for evidence outlines possible policy options, ranging from low to high intervention. The policy options are as follows:

Option 1: low intervention – voluntary commitments:

  • Encourage businesses to commit voluntarily to repairing goods with a significant negative impact on the environment and promote the purchase of second-hand and refurbished goods.

Option 2: moderate intervention:

  • Option 2a: Extend the legal guarantee period: (i) for new goods that consumers choose to repair instead of replacing them; and/or (ii) for second-hand and/or refurbished goods (amendments to the Directive).
  • Option 2b: Make repair the preferred remedy when repair is less expensive than or as expensive as replacement (amendment to the Directive); oblige producers or sellers to repair goods beyond the legal guarantee period for a reasonable price (new right to repair within the Directive or a separate instrument).

Option 3: high intervention:

  • Option 3a: Limit consumers’ choice of remedies by prioritising repair over replacement (amendment to the Directive); Oblige producers or sellers to repair goods beyond the legal guarantee period, in some cases for free (new right to repair within the Directive or a separate instrument).
  • Option 3b: Extend the legal guarantee period beyond the current minimum period of 2 years (amendment to the Directive).
  • Option 3c: Enable the seller to replace defective products with refurbished goods and not new ones (amendment to the Directive).

In addition to the above, the Commission is also welcoming views on the need and design of additional legislative and non-legislative measures to promote sustainable use of goods, which could influence the current relationship between consumers and businesses, with the aim of extending the useful life of goods.

The Commission is asking for feedback on its “call for evidence for an impact assessment” by 5 April 2022. The feedback received will be taken into account as the Commission further develops and fine-tunes the initiative.

Further details on the initiative and the call for evidence is available here.

 

California’s Office of Environmental Health Hazard Assessment (OEHHA) has extended the public comment period for the proposed amendments to their “short-form” Proposition 65 “safe harbor” warning regulations in response to a request from the California Chamber of Commerce. OEHHA’s proposed amendments change existing provisions addressing label size, catalog and internet warnings, and other issues (see here for our earlier summary report). Due in part to the intervening holidays, OEHHA now must receive comments on the proposed modifications by January 21, 2022.

Once finalized, the new regulations would become operative one year after the effective date of the amendments.  OEHHA believes that is sufficient time to allow stakeholders to continue using the current short-form warning until such effective date. OEHHA also proposed last year to allow an “unlimited sell through period for products that had compliant warnings when they were manufactured, thus allowing businesses to avoid recalling items in the stream of commerce to apply the modified short-form warning.”

Stakeholders will have a small window of time to react if and (more likely) when the amendments are adopted. However, the best opportunity is now for providing input to OEHHA – particularly on issues such as a more reasonable transition time to implement new warnings. There is no guarantee that OEHHA will seek any further comments, so we recommend providing input before the January deadline.

As we reported this past year, the California Office of Environmental Health Hazard Assessment (OEHHA) seeks to significantly amend the regulations under the Safe Drinking Water and Toxic Enforcement Act of 1986 (aka “Proposition 65”) to limit use of the previous State-approved “safe harbor” short-form warnings for regulated chemicals in consumer products.  The State announced on December 13, 2021 further amendments to the proposed regulations, but generally continues to propose that use of the current “short form” safe harbor warning be dramatically scaled back, which will impact thousands of consumer products by requiring more specificity in future warning language.

As background, current California law allows a manufacturer, distributor or retailer of a consumer product to place either a “long form” or “short form” warning on the product or product packaging if one or more of 900+ regulated chemicals is in the product.  The long form warning identifies by name “at least one” chemical from each regulated chemical risk category (i.e., carcinogens or reproductive toxicants).  The short form alternate warning only requires identification of the risk category (ies) – not particular chemicals.

After reviewing over 160 written and oral comments on a prior proposed version of the regulations, OEHHA modified the proposed regulation again to:

Continue Reading California proposes further modifications to its “Short-Form” Proposition 65 warnings