The spotlight on carbon emission reduction has grown significantly in recent times, gaining global recognition as a pressing issue. Almost two hundred nations pledged to transition away from fossil fuels during the COP28 climate summit, marking an unprecedented unified effort to implement lower-carbon energy sources and monitor their progress toward this objective. This shift towards decarbonization is also evident throughout the United States, as the Securities and Exchange Commission works on finalizing emission disclosure regulations for public companies, while several states have implemented extensive new requirements.
In the wake of this movement, the requirement to measure, reduce, and report carbon emissions has increased. Likewise, there has been a growing rise in greenwashing litigation claims, prompting companies to pay more attention to all things related to carbon. Let’s look at some of the key developments around decarbonization that are poised to shape how US companies address their sustainability goals in 2024. (Read more)
- Green Tax Incentives
The Inflation Reduction Act of 2022 brought in or enhanced various tax credits for clean energy deployment and manufacturing setups. This act also introduced innovative methods to monetize these credits, such as the option to sell credits for cash. The Treasury and the IRS have released comprehensive guidance following the enactment of the Inflation Reduction Act, including proposed regulations on the Section 48, 45X, and 45Vcredits.
- Clean Energy Transportation
During the last summer, the National Highway Traffic Safety Administration proposed revised corporate average fuel economy standards that aim to promote the production of more fuel-efficient vehicles and minimize greenhouse gas emissions.
- Voluntary Carbon Markets
With an increasing number of companies considering the purchase of carbon offsets to meet their sustainability commitments, the Commodity Futures Trading Commission has issued proposed guidance to enhance the transparency of voluntary carbon credits related to derivative contracts within its jurisdiction.
- Nuclear Energy
Developments in nuclear technology have brought renewed public interest in nuclear energy as a potential solution for achieving decarbonization. Currently, 94 nuclear power plants are licensed to operate in the US.
- Sustainable Fuels
The aviation industry, one of the major contributors to greenhouse gas emissions, is actively exploring sustainable aviation fuels derived from renewable or waste resources as a pathway to speed up the industry’s decarbonization efforts.
As the global community gradually moves away from fossil fuels and regulatory measures around carbon emissions strengthen, companies should stay abreast of these trends and leverage them to journey towards carbon neutrality.
Casey August, Jane Accomando, and Levi McAllister had major roles in writing the analysis. Visit the author’s profile to find out more about their work.