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TheCorporateCounsel

TheCorporateCounsel.net

A basis for research and practical guidance focusing on federal securities laws, compliance & corporate governance.

DealLawyers

DealLawyers.com

An educational service that provides practical guidance on legal issues involving public and private mergers & acquisitions, joint ventures, private equity – and much more.

CompensationStandards

CompensationStandards.com

The “one stop” resource for information about responsible executive compensation practices & disclosure.

Section16.net

Section16.net

Widely recognized as the premier online research platform providing practical guidance on issues involving Section 16 of the Securities Exchange Act of 1934 and all of its related rules.

PracticalESG

PracticalESG.com

Keeping you in-the-know on environmental, social and governance developments

Last week, S&P Global wrote about a fascinating interrelationship of US carbon policy, tax incentives, commodities markets and consumer products. It sounds complicated, but it really isn’t – and it makes total sense.

“The US expanded its carbon capture tax credit program in 2022 to provide up to $85 for every metric ton of CO2 stored underground. But … the tax credit boost came as industrial companies struggled to secure CO2 on the merchant market for a range of uses, from beermaking to medical procedures.”

Companies producing CO2 as emissions – rather than a product – now face a perverse decision: dispose of their emissions for an $85/ton tax credit or get a smaller tax credit (up to $60/ton) for providing recovered CO2 as a product rather than disposing of it.

“Companies supplying industrial gasses must now compete with carbon sequestration developers …’They [US lawmakers] had blinders on,’ [Maura Garvey, president of Intelligas Consulting LLC] said. ‘I think when they put through all the tax credits, they really weren’t paying attention to how this might have a ripple effect down the road.'”

This isn’t really too surprising. I would venture to say that most people – including those working for high-CO2 emitting companies – consider carbon emissions to be a waste needing disposal rather than a product with intrinsic real financial value. Certainly, policy makers see it that way, so that is how they craft their policies – without understanding supply chains or existing successful circular economies. Last week, we announced the availability of our new checklist Identifying & Updating Climate Risks and Uncertainties consisting of ten categories, with specific potential risks/uncertainties for each. That checklist even includes these policy risks:

  • Policies with political – rather than market – mechanisms for climate/carbon solutions
  • Policies that interfere with, disincentivize or prevent market solutions or innovations (including trickle down or ripple effects in supply chains)

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The Editor

Lawrence Heim has been practicing in the field of ESG management for almost 40 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting with ENSR Consulting & Engineering at the height of environmental regulatory development, working across a range of disciplines. He was one… View Profile