Renewables: Corporate Sustainability
Companies across industries and around the world are evaluating their environmental risk and impact and are setting ambitious sustainability targets. Strategic first-movers are setting goals to become “carbon negative” or “resource positive"—goals intended to reverse and restore their environmental impact.
Others are setting equally ambitious targets to become carbon neutral, use clean energy, electrify their fleets, and reuse materials—goals that require sustainable practices within their companies and supply chains. Achieving these bold targets raises unique legal issues and requires thought leadership by the corporations and their counsel.
Our team has a well-established reputation for thought leadership and unmatched experience in corporate renewable energy procurement. Additionally, we have deep global experience in the full range of legal issues that companies face as they tackle ambitious sustainability goals, including environmental stewardship and compliance, ethical supply chains, corporate social responsibility reporting, ethical investing, and carbon markets. We understand that aggressive sustainability goals require innovative legal advice.
Corporate Energy Sourcing
We are deeply immersed in the global corporate energy procurement market and have a well-established reputation for thought leadership in buy-side transactions for corporate purchasers. Few, if any, law firms can match our firm's global experience negotiating corporate buy-side renewable power purchase agreements. Our renewables team consists of lawyers worldwide and a globally integrated Corporate Energy Sourcing initiative which ensures our renewables lawyers are constantly sharing and innovating deal structures to meet our corporate clients' needs. Our Renewables team structured some of the first large-scale corporate renewable energy purchase agreements in the United States, and has since negotiated thousands of MW of corporate renewable energy power purchase agreements, both physically and financially settled, and on both the buy and sell side of the transactions. We represent a wide range of clients across the globe in the purchase and sale of renewable energy, renewable energy credits (RECs) or certificates, verified emissions reduction certificates, emissions allowances, and other environmental trading products.
Our lawyers help savvy companies develop and execute the energy strategies necessary to meet their sustainability goals and achieve competitive advantage in today’s marketplace. Whether a corporate client seeks primarily to lower its energy costs, minimize its exposure to volatile energy prices, stabilize the reliability of its energy supply, meet emissions reduction goals through the purchase of renewable energy, or even generate potential additional revenue streams from sales of renewable energy, we can help.
Companies and consumers are increasingly focused on how renewable energy targets are met. For most corporate buyers, simply shopping for low cost renewable energy attributes, such as unbundled RECs, is no longer a viable strategy. As a result, clean energy procurement methods have shifted dramatically, reflecting companies' desires to show a more tangible connection to the underlying renewable projects, supporting a clear claim for “additionality”—that the company's purchase of renewable energy facilitated the construction of a new renewable generation facility.
Off-site power purchase agreements (PPAs) present an opportunity for corporate energy purchasers to meet their internal sustainability goals efficiently and effectively. Corporate purchasers that have single large loads, such as data centers, and that are able to satisfy the applicable regulatory requirements, may prefer to purchase the physical output of utility-scale renewable energy projects. Other corporate purchasers, including purchasers that operate retail chains or office facilities in numerous or widespread locations, may not have an ability to use the physical energy output of a renewable energy project, and may therefore prefer to purchase the renewable energy attributes of a project under an alternate financially settled arrangement known as a virtual or synthetic power purchase agreement.
Whatever form these power purchase transactions take, they are complex and require careful consideration of a wide range of issues, including potential regulation under the swaps provisions of Title VII of the Dodd-Frank Act and Federal Trade Commission (FTC) limitations on green claims related to the purchases. Our experience addressing the FTC, Dodd-Frank, accounting, and other operational or REC-related issues that arise in the context of physical and virtual corporate energy purchases allows us to structure agreements that meet not only the sustainability goals, but also the financial and other organizational needs of corporate energy customers.
In addition to signing PPAs, companies are increasingly turning to their utilities to provide access to renewable energy. Seventy-eight companies have signed the Renewable Energy Buyers' Principles, establishing parameters for utilities regarding what industry-leading multinational companies are seeking when buying renewable energy from the grid. There are now over a dozen green-tariff programs in the United States allowing customers to purchase large-scale renewable energy over the grid, with the majority of these tariffs adopted in the last year. However, participation in these programs is complex and still unavailable in many areas. The process for a large-load customer to change its relationship with its incumbent utility to allow access to renewable energy is lengthy and involves careful consideration of economic, regulatory, and political implications. Our team offers a deep understanding of utility regulatory frameworks, operations, and business models, enabling us to effectively advise on green tariffs, direct access, and other innovative utility-provided options.
CARBON OFFSETS AND REMOVAL
As carbon capture projects have expanded in number and variety and have progressed from pilot projects to commercial scale initiatives, our team has played a central role in helping to create the market standard. We have assisted project developers form and organize; secure Internal Revenue Code Section 45Q tax credit financing; obtain grants, venture capital, and other sources of financing; establish strategic alliances; acquire requisite permits and governmental authorizations; commercialize their products through technology licensing; and protect their intellectual property. We have advised on many aspects of carbon capture and storage projects, from inception to commencement of commercial operation and ongoing operation.
As one of the world’s leading law firms in corporate sustainability and corporate renewable energy sourcing transactions, we draw on deep global experience in the preparation and negotiation of long-term renewable energy, physical commodity, and environmental attributes offtake agreements involving many of the same risk mitigation and other legal and commercial considerations that apply to carbon removal and purchase and sale agreements. We draw also on substantial experience in preparing and negotiating emission reduction purchase agreements and greenhouse gas allowance and offset credit trading agreements for use in both compliance markets and voluntary markets.
Our transactional capabilities are enhanced by our experience in carbon capture policy and legislative matters, as exemplified by our work on behalf of clients to secure the initial enactment and subsequent expansion of the Code Section 45Q tax credit, and our work on behalf of clients to persuade the Internal Revenue Service and Department of the Treasury to issue guidance clarifying the circumstances under which the Code Section 45Q credit is available.
Ethical Supply Chain
Managing supply chain risks in a globalized economy is challenging for any business, but it is particularly difficult for multinational corporations with complex, multilayered supply chains and sustainability goals. Monitoring these vast and intricate webs of suppliers for unethical behavior like environmental noncompliance, human trafficking, forced labor, and other human rights abuses is an increasingly daunting task. Failing to foresee and neutralize these risks can result in severe consequences, ranging from a damaged image to criminal penalties.
To help our clients navigate these risks, we developed an array of due diligence and compliance tools for maintaining global ethical supply chains and formed a Global Ethical Supply Chain Task Force, made up of lawyers strategically located in global compliance hot spots throughout the world.
Corporate Social Responsibility Reporting
Our lawyers offer legal support related to compliance, tracking, and reporting of sustainability goals and metrics in compliance with programs and guidelines set out by non-governmental organizations, state or federal legislation, and other governmental organizations. We have assisted clients in complying with standards set forth by the Global Reporting Initiative, the U.S. Federal Trade Commission’s “Green Guides,” the United Nations Global Compact Index, the United Nations Sustainable Development Goals, the Sustainability Accounting Standards Board, ISO 26000, and others.
We draw on a range of areas, including corporate, securities, environmental, energy, financing, intellectual property, international law, public/municipal finance, public policy, real estate, construction, and tax. Our global team hails from the firm’s offices across the United States, Asia, Europe, and the Middle East.
