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The Climate Report | Second Quarter 2026
REGULATORY ISSUES & UPDATES
The New UK Carbon Border Adjustment Mechanism
The UK Carbon Border Adjustment Mechanism, taking effect January 1, 2027, will tax carbon-intensive imports to prevent carbon leakage and ensure importers face carbon costs comparable to those borne by domestic producers under the UK Emissions Trading Scheme.
European Commission Planning to Amend the EU Taxonomy on Climate Issues
The amendments represent a usability-focused reform rather than a substantive policy shift; the amended provisions are intended to take effect beginning January 1, 2027.
California Climate Disclosure Countdown
On May 20, 2026, the California Air Resources Board ("CARB") submitted its initial regulation implementing California climate disclosure laws to the Office of Administrative Law for review. On June 24, 2026, CARB announced a proposed deferral of the first-year reporting deadline from August 10, 2026, to November 10, 2026.
ECB Sanctions for Failure to Comply With Climate Stress Tests
ECB climate stress tests impose operational requirements; an institution may be exposed to enforcement measures not because it "fails" the stress test, but because it does not comply (or does so belatedly) with associated requirements.
LITIGATION ISSUES & UPDATES
Maryland Supreme Court Affirms Dismissal of State Climate Change Suits Against Energy Companies
On March 24, 2026, the Maryland Supreme Court became the first state supreme court in the country to affirm a complete dismissal of a climate change public nuisance lawsuit against energy companies for extracting, processing, selling, and promoting fossil fuels.
Federal Court Dismisses Government's Attempt to Block Hawaii's Climate Change Lawsuit
The ruling is a significant development in the ongoing legal battles between the federal government and states asserting claims against energy companies for alleged climate impacts.
Hague District Court Rules the State of the Netherlands Must Adopt Absolute Greenhouse Gas Emissions Reduction Targets
In January 2026, the Hague District Court concluded that the State of the Netherlands violated fundamental rights, in part because its environmental policy lacked absolute greenhouse gas emissions reduction targets.
Challenges to EPA's Repeal of the 2009 Endangerment Finding
The EPA's repeal of the 2009 Endangerment Finding and repeal of all federal GHG emission standards for motor vehicles and engines have sparked litigation led by a coalition of health and environmental agencies as well as a coalition of state and local governments.
DOE Orders on Availability of Coal-Fired Power Plants Challenged in Court
Since May 2025, DOE has issued Section 202(c) emergency orders keeping certain coal-fired units operating despite planned retirements, prompting petitions for review in the U.S. Court of Appeals for the D.C. Circuit.
TRANSACTIONAL ISSUES & UPDATES
Climate Risk Pricing, Fair Access, and the Evidence for Ordinary Credit Risk Management
Empirical research links climate risks to bank funding, collateral, pricing, and litigation exposure. Amid divergent U.S. and EU rules, the evidence supports treating climate factors as identifiable financial risks, rather than political or other ideological preferences.
Nature-Based Solutions: The Next Infrastructure Class?
Nature-based solutions, or NbS, long reliant on grants and philanthropy, are increasingly structured and financed like conventional infrastructure, drawing institutional capital amid regulatory mandates, maturing environmental markets, and climate and biodiversity targets.
Green Data Centers: Pioneering Energy Efficiency and Sustainability in the EU
The EU has introduced the Code of Conduct for Data Centre Energy Efficiency, offering guidelines to improve energy efficiency. Other regulations are also being adopted across the EU to ensure that data centers contribute to climate goals.
LAWYER SPOTLIGHT
Nath Curtis, a partner in the Financial Markets Practice in the London Office, leads high-impact financing of major infrastructure, energy transition, and decarbonizations projects across the United Kingdom and Europe particularly where multiple funding sources or new technologies are involved. He acts for banks, DFIs (development finance institutions), green infrastructure investors, and sponsors and developers on complex, multisource debt and equity financing involving renewable energy (wind, solar, biomass, storage, transmission, geothermal), nature-based solutions, transportation (rail and air), mining, waste to energy, and smart grid technology.
Prior to joining Jones Day, Nath worked on multibillion-dollar transactions involving greenfield battery storage, natural capital financing (supported by UK's biodiversity net gain regime), UK mainline rail station infrastructure, and cross-border hydrogen investments and the development, financing, and sale of a portfolio of ground-mounted solar projects across the United Kingdom, Romania, and Bulgaria.
He's recognized by The Legal 500 as a "stand-out partner" in energy and renewables.
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