Carbon Tax / CBAM

The sector faces significant social and labor structural risks, particularly concerning occupational safety, global supply chains, and community relations. Construction and maintenance of generation and grid infrastructure involve inherently hazardous work, with utility workers experiencing 2.5 fatal occupational injuries per 100,000 full-time equivalent workers in 2021 in the U.S. Furthermore, global supply chains for renewable components are exposed to potential labor rights violations, while managing community opposition and securing a 'social license to operate' are critical for project success.

The electric power industry operates under pervasive and highly structured regulatory oversight due to its critical role in national security, economic stability, and public welfare. Every segment, from generation to distribution, requires ex-ante approvals for significant investments, rate adjustments, and operational changes. In the United States, bodies like the Federal Energy Regulatory Commission (FERC) and state Public Utility Commissions (PUCs) mandate continuous monitoring and adherence to reliability standards enforced by the North American Electric Reliability Corporation (NERC). Similarly, the European Union employs a robust framework involving national regulators coordinated by entities such as the Agency for the Cooperation of Energy Regulators (ACER), demonstrating a system where continuous governmental oversight and compliance are fundamental.

The electric power industry faces moderate traceability fragmentation for its supply chain, particularly for critical raw materials. While major equipment often features lot or serial number tracking, deeper supply tiers for materials like lithium, cobalt, and rare earth elements for batteries and renewables often exhibit batch-level and paper-heavy provenance data.

• Risk: This limited visibility creates significant provenance risk, hindering the verification of ethical sourcing, conflict-free status, and overall sustainability claims, especially as global demand for these materials surges.