A failure to account for outsourced greenhouse gas emissions has allowed many jurisdictions to fudge their domestic carbon reduction numbers. But awareness of the economic and climate consequences of this “carbon loophole” is growing, and many stakeholders are working hard to close it, according the ClimateWorks Foundation.
“More than 20% of [global] greenhouse gas emissions escapes regulation because it is traded internationally,” Corporate Knights reports, in a recent recap of the September 2017 study. But times are changing. In “possibly the world’s first legislative effort to address carbon emissions in the supply chain,” California Governor Jerry Brown signed the Buy Clean California Act into law last October.
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Requiring “the state’s Department of General Services to set a maximum ‘acceptable life cycle global warming potential’ for different building materials, including steel, glass, insulation, and certain types of pipes,” writes Corporate Knights, the Act “was championed by a surprising coalition of industrialists, environmentalists, and labour [who] were triggered to act when the new Bay Bridge connecting San Francisco and Oakland, which opened in 2013, was built with steel from a carbon-intensive Chinese factory rather than cleaner steel from California.”
That decision “had significant climate implications,” Corporate Knights notes, citing testimony from the Blue-Green Alliance. “Local steel would have used 180,000 fewer tons of carbon dioxide, equal to taking 38,000 U.S. cars off the road for a year.”
The bill could also have long-lasting economic effects. “California spends about US$10 billion a year on infrastructure projects—bridges, highways, government buildings, universities,” said ClimateWorks communications consultant and report co-author Matt Lewis. So “this new law has the potential to shift markets.” Manufacturers “don’t make a different factory for the private sector and the public sector,” he explained, “so governments can leverage their purchasing power to achieve transformation across the industry.”
Ryan Zizzo, technical director at Toronto-based consultancy Zizzo Strategy, told Corporate Knights he first encountered the idea of “embodied carbon” in Finland. By now, he said, several countries “have policies to account for it when constructing new buildings” and other big installations. Sweden, for example, “now requires large transportation infrastructure projects such as roads and rails to calculate and report embodied carbon, with incentives to reduce it.”
The notion of “embodied carbon” is finally beginning to get traction in Canada, Zizzo said, “with policies such as the Treasury Board of Canada’s greening procurement program, Ontario’s Ministry of Infrastructure long-term infrastructure plan, British Columbia’s Ministry of Environment greening procurement program, and Quebec’s Wood Charter.” For the most part, though, those provisions are “more or less voluntary at this time,” he cautioned, and “the few requirements that exist apply to a very small proportion of the construction taking place.”
Getting a full and accurate accounting of embodied carbon is no small feat, Corporate Knights notes, since the process requires independent, third-party auditors to “add up all the energy used in mining materials, manufacturing the product, shipping it, and recycling or disposing of it at end of life.” That level of detail matters, “because the same material can be made with different manufacturing processes that may have dramatically different carbon footprints.”
Assessors can also run into problems “when using materials from a place that doesn’t regulate carbon, [as] data for that particular product may be unavailable,” the publication notes. Very often, Zizzo said, “that leads project managers to fill in the blank with data from another jurisdiction.”
Another less-than-ideal practice is to use software that produces average values for materials that lack data, said C-Change Labs CEO Phil Northcott. “If you use an average for people who aren’t reporting, it means the bad actors get a free ride,” he said. “And we can’t afford to give people a free ride.”
C-Change Labs’ greenhouse gas accounting and pricing software addresses that particular issue by assigning a higher carbon intensity to any material that is not declared. “It’s an incentive to factories unregulated by their governments to declare their emissions,” Northcott explained. “We assume that anyone who does not declare is one of the worst.”
