The Nature of Disclosure
In 1986, I had the privilege of attending a Jesuit college to study economics. Buried within the 'dismal science’ was the concept of externalities—the idea that we should not treat the environment as a free resource. In a Jesuit school, these things are not mere technicalities but profound moral questions built on the principle that once we understand something, it can no longer be ignored.
In the labyrinth of federal policy, it's a challenge to identify initiatives that genuinely impact emissions reduction and prioritize these for discussion above the messaging bills that many politicians promote. The impact of some messaging bills is so uncertain that we should be thankful they never become law. However, two important ideas are working their way through the noise that could significantly impact emissions reduction and their impact, scope, and complexity, should encourage Congress to spend more time on these than messaging bills.
First is the Federal Acquisition Regulation (FAR), which sets rules for the purchasing behavior of federal agencies. The federal government is one of the largest consumers in the economy, so FAR's influence on emissions reduction is significant. FAR dictates the purchasing practices of our economy’s biggest spenders changing not just government procurement but also establishing a standard for spending across various sectors. FAR’s potential for wide-reaching impact highlights why Congress needs to direct it’s attention here to ensure new rules enhance our economy and reduce emissions.
Second is the dialogue surrounding corporate transparency of emissions. The term "disclosure" in discussions about corporate emissions suggests something is known and being hidden. Either one assumes that the company is intentionally concealing its carbon footprint or it’s an onerous and unnecessary regulatory intrusion into a company’s operations. Most companies are unaware of their carbon footprint or how to measure it. Shifting the emphasis from 'disclose' to 'discover' could soften this framing, fostering a more collaborative approach to uncovering emissions data.
The government picks up the tab on externalities, so they have a civic responsibility to prioritize emissions reduction. In March 2023, the Committee on Science, Space, and Technology scrutinized a rule proposal requiring U.S. contractors to report and cut their greenhouse gas emissions, with oversight from third-party entities. The investigation raised concerns about the integrity of the selection process and the delegation of quasi-regulatory authority to private organizations. There was concern about possible bias in the Federal Acquisition Regulation (FAR) Council's decision-making which raised broader questions about the government's role in environmental regulation and corporate accountability. This sort of oversight is often reported as some kind of scandal but this tension is only natural and stems from what role the government should play in regulating environmental impacts and corporate transparency. Should the government lead with stringent regulations to address environmental degradation or could such interventions disrupt market freedom and lead to unintended outcomes?
FAR’s leadership is essential for driving emissions reduction and ensuring corporate transparency. However, it's crucial to balance this with respect for market dynamics. When the government chooses specific technologies or practices, it risks distorting the free market by compelling the private sector to align with these preferences. The challenge lies in leveraging government influence to promote environmental goals without undermining the market's competitive landscape.
Congress passes laws to serve the public, raise money, and spend it on our behalf. While some members frame gas stove bans as threats to liberty and the economy, serious members pursue a more balanced approach. They critically assess environmental policies for their efficacy and strive for harmony between environmental preservation, individual freedom, and economic stability. It’s a significant challenge, but it’s the type of leadership needed in Congress. I encourage you to take a look at these initiatives that will impact the emissions curve and the members of Congress who are taking on the real work.
Adequate and Timely Over Perfect
In January, New Jersey utility regulators greenlit the development of new offshore wind farms, which will power 1.8 million households; nearly 46% of New Jersey homes. This decision successfully navigates a web of financial and economic considerations. Although opinions on the regulators' resolution may vary, it's important to acknowledge their effort in addressing and resolving the matter; time is not on our side. There is a long way to go and the financial and economic underpinning is complex and heavily reliant on government largess, but progress is being made and every advancement pulls something else in its wake.
As always, please forward this email to anyone interested in our work or members, and don't hesitate to contact me anytime.