A little-noticed rule-making proposed by the Department of Defence, NASA and the General Services Administration last month would require federal contractors to disclose and reduce their CO2 emissions as well as climate financial risks. The rule would cover 5,766 contractors that have received at least $7.5 million from the feds in the prior year.
Smaller contractors would have to publicly report their so-called Scope 1 and 2 emissions — i.e., those they generate at their facilities and from the electricity and heating they use. Firms with larger contracts would also have to tabulate their upstream and downstream Scope 3 emissions, including those from customers, suppliers and products used in the field.
For example, weapons manufacturers would have to quantify and disclose the amount of CO2 generated from their own facilities; manufacturers that produce steel, computer chips and motors used in their weapons; propellants and fuel; and even munition storage areas. It’s unclear if CO2 emissions will influence procurement decisions.
Large contractors would also have to publish an annual climate disclosure and develop “science-based targets” to reduce greenhouse gas emissions in alignment with the goals of the 2015 Paris agreement. That means contractors will have to aim to zero out emissions and possibly require their contractors to do so.
Will Lockheed Martin and Raytheon Technologies have to redesign weapons systems and aircraft to be powered by lithium-ion batteries? China mines and processes the critical minerals used in batteries and other green technologies that will be required to meet these “science-based targets.”
The proposed rule would also apply to non-defence contractors, including pharmaceutical, shipping and tech companies, though it curiously exempts universities, non-profit research institutions and state and local governments. These exemptions are a concession that the rule imposes costly burdens.
But the very point of the rule is to force CO2 emissions reductions across the private economy by leveraging $650 billion in annual federal contracts. By covering Scope 3 emissions, the rule would sweep in tens of thousands of non-federal contractors, including many small businesses.
“Public procurement can shift markets, drive innovation, and be a catalyst for adoption of new norms and global standards,” the rule-making says. The climate conditions on contractors “will give visibility to major annual sources of GHG emissions and climate risks throughout the Federal supply chain and could, in turn, provide insights into the entire U.S. economy.”
In other words, this is a back door for the Administration to force businesses across the economy to report and reduce their CO2 emissions. It goes even further than the Securities and Exchange Commission’s proposed rule requiring publicly traded companies to report Scope 1 and Scope 2 emissions.
The rule-making claims that federal contractors will benefit from climate mandates by “increasing senior management attention and funding for investing in GHG reduction projects.” Great. As the U.S. military faces strained budgets and growing threats, climate will be a costly new priority in national defence. The People’s Liberation Army must be dumbfounded by its good luck.
The Wall St Journal
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