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24 JAN 2020

The Buy Clean California Act - What can we learn from it?

“Bring it on!” declared California governor Jerry Brown, in the run-up to the 2016 US presidential election. It was a direct challenge to then-candidate Donald Trump and others who denied the existential threat of anthropogenic climate change, but he may as well have been referring to expansive new climate-focused legislation that was to come.

The Buy Clean California Act, which Brown signed into law in October 2017, was the world’s first-ever legislative push to target supply chain carbon emissions. It requires state agencies to weigh the carbon cost of materials used in infrastructure projects, including steel, glass, and certain kinds of insulation. Only products with Environmental Product Declarations (EPDs) demonstrating lower greenhouse gas emissions than the category benchmarks will be eligible for use on state projects. It helps heavily regulated California steel mills that compete with unregulated or under-regulated mills in China, India and elsewhere – recent tariffs notwithstanding. The bill will also benefit local low-carbon suppliers, which makes it a boon for labour unions and corporate industrialists, to say nothing of the environmental lobby.

As a first-of-its-kind regulation, the Buy Clean California Act is not perfect. Currently, it covers just four construction materials: concrete-steel rebar, flat glass, structural steel, and mineral-wool board insulation. Concrete, cement and aluminium – all of which are extraordinarily carbon-intensive materials used in abundance in infrastructure projects – weren’t included, and neither was wood. The law’s creators anticipated that it would eventually include more building materials once early implementation issues were dealt with. Alternatively, critics have suggested, they simply kicked the can down the road.

Picture of san francisco streets
The Buy Clean California Act is a promising start in the regulation of supply chain carbon emissions

Still, the Act is a promising start in regulating supply chain carbon emissions. It follows successful efforts in the building trades to certify carbon emissions in construction, via the Leadership in Energy and Environmental Design (LEED) programme, and in energy efficiency, with Energy Star.

Future legislative battles will test whether lawmakers can gain enough support to expand the law in California, even if it raises costs for the state and its suppliers in the short term. Governments beyond California will need to adopt similar measures if it is to put a meaningful dent in the consumption practices of the global supply chain.

As Brown said: bring them on. Inevitably, inaction will be costlier.

Whole Life Carbon Assessments are mandatory for RICS professionals. To find out more, go to rics.org/carbonassessment

Clean sweep: three more carbon-conscious initiatives

New York’s Climate Mobilisation Act

New York City’s Climate Mobilisation Act is an effort to meet the carbon reductions set by the Paris COP 21 climate change agreement by setting strict new building performance standards. The city aims to cut carbon emissions by 40% by 2030 (and by 80% by 2050) by requiring landlords to optimise the energy efficiency of their buildings. The law creates a new industry in New York for clean-energy consultancies as well as for capital projects to finance energy efficiency improvements.

EU action plan on sustainable finance

In March, the European Union enacted new disclosure requirements for the financial marketplace. Investors and advisers are now required to inform clients of pertinent effects that the climate might have on an investment or transaction and vice versa. For example, financial advisers are required to disclose whether an investment might adversely affect an ecosystem’s biodiversity – or whether an asset is located in an area increasingly prone to flooding. The new regulation for investment funds, insurance products, pensions and other financial instruments aims to give buyers more information about their purchasing decisions in order to counter “greenwashing” claims, promote sustainable investments, and change the behaviour of market actors.

EU Emissions Trading Scheme

The UK is one of the largest partners in the Emissions Trading Scheme, the EU’s carbon-trading market. However, that may change post-Brexit: the prospect of a hard Brexit led the European Commission to briefly suspend the UK from marketplace activities in late 2018. Since then, UK-based companies and carbon traders have resorted to opening accounts in other EU member nations.