Carbon Policy Impact on Industrial Facilities

Abstract

Concerns over climate change in the U.S. are prompting actions
at the federal, state and corporate levels that will affect how indus-
trial facilities operate now and in the future. Because a comprehensive
federal carbon policy is still in its infancy, some states are implement-
ing their own carbon policies and setting their own reduction targets
ahead of federal regulations. For example, California’s climate change
mitigation plan requires a reduction of 80 million metric tons of Co2
equivalent (MMTCo2 eq), or a 16% reduction, from the state’s pro-
jected 2020 business-as-usual emissions. A significant share of the re-
quired reduction will come from a cap-and-trade program, a program
that directly affects industrial operation in the state.
This article discusses the impact of federal and state policies on
the operation of industrial facilities. It addresses the three primary
steps that industrial facilities are currently taking to address or pre-
pare for carbon policies: monitoring and reporting of greenhouse
gas (GHG) emissions, managing GHG emissions, and preparing for
participation in cap-and-trade programs. The article begins with an
analysis of the industrial sector’s contribution to total U.S. GHG emis-
sions in the last 20 years. This is then followed by an overview of fed-
eral and state climate policies affecting industrial operations. Recent
regulations on mandatory GHG emission reporting and permitting at
the federal level are discussed. The comprehensive statewide cap-and-
trade program in California is also described, as it will greatly affect
industrial operation in the state. Finally, the article concludes with ex-
amples of GHG strategies and actions taken by industrial subsectors
and individual companies to better position themselves for carbon
policies at home and abroad.