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California Moves to Adopt Strict GHG Reporting Regulations for Big Companies

Stephanie Salmon

Corporations with more than $1 billion in annual revenue would be required to disclose all scopes of their greenhouse gas (GHG) emissions to the California Secretary of State under a first-of-its-kind bill the State Senate passed Jan. 26.

The bill, called the Climate Corporate Accountability Act (SB 260), would require businesses with total annual revenues in excess of $1 billion and that do business in California to:

  • Disclose their GHG emissions in a manner that is easily understandable and accessible beginning on January 1, 2024.
  • Disclose scope 1, 2, and 3 GHG emissions following the implementation of regulations. Scope 1 GHG emissions are all direct GHG emissions from sources the reporting entity owns or controls. Scope 2 emissions are indirect GHG emissions from electricity purchased and used by the reporting entity.  Scope 3 emissions are indirect GHG emissions from sources that the reporting entity does not own or directly control such as emissions associated with the reporting entity’s supply chain, business travel, employee commutes, procurement, waste and water usage, and disposal of the reporting entity’s products. These corporations will require smaller businesses, including foundries, that act as their suppliers and/or third-party providers to align with any new GHG accounting practices to facilitate compliance with SB 260. 
  • Ensure their public disclosures have been independently verified by a third-party auditor that is approved by the California Air Resources Board and has expertise in GHG emissions accounting.

The measure now goes to the lower legislative chamber for committee work before a final version is produced—likely in June—and forwarded to Gov. Gavin Newsom for his signature. Since California often leads the way for other states, foundries and metalcasting suppliers should anticipate and prepare for similar legislation in other states in the future. At the federal level, the U.S. Securities and Exchange Commission is preparing a federal rulemaking for climate-related disclosures for public companies expected to be rolled out this spring. Environmental groups are pushing to have Scope 3 emissions reporting requirements included in the rule, as well.     

Administration Announces Steps to Boost U.S. Critical Mineral Production 

The Biden administration announced major investments to expand the domestic production of critical minerals and materials on February 22. The plan includes both federal and commercial investments to expand the mining, production, processing, and recycling of the targeted minerals that are used in the production of computers, defense systems, electric vehicles, batteries, wind turbines, renewable energy systems, and household appliances. 

The announcement comes a year after President Biden signed an executive order to evaluate vulnerabilities in mineral and material supply chains. AFS submitted comments last year in response to the executive order underscoring the need to increase the domestic production of our critical mineral resources in the U.S., like lithium, nickel, and cobalt, which are contained in products the metalcasting industry supplies to and are vital to our national security.

The plans intend to break the United States’ dependence on China. It includes a $35 million Pentagon contract to MP Materials to process heavy rare earth elements at the company’s Mountain Pass, California, production site—the only processing and separation facility of its kind in the country. Berkshire Hathaway Energy Renewables announced plans to break ground on a facility to test its sustainable lithium extraction process from geothermal brine. Redwood Materials is working on a pilot project with Ford and Volvo for the collection and recycling of lithium-ion batteries with the goal of extracting lithium, cobalt, nickel, and graphite.  AFS continues to interact with key administration officials on this important supply chain issue.    

Click here to read the column in the March 2022 digital edition of Modern Casting.