Regulating Carbon Emissions Like We Regulate Hazardous… | ENGIE Impact

Regulating Carbon Emissions Like We Regulate Hazardous Waste

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Mathias Lelievre Chief Executive Officer
Carbon Emissions
Carbon Risk
Carbon Emission Regulation

When I served as the regional head of the Paris Division of the French Nuclear Safety Authority (ASN), we had a clear mandate to protect the public, the workers and the patients from the risks associated with nuclear activities. While there had always been programs in place around the broad use of nuclear capabilities, our mission expanded to include clear regulations for individual facilities and established additional site-level accountability. Given the potential risks associated with nuclear radiation, there was a broad consensus that these new regulations would be necessary to protect workers, patients, and local communities. Paired with the existing macro-level reporting and regulatory requirements, this micro-level oversight fully empowered the ASN as an impartial, legitimate, and credible body — with power to take any necessary measures and enforce necessary penalties to fulfill its mission.

What if governments were to implement the same site-level oversight when it comes to carbon emissions?

Carbon emissions are a fact of every organization, and we already see so many other pieces in the classic carrot-and-stick toolbox that governments use to regulate them: from financial incentives to develop green technologies to regulations stopping production of internal combustion engines to develop greener mobility solutions. Would it be too far-fetched to imagine that micro-regulations will soon be developed in our fight against climate change?

I know there will be a general hesitancy to any additional corporate regulation. But even the staunchest anti-regulatory ideologues see the value in having guardrails around how hazardous materials, like radioactive waste, are handled. But the truth is, carbon in the atmosphere is a hazardous material and we continue to emit more and more of it. We need the proper framework in place to accelerate the global reduction of carbon emissions.

Building the Regulatory Framework

Many governments and regulatory bodies are beginning to put in the macro-level reporting and disclosure requirements around carbon, including some broad oversight from the SEC and from measures like CBAM. But with climate change as immediate a danger as it is — even more threatening than nuclear power — the current macro-level, incentive-driven approaches will only get us so far. An additional layer of stick-focused, micro-level regulation and oversight should be implemented.

Admittedly, the appetite for regulatory intervention varies around the world, and the tools available to each region and each industry varies as well. With the ASN, we had a variety of tools to ensure best practices were followed, including licensing requirements, oversight to equipment procurement, and ultimately the ability to stop an economic activity if the required safety measures were not in place.

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There are many common avenues to implementing an effective oversight program. These elements, and others, will complement each other to build an impactful approach:

1. Micro-level Oversight

My observation is that depending on the organization, translating global decarbonization action and ambition into local site-level action takes too much time and is still too loose today. We don’t have time. Individual sites could be inspected and regulated just as governments currently do with other sectors.

2. Proportionality to Risk

Even if there were enough people to inspect and enforce carbon emission regulations throughout a country, some sectors contribute more carbon than others and some companies (typically larger companies) contribute more carbon than others. Focusing initial efforts on the largest emitters will have the biggest impact. Like any other approach, it should not be one-size-fits-all. Targeting the most emitting factories would be a smart way to start.

3. Reduce the Burden

While regulations are ultimately beneficial for everyone if structured correctly, requiring organizations to make changes brings with it the burden of time, money and other resources as they initially implement the changes and then maintain them in perpetuity. Governments could consider how to reduce the load of those changes — or even target the existing subsidies with financial support through grants or tax incentives.

4. Enforcement Tools

There must be significant consequences for noncompliance, and the regulatory body with oversight needs to be agile enough to enforce them. Whether it’s fines or loss of license or other tools, the punishment should match the danger and harm being caused by not implementing carbon reduction measures.

5. Independence and Autonomy

It can be a hard balance to find, but regulators need the authority that comes with the backing of government, while also having the freedom to rise above political discourse.

6. Transparency

To become acceptable and to be accountable for its actions, the regulatory body needs to be accountable for results and bear the obligation to report on its actions.

7. Education and Training

It is also essential for the regulatory body to put significant emphasis on educating the impacted industries, other industries that may see similar micro-regulations in the future, and even the general public. Collaboration on how these initiatives move forward will go a long way in ensuring success.

Positive Power of Micro-Regulation

Many decarbonization efforts to date have been driven from the highest level — by governments, by the largest corporations, and by sectors with the highest emissions. The burden needs to be shared, and we need to be more aggressive than we are today for more transformation to happen at the local level.

We need inspection at individual factories, discussing how they measure carbon emissions, breaking down Scope 1, Scope 2, and Scope 3 emissions, talking about plans to reduce the emissions, showing investment plans to upgrade equipment, measurements, and verifications in place, change supply towards green electrons and molecules, put in place the right culture to consume less, etc. We need public data on site-level comparable baselines across sites and across sectors. We need to facilitate collaboration across and within sectors to identify common opportunities. We need to realize that carbon emissions are dangerous — as dangerous as other threats we have no reservations about regulating — and embrace similar protections.

In my experience, this type of regulation is always looked at with the same ambiguity: on one hand, it is an additional weight for the private sector; on the other hand, it is establishing a transparent, level playing field as long as the rules are shared among the right markets.

But it's a mindset change — thinking about carbon risk the same way we think about other life-threatening risks. It is a change that might come faster than anybody anticipates and one that will require collective climate action and smart regulatory oversight.

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