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The effort to measure companies’ carbon footprints is remarkably imprecise — and suddenly more important than ever.
Large companies generate a gargantuan amount of carbon-dioxide pollution.
Take the big-box retailer Costco. During the financial year 2020, it emitted 144.5 million metric tons of carbon dioxide — a number on par with the Philippines’ annual emissions. Nike pumped out the equivalent of 11 million metric tons of carbon during the same period, a footprint roughly equal to Zimbabwe’s. Apple, meanwhile, was somewhere on the order of Estonia.
You’ve probably seen data like this before. But here’s a question: How do companies actually arrive at these numbers? How did Costco know its carbon footprint in 2020? Carbon dioxide and other climate-warming gases are invisible, potent even in trace amounts, and constantly absorbed and produced by hundreds of billions of different organisms and chemicals around the world. Costco alone directly or indirectly choreographs the actions of millions of people and things: sailors and longshoremen, factory workers and cotton farmers, employees coming in for their shift and marketing managers spending down an advertising budget.
How could a company like that possibly know its carbon footprint?
Here’s the sorry answer: Most companies don’t. They estimate.
Those estimates are suddenly looking more important. New laws and a proposal from the U.S. Securities and Exchange Commission could soon require that companies treat this data with the same seriousness that they devote to their accounting books. Companies now need their corporate climate data to do something that it was never meant to do: help them make decisions.
So the race is on to help companies estimate better. On Wednesday, Watershed, a startup that helps companies run their climate programs, bought VitalMetrics, a climate-data mainstay that owns and manages one of the most important tools that companies use to estimate their carbon footprints.
That tool, called the Comprehensive Environmental Data Archive, or CEDA, provides what’s known as carbon-intensity data for hundreds of products as made in more than 140 countries. It is one of several tools that has been used to advise Microsoft, Kellogg’s, and Virgin Atlantic since Sangwon Suh, an industrial-ecology professor and Intergovernmental Panel on Climate Change author, founded VitalMetrics in 2005.
Watershed’s acquisition of VitalMetrics signals that corporate climate data is entering a new stage, Taylor Francis, one of the company’s cofounders, told me. Watershed, at least, is a different kind of company than the climate bean counters of yore: Founded by former employees of the payments behemoth Stripe, it has raised $84 million from the venture-capital firms Kleiner Perkins, Sequoia Capital, as well as the billionaire Laurene Powell Jobs.
“The traditional corporate climate complex was basically designed for a world of numbers in the corporate social responsibility report, and a pledge, and a press release,” he said. ”We’re shifting to the new world of numbers in a 10-K,” the annual financial report that public companies must file with the government, “and a planet running out of time.”
I will admit I had it all wrong. I had assumed that because corporate carbon footprints sounded precise and vaguely science-adjacent, they were produced by something like a scientific methodology themselves. I imagined a company’s employees — or at least their consultants — collecting emissions data smokestack by smokestack, pacing around factories while studying air-quality monitors, and doing careful math somewhere in the vicinity of a bunsen burner or two. (I believed this, I should add, despite knowing that many corporate climate reports contain glaring arithmetic errors and sometimes literally do not add up.)
That sort of methodology is the “platonic ideal of carbon accounting,” Francis, the Watershed cofounder, told me. In a perfect world, a company would have measured the per-ton emissions of each of its processes, and it would know these for each of its suppliers down to the raw material.
Yet this is still a ways off for most companies. Instead, the bulk of carbon accounting today now happens in spreadsheets, and it uses dollars, not tons, as an input. Each consumer good or raw commodity aligns to a “factor,” a multiplier that says that for every dollar spent on, say, glass or aluminum, a certain amount of carbon is emitted. A climate team inputs the dollar amount, multiplies it by the factor, and arrives at a result: a company’s annual carbon footprint.
Until now, Watershed and other firms have often calculated corporate climate emissions by using a U.S. Environmental Protection Agency-made database called the Environmentally Extended Input-Output, or EEIO, model, Francis said. “You start with very coarse input data like, we spent $100 million on marketing. So you go to the old EEIO database, and the EEIO says that in the U.S. 10 years ago, the carbon emissions per dollar of marketing spend was X, and you multiply that to get your emissions number.”
“I think that gets you into the right order of magnitude,” he said, but it was messy. The EEIO data is roughly a decade out of date, meaning it overstates climate pollution from the power grid and understates the role of inflation.
VitalMetrics’ CEDA database, on the other hand, is updated every year. It contains carbon-intensity factors for more than 300 products and — most important — it varies these factors based on the country of origin. Going forward, Watershed will calculate corporate emissions data using these CEDA estimates.
This kind of data-gathering isn’t fine-tuned enough for companies to actually make better decisions with their data, Madison Condon, a law professor at Boston University who has criticized the reigning approach, told me. Under the current approach, a company can improve their carbon-accounting data only by shifting production to countries with lower emissions factors. It doesn’t get credit for, say, installing technologies at its existing factories that lower emissions.
That is unsustainable because corporate carbon accounting is becoming important to governments around the world. The Securities and Exchange Commission has proposed requiring publicly traded companies to disclose carbon data and major climate-related risks. Even if that rule is swatted away by the Supreme Court, the European Union will soon require tens of thousands of companies to disclose sustainability and emissions data; these rules could apply to more than 10,000 foreign companies, including many mainstream American brands. California could soon pass its own law mandating that companies produce carbon-accounting data.
Even apart from those disclosure requirements, carbon-footprint requirements are now written into laws. Some of the Inflation Reduction Act’s subsidies will pay out only if a product’s carbon intensity is below a certain threshold.
Eventually, Watershed hopes to produce a hybrid tool that can use dollar-based production factors, tonnage estimates, and technology-based improvements together, Francis told me. More broadly, Watershed’s acquisition of Vitalmetrics — not to mention Watershed itself — is a gamble about how the climate economy will eventually work.
“Five years from now, the disclosure piece is just part of the water. No one talks or writes about it because it is an expected part of doing business for every company. And it’s relatively low friction. It’s a part of your annual close, your quarterly close,” Francis told me. “We don’t really talk about climate as a political issue because businesses don't think of climate as a political issue because they see it as, you know, the biggest growth sector of the decade.”
Of course, if that’s true, then companies may not need a startup like Watershed to do their climate counting for them. Bog-standard corporate accountants, like KPMG or Deloitte, will do the task just fine.
But Watershed is betting that climate accounting will remain both more technical and more central to a company’s employee and investor relationships than, say, its power bill. Just as companies use Salesforce specifically to manage customer relationships, or Justworks to manage payroll and benefits, Watershed hopes they will need a single place to manage all their climate data — a single source of emissions truth. It’s investing in its database to try to make that bet payoff.
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The Loan Programs Office is good for more than just nuclear funding.
That China has a whip hand over the rare earths mining and refining industry is one of the few things Washington can agree on.
That’s why Alex Jacquez, who worked on industrial policy for Joe Biden’s National Economic Council, found it “astounding”when he read in the Washington Post this week that the White House was trying to figure out on the fly what to do about China restricting exports of rare earth metals in response to President Trump’s massive tariffs on the country’s imports.
Rare earth metals have a wide variety of applications, including for magnets in medical technology, defense, and energy productssuch as wind turbines and electric motors.
Jacquez told me there has been “years of work, including by the first Trump administration, that has pointed to this exact case as the worst-case scenario that could happen in an escalation with China.” It stands to reason, then, that experienced policymakers in the Trump administration might have been mindful of forestalling this when developing their tariff plan. But apparently not.
“The lines of attack here are numerous,” Jacquez said. “The fact that the National Economic Council and others are apparently just thinking about this for the first time is pretty shocking.”
And that’s not the only thing the Trump administration is doing that could hamper American access to rare earths and critical minerals.
Though China still effectively controls the global pipeline for most critical minerals (a broader category that includes rare earths as well as more commonly known metals and minerals such as lithium and cobalt), the U.S. has been at work for at least the past five years developing its own domestic supply chain. Much of that work has fallen to the Department of Energy, whose Loan Programs Office has funded mining and processing facilities, and whose Office of Manufacturing and Energy Supply Chains hasfunded and overseen demonstration projects for rare earths and critical minerals mining and refining.
The LPO is in line for dramatic cuts, as Heatmap has reported. So, too, are other departments working on rare earths, including the Office of Manufacturing and Energy Supply Chains. In its zeal to slash the federal government, the Trump administration may have to start from scratch in its efforts to build up a rare earths supply chain.
The Department of Energy did not reply to a request for comment.
This vulnerability to China has been well known in Washington for years, including by the first Trump administration.
“Our dependence on one country, the People's Republic of China (China), for multiple critical minerals is particularly concerning,” then-President Trump said in a 2020 executive order declaring a “national emergency” to deal with “our Nation's undue reliance on critical minerals.” At around the same time, the Loan Programs Office issued guidance “stating a preference for projects related to critical mineral” for applicants for the office’s funding, noting that “80 percent of its rare earth elements directly from China.” Using the Defense Production Act, the Trump administration also issued a grant to the company operating America's sole rare earth mine, MP Materials, to help fund a processing facility at the site of its California mine.
The Biden administration’s work on rare earths and critical minerals was almost entirely consistent with its predecessor’s, just at a greater scale and more focused on energy. About a month after taking office, President Bidenissued an executive order calling for, among other things, a Defense Department report “identifying risks in the supply chain for critical minerals and other identified strategic materials, including rare earth elements.”
Then as part of the Inflation Reduction Act in 2022, the Biden administration increased funding for LPO, which supported a number of critical minerals projects. It also funneled more money into MP Materials — including a $35 million contract from the Department of Defense in 2022 for the California project. In 2024, it awarded the company a competitive tax credit worth $58.5 million to help finance construction of its neodymium-iron-boron magnet factory in Texas. That facilitybegan commercial operation earlier this year.
The finished magnets will be bought by General Motors for its electric vehicles. But even operating at full capacity, it won’t be able to do much to replace China’s production. The MP Metals facility is projected to produce 1,000 tons of the magnets per year.China produced 138,000 tons of NdFeB magnets in 2018.
The Trump administration is not averse to direct financial support for mining and minerals projects, but they seem to want to do it a different way. Secretary of the Interior Doug Burgum has proposed using a sovereign wealth fund to invest in critical mineral mines. There is one big problem with that plan, however: the U.S. doesn’t have one (for the moment, at least).
“LPO can invest in mining projects now,” Jacquez told me. “Cutting 60% of their staff and the experts who work on this is not going to give certainty to the business community if they’re looking to invest in a mine that needs some government backstop.”
And while the fate of the Inflation Reduction Act remains very much in doubt, the subsidies it provided for electric vehicles, solar, and wind, along with domestic content requirements have been a major source of demand for critical minerals mining and refining projects in the United States.
“It’s not something we’re going to solve overnight,” Jacquez said. “But in the midst of a maximalist trade with China, it is something we will have to deal with on an overnight basis, unless and until there’s some kind of de-escalation or agreement.”
A conversation with VDE Americas CEO Brian Grenko.
This week’s Q&A is about hail. Last week, we explained how and why hail storm damage in Texas may have helped galvanize opposition to renewable energy there. So I decided to reach out to Brian Grenko, CEO of renewables engineering advisory firm VDE Americas, to talk about how developers can make sure their projects are not only resistant to hail but also prevent that sort of pushback.
The following conversation has been lightly edited for clarity.
Hiya Brian. So why’d you get into the hail issue?
Obviously solar panels are made with glass that can allow the sunlight to come through. People have to remember that when you install a project, you’re financing it for 35 to 40 years. While the odds of you getting significant hail in California or Arizona are low, it happens a lot throughout the country. And if you think about some of these large projects, they may be in the middle of nowhere, but they are taking hundreds if not thousands of acres of land in some cases. So the chances of them encountering large hail over that lifespan is pretty significant.
We partnered with one of the country’s foremost experts on hail and developed a really interesting technology that can digest radar data and tell folks if they’re developing a project what the [likelihood] will be if there’s significant hail.
Solar panels can withstand one-inch hail – a golfball size – but once you get over two inches, that’s when hail starts breaking solar panels. So it’s important to understand, first and foremost, if you’re developing a project, you need to know the frequency of those events. Once you know that, you need to start thinking about how to design a system to mitigate that risk.
The government agencies that look over land use, how do they handle this particular issue? Are there regulations in place to deal with hail risk?
The regulatory aspects still to consider are about land use. There are authorities with jurisdiction at the federal, state, and local level. Usually, it starts with the local level and with a use permit – a conditional use permit. The developer goes in front of the township or the city or the county, whoever has jurisdiction of wherever the property is going to go. That’s where it gets political.
To answer your question about hail, I don’t know if any of the [authority having jurisdictions] really care about hail. There are folks out there that don’t like solar because it’s an eyesore. I respect that – I don’t agree with that, per se, but I understand and appreciate it. There’s folks with an agenda that just don’t want solar.
So okay, how can developers approach hail risk in a way that makes communities more comfortable?
The bad news is that solar panels use a lot of glass. They take up a lot of land. If you have hail dropping from the sky, that’s a risk.
The good news is that you can design a system to be resilient to that. Even in places like Texas, where you get large hail, preparing can mean the difference between a project that is destroyed and a project that isn’t. We did a case study about a project in the East Texas area called Fighting Jays that had catastrophic damage. We’re very familiar with the area, we work with a lot of clients, and we found three other projects within a five-mile radius that all had minimal damage. That simple decision [to be ready for when storms hit] can make the complete difference.
And more of the week’s big fights around renewable energy.
1. Long Island, New York – We saw the face of the resistance to the war on renewable energy in the Big Apple this week, as protestors rallied in support of offshore wind for a change.
2. Elsewhere on Long Island – The city of Glen Cove is on the verge of being the next New York City-area community with a battery storage ban, discussing this week whether to ban BESS for at least one year amid fire fears.
3. Garrett County, Maryland – Fight readers tell me they’d like to hear a piece of good news for once, so here’s this: A 300-megawatt solar project proposed by REV Solar in rural Maryland appears to be moving forward without a hitch.
4. Stark County, Ohio – The Ohio Public Siting Board rejected Samsung C&T’s Stark Solar project, citing “consistent opposition to the project from each of the local government entities and their impacted constituents.”
5. Ingham County, Michigan – GOP lawmakers in the Michigan State Capitol are advancing legislation to undo the state’s permitting primacy law, which allows developers to evade municipalities that deny projects on unreasonable grounds. It’s unlikely the legislation will become law.
6. Churchill County, Nevada – Commissioners have upheld the special use permit for the Redwood Materials battery storage project we told you about last week.