Chip fabs face EPA review of their emission targets in budget bill

U.S. companies, including chip fabs, would face EPA oversight of their greenhouse gas reduction plans through September 2031, according to a massive budget bill that narrowly passed the U.S. Senate and is expected to clear the U.S. House on Friday.

The Inflation Reduction Act, passed by a vote of 51-50 on Sunday, includes a provision in Section 60111 on page 697 appropriating $5 million to the EPA until September 30, 2031, “to support enhanced standardization and transparency of corporate climate action commitments and plans to reduce greenhouse gas emissions.”

The bill further calls for “enhanced transparency regarding progress toward meeting such commitments and implement such plans.”

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The language in the bill sets up some level of mandatory disclosure on climate goals created by companies, although the final approach could apparently be strengthened or lessened by the EPA and future administrations. However, the bill makes it clear that the $5 million stays in place for the EPA to use until the end of fiscal 2031.

 Republicans in Congress broadly oppose too much disclosure, although some companies in the chip sector have worked hard to detail their green efforts.  Intel has been transparent on its work with emissions at its existing chip fabs in the U.S. and in April set a goal to achieve net-zero greenhouse gas emissions in global operations by 2040.

RELATED: How Intel plans to reach net-zero GHG emission by 2040

As the recently approved CHIPS Act takes effect and more fabs are approved and built, EPA oversight envisioned in the budget bill is expected to come into play. Intel, for example, plans to build at least two large fabs at a cost of $20 billion in central Ohio in coming years.

The Biden administration has set goals of cutting greenhouse emissions by up to 52% by 2030 from 2005 levels.

The $5 million EPA appropriation in the bill “is going to help companies provide better metrics around climate in an apples-to-apples way,” said U.S. Sen. Thomas R. Carper, D-Delaware. He worked with staff on the Environment and Public Works Committee to implement the provision.

“Addressing the climate crisis requires all hands on deck and businesses have an important role to play in reducing emissions,” Carper added in a statement. “Today many U.S. corporates are trying to meet net zero goals and want the opportunity to be more transparent about climate actions with shareholders.”

A Democratic staff member on the committee said that major U.S. have been concerned whether their project and carbon offsets would meet net-zero goals. The provision is designed to help companies provide better data around meeting their climate goals, the staffer said.

The publication Roll Call quoted Ceres, a nonprofit that works with companies on sustainability, as supportive of the provision. “We really need all hands on deck to improve standardization and transparency on corporate commitments and, more importantly, progress toward those commitments,” Laura Draucker, director of corporate greenhouse gas emissions at Ceres told Roll Call.

Draucker said the provision would be help activist shareholders monitor corporate commitments to environmental issues.

Separate from the budget legislation, the Securities and Exchange Commission is also proposing a rule to mandate standardized information on companies’ direct emissions and materials risks from climate change.

Chip fabs use tremendous amounts of electricity to produce their wares and a large amount and variety of chemicals that have to manufactured and purchased from suppliers. As a result, it can be difficult to assess whether a fab is net zero across its supply chain.

Regarding the 2040 goal Intel set for net zero, analyst Jack Gold of J. Gold Associates remarked in April that it will take time for Intel to find enough renewable energy for its plants as well as reduce the greenhouse effects for all the chemicals Intel uses in processing. “It’s a great goal, but we’ll have to see how realistic it becomes over the next several years as not everything is within Intel’s control,” he said.