Navy Climate Program Questions Contractors on Carbon Emissions

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May 2 — Defense contractors hoping to continue selling their ships and planes to the U.S. Navy may soon need to reduce their carbon footprints.

The Navy recently became the second federal agency to work with CDP, a non-profit headquartered in the U.K. with offices on five continents, which monitors carbon disclosures for big businesses and other organizations in an effort to reduce the risks associated with climate change.

The new partnership is likely to spur the Navy to begin pressuring its existing contractors to find ways to reduce their greenhouse gas emissions (GHG) — and it may also become a more significant factor the agency uses to weigh which companies win lucrative contracts in the future.

On April 7, the Navy sent questionnaires to 100 suppliers, which represent 75 percent of the department’s contracts in terms of dollar value, wrote Deputy Under Secretary of the Navy for Management Tom Hicks in response to e-mailed questions from Bloomberg BNA. The information request is the first step from the Navy in working with CDP’s supply chain program, which focuses on how companies that supply an organization can be responsible for up to four times the GHG as the organization’s direct operations.

The CDP program is “completely voluntary,” wrote Hicks, and does not represent a change in policy. At the same time, he made it clear that efforts to monitor and ultimately lessen carbon emissions from vendors not only fits with the Navy’s own reductions in GHG, detailed in annual reports to the Office of Management and Budget — it might also help them win new business.

“We believe this reporting, when combined with the Department’s efforts to become more energy efficient, utilize renewable energy to power our installations, and use alternative fuels to power the Fleet, makes us better warfighters and improves our energy security. It also enables us to manage, and in many cases, lower costs,” wrote Hicks. “We believe these benefits translate to the commercial sector as well, enabling those companies that participate to be more competitive in all aspects of their business including their responses to (requests for proposals).”

Wrote Hicks: “Once the [Department of the Navy] is able to see this data from our suppliers, we will evaluate the next steps.”

Taking The Lead

The U.S. military is the world’s single largest user of fossil fuels. This fact hasn’t been lost on national and international climate change organizations. Under the Paris climate deal adopted last December, countries aren’t obliged to cut their military carbon emissions — but there are no longer any built-in exemptions for them either, as used to be the case.

Through an “opt-out” provision in the Kyoto protocols, which the U.S. never ratified, the U.S. military did not have to fully report on its greenhouse gas emissions or act to reduce them.

More recently, military leaders have recognized the dangers a warming climate poses to the planet and vowed to act. In 2014, a Pentagon report referred to climate change as an immediate threat to national security because drought, rising seas and more violent weather patterns are leading to growing risks of poverty, food shortages and conflict between nations.

The Navy is responsible for about one-third of the military’s use of fossil fuels, Navy Secretary Ray Mabus said at an April 12 workshop sponsored by CDP and Google in Silicon Valley. Many of the vehicles most essential to the Navy — jet aircraft, helicopters and ships of all sizes — emit significant amounts of carbon.

As part of the Paris deal, the Obama administration presented an aggressive agenda to reduce U.S. carbon dioxide emissions, including a clean power plan with a goal of cutting emissions by 32 percent from the 2005 levels by 2030.

Federal agencies have been asked to take the lead. Since 2008, agencies have reduced GHG by 17 percent, the administration has noted — and a plan is in place to have them reduce GHG by 40 percent by 2025.

The initiative comes as House Republicans have signaled their opposition to the climate agenda pursued by the Defense Department during the Obama administration.

An amendment sponsored by Rep. Mike Conaway (R-Texas), which clarifies that nothing can be construed as a constraint on fuel procurements necessary for military operations, including alternative fuels that emit more carbon pollution than regular fuels, was adopted in the fiscal 2017 National Defense Authorization Act approved April 28 by the House Armed Services Committee.

Sincere Belief

It shouldn’t be a surprise that among the military branches, the Navy has been out front on the issue, observers say.

Mabus “has been a leading voice not just in the military but throughout the government regarding green energy,” Jerry Hendrix, director of the Defense Strategies and Assessments Program for the Center for a New American Security, a nonpartisan Washington policy center, told Bloomberg BNA. “He has a deeply held, sincere belief in addressing climate change.”

Hendrix, a retired Navy captain, served as director of Mabus’ advisory panel in 2012 and 2013.

Mabus, a former ambassador to Saudi Arabia, has a long history as an advocate for addressing climate change. Since President Barack Obama appointed him to the post in 2009, he has attempted to reduce the Navy’s dependence on foreign oil in several ways, including by increasing its use of solar power and other forms of renewable energy.

Hendrix said that although many defense contractors have worked to reduce GHG of their own accord — in concert with the Navy’s aims — they might be bristling at the Navy’s questionnaire request, and whatever else the survey might lead to.

“These companies already operate under a strict regulatory blanket” from the Defense Department and the Environmental Protection Agency, Hendrix said.

‘The Serendipitous Circle.'

Prime defense contractors are reluctant to talk about their procurement relationships with the Navy, and how they may be affected by the agency’s partnership with CDP, formerly called the Carbon Disclosure Project. But a few addressed the issue indirectly by discussing their philosophies — and direct efforts — to address climate change.

Northrop Grumman is a CDP supply chain program member, the only defense contractor on the list of 76 organizations, which is composed mostly of large corporations, such as Wal-Mart, AT&T and Microsoft.

A Northrop spokesman declined comment other than to say that environmental sustainability, both in its operations and in support of its customers, is “very important” to the company.

According to a Boeing spokesman, the company has a clear strategy and commitment to address concerns about climate change. That includes efforts to improve the environmental performance of the F/A-18 Super Hornet fighter aircraft, such as the approval of the use of a sustainable biofuel in a 50/50 blend with regular jet fuel.

Lockheed Martin officials said in a press release that it has been recognized by CDP for five years running for its climate-related transparency. Lockheed officials also noted in a release that it recently signed a 17-year agreement to purchase solar-generated electricity through Duke Energy Renewables. The pact will provide clean energy across the company’s domestic business segments.

In recent years, Lockheed has won contracts to develop several projects for the Navy, including the F-35C Joint Strike Fighter and the Littoral Combat Ship.

Leo Mackay Jr., Lockheed’s vice president of ethics and sustainability, told Bloomberg BNA that “a big part of being a good neighbor” is letting employees, business partners and communities in which the company does business know of Lockheed’s efforts to go green.

“There really isn’t a downside” to pursuing environmental sustainability, Mackay said, including reducing Lockheed’s carbon footprint and thus helping mitigate the effects of climate change, save the company money and helping to attract new employees, especially climate-conscious millennials.

“I call it the serendipitous circle,” Mackay said.

Like each of the half-dozen contractors contacted for this article, Mackay declined to discuss the Navy’s new carbon reporting plan.

Fossil Fuel Era

The Navy’s involvement with CDP stemmed from the decision by the General Services Administration (GSA) to become the first U.S. government agency to join the CDP’s supply chain program. The response from the GSA’s suppliers is instructive.

According to a letter from GSA Chief Sustainability Officer Kevin Kampschroer to CDP for its 2016 program report, 63 of the 115 suppliers the GSA asked to participate responded to the CDP questionnaire, including 14 that shared their data publicly for the first time. “And I’m thrilled to see that our suppliers are taking action to reduce their emissions,” he wrote. “This year, 85% of GSA’s responding suppliers reported emissions reduction investments totaling $11.7 billion, collectively saving $1 billion and 15.9 million metric tons of (carbon dioxide or its equivalent).”

The suppliers were asked to fill out CDP’s detailed, 25-page questionnaire. It includes questions about procedures with regard to climate change “risks and opportunities”; data concerning emissions reduction or renewable energy consumption or production targets; and the methodology used to collect that data.

Dexter Galvin, head of the CDP supply chain program, told Bloomberg BNA that about half of the program's members use the data they receive from the questionnaires as part of their future procurement selection criteria. “It may be that the Navy will push the suppliers to put reduction targets in place,” he said

“We’re witnessing the end of the fossil fuel era,” Galvin said. “There’s a massive change in the global economy underway.”

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bna.com

To contact the editor responsible for this story: Seth Stern at sstern@bna.com