Environmental executive order poses questions for supply chain and logistics green efforts

In light of the news that President Trump has inked an executive order that essentially nixes the climate polices drafted and enacted during the Obama administration, there are a few notable takeaways that seem to resonate from a supply chain perspective.

Some of the key components of the White House’s “An America First Energy Plan,” as outlined on the White House Website, include:

• eliminating harmful and unnecessary policies such as the Climate Action Plan, which was created by the Obama administration and included measures to reduce carbon pollution, deploy more clean energy, and augment energy efficiency, and the Waters of the U.S. rule. Lifting these restrictions will greatly help American workers, increasing wages by more than $30 billion over the next 7 years;
• take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own, and use the revenues from energy production to rebuild roads, schools, bridges and public infrastructure and augment American agriculture;
• a commitment to clean coal technology, and to reviving America’s coal industry

“In addition to being good for our economy, boosting domestic energy production is in America’s national security interest,” the executive order stated. “President Trump is committed to achieving energy independence from the OPEC cartel and any nations hostile to our interests. At the same time, we will work with our Gulf allies to develop a positive energy relationship as part of our anti-terrorism strategy. [O]ur need for energy must go hand-in-hand with responsible stewardship of the environment. Protecting clean air and clean water, conserving our natural habitats, and preserving our natural reserves and resources will remain a high priority. President Trump will refocus the EPA on its essential mission of protecting our air and water.”

While some of the actions and proposals within the executive order will not be embraced by all, it does not mean by any stretch that all previous environmental and climate efforts will be permanently abandoned.

“From both transportation and logistics standpoints, there is no retreat from being reasonable or smart like we have done in the past,” explained Kevin Smith president of Sustainable Supply Chain Consulting, and former head of supply chain for CVS Caremark, in advance of the executive order being announced.“There are actually a lot of positives I think will come out of this, and I don’t think we will see a government or industry retreat from doing things that make sense.”

As an example of certain things not changing, Smith pointed to the EPA’s SmartWay program, as it is espoused as environmentally friendly along with being a “money maker” in that it helps to save fuel and money in the long-term for the participating companies.

“If a client comes to me and says ‘we want to be green,’ I say ‘what do you mean? Do you want to pick 10 out of 1,000 things you can do to be environmentally-friendly while also make money or save money—with the new business environment we are in that is the direction you will see shippers going?’” Smith said.

On a related note to the executive order is what becomes of the United States involvement in the Paris Agreement by the United Nations Framework Convention on Climate Change (UNFCC), which requires each of the 197 participating countries to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. It also aims to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The Agreement also provides for enhanced transparency of action and support through a more robust transparency framework, the UNFCC added.

As to whether the U.S. remains part of the Paris Agreement remains to be seen, given that President Trump called it a “bad deal for the U.S. before taking over in the White House, even though he has stated that clean air and crystal clear water are important.

In terms of how the Paris Agreement relates to the supply chain going forward, it is still to be determined. That was made clear by Adrian Gonzalez, president of Boston-based Adelante SCM.

“It’s too soon to know what impact this will have on supply chain in the near term, but considering that the agreement is voluntary and there are no enforcement mechanisms in place, my sense is that very little will change in the short term.”