Freedom Line Blog

This week, in an official comment filed with the U.S. General Services Administration (GSA), CFIF called for reform or replacement of the Leadership in Energy and Environmental Design (LEED) standard endorsed by the GSA.  Americans deserve a building certification system that is more fair, open, evidence-based and that uses consensus-based standards.

Although the issue of forest certification remains rather obscure to most Americans, its regulation significantly impacts the price consumers pay for wood products, not to mention America’s struggling domestic timber industry.  Unfortunately, a vocal group of environmental activists only endorses Forest Stewardship Council (FSC) certification, and prefers it as a monopoly, while irrationally demonizing competing forest certification systems.  Among other things, those activists successfully pressure Fortune 500 companies into accepting the exclusive use of FSC-certified products, and many government and rating agencies to only award green “credits” to forest products recognized by FSC.

That policy causes the market to become increasingly distorted, with real costs for producers of wood and the environment, and fewer choices for consumers.  A recent study by the American Consumer Institute estimated the costs of carrying that policy to its endpoint.  Namely, FSC certification as a binding requirement for American forests means consumer welfare losses in a number of markets, totaling $10 billion for wood products and $24 billion for paper products markets each year.  Another destructive consequence of the FSC monopoly is that wood from almost 75% of America’s certified forests is placed off-limits.  While that single-source arrangement benefits the FSC and activists, it imposes significant costs on the domestic forestry industry and discourages competition.  That’s because FSC holds foreign landowners to lower standards than U.S. foresters.  For example, harvesting 600-year-old Russian trees occurred on FSC-certified property.  Such an arrangement discriminates against domestic foresters and increases the likelihood of builders seeking foreign suppliers of wood.  In fact, 90% of FSC’s certified land is found abroad, making it fairly easy for businesses to access foreign timber.  Typically, the government interferes with the market to ostensibly protect American industries.  Here, sadly, it is relying on an unaccountable third-party to do the opposite.

The current LEED policy also jeopardizes American jobs;  penalizes smaller landowners who use other certification systems;  discourages the use of many common building materials and other products that are regularly found in construction projects, such as PVC piping, foam insulation, heat reflective roofing and LED lighting face.

Meanwhile, there exists little to no clear environmental benefit to using FSC over alternatives like SFI or ATFS.  A recent study published in the Journal of Forestry examined the impact of FSC and SFI forest certification in North America, and found few differences in land management outcomes of those two alternative systems.  Additionally, the League of Conservation Voters, National Alliance of State Foresters and National Association of Conservation Districts also favor a more level playing field for certification.   Those groups possess much better on-the-ground expertise than the activists who come from marketing backgrounds and lack credentials pertaining to land management or environmental science.

We conclude:

We already witness too many government policies picking winners and losers in the marketplace.  For the federal bureaucracy to allow a third-party environmental group to do so is appalling.  Given USGBC’s agenda and arbitrary actions, it is reckless to empower that organization to dictate a government-sanctioned standard, especially when that standard stifles growth and kills off American jobs during this time of economic uncertainty…  LEED in its current incarnation as the government-approved standard is simply unacceptable.  American consumers, small businesses and our domestic timber industry deserve much better, and the era of the USGBC’s taxpayer-subsidized monopoly must end.”

Meanwhile, in an excellent Forbes commentary this week, George Mason University fellow Jon Entine echoes our view.  Entitled “Forestry Labeling War Turns Ugly as Greenpeace Bungles Logging Industry Attack,” Entine neatly examines the contradictions and tensions contaminating the current forest certification regime:

Policies regarding the procurement of timber, use of building codes and what businesses can sell to their customers should be informed by facts and science, not scare tactics. Greenpeace’s deception is only the latest propaganda effort that has muddied rather than clarified the issues surrounding forestry practices. With a majority of forests lacking certification, we need common-sense incentives and more certification options to achieve sustainable forestry management goals. Consumers and the general public deserve much better than the disinformation campaigns that have shadowed this debate.”

Fortunately, the GSA review period offers the opportunity to return credibility to the building certification system.

Earlier this year, we examined how land management regulations for our forests significantly alter economic activity in timber markets.  Since that time, more recent reports and studies underscore the importance of maintaining a level regulatory playing field, and how policies based on faulty assumptions can have economic and environmental consequences.

Specifically, forest certification programs like the American Tree Farm System (ATFS), Forest Stewardship Council (FSC) and Sustainable Forestry Initiative (SFI) recognize when a landowner or business complies with benchmarks that signify responsible forest management.  Tree farmers and businesses seek “certification” from these groups to preserve their property and sell “green” goods in the market.  Numerous studies and testimony from land managers and conservationists support all three systems as beneficial to the environment.  However, environmental activists continue to pressure private companies and government officials nationwide to favor FSC over the other two programs, which themselves certify tens of millions more acres of forests in America than FSC.

Specifically, the U.S. Green Building Council’s (USGBC) LEED system only defines FSC-certified wood as sustainable.  As a result, SFI or ATFS timber cannot enter LEED projects, of which there are more than 13,000 nationwide.  The USGBC is nominally a nonprofit organization, but local, state and federal agencies accept its guidelines without question, and mandate them in building projects.

The National Legal Policy Center underscored the wrongheadedness of that framework in a recent white paper entitled “The Ethics of Forest Certification: When Unintended Consequences Result.” The paper explains the anti-competitive nature of the LEED system, and how it forces taxpayer dollars to finance projects to benefit a private organization – FSC – over its competitors.  Additionally, the paper questions whether consumers get a “bang for their buck” when they pay price premiums in excess of 15% for FSC wood.  These questions occur due to documentation of “clear-cuts” of forests on FSC-certified land overseas, and the fact that FSC recognizes 90% of its forests in countries outside the U.S. – many of them with lower environmental standards.

The American Consumer Institute published another study, “Comparing Forest Certification Standards in the U.S.,” which highlights how the actual practices of certification programs in the U.S. do not always match public perceptions.  The study shows auditors for FSC readily acknowledging discrepancies between FSC’s implementation on the ground, and how land managers and FSC differ on common definitions for forestry terms.   This confusion leads to companies “leaving clumps of unmerchantable trees in scattered areas, usually in riparian areas, draws and inaccessible corners” on FSC property in the southern U.S.”

Given the anti-competitive nature of the current LEED rating system, the negligible environmental benefits of an FSC-only regime and the misinformation resulting from these frameworks, the time is long overdue to support a level playing field that allows all certification programs to compete equally among consumers, businesses and foresters.

A freer market would be a better market.

In an interview with CFIF, Richard Trzupek, a chemist, consultant and writer who has worked in the environmental industry for decades, discusses his recently released Encounter Broadside titled, “How the EPA’s Green Tyranny is Stifling America.”

Listen to the interview here.

While congressional investigators continue to probe into whether the Obama Administration broke federal laws in awarding a $535 million loan to now-bankrupt Solyndra, the Wall Street Journal details how crony capitalism prolonged a series of bad decisions by the solar company’s management.

Here’s the money paragraph:

In mid-2009, Solyndra had a choice: It could hunker down with its existing factory and try to slash costs to meet competition, drawing on additional private capital as needed, according to the people familiar with the company. Or, with a loan from Uncle Sam, it could gamble and build a brand-new, bigger factory in a bid to gain economies of scale and dominate the market.

Choosing to gamble, Solyndra overbuilt its manufacturing capacity, and continued rushing to market a product that was not marketed – or priced – correctly.

As the WSJ article makes clear, not all of Solyndra’s problems were the result of inept management.  An unexpected drop in the price of a competing product turned Solyndra’s profitability upside down.  The market was sending Solyndra’s management a message to rethink their strategies.  The Obama Administration bypassed that all-important-process with huge amounts of money to continue pursuing failure.

Come to think of it, that pretty much sums up the president’s thinking when it comes to government spending.  No wonder his new jobs plan is dead on arrival.

Few things represent American ingenuity more than the incandescent light bulb.  Painstakingly created by Thomas Edison in the late 19th century, it also represents the more universal concepts of hard work, persistence, creativity and the life-improving contributions of private entrepreneurs.

But Edison’s marvel is being relegated to anachronism status in our brave new world of hyper-regulatory big government.

This week in Winchester, Virginia, General Electric ceased operations at its last incandescent lightbulb factory.  Under new nanny-state energy regulations, incandescent lightbulbs will be prohibited and replaced by compact florescent bulbs whose unflattering light makes for an ugly, sinister symbol of the nitpicking green movement.  Most of those florescent bulbs are manufactured overseas, by the way, but that’s also of little concern to righteous green crusaders.

Question:  Anyone else get that sneaking suspicion that famed energy hypocrite Al Gore is hastily stockpiling incandescent bulbs at his various compounds as we speak?