Nudges on the House Floor

Two things I’d hoped to write about this quarter are HB 2412 (the “Buy Clean Washington Act”) and Thaler and Sunstein’s “Nudges.” I watched the hearings and read the bill and substitute for HB 2412, and wonder how Nudges might have come into play, both in conversation on the House Floor, and in the bill’s revision (which included dramatic shifts from the original language).

As an overview, HB 2412 is not so much about buying clean things from Washington, but about accounting for clean projects in Washington. HB 2412 initially required all WA State Public Infrastructure Projects to account for the emissions embodied in some materials used for their construction (e.g. wood, concrete, steel) and to select only materials whose emissions are below recommended levels for their category. This is important because embodied emissions have as much impact on our ability to reach climate change goals as operational energy. Even if we approach net-zero operations, at current rates of construction, embodied emissions from new construction materials will likely prevent reversal of climate change.

The primary obstacle to this bill is tied to status-quo bias. Life Cycle Assessment (LCA), the process for emissions accounting, takes a level of initiative that many materials manufacturers have yet to demonstrate. HB 2412 requires that state infrastructure projects use only materials that have gone this process, and lobbyists showed up in force. To qualify their products, manufacturers would have to hire a verified 3rd party to calculate the emissions embodied in each of their products, establishing Environmental Product Declaration (EPD) labels for each. Meanwhile, someone working for the State would need to be aware of Product Category Rules (PCR’s) for each material they elect to use, so that they could select products whose EPD’s comply with the maximum allowed PCR allowable for that material type. The learning curve for LCA is steeper and more time-intensive to engage than an acronym-filled paragraph, and in reality, many manufacturers just don’t want to do it.

Anchoring and availability heuristics contributed to the idea that EPD acquisition is burdensome.  At HB 2412’s initial hearing, a National Ready-mix Concrete Association lobbyist claimed that there were “just too many” different mixes that there is “no way” to keep track of them. This generalization was later contradicted by an architect who testified that their firm had elected to use only products with EPD’s on one single project, and as a result, dozens of materials manufacturers established EPD’s to make their products eligible for use. While it is fully possible for companies to participate in an LCA process when incentivized to do so, the idea that calculation is “too hard” seemed easier for many Representatives to accept. Availability heuristics may have influenced industry-sympathetic Representatives to avoid the risk of placing unnecessary burden on WA businesses.

The conversation above veiled underlying obstacles to EPD-based materials vetting, including the need for manufacturers to better track and standardize their products in the first place so that those products could be evaluated, and the need for manufacturers to improve their manufacturing efficiency to reduce ecological impacts. These topics were avoided by both sides. I suspect that those sponsoring the bill may have let this avoidance happen, leveraging anchoring and availability heuristics in their favor to present the bill as one that will help WA business. Statements were made to the effect of: “Washington has the cleanest companies around; they should be rewarded for this effort, yet instead our public infrastructure projects are importing materials from China.” In reality, some products coming from China will remain quite competitive if EPD’s are established, because opportunity for efficiency gain in some materials is highest in production, rather than in shipping. This means that WA companies will have to improve their production efficiency to be competitive in addition to undergoing LCA, but this was not discussed.

The representative heuristic both hampered HB 2412 and allowed the substitute bill to pass. Those who disagree with projections about climate change and feel that environmental concerns are hypothetical were not convinced. Those same parties, however, were willing believe that a sustainability bill would favor WA business, based on projections about the green market being “hot” and the idea that US manufacturers are just more “innovative.” Ultimately, those some Representatives who were not convinced about climate change were convinced that Washington’s companies might benefit from sustainability incentives. The bill’s sponsors seemed aware of this “in,” as the eventual substitute bill was stricken of all language related to climate change;  this was replaced with language about helping WA business.

Herd mentality was harder for sponsors to garner; all parties needed more information before anyone would get on the bandwagon. Those already concerned about climate change needed to understand the relevance of embodied carbon, and those concerned about Washington business needed to see that potential for regional profits and benefits to worker health. All wanted to see the bill working in California, as well as case studies here, before getting on board, and the substitute bill was reduced to apply to a few test-projects. After changes in language and scope, accompanied by a robust bipartisan conversation, the substitute bill “be substituted” and “do pass” (why do they still use this kind of language?). Although the HB 2412 has since been tabled, I was impressed to see educated dialogue from many perspectives around this initiative. Hopefully the nudges above will apply in a more informed way the next time such a proposal comes around.

 

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