The Gap-Filling Role of Private Environmental Governance

Abstract

Private environmental governance provides new tools that can fill gaps in government regulatory regimes. The Tennessee Valley Authority (TVA) is a valuable case study for testing the efficacy of private environmental governance because it is one of the largest utility carbon emitters and is largely insulated from near-term federal and state government pressure to reduce emissions. TVA is not on a trajectory to achieve the decarbonization targets necessary to meet the goals of the Paris Agreement, but private governance initiatives can motivate TVA to accelerate its decarbonization process. TVA's securities filings acknowledge that it faces material threats on the energy supply side from distributed generation and customer preferences for renewable energy, and on the energy demand side from efficiency and conservation. Private governance initiatives could address the supply side by inducing large corporate and institutional customers, bondholders, and households to press for decarbonization of TVA's generation assets. On the demand side, private initiatives could motivate action by offering TVA accelerated electrification of motor vehicle fleets and buildings in return for accelerated decarbonization of TVA's generation assets. The Article concludes that these private governance options are not a panacea, but they have the potential to fill an important gap in public climate governance and pose little risk of displacing more effective government action. The TVA example also demonstrates the wide range of private governance options that are available to motivate emissions reductions by other difficult-to-regulate emissions sources.