Disclosure of Carbon Emissions Spurs Business Creation

How US emissions disclosure rules created unexpected business opportunities

A decade-old American reporting program has done more than reduce pollution. Research from Yale School of Management shows it has created surprising opportunities for new businesses in industries previously dominated by large incumbents. However, proposed changes from the Environmental Protection Agency could soon eliminate these effects.

The Greenhouse Gas Reporting Program requires large facilities to disclose their emissions publicly. Researchers studying county-level business formation data discovered two ways this transparency helped entrepreneurs. First, public scrutiny pushed existing polluters to cut production. Second, the disclosed data revealed proprietary manufacturing processes, showing newcomers where market gaps existed.

Now the EPA wants to eliminate most of this reporting. The proposal would affect 46 of 47 source categories and suspend petroleum reporting until 2034. Industry groups, think tanks, and business associations warn this could fragment standards, raise compliance costs, and jeopardize billions in tax credits tied to verified emissions data.

The reporting program and how it changed behaviour

The EPA established the Greenhouse Gas Reporting Program in 2010. Facilities emitting over 25,000 metric tons of carbon dioxide equivalent annually must submit yearly reports. This threshold covers carbon dioxide, methane, and several other greenhouse gases.

The program aimed to reduce emissions through transparency. Public disclosure would pressure high-polluting firms through media attention and investor demands. Studies confirm this worked. Companies facing scrutiny invested in cleaner technology and reduced output to avoid negative publicity.

Yale researchers Raphael Duguay, Chenchen Li, and X. Frank Zhang analyzed what happened next. They examined business formation patterns after 2010 and found something regulators had not anticipated. New businesses formed at higher rates in counties with facilities subject to reporting requirements.

The mechanism worked in two ways. Incumbents reduced production in response to public pressure, which raised prices and created space for market entrants. Meanwhile, the disclosed emissions data contained valuable competitive intelligence. Chemical equations are fixed, so knowing what pollutants a facility releases reveals details about its production process.

Professor Duguay explained the research approach: “What we do as researchers is look into the unobvious consequences of regulation. Whatever the intended goal of a regulation, we are curious about outcomes that the policymaker or regulator perhaps didn’t anticipate.”

The findings showed genuine business creation, not just reshuffling of existing firms. Consequently, the program delivered environmental benefits while simultaneously encouraging entrepreneurship in regulated industries. Nevertheless, the researchers noted a potential offset. New entrants may pollute during growth phases, which could partially negate emissions reductions from incumbents.

The proposed EPA rollback and industry response

On 12 September 2025, the EPA proposed sweeping changes to the reporting program. The agency wants to eliminate permanent reporting for 46 of 47 source categories. Petroleum and natural gas systems would face suspended reporting until 2034. The EPA estimates this would save $303 million annually, totaling $2.4 billion by 2033.

The agency frames this as regulatory relief under the Trump administration. Officials argue most reporting requirements lack statutory mandate. Therefore, eliminating them reduces burden on American businesses without legal consequence.

Industry response has been overwhelmingly negative. Business Roundtable, representing major American corporations, warns the rollback would create “piecemeal, duplicative” reporting across states and international jurisdictions. Many companies have already invested in monitoring infrastructure. Switching to multiple fragmented systems would cost more than continuing the federal program.

Tax credit concerns dominate much of the opposition. Several valuable incentives rely on verified emissions data from the reporting program. The 45Q credit for carbon sequestration, 45V for clean hydrogen, and 45Z for clean fuels all depend on accurate measurements. Without federal reporting standards, companies may struggle to claim these credits or face higher verification costs.

Think tanks and policy groups emphasize broader economic risks. The Center for Strategic and International Studies analysis highlights how weakened data undermines risk assessment across the economy. Capital costs rise when investors lack reliable emissions information. Meanwhile, US producers lose competitive advantages in global markets increasingly focused on carbon transparency.

The Center for Climate and Energy Solutions stated: “Weakening the GHGRP would erode the transparency that gives U.S. producers their competitive edge.” Global buyers want verified emissions data for their supply chains. American companies with robust reporting can demonstrate lower carbon intensity than competitors. This rollback eliminates that advantage.

As of early 2026, the EPA plans to finalize its rule by mid-2026. No final decision has been issued. Public comment periods revealed significant opposition from both environmental groups and business interests, creating an unusual coalition defending the program.

What this means for UK businesses with US operations or supply chains

British companies operating American facilities or sourcing from US suppliers face potential complications. Currently, the reporting program provides standardized emissions data across your supply chain. If the EPA proceeds, you may need to gather this information through multiple state-level systems or private verification services.

Supply chain transparency requirements continue to grow in the UK and EU. Your business may need verified emissions data from American suppliers to meet domestic compliance obligations. The proposed rollback could make this harder and more expensive to obtain. Some US suppliers might stop collecting detailed emissions data altogether without federal requirements.

Companies claiming UK tax relief or participating in government procurement should pay particular attention. Carbon reporting quality affects tender scores and subsidy eligibility. If your carbon footprint calculations rely on US supply chain data, you need confidence in those numbers. Fragmented American reporting standards could introduce uncertainty into your compliance documentation.

Financial implications extend beyond compliance. Investors increasingly demand emissions transparency before committing capital. The Yale research demonstrates that pollution disclosure creates market discipline and business opportunities. Weakening these standards could affect how investors perceive risk in American markets and supply chains.

Currency and trade considerations also matter. If the rollback increases costs for US suppliers navigating multiple state systems, those expenses may appear in your invoices. Alternatively, suppliers might reduce monitoring rigor, which shifts verification burden and liability to you as the buyer.

Core facts about the reporting program and proposed changes

• The Greenhouse Gas Reporting Program launched in 2010 and covers facilities emitting over 25,000 metric tons of CO2 equivalent annually.
• Yale research found the program unexpectedly increased new business formation by reducing incumbent production and revealing proprietary manufacturing processes through disclosed emissions data.
• The EPA proposed eliminating reporting for 46 of 47 source categories in September 2025, with potential savings of $303 million per year.
• Business Roundtable and other industry groups oppose the rollback, warning that fragmented state and international reporting would cost more than the current federal system.
• Several billion-dollar tax credits for carbon sequestration, clean hydrogen, and clean fuels rely on verified emissions data from the program.
• The EPA plans to finalize its decision by mid-2026, with no final rule issued as of early 2026.
• Opposition spans environmental groups and business interests, creating an unusual coalition defending the program’s economic and competitive value.

Strategic considerations for emissions reporting and compliance

The debate around this American program highlights a broader principle. Emissions transparency creates value beyond regulatory compliance. The Yale findings show how disclosure disciplines incumbents and enables new entrants. Meanwhile, industry opposition to rollback reveals how businesses rely on standardized data for investment decisions, tax planning, and market positioning.

UK businesses should consider whether their carbon reporting infrastructure could survive fragmented standards. Many companies have built processes around consistent data collection and verification. If your American operations or supply chain partners face changing requirements, you need systems flexible enough to adapt without compromising data quality.

The connection between reporting and tax incentives deserves attention. Both the US and UK offer credits tied to verified emissions reductions. Robust measurement systems protect these financial benefits. Companies claiming relief need audit-grade documentation. Any gaps in your data chain, particularly from international operations, create risk during reviews.

Supply chain mapping becomes more important as standards fragment. You should identify which suppliers fall under current reporting requirements and what would change if those requirements disappear. Some may continue voluntary reporting. Others might reduce monitoring to save costs. Understanding this variation helps you manage compliance risk and evaluate alternative suppliers if needed.

The program demonstrates how environmental regulation can support business formation and competition. Transparency reduces information asymmetry between incumbents and potential entrants. Public emissions data helps entrepreneurs identify inefficient markets and develop cleaner alternatives. Policymakers designing UK regulations might learn from these unintended positive effects.

Looking ahead, global supply chains increasingly demand verified emissions data regardless of domestic regulations. Major buyers in Europe and Asia require carbon transparency from suppliers. Even if American federal reporting weakens, market forces may sustain disclosure through private standards and customer demands. British businesses should prepare for a landscape where verification comes from multiple sources rather than unified government programs.

Further reading

The EPA Greenhouse Gas Reporting Program website provides current requirements, reporting tools, and datasets for facilities across the United States. You can search disclosed emissions by facility, location, or industry sector.

For UK-specific guidance on carbon reporting and compliance requirements, the UK government’s energy and climate change transparency resources explain mandatory reporting standards for British companies.

The Yale School of Management research on business formation effects offers detailed analysis of how emissions disclosure influences entrepreneurship and market competition.

If your business needs support with carbon reporting, supply chain emissions mapping, or compliance with UK net-zero requirements, structured programs can help you build robust measurement systems that work across multiple jurisdictions. Similarly, sustainable procurement frameworks provide methods for evaluating supplier emissions data quality and managing supply chain transparency risks.