Materiality is a critical component in identifying the statutory limitations of the SEC’s regulatory authority. For the SEC to continue to pretend that its proposed emissions disclosures are material information for investors means that these disclosures are doomed to be vacated by the D.C. Circuit Court of Appeals. It makes no sense for the SEC to take this approach.
The most fundamental problem with McGillis’s article, however, is that the author largely fails to consider the question of cost in comparing and contrasting energy sources. He recognizes the importance of cheap electricity in the context of non-renewable energy sources, lauding the market’s “displacement of coal by lower-cost natural gas.” He further recognizes that when “markets fail to account for polluting emissions, it may be appropriate to accept a cost trade-off and implement a framework to account for them.” But in his thesis that a pivot to a cleaner energy economy would “introduce certain new energy-security vulnerabilities” vis-à-vis China, McGillis ignores the abundant cost benefits of renewables altogether. That’s a rather important omission — for energy economics and energy security are largely inseparable from one another. Different energy sources have very different price points, for example, and thus the makeup of our energy mix has a considerable influence on how much residential, commercial, and industrial customers pay for electricity. This has downstream effects, impacting everything from production costs to inflation to disposable household income. Reliance on expensive energy sources, then — as well as a lack of access to cheap alternatives — represents a significant energy-security vulnerability.