Biden wants industry to fix the climate mess it helped create

Source: By Corbin Hiar, Kelsey Brugger, E&E News • Posted: Thursday, December 8, 2022

DETROIT, MI - NOVEMBER 17: U.S. President Joe Biden speaks at the General Motors Factory ZERO electric vehicle assembly plant on November 17, 2021 in Detroit, Michigan. Biden was in town to tout the benefits of the infrastructure bill he signed two days ago that allocates $1 trillion for, among other things, adding electric vehicle charging stations around the country as companies like GM retool away from the internal combustion engine. (Photo by Nic Antaya/Getty Images)

President Joe Biden speaks Nov. 17, 2021, at the General Motors Factory ZERO electric vehicle assembly plant in Detroit. Nic Antaya/Getty Images

Over the last century, the American economy has been a major driver of climate change. Now President Joe Biden wants to redirect the nation’s industrial strength towards addressing the problem.

Aided by historic climate spending legislation, the Biden administration is attempting to use the federal government’s immense purchasing power to catalyze an economic transformation that would boost domestic industries while effectively eliminating the nation’s planet-warming emissions by 2050.

But the White House can’t buy its way to net-zero emissions, policy experts say. For the president’s clean procurement efforts to have an impact beyond his term in office, he’ll need to get corporations and state and local governments to help drive demand for clean energy, electric vehicles and low-emission building products.

“This guy’s been in politics for a long time and understands how these things work, and so for sure they’re trying to design these policies so that they do have a lasting impact,” said Victor Olgyay, who leads the carbon-free buildings program at the environmental think tank RMI.

“Part of that is ensuring that the private sector recognizes the benefits and incorporates them into their business models,” he said of the green products the president has called for. If the administration can demonstrate the appeal of commodities such as low-emission steel, cement and round-the-clock clean energy to state and corporate leaders, Olgyay said, “it’ll survive beyond the Biden administration.”

Building on the order this week, White House officials issued a new federal standard that requires agencies to cut emissions and electrify appliances in 30 percent of the federal building stock by the end of the decade. The Energy Department issued a companion proposal for new buildings (E&E News PM, Dec. 7).

“This is part of a broader suite of actions that are designed to catalyze this shift in the building sector,” White House climate advisor Ali Zaidi told reporters Wednesday.

Those actions follow last year’s enactment of the bipartisan infrastructure bill, which included billions of dollars for upgrading the electric grid and promoting transit. Then hissustainability plan got a boost in August with the passage of the Inflation Reduction Act, which provides hundreds of billions more to encourage businesses and households to cut their emissions.

The laws are more permanent than Biden’s clean procurement initiatives, which a Republican successor could scrap on their first day in office. But the combined market impacts of the legislative and executive actions would be far more difficult for them to reverse.

Bob Perciasepe, a top EPA official during the Obama administration, suggested momentum behind lower-carbon industrial production is already building: “You need to have a receptive private sector out there,” he said. “And I think they are — more so than they were 10 years ago.”

Following Carter’s lead

Federal spending has long comprised a substantial share of the U.S. economy. It has ranged from nearly 41 percent of gross domestic product at the end of World War II to about 29 percent last year, data from the Federal Reserve Bank of St. Louis shows.

Former President Jimmy Carter was the first U.S. leader who applied that vast market power for environmental ends, according to some scholars.

In May 1977, when Biden was a first-term senator, Carter informed Congress that he’d instructed the General Services Administration “to revise its paper-product specifications to encourage the purchase of more recycled paper.”

But Carter’s encouragement did little to alter the buying habits of federal agencies. By 1992, only 12 percent of paper purchased by the government included significant quantities of recycled materials.

A 1998 executive order from President Bill Clinton eliminated any ambiguity, setting minimum environmental standards for “purchasing or causing the purchase of printing and writing paper.”

Four years later, “98 percent of the 10,000 sheets of paper the government purchases every hour contain at least 30 percent post-consumer content,” E – The Environmental Magazine reported at the time. The order “stabilized market standards” and reduced the cost for recycled paper, which convinced large corporations and private universities to make the switch, the magazine found.

Subsequent administrations have used the federal procurement powers to promote everything from energy-efficient appliances to environmentally friendly cleaning products.

Now Biden is trying to use government buying power to help decarbonize the steel, cement and electric industries.

But the federal government is a relatively minor consumer of certain industrial goods, such as the pliable sheet steel used to make auto bodies.

“Those steel products are going to be driven much more by the needs of our customers in the automotive industry than by government policy,” said Kevin Dempsey, the head of the American Iron and Steel Institute, a trade association.

Corporate help needed

The Biden administration is looking to create demand for lower-emission steel and other products that extends far beyond Washington, experts say. Businesses and state and local governments that are similarly committed to reaching net-zero emissions can help.

“Especially in the tech sector, companies like Microsoft and Salesforce are recognizing that they have a big environmental impact through the purchasing of their materials,” Olgyay said.

By 2030, Microsoft Corp. aims to be carbon negative, meaning it’d offset more carbon than the company and its products emit. Salesforce Inc. aims to hit net zero across its value chain by midcentury.

Microsoft is also one of several tech firms pioneering procurement of round-the-clock clean energy. That would ensure that all the energy that powers its offices, data centers and other facilities come from emission-free sources, even on calm nights when the sun doesn’t shine and the wind doesn’t blow.

The Biden administration is piloting a similar effort with Entergy Arkansas LLC, which the GSA says is one of the top 10 suppliers of electricity to the federal government. Last month, the agency signed a nonbinding agreement to work together on preserving the utility’s existing nuclear fleet and on constructing or acquiring new renewable and carbon-free energy resources.

“Once fully developed and approved, it is anticipated that Entergy Arkansas customers in both the public and private sector will have a cost-competitive and reliable option for [carbon-free electricity] that matches their electricity consumption for all hours of the day,” the GSA said in a press release.

The administration’s goal to purchase only carbon pollution-free electricity by 2030, half of which would be delivered in real time, “is a recognition that the federal government has a role to play … in helping evolve the market to where the grid needs to go, which is clean energy 24/7, every day of the year,” said Misti Groves, Clean Energy Buyers Association’s vice president of market and policy innovation.

States look to ‘Buy Clean’

Another key component of the federal sustainability plan is the Biden administration’s “Buy Clean” initiative, which will prioritize the use of domestically sourced, lower-carbon construction materials in federal procurement and federally funded projects.

While the details for what will qualify as “low carbon” are still being hammered out by federal officials, some states are already moving to prioritize cleaner building materials. For instance, New York Gov. Kathy Hochul last Decembersigned into law a bill to establish “guidelines for the procurement of low embodied carbon concrete.” And California has had a “Buy Clean” law on the books since 2017, although many of its key provisions have only recently begun to take effect.

The actions of large states can reinforce the Biden administration’s message to heavy-emitting industries. Consider California, which is the second-largest cement-producing state in the country, behind Texas. Its eight cement plants together produced 10 million metric tons of cement and emitted 8.2 million metric tons of carbon dioxide in 2017, according to a Blue Green Alliance report.

“We’ve been hard at work on cement and a few other materials, and actually just had a state law passed to fully decarbonize cement and concrete here in California,” said Lauren Sanchez, a senior climate adviser to California Democratic Gov. Gavin Newsom, on Wednesday during an online briefing with the White House. “Our energy and climate agencies are working hard on what that roadmap would look like.”

Aware of the whipsaw pattern of environmental policymaking in Washington, polluting industries closely monitor state action before making major investment decisions.

“If they think something’s going to come, it’s going to be there for a couple of years and then it’s going to go away, that’s going to affect whether or not [businesses] are willing to go with that standard,” said Dianne Rahm, a political science professor at Texas State University who’s studied government procurement.

“If it dribbles down to the state, then it’s more likely to stick,” she added.

Leaders of the cement industry say they’ve heard the carbon-cutting messages coming from elected leaders across the country.

“Decarbonisation for our industry isn’t some pipe dream — this is a reality,” said Rick Bohan, the head of sustainability at the Portland Cement Association, an industry group. “This is going to happen, regardless of the administration.”

The White House Council on Environmental Quality, which is coordinating the federal sustainability plan, declined interview requests and instead sent a written statement.

“The future of construction is clean,” White House Federal Chief Sustainability Officer Andrew Mayock said. Buy Clean and other initiatives are “catalyzing demand for clean construction materials by leading the way for private-sector companies, states and cities,” he said.

“This not only ensures that this change is here to stay, but that we’re also fast-tracking change,” Mayock added. “We will see this momentum in the marketplace toward more climate-friendly products like electric cars or low-carbon steel accelerate in the years to come.”