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Path to Biden’s Green Buying Pledge Runs Through Obama Policies

Jan. 21, 2021, 10:01 AM

President Joe Biden‘s most potent weapon for making climate change a priority for companies and federal officials may already be in his arsenal as chief executive: the country’s roughly $600 billion annual procurement budget.

He took strides toward setting environmental restrictions on how officials spend that budget before he took office, including in a December speech when he said his administration would “harness the purchasing power of our federal government” to buy American-made electric cars. He committed in his campaign platform that the federal government would focus on buying energy-efficient batteries and that every federal infrastructure investment would consider climate change.

He could also revive some of former boss Barack Obama’s executive orders to consider environmental impact when shopping for a range of supplies and services, from landscaping and toner cartridges to government construction.

But to go beyond that, Biden would likely have to deploy the trickier option of requiring businesses that call the U.S. government a customer to reduce their own greenhouse gas emissions. When the Obama administration in 2016 proposed a rule requiring bidders to say if they reported statistics on their emissions — without actually requiring disclosure — companies protested that they would be forced to disclose trade secrets and set themselves up for bid protests.

And major changes to how agencies across the executive branch spend their money would probably have to pass detailed cost-benefit analyses from the White House.

“When you contemplate doing something that is that politically fraught, you have to get something out of it that’s worthwhile,” said John Conger, who oversaw environmental policy at the Defense Department during the Obama administration.

Defense Climate Contribution

The Pentagon is a huge potential target for Biden’s climate efforts as the government’s biggest spender on contracts — $446.5 billion in fiscal 2020, according to a Bloomberg Government analysis — and its largest carbon dioxide emitter.

Fuel used to power the department’s fighter jets and tankers produce the bulk of the agency’s emissions.

The Air Force, which accounts for roughly half of the fuel consumed by the department, qualified most of its planes, such as the F-15, to use synthetic fuel at the beginning of the Obama administration, said Gen. Herbert “Hawk” Carlisle, who worked on operations at Air Force headquarters in D.C. at the time. In the Navy, officials approached the switch by requiring that any alternative fuel be “drop-in” — that the engines wouldn’t need an adjustment, Ray Mabus, Obama’s secretary of the Navy, said in an interview.

The tough part, Carlisle said, was finding companies willing to produce enough synthetic fuels to meet the department’s needs around the world, at a profit, and still keep the price reasonable for the agency. A 2012 Navy purchase of a $12 million biofuel mix, bought to test out on warships, drew the ire of Republican lawmakers who said that the test fuels were too expensive.

Companies that compete for business will want a guarantee that if they invest in building a new product, such as synthetic fuels, the government will buy it. Biden’s Defense Department could offer long-term contracts for companies to produce environmentally-friendly fuel or help pay for the facilities to produce it to lure companies to make the fuel the military needs, Carlisle said.

The commercial aviation industry also plays a role in what’s available for the agency to buy. U.S. airlines have invested billions of dollars in recent years on new aircraft and technology that decrease emissions, and that spending trend can spill over into manufacturers, such as Boeing Co. and Airbus SE, that also do business with the Defense Department. The Air Force’s larger aircraft sometimes use the same engines as commercial airlines, Carlisle said.

Beyond Defense

Another arena for Biden’s climate efforts would be the General Services Administration, the procurement arm of the federal government.

The agency owns more than 221,000 vehicles used by over 75 federal agencies, a prime opportunity for Biden to execute on his promise to buy electric cars. Its fleet is comparable in size to those of companies such as FedEx Corp. or United Parcel Service Inc.

The GSA also helps agencies comply with federal acquisition rules, which already include environmental requirements, such as that government agencies should generally buy energy-efficient light bulbs or refrigerators. Biden’s federal agencies can also structure their contractor selection so that companies that meet certain environmental standards are evaluated more favorably, said Kendra Perkins Norwood, a partner who specializes in government contracts at Wiley Rein LLP.

Under Obama, the council that governs contracting regulations added a provision to its rules directing companies who do business with the federal government to avoid items with hydrofluorocarbons, a potent greenhouse gas, when possible.

That rule, still active, is cited in hundreds of solicitations for government contracts large and small. A help-wanted notice for landscapers to cut the grass at the U.S. Embassy in Jordan required that the gardeners avoid hydrofluorocarbons. When the Defense Information Systems Agency put out a call in December for an estimated $11.7 billion worth of cybersecurity services, the advertisement included a similar requirement.

The hydroflurocarbons rule is still active because it went through a tricky and lengthy regulatory process that makes it more difficult for future presidents to undo. That type of top-level regulatory change is typically spearheaded by the White House office in charge of government-wide procurement regulations. Biden hasn’t yet picked someone to lead that office in his administration or offered specifics for how he would revise contracting regulations to consider climate.

Popular, Not Easy

A progressive think tank’s poll of likely voters published last month found that 69 percent back green procurement, including 53 percent of people identifying as Republicans.

“When the government leads the way on clean energy procurement, it smooths the road for everyone else to follow,” said Johanna Neumann, Environment America’s senior director for Environment America’s Campaign for 100% Renewable Energy.

But popularity won’t make it easy.

If Biden does direct work on new contracting regulations, it takes about 18 months from a president’s order to finalize a rule that companies have to follow, said Joe Jordan, who led the White House procurement office under Obama. Regulation writers will need to strike a balance between what the Biden administration wants and what companies and their suppliers are willing — or able — to achieve.

“Even if everybody was on board with this, it’s going to be hard,” Jordan said.

To contact the reporter on this story: Courtney Rozen in Washington at crozen@bgov.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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