President Biden Outlines Comprehensive Plan for Federal Sustainability | Latham & Watkins LLP


The president’s executive order aims to use the US government’s procurement power to achieve “carbon pollution-free electricity” by 2030 and net zero emissions by 2050.

On December 8, 2021, President Biden issued an Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability (EO), which aims to set the federal government — the largest purchaser in the country with an annual purchasing power of $650 billion — on a path to net zero emissions by 2050. The EO establishes the following policies as part of a whole-of-government strategy.

  • The federal government must use 100% carbon pollution-free electricity on a net annual basis by 2030, including 50% “24/7 carbon pollution-free electricity”: The EO defines “carbon pollution-free electricity” to include “electrical energy produced from resources that generate no carbon emissions,” such as solar, wind, and green hydrogen, as well as energy generated from fossil resources if “there is active capture and storage of carbon dioxide emissions that meets EPA requirements.” This electricity must include “24/7 carbon pollution-free electricity” that matches “actual electricity consumption on an hourly basis” and is “produced within the same regional grid where the energy is consumed.” Thus, “24/7 carbon pollution-free electricity” requires that energy generation matches consumption, such as through storage capacity or sources other than wind or solar. To promote this policy, the EO also requires that federal agencies develop carbon pollution-free electricity generation and energy storage capacity on their real property assets. This directive raises the possibility of a greater opening of government land — in particular military bases — for renewable energy projects.
  • A 65% reduction in scope 1 and 2 greenhouse gas emissions from federal operations by 2030 from 2008 levels: To meet these targets, the EO requires agencies to, among other things, pursue building electrification strategies, procure carbon pollution-free energy, and use performance contracting to reduce emissions. The EO incorporates the definitions of scope 1 and scope 2 greenhouse gas emissions from the Council on Environmental Quality Federal Greenhouse Gas Accounting and Reporting Guidance (Guidance).
    1. Scope 1 emissions result primarily from certain “activities [] owned or controlled by the reporting agency,” including emissions from the “combustion of fuels in stationary sources,” “mobile combustion sources” such as federal fleet vehicles, fugitive emissions, and process emissions.
    2. Scope 2 emissions are “associated with consumption of purchased or acquired electricity, steam, heating, or cooling” and “are a consequence of activities that take place within the organizational boundaries of the reporting agency, but the emission releases physically occur at the facility where the electricity, steam, heating, and/or cooling is generated.”
  • 100% zero emission vehicle acquisitions by 2035, including 100% zero emission light-duty vehicle acquisitions by 2027: Each federal agency must develop and annually update a zero emission fleet strategy to optimize fleet size and composition, deploy zero emission vehicle refueling infrastructure, and maximize acquisition and deployment of zero emission light-, medium-, and heavy-duty vehicles.
  • A net zero emissions building portfolio by 2045, including a 50% emissions reduction by 2032: To reach these targets, the EO directs federal agencies to prioritize improving energy efficiency and eliminating “onsite fossil fuel use” in new construction, renovations, and retrofits. The EO also requires that larger construction and modernization projects — those greater than 25,000 gross square feet — must be designed to be net zero by 2030, but does not provide a definition of “net zero.”
  • Net zero emissions from federal procurement, including a “Buy Clean” policy to promote use of construction materials with lower embodied emissions: The EO requires federal agencies to consider contractor emissions and embodied emissions (e.g., the life-cycle emissions associated with producing materials) and develop procurement strategies to reduce both in products acquired or used in federal projects. Additionally, the Administrator of the General Services Administration must track greenhouse gas emissions, emissions reduction targets, climate risk, and other sustainability-related disclosures by major federal suppliers. This requirement furthers the EO’s general directive that agencies reduce Scope 3 emissions — e.g., those that “are a consequence of the agency’s activities but are released from sources outside its organizational boundary.” The EO also creates a “Buy Clean Task Force” to expand consideration of embodied emissions in federal procurement and federally funded projects. Notably, concrete and steel are identified as materials to consider prioritizing under a “Buy Clean” policy. The specific mention of concrete and steel could represent an attempt to nudge these industries towards developing less carbon-intensive production methods, such as green hydrogen.
  • Climate resilient infrastructure and operations: The EO identifies steps that each federal agency must take to promote climate resiliency, including developing policies to promote climate resilient investment, conducting climate adaptation analysis and climate-informed financial and management decisions, reforming agency policies and funding programs that increase vulnerability to climate risks, and developing tools to assess climate change impacts and support climate adaptation planning and implementation.
  • A climate- and sustainability-focused federal workforce: The EO recognizes the importance of workforce culture in meeting ambitious goals. To that end, the EO directs federal agencies to expand employees’ sustainability and climate education and training and incorporate sustainability into performance plans. The EO also reestablishes the role of a Federal Chief Sustainability Officer to lead the development of policies, programs, and partnerships to achieve the EO’s policies.

Consistent with other recent executive orders from the Biden Administration, the EO places a strong focus on environmental justice as well as a “just transition” toward cleaner energy. The EO also identifies growing domestic industry, creating well-paying union jobs, and improving public health as key policies of the government’s energy transition.

Despite the apparent expansive sweep of the EO, it contains exemptions for (1) certain activities, personnel, and facilities “in the interest of national security,” and (2) vehicles and equipment used in combat support, military operations, or training. The EO also includes a process for agency heads to request exemptions for any other reason.

While the EO establishes targets and goals, many of the implementing details are to be developed by federal agencies:

  • Each federal agency is required to set targets for reducing greenhouse gas emissions, transitioning to 100% carbon pollution-free electricity, shifting to a zero-emission fleet, achieving net zero emissions facilities, and increasing energy and water efficiency. These targets must be incorporated into performance management systems.
  • Within 30 days of the date of the EO — by January 7, 2022 — agencies must designate an “Agency Chief Sustainability Officer.”
  • “Principal agencies” must develop and implement annual “Sustainability Plans” that describe actions and progress toward achieving the EO’s goals.[1]
  • The Director of the Office of Management and Budget, in coordination with the Chair of the Council on Environmental Quality and the National Climate Advisor, must issue a memorandum providing direction to agencies on immediate actions and further requirements to meet the EO’s policies and goals.
  • The Chair of the Council on Environmental Quality, in consultation with the Director of the Office of Management and Budget, must (1) issue building performance standards to support achievement of net zero emissions in the federal building portfolio; (2) consider issuing guidance for agencies to promote sustainable locations of federal facilities; and (3) within 120 days of the date of the EO — by April 7, 2022 — issue implementing guidance for agencies that provides directions, strategies, and recommended actions to meet the EO’s policies and goals.

A number of the EO’s policies dovetail with components of the recent Infrastructure Investment and Jobs Act, including promoting a nationwide transition to electric vehicles, upgrading and increasing resiliency of the country’s power and transportation infrastructure, expanding clean energy generation and storage, and transitioning to a zero emissions future. This overlap further emphasizes the importance of these issues to the Biden Administration and indicates that climate and sustainability will continue to remain a focal point in executive policy.

Endnote

[1] The EO defines “principal agencies” as the Departments of State, the Treasury, Defense (including the Army Corps of Engineers), Justice, the Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, and Homeland Security; the Small Business Administration, the Social Security Administration, the National Aeronautics and Space Administration, the Office of Personnel Management, the General Services Administration, and the National Archives and Records Administration.



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