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In the first two weeks of his presidency, President Biden has signed a wave of ground-breaking executive orders, signaling sweeping commitment to climate action, job creation, and environmental justice, with a foundation built to drive immediate and visible impact. The Biden administration is taking swift action in the spheres it can best influence: the federal government. His early policies signal serious commitment to take far-reaching action at home and abroad, including rejoining the Paris Agreement, putting climate at the heart of government procurement, national security, international diplomacy and engagement, domestic infrastructure planning, and COVID economic recovery activities.
In this article, we’ll dive into three specific areas of the climate change executive order: federal government spending provisions, clean energy targets and vehicle electrification goals.
Here’s what leaders need to know:
Climate impacts will be firmly embedded as a criterion for federal procurement and spending decisions, as well as serve as the north star for reviewing and revising the policies of the previous administrations across federal agencies. To be awarded a government contract, operate on federal land, or receive federal grants or incentives, organizations will now need to comply with far more rigorous criteria that accounts for the external societal damages associated with greenhouse gas emissions, known as the Social Cost of Carbon, Methane and Nitrous Oxide, a key measure to price carbon and level the playing field for low carbon technologies.
These executive orders, combined with the new spending authorized in the Energy Act of 2020, will direct billions of federal dollars to advancing greenhouse gas reduction technologies, practices and business transformation.
Companies that have assessed their decarbonization options and conducted early-stage feasibility assessments on low- and zero-carbon technology deployment opportunities across their operations will be best positioned to compete for the billions of federal dollars that are being allocated to the low carbon economic transition.
President Biden has now formalized his campaign goal to reach 100 percent clean electricity by 2035, leveraging the procurement authorities of the federal government. Decarbonizing the U.S. power sector will be a huge undertaking—about 63% of U.S. electricity generation was from fossil fuels in 2019, according to the U.S. Energy Information Administration—and likely require additional Congressional action. The federal government investment in the modernization of the electricity grid will enable a more resilient, lower carbon, and lower cost electricity system that will offer a net benefit to the economy at large and to organizations with ambitious decarbonization goals. To facilitate this transition, the executive orders include a range of new mandates, incentives, and investment in energy infrastructure, as President Biden seeks to directly link economic recovery efforts with green infrastructure to fuel sustainable growth. This includes an historic mandate to end fossil fuel subsidies by the federal government with a goal of zero federal fossil fuel subsidies included in the federal budget by fiscal year 2022; an unprecedented and enormously impactful step that is likely to have almost immediate market impacts.
To ease the transition, the Biden administration will include significant investment in supporting a “just transition” for communities left behind by the declining profitability of the fossil fuel industry and significantly increase investment in helping American companies accelerate the adoption of new, zero carbon energy sources and technologies and provide good paying union jobs. Areas targeted for investment, R&D and scaled grant support include renewable energy, green hydrogen, grid modernization, energy storage, and carbon, capture, utilization and sequestration (CCUS).
Whether driven by regulation or pure economics, it’s now clear that those organizations still reliant on fossil fuels must reassess and rapidly accelerate decarbonizing their core business. Overall, businesses that move quickly to implement energy efficiency measures and reduce their reliance on fossil fuels for their ongoing operations will be best positioned to navigate, and even benefit from, what will almost certainly be a rapidly evolving regulatory landscape in the coming four years. For companies who rely on fossil fuel inputs and are not readily decarbonized (heavy industry, mining, etc), consider beginning evaluation of aggressive energy efficiency and feasibility analysis of deploying green hydrogen, carbon capture, storage and utilization or permanent sequestration (CCUS) and other technologies that enable continued, zero carbon operations.
President Biden’s executive order instructs agencies to use the procurement authority to achieve clean and zero-emission vehicles. The U.S. federal government maintains a fleet of 645,000 vehicles today. The potential to electrify hundreds of thousands of vehicles is significant on its own, but the foundation built to support it will extend the impact beyond the walls of the federal government. While electrifying the federal fleet will certainly be a challenge, we know from experience that presidential leadership will enable agencies, including the General Services Administration, to begin aggressive planning towards that goal. As those plans emerge, we anticipate notable advancements in infrastructure, fleet management software platforms, and R&D for medium- and heavy-duty vehicles not yet viable at commercial scale. Furthermore, President Biden’s recent executive order directs agencies to support the transition of state, local, and tribal government fleets to zero emissions, which will accelerate actions already underway to decarbonize transit and school bus fleets across the country.
The accelerated effort on the executive level is paving the way for parallel enthusiasm on Capitol Hill to roll out more ambitious vehicle electrification incentives. A wide range of legislative proposals have already been presented to support the adoption of electric buses, national expansion of electric vehicle charging infrastructure, and increased deployment of electric vehicle charging infrastructure in low-income communities and communities of color. The growing and synergistic push for transportation electrification by both the Biden administration and Congress will respond to, and continue to be influenced by, numerous calls from private and public organizations across the country to devote more federal funding for EVs, such as the $150 billion stimulus proposal by the Transportation Electrification Partnership.
Corporations, cities and communities should move quickly to capitalize on the increasing pool of federal funds that will soon become available. Transportation electrification can be complex, requiring careful planning to understand the ecosystem of electric vehicles, charging hardware and software, and interaction with the grid or energy supply. Private and public entities should move quickly to set concrete targets, design detailed blueprints and identify the optimal mix of clean mobility technologies and services that best fit their needs. Doing so will reveal funding gaps, enabling them to seek federal funds for infrastructure deployment once they become available.
With ambitious, accelerated action, the Biden administration’s sustainability agenda is signaling the beginning of a new, green era, evolving the calculus on the speed, pace and scale of the low-carbon transition for organizations in both the public and private sectors. Leaders must now deeply understand the energy and climate aspects of their organization and operations and consider their business models. Business and government leaders should consider the impact of these impending regulatory changes, position their companies to identify and seize new market opportunities, and address key risks as they establish a path forward. Wherever your company is on its sustainability transformation, the new policies and regulations signed in the first weeks of this administration signal the dawning of a new, low-carbon day in America.
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