Ever since the Carbon Reduction Manager (CRM) program was launched in 2007, people have asked me about the U.S. policy for GHG emissions reductions. Until recently, I haven't had a very good answer because the political willpower within our government has not matched the commitments of other governments on this issue. However, on March 19th, 2015, an Executive Order was signed that mandates all federal facilities to reduce their greenhouse gas footprints by 40%. This is a huge commitment because the Executive Branch is possibly the largest real estate owner in the world when you consider all the military installations. This government mandate will certainly create work for communities and contractors that support the bases.
In addition, suppliers to the federal government are also being asked to show similar GHG reduction commitments if they want to continue to do business with the Executive Branch. This is not an “untested” strategy. In 2007, Walmart applied a similar stipulation to its product suppliers, and this single requirement had a very large “upstream” impact in China and in factories throughout the world. This article will review the requirements and describe what this means to you if your facility is impacted, as well as if you are a supplier to federal facility. All in all, this will have a huge impact on many buildings – maybe even yours!
Let’s take a look at the requirements because many “carbon reduction” activities will manifest themselves as “energy reduction” measures. This holds true for this mandate as many of the specific items relate directly to energy and water efficiency improvements. In addition, because this order is active now through the next 10 years, immediate action is required to meet the incremental measurement milestones every two years. If you operate a federal facility, some of the main benchmarks are:
1) 30% of your building’s electricity consumption is required to be from renewable sources by 2025.
2) Federal vehicle fleets must reduce GHG emissions by 30% from 2014 levels.
3) You must reduce energy intensity by 2.5% per year (2015-2025).
4) You must reduce water intensity by 2% per year (2015-2025).
These may sound easy to some readers, but don’t relax, these are aggressive goals because the reductions are relative to more recent baselines (not 1990 baselines). It would be analogous to a situation where you go on a diet and reduce your percent body fat by 10% and then you set a new goal to achieve another 30% reduction – the challenge gets more difficult with every additional percent reduction. Fortunately, the increase in renewable energy generation (which has practically zero GHG emissions once operating) will help everyone make progress on the 40% reduction goal.
In 2010, the Executive Branch began mandatory reporting of its GHG emissions and there was a significant amount of work prescribed for energy managers and especially those that had the CRM certification because some carbon reduction activities can have a 21 times greater impact on GHG savings than energy or CO2 reduction strategies. Now the Executive Branch is requiring GHG savings not only for itself but also for its supply chain. This is much more challenging than just “reporting” emissions. Thus, there will be an even greater demand for skilled professionals. Also – because this is the federal government (which does a lot of performance contracts) – the new PCF certification will help professionals fund many of the energy/carbon/renewable projects.
Make no mistake, this Executive Order will impact your career and it is not alone. This single mandate is mirrored by similar mandates and legislation at state levels. Often called “Lead by Example” bills, they’re establishing clear momentum toward a more energy-efficient and low carbon economy. The good news is that these efforts will reduce energy expenses and waste, and I have seen similar strategies work in other countries over the past 10 years.
Implementing change to comply with the mandate may be painful (like a diet) but will make everyone more cost-competitive in the long run. The government has the luxury of a longer term view than most private companies, and these policy changes show commitment to future success and leadership that is much needed. To meet these mandates, we all will have to think and act differently with respect to energy. As energy management continues to become more valuable, your job is worth more because you can have a bigger impact on the bottom line while satisfying national mandates.