Could a Buy Clean rule for procurement be in the works?
It’s been said that elections have consequences. They do! And now that there’s a new president in the White House and new Democratic majorities in Congress, Washington is talking about policies to encourage industries to shift toward clean sources of energy. Probably wouldn’t have happened under the other guy with his party in charge. But that’s just a guess, what do I know.
Anyway: America’s energy intake was the topic of a recent hearing held by the House Committee on Energy & Commerce to discuss the CLEAN Future Act, an enormous piece of legislation pushed by Congressional Democrats that would require the nation to reduce its greenhouse gas emissions by at least 50 percent below 2005 levels by 2030. It also sets a goal of 100 percent clean energy generation by 2035, and would update efficiency. Notably, it would also direct the Environmental Protection Agency to establish a Buy Clean program to reduce embodied emissions in materials and products used in federally funded projects.
These are only a few of the big takeaways, and nowhere close to all of them. But while it’s highly unlikely this gargantuan bill with its ambitious goals will pass as is in a Congress split on razor-thin margins, it’s worth noting because this kinda transformative legislation will be coming at some point. Climate change is real, human action is driving it, and the contours of the discussion today will affect the contours of policy proposals tomorrow.
As they say: You don’t need a weatherman to know which way the wind blows!
The CLEAN Future Act also includes Buy America language, which “Requires that any project funded under the Act to construct, alter, maintain, or repair a public building or public work only use iron, steel, and manufactured goods produced in the United States,” and it includes prevailing wage standards and project labor agreement requirements for any project it funds. And that’s good; the Alliance for American Manufacturing believes Buy America should be the standard for any new set of rules governing federal procurement policy, because Buy America rules mean more jobs for American workers. We even like the idea of Buy Clean rules for procurement, too, provided they don’t supersede Buy America ones. There are lots of caveats to consider, but procurement rules certainly shouldn’t give foreign-produced goods an up-front advantage over domestically produced goods, for example, or create an advantage for one production process over another among domestic producers – especially when it comes to steelmaking.
My learned, esteemed colleague Brian Lombardozzi wrote about California’s Buy Clean rule a few years ago, and he laid out why getting the details right for these kind of economic inducement policies is so crucial. We heavily regulate carbon-intensive manufacturing in this country like steelmaking, and that regulation should be considered in procurement decisions:
Compare the American regulatory environment with China’s, the United States’ largest trading partner. In 2015, Lawrence Berkeley National Laboratory found that China’s steel industry on average emits 23 percent more carbon dioxide per ton of steel than American or German manufacturers. 2017 data from the Steel Statistical Yearbook by Worldsteel shows China exported 112 million tons of commodity steel (steel that is produced and traded directly, not steel-containing products). That is 1.4 times the total steel production in the United States in that same year. China is also the largest exporter of embodied emissions in steel, accounting for 27 percent of the total export of embodied carbon in worldwide commodity steel trade, and a quarter of the world’s embodied carbon in exported value-added steel products (that’s steel-containing goods).
Though we regulate the domestic steel sector’s production emissions, and the sector has invested heavily to assure production complies with the existing regulatory regime, American buyers of imported Chinese steel (and goods made from it) are essentially importing the embodied carbon. For accounting purposes that negates the reductions made here in the United States and simply shifts emissions to China.
Is America Importing Its Pollution?
It’s good to see Congress grappling with these huge issues. And we expect to see the American worker is kept in mind when the policies are crafted. Roxanne Brown is a vice president at large in the United Steelworkers union, and she testified before a House Appropriations subcommittee on domestic manufacturing’s role in clean energy policy. Here’s what she said:
A robust domestic manufacturing sector supplying the key energy transition is not just important to our members but also to their communities. The average steelworker is paid about $85K a year plus benefits. Those wages ripple out into the community and help fund infrastructure projects, schools, and hospitals, not to mention the multiplier effect as for every one job in the U.S. steel industry alone seven more are created.
For our union, we have to strike a very delicate balance. It’s clear that our economy is undergoing an energy transition, and it’s clear the industrial sector will also need to go through this transition. A key goal of energy policies has to be to help bring backbone industries like glass, and steel, chemicals and cement into the new economy.