President Biden signed an Executive Order (“Order”) on December 8, requiring the entire federal government, the largest procurer of energy in the country, to be entirely carbon neutral by 2050. This broad goal tells only part of the story, however, because the Order also establishes diverse intermediate goals that are intended to force major market changes long before 2050 rolls around.
For example, the Order requires that by 2030, all electricity purchased/produced by the federal government will be carbon pollution free with at least 50% of that being locally supplied 24/7 power. The Order also requires that 100% of the vehicles purchased by the federal government be zero emission vehicles by 2035, and for light-duty vehicles the date is moved up to 2027. These two requirements alone, based on the buying power of the federal government, will drive the construction of the power production infrastructure that will be needed to provide 24/7 carbon pollution free electricity as well as reassuring the auto industry that the vast investments that will be required to re-tool production to build EVs and other zero emission vehicles will not be stranded. This is not speculation — a week after the Order was signed, Toyota announced its commitment to invest $70 billion to bolster its EV program . Only four days after signing the Order, the President released an action plan to jumpstart the process of deploying the estimated 500,000 charging stations that will be needed to support the level of EV market penetration that will be necessary to meet the net zero goals. The recently passed Infrastructure Investment and Jobs Act allocates $7.5 billion for beginning to build the public charging network, and the action plan demonstrates the Administration’s commitment to that goal.
The federal government is also the largest landowner and tenant in the nation, so it is understandable that another goal addressed in the Order is retrofitting the vast array of buildings already owned or leased by the government so that the entire federal real estate portfolio produces net-zero emissions by 2045, with 50% being converted by 2032. All new buildings will also need to meet the net zero standard.
These goals dovetail with the overall goals of net zero emissions from federal procurement and net zero emissions from all federal operations by 2050 with reductions of 50% by 2032 in the latter. These provisions will incentivize the entire federal supply chain, everything from paper clips to combat aircraft, to make the investments that are needed to move the economy to net zero. The Order is premised on the federal government having the purchase power to drive decarbonization from the demand side; it is ambitious and will require future administrations to pick up the baton and continue the race, but will it be enough? If other major global companies take the que from this order, and many are already far down this road, it may be enough to drive the economy irrevocably in the net zero direction. Time will tell.
