President Barack Obama recently returned from a United Nations conference on global climate change in Paris, where he held forth for a program of legally-binding agreements to reduce carbon emissions in the atmosphere. That slate is likely to face opposition at home—Congressional Republican leaders have already indicated that they will not pass the supporting legislation—but in numerous important ways the administration has already put reductions into place, building on the George W. Bush–era Energy Independence and Security Act of 2007 to reduce the federal government’s carbon footprint through measures that have direct bearing on leased and purchased federal buildings.
Last summer, following its announcement, and through the Fall, the Obama administration has been putting in place a comprehensive Clean Power Plan. Noting that since 2008 federal agencies have reduced greenhouse gas pollution by more than 17 percent (roughly equivalent to removing 1.8 million cars from service), it has set a goal of reducing federal emissions by 40 percent by 2025.
At a macro level, the CPP targets reducing carbon emissions from existing power plants, which produce about a third of the US output of so-called greenhouse gases—gases, that is, that trap heat in the atmosphere and are thus agents of atmospheric warming. New power plants have had to operate under stringent emissions standards since the EPA promulgated new regulations in 2013. The CPP adds to those standards somewhat less demanding but still strict requirements for existing power plants, whose working lives can span decades. These measures will require investment in sequestration and scrubbing technology, costs that will directly or indirectly be passed along to energy consumers.
Those consumers, however, will also have cleaner energy sources to choose from, if current trends in the diversification of the nation’s energy portfolio hold. One plank of the CPP mandates that the federal government buy at least 20 percent of its electricity from renewable sources by 2020. In the current energy economy, and given the federal government’s heavy concentration along the eastern seaboard, this translates to mostly solar power. The administration has supported the solar sector with several initiatives since 2009, including funding “clean energy” utilities on public and tribal lands, with an expected gain of 20,000 jobs, and training military veterans to work in the solar energy sector, adding another 75,000 jobs to the economy.
Of direct interest to the federal real property sector are several additional initiatives. One is the Energy Star’s Energy Performance Contracting service, which provides customers with a comprehensive set of energy efficiency and renewable energy measures and with financing calculations to see that the cost savings realized by, say, energy-saving new construction will cover the cost of the project. The Obama administration recently expanded EPC financing from $2 billion to $4 billion.
Along with the EPC service, the Better Buildings Challenge has provided funding and a clearinghouse of information for partner programs with municipal governments, public utilities, school districts, and other entities, so far saving an estimated $840 million in energy costs. Programs run through the Departments of Energy, Housing and Urban Development, and Agriculture have promoted energy efficiency and renewable energy development in private homes and public buildings alike, while new DOE standards announced in 2014 for appliances, HVAC systems, and manufacturing equipment are intended to reduce energy consumption throughout the economy.
There has been a piecemeal quality to these disparate efforts towards achieving desired reforms and updated performance standards. The finalized CPP is intended to improve the situation by providing a means for coordinating climate change, carbon reduction, and green energy initiatives. How successful it will be remains to be seen—and, of course, it is all subject to legislative cooperation, or the lack thereof, to say nothing of the outcome of the 2016 election.
Kurt Stout is the national leader of Colliers International’s Government Solutions practice group, which provides government real estate services to private investors and federal agencies. He also writes about federal real estate on his Capitol Markets team blog. You can contact Kurt by email or on Twitter.