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Biden pushes to require big federal contractors to cut climate pollution

Federal suppliers would also have to disclose their greenhouse gas emissions and the climate change risks they face under the proposed rule

John F. Kerry, U.S. special presidential envoy for climate, during the COP27 climate conference in Egypt on Nov. 9. (Joseph Eid/AFP/Getty Images)

The Biden administration on Thursday will propose requiring all major federal contractors to set targets for reducing their emissions in line with the 2015 Paris climate accord, a significant step toward greening the government’s sprawling operations and one that could ripple across the U.S. supply chain.

The proposed rule, which comes as leaders from nearly 200 nations converge at the U.N. Climate Change Conference in Egypt, would also mandate that federal contractors publicly disclose their greenhouse gas emissions and the risks they face from climate change.

The U.S. government is the world’s largest buyer of goods and services, purchasing more than $630 billion in the last fiscal year alone. President Biden has previously called for the government to become carbon-neutral by 2050, in part by creating a federal fleet of electric vehicles and buying clean electricity for federal buildings.

Speaking to reporters Thursday, White House national security adviser Jake Sullivan said Biden will arrive at the talks Friday “with historic momentum on climate thanks to the passage of the Inflation Reduction Act and other significant steps that put us on an enduring path towards meeting our ambitions and clean energy goals.”

“While he’s on the ground, he’ll speak to his personal commitment to addressing the climate crisis,” Sullivan added. “He’ll highlight some of the progress the United States has made, both here at home and in rallying action on climate around the world. And he’ll underscore the need to go further, faster to help the most vulnerable communities build their resilience without losing sight of the need for the world and particularly for the major economies to cut emissions drastically. in this decisive decade.”

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The administration plans to highlight the proposal during Biden’s visit to the U.N. summit, as well as during a Saturday event there featuring Brian Deese, the director of the National Economic Council, and Ali Zaidi, the White House national climate adviser.

“As the world’s largest purchaser of goods and services, the Federal government has a critical opportunity to leverage its spending power to help reduce climate risks and safeguard taxpayer dollars,” Office of Management and Budget Director Shalanda Young said in a statement. “This new proposed rule is an important step forward that will help us achieve our ambitious climate goals, promote efficiency, and increase the resilience of federal supply chains.”

On Friday, the Biden administration will also issue a long-awaited proposal on limiting emissions of methane, a powerful greenhouse gas, from U.S. oil and gas operations, according to an individual familiar with the plan who spoke on the condition of anonymity because they were not authorized to speak publicly on the details. The Environmental Protection Agency will offer oil and gas companies more flexibility in how they monitor their wells for methane emissions, this person said, allowing flyover inspections with sensors that have become popular in the industry to count toward new monitoring requirements.

The rule would allow companies that fly drones or planes with methane-detection technology over their oil and gas fields at least every other month to limit more arduous on-the-ground inspections to once a year. It would also grant further leniency to companies that use constant-monitoring systems, often deployed in conjunction with independent certification programs, under a sliding-scale system that aims to enable industry to use developing technology to do more efficient monitoring.

Asked about the matter Thursday, the EPA declined to comment.

By unveiling the two proposals during the talks, Biden aims to reassure America’s partners overseas that the U.S. government can continue to fulfill its climate pledges even in the face of Republican opposition.

The proposed rule on the federal supply chain covers roughly 85 percent of the emissions associated with it, which are more than double the emissions stemming from operating the government’s 300,000 buildings and 600,000 vehicles combined, the White House said. Once enacted, officials said, the rule would make the United States the first national government to require major suppliers to set climate goals aligned with the Paris agreement.

Under the proposal, federal contractors receiving between $7.5 million and $50 million in annual contracts would be required to publicly disclose their “Scope 1” and “Scope 2” emissions. Scope 1 covers direct emissions from sources owned or controlled by a company, such as a fleet of cars or a power plant. Scope 2 covers emissions from the generation of energy the company purchases.

Federal contractors with less than $7.5 million in annual contracts would be exempt from the rule. The largest suppliers would need to disclose certain categories of scope 3 emissions, which cover those produced by a company’s customers and suppliers, such as drivers filling their cars with gasoline.

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“On week one, President Biden charged us to make the Federal government climate-ready and resilient,” Council on Environmental Quality Chair Brenda Mallory said in a statement. “Requiring major Federal suppliers to disclose emissions and risks strengthens our supply chain and brings us closer to reaching our net-zero emissions goals.”

The proposed rule reflects the Biden administration’s broader push to treat climate change as an economic risk. In March, the Securities and Exchange Commission unveiled a controversial proposal that would require all publicly traded companies to disclose their emissions and the risks they face from global warming, prompting pushback from Republicans who said the Wall Street regulator was overstepping its authority.

A senior administration official, speaking on the condition of anonymity because they were not authorized to comment publicly, said the regulation would protect the federal supply chain from increasingly common disruptions linked to climate change, such as heat waves that can strain the electricity grid.

Even without the rule in place, the government has taken steps to reduce this risk. For example, the Defense Department installed a solar-powered microgrid at the Miramar base in San Diego, allowing the base to disconnect from California’s electricity system during the heat wave that scorched the state this summer.

“We see financial risk without those kinds of investments,” the senior administration official said.

The proposal will be issued by the Federal Acquisition Regulatory Council, a body comprising the Defense Department, the General Services Administration and the NASA and chaired by the Office of Federal Procurement Policy in the Office of Management and Budget. It will be subject to a 60-day public comment period.

Matt Viser, Timothy Puko and Dino Grandoni contributed to this report.

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