What’s in a name? That which we call a rollout of shovel-ready clean tech infrastructure projects by any other name would still decarbonize the economy. A “Green New Deal” is not going to pass Congress anytime soon. Yet despite this, Biden is poised to bring on an unprecedented clean tech policy revolution that would far outstrip anything undertaken under his predecessors, even without extra authority from Congress.
First, the Department of Energy has about $40 billion lying around ear marked for clean tech investment. As part of the 2009 economic stimulus, the DOE was given a chunk of money it could use in lending authority and loan guarantees for renewable energy companies.
Although the program was broadly successful – its default rate was lower than private sector loans – the high-profile collapse of Solyndra sapped the political appetite of the Obama administration for any more such ventures. Loan approvals dried up. Now, a decade later, there remain unused funds that could form the basis of a new clean tech investment program.
This $40 billion would be a significant shot in the arm to the renewable energy industry. If totally spent over the course of Biden’s first term, this could increase annual renewable energy investment in the United States from about $55 billion to $65 billion – an 18% jump.
Second, Biden can direct the federal government to purchase more of its energy from clean sources of power. In the $5 billion annually on electricity, there is even more room for improvement. The federal government is shockingly behind the rest of the nation on renewable energy. Whereas the US sources about 17% of its electricity from renewables, the federal government derives 10% of the federal government’s electricity from clean energy. A 2005 statute mandates a minimum of 7.5%, but the President still has plenty of room to mandate renewable power purchases above that floor.
Yet to be truly transformative on climate without going through Congress, Biden will have to look at the $586 billion or so the federal government spends on goods and services. The Biden administration has pledged to use federal procurement to enforce higher energy efficiency and clean energy standards and generally has wide latitude to stipulate that contract bids include clean energy standards.
These expenditures cover everything from aircraft to pharmaceuticals to consulting services. In these areas, the Biden administration has considerable authority to guide the decarbonization of the economy by requiring contractors adopt clean energy and energy efficiency standards. Assuming government contractors spend between 1.5% and 2.5%1 of their gross sales on electricity, power purchase requirements for contractors could affect electricity spending of between $8.8 billion and $14.65 billion.
Between the federal government’s electricity purchases, the electricity expenses of its contractors, and the lending authority of the Department of Energy, Biden can control between $50 billion and $60 billion in electricity spending and investment. Although a far cry from Biden’s goal of a $2 trillion green infrastructure program, he is well-placed to radically increase demand for renewable energy and thus facilitate further private sector investment into renewable energy.
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