By Evan Milberg, Reprinted with Permission of Smartbrief
There’s an alleged pattern among federal government initiatives that drives the construction industry crazy. Lawmakers will set a priority for the industry but refuse to put any money behind it. But with the Biden administration recently allocating $2 billion from the Inflation Reduction Act for 150 construction projects for the General Services Administration that make use of low-carbon construction materials, the government is putting its money where its mouth is, says Jordan Howard, who serves as counsel for federal construction and regulatory affairs at the Associated General Contractors of America.
“Any time Congress appropriates money for a priority, that drives a signal to industry,” Howard says.
GSA recently completed a pilot program for low-carbon procurement that required adherence to interim guidance from the Environmental Protection Agency. The guidance set global warming potential (GWP) limits for carbon-intensive materials prioritized by the federal interagency Buy Clean Task Force. Materials meet EPA’s guidance if their product-specific GWP is in the lowest 20% in embodied greenhouse gas emissions when compared to similar materials or products.
Environmental Product Declarations, or EPDs, are key to determining which materials are eligible for use in the GSA program. As of December 2022, EPA has identified these EPDs as acceptable:
- Concrete: Cradle-to-Gate Life Cycle Assessment of Ready-Mixed Concrete Report – Version 3.2 analysis (July 2022), regional benchmarks.
- Hot Rolled Steel Sections: AISI Fabricated Hot-Rolled Steel Section EPD (January 2021)
- Steel Plate: AISI Fabricated Steel Plate EPD (January 2021)
- Hollow Structural Steel Sections: AISI and STI Fabricated Hollow Structural Steel Section EPD (January 2022)
- Concrete Reinforcing Steel: CRSI Steel Reinforcement Bar EPD (September 2022)
- Steel Framing: Steel Framing Industry Association Cold-Formed Steel Framing EPD (May 2021)
- Steel Joists: Steel Joist Institute Open Web Steel Joists and Joist Girders EPD (January 2022)
- Flat Glass: ASTM International Flat Glass EPD (December 2019)
However, that can present a plethora of logistical challenges if a contractor cannot find an acceptable material.
“By the time the material reaches the contractor for use in a project, the EPD decision/tag has already been made and certified,” says Zack Perconti, vice president of government affairs at the National Utility Contractors Association. “Our concern, much like with the Build America, Buy America Act, is that a working waiver process be in place when these materials are not readily available because of supply chain shortages, or they simply aren’t manufactured domestically or within EPD guidelines.”
Luckily, according to Howard, the federal government has been very transparent in the development of this low-carbon initiative and has done a good job of engaging key stakeholders in the construction industry. As a result of advocacy from AGC, NUCA and other construction industry organizations, the GSA program includes a waiver that stipulates that if materials or products in the lowest 20% in embodied greenhouse gas emissions are not available in a project’s location, then an alternative in the lowest 40% in embodied greenhouse gas emissions suffices. If materials or products in the lowest 40% percent are not available in a project’s location, then they have to at least beat the estimated industry average for lower embodied carbon.
Ian Wells, a federal industrial decarbonization advocate at the Natural Resources Defense Council, notes that some stakeholders in the climate community are encouraging GSA to use predictive EPDs to avoid a lengthy review process that might slow down the process of securing the best-performing materials.
Howard says that contractors should feel encouraged that while GSA’s requirements do not supersede stricter federal laws, the goal of the program is not to mandate compliance, but rather to incentivize it and create a market for low-carbon materials.
In many ways, GSA is considered a guinea pig for low-carbon materials in vertical construction. Perconti notes that most of the work the federal government is currently targeting with this initiative is above-ground, so utility contractors, particularly those who work on water infrastructure projects, may not feel the effects of low-carbon programs immediately. However, contractors who work in federally funded highway construction might. The Inflation Reduction Act contains $2 billion for the Federal Highway Administration to reimburse eligible recipients for the use of construction materials/products that have substantially lower embodied carbon, as determined by EPA.
The legislation also includes $250 million for EPA to develop a program to support enhanced standardization, measurement, reporting and verification of embodied carbon of construction materials/products through grants and technical assistance. EPA also received $100 million to, in coordination with GSA and FHWA, develop a program to identify and label construction materials/products that have substantially lower embodied carbon.
However, while the federal government is making a financial commitment to lower-embodied-carbon construction and the EPDs needed to procure the right materials, some contractors that have waded into that world still find EPDs and low-carbon calculations very challenging, says Melinda Tomaino, senior director of environment and sustainability at AGC. Tomaino feels that outside of the Skanska-developed Embodied Carbon in Construction Calculator, there’s not a very good centralized outlet for EPD work. Another factor in play, Tomaino notes, is the interplay between contractors and manufacturers. Tomaino feels the construction industry is “very much in a transition phase” in terms of the learning curve with working with manufacturers on low-carbon material procurement.
There’s also the question of what happens to these federal projects when the supply chain breaks down.
“If a ship gets caught in a canal, you see the reverberations throughout the industry with materials pricing. Any time there’s a shock to the supply chain, it causes some downstream effects,” she says. “And that’s what we’re worried about; not that we’re moving towards decarbonization, but making sure that we’re buffering some of those stressors on that supply chain.”
Tomaino notes the association has been providing guidance on EPDs for at least seven years, going back to the growth of the US Green Building Council’s LEED program. And earlier this year, in conjunction with a breakout session at AGC’s 2023 Surety Bonding and Construction Management conference, Smith, Currie & Hancock LLP published an extensive guide on the expanded requirements for contractors on projects receiving funding from the federal infrastructure law and the Inflation Reduction Act.
One of the key takeaways from that document is that these low-carbon materials are largely unproven, and contractors might bear the risk if those materials do not perform as expected. The document also notes that “warranty issues and defects often may not manifest until years in the future and newer, untested products have the unknown potential for such issues.” And on projects where low-carbon materials will be required as part of an incentive program funded by the IRA, it’s very possible contractors will be required to employ materials with the required EPDs. Smith, Currie & Hancock also believe the EPA’s standardization of EPDs “will likely result in increased specification of low-carbon materials for use in private projects and public projects not funded by the IRA.”
Another factor to consider, according to Tomaino, is the need for more sustainability professionals in the industry. She feels the number of professionals is not keeping pace with certain federal initiatives, such as the Securities and Exchange Commission’s proposal for climate reporting.
But ultimately, AGC feels if the federal government continues its current level of engagement with industry, contractors will be better poised to meet the procurement and personnel needs of low-carbon construction.