case-study

ARE YOU READY? Biden’s Executive Order 14057: A Wake-Up Call for the Asphalt Industry Executive orders (EO’s) have been issued by every President since George Washington.  They are powerful written directives through which a President can issue commands to establish and shape the U.S. policy agenda and provide guidance to Federal agencies and its workforce. The Emancipation Proclamation issued by Abraham Lincoln is an EO.  Donald Trump issued 220 EO’s between 2017 and 2021 and President Joe Biden has issued 107 EO’s as of March 9, 2023.  Franklin D. Roosevelt holds the record for the most EO’s issued as president with 3,721 and since George Washington, there have been over 15,000 signed EOs.    Unless you are a daily reader of the Federal Register, they are easy to miss, but they are an important, essential tool impacted businesses should know to fully understand the direction of policy coming out of Washington. What Happened? On the heels of Congress passing the Infrastructure Investment and Jobs Act (IIJA), President  Biden issued Executive Order 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability.  Buried in its pages is Section 303 simply titled “Buy Clean.”   With a stroke of a pen, the President established The Buy Clean Task Force and populated it with agency heads from across the Federal Government for the specific purpose of regulating the embodied carbon of construction materials in Federal direct procurement and federally funded infrastructure projects.  Furthermore, EO 14507 makes Environmental Product Declarations (EPDS) the main source of relevant data construction material suppliers will need to have to demonstrate they have the appropriate construction material the Federal government will make eligible to purchase.   On September 17, 2021, the White House went further and announced that the Federal government, the largest purchaser of asphalt, will prioritize the purchase of asphalt with lower levels of carbon emissions.  Furthermore, the Federal government plans to expand the Buy Clean program to the Federal-aid Highway (FAH) program.   The bottom line for asphalt suppliers is this, the federal government, through IIJA and the Inflation Reduction Act (IRA), is for the first time imposing a market differentiation and utilizing incentives for manufacturers of low-carbon asphalt.  This is a game changer for the asphalt industry.   Why should asphalt suppliers care? The asphalt pavement industry depends on the publicly funded highway market for two-thirds of its market.  The Federal government contributes more than half of the capital investment towards that market.  In less-populated states, the federal share is much greater.  It is through the enactment of IIJA and IRA, that the Federal government is in a unique position now to drive the industry to deploy technologies that lower its carbon footprint and for State transportation agencies to adopt these changes in an expeditious manner.  Otherwise, both the industry and state transportation departments are leaving infrastructure investment money on the table.   Put another way, over the life of IIJA and beyond, the Federal government is offering carrots to the industry and state transportation agencies to decarbonize from cradle to end-of-life.  Contractors have a choice, they can provide the material the Federal government will pay for, or they can depart the market.  The market risk for asphalt manufactures from ignoring the Federal (and some states) government’s shift towards lower carbon asphalt pavements means they will not be players in the new market opportunities and in fact, will certainly shrink their market, substantially!   What’s next for the Federal government? Last September, the U.S. Department of Transportation issued its Buy Clean policy and established an Embodied Carbon Work Group.  The Federal Highway Administration is developing new procurement standards to incentivize low carbon asphalt pavement mix.  Twenty-five states have received climate challenge grants aimed at quantifying emissions of sustainable asphalt pavements.   Other Federal agencies are also working to drive change in the asphalt industry.  The Environmental Protection Agency is gearing up to identify and label low-carbon asphalt paving materials and award grants to asphalt companies to obtain EPD’s.  The General Services Administration, Department of Defense, Corp of Engineers, and others are developing specification for low carbon asphalt pavements.  The Department of Energy (DOE) is assessing potential Internal Revenue Service (IRS) tax credits and DOE grants for asphalt manufacturers to spur decarbonization technology at asphalt plants.     TAKIN’ HILL TO THE STREETS Takin’ Hill To The Streets will be Surface Tech’s go-to resource on what the Federal government is doing to steer asphalt producers to utilize technology to manufacturer low carbon asphalt material for roads and highways across the country.  Future stories will examine what each agency is doing in this space and the role Congress is playing in implementation of the Buy Clean program.  Make no mistake, President Biden’s executive order is a declaration to innovate. It’s a game changer that will challenge the asphalt market for many, many years to come.  Jay’s years of experience educating the asphalt pavement industry on complex legislative and policy issues will be very valuable in forecasting the market.   − Jay Hansen joined Surface Tech following a long and distinguished career at the National Asphalt Pavement Association and in the U.S. Congress where he worked on legislation from the Intermodal Surface Transportation Act (ISTEA) in 1991, to the Infrastructure Investment and Jobs Act (IIJA) in 2021.  Jay will serve as an ongoing resource for Surface Tech customers to help them get ahead of the growth curve and be ready for shifting market conditions as they occur in 2023 and beyond.   Stakeholders in the asphalt pavement industry are free to reach out to Jay Hansen at jay.hansen@surface-tech.com with questions, , or assistance.