Legal and Regulatory

New Executive Orders Expedite the Need for Contractors to Go Green

New executive orders aim to boost clean-energy construction and domestically manufactured technology.
By Vince Calio
July 19, 2022
Topics
Legal and Regulatory

The importance of going green just became even more crucial for small construction companies, as President Joe Biden signed three executive orders on June 6, 2022, aimed at boosting clean energy construction projects and the use of domestically manufactured clean energy technology.

Specifically, the orders require the U.S. Department of Energy to deploy the use of the Defense Production Act of 1950 to expand American manufacturing of solar panel parts, environmentally friendly building insulation, heat pumps, equipment for making clean power-generating fuels and critical power grid infrastructure. Federal construction contracts will also require local contractors to use eco-friendly materials.

According to an announcement from the White House, the order will encourage the use of project labor agreements that offer wages “above and beyond the prevailing rate and include local hire provisions.” The order will also encourage clean construction projects in low-income areas burdened by legacy pollution.

The orders put a two-year moratorium on tariffs being placed on imported solar panels that the United States imports from countries such as Cambodia, Thailand, Vietnam and Malaysia, from which the United States gets 80% of its solar panels. The new orders aim to help achieve the Administration’s ambitious goal of eliminating carbon from the nation’s power supply by 2035.

Why it Matters

Aside from protecting the environment, the orders emphasize the urgency of contractors and subcontractors to demonstrate that they can handle green projects. This will be especially important as the federal government begins to search for contractors to handle a bevy of upcoming construction contracts as a result of the passage of the $1.2 trillion Infrastructure Investment and Jobs Act passed late last year.

Put simply: It would behoove small construction companies to show that they have expertise in government-led clean energy construction projects. Aside from the executive orders, the construction industry—one of the least green industries in the United States—needs to start making a push toward becoming green to survive going forward. This has become more than just a trend—currently, the building industry uses nearly half of all electricity used in the United States, according to Research Gate, and more than 28% is used by the transportation industry. ComfyLiving.net estimates that green construction projects will reach nearly $100 billion by 2023 in the US.

Actions to Take

There are several ways small construction companies can certify themselves as being proficient in green technologies.

Get Green Certified
Construction companies can receive their “green certification” through either the Green Building Initiative (GBI) or the Leadership in Energy and Environmental Design (LEED), which is a rating system for construction eco-performance. The two programs use performance-based codes to ensure construction companies use design, construction, tools and processes that are up to state and local green codes. The International Green Construction Code often sets these requirements as well and is followed by LEED and GBI. This certification is a quick way to let government agencies and private clients know that contractors are environmentally conscious.

Use Recycled Construction Materials
Using recycled materials to construct a building will go a long way in letting clients know the company is serious about being green. These materials can include recycled concrete, wood and steel, and involves the use of eco-friendly materials such as plastic composite lumber, wool bricks and polyurethane rigid foam.

Offer Green Solutions
The company can make a lasting impression on customers by offering various green solutions when building an office building. Nearly half of the power used by office buildings is for heating and cooling, so giving them greener and cheaper options for electricity and insulation will show that the construction company is environmentally conscious. Installing solar panels would probably be the most obvious way of making an office building more energy efficient. Contractors can also use eco-friendly insulation to avoid wasting hot or cold air through a structure’s HVAC system. Other options include offering to install programmable thermostats, water-conserving plumbing, green HVAC systems and offering to install low-emissivity windows.

Use Energy-Efficient Construction Vehicles
It may be time to replace and update equipment with environmentally friendly machinery. Construction equipment manufacturers such as Bobcat, Volvo, John Deere and Caterpillar already produce construction equipment such as backhoes and bulldozers that have economy modes and on-demand throttles installed in them to reduce their carbon footprint. These companies are also in the process of developing electric equipment (instead of gas-powered equipment) to become more eco-friendly.

Show Concern for Customers’ Health
Present manufacturers’ reports on the materials being used to customers to inform them that the company is using materials that will benefit their health and wellness, especially when it comes to the air quality in their buildings. Such reports are produced by the Health Products Declaration Page site run by SCS Global Services and the Environmental Product Declaration site.

Use Energy-Efficient Processes
Use 3D printing to show models of projects to customers and blockchain technology to centralize data from contractors, subcontractors and customers to prevent wasting hundreds of pages of paper. Contractors can also use construction software to make projects more efficient by managing material procurement to cut down on waste and save time, money and resources.

Market the Company as Green

Making the construction company green won’t mean much if customers and potential contractors don’t know it. It’s important to make the necessary changes to the contractor’s marketing strategy to inform future customers and government contractors that it meets eco-friendly standards.

Make changes to the website and advertisements to let the world know that the company is eco-friendly. Also, make sure one of the company’s pre-qualifications is that it adheres to environmentally friendly standards. This could very well mean the difference between landing and losing a client.

Don’t Get Caught Off-Guard

It’s obvious that more state and federal agencies will require contractors and subcontractors to follow eco-friendly standards, especially with the passage of the Infrastructure and Jobs Act. It’s crucial that construction companies take the necessary steps to let the world know they’re environmentally conscious, in addition to being excellent builders.

by Vince Calio
Kapitus is one of the most experienced and trusted names in small business financing. As both a direct lender and a marketplace built with an expansive network of lending partners, Kapitus has provided over $3.6 billion in growth capital to over 50,000 small businesses. Kapitus offers multiple financing products to small businesses including term loans, revenue-based financing, SBA loans, equipment financing and revolving lines of credit.

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