Administrator Carnahan Remarks at NARUC Winter Policy Summit

February 14, 2023

February 14, 2023

REMARKS AS PREPARED

Thank you, Julie, for that warm introduction. I’m so glad to be here at your Winter Policy Summit.

First, I want to say thanks to all the Commissioners in the room and your teams. I served as a state official in my home state of Missouri for many years, so I’m very familiar with the work you do to ensure that families across your states have access to the essential services they need to live their lives.

Thanks also to the team at NARUC. I know how valuable these convenings are and how much work goes into them. When I attended similar meetings during my tenure as Secretary of State, I always returned home with lots of new ideas and an invaluable network of people to call on to help implement those ideas.

Understanding the diversity of our states and recognizing that each comes to the table with their own unique resources, strategies, and goals is important for Washington policymakers, because in your world, striking the right balance between competing interests may not always look the same.

But many of your challenges are the same, whether that’s extreme weather, supply chain disruptions, aging infrastructure, or cybersecurity and physical threats.  And your customers expectations are also the same…having access to a reliable, diversified, resilient, and affordable power supply.

Gatherings like this are a great way to learn from each other and get feedback from stakeholders across the country and industry, so I’m grateful to be able to join you.

I’m told that I’m the first GSA Administrator to ever attend this conference. So, you may wonder what I’m doing here.

I’m here today because GSA is one of the largest buyers of energy in the country.  In fact, the federal government uses about 2 percent of the total electricity in the U.S., making us the single largest consumer of electricity and fuel in the country. GSA and the Department of Defense make up the bulk of that – DoD buys for its own assets, and GSA takes care of pretty much everyone else.

That includes buying electricity for our portfolio of over 8000 leased and owned buildings totaling 370 million square feet of space – making it one of the largest building portfolios in the country. 

We also manage the federal fleet of 227,000 vehicles which is also one of the largest fleets in the country and we’re transitioning that to electric vehicles.

The bottomline is, we’re a big customer… with steady, long-term power needs.

But, we’d like to be more than just that. We’d like to be a steady, long-term partner with all of you as we work to transition our nation's energy infrastructure.

This transition is going to require an all-hands on deck approach because, the fact is, the challenges we’re facing are complicated and intertwined and will only be met if we all work together.

• Our aging infrastructure needs rebuilding. That’s why the President pushed so hard for passage of the Bipartisan Infrastructure Law and the Inflation Reduction Act so we could make those once in a generation investments that are long overdue.
• Global supply chain disruptions caused by the pandemic have affected every single industry from transportation, to construction, manufacturing and utilities as well. That’s why the Administration is working tirelessly to bring those supply chains back online and invest in domestic production for some of our most critical needs.
• And recent global events and extreme weather patterns are a stark reminder that energy security and national security are inextricably linked. Diversifying our energy supply and increasing the resilience of our grids are such an important part of mitigating those risks.

The economic health and security of our country and all the families we serve, depends on all of us working together to create the energy infrastructure the American people expect and deserve. And GSA is committed to being a key partner and an early adopter as we make that transition.

The fact is, these investments are a triple-win.

1. First, they create good domestic jobs that boost our economy, our competitiveness and our national security. DOE reports that energy jobs grew at the rate of 4.0% between 2020 to 2021, outpacing overall job growth at 2.8%. And jobs in clean energy drove those increases, especially in solar, wind, and electric vehicles.
2. Second, these investments help the government save taxpayers money by reducing energy costs… I saw an example of this nearby at an IRS building in New Carrollton, just a few miles east of here in Maryland.  That building was built in the 1980s and was, to be blunt, a serious energy hog. GSA partnered with Amersco to do a deep-energy retrofit that resulted in 60%-energy and 56%-water reductions. It’s estimated to reduce greenhouse gas emissions by 20,000 metric tons and save $2.5M annually.  Given our huge portfolio of buildings, we know there are lots more opportunities to reap similar savings.
3. And the third part of the triple win, of course, is that these investments help ensure a healthier planet for our kids.

As we make the investments in our energy infrastructure, the Biden Administration has ambitious goals to accelerate the transition to an economy powered by Carbon Pollution-Free Electricity.  And the federal government intends to lead by example.  As Secretary Granholm said yesterday, we’ll be supporting new ways to invent, innovate, and integrate new technologies for the grid of the future, and maximize the dollars we invest here at home.

When it comes to our federal facilities, which is what GSA manages, we plan to power our buildings with 100% Carbon Pollution Free Electricity on a net annual basis by 2030.  And that includes procuring 50% of that as 24/7 CFE which is the shorthand way of saying we plan to time match at least ½ of our hourly demand to Carbon Free Electricity that’s available on the same regional grid where the energy is consumed.  Longer term, our goal is to transition our entire federal building portfolio to net-zero emissions by 2045.

Now, I know these sound like very ambitious goals, but this is no pipedream, because, right now, we’ve got both momentum and money to make this a reality.  But, we’re also clear that this transition will be complicated and take time and that we’ll never reach these goals alone, it’ll take close collaboration with all of you…regulators and utilities in both vertically integrated and retail markets.

So, let me spend a few minutes talking about the approaches we’re exploring and ways I hope we can work together.

But first, I want to make sure we’re all on the same page about a few definitions, especially what Carbon Pollution-Free Electricity means…because it’s not just a focus on renewables. We’re talking about electricity produced from resources that do not generate carbon emissions. Let me say that again…CFE includes any electricity production that does not generate carbon emissions.

So, that includes renewables like solar, wind, and hydro but also nuclear and electrical-energy generation from fossil resources to the extent there is active capture and storage of carbon dioxide emissions. 

24/7 CFE, as I said, means that our energy procurements will match actual electricity consumption on an hourly basis and are produced within the same regional grid where the energy is consumed.

Another important term is “CFE on a net annual basis,” which means the net annual goal will be met through matching annual consumption with a combination of purchased CFE, on-site CFE, Energy Attribute Certificates (EACs), and grid-supplied CFE.

For anyone interested in taking a deeper dive into these new definitions, policies, and procurement strategies, take a look at the Council on Environmental Quality’s Implementation Instructions for the Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability.

The good news is that, even though there’s a lot of information to wade through, the federal government is aligned on these definitions, so you can expect to see GSA, DOD, and DOE all speaking with one voice and working closely together to develop strategies for how we plan to buy and manage power… and how we can leverage that buying power to incentivize the move toward greater innovation, diversification, resilience, and reliability in our nation's energy supply.

At GSA, that means we're looking to drive innovation in our buildings by adopting new technologies, reducing waste, increasing energy efficiency, and, of course, by electrifying our buildings.

Now, I know that many folks in this room aren’t used to looking to the government for innovative thinking.  But I’m here to tell you that we have a first-rate team at GSA who are working hard to change that.  And we intend to take advantage of our unique position as both a big customer with flexibility and long-term energy needs, which puts us in a better position than many of your commercial customers to explore new ways of working.

The first thing we’re doing is investing nearly $1 billion into innovative products like those that have gone through our Green Proving Ground program that selects companies to use federal facilities as testbeds for new products and services.  Anyone who wants to learn more about that can go online and search for GSA and Green Proving Ground.

In addition to that, you may have seen that in December, the Administration announced the first-ever Federal Building Performance Standard that requires agencies to cut energy use and electrify equipment and appliances. On the same day, the Department of Energy also announced a proposal to electrify all new or newly renovated Federal buildings.  So that has big implications for GSA construction projects starting immediately.  In fact, we’ve already announced 7 projects funded by the Inflation Reduction Act, including the modernization and expansion of the San Luis Land Port of Entry in Arizona which will become an all-electric facility.

In deregulated, retail markets, we’re reaching out to learn more about what’s actually happening on the ground and what’s possible going forward.  That’s why we’re collaborating on multiple RFIs – to get feedback to better inform the procurement RFPs we’ll be issuing on a rolling basis for CFE as contracts come up in the coming months and years.

For the utilities in the room, I’d ask you to please take a look and respond to the RFI that’s currently open for comment.  The comment period closes on March 3rd and we’ll use your responses to refine upcoming solicitations across all U.S. retail choice electricity markets. Again, it closes March 3, so go check it out. The only way we can get this right is to hear from you and incorporate your feedback.

In vertically integrated markets, we’re eager to procure more CFE through green tariffs and other programs that provide electricity that meet our CFE requirements and also benefit states. In taking the lead on these efforts, we hope to align closely with private sector corporate sustainability efforts that we’re seeing across the country from a wide-range of companies from Wal-Mart to Google.  And we hope these green tariffs provide other businesses the opportunity to access CFE for their operations.

A great example of our progress on this front is our recently signed MOU with Entergy Arkansas. Through this MOU, we hope to take advantage of their CFE generation capacity through a green tariff while allowing public and private sector customers to buy regionally-sourced nuclear and renewables, including solar, hydro, or wind. Together, we’re planning for and promoting more local, clean energy sources, better storage, and a more resilient grid.

This is a real partnership – we’re learning about their objectives, resources, and real barriers to more CFE, they’re learning about our needs as a major customer, and I’m confident that through that collaboration we’ll find solutions that really work.

We’re eager to recreate that same kind of partnership in other markets by starting more conversations with all of you – and we’re not the only ones. Other government agencies and industry partners are curious about how this strategy could work for them. The Department of Energy is working on their own MOU with a utility – and even folks from the UK government wanted to learn more about our partnership with Entergy.

So, for all the utilities in the room that operate in vertically integrated markets, I’d encourage you to think about what it would take for you to meet our CFE and hourly time matching goals, and what GSA and federal customers can do to support you getting there.

Tell us what it’ll take to increase your generation of CFE – and how we can help. If anyone has excess CFE generation, let’s tap into that. For those who want to increase your generation, how can we help you reduce risk by ensuring the demand is there to justify your investment?

We know it’s going to be different from place to place based on your existing energy mix and generation and transmission capacity. But we’re ready to have those conversations…and the sooner the better.

And for the regulators in those vertically integrated markets, I’d ask that you prioritize moving forward on green tariff offerings so that we’ll all be able to meet this moment to move our country toward a more secure, reliable, resilient, and clean energy future.

I’ve been around long enough to know what a unique moment we’re living through…I know how unusual it is to have money and momentum at the same time to make the kind of investments we’re talking about and that will have such a lasting impact on our country. It’s up to us, all of us in the room, to meet this moment – to work together to secure our nation, drive American innovation, create good jobs, save money for taxpayers, and leave a healthier planet for our kids. We’re excited to work with you on these important goals and look forward to more conversations in the months ahead. Thank you.