Construction Monkey

Construction Monkey Blog

With Copenhagen behind us and health care on the ropes, will Cap and Trade be on the block?  The US House of Representatives have passed a bill, but the Senate has not taken it up yet.  The smart money right now would say that Cap and Trade will not be passed with the pressure around the economy, but let's not forget the ruling that the EPA made that they can regulate carbon dioxide.  They may be able to pass rules that will not require any political capital from Congress and with all of the other issues on the public's mind may be able to move through with little or no scrutiny.  With this as a prelude, let's look at what regulation around carbon dioxide would mean to subcontractors.

If you have a decent service department, chances are you have a fleet.  In industry terms, construction companies have some of the largest vehicle fleets.  Even if we are not in road construction or earth moving, think about all of the vehicles from service vans to Project Manager trucks. With more regulation, we will definitely see increased vehicle fuel economy that will help out the bottom line, but may adversely impact our ability to haul loads safely.  The two key components to increasing fuel economy is weight and power.  These impacts may be direct in limiting a total fleet's fuel economy or may be more indirect through regulation on the automakers.  Additionally, these fleets may be required to be enhanced through stricter regulations on emissions.

Carbon footprints are all the rage now.  It is unclear how they will impose carbon calculations on more diverse industries like construction, but they will regulate certain industries which will still impact us.  Take for example the power production industry.  Regulations that apply to them may have impacts on us as we perform maintenance or new construction on their facilities.  In a true Cap and Trade system, they will involve many industries including ones that do not expel large quantities of carbon dioxide as those industries will have "offsets"that will prove lucrative to them.  This may mean that companies like Starbucks are involved in the regulatory system and if you do work for them, you may be involved whether you want to or not.

How willit involve you?  If you have worked on LEED project you may recognize that there is a decent amount of documentation to validate the Certification process.  On US Corps of Engineer projects on military posts there are calculations to determine the amount of vehicle/equipment exhaust.  If regulation passes, I would expect a decent amount of validation (paperwork) associated with the programs.

In the short term, you may start to see increased activity through voluntary programs on government projects.  If they are on government programs, they may have contractual obligations like pay tied to the conditions of not only keeping track of certain metrics, but falling within them.  I can envision that certain agencies will tie the carbon footprint of projects to contracts similar to the way MBE/WBE requirements are tied currently.  There will be an easy way to solve the issue if you fall out of compliance, but it will be through purchasing of carbon offsets.

In summary, please be aware thatCap and Trade or EPA regulation can have serious impacts on your business.  Prior to bidding a project (especially government) read the contractual and Division 1 requirements looking out for these programs/requirements.  If we don't keep a watchful eye, we can alllose a significant amount of money.  For most of us, we are small businesses and the additional regulation and costs if not managed properly could also impact the survival of our business.

About the Author

Craig Pierce
