The Big Green Buy
"If we could buy gear boxes in batches of a hundred rather than ten at a time, they could be cast to our specifications rather than each one machined. That would immediately cut the cost by 30 to 40 percent," says Smith CEO Bryan Hansel. Similar savings would be available for other inputs like steel chassis, cabs, drive shafts, suspensions and wiring harnesses, all of which are purchased from the same suppliers used by diesel- and gas-powered vehicle makers.
In March Smith received a $32 million Energy Department grant that will help it offset the cost of its trucks. But what would really give it a boost is an order of 1,000 trucks a year for the next ten years, from, say, the Defense Department or the Postal Service or the General Services Administration (GSA). If that happened, Smith's plans to open twenty more small manufacturing facilities around the country would shift into high gear.
"We have approached the DoD about nontactical vehicles, like trucks that are used on bases here in the US. They bought four of our vehicles for testing. So we're hopeful," says Hansel. The Defense Department has 160,000 nontactical vehicles, many of which are suitable for electrification.
In other respects, the military is one of the most avid adaptors of clean technology. Of all the energy the federal government consumes, 80 percent is used by the Defense Department. The cost of delivering fuel to forward operating areas can be as high as $400 a gallon, by some estimates. And according to an Army Environmental Policy Institute report, 170 soldiers died and many more were horribly maimed just protecting fuel in combat zones during 2007. For purely strategic reasons the military is trying to free itself (at least a bit) from its clumsy and very long fossil fuel tether.
Thus the military is experimenting on a large scale with green technology. Fort Irwin, in California, is building a 500 megawatt (that is big) solar power plant and is on track to become self-sufficient in electricity use within a decade. Fort Leavenworth is undergoing an energy retrofit that a Pew report described thus: "energy efficiency improvements are made by a private-sector firm at no upfront cost to the Army, with resulting savings shared by the base and the contractor." The list goes on, but unfortunately most of the changes are relatively small scale.
Government procurement, particularly the military's, would become significantly greener if two recently introduced bills became law. The Department of Defense Energy Security Act of 2010, introduced by Gabrielle Giffords of Arizona, would require the department to derive a quarter of its electricity from renewable sources by 2025. And—good news for Smith Electric Vehicles—the bill also calls, rather ambitiously, for a full-scale conversion of the military's nontactical vehicle fleet to electric, hybrid or alternative-fuel vehicles by 2015.
A similar bill, introduced by Democrat José Serrano of New York, would require the Postal Service to purchase at least 20,000 electric vehicles by 2015. That goal is reasonable, and the USPS is a perfect place to start, as most of its vehicles travel in loops of less than 20 miles each day and always park in the same garage. Thus, even current battery technology is sufficient. Many other government fleets fit the same profile: they have regular routes of less than 100 miles a day and use the same parking spot each night, so they are easy and cheaper to charge because the price of juice drops at night.
Right now a vehicle from Smith is about 20 percent more expensive than a standard gas or diesel truck. But the cost per mile to run an electric truck is about one-third the cost per mile of a gas- or diesel-powered one. Hansel says that with enough large orders his product will reach cost parity with dirty-tech options. When that happens, large private-sector fleets, like UPS, FedEx, Staples and Frito-Lay, will start buying electric vehicles simply because it will be the cheaper option.
In anticipation of that day, Nissan is releasing the 2011 Leaf, a fully electric plug-in car. It plans to make 90,000 of them. Chevy is coming out with the Volt—10,000 of them. Will this first generation of EVs really have a market, and sufficient charging options? Who knows? But you can be sure they would if Big Government made the Big Green Buy.
Buildings also use lots of energy. The US Green Building Council reports that buildings account for about 36 percent of America's total energy use and emit roughly the same proportion of greenhouse gases. But if properly constructed and managed, many buildings could actually generate energy for their own use, for vehicles or to put back into the grid.
The government's building manager—its janitor, if you will—is the GSA. The GSA constructs, repairs and manages federal buildings; it buys the supplies and keeps the heat and AC on; and it buys and maintains much of the government's nonmilitary vehicle fleet. It also acts as a purchaser and contractor of sorts for most other federal agencies. The GSA is about as dull an agency as you can imagine. It has pocket-protector and brown shoes written all over it. But in the age of climate change, its brief has taken on vital importance. The implications of Executive Order 13514 have put the GSA, along with the military, at the cutting edge of the Big Green Buy.
"We're taking this very seriously," says Martha Johnson, administrator of the GSA. "We are normally sort of overlooked, but we were thrilled, really excited, when the president gave us such prominent place in his environmental strategy."
President Bill Clinton issued four executive orders on sustainable clean procurement, but they lacked specific targets or enforcement mechanisms and thus achieved very little. "Our progress in general in buying these products stinks," said Dana Arnold, senior program manager at the White House Office of the Federal Environmental Executive in a recent interview with the Federal Times.
This time it may be different, and the GSA is gearing up to be the point agency in what is sometimes called Environmentally Preferable Procurement, or "green supply chain management." The GSA is putting up solar arrays, buying a few electric cars and hybrids, trying to produce energy at its buildings and buying renewable energy like biomass, solar and wind power, which now account for 10.8 percent of the GSA's federal building power supply. It is also creating monitoring systems to track progress and keep federal agencies accountable.
The GSA's sustainability plan requires "a minimum of three percent renewable energy source for all competitive electricity supply contracts and requires that renewable energy be from a plant that was recently built in order to stimulate greater investment in the industry." The agency has reduced its own energy use by 15 percent, as measured against a 2003 baseline, and plans to reduce energy consumption in its buildings by 30 percent from that baseline by 2020. Already the GSA's building stock—mostly offices—is about 22 percent more efficient than similar private-sector buildings.
In addition, the GSA is working on cutting the amount of jet travel its workforce requires and, when possible, increasing telecommuting and home-based work. It is also pressuring other agencies to shut off unused data centers—the USDA, for example, uses only between 10 percent and 20 percent of its total computing capacity, but its huge, largely empty servers run at 100 percent of power.
Other federal agencies, however, are lagging far behind. "It is amazing to us to find out the low level of awareness," says Linda Mesaros, a consultant for sustainable purchasing. State and local governments are also moving toward green procurement, but few have been very aggressive or ambitious.