SPI Insights

Thousands of new contracting opportunities will be tied to decarbonization projects

Get ready to hear a lot about decarbonization. That’s the new magic word. It can be used to refer just about any program that removes or replaces carbon emissions. Because the term entails such a wide range of activities, it will soon open the door to an equally diverse pool of funding.

Since the U.S. federal government announced a plan to achieve net-zero greenhouse gas emissions by 2050, decarbonization has become a very hot, coveted trait for projects among budgetary planners at every level of government. There will be billions spent on decarbonization projects over the next decade or two.

The recently announced 2022 budget for the city of Chicago includes numerous projects designed to decrease dependence on carbon-emitting activities. The city has budgeted $60.3 million for a program to decarbonize the city’s fleet of vehicles. Another $41 million is earmarked for a collaborative initiative to enhance energy efficiency and boost the use of renewable energy.

Officials in Tacoma, Washington, will distribute match grant funding for programs that result in decarbonization. The city has identified 14 buildings that rely on natural gas, and these facilities have been designated as prime targets for energy conservation updates. Between 2022 and 2024, city officials will contract with private-sector firms to reduce carbon emissions in numerous ways. The projects are described in the city’s most recent community action plan which lists carbon neutrality as its most important agenda item.

Decarbonization plans also are gaining traction along the country’s west coast. The city of Oakland, California, has made decarbonization a part of the city’s economic recovery plan. Once design and timeline efforts are complete, officials will issue procurement documents.

Officials in Ithaca, New York, have authorized significant funding to begin decarbonization activities. In November, the city released its plan to decarbonize all public buildings within municipal limits by 2030. Contractors will fulfill the sweeping objectives of this plan, which has already secured $100 million in funding for its initial phase.

Meanwhile, officials in Tompkins County, which encompasses Ithaca, will decarbonize all buildings owned and/or operated by the county. This will be a major component of a Green Facilities Project outlined in the county’s five-year capital plan. The county has also allocated $28 million to procure LED lighting, secure power management upgrades, and improve pipe insulation by 2023.

Decarbonization also is a high priority at the state level of government. Officials at New York’s State Energy Research and Development Authority (NYSERDA)’s will direct funds to decarbonization programs statewide. One objective is to incentivize larger storage systems to pursue new energy sources. NYSERDA has a pool of $150 million for projects between now and December 2025.

Other states also are integrating decarbonization strategies into upcoming budgets. This will result in various contracting opportunities over the next several years.

In New Jersey, many decarbonization opportunities are tied to alternative energy initiatives. The governor’s advocacy for offshore wind projects supports solicitations that fall under the banner of decarbonization. Having recently awarded contracts for two offshore wind power projects, state officials are currently developing the specifics of a third. Accordingly, the New Jersey Board of Public Utilities has announced that the third offshore wind program will solicit bids in the third quarter of 2022. The project’s cost has been projected to be in the tens of millions.

State leaders in Connecticut released a Conservation & Load Management Plan in November, which listed decarbonization as a top priority for its funding schedule between 2022 and 2024. Beginning in 2022, the state has authorized $189.1 million and approximately $170 million each of the following two years for projects related to decarbonization. The plan is to prepare multifamily residential buildings for more efficient heating and cooling technologies powered by clean energy.

In just the past week, decarbonization has also taken root in Colorado’s budgetary plan for 2022. As outlined in the details of the budget, a total of $50 million will be available for work contracted specifically for decarbonization of the industrial and aviation sectors.

This trend toward funding decarbonization projects will continue its upward trajectory because of pending distributions of federal funding for the same objective. The recently passed Bipartisan Infrastructure Law allocates $4 billion just for projects that reduce carbon emissions at industrial facilities. Another $3.25 billion is available to state and municipal leaders for other types of projects that lower carbon dependence.

The burgeoning whirlwind of activity related to achieving net-zero carbon emissions by 2050 should be noted by private-sector contractors capable of providing the work. Decarbonization projects will become more abundant every year.