Asserting its position as the global leader in climate change policy, California Assembly members Rob Bonta (D-Oakland) and Susan Eggman (D-Stockton) have jointly introduced legislation that would require companies bidding on public works contracts that use certain building materials to report greenhouse gas (GHG) emissions generated through the manufacturing process of such materials. The State of California would, in turn, take the bidders' GHG emissions footprint into consideration using a yet-to-be-developed formula when reviewing and awarding bids.
The State Contract Act and other existing laws generally require that the awarding department engage in a competitive bidding process whereby bids are awarded to the lowest responsible bidder. AB 262, however, would change the way in which awarding state departments-including the California public university systems-would determine lowest responsible bidders. To wit, if passed, AB 262 would require prospective bidders on public works projects-this could be almost anything from buildings to roads-to disclose GHG emissions generated by the manufacture of certain "eligible materials" to be used in the project. The "social cost" of the eligible materials would then be used to determine who the lowest responsible bidder was, using a formula to be established by the Secretary of Government Operations.
Under the bill, all prospective bidders on state projects using "eligible materials" will be required to disclose the cumulative amount of Scope 1, Scope 2, and Scope 3 GHG emissions generated in the manufacture of those materials in their bids via a standardized form. The bill defines "eligible materials" as "cement, flat glass, manufactured wool, or steel," as well as asphalt starting in 2021, but not aluminum, a common metal used in construction. For context, Scope 1 emissions are direct emissions, Scope 2 are all indirect emissions from consumption of purchased electricity, heat, or steam, and Scope 3 are all other indirect emissions.
The bill would then require the awarding department to use the GHG emissions information to calculate the lowest bid. In doing so, the portion of the bid on the base contract that represents the cost of the eligible materials will be adjusted to incorporate the "social cost" of those materials, pursuant to a formula to be established by the Secretary of Government Operations. The bill is unclear on precisely how the formula is to be calculated, but generally sets out a three-step...