Scale of Government Procurement of Carbon-Intensive Materials in the United States
Authors: Ali Hasanbeigi, Harsh Khutal
Public procurement accounts for an average of 12 percent of gross domestic product (GDP) in Organization for Economic Cooperation and Development (OECD) countries, and up to 30 percent of GDP in many developing countries. When public entities leverage their large-scale purchasing power by buying goods and services with a lower carbon footprint, they help drive markets in the direction of sustainability, reduce the negative impacts of their use of goods, and produce positive environmental and social benefits.
This report aims to analyze the scale of government procurement of carbon-intensive materials (in particular, concrete, cement, steel, aluminum, and glass), both at the federal and state-levels, for the development of infrastructure in the U.S. It analyzes the scale of federal funds provided to state and local governments for the development of physical capital, the amount of federal spending on imported and domestic materials for infrastructure projects, and specific states where federal funds are used to purchase significant amounts of materials for infrastructure projects.
Some of the key findings of this report are as follows:
Federal findings:
o In 2018, around 68% ($75.2 billion) of the federal government’s non-defense expenditure on physical capital was through grants to state and local governments.
o In 2018, federal non-defense expenditure on physical capital was dominated by transportation projects, accounting for around 58% ($63.9 billion) of total. Additionally, 92% ($58.8 billion) of total federal expenditure on transportation was through federal grants to state and local governments.
o As per 2012 U.S. Bureau of Economic Analysis (BEA) data, transportation, education, and other non-residential structures represent the highest proportion of total government spending on construction projects (around $237 billion). The federal government spent around $75.4 billion, either directly or through federal funds to state and local governments, on construction.
o Procurement spending was estimated to account for 43% of total spending on construction in 2012. As a result, federal government spending on the procurement of goods and services was determined to be around $32.4 billion (43% of $75.4 billion).
o Using 2012 U.S. BEA data, the total breakdown of government spending on construction was estimated to be: direct federal spending (8%), spending of federal funds by state and local governments (18%) and state and local government own-sourced spending (74%).
State and Local findings:
o In FY2017, federal grants accounted for roughly 31% of state budgets and 23% of combined state and local budgets.
o In FY2019, around 26% of state capital expenditures were supported by federal funds.
o As per 2012 U.S. BEA data, state and local governments spent around $214 billion on construction through their own-sourced funds, with around $92 billion (43% of $214 billion) going towards the procurement of goods and services.
Commodity level findings:
o In 2012, the federal government spent $804 million directly and $1.8 billion indirectly through grants to state and local governments, for the procurement of the five commodities of interest (concrete, cement, steel, aluminum, and glass) for construction.
o Based on estimations, the federal government procured imported commodities of interest worth around $156 million for construction in 2012.
o In 2012, state and local governments spent $7.5 billion on the procurement of the five commodities of interest through their own-sourced funds.
o Federal spending on the procurement of concrete and steel for construction projects was in the range of $2.3 billion and $190 million respectively, as per 2012 U.S. BEA data.
o In 2012, government spending (including federal, state, and local) accounted for 42% of total U.S. procurement spending on concrete for construction, with the federal government accounting for 25% of total government procurement spending on concrete.
o The estimation analysis projected a rise in concrete procurement spending by the federal government, increasing from $2.3 billion in 2012 to $5.2 billion in 2018.
To read the full report and see complete results and analysis of this new study, Download the full report from the link above.
Don't forget to Follow us on LinkedIn , Facebook and Twitter to get the latest about our new blog posts, projects, and publications.