The President's New Federal Energy Efficiency Executive Order

The President's New Federal Energy Efficiency Executive Order

On June 3, 1999, President Clinton issued Executive Order 13123 that will help meet the challenge of global warming by requiring each Federal agency to reduce greenhouse gas emissions from energy use in buildings by 30 percent below 1990 levels by 2010. This will reduce annual greenhouse gas emissions by 2.4 million metric tons of carbon equivalent (MMTCE) -- the equivalent of taking 1.7 million cars off the road -- and save U.S. taxpayers more than $750 million a year. The order also will expand markets for renewable technologies, reduce air pollution, and serve as a powerful example to U.S. businesses and consumers who can reap substantial benefits from energy improvements.

Prior Federal Energy Efficiency Efforts

The President's June 1999 Executive Order builds upon previous efforts to improve Federal energy efficiency. The Energy Policy Act of 1992 established the goal of improving energy efficiency in Federal office buildings by 20 per-cent on an energy-per-square-foot basis by the year 2000, compared with a baseline year of 1985. In March 1994, President Clinton issued Executive Order 12902, which extended the energy efficiency goal to 30 percent below 1985 levels by 2005. The latest order extends these goals still further, while also tightening provisions on exempted facilities and setting forth the first-ever Federal goal tied specifically to greenhouse gas reductions.

Aggressive New Goals

The Federal government is the largest energy consumer in the United States. Its annual energy bill runs more than $8 billion, including $4 billion to heat, cool, and power 500,000 buildings. Federal agencies already have reduced energy consumption 17 percent per square foot relative to 1985 levels. The Executive Order builds on that progress, extending current energy efficiency goals and set-ting new targets for greenhouse gas reductions, renewable energy use, and water conservation.

New Greenhouse Gas Reduction Goal. The order requires each Federal agency to reduce greenhouse gas emissions that result from energy use in its buildings by 30 percent below 1990 levels by 2010. This is the Federal government's first-ever goal tied to greenhouse gas reductions.

New Energy Efficiency Goal for Facilities. The Executive Order requires each Federal agency to improve energy efficiency in its buildings by 35 percent relative to 1985 levels by 2010.

New Energy Efficiency Goal for Industrial and Laboratory Facilities. The order requires each Federal agency to improve its energy efficiency in industrial and laboratory facilities by 25 percent relative to 1990 by 2010.

Expanded Use of Renewable Energy. Building on the President's commitment to install 20,000 Federal solar energy systems by 2010, the order calls for Federal agencies to expand their investments in renewable energy through applications of solar, wind, geothermal, and biomass technologies at Federal facilities and through the purchase of electricity from renewable energy sources.

Water Conservation. The order calls for Federal agencies to improve their efficiency in the use of water in order to reduce water consumption and associated energy use. The order requires the U. S. Department of Energy (DOE) to work with other Federal agencies to develop water consumption baselines and then set appropriate goals for water conservation.

Fewer Exempt Facilities. Prior to the President's new Executive Order, a large number of facilities (accounting for 17 percent of energy use in buildings) were exempt from meeting Federal energy goals. Now all facilities are subject to those goals and requirements unless they meet new exemption criteria to be developed by DOE. In addition, each agency must report all exempt facilities in its annual report to the President and explain the rationale behind excluding them from Federal energy goals.

Cutting-Edge Tools and Strategies

The Executive Order calls for agencies to use a wide range of energy management tools and strategies to fulfill the new energy efficiency, renewable energy, and greenhouse gas reduction goals.

Alternative Financing. Financing options such as Energy Savings Performance Contracts (ESPCs) and utility energy efficiency service contracts offer Federal agencies powerful tools for leveraging private sector financing to fund cost-saving energy improvements at no net cost to taxpayers. Under ESPCs, private sector energy service companies finance the up-front cost of purchasing and installing new energy efficient equipment. The Federal government uses a portion of the savings it accrues through reduced energy bills to repay the energy service company over the life of the contract. Contractors then receive a predetermined share of the value of the energy savings generated by their efforts and may be paid only if actual savings result from the reduced energy use. All additional savings go to the Federal government. The government benefits from new equipment, reduced energy costs, improved energy efficiency, reduced greenhouse gas emissions, and conservation of nonrenewable fuels.

To date, DOE and the U.S. Department of Defense (DoD) have made more than $8 billion in ESPC contract authority available for all Federal agencies to fund energy improvements. In addition, many of these contracts are "Super ESPCs" that rely on the same principles as regular ESPCs but offer an umbrella contract to allow expedited service. The Executive Order calls for agencies to maximize their use of ESPCs and utility energy efficiency service contracts to realize energy and cost savings.

Life-Cycle Cost Analysis. Federal agencies need to consider the full cost of their investments, including energy, operation, and maintenance costs, not simply the purchase cost of projects or products. By taking all costs into account, agencies can save money and reduce energy use. To that end, the order requires agencies to consider life-cycle costs-that is, investment, capital, installation, energy, operating, maintenance, and disposal costs-over the life of the project or product.

ENERGY STAR ® Labels and Other Energy Efficient Products. The order calls for agencies to purchase energy efficient products such as those with the ENERGY STAR label. Purchasing compact fluorescent light bulbs, highly efficient boilers, and other energy efficient products can save Federal agencies hundreds of millions of dollars.

ENERGY STAR Building SM Label. Agencies shall strive to meet the ENERGY STAR Building criteria in their eligible facilities to the maximum extent practicable by the end of 2002. The label signifies that the building is in the top 25 percent of similar buildings with regard to energy efficiency.

Electricity from Renewable Energy and Energy Efficient Sources. Given that more than 70 percent of the Federal government's costs for energy used in buildings comes from electricity, the Executive Order requires agencies to consider the source of their electricity and opt for cleaner, more efficient electricity generation. Specifically, agencies shall strive to minimize the greenhouse gas intensity of purchased electricity. In addition, agencies should adopt policies to increase the use of electricity from renewable energy sources.

Highly Efficient Energy Systems. The Executive Order calls for agencies to make greater use of highly efficient energy systems, including combined heat and power systems that use "waste" heat from industrial processes to supply power to other needs. These systems can offer tremendous energy and cost savings, as well as significant environmental benefits.

Off-Grid Electricity Generation. The Executive Order requires agencies to consider off-grid electricity opportunities that often provide energy and environ-mental benefits, while allowing agencies to avoid the costs of building new transmission lines or digging up existing lines. Off-grid options can be particularly effective in remote locations such as some U.S. national parks. Technologies range from solar outdoor lighting to small wind turbines and fuel cells.

Sustainable Building Design. In July 1998, a number of Federal agencies committed to constructing sustainably designed buildings. The June 1999 Executive Order requires all Federal agencies to apply sustainable design principles to the siting, design, and construction of new facilities, thereby saving energy and taxpayer dollars, and reducing pollution.

Strengthening Agency Accountability

The Executive Order provides a frame-work to hold agencies accountable for their progress in Federal energy management. The following new management strategies and reporting requirements will help ensure that all Federal agencies manage energy use wisely, reaping substantial fiscal and environmental benefits for years to come.

Annual Reports to the President and Annual Score Cards. Under the Executive Order, each Federal agency must submit an annual report to the President describing the agency's progress in meeting the goals. In addition, the Deputy Director for Management of the Office of Management Budget will evaluate each agency's performance and submit agency score cards to the President.

President's Management Council. The President's Management Council, which generally consists of deputy secretaries from all agencies, will monitor agency progress on Federal energy management and provide a high-level forum for identifying ways to accelerate improvements.

Agency Energy Teams. The Executive Order requires each agency to form a technical energy support team to ensure that energy management strategies are implemented across all facilities. The energy teams bring together legal, procurement, and other essential agency representatives to overcome barriers to realizing energy and cost savings.

New Public-Private Advisory Committee. The order calls for DOE to organize an advisory committee to bring together private and public sector experts who can advise agencies on ways to improve their energy management practices.

Concrete Steps, Concrete Savings

In conjunction with the signing of a new Executive Order to promote energy efficiency, President Clinton announced the Pentagon's intent to award the Federal government's largest-ever Energy Saving Performance Contract (ESPC). Under this award, Viron Energy Services and Pepco Energy Services will upgrade the energy performance of 837 Federal buildings at no up-front cost to taxpayers. The 18-year service contract, covering five military installations in the Washington, DC, area, will reduce annual energy consumption by 17 percent. The reductions will reduce annual greenhouse gas emissions by 24,000 metric tons of carbon equivalent (MTCE) -- equivalent to taking more than 19,000 cars off the road -- and will save DoD more than $219 million in energy and related costs. Other examples of energy-saving actions that the Executive Order is designed to promote include:

Energy Efficient Procurement. The Defense Logistics Agency (DLA), which supplies almost 20 percent of all light bulbs purchased by the Federal government, teamed up with DOE to offer half-price compact fluorescent light bulbs to any Federal purchaser.

Last year, the DLA supplied 1.5 million bulbs to Federal purchasers. If the bulbs had all been compact fluorescents, savings over the life of the bulbs would have totaled $7.5 million. Recently, DOE added compact fluorescents to the ENERGY STAR product-rating program, providing consumers with quality assurance when they purchase the bulbs. A compact fluorescent bulb can last up to five years, saving $67 over its lifetime.

Renewable Energy Projects. Some 18 Federal agencies -- from the departments of Agriculture, Interior, and Transportation to the Smithsonian Institution and the U.S. Postal Service -- recently received a combined $1.5 million in DOE funding for more than 100 cost-effective renew-able energy projects at government sites. The technologies include more than 50 new or renovated solar water heating systems, large and small photovoltaic (PV) systems, PV-powered lights, wind power, and "solar walls" that preheat outside air for interior heating.

Buying Renewable Power. EPA's Richmond, California, laboratory became the first major Federal facility to use 100 percent renewable energy. Initially, 60 percent of the power supplied will come from geo-thermal sources, and 40 percent will come from biomass. This green power purchase will produce environmental benefits equivalent to eliminating more than two million passenger car miles driven in California each year.

ENERGY STAR Buildings. EPA retrofitted GSA's Foley Square Federal Office Building in New York City to qualify for the ENERGY STAR Buildings Label. The building, which opened in 1994, has 1.2 million square feet and houses offices of the Federal Bureau of Investigation, Internal Revenue Service, and EPA. By deploying equipment and products that qualify the building for the ENERGY STAR label, Foley Square saves taxpayers $1.3 million annually in energy costs.

Click here for additional information on the President's Federal Energy Efficiency Executive Order.

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