Testimony: Funding for the Energy Star Program

DAVID M. NEMTZOW
PRESIDENT, ALLIANCE TO SAVE ENERGY

SENATE APPROPRIATIONS COMMITTEE
SUBCOMMITTEE ON VA, HUD AND INDEPENDENT AGENCIES

FY 2004 BUDGET FOR ENERGY-RELATED PROGRAMS AT THE ENVIRONMENAL PROTECTION AGENCY

APRIL 30, 2003

My name is David Nemtzow. I am the President of the Alliance to Save Energy, a bi-partisan, non-profit coalition of business, government, environmental, and consumer leaders dedicated to improving the efficiency with which our economy uses energy. Senators Charles Percy and Hubert Humphrey founded the Alliance in 1977. The leadership of the Alliance is also a partnership between the private sector and government chaired by Senator Byron Dorgan (D-ND) and co-chaired by Dean Langford the former CEO of Osram Sylvania. Over seventy companies currently participate in the Alliance's Associates program and with your permission Mr. Chairman I would like to include for the record a complete list of the Alliance's Board of Directors and Associates. This list includes the nation's leading energy efficiency firms, electric and gas utilities, and other companies committed to promoting sound energy use.

Thank you for the opportunity to testify regarding the energy-related components of the Environmental Protection Agency’s (EPA) FY 2004 budget request. Specifically, I respectfully urge you to significantly increase your support for the EPA’s Energy Star program. The Energy Star program is an entirely voluntary program that yields significant economic returns to our nation’s consumers while generating considerable environmental benefits for our nation – all through energy efficiency.

The Alliance has a long history of advocating for, as well as researching and evaluating, federal efforts to promote energy efficiency. While many of these efforts include laws passed by this Congress and federal regulations and standards issued pursuant to those laws, we especially applaud efforts that rely on cooperative partnerships between government and business and between the federal and state governments, and not just government mandates. EPA’s climate programs are entirely voluntary and address the national goals of broad-based economic growth, environmental protection, national security and economic competitiveness at the same time. The EPA’s Energy Star program is a shining example of such a program. The Climate Protection Division at EPA which operates the Energy Star program works closely with the private sector manufacturers, retailers, building owners, and energy service providers, as well as state and local governments, non-profits, and other organizations to promote energy efficient products and buildings. And they do it extremely well – for every tax dollar spent by the Energy Star program, $75 or more of energy savings are returned. Last year alone, Americans with the help of Energy Star saved enough energy to power 15 million homes and avoid the greenhouse gas emissions from 14 million cars – all while saving over $6 billion.

Energy Efficiency As A Valuable Resource

Mr. Chairman, over the past 30 years, energy efficiency has met more of the country's energy needs than any other single domestic energy resource. Energy efficiency is a significant and valuable resource. Furthermore, energy efficiency measures are powerful and dynamic policy tools through which prices, supply, and emissions can be radically adjusted. While the Alliance to Save Energy believes that an effective energy policy must include a combination of measures that provide electricity, heating fuel, and motor fuel to Americans, it also believes that we must first go after the resource that is cheapest, can be delivered most quickly, and can stand up to all environmental scrutiny – that resource is energy efficiency.

Energy efficiency gains have significantly improved the way we use energy. The U.S. economy grew nearly five times faster than did energy use from 1973 to 2001. A refrigerator sold today uses about 70 percent less energy than one built in the early 1970s. Since 1973, energy efficiency has saved the nation 27 quadrillion Btus (quads) of energy annually, more than one-fifth of total consumption, and about $150 billion each year. The energy efficiency industry has become a vibrant part of the American economy. More than 5,000 companies provide energy-saving equipment and services, contributing over $10 billion and a quarter-million jobs to our economy each year.

But despite these new technologies and the integration of energy efficiency into the nation’s energy policies and economy, we have barely scratched the surface of energy efficiency’s potential. Technologies that dramatically increase the efficiency of electric distribution lines, lighting systems, air conditioning and refrigeration, and other products are moving out of laboratories. It seems that every year technological developments bring more and better measures at our disposal to reduce electricity demand, make homes more energy-efficient, and go further on less gasoline. But Mr. Chairman, we must make sure that we are able to maximize these resources.

How Energy Star Capitalizes On This Resource

Mr. Chairman, EPA’s Energy Star program has proven to be an extremely effective way for this nation to capitalize on the potential of energy efficiency as a resource. In fact, over the last decade, Energy Star successfully promoted the use of advanced technologies that are quite common today such as power management systems for office equipment, LED traffic lights, and low standby energy use. The President’s National Energy Plan even recommends that the Energy Star program be expanded to include schools, retail buildings, health care facilities, and homes, and that the Energy Star labeling program be extended to cover more products. And, Mr. Chairman, the President Bush has publicly declared his strong support of the program.

Energy Star’s voluntary partnership program – which includes Energy Star Buildings, Energy Star Homes, Energy Star Small Business, and Energy Star Labeled Products – works by removing marketplace barriers to existing and emerging technologies, resulting in faster deployment of energy efficient technology into the residential and commercial sectors of the economy.

Rather than providing financial subsidies or tax breaks, Energy Star develops voluntary partnerships and provides clear, reliable information to the public. The Environmental Protection Agency is uniquely qualified to operate these voluntary programs in the public interest with the confidence of market participants. The program has proved successful in providing information on technology opportunities, generating awareness of energy efficient products and services, and educating consumers about life cycle energy savings so that consumers can make informed purchases. In fact, the Energy Star label is a nationally recognized label for energy efficiency, used by many (including retailers and utilities) to promote efficiency. According to the EPA, as of 2002, the label has achieved more than forty percent awareness among the public.

Providing the catalyst for many businesses, state and local government institutions, and consumers to invest in energy efficiency, Energy Star helps overcome market barriers through brand recognition, information, and positive publicity. Because Energy Star takes a strategic approach to energy management, it can produce twice the savings – savings for the environment and for consumers.

About The Energy Star Partnerships

Energy Star is composed entirely of voluntary partnerships, and they have grown since the early 1990s to include thousands of partnerships with product manufacturers, private and public building owners and operators, homebuilders, small businesses, utilities, and retailers. The sheer number of these partnerships is a testament to the fact that energy efficiency delivers “pollution prevention at a profit.”

Energy Star serves broad constituencies across every state in the country. Energy Star includes over 1250 manufacturing partners of over 35 different product categories, who make and market over 18,000 different models of Energy Star qualified products. Energy Star assists over thousands of small businesses with their efforts to maximize the energy efficiency of their facilities. Energy Star’s work with partners further advances the education of energy efficiency and the reduction in energy consumption. For example, by working with builders, Energy Star helps the customers of those builders make smart decisions – decisions that will save the consumer money and the country pollution – for as long as the home is standing. To date, more than 3,000 builders have built over 100,000 Energy Star-qualified homes, locking in financial savings for homeowners of more than $26 million annually. The Energy Star Building Partnership currently represents 17 percent of the U.S. building floor space.

Recently, the Alliance to Save Energy asked many of Energy Star’s partners if they would support our request for a significant increase in funding for these important programs. The response was remarkable. Over 650 businesses, from large businesses like Merrill Lynch & Co., Inc., the Target Corporation, and Exxon Mobil to smaller businesses like Target Aluminum, Inc. and Thomas Homes, Inc. (in Bridgeton, MO and Dunkirk, MD, respectively) and even schools such as the Howard County Public School System in Maryland pledged their support for these important programs. Each member of the Subcommittee will receive a copy of this letter with the list of businesses. With your permission Mr. Chairman I would like to include for the record a copy of this letter.

Lowe’s Companies, Inc., another company that has pledged their support for increased funding of the program, also recently committed to increasing nationwide sales of Energy Star qualified products in by twenty percent in 2003. While saving their customers money with reduced utility bills, Lowe’s will also helped to reduce the emissions of greenhouse gases.

Energy Star proves that environmental protection can not only be achieved without harming the economy, but also that such protections can act to boost consumer savings and economic growth. Energy Star provides the catalyst for many businesses, state and local government institutions, and consumers to invest in energy efficiency, which in turn yields multiple private and public benefits. It does this by providing access to information, improving brand recognition, and reporting positive publicity. This voluntary partnership program reduces pollution through cost-effective measures; promotes economic growth by stimulating investment in new technology; and helps ensure the reliability of our electric system by reducing peak demand.

Investments In Energy Star Pay Back For Years

While consumers who purchase Energy Star-labeled products save through the life of the product, product manufacturers get the economic boost and incentives from the purchases of these products. According to EPA, consumers and businesses saved more than $6 billion in 2002 alone by investing in energy-efficient technologies. In addition, EPA predicts cumulative net energy bill savings for consumer and businesses of $85 billion through 2012.

Pollution savings are as dramatic as the financial savings. EPA estimates that emissions reductions averaging more than 35 million metric tons of carbon equivalent (MMTCE) per year between now and 2012 were locked in last year based on actions already taken by EPA’s Climate Protection program’s voluntary partners. Because many of the investments in energy-efficient technology promoted by Energy Star offer a life of ten years or more, these investments will continue to deliver economic and environmental benefits through 2012 and beyond.

The Energy Star program seeks to influence those capital investment decisions in a way that helps individual purchasers save money while simultaneously helping the nation meet its clean air and greenhouse gas emissions-reduction goals. All of this through voluntary participation in Energy Star, and the voluntary, market-based choices made by thousands of partners and millions of American consumers. No regulations, no government mandates.

Much Has Been Accomplished, But Huge Potential Remains Untapped

As noted earlier, Mr. Chairman, Energy Star ensures American consumers have access to information about the energy efficiency of the products they consume. However, Energy Star does not cover all products. The Alliance to Save Energy agrees with the President’s National Energy Plan that notes, “energy efficiency would be further promoted if the Energy Star program were expanded to a broader range of products.” We believe, Mr. Chairman, that the Energy Star program should have the appropriate resources to do just that.

While the Energy Star program has thus far made significant reductions in greenhouse gas emissions, opportunities to use energy efficiency to further eliminate pollution and cut energy bills remain untapped. Over 85 percent of the major air emissions in the U.S. are attributable to energy consumption. Furthermore, American families and businesses spend over $700 billion each year on energy bills according to the Energy Information Administration. As successful as the Energy Star programs have been, these programs could accomplish much more. According to EPA, a typical homeowner could save roughly thirty percent per year on their energy bills by using Energy Star-labeled products. Imagine how much Americans could save with the help of a stronger, even more effective Energy Star program.

Unfortunately, these important programs have received a virtual level funding request for the past three years, even as the number of products and manufacturers in the Labeling program has greatly expanded, and the number of partners in the Buildings, Homes, and Small Business programs have soared.

Appropriations to the Energy Star program go directly to fund the underlying research, program implementation, and technical assistance to partners. These funds are hugely leveraged through EPA’s thousands of voluntary partnerships with product manufacturers, home builders, state and local government institutions, commercial building owners, and small businesses. For every federal dollar spent on these programs, EPA can show an average of $75 or more in energy bills savings and $15 in private sector investment in energy efficient technology, reductions in greenhouse gas emissions of 1.0 metric ton of carbon equivalent, and an addition of over $60 to the economy.

Recommendations

Mr. Chairman, I hope that I have helped to demonstrate the extensive value of EPA’s Energy Star program. The Energy Star program has proven to be an extremely effective way to capitalize our nation’s resource of energy efficiency and successfully make use of energy efficiency’s ability to enhance energy security, reduce pollution, and provide economic value at the same time.

The Alliance to Save Energy would like to respectfully recommend the Subcommittee take the following actions to best maximize the successful efforts of EPA’s Energy Star program.

1. Last year, the Senate provided a $6.4 million increase in funding for this program over the fiscal year 2002 levels. Unfortunately, this was omitted in Conference. However, both the Senate and Omnibus report marks the first time the Energy Star program and its funding have been mentioned in a VA-HUD appropriations report. I strongly encourage the committee to again make its funding intent for the program clear with report language.
2. In addition, due to the multiple benefits of the Energy Star program, I respectfully request a significant increase in funding for the program from the fiscal year 2003 levels of $49.8 million.