Media Release

Federal Government Energy Waste Costs Taxpayers $1 Billion Annually

Release Date: Tuesday, November 10, 1998

Taxpayers could save $1 billion annually and see a significant reduction in air pollution and greenhouse gas emissions (7 million tons of carbon dioxide) if the federal government adhered to the Energy Policy Act and executive orders that require agencies to reduce energy waste through improved energy productivity, reports the Alliance to Save Energy and a task force of 50 energy companies and organizations.

Examining energy use by the federal government, the nation’s largest energy user, the Alliance and the task force spent more than two years researching information for a major new report released at a news conference today, Leading By Example: Improving Energy Productivity in Federal Government Facilities.

"How can the federal government expect businesses and others to meet climate change targets, when it’s not setting the right example?" questioned Alliance to Save Energy President David M. Nemtzow. "The Clinton Administration continues its laudable support of the Kyoto agreement to reduce U.S. greenhouse gas emissions. Two major oil companies, British Petroleum and Shell Oil, have committed to reducing their greenhouse gas emissions. Shell is even going beyond Kyoto and committed to cut greenhouse gas emissions by 10 percent below 1990 levels by 2002. Yet the federal government hasn’t even established a goal for itself."

"Reducing the federal government’s massive energy waste offers enormous opportunities to save taxpayers billions of dollars for decades to come and improve the environment," said Senator Jeff Bingaman (D-NM), senior Democrat on the Senate Energy and Natural Resources Committee next session and co-chair of the Alliance. "We’re starting to make progress, but there’s no excuse for this much waste when leading companies in the U.S. energy-efficiency industry are willing to provide the money for improvements at no up-front cost to taxpayers."

While the federal government claims to have reduced energy use 14.2 percent per gross square foot between 1985-95, the Alliance’s analysis indicates that energy use actually went up 2.7 percent per gross square foot when all government buildings and energy use are counted. Unlike federal government calculations, Leading By Example includes energy-intensive buildings and accounts for energy consumed in the generation and distribution of power in federal facilities.

The federal government, which still consumes about 32 percent more energy per square foot than the nation’s building stock at large, spends $4.2 billion per year to power and fuel half a million buildings and facilities. With an investment of $4.7 billion in energy-saving products over the next eight years, taxpayers would save $1 billion annually for decades to come.

"Federal agencies have clearly made some progress, but they have only started to tap the opportunities," said Jared O. Blum, president and chief executive officer of the Polyisocyanurate Insulation Manufacturers Association and co-chair of the Alliance’s Federal Energy Productivity Task Force. "Private industry has the technology to enable the federal government to save an enormous amount of money each year with upgrades of energy-efficient technologies."

In order to meet the president’s 30 percent energy reduction goal by 2005, federal agencies will need to rely on the private sector, especially energy service companies (ESCOs), to finance their energy-efficiency improvements. Energy-saving performance contracts (ESPCs) could generate $900 million in investment capital for government agencies through 2005, the Federal Energy Management Program (FEMP) estimates. Available since 1992, just 72 ESPCs have been used by agencies– an investment of only $138 million.

"The fundamental problem is Cabinet secretaries aren’t doing their job," said Alliance Vice President Mark Hopkins. "I think the President is as frustrated as we are – that’s why he ordered them to prepare strategic plans in July. They were to be done by now. Where are they?"

To reduce the time it takes to award a delivery order for an energy-efficiency project to six months rather than the previous one to three years, FEMP and the Army Corps of Engineers have each issued regional indefinite-delivery indefinite-quantity contracts (IDIQs) that agencies can use to enter into ESPCs.

"I compliment FEMP and the Corps of Engineers for creating the IDIQ approach. But even with this innovative approach, few energy-saving projects have been turned into actual contracts," said Glen J. Skovholt, vice president of government and community affairs at Honeywell Inc., and chair of the Federal Energy Productivity Task Force. "The real challenge now is for FEMP and the Corp to help agencies push projects out the door, so the private sector can make the investments needed to end this waste of taxpayers’ money."

"If major oil companies can commit to deeper and faster reductions of greenhouse gas emissions than called for by the Kyoto agreement, then the federal government should certainly be able to at least match them," Nemtzow said. "The U.S. government must lead by example."