Federal Energy Management

Leading By Example in Reducing Energy Use

“We’ll save taxpayers $2 billion a year by making 75 percent of federal buildings more energy efficient” – President Barack H. Obama, January 24^th, 2009

Background

The federal government is the nation’s single largest energy consumer and energy waster.  In 2006, the federal government consumed approximately 1.5 quadrillion Btu (quads) of energy at a cost of $18 billion. This is 1.5% of all energy used in the U.S.  American taxpayers pay about $4 billion annually just to heat, cool, and power the 500,000 federal buildings and facilities.

Efforts over the last two decades to reduce energy use in federal buildings and facilities have resulted in significant energy and cost savings.  Overall, federal primary energy use decreased by 18 percent from 1985 to 2006, and in buildings, primary energy consumption decreased by 3 percent.  Federal building and facility energy bills decreased by 27 percent in real terms in that time period.  In large part due to energy-saving efforts, federal building carbon emissions were 7 percent lower in 2006 than in 2003.  (See table at end of fact sheet)

A range of policies and programs have been used to realize these savings, including most notably: energy intensity targets, alternative project financing, efficient procurement requirements, and a variety of training and technical assistance.  Expanding, enhancing and fully implementing these policies and programs will help the federal government reap huge amounts of savings that still remain.

Federal Energy Requirements

For more than three decades, federal agencies have been subject to energy intensity reduction goals or mandates (reducing energy consumption per square foot of buildings).  The current goals, originally required as part of the January 2007 Executive Order (EO) 13423 and codified in Section 109 of the Energy Independence and Security Act of 2007 (EISA), require federal agencies to reduce energy intensity in buildings by three percent each year, or 30 percent by 2015 compared to 2003 energy intensity levels. 

Stimulus and Federal Energy Management

The American Recovery and Reinvestment Act (ARRA) earlier this year placed the greatest federal investment in the American economy and energy efficiency in the United States’ history.  Among ARRA’s investments in energy efficiency was unprecedented funding for improvements to federal buildings.  It allocated $4.4 billion dollars to the General Services Administration (GSA) for the creation of High-Performance Federal Buildings.  GSA is currently the landlord for over 400 federal agencies, bureaus and commissions, with a portfolio of over 354 million rentable square feet.  GSA has focused this money toward improvements such as roofing projects (including green roofs), window retrofits, lighting retrofits, high-performance building systems, and advanced metering.  $750 million of this money has been allocated to federal courthouses, federal buildings, and modernizations, including $450 million for the Department of Homeland Security’s new headquarters.  

ARRA also provided approximately $4.3 billion to the Department of Defense (DOD) for energy efficiency projects and modernization of facilities.  Currently, the Department of Defense holds 545,714 facilities, including 316,238 buildings and was responsible for almost 80% of total federal energy use in 2006.  Through the use of stimulus funds, DOD has obligated over $1 billion for energy modernization projects, including $300 million for energy efficiency research and development, $120 million for energy efficiency within existing buildings, and $451 million in obligations for roofing retrofits.

Financing Federal Energy Savings

Although many energy-efficiency investments save money over time, appropriations for energy-efficiency projects have historically been insufficient, and the new energy intensity targets will exacerbate the funding gap.  An investment of about $9.5 billion through 2015, or about $1.3 billion per year over the next seven years, likely will be needed to meet the current energy targets and reap the associated energy and carbon savings.  This investment is far greater than recent annual appropriations for energy efficiency, water conservation, and renewable energy projects in existing federal buildings, which have ranged from only about $100 million to $300 million.  Through 2015, at existing appropriations, the federal government would therefore be facing a cumulative budget shortfall of up to about $7 billion.

Since the mid-1990s, this funding gap has been filled with private sector financing from energy services companies (ESCOs) and energy utilities.  ESCOs and utilities finance and help implement energy-saving projects through Energy Savings Performance Contracts (ESPCs) and Utility Energy Services Contracts (UESCs), in which the contractor is paid out of the resulting stream of energy bill savings.  In FY 2006 direct appropriations provided $281 million for energy efficiency, water conservation, and renewable energy projects, while ESPCs provided $314 million and UESCs provided $70 million.  Prior to a lapse in ESPC authority in 2003 and 2004, ESPCs provided an even greater share of overall funding for energy efficiency.  With ESPCs now receiving permanent authorization in EISA, ESPCs increasingly can be used again by agencies to pay for and implement energy-efficiency projects.   

Other Federal Energy-Efficiency Requirements

Energy Management and Reporting Requirements:

One of the biggest challenges to realizing the energy intensity reduction goals is funding and making energy efficiency a priority for already overburdened agencies.  Numerous complementary requirements have been enacted, which help agencies justify specific requests for energy efficiency-related funding and technical assistance.  They include Section 432 of EISA requiring energy evaluations of all buildings, reporting identified opportunities to central database, and tracking of measure implementation. Section 433 of EISA also requires new federal buildings to reduce fossil fuel consumption by 55 percent compared to similar buildings by 2010 and by 100 percent by 2030.

Section 432 of EISA requires all federal agencies to identify facilities that combine to make up at least 75% of agency energy use, and appoint an energy manager at each of those facilities.  Agencies also must perform comprehensive energy and water evaluations for 25% of those facilities each year, and track implementation of cost-effective measures found. 

Procurement Requirements:

Since at least the early 1990s, federal agencies have been encouraged to purchase energy-efficient products wherever “practicable.”  Agencies were first required to purchase energy-efficient products in EO 13123, issued in 1999.  EPAct 2005 codified the existing directives into law, and directed supply agencies, including the General Services Administration (GSA) and the Defense Logistics Agency (DLA), to remove all non-compliant products from their shopping websites.  EISA section 525 specified that non-compliant products must be removed from the GSA and DLA shopping sites by August 19, 2008.  EPAct 2005 also required agencies to provide written justification for non-compliant purchases.

The Alliance recently conducted research suggesting that compliance with the procurement requirements has been uneven at best. Of the 164 government solicitations we examined that included requests for products covered by this legislation, only seven percent appeared to be fully compliant.  Most procurement agents we talked to were unfamiliar with the energy-efficiency purchasing requirements or did not realize that they were responsible for ensuring they were carried out.  Moreover, GSA and DLA’s purchasing websites still list primarily non-compliant products and frequently do not offer shoppers the option to purchase compliant products. 

EO 13423 established additional requirements, directing agencies to:

• Procure energy-efficient electronic products and enable ENERGY STAR features on all computers and monitors in federal facilities;
• Incorporate sustainable building principles in new construction and major renovation of agency buildings, and achieve 15 percent implementation of these principles by 2015; and
• Purchase plug-in hybrid vehicles once they are commercially available and cost-effective.

Advanced Metering Requirements:

Section 103 of EPAct 2005 required agencies to install advanced electricity meters in all federal buildings and facilities (where practicable) by 2012.  Currently, it is unknown if agencies are on pace to meet their metering requirements.  Agencies were required to submit their electric meter implementation plans to DOE in August of 2006, and most have reportedly done so, but no agency plans have been made available for the general public, and their quality is reportedly mixed.  EISA added a requirement for agencies to meter natural gas, steam and water usage in their facilities.

DOE’s Help Necessary for Agencies to Meet These Goals

Reducing federal building and facility energy intensity by three percent annually is achievable, but will be challenging even if agencies have access to all the necessary technical and financial resources the Department of Energy has historically provided. Over the last couple of years, DOE’s support capability has been allowed to erode as the regional offices have been closed and national lab resources for technical support of ESPCs and UESCs has declined dramatically. DOE’s major responsibilities should include helping other agencies meet the energy program goals and rebuilding FEMP’s technical support capacity. FEMP’s budget should be increased in proportion to the stringency of federal energy management requirements to reflect the importance of FEMP’s technical assistance role.