x>EPA
United States
Environmental Protection Agency
ENERGY^STAR BUILDINGS5" AND GREEN LIGHTS" 1998,YEARIN REVIEW
WValue Of
Pennsylvania Avenue NW
Washington., DC 20460
202-566-0556
-------
June 1999
Congratulations to ENERGY STAR Buildings5" and Green Lights* participants:
ENERGY STAR Buildings and Green Lights participants are demonstrating that it is possible to
protect the global climate while simultaneously strengthening their financial performance and the
American economy. We've heard many people in the U.S. and around the world say that this can't
be done, that acting now to reduce carbon dioxide in the atmosphere will harm our economies.
The accomplishments of ENERGY STAR Buildings and Green Lights send a different message.
Consider their success. At the close of 1998, more than 4,400 ENERGY STAR Buildings and
Green Lights participants had:
• Invested more than $2.3 billion in energy-efficient technologies in 3.8 billion square feet
of facility space
• Reduced their annual energy costs by more than $800 million
• Prevented 19 billion pounds of greenhouse gas emissions per year - the equivalent of
planting more than 2 million acres of trees
By incorporating strategic energy management into their business plans, these organizations
have not only helped to protect the environment, they have helped to build more competitive
and profitable businesses. In fact, detailed analysis of financial performance over time suggests
that participants that have made significant energy-efficient upgrades have higher operating
margins than companies that have not embraced energy efficiency.
To build on these successes, the Environmental Protection Agency (EPA) and the Department of
Energy (DOE) have joined forces to deliver a powerful new marketing tool that defines and
recognizes energy performance. The ENERGY STAR* Label for Buildings will allow building owners
for the first time to benchmark their buildings' energy performance relative to similar properties.
Awarded to buildings performing in the top 25 percent of the market, this Mark of Excellence in
Energy Performance will indicate that your building has outstanding energy performance, lower
operating costs, and superior value. We look forward to American businesses using the ENERGY STAR
Label as an important organizational benchmark - whether they have one. building or a hundred.
EPA wishes to thank the ENERGY STAR Buildings and Green Lights participants for their
exemplary contributions to the prevention of global climate change. These leaders serve as
remarkable examples of how we can address air pollution and promote economic growth.
Carol M. Browner
Administrator
U.S. Environmental Protection Agency
-------
Demonstrating the value
of energy efficiency
Since the launch of Green Lights in
January 1991, the U.S. Environmental
Protection Agency's (EPA's) ENERGY STAR
programs have redefined air pollution
prevention. While promoting partnership
over regulation, the ENERGY STAR
programs have significantly reduced
carbon dioxide emissions and
demonstrated the financial benefits of
strategic energy management. By the
end of 1998, energy investments
within the ENERGY STAR Buildings and
Green Lights Partnership have added
$2.9 billion of Net Present Value to
U.S. businesses (Figure 1).
For every dollar of Net Present Value
added to these organizations in 1998,
6.9 pounds of greenhouse gases were
also prevented. Because energy is
usually created by burning fossil fuels,
these environmental leaders are
reducing carbon dioxide emissions by
2.4 Million Metric Tons of Carbon
Equivalent (MMTCE) - a metric used to
measure reductioas in greenhouse gases
(Figure 2). The 1998 rate is equivalent
to planting more than 2 million acres
of trees. The accomplishments of the
ENERGY STAR Buildings Partnership
establish that global climate protection
and economic progress are not
mutually exclusive.
(FIGURE 1) CUMULATIVE NET
PRESENT VALUE OF '91 -'98 UPGRADES:
$2.9 BILLION (IN '97 DOLLARS)
A, Manufacturing 10%
$290.8 Million
A Healthcare 6%
SW.SM/fcn
A Education 27%
$779.7 Million
1 Retail 24%
$S91.5 Million
A Other 18%
$S16.0 Million
A Government 15%
$442.0 Million
(FIGURE 2) ANNUAL CARBON
EQUIVALENT PREVENTED FROM
COMPLETED UPGRADES
3 MMTCE
91 92 93 94 95 96 97
,$?
Mai! code 3201
ennsylvaniaAvenu
Washington OC 2046
Page 1
-------
Linking financial performance
to strategic energy management
Recognizing that efficiencies in other
building systems can double the cost
savings from efficient lighting alone,
EPA merged ENERGY STAR Buildings
with Green Lights in 1998. Through
this combined partnership, the nation
has the opportunity to save more than
$130 billion in energy costs by 2010,
while drastically reducing carbon
dioxide emissions.
By the end of 1998, more than 4,400
organizations benefit from ENERGY STAR
Buildings and Green Lights, which
represents 13 percent of U.S. commercial
and industrial building space.
Participants are diverse and include 120
retailers, 209 healthcare organizations,
372 schools and universities, and more
than 1,598 small businesses through
ENERGY STAR Small Business (Figure 3).
(FIGURE 3)
GROWTH OF PARTICIPANTS
5,000
91 92 93 94 95 96 97
By the close of 1998, ENERGY STAR
Buildings and Green Lights participants
had invested $2.3 billion in energy-
efficiency upgrades. Collectively, these
businesses save 11.9 billion kWh and
$802 million annually in energy costs.
Although the value of energy efficiency
begins as cost savings, it strengthens
businesses in the form of higher net
(FIGURE 4) NET PRESENT VALUE
OF 1998 UPGRADES:
$763 MILLION (IN '97 DOLLARS)
A Manufacturing 2%
$12.7 Million
A Other 6%
$44.0 Million
A Retail 36%
$282.8 Million
A Healthcare 4%
$32.8 Million
A Education 17%
$127.0 Million
A Government 35%
$263.9 Million
operating margins and increased
organization value. In 1998 alone,
ENERGY STAR Buildings and Green Lights
participants experienced an increase
of $763 million to their organizations'
Net Present Value as a direct result of
their energy-efficient upgrades (Figure 4).
To further highlight the link between
energy investments and financial
performance, EPA compared and
analyzed the Net Operating Income
(NOI), over an extended period of time,
of ENERGY STAR Buildings participants.
This analysis suggests that the NOI of
participants who complete 50 percent
of their lighting upgrades increases
over time (Figure 5). Although many
variables affect the ultimate success of
an organization, the strategic energy
management of ENERGY STAR Buildings
participants indicates a link between
energy savings and enhanced financial
performance.
Page 2
-------
In addition to preventing pollution,
improving a building's efficiency is an
effective way to lower operating costs
and thereby increase asset value. EPA
estimates that utility costs make up
nearly one-third of a typical office
building's operating expenses. As a
result, a 30 percent savings in energy
costs can translate into a six percent
increase in net operating income. At a
capitalization rate of 10 percent, each
dollar of incremental income can raise
a building's asset value by 10 percent.
To assist the commercial real estate
market in evaluating ways to capture
this value, EPA released new ENERGY STAR
Buildings software and tools in the fall
of 1998. By year's end, real estate
managers and owners had already
committed more than 100 million square
feet to strategic energy management.
By partnering with EPA, these business
leaders will be equipped to realize
increased asset value.
(FIGURE 5}
NET OPERATING INCOME
INCREASES WITH UPGRADES
20% NOI
15%
-8 -6 -4 -2
Pre-Upgrades
Per Quarter
8 10
Post-Upgrades
Per Quarter
i Group Mean Upgraded > 50 Percent
I Group Mean Other
Source: Comoustat
In the fall of 1998, EPA and the
Department of Energy (DOE) also
piloted a new initiative: the ENERGY STAR
Label for Buildings. Like other
ENERGY STAR-labeled products, such as
office equipment and homes, the Label
for Buildings represents the mark of
excellence in energy performance.
Increasing asset value through energy
management requires the ability to set
goals, track costs and consumption, and
communicate building performance to
others. Assessing the comparative
performance of a building against this
goal can be accomplished by the
ENERGY STAR Benchmarking Tool. This
simple-to-use, Internet-based tool,
located at www.epa.gpv/buildinglabel,
catalogs all energy uses in a building,
calculates an energy intensity, and
benchmarks a building's energy
performance against all similar-use
buildings in the United States. The
building is assigned a benchmark score
from 0 to 100. Buildings that perform
in the top 25 percent and satisfy
indoor environmental requirements
may apply for the ENERGY STAR Label.
V f\
\f'
Page 3
-------
Recognizing environmental and
business leadership
EPA is dedicated to recognizing its
participants' efforts to increase their
energy performance, adopt strategic
energy management, and help to
protect the earth's climate. As a result
of their environmental and business
accomplishments, "Partners and
Allies of the Year" are spotlighted in
national editorial outreach, public
service announcements, and
newsletters. Congratulations to EPA's
1998 award winners.
ENERGY STAR Buildings
Award Winners:
Broward County,
Florida's investments
in energy efficiency
have resulted in
BROWARD COUNTY
savings of more than $600,000 in 1998.
The county also annually prevents the
release of more than 14 million pounds
of carbon dioxide - the equivalent of
planting 1,918 acres of trees.
CEC Consultants, Inc.,
actively promoted
CEC Consultants, inc. strategic energy
^ management through
Consulting Engineer! ENERGY S'l'AR Buildings
seminars, ads on local buses, and direct
mail. Additionally, CEC helped Partners
by performing energy audits and making
upgrade recommendations.
As a performance
contractor, Johnson
Controls Inc. has
measured, monitored, and managed
energy usage for more than 1,400
JgHNSON
CONTROLS
Johnson ConMs Wfortd Services Inc.
organizations, helping maximize cost
savings (more than $1 billion to date)
and enhancing building performance
through strategic energy management.
mervyns During us
store upgrades, Mervyn's took the
opportunity to increase the lighting
level of its retail space by 88 percent
and improve merchandise visibility. Even
with this lighting increase, the average
annual energy consumption per store
was lowered by 171,000 kWh through
strategic energy management.
New York State Office
of Mental Health (OMH)
OflKs of Mental Health has reduced the
agency's energy consumption by nearly
55 percent. Realizing an internal rate of
return of 36 percent, OMH has amassed
$55 million in savings through energy-
efficiency upgrades.
Polaroid
Since partnering
with EPA in 1991,
Polaroid has upgraded nearly 5 million
square feet of facility space with energy-
efficient technologies. As a result of its
strategic energy management, Polaroid
saves more than $3 million per year in
energy costs.
Wake County Public
School System (WCPSS)
uses part of its $600,000
in annual energy savings
to help educate schools
on strategically managing energy use.
WCPSS's efforts include conducting
workshops and publishing a handbook
that provides suggestions on how to
improve energy performance.
Page 4
-------
Green Lights Award Winners:
Amtech Lightjng
Services has not only completed Green
Lights, but also helped ten partners
complete their lighting upgrades. To
further build its business, Amtech has
integrated the ENERGY STAR Buildings
Partnership's message into its
marketing materials.
&J94FJ/V47 Through
strategic energy
management, Boeing has reduced its
energy use by more than 25 percent,
reducing its annual energy bill by $7
million. This 200-million-kWh reduction
also prevents the release of more than
40 million pounds of carbon dioxide.
Mercer County, N.J.,
has upgraded more
than 2.5 million square
feet in office buildings,
schools, and higher-
education institutions. As
a result, the county annually saves
more than $1.7 million and prevents
the release of more than 10.5 million
pounds of carbon dioxide.
Northern Illinois
Medical Center
In order to
prioritize
comfort,
Northern Illinois Medical Center's nursing
staff was consulted on each lighting
upgrade decision. Additionally, the
hospital saves $82,000 per year in
reduced energy costs. The Center
communicated its success through a
temporary display in the hospital and
through editorial outreach.
To reduce up-front
financial burdens, the
State of Ohio used
performance
contracting combined
with air quality bond
financing to fund energy-efficiency
investments. The state's efforts reduce
its energy use by 32 million kWh and
prevent the release of 68 million
pounds of carbon dioxide per year.
STAPLES
The Office Superstore
In addition to
upgrading 880
stores, Staples
built 150 new
stores, each incorporating the latest
energy-efficient building technologies.
One hundred thirty-five will follow in
1999 - all part of "Staples 28," an effort
to reduce Staples' energy use and
operating costs by 28 percent.
While studying the
ENERGY STAR Buildings
Manual, students in the
University of Virginia's
(UVA's) Engineering
Design course conduct
energy analyses on campus buildings
and prepare reports. The students' and
other UVA projects have reduced the
university's energy use by more than
23 million kWh.
-,-v f*
U,c, ufA Headquarters Li
Mall code 3201
1200 Pennsylvania Avenu
Washington DC 2
-------
Gaining an enhanced
environmental image
Many organizations have recognized the
value of working with EPA to develop an
image of environmental responsibility
and sound financial management. Many
ENERGY STAR participants convey to their
employees a culture of commitment to
environmental and financial well-being.
They communicate to the public their
voluntary efforts to protect the
environment. And they share with
their stakeholders the financial success
that results from strategic energy
management. Working closely with
participants, EPA has helped with
communications efforts across a variety
of media and venues, including the
examples below.
Hartsfield Atlanta
International Airport
Hartsfield Atlanta
International Airport,
a Green Lights Partner,
is plugged into energy
efficiency. To educate
staff and customers
about its energy-
efficiency efforts,
Hartsfield worked
with EPA to create
dioramas featuring
information about the
Partnership. Measuring 3' x 5', these
10 backlit dioramas are displayed in
each of the airport's main terminals and
are viewed by travelers approximately
32 million times per year.
Kinko's
In April 1998, Kinko's worked with EPA
to create artwork for an Earth Day poster
that Kinko's displayed in its 859 stores
during the last two weeks of the month.
Based on positive customer feedback,
Kinko's also displayed screen savers
for its rental computers, counter cards,
and window decals - all promoting
the environmental benefits of energy
efficiency. These materials were
distributed to 250 Kinko's branches that
had installed energy-efficient lighting.
Quakertown Community
School District
In order to highlight its participation
in ENERGY STAR Buildings, Quakertown
Community School District worked
with EPA to design flags featuring
Page 6
-------
both the school district's logo and the
Partnership's logo. These colorful flags
are flown outside of nine upgraded
facilities and remind people daily of
the district's energy-efficiency efforts.
McDonald's
To share die company's experience with
ENERGY STAR Buildings and Green Lights,
McDonald's launched a nationwide
awareness campaign to commemorate
Earth Day Month. McDonald's bags and
cups carried the ENERGY STAR label, a
description of what the label means and
of McDonald's progress in upgrading
restaurants with
energy-efficient
technologies,
and contact
information for
customers to
learn
more.
"This promotion fit the bill
for McDonald's. Our
customers like to know what
we're doing to save
resources, and they like to
see that McDonald's is an
environmental leader."
- Bob Langert,
Director of Environmental Affairs,
The Goodyear Tire and Rubber
Company
Goodyear, an ENERGY STAR Buildings
Partner, lit up one of
its blimps with
the ENERGY STAR
Buildings logo.
This blimp flew
over baseball fans
in Chicago and Los
Angeles in the spring of
1998 and was viewed by
spectators more than 500,000 times.
These environmental image-building
efforts are reinforced by the ENERGY STAR
Buildings and Green Lights outreach
campaign that generates broad awareness
of the benefits of energy efficiency and the
Partnership. ENERGY STAR Buildings and
Green Lights articles and public service
announcements (PSAs) often feature the
energy-efficiency successes of participants.
In 1998, placements of PSAs and articles
were made in high-profile publications
such as Business Week and The New
York Times, with total circulation of
more than 14 million readers.
Page 7
-------
^ -rz^^^'Z* -^
ss'*-^*^; r-y-z- ->5C.V
•r-^Tr^f'^'^lf^
.'*L:::^ *•, T.& **> .»>*•- -•:. ,:v ^£. .*_*.-• .
h:%5^
Building on ENERGY STAR
Buildings' success
"ENERGY STAR proves we can
meet challenges like global
warming through the
marketplace, through new
technology and innovation,
and through good business
sense.... Together, we can
build a 21st century that
is stronger, healthier, and
more prosperous than any
time in human history."
~ Vice President Al Gore
(FIGURE 7) GOALS FROM COMPLETED
UPGRADES ENERGY SAVINGS (kWh)
30 Billion
ENERGY STAR Buildings and Green Lights
is steadily positioning the commercial
and industrial market to cost-effectively
reduce air pollution levels (Figures 7
& 8). By the year 2010, EPA expects
ENERGY STAR Buildings and Green Lights
participants to reduce annual
greenhouse gas emissions by at least
24 MMTCE, close to 10 percent of the
projected emissions from commercial
buildings. By the end of 1998,
ENERGY STAR Buildings and Green Lights
participants were preventing the release
of 2.4 MMTCE and saving more than
$800 million in energy costs. These
investments in strategic energy
management have added $2.9 billion
of Net Present Value to participants.
ENERGY STAR Buildings investments
(Figure 9) demonstrate the strong link
between strategic energy management
and enhanced financial performance.
However, the majority of the nation's
high-level financial decision-makers in
private and public organizations still
view electric energy costs as the least
controllable category of business costs.
In fact, most are still not involved in
their company's decisions regarding
energy use. In 1999, EPA will continue
its focus on investigating the extent to
which energy efficiency provides a
competitive advantage and on helping
bridge this information gap.
PageS
-------
Within the next year, ENERGY STAR
Buildings will provide new organi2ational
tools to give these decision-makers the
information they need to understand
the link between strategic energy
management and financial performance.
EPA will launch One-2-Five™ Energy, a
tool that will help businesses evaluate
their organization's ability to implement
strategic energy management. To help
public institutions, retail establishments,
and healthcare organizations assess their
buildings' energy performance and to
increase the reach of the ENERGY STAR
Label for Buildings, EPA's ENERGY STAR
benchmarking tool will be expanded
to evaluate industry-specific energy use.
Finally, in an effort to reach out to
corporate and financial decision-makers,
(FIGURE 8) GOALS FROM
COMPLETED UPGRADES
CARBON EQUIVALENT PREVENTED
6MMTCE
(FIGURE 9) TOTAL
INVESTMENTS IN ENERGY-EFFICIENT
BUILDING UPGRADES
$2,500 Million
$2.000 Million
$1,500 Million
$1,000 Million
91 92 93 94 95 96 97
EPA will work with them to develop
new methods to communicate the
financial benefits of energy efficiency.
Early results of EPA research suggest
that organizations that strategically
invest in energy efficiency increase
their net operating income. To provide
the financial community with relevant,
credible, and comparable measures of
performance, EPA will introduce new
methods of evaluating organizational
risk relative to an organization's energy
expenditure. By establishing such
links between energy investment and
financial performance, EPA expects to
continue to raise awareness of the
value of energy efficiency, to transform
the perception of energy efficiency,
and to promote investments in
building upgrades.
•'•s
Hfc
Page 9
-------
CO CD
O 3
O CD
oo
00
°
CB
0) NJ 3 2
co o 5. s
3- N> ^ CD
5'^g Q.
O
Co
m
5
C/3
o
CD
C
CO
CD
TJ
O
O
!-»•
o'
.
co
CD
o m ~D no
A 5 ° C
tO T> {O *—
01 S !~
CU Tp
CQ «">
CD a
0) fe
3 H
°- m
-n
CD
CD
w
------- |