United States
Environmental Protection
Agency
Air and Radiation
6202J
Climate Protection Division
EPA 430-R-99-005
July 1999
DRIVING INVESTMENT IN
ENERGY EFFICIENCY

ENERGY STAR® and Other Voluntary Programs




                             1998 Annual Report

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CONTENTS
Executive Summary	
Introduction	
   Voluntary Partnerships Save Energy and Prevent Pollution
   The Importance of Managing Energy 	
   Turning the Environmental Challenge into
   Profitable Opportunities  	
   Voluntary Partnerships Overcome Market Barriers	
1998 Achievements 	
   Voluntary Program Investments and Benefits	
   Award Winners	
Partnership Programs  	
   ENERGY STAR® for Commercial and Industrial Buildings ....
      ENERGY STAR BuildingsSM and Green Lights® Partnership
      ENERGY STAR® Small Business 	
   ENERGY STAR® for Home and Office	
      ENERGY STAR®-Labeled Products	
      ENERGY STAR® Homes	
   Methane Partnerships	
      Landfill Methane Outreach	
      Natural Gas STAR	
      Coalbed Methane Outreach	
      Ruminant Livestock Efficiency	
      AgSTAR  	
   Environmental Stewardship Programs	
References	
End Notes .,,,,..,.,,,,,,,.,.,,,,,,,.,.,,,,,,,.,..,,,,
For additional information, please call the toll-free
ENERGY STAR Hotline at 1-888-STAR-YES (1-888-782-7937)
or visit our web site at www.epa.gov/energystar.

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EXECUTIVE SUMMARY
In partnership, American organizations, businesses, consumers, and the Climate Protection
Division (CPD) of the US Environmental Protection Agency (EPA) are successfully reducing
emissions of greenhouse gases (GHGs) that contribute to global climate change.
Through voluntary programs that promote cost-effective energy efficiency and GHG
emissions reductions, the Division forges partnerships with private and public organizations.
These partnerships capitalize on the nation's technological creativity. They are transforming
markets by enhancing demand for energy-efficient products and services across all sectors of
the economy, driving investment in energy efficiency, and saving consumers and organizations
money on energy bills. Many of the improvements catalyzed by the partnerships will provide
both environmental and economic benefits for the next 10 to 20 years.
The Climate Protection Division continues to have great success with its partnership
programs. In 1998, the Division exceeded its key goal—the Climate Change Action Plan
(CCAP) carbon-reduction goal of 14.6 million metric tons of carbon equivalent (MMTCE).
The Division remains on target to meet its goal for 2000 (see Figure ESI).
                    Figure ES1. Division carbon reductions compared
                    with CCAP targets
                    1995    1996     1997      1998     1999   2OOO
                    | Target   • Actual     Source: EPA Climate Protection Division
This annual report summarizes the environmental and economic results
from the partnership programs of the Climate Protection Division through the end of 1998:
  ENERGY STAR Buildings™ and Green Lights®
  ENERGY SiAR®-Labeled Products
  Methane Partnerships
  Environmental Stewardship Programs
                             CLIMATE PROTECTION  DIVISION 1998 ANNUAL REPORT

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              The major economic and environmental achievements across these voluntary programs
              through 1998 include the following:

                 • Annual reductions of GHG emissions totaled 17 MMTCE1 in 1998—a 40-percent
                   increase over the 1997 emissions reductions.
                 • Sulfur dioxide (SO2) emissions were reduced by about 130,000 tons in 1998, while
                   emissions of nitrogen oxides (NOX) were reduced by about 70,000 tons.
                 • Cumulative investment in energy-efficient technologies exceeded $4 billion.
                 • Cumulative energy bill savings for consumers and businesses amount to more
                   than $18 billion.
                 • The cost of the Division's voluntary programs to the government continues to
                   represent a small percentage of the total investment resulting from the
                   programs—6.3 percent.
                 • The net increase in economic activity (in effect, the amount of cash added to the
                   economy), which is the difference between cumulative energy bill savings and
                   investment in energy-efficient technologies, amounts to more than $14 billion.
                 • Program partners' commitments for additional investments will result in further
                   reductions of carbon emissions totaling 146 MMTCE through 2015, cumulative
                   energy bill savings of $23.9 billion, and a net increase in economic  activity of more
                   than $19 billion.

              Some of the key accomplishments of CPD's programs in 1998 include the following:

                 • ENERGY STAR Buildings participants represented over 8 billion square feet or
                   13 percent of the total commercial, public, and industrial building market. They
                   upgraded 3.8 billion square feet, saved nearly 12 billion kWh of energy, prevented
                   emissions of 2.4 MMTCE, and saved over $802 million on utility bills, in 1998 alone.
                 • EPA and the US Department of Energy (DOE) piloted a performance-based award—
                   the ENERGY STAR Label for Buildings—to help building owners identify properties
                   with the greatest potential for energy-efficiency improvements and to recognize top-
                   performing buildings.
                 • More than 1,200 manufacturers produced a total of 3,400 individual product models
                   in 29 consumer product categories that were ENERGY STAR compliant; use of these
                   products prevented emissions of 4.0 MMTCE and saved $1.8 billion in 1998.
                 • Over 900 partnerships achieved reductions of non-carbon dioxide (CO2) gases—
                   methane, perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), and sulfur
                   hexafluoride (SF6)—totaling more than 10.5 MMTCE.
* Reductions in annual greenhouse gas emissions for all CPD programs, including non-CO2 gases, are expressed in
  "carbon equivalents" as defined by the Intergovernmental Panel on Climate Change (IPCC).
CLIMATE  PROTECTION  DIVISION 1998  ANNUAL  REPORT

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                      Figure ES2. Total GHG emissions
                      prevented to 2015
                       ENERGY STAR
                       Building*
                       and
                       Green Light*
ENERGY STAR
Labeling
The Division's partnership programs reduce GHGs by promoting cost-effective, energy-
efficient technologies and practices. The programs drive investment, deliver cost savings, and
enhance economic activity. Environmental and
economic benefits from these investments will
continue well beyond 1998. Many of the
investments resulting from the partnership
programs have 10- to 15-year lifetimes, and
key benefits for the next decades are being
"locked in" now.
These locked-in benefits through 2015 total:
   • GHG reductions. 163 MMTCE from
    completed projects and an additional
    146 MMTCE from partner commitments
    to additional projects.
   • Energy bill savings. $18.8 billion in bill
    savings from completed projects and an
    additional $23.9 billion in bill savings
    from partner commitments to additional
    projects.
   • Technology investments. $4.1 billion in
    technology expenditures on completed
    projects and an additional $4.8 billion in
    technology expenditures from partner
    commitments to additional  projects.
   • Economic activity. A $14.6  billion net
    increase in economic activity from
    completed projects and an additional
    $19 billion net increase in economic      w
    activity from partner commitments to    8
    additional projects.
                                            a
Figures ES2 through ESS show the
distribution of these benefits across the
voluntary partnership programs.
The partnership programs continue to
successfully leverage investments in
energy efficiency by providing their
partners with information, motivation,
and tools to help them choose better
investments. EPA does not provide
financial subsidies to its partners.
Industrial
Stewardship
                        | Completed     Committed

                        Source: EPA Climate Protection Division
                      Figure ESS. Total energy bill savings to 2015
               $1 B.OOO
               $14,000
               $12,000
               $10,000
                $8,000
             =  $6,000
                $4,000
                $2,000
                       ENERGY STAR
                       Buildings
                       and
                       Green Lights

                       | Completed
ENERGY STAR
Labeling
  I Committed
                       Source: EPA Climate Protection Division
CLIMATE PROTECTION  DIVISION  1998  ANNUAL  REPORT

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               Every federal dollar spent on partnership programs through 1998 means:

                  • Reductions in GHG emissions of more than 0.6 metric tons of carbon equivalent
                   (2.2 tons of CO2).
                  • Savings for partners and consumers of about $75 on their energy bills.
                  • The creation of $16 in private sector investment.
                  • The addition of over $58 into the economy.
               These results are based on the investments, savings, and emissions reductions associated
               with projects that program participants completed through the end of 1998. As
               mentioned previously, investments, savings, and environmental benefits of the same
               order of magnitude will be realized as a result of additional commitments partners have
               already made.
         Figure ES4. Total expenditure on
         technologies to 2015
          ENERGY STAR  ENERGY STAR  Methane
          Buildings    Labeling
          and
          Green Lights

          | Completed     Committed

          Source: EPA Climate Protection Division
Figure ES5. Net increase in
economic activity to 2015
 ENERGY STAR  ENERGY STAR  Methane
 Buildings    Labeling
 and
 Green Lights


 H Completed   | Committed

 Source: EPA Climate Protection Division
CLIMATE  PROTECTION  DIVISION 1998 ANNUAL REPORT

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INTRODUCTION
                                                Figure 1. Carbon dioxide emissions by source
Voluntary  Partnerships Save  Energy and
Prevent Pollution
Protecting our environment is a compelling reason to improve the way we use energy—or
more specifically, eliminate the waste in our energy system. Approximately 85 percent of the
energy consumed in the United States is produced through the combustion of fossil fuels. As
they burn, fossil fuels emit carbon dioxide (CO2)—the major greenhouse gas (GHG) that
contributes to global climate change (see below)—as
well as harmful pollutants such as nitrogen oxides
(NOX) and sulfur dioxide (SO2).
Roughly one-third of the CO2 emissions come from
industry, one-third from commercial and residential
buildings, and one-third from transportation (see
Figure 1). Technologies available today can cut this energy
use significantly and, at the same time, improve our
quality of life. EPA's voluntary public-private partnerships
promote the widespread use of today's technologies to save
energy and reduce emissions of greenhouse gases and
other air pollutants across many sectors of the economy.
                                                          Gommare
                                                          Buildings
                                                          ier
                                                      Rasidantia
                                                      Buildings
                                                                     Transportation
                                                                     31%
                                                                Source: EPA 1998
Global
             The earth's land surface, flora and fauna, oceans, and atmosphere absorb energy
             from the sun. Over time, a balance occurs between this incoming energy and
             outgoing radiation (long-wave, invisible, infrared energy or heat). Greenhouse
             gases, among them carbon dioxide (C02) and methane, trap the outgoing heat
             (energy) in the atmosphere. Since the Industrial  Revolution, concentrations of
             C02 in the atmosphere have  risen about 30 percent. As human and natural
             activities produce ever more greenhouse gases, the composition of the Earth's
             atmosphere is changing as is the balance between incoming and outgoing heat
             energy. The earth's atmosphere is gradually warming.

             Scientific models predict that the average global temperature will increase 2 to 6
             degrees Fahrenheit in the coming  100 years. The Second Assessment Report of
             the Intergovernmental Panel  on  Climate  Change  (IPCC)  noted:  "Increasing
             concentrations  of  greenhouse gases will raise  atmospheric and oceanic
             temperatures and could alter associated weather and circulation patterns." IPCC
             is composed of more than 2,000 of the world's leading climate scientists; its peer-
             reviewed reports are the most widely accepted.
                            CLIMATE PROTECTION  DIVISION 1998 ANNUAL REPORT

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       Figure 2. Energy efficiency is a
       superior investment
  40%
                                  Small Company Stocka
                                  Common Stocks
                                  Corporate Bonds
                                  U.S. T-Bill*
       Risk Index (year-to-year volatility)
       Source: Richards et al., 1998
       Figure 3. Large opportunity to direct
       investment to efficient and clean
       technologies over the next decade
       Buildings  Transportation   Industry
       and
       Homes


       • New Stock (Purchased 1999-2O1O)

       H Pre-1999 Equipment Stock

       Source: EPA Climate Protection Division
The  Importance  of
Managing  Energy
American families and businesses spend over
$500 billion each year on energy bills—more
than we spend on K-12 education. Energy
consumption in the United States has almost
tripled since 1950. A growing, mobile population
has come to expect more goods and services—
more equipment, homes, office buildings,
industries, and vehicles. Operating all of these
takes energy.
As a nation, we could use energy more
efficiently. Numerous studies indicate that
greater use of existing energy-efficient
technologies can cut energy bills, enhance
economic growth, and reduce GHG emissions.
The Division's partnership programs capitalize
on the  tremendous opportunity for consumers,
businesses, and organizations to make smarter
equipment purchasing and investment decisions.
Thousands of equipment purchases are made
every day. People tend to buy the equipment
that is the least efficient, thereby committing
themselves to higher energy bills for the next 10
to 20 years, depending on the life of the equipment.
At the same time, buyers overlook the investment
opportunities represented by the more efficient
equipment—investment opportunities with more
than double the return on  investment of other
common options, such as money markets or US
Treasury bonds (see Figure 2).
CLIMATE  PROTECTION  DIVISION 1998  ANNUAL REPORT

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Turning the  Environmental  Challenge into
Profitable Opportunities
In the next decade, the nation can capitalize on extensive opportunities to reduce GHG
emissions as buyers replace outdated equipment and products as part of normal business
operations. More than 60 percent of the CO2 emissions in the United States in 2010 will be
from equipment purchased between now and then (see Figure 3). If the new equipment is
energy efficient, it can have a dramatic impact on overall US CO2 emissions, especially in the
buildings/homes and transportation sectors of the economy .
Through its partnership programs—ENERGY STAR Buildings and Green Lights, ENERGY STAR-
Labeled Products, Methane Partnerships, and Environmental Stewardship Programs—the
Division will continue to deliver the information that organizations and consumers need to
choose energy-efficient solutions.
By adopting existing energy-efficient technologies and practices, businesses and individuals
can simultaneously lower costs and prevent associated GHG emissions.
  • If everyone in the country bought only energy-efficient products marked with the ENERGY
    STAR label during the next 15 years, the nation would slash its cumulative energy bill by
    more than $100 billion and reduce carbon emissions by more than 380 MMTCE.
  • If all commercial and industrial building owners implemented the ENERGY STAR Buildings
    strategy, they would shrink their cumulative energy bill  by $130 billion by 2010 and reduce
    GHG emissions by more than 350 MMTCE, eliminating emissions equivalent to those
    produced by 20 million-30 million cars.
Major opportunities also exist to prevent emissions
of other greenhouse gases that ton-for-ton trap more
heat in the atmosphere than does CO2 (see Table 1).
Industries—such as semiconductor manufacturing,
aluminum smelting, natural gas production, and coal
mining—are collaborating with EPA to reduce
emissions of methane, hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
EPA's partnership programs are a key component of
a successful approach to mitigating climate change
while accelerating economic growth. Investments in
energy efficiency will continue to pay off in the
coming decades in energy savings, increased profits,
net reductions in GHG emissions, and lower
emissions of other air pollutants, including NOX
and particulates.
Table 1. Numerical Estimates of Global
Warming Potentials Compared with
Carbon Dioxide
                           Direct Effect
Carbon Dioxide
Methane
Nitrous Oxide
Hydrofluorocarbons
Perfluorocarbons
Sulfur Hexafluoride
1
21
310
140-11,700
6,500-9,200
23,900
Source; IPCC 1996.
                             CLIMATE  PROTECTION  DIVISION 1998 ANNUAL  REPORT

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              Voluntary Partnerships Overcome Market Barriers
              EPA has designed its voluntary energy-efficiency programs with the long-term goal of
              transforming the market for products and services that are both energy efficient and cost
              effective. These programs are sustained efforts to increase the supply of, and demand for,
              profitable energy-efficient technologies and practices. The Division's efforts include
              raising the awareness of consumers and business owners about the financial and
              environmental benefits of energy efficiency.
              EPA's approach to transforming and enhancing markets involves both supply- and
              demand-side strategies. For example, on the supply side, the ENERGY STAR Labeling
              program stimulates product innovation by specifying energy performance benchmarks
              for a growing array of products (e.g., copiers, computers, consumer audio equipment,
              and residential heating, ventilating and air-conditioning (HVAC), and light fixtures).
              Through its ENERGY STAR label recognition campaign, this program also stimulates
              demand for labeled products.
              ENERGY STAR Buildings focuses on overcoming demand-side market barriers—engaging
              private companies and public agencies to pursue cost-effective, energy-efficiency
              measures in their buildings. It also seeks to improve the services that building owners
              are offered though its ENERGY STAR Buildings ally effort.
              Methane outreach focuses on specific market opportunities, such as the development of
              profitable landfill-gas-to-energy (LGTE) projects.
Bottom-Hne&
    Energy Cost Savings Council is a coalition of manufacturers, utilities,
industry groups, and government agencies working to educate American
business leaders on the bottom-line benefits of upgrading buildings with
new electrical technologies. Recently, the Council cosponsored a survey
with CFO Magazine that drew 275 responses from subscribers. Respondents
said  they had the least amount of control over electrical energy costs
compared to seven other typical expenses such as labor, travel, and rent. That
suggests the top financial officers  may be overlooking opportunities to
reduce energy costs because they assume they have relatively little control
over them.
CLIMATE PROTECTION  DIVISION  1998 ANNUAL  REPORT

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Despite the financial attractiveness of these more efficient technologies and practices, many of
them have not penetrated the market as much as one might expect given their financial
returns. There is clear evidence that their potential is not being realized in the current market
system because of various informational, institutional, organizational, and other barriers that
work against the diffusion of existing energy-efficient technologies and the development of
advanced technologies. Information about these technologies must flow more quickly through
the marketplace, and a variety of split incentives (i.e., the buyer is not the builder; the tenant
is not the owner) must be more effectively addressed.
Programs like EPA's ENERGY STAR Buildings and Green Lights Partnership, ENERGY STAR
Labeling, and ENERGY STAR Homes are working with industry to overcome these market
weaknesses. The programs provide partners and consumers with technical assistance,
software tools, and objective information on financing options, life-cycle costs versus purchase
price, and new energy-efficient products.
Removing the barriers to the diffusion of energy-efficient products causes a substantial ripple
effect that enhances the potential for energy-efficient technologies. First, overcoming the
barriers against today's technologies will improve the manufacturers' incentive to invest in
the R&D needed for the next generation of technologies. This, in turn, will lead to new
technologies that expand the potential for future  energy savings. Second, as sales and
production experience with efficient technologies increase, the costs of production generally
fall, reducing the cost of the technology to the end-user. This "learning by doing" improves
the cost-effectiveness of energy-efficient technologies and expands the potential for
GHG reductions.
The Division continually evaluates the success of its voluntary programs, improving their
effectiveness over time and identifying opportunities for new initiatives. One such initiative,
the ENERGY STAR Label for Buildings, provides valuable recognition to buildings that operate
within the top quartile of energy efficiency for a specific building type (e.g., office buildings or
schools). In this endeavor, the Division is  collaborating with EPA's Indoor Environments
Division to promote the dual benefits of energy efficiency and indoor air quality, particularly
in the nation's schools.
The remainder of this 1998 Annual Report discusses the Climate Protection Division's
partnership programs in more detail. Included are the major program achievements through
1998, program investments and benefits, annual emissions reductions compared with annual
goals, partner success stories, and examples of public outreach efforts.
                              CLIMATE  PROTECTION DIVISION  1998  ANNUAL REPORT

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              A WORD FROM OUR ENERGY STAR PARTNERS

                                                  KIEL HEATING AND  AIR CONDITIONING
              By joining forces with manufacturers of ENERGY SiAR-labeled HVAC equipment, dealers are
              increasing sales volume, saving customers money on their utility bills, and helping reduce
              air pollution associated with energy use. New Jersey dealer Milton Baum considers ENERGY
              STAR a great way to differentiate his business from the competition. His Kiel Heating and Air
              Conditioning firm caters exclusively to the residential market. Mr. Baum first learned about
              ENERGY SiAR-labeled products through a national HVAC dealer membership organization. He
              then attended a 2-hour EPA training session to learn how to market the financial benefits of
              ENERGY SiAR-labeled equipment to customers. "The tools provided by EPA have been great.
              They really show other dealers and consumers  what the actual savings of ENERGY STAR-
              labeled heating and cooling equipment can be/'says Mr. Baum.
                                                                    APlrt,OA/C  & HEATING
 H/VM(Y\ ITU/)/        r*  I   /1'M'fTYll  HVTTDi   A/ WHPAD
              Consumers are realizing that, with the help of the Honeywell/GE Capital ENERGY STAR loan,
              they can purchase energy-efficient heating and cooling systems that offer improved home
              comfort, reduced utility bills, and increased home resale value. This loan  offers fixed
              payments with interest rates as low as 11.9 percent, terms of up to 60 months, and financing
              up to $10,000 for qualifying ENERGY STAR-labeled products. According to Vince Pipetone, the
              owner of Pipco A/C & Heating in Timonium, Maryland,"0ne of the greatest merits of the
              Honeywell/GE Capital ENERGY STAR loan  is  its  convenience to the customer. The credit
              decision is quick and there is no paperwork for the  customer or dealer." For Mr. Pipetone
              and his staff, selling high-efficiency equipment is a
              key business strategy. His clients get a brand new,
              energy-efficient   system,   low  interest-rate
              financing, and lower utility bills, which makes the
              investment "a lot easier to swallow," he says.
CLIMATE  PROTECTION  DIVISION 1998  ANNUAL  REPORT

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1998 ACHIEVEMENTS
EPA's Climate Protection Division has continued "identifying and implementing low-cost and
profitable opportunities to reduce emissions of greenhouse gases," as set out by the Clinton
Administration's 1993 Climate Change Action Plan (CCAP). 1998 was an outstanding year for the
Division. Its voluntary programs exceeded the reduction targets of 14.6 MMTCE set by CCAP,
achieving total carbon reductions of 17 MMTCE (see Figure 4).

At the same time that they cut greenhouse  gas emissions, the programs lowered emissions of
other pollutants. Sulfur dioxide  (SO2) emissions were reduced by about 130,000 tons, while
emissions of nitrogen oxides (NOX) were reduced by about 70,000 tons (see Figure 5).
The work accomplished by all of the Division's
voluntary programs through 1998 yielded these
achievements:

  • Annual reductions of GHG emissions
    totaled 17 MMTCE in 1998—a 40-
    percent increase over last year's
    emissions reductions.
  • Cumulative investment in energy-
    efficient technologies exceeded
    $4 billion.
  • Cumulative energy bill savings
    amount to more than $18 billion
    for consumers and businesses.
  • The low cost of the programs to the
    government continues to represent
    a small percentage of the total
    investment resulting from the
    programs—6.3 percent.
  • The net increase in economic activity
    (in effect, the amount of cash added
    to the economy), which is the
    difference between cumulative
    energy bill savings and investment
    in energy-efficient technologies,
    amounts to more than $14 billion.
  • Additional project commitments
    made by program partners will
    result in further reductions of
    carbon emissions totaling 146
    MMTCE through 2015, cumulative
    energy bill savings of $23.9 billion,
    and a net increase in economic
    activity of more than $19 billion.
    Figure 4. Division carbon reductions compared
    with CCAP targets
    I Target  | Actual

    Source: EPA Climate Protection Division
    Figure 5. Division SO2 and NOX reductions
140
100
 80
    •soz  •NOX
    Source: EPA Climate Protection Division
                             CLIMATE  PROTECTION  DIVISION 1998  ANNUAL  REPORT

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              Key program accomplishments in 1998 include the following:

                • ENERGY STAR Buildings participants represented over 8 billion square feet or
                  13 percent of the total commercial, public, and industrial building market. They
                  upgraded 3.8 billion square feet, saved nearly 12 billion kWh of energy, prevented
                  emissions of 2.4 MMTCE, and saved over $802 million on utility bills.
                • A total of 3,400 individual product models in 29 consumer product categories were
                  ENERGY STAR compliant; use of these products prevented emissions of 4.0 MMTCE
                  and saved $1.8 billion in 1998.
                • More than 1,200 manufacturers produced ENERGY STAR-labeled products, and over
                  3,500 retail stores nationwide actively promoted ENERGY STAR products.
                • More than 33 utilities serving over 28 million households partnered with ENERGY
                  STAR to promote compliant appliances, windows, HVAC, and consumer electronic
                  equipment.
                • EPA and the US Department of Energy (DOE) piloted a performance-based award—
                  the ENERGY STAR Label for Buildings—to help building owners identify properties
                  with the greatest potential for energy-efficiency improvements and to recognize
                  top-performing buildings.
                • More than 920 ENERGY STAR Homes builder partners in 50 states participated in
                  profitable energy-efficiency opportunities; a total of more than 5,000 new homes with
                  an ENERGY STAR label averaged energy reductions of over 35 percent.
                • Annual reductions of non-CO2 GHGs—methane, HFCs, PFCs,  and SF6 —from over
                  900 partnerships totaled more than 10.5 MMTCE.
                • Awards were presented to 37 top performers across the programs (see pp. 15-16).
                               \Af\4tn I     1/^1
-Ofl-OVfl I     I/I 11 flVC
Every federal dollar spent on these partnership programs through
1998 means:
• Reductions in GHG emissions of more than 0.6 metric tons of carbon
 equivalent (2.2 tons of C02).
• Savings for partners and consumers of about $75 on their energy bills.
• The creation of $16 in private sector investment.
• The addition of over $58 into the economy.
CLIMATE  PROTECTION  DIVISION 1998 ANNUAL  REPORT

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Voluntary Program  Investments and  Benefits
EPA's partnership programs drive investment in energy efficiency, which enhances economic
activity. They deliver cost savings to consumers, public agencies, organizations, and businesses.
The programs also reduce GHGs by promoting cost-effective, energy-efficient technologies and
practices. The economic and environmental benefits of the programs'investments will continue
well into the next decades. In Table 2, the benefits are presented through 2015 for completed
and committed projects.2
Table 2. Program Investments and Benefits (in millions of 1998 dollars)

Partners' Completed Investment

ENERGY STAR Buildings & Green Lights
ENERGY STAR-Labeled Products
Methane Partnerships
Environmental Stewardship Programs
TOTAL
Partners' Committed Investments2
ENERGY STAR Buildings & Green Lights
ENERGY STAR-Labeled Products
Methane Partnerships
Environmental Stewardship Programs
TOTAL
Bill Savings3
$9,772.845
$7,161.403
$1,867.447
--
$18,801.695
^^^H
Bill Savings3
$13,376.602
$9,008.442
$1,549.793
--
$23,934.837
Technology4
Expenditures
$3,061.300
$204.863
$844.163
N/A
$4,110.326
^^^m
Technology4
Expenditures
$4,111.858
$8.225
$763.254
N/A
$4,883.337
Net savings5
$6,711.545
$6,956.540
$1,023.284
--
$14,691.369
^^^m
Net savings5
$9,264.744
$9,000.217
$786.539
--
$19,051.500
MMTCE6
25.1
16.1
72.1
50.2
163.5
MMTCE6
29.4
23.4
71.8
21.8
146.4
—:      Not applicable.
N/A:     Not available.
1-6:      See end notes on page 35.
2 For example, ENERGY STAR Buildings partners commit to implementing whole-building upgrades over a 7-year period.
  For purposes of its evaluation, CPD assumes that these commitments will be met. Even though new partners are certain to
  join between now and 2015, CPD does not take credit for environmental or economic benefits from prospective partners.
                              CLIMATE  PROTECTION  DIVISION  1998  ANNUAL REPORT

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               The end notes to this Annual Report (see page 35) provide detailed documentation of the
               evaluation methodology and the assumptions used in measuring the performance of these
               voluntary programs. A few key methodological concepts and assumptions are summarized
               below.
               Emissions Prevented. Most of the Division's programs focus on energy efficiency. For
               these programs, CPD estimated the expected reduction in electricity consumption in
               kilowatt hours (kWh). Emissions prevented are calculated as the product of kWh of
               electricity saved and an emission factor (e.g., MMTCE prevented per kWh). Other
               programs focus on directly lowering GHG  emissions (e.g., Natural Gas STAR, Landfill
               Methane Outreach, and Coalbed Methane  Outreach). These GHG emission reductions
               were estimated on a project-by-project basis.
               Expenditures on Energy-Efficient Technology. For most of its programs, the
               Division's estimate of expenditures on energy-efficient technology is based on the
               partners' capital cost of energy-efficient equipment, including the cost of financing.3 For
               the Product Labeling and Homes Programs, however, expenditures on energy-efficient
               technology are based simply on the purchase price of labeled products.
               Energy Bill Savings. Energy bill savings are calculated as the  product of the kWh of
               energy saved and the average cost of electricity.
               Net Increase in Economic Activity. This is the difference between energy bill
               savings and investment in energy-efficient technology. Simply put, it is the increase in
               the amount of money partners have available to invest in the economy as a result of
               participating in the Division's programs.
               Many of the investments resulting from the partnership programs have 10- or 15-year
               lifetimes, and key benefits over the next 10 to 15 years are being"locked in"now.This
               analysis shows the locked-in benefits from only those efficiency improvements that
               current partners have completed (or, in the case of ENERGY SiAR-labeled products,
               products that have already been purchased4) or have committed to complete (e.g., by
               signing an ENERGY STAR Buildings Memorandum  of Understanding). It is certain that
               over time, more businesses will join these partnerships and that ENERGY SiAR-labeled
               products will continue to penetrate markets; however, the figures in Table 2 do not
               forecast the environmental and economic benefits for actions not already locked in.
                CPD assumes that equipment purchases are financed at a 7-percent real rate of interest by private sector
                partners and a 4-percent real rate of interest by public sector partners.
                In the case of ENERGY STAR Office Equipment, EPA estimated environmental and economic benefits for one
                more product cycle (product cycles range from 4-6 years, depending on the specific product), but assumed
                conservatively that the rate of market penetration would remain unchanged from 1998.
CLIMATE PROTECTION  DIVISION  1998 ANNUAL  REPORT

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1998  Award Winners
ENERGY STAR Labelim
Exit Sign Partner of the Year
Lithonia Emergency Lighting, Decatur, GA
Imaging Partner of the Year
Ricoh Corporation, West Caldwell, NJ
Computer Partner of the Year
IBM Corporation, Poughkeepsie, NY
Home Electronics Partner of the Year (tie - 2)
Panasonic Communications & Systems Co, Mahwah, NJ
Sony Electronics, Inc., Park Ridge, NJ
National Windows Partner of the Year*
Andersen Corporation, Bayport, MN
Regional Windows Partner of the Year (2)*
Soft-Lite L.L.C.,Bedford, OH
Windowmaster Products, El Cajon, CA
National Windows Retailer of the Year*
The Home Depot, Atlanta, GA
Appliance Partner of the Year*
Whirlpool Corporation, Benton Harbor, Ml
Appliance Leadership Award*

*DOE ENERGY STAR Labeling and Retail
Maytag Corporation, Washington, DC
Utility of the Year (2)
Conectiv Power Delivery, Wilmington, DE
Joint Management Council/Conservation Services Group,
   Boston, MA
Manufacturer of the Year
Andersen Windows, Bayport, MN
Technical Support Provider of the Year
Energy Rated Homes of the Midwest, Indianapolis, IN
State or Local Government Agency of the Year
Florida Solar Energy Center, Cocoa, FL
Special Recognition Awards (4)
Energy Diagnostics, Valparaiso, IN
Energy Rated Homes of Utah, Orem, UT
Energy Services Group, Wilmington, DE
Florida HERO, Newberry, FL
                                  CLIMATE  PROTECTION  DIVISION  1998  ANNUAL  REPORT

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ENERGY STAR Buildings and Green Lights Partnership

                                                    Polaroid Corporation, Waltham, MA
ENERGY STAR Buildings Corporate
Partner of the Year
ENERGY STAR Buildings Government
Partner of the Year
                                                    Eroward County, Fort Lauderdale, FL
ENERGY STAR Buildings Healthcare
Partner of the Year
                                                    New York Office of Mental Health, Albany, NY
ENERGY STAR Buildings Education Partner of the Year     Wake County Public School System, Raleigh, NC
ENERGY STAR Buildings Retail Partner of the Year
                                                    Mervyn's California, Hayward, CA
Green Lights Corporate Partner of the Year
                                                    Boeing Company, Seattle, WA
Green Lights Government Partner of the Year (2)
                                                    State of Ohio, Columbus, OH
                                                    Mercer County, NJ
Green Lights Healthcare Partner of the Year
                                                    Northern Illinois Medical Center, McHenry, IL
Green Lights Education Partner of the Year
                                                    University of Virginia, Charlottesville, VA
Green Lights Retail Partner of the Year
                                                    Staples, Framingham, MA
ENERGY STAR Buildings Ally of
the Year Facilities >100,000 sq. ft.
                                                    Johnson Controls, Inc., Milwaukee, WI
ENERGY STAR Buildings Ally of the
Year Facilities <100,000 sq. ft.
                                                    CEC Consultants, Inc., Cleveland, OH
Green Lights Ally of the Year

Natural Gas


Production Sector Partner of the Year
                                                    Amtech Lighting, Anaheim, CA
                                                    Mobil Exploration and Producing US, Houston, TX
Transmission Sector Partner of the Year
                                                    Enron - Gas Pipeline Group, Houston, TX
Distribution Sector Partner of the Year
                                                    Brooklyn Union Gas Company, Brooklyn, NY
CLIMATE  PROTECTION  DIVISION  1998  ANNUAL  REPORT

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PARTNERSHIP PROGRAMS
ENERGY STAR for Commercial and Industrial  Buildings
US businesses spend more than $90 billion a year on energy to operate buildings. This energy
represents about 16 percent of CO2 emissions. Many buildings could use 30 percent less
energy if owners made profitable investments in energy-efficient products, technologies, and
best management practices—investments with high returns and low risks.


ENERGY  STAR  BUILDINGS AND GREEN LIGHTS PARTNERSHIP
EPA's ENERGY STAR Buildings promotes energy efficiency as a business strategy that owners
and managers of commercial, public, and industrial buildings can adopt to improve their
bottom line and the environment. The partnership's goal is to provide tools that stimulate
organizations to apply best management practices to energy management, evaluate energy
use, document energy performance, set goals, and recognize energy excellence all within an
integrated investment strategy for energy-efficiency upgrades.
In 1998, more than 4,000 ENERGY STAR Buildings participants
represented over 8 billion square feet or 13 percent of the total
commercial, public, and industrial building market. Cumulative
investments in advanced technology totaled more than $2.3 billion.
Partners' achievements for the year are impressive:
  • 11.9 billion kWh of energy saved.
  • 3.8 billion square feet upgraded (see Figure 6).
  • Annual emissions of 2.4 MMTCE prevented.
  • $802.2 million saved on annual utility bills.


       Figure 6. Total upgraded square footage
  4,000

  3,500

u 3,OOO
S
§ 2,500

» 2,000
IL
0
8 1.500

Placements in prominent magazines and
newspapers of articles and public service
announcements (PSAs) about ENERGY STAR
Buildings are increasing. To honor Partners of
the Year, the PSA above appeared in
magazines nationwide, including Business
Week, Forbes, Fortune, and Black Enterprise.
        1991   1992  1993   1994  1995  1996   1997   1998

       Source: EPA Climate Protection Division
                             CLIMATE PROTECTION  DIVISION 1998 ANNUAL  REPORT

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              These achievements measure up very well against the goals established for the program
              (see Table 3).

              ENERGY STAR Buildings is constantly evolving to better serve the needs of the market. In
              1998, the program emphasized linking the value of energy efficiency to an organization's
              business objectives and strongly promoted whole-building upgrades.

              For example, EPA and DOE piloted a voluntary, performance-based award—the ENERGY
              STAR Label for Buildings—to help building owners identify properties with the greatest
              potential for energy-efficiency improvements and to recognize top-performing buildings.
              The first commercial space type to be eligible for this award is office buildings (see below).

              ENERGY STAR Buildings services were fine-tuned in 1998 to align with building
              ownership. Each sector, whether owner-occupied, investor-owned, or publicly owned
              buildings, values energy differently and faces unique barriers that can prevent efficiency
              upgrades from being a priority.
TheMarkofEm
                     J      ooti
    and DOE have created a tool to help building owners and managers
optimize energy management  in  their facilities. The  ENERGY STAR
Benchmarking Tool  for Buildings allows them to evaluate energy use,
document performance, set goals, and compare energy performance of
individual office buildings to top-performers nationwide.

Any building manager with access to the Internet can measure a
building's energy performance by supplying basic data, such as building
size and location, number of occupants, hours of operation, number of
computers, and annual energy use (from utility bills). With these data the
Benchmarking Tool generates a Statement of Energy Performance, which
        shows the building's score on a scale of 1 to 100 and serves as a
        benchmark.

        The ENERGY STAR Label for Buildings is awarded only to commercial
        and public buildings that rank in the top 25 percent of their class
        nationwide  for   energy   performance  and  have   indoor
        environmental quality that conforms to industry standards. The
        Label for high-performing buildings is market based. It recognizes
        buildings with low energy bills (higher net operating income),
        higher asset value, and low carbon impact.
CLIMATE PROTECTION DIVISION 1998 ANNUAL  REPORT

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Green Lights was completely integrated into ENERGY STAR Buildings, and the focus of the
partnership is now whole-building energy upgrades. The last Green Lights partner was
received in December 1998, although existing partners will continue to be served.
A key new initiative in 1998 involved working with the commercial real estate market,
providing tailored tools and a streamlined partnership letter. Milestones included:
  • Final release of a financial analysis tool for real estate asset managers to allocate the costs
    and benefits of energy-efficiency upgrades between owners and tenants, Quikscope.
  • Release of a Letter of Intent tailored for commercial real estate owners wishing to commit
    to energy efficiency and form partnerships with EPA. Soon after its release in the fall of
    1998, EPA began partnering with more than 20 real estate owners, representing over
    200 million square feet of owned real estate.
  • Use of ENERGY STAR Buildings by the National Realty Committee as a key tool to
    meet its industry climate change commitment of reducing carbon emissions by
    30 percent in 2010.
  • Commitment of 25 percent of all retail space to energy efficiency through
    ENERGY STAR Buildings.


ENERGY STAR SMALL BUSINESS
Complementing ENERGY STAR Buildings, ENERGY STAR Small Business  encourages small
companies and organizations with less than 100,000  square feet to commit to making energy-
efficiency improvements  in their facilities. The program tailors the integrated buildings
upgrade strategy to meet the needs of small business partners. To reach its market, the
program capitalizes on recognized networks, such as the Small Business Administration's
Small Business Development Centers, Chambers of Commerce nationwide, and EPA/DOE
regional offices. In 1998, the number of program partners rose to more than 1900 small
businesses.
TABLE 3. ENERGY STAR Buildings and Green Lights Goals and Achievements
                                        1998 GOAL     1998 ACHIEVEMENT
Square Feet Recruited - Lighting (billion)            9.0                 8.6             12.2

Square Feet Recruited - Whole building (billion)       3.1                 2.8              4.8

Floorspace Upgraded (billion square feet)            3.8                 3.8              5.4

Annual Energy Savings Earned (billion kWh)        12.2                11.9             18.5
                              CLIMATE  PROTECTION DIVISION  1998  ANNUAL REPORT

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              ENERGY SAVING STARS
                                                                      JOHNSON CONTROLS
                                                   licizing ENERGY STAR Buildings on its own Internet
              site, Johnson Controls actively  promotes  cost-effective building upgrades. As  a
              performance contractor, Johnson Controls has measured, monitored, and managed energy
              use for more than 1,400 organizations. The firm helps ENERGY STAR Buildings partners
              maximize cost savings—over $1 billion to date—and enhance building performance through
              energy-efficiency upgrades. Upgrades of its own corporate facilities in Milwaukee have
              reduced the company's annual energy costs by more than $150,000. Johnson Controls was
              named ENERGY STAR Buildings Large Corporate Ally of the Year.
                                           THE WAKE  COUNTY  PUBLIC  SCHOOL SYSTEM
                                     The Wake County Public School System in North Carolina uses
                                     the ENERGY STAR Buildings strategy in its customized Energy
                                     Savers Program, which aims to cut the school system's energy
                                     expenses. The Energy Savers Program also educates staff and
                                     students on  energy management  and conservation  by, for
                                     example,   conducting   energy-efficiency  workshops   and
                                     publishing the annual Energy Savers Handbook. This handbook
                                     details the goals and  objectives of  the  program,  providing
              suggestions on how individual schools can better manage their energy use. Having saved
              more than $600,000 in energy costs last year, the system uses its own success with ENERGY
              STAR Buildings to demonstrate how schools can do likewise. The Wake County Public
              School System was named ENERGY STAR Buildings Education Partner of the Year.

                                     THE NEW YORK STATE OFFICE  OF MENTAL  HEALTH
              The New York State Office of Mental Health (NYOMH) has made ENERGY STAR Buildings a key
              part  of its Energy Efficiency and  Pollution Prevention Program, which  has  reduced the
              agency's energy consumption by nearly 55 percent. NYOMH credits this enormous energy
              reduction to the aggressive, simultaneous pursuit of all five stages of building and lighting
              upgrades.  Realizing a 36-percent internal rate of return, the agency has saved $55 million
              through energy-efficiency upgrades. These  upgrades include the installation of energy-
              efficient electronic ballasts, T-8 lamps, occupancy sensors, LED exit signs, as well as
              campus-wide steam and HVAC distribution system improvements. The New York State
              Office of Mental Health was named ENERGY STAR Buildings Healthcare Partner of the Year.
CLIMATE  PROTECTION  DIVISION 1998 ANNUAL  REPORT

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ENERGY STAR  for Home  and Office
Americans spend $120 billion per year on home energy. Generating that energy contributes
approximately 19 percent of US CO2 emissions. Like many office buildings, many homes could
use 30 percent less energy if builders and owners made sound technology investments.
ENERGY STAR-LABELED  PRODUCTS
EPA and DOE offer the ENERGY STAR label to manufacturers to identify high-quality, energy-
efficient products—such as computers, lighting, refrigerators, and TVs—that will, as the tag
line suggests, save consumers money and help save the environment (see Exhibit 1 on page 25).
The ENERGY STAR label gives  consumers the information they need to choose energy-efficient
products. ENERGY STAR-compliant products now save businesses and consumers more than
$1.8 billion per year.
Between 1992 and 1998, the ENERGY STAR label became the
national consumer-oriented  symbol for energy efficiency. By the
end of 1998, 3,400 individual  product models in 29 consumer
product categories were ENERGY STAR compliant, and more than
1,200 manufacturers were producing ENERGY STAR-labeled products.
In 1998, the labeling program introduced new ENERGY STAR
product categories covering windows, TVs, VCRs, audio and
DVD products, roofing products, and commercial transformers.
The program also strengthened the presence of ENERGY STAR-
labeled products in
mainstream retail and
dealer distribution
channels. Over the
past year, strong
relationships were
built with retailers,
utilities, and regional
groups devoted to
promoting  energy
efficiency.
       Thit SaW .
     Energy and
the EiLviiwnmrrn
1    *
                                      PSAs and articles about ENERGY STAR-labeled
                                      products are also receiving more nationwide
                                      media coverage. The article (left) on ENERGY
                                      STAR-labeled home electronics and household
                                      appliances appeared in the August 1998 issue
                                      of Good Housekeeping. The labeling program
                                      PSA (above) appeared in prominent
                                      magazines, including The New Yorker.
                              CLIMATE PROTECTION  DIVISION  1998 ANNUAL  REPORT

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              ENERGY STAR HOMES
              ENERGY STAR homes are at least 30 percent more energy efficient than the current Model
              Energy Code. Homes that achieve the ENERGY STAR distinction incorporate such features
              as advanced insulation, advanced duct sealing, high-performance windows, and high-
              efficiency heating and cooling systems and appliances. The net cost of these homes is
              less than ordinary ones because energy savings from the improved energy features
              typically exceed the small increase in monthly mortgage costs.
              These initiatives aim to transform the market for energy efficiency in both new and
              existing housing stock in  the United States, while simultaneously improving builder and
              related industry profitability; increasing home quality, comfort, and value; making
              energy use more efficient and reducing emissions of greenhouse gases; reducing local
              air pollution associated with energy production; and enhancing local economies.
              Hundreds of builder partners and allies participated in the construction of more than
              5,000 new ENERGY STAR homes in 1998. This represents a 210-percent increase over 1997.
              The energy-use reduction of these new homes averages 36.7 percent, which it is
              estimated will save owners more than $2.6 billion annually.

              ACHIEVEMENTS
              The 1998 achievements of the ENERGY STAR-Labeled Products and Homes programs
              include the following:

                     • Products bearing the ENERGY STAR label reduced GHG emissions by
                       4.0 MMTCE and reduced energy consumption by 20 billion kWh.
Nationwide media coverage on ENERGY STAR-
labeled products for the home also included this
article on wasted watts in the March 1998
Consumer Reports.
• More than 33 utilities and energy service providers serving over
 28 million households partnered with ENERGY STAR to promote
 compliant appliances, lighting, windows, HVAC, and consumer
 electronic equipment.
• Over 3,500 retail stores nationwide actively promoted ENERGY
 STAR products. Sears, Home Depot, Home Base, and Associated
 Volume Buyers joined Circuit City and Montgomery Ward as
 national ENERGY STAR retail partners.
• Sales of ENERGY STAR-compliant clothes washers took off with
 the introduction of the Maytag Neptune® and Whirlpool
 Resource Saver™ models, combined with aggressive promotion
 by the ENERGY STAR labeling program and its partners.
• More than of 5,000 new homes were built with an ENERGY STAR
 label, averaging an energy reduction of 36.7 percent.
• More than 920 ENERGY STAR Homes builder partners in all 50
 states participated.
CLIMATE  PROTECTION DIVISION  1998 ANNUAL  REPORT

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   • Estimated annual savings totaled $2,666,400 for owners of ENERGY STAR homes.
   • More than 600 ENERGY STAR Homes allies participated.
   • Three national and seven regional lenders offered ENERGY STAR mortgages.
Consumer awareness and understanding of the ENERGY STAR label continued to rise as a result
of strong media coverage and outreach efforts. In 1998, Vice President Gore launched ENERGY
STAR TVs/VCRs, and Secretary of Energy Pefia launched ENERGY STAR windows. Some 20,000
print and broadcast public service announcements (PSAs), achieving an estimated 1 billion
viewer impressions, appeared in publications such as Time and People as well as on local,
national network, and cable TV channels. Articles about ENERGY STAR appeared in Better Homes
and Gardens, Parade Magazine, The Washington Post, and The New York Times; and ENERGY STAR
was featured on ABC News and CNN. Bob Vila promoted ENERGY STAR on "Home Again with
Bob Vila," and on his home improvement web site, while McDonald's did the same on 100
million bags and cups to celebrate Earth Day.
Research conducted by utilities indicates that because of
growing market penetration and EPA's education and
outreach efforts, a majority of consumers  now understand the
meaning of ENERGY STAR and the benefits of energy efficiency.

OUTLOOK
Looking to the future, EPA will  continue to play a key role in
advancing the efficiency  of all buildings, including federal
facilities, by expanding beyond current partnerships and
launching 25 new ENERGY STAR  product lines by 2000. As
consumer awareness  of the label increases and the number
of ENERGY STAR-labeled products grows, consumers,
organizations, and businesses across the country will
continue to experience increased economic benefits as well as
emissions reductions of GHGs  and other  harmful pollutants.
ENERGY STAR Home Improvement—a new initiative aimed at
the existing-homes market—will be launched in 1999. ENERGY
STAR Homes will continue to promote consumer awareness
about energy efficiency so that  market penetration and
demand for ENERGY STAR homes and products increase.  By the
end of 1999, a total of 20,000 new ENERGY STAR homes are
expected to be built, meeting the program's goal. ENERGY STAR    on Januarys, 1993, ABC'S Good Morning America
Homes aims to have at least 10  percent Of the annual new        fop) carried live coverage from the Consumer
Construction market—equal to 100,000 homes—built to           Electronics Show in Las Vegas, featuring ENERGY
ENERGY STAR guidelines by the year 2002.                        STAR-,abe,ed video products. The following day,
                                                            The New York Times (bottom) covered Vice
                                                            President Gore's launch of ENERGY STAR-labeled
                                                            TVs and VCRs.

                              CLIMATE PROTECTION  DIVISION 1998  ANNUAL REPORT

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              A WORD FROM OUR ENERGY STAR MANUFACTURING PARTNERS

                                                        LITHONIA  EMERGENCY SYSTEMS
              Lithonia Emergency Systems, the largest exit sign manufacturer in the United States, was a
              charter Partner in the ENERGY STAR Exit Signs product category. The company has taken a
              leading role in educating businesses about the economic and environmental benefits of
              energy-efficient exit sign products.

              "ENERGY STAR  Labeling Program officials have done an excellent job of working with
              manufacturers to develop product criteria that effectively raise the bar for energy-efficient
              products in our industry. Lithonia Lighting is pleased to be associated with the ENERGY STAR
              Labeling Program, knowing that together our efforts are contributing to the preservation of
              critical energy resources," says Britt Lee, Marketing Manager for Emergency Systems.

              Lithonia's commitment to the manufacture, sales, and promotion of ENERGY STAR-compliant
              products runs deep. Half of its existing exit sign models were modified to meet ENERGY STAR
              guidelines, and the company will incorporate ENERGY STAR specifications into the design of
              all future LED exit signs. Lithonia has actively educated its entire sales force, as well as more
              than 1,600 distributors, specifiers, engineers, and sales agency representatives, about the
              ENERGY STAR label and the benefits of energy efficiency.

                                                                                      INTEL
 rM0vcni-rttiri0i/iT  I orl/11/inmCfioc
              Intel has embraced energy efficiency and ENERGY STAR compliance as key goals for its
              new products and technologies.  Using ENERGY STAR compliance as a benchmark, Intel
              engineers have developed cutting-edge products and technologies that incorporate "user-
              transparent" power management features. One such technology, called Instantly Available
              PC  (IAPC), ensures that increasing  computational  power,  functionality, and  network
              compatibility go  hand-in-hand with the aggressive energy consumption targets established
              by the ENERGY STAR Labeling Program.

              Dave Chan, Strategic Initiatives Manager for Intel's Platform Marketing Group, says: "The
              ENERGY STAR  Labeling  Program is being expanded to  include  new  products,  such as
              consumer electronics and appliances, extending the reach  and recognition of the ENERGY
              STAR brand. These developments are influencing the general market, where an increasing
              number of IT purchasers are requiring products that meet ENERGY STAR guidelines. IAPC
              technology was developed to respond to these challenges. It establishes a forward-looking
              delicate balance  between high performance, connectivity, and low-power consumption for
              today's and tomorrow's Intel architecture-based  computers, ranging from  home  and
              business PCs up  through multi-processor high-performance workstations."
CLIMATE  PROTECTION DIVISION  1998  ANNUAL  REPORT

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                                              INSULATION
     LIGHTING FIXTURES
       ROOM AC
           WINDOWS
     HOME
     ELECTRONICS
     • TV
     • VCR
    THERMOSTAT
           CLOTHES
           WASHER
BIBII
                                        1=1
HOME OFFICE
• Computer
• Fax
• Scanner
• Printer
• Copier
                    KITCHEN
                    • Dishwasher
                    • Refrigerator
                        HEATING
                        AND COOLING
                        EQUIPMENT
                        • Furnace
                        • Central A/C
                        • Boiler
                        • Heat Pump
                       Exhibit 1: A home completely equipped
                       with ENERGY SrAR-compliant products
                       can save 30 percent on energy use or up
                       to $400 on utility bills per year.
TABLE 4. ENERGY SrAR-Labeled Products Goals and Achievements
                                                 U.   1998 ACHIEVEMENT
Percent of Market with ENERGY STAR Feature
Computers
                                             90%
                                                            80%
                                                                        1999
                                             GOAL
                                                                          90%
Monitors
                                             90%
                                                            95%
                                                                          90%
Printers
                                             99%
                                                            99%
                                                                          99%
Fax Machines
                                             90%
                                                            90%
                                                                          95%
Copiers
                                             65%
                                                            65%
                                                                          75%
Annual Energy Savings from Office Equipment (billion kWh)   14.9
                                                            14.7
                                                                          19.0
Market Penetration of ENERGY STAR New Homes
                                             .5%
                                                             .5%
                                                                         1.5%
                            CLIMATE PROTECTION  DIVISION  1998 ANNUAL  REPORT

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              A WORD FROM OUR ENERGY STAR HOMES PARTNERS


                                                           BOSSHARDT  BEALTV SEBVICES
              Patti Glenn, the Vice President of Bosshardt Realty Services, has been an avid supporter of
              ENERGY STAR Homes since its inception. As one of the first realtors in the country to market
              ENERGY STAR Homes, Ms. Glenn accepted her leadership role and the potential to influence
              the new homes market. She began by nurturing alliances with mortgage lenders, realtors,
              builders, raters, and utility representatives.  Ms. Glenn has educated builders about the
              benefits of offering ENERGY STAR Homes, trained realtors to  sell the homes, and helped
              consumers understand the  benefits of buying energy-efficient homes. Her efforts  have
              stimulated the market for and awareness of ENERGY  STAR homes.  "The best news about
              ENERGY STAR is that I sleep well at night, knowing that I've helped developers and builders
              realize their profit margins, but more  importantly, I've helped people realize their dream
              home ... a home that saves money, is healthier to live in, offers more comfort, and is more
              affordable through energy-efficient mortgage benefits/'says Ms. Glenn.

                                                   THE CONSERVATION SERVICES GROUP
              The Conservation Services Group (CSG) has been a major force in the promotion of energy-
              efficient new construction in New England. This consortium of electric utility companies has
              developed a marketing strategy that features (1) generous incentives to homeowners who
              opt for ENERGY SiAR-labeled appliances, (2) brochures for builders and consumers, (3) direct
              mail pieces, (4) a web site, (5) seminars for home buyers, and (6) an extensive newspaper
              advertising campaign. The Group's efforts have attracted the attention of builders, utilities,
              service providers, manufacturers, and consumers throughout New England.  CSG has
              recruited more than 65 ENERGY STAR home builders and rated 219 ENERGY STAR homes.

                                                                          BOB WARD HOMES
              As the fourth largest builder of single-family homes in the Baltimore area. Bob Ward Homes
              has maintained a strong commitment to promoting energy-efficient homes. One-third of the
              homes built by Bob Ward in 1998—100 of 300—were certified ENERGY STAR homes. While
              offering affordable housing. President and CEO Robert Ward encourages consumers to
              consider the benefits of ENERGY STAR homes and ENERGY STAR-labeled  appliances. Of his
              participation in ENERGY STAR Homes, Mr. Ward says, "(It) helps us develop brand awareness
              and loyalty even before we sell a home. We  educate home shoppers about what energy
              efficiency means; and when they have all the facts, they're more confident decision makers
              and know they're getting added value. After the sale, an ENERGY STAR home means less  need
              for follow-up service, greater homeowner satisfaction, and higher resale value."
CLIMATE  PROTECTION  DIVISION 1998  ANNUAL  REPORT

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Methane Partnerships
Methane is the most common non-CO2 greenhouse gas, 21 times more potent than carbon
dioxide. If captured, methane is also a source of energy. EPA's Methane Partnerships assist
US industries and state and local governments in reducing methane and other GHG emissions
from their operations. The five initiatives within the program are Landfill Methane Outreach,
Natural Gas STAR, Coalbed Methane Outreach, Ruminant Livestock Efficiency, and AgSTAR.
All five follow a common approach, which is to provide sound technical, economic, and
regulatory information on emission-reduction technologies and practices, as well as tools to
facilitate implementation of methane-reduction opportunities. Partners profit from their involvement
in the program by making their operations more efficient and their businesses more competitive.
In 1998, the Methane  Partnerships supported more than 200 companies, 500 farms, 29 states,
and 22 local communities in reducing emissions of methane by over 5.4 MMTCE (see Table 5).


LANDFILL METHANE OUTREACH PROGRAM
The Landfill Methane Outreach Program (LMOP) helps communities and landfill owners and
operators collect and  sell landfill gas. LMOP works with the landfill gas industry to overcome
project development barriers—such as low avoided-energy costs, public misperceptions,
financing, and permitting.
LMOP's main achievements in 1998 include the following:
   • Working with 75 new partners to promote projects. The total number of partners  and
    allies reached more than 200; of these, 120 were industry allies, 29 were state allies,
    33 were energy allies, and 22 were community partners.
   • Facilitating project assessment and development at more than 75 percent of the
    55 landfills that came on line in 1998 and at all of the 82 landfills under construction and
    scheduled to come on line in 1999. In terms of new projects on line, 1998 was the
    highest growth year in the landfill industry's history.
   • Reducing methane emissions by 1.2 MMTCE, which means that LMOP is
    ahead of schedule for meeting its goal of 1.9 MMTCE by the end of 2000.
                                                                          LANDFILL METHANE
                                                                          OUTREACH PROGRAM
                             CLIMATE PROTECTION DIVISION  1998 ANNUAL  REPORT

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              A WORD FROM OUR METHANE PARTNERS

                                                                YANCY/MITCHELL LANDFILL
                                                      idfill in Avery County, North Carolina will use
              landfill gas to operate a greenhouse consortium that will provide hands-on learning centers
              for high school and college students and a research facility to develop programs that re-
              establish rare plants in suitable locations, discover new cash crops, and generate income
              opportunities for the region. This project shows that small landfills can produce economic,
              environmental, and social benefits.

              Approximately 918 landfills are considered  "small landfills," which means they have less
              than 2.75 million tons of waste in place (WIP). The average small landfill has 1.5 million tons
              of WIP and the potential to generate 1.2 megawatts of electricity. If all small landfill projects
              were developed, they could generate over 1  gigawatt of electricity and reduce methane
              emissions by almost 12 MMTCE. This is the equivalent of removing the pollution from more
              than 19 million cars, planting more than 13 million trees, or creating enough power to heat
              over 800,000 homes.

                                                                                  APEX PORK
              Apex Pork in  Rio, Illinois is a 2,000-head  finishing farm that uses a  closed-cell heated
              lagoon to control odors and prevent complaints from the neighbors. The farm uses manure
              off-gases to heat water in a boiler for lagoon and farm heat. Excess gas is flared off.

                                                 ENRON'S OIL  AND  GAS PIPELINE  GROUP
              Enron's Oil and Gas Pipeline Group implemented leak detection and measurement programs
              at several  compressor facilities, yielding methane emission reductions of 303 million cubic
              feet (MMcf) and a net profit of $265,000.

                                                                   JIM WALTER  RESOURCES
              Jim Walter  Resources (JWR),  in Brookwood,  Alabama  has turned coal  mines with
              prohibitively high methane concentrations into financial  successes through coal  mine
              methane recovery projects. Each year, four JWR mines produce and sell about 21 Bcf of high-
              quality coal mine methane. In terms of emission reductions, the capture and use of this coal
              mine methane is equivalent to removing the pollution from approximately 1.9 million cars
              each year. In 1990, the Coalbed Methane Outreach Program (CMOP) began working with
              JWR on innovative ways to boost coal mine methane recovery. Through this collaboration,
              CMOP has helped JWR raise its coal mine methane recovery from 18.5 Bcf per year to today's
              21 Bcf, an  increase of 2.5 Bcf per year.
CLIMATE  PROTECTION DIVISION  1998 ANNUAL  REPORT

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NATURAL GAS STAR PROGRAM
The Natural Gas STAR Program assists the oil and natural gas industry in cost effectively
reducing methane emissions from the production, transmission, and distribution of natural
gas. In 1998, the Gas STAR Program focused on implementing best management practices—
many of which target leak prevention—and on bringing the benefits of the
program to independent producers.

Gas STAR Partner companies are expected to report methane emissions
reductions of 23 billion cubic feet (Bcf) for 1998.5 That would bring Gas
STAR'S cumulative methane emissions reductions to
approximately 75 Bcf, worth more than $154 million.

Natural Gas STAR'S main achievements in 1998 include:

  • Adding three major partners: Spirit Energy 76 (a business
    unit of Unocal), Koch Gateway Pipeline Company, and
    Williams Gas Pipeline-Central.
  • Providing technical and economic information on methane
    reduction technologies to oil and gas producers at regional
    Producer Technology Transfer Workshops.
  • Releasing the Partner Reported Opportunities Report,
    which summarizes economic information on 45 cost-
    effective methane reduction practices and technologies.
  • Holding the 5th Annual Implementation Workshop in
    Houston, Texas, which brought together representatives
    from 23 Partner companies.
  • Placing  articles on the Gas STAR Program in the American
          0                           °                      Sponsored by an endorser, a Gas STAR
    Oil and Gas Reporter (March 1998) and the Pipeline and Gas    Program PSA recognizing companies making a
    Journal (December 1998).                                   difference appeared in the Oil and Gas Journal
                                                             (December 1998).
"The STAR Program has helped us save gas, increase profits, and improve system
efficiency. It is a good example of how voluntary efforts can help our business and
improve the environment."
                                          Mike Sellers, Environmental and Safety Manager
                                                              Chevron USA Headquarters
 ' 1998 reports from Gas STAR Partners come into EPA in mid-1999.
                              CLIMATE  PROTECTION DIVISION  1998 ANNUAL  REPORT

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                                 COALBED METHANE OUTREACH PROGRAM
                                 The Coalbed Methane Outreach Program (CMOP) encourages coal
                                 mine owners and operators to recover and use coal mine methane as
                            J     an energy source. CMOP provides high-quality, project-specific
                                 information to coal mine operators and supports coal mines in
               project implementation activities, such as technology research and cultivating investor
               interest. Also, CMOP documents state-of-the-art technology for coal mine methane use
               and disseminates this information to interested parties.
               CMOP's main achievements in 1998 include:
                 • Generating $30 million in direct gas sales through reducing methane emissions
                   by 15 Bcf, which is equivalent to removing the pollution from more than 1.3 million
                   cars per year.
                 • Developing three new projects, expected on line in 1999, and expanding two existing
                   projects, bringing to 18 the total number of CMOP projects in the United States.
               Table 5. Methane Partnerships Goals and Achievements
                                                   1998 GOAL     1<
t ACHIEVEMENT
1999 GOAL
^^^^m
LMOP
Number of Projects
Annual Methane Reduction (MMTCE)
CMOP
Number of Projects
Annual Methane Reduction (MMTCE)7
NATURAL GAS STAR8
Transmission Pipeline Miles (% in program)
Distribution Pipeline Miles (% in program)
Natural Gas Production (% in program)
Annual Gas Savings (MMTCE)7
AGSTAR & RLEP
Partner Farms
Annual Methane Reduction (MMTCE)7

25
0.5

17
1.5

80%
80%
70%
2.5

250
0.5

42
1.2

18
1.7

68%
43%
37%
2.3

503
0.2

45
1.2

21
1.7

85%
85%
70%
3.9

400
0.6
               7 Includes both CCAP program and base reductions
               8 Estimated
CLIMATE  PROTECTION  DIVISION  1998 ANNUAL  REPORT

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RUMINANT LIVESTOCK EFFICIENCY PROGRAM

The Ruminant Livestock Efficiency Program (RLEP) is a joint EPA-US
Department of Agriculture (USDA) effort that helps livestock managers reduce
emissions of methane and other greenhouse gases through the adoption of
improved management practices.

RLEP's achievements in 1998 include the following:

   • Developing a model state forage and grazing management program in Virginia with the
    collaboration of USDA, the Virginia Cooperative Extension Service, Virginia Cattlemen's
    Association, and Virginia Forage and Grasslands Council.
   • Demonstrating to more than 3,000 farmers how improved management can lead to lower
    methane emissions per unit of product (such as gallon of milk or pound of beef) and
    increased profitability. Farmers participated in field-day activities and visits to 48 farms
    across the southeast.
                                                                          ALAN  GRAYBEAL
With assistance from RLEP, Alan Graybeal, a beef producer in Blacksburg, Virginia developed a business
plan for his cow-calf operation, which included improved grazing management practices that reduced
methane emissions per unit of product. Mr. Graybeal says that he has already begun to reap the benefits
of RLEP after only one year.
AGSTAR PROGRAM

The AgSTAR Program aims to reduce greenhouse gases from confined
animal feeding operations. It assists farmers in assessing and
implementing manure off-gas recovery systems whenever these are
environmentally and economically appropriate compared to conventional
waste management systems.

In 1998, AgSTAR focused on information exchange, environmental accounting, and
commercial farm demonstration activities, which attracted strong interest from livestock
producers and the electric utility industry.

AgSTAR's main achievements in 1998 include:

   • Initiating environmental monitoring of commercial systems as the first step in
    establishing a comprehensive environmental accounting methodology for livestock waste
    management systems.
   • Hosting a  series of field days with producers, utilities, state government officials, and
    the public.
   • Starting several demonstration farms in key dairy and swine livestock producing regions.
                              CLIMATE  PROTECTION  DIVISION  1998 ANNUAL  REPORT

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              Environmental  Stewardship Programs
              Many opportunities exist for making industrial processes more efficient. EPA's
              Environmental Stewardship Programs promote cost-effective opportunities for
              improving the efficiency of processes used in the industrial sector, particularly in
              energy-intensive industries. These programs strive to reduce GHG emissions from
              industrial sectors that use or emit perfluorocarbons (PFCs), hydrofluorocarbons (HFCs),
              or sulfur hexafluoride (SF6) because ton-for-ton these gases trap more heat in the
              atmosphere than does CO2.
              In 1998, the Stewardship Programs supported 23 semi-conductor firms, 11 aluminum
              smelting companies, 4 HCFC-22 producers, 50 electric utilities, and 7 companies in the
              magnesium casting industry in achieving GHG reductions of 5.2 MMTCE (see Table 6).
              EPA plans to expand these efforts by promoting combined heat and power (CHP) to its
              program partners in  cooperation with DOE. This initiative addresses the regulatory
              and institutional barriers that currently prevent more rapid dissemination of CHP
              technology. EPA and DOE are working together to identify the economic potential for
              CHP within different segments of industry and for different commercial building types.
              A strategic mix of tools, determined by the specific barriers dominating each segment,
              will then be applied to facilitate broader  implementation of CHP where opportunities
              are the most profitable.
RedmvPK
                                                                                      IBM
IBM demonstrated its environmental leadership by commercializing a new
system to replace perfluoroethane (C2F6) with a dilute mixture of nitrogen
trifluoride (NF3) for use in the chemical vapor deposition (CVD) cleaning
process for semiconductors.  The new NF3  technology reduces RFC
emissions from the process by more than 95 percent. "The new technology
avoids $3 million in capital and $3 million to $4 million in annual operating
expenses  associated with the  recycling  alternative that  IBM  was
considering as a means of reducing RFC emissions,"  says Wayne Balta,
Director of Corporate Environmental Affairs for IBM. This effort is part of
IBM's voluntary corporate goal to reduce its RFC emissions 40  percent by
year-end 2002,  indexed to production against a base year of 1995, as
announced in October 1998.
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The stewardship initiatives for specific industries made steady progress in 1998.

THE SEMICONDUCTOR INDUSTRY
The Emission Reduction Partnership for the Semiconductor Industry made great
strides in 1998 in identifying practical methods to reduce emissions of PFCs and
began the important work of setting specific goals for reductions. EPA completed
two workshops with the semiconductor industry in 1998. In April, some 150
participants attended the Global Semiconductor Industry Conference  on
Perfluorocompound Emissions Control; in September, over 60 participants
attended the Semiconductor Industry Energy Opportunities Workshop.
THE ALUMINUM INDUSTRY
Eleven of the 12 primary US aluminum smelting companies now participate in
the Voluntary Aluminum Industrial Partnership. Partners have lowered their
annual PFC emissions by 31 percent, or 1.8 MMTCE, and are on track to
achieve their goal of reducing annual PFC emissions by a total of 2.2 MMTCE
by 2000. In 1998, the industry and EPA not only worked jointly on reducing emissions, but
also gathered data on international efforts to reduce PFCs. This work was highlighted in a
well-received article in the February  1999 issue of Light Metal Age.

THE CHEMICAL INDUSTRY
All four US chemical producers are working with CPD to reduce emissions of HFC-23, which
is inadvertently produced during the manufacture of HCFC-22. In 1998, partners reduced
emissions of this highly potent greenhouse gas by 3.4 MMTCE. Also in 1998, EPA completed
two significant studies in collaboration with manufacturers. One focused on performance
standards for determining emissions of HFC-23 from HCFC-22 production. The other
completed an audit of reporting methods.

THE MAGNESIUM AND ELECTRIC POWER SYSTEMS INDUSTRIES
The Division created the SF6 Emission Reduction Partnership for the Magnesium Industry
and the SF6 Emissions Reduction Partnership for Electric Power Systems in 1998. These new
partnerships were established because the magnesium casting industry and firms with
electric power systems that use SF6 expressed interest in working with EPA on a voluntary
basis to reduce emissions. The two partnerships will identify and encourage adoption of best
management practices to cut emissions of SF6—an extremely potent greenhouse gas.
Table 6. Stewardship Initiatives Goals and Achievements

                               1998 GOAL          1998 ACHIEVEME
Annual GHG Reductions (MMTCE)
                                  3.5
                                                        5.2
                                                                               5.7
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REFERENCES
              American Geophysical Union. 1999. AGU adopts position on climate change
              and greenhouse gases. News Release 99-03, January 28 (on line at
              http://www.agu.org/scLsoc/prrl/prrl9903.html as of March 16,1999).
              Building Operating Management Online. 1999. Financial executives find energy costs
              hardest to control. Summarized from CFO Magazine (on line at http://www.
              facilitiesnet.com/NS/NS3b9bj.html as of February 23,1999).
              Climate Protection Division of the US Environmental Protection Agency. 1999. Partner
              and emissions data provided by individual programs and partnerships in the Division.
              Intergovernmental Panel on Climate Change (IPCC). 1996. Climate Change 1995: The
              Science of Climate Change. J.T. Houghton, L.G. Meira Filho, B.A. Callander, N. Harris, A
              Kattenberg, and K. Maskell, eds. Cambridge University Press. Cambridge, U.K.
              Richard, S., Hardy, B., Von Neida, B., and P. Mihlmester. 1998. The Investment Risk in
              Whole Building Energy-Efficiency Upgrade Projects. In the Proceedings of the 1998 ACEEE
              Summer Study on Energy Efficiency in Buildings.
              U.S. Department of State. 1997. Climate Action Report. 1997 Submission of the United
              States of America Under the United Nations Framework Convention on Climate
              Change. July.
              U.S. Environmental Protection Agency. 1998. Inventory of U.S. Greenhouse Gas Emissions
              and Sinks: 1990-1996. Office of Policy, Planning and Evaluation. March (EPA 236-R-98-006).
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END  NOTES  FOR TABLE 2
1. Partners' Completed Investments. These are energy-efficiency and methane project investments
  for which partners have made initial technology expenditures in 1998 or prior years. This category
  also includes sales of ENERGY SiAR-labeled products through 1998. The benefits of these Completed
  Investments have accrued since they were made and will continue to accrue until the end of their
  useful lives.
2. Partners' Committed Investments. These are energy-efficiency and methane project investments
  for which partners have committed to make initial technology expenditures in years after 1998. This
  category also includes one cycle of replacements for ENERGY STAR office products with lifetimes of 6
  years or less. Replacement of ENERGY STAR office products is assumed to be at the same penetration
  rates as in 1998. All benefits from Committed Investments will accrue in the years after 1998.
3. Bill Savings. These represent the total savings in energy bills, or income associated with  ENERGY
  STAR programs or methane programs, in 1998 dollars, to partners or purchasers of ENERGY STAR
  products over the lifetime of the investment or through 2015, whichever comes first. The
  investments have varying lifetimes. Some, such as PCs and monitors, have short expected lifetimes,
  e.g., 4 years. Others, such as the thermal envelope improvements associated with ENERGY STAR
  Homes, have much longer lifetimes, e.g., 30+ years. A cut-off of 2015 was chosen as  a reasonable
  end-point to assess benefits, even though the benefits of the Division's voluntary programs and
  partner investments will often continue to be realized after that year.
4. Technology Expenditures. These represent the total  cost to partners, in 1998 dollars, of investments
  in energy efficiency, including the cost of financing the investment over the life of the investment at
  a 7-percent real rate of interest (4 percent for public sector investments). This category includes any
  premium, and the cost of financing that premium, for the purchase of ENERGY STAR-labeled
  products. The 7-percent interest rate is the standard rate recommended by the Office  of
  Management and Budget in Circular No. A-94, Guidelines and Discount Rates for Benefit-Cost Analysis
  of Federal Programs for Base-Case Analysis. As stated in the  circular, "(The 7.0 percent) rate
  approximates the marginal pretax rate of return on an average investment in the private  sector in
  recent years."
5. Net Savings. This category represents the difference between Bill Savings and Technology
  Expenditures. It is the amount of cash available to partners and purchasers of ENERGY STAR
  products to put back into the economy over the life of the investment, or through 2015, whichever
  comes first.
6. MMTCE. This column presents the amount of carbon emission equivalents avoided by investments
  in energy-efficient products over the lifetime of the investments or through 2015, whichever comes
  first. It includes the emissions avoided by methane programs, using a Global Warming Potential of
  21. For energy-efficiency investments and purchases, the carbon emission equivalents are based on
  an analysis of marginal carbon emissions. The marginal carbon emission rate varies over time. In
  the year 2000, it is assumed to be 1.64 Ibs. CO2/kWh; in the year 2005, it is assumed to be  1.20 Ibs.
  CO2/kWh; and in 2010, it is assumed to drop to 1.09 Ibs. CO2/kWh.
For more detailed information on the program cost and benefits calculations, call CPD at 202-564-9190.


                             CLIMATE  PROTECTION DIVISION  1998 ANNUAL REPORT

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