United States
Environmental Protection
Agency
PROTECT THE ENVIRONMENT THROUGH
ENERGY EFFICIENCY
INTRODUCTION
The ENERGY STAR® program has been a tremendous
success in its first decade. Established by the U.S.
Environmental Protection Agency (EPA) in 1992 for
energy-efficient computers, the ENERGY STAR
program has grown to encompass more than
35 product categories for the home and workplace,
new homes, and superior energy management within
organizations. Some highlights demonstrating the
impact of this program are:'
• Thousands of organizations have partnered with
the federal government to demonstrate a
commitment to protecting the environment
through energy efficiency.
• Americans have purchased more than 1 billion
ENERGY STAR qualified products.
• More than 100,000 families live in new homes that
have earned the ENERGY STAR.
• More than 40 percent of the American public
recognizes the ENERGY STAR.
• Thousands of buildings have undergone effective
energy improvement projects.
• More than 15,000 of the nation's buildings have
been rated using EPA's national energy
performance rating system.
• More than 1,100 buildings have earned the
ENERGY STAR label for superior energy
performance.
Further, because using energy more efficiently avoids
emissions from power plants, avoids the need for new
power plants, and reduces energy bills, sizable national
benefits have accrued. In 2002, with the help of the
ENERGY STAR program, Americans prevented
greenhouse gas emissions equivalent to those from
14 million vehicles and avoided using the power that
50 300-megawatt (MW) power plants would have
produced, while saving more than $7 billion."
With this success come questions about the future of
the ENERGY STAR program, such as:
• What is necessary to build and maintain the
ENERGY STAR program over the next decade?
• Have the most easily obtained benefits already
been realized and will taxpayers receive a similar
environmental and economic return on their
investment over the next 10 years as they did in
the first?
This paper explains how EPA will continue to expand
the ENERGY STAR program, and it shows the expected
growth in environmental and economic benefits. The
overview—Why the ENERGY STAR Program Works-
describes what EPA is striving to achieve with ENERGY
STAR. Then for the major energy end-use sectors—
residential, commercial, and industrial—the paper
summarizes accomplishments to date and program
elements that require further development. Finally, it
outlines EPA's longer term goals for greenhouse gas
reductions and energy bill savings for the nation, and
shows that the ENERGY STAR program will continue
to be a sound taxpayer investment over the next decade.
THE ENERGY STAR PROGRAM PROTECTS THE ENVIRONMENT BY
PROVIDING COST-EFFECTIVE ENERGY EFFICIENCY SOLUTIONS TO
BUSINESSES, ORGANIZATIONS, AND INDIVIDUALS.
ENERGY STAR
INTRODUCTION
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WHY THE ENERGY STAR PROGRAM WORKS
The ENERGY STAR program has dramatically increased
the use of energy-efficient products and practices and is
well positioned to promote more widespread efficiency
improvements. Success is due, in part, to common market
conditions surrounding energy efficiency. That is, there
are many opportunities to save money by improving the
efficiency of our homes, buildings, and industries using
technologies and practices that already exist.'" However,
homeowners, businesses and others do not take advantage
of these opportunities because market barriers, such as
lack of information and split incentives, limit their
expenditures on what are, in fact, attractive financial
investments when judged on the basis of complete
information.
ENERGY STAR is designed to overcome many
of the market barriers to the adoption of cost-effective
energy efficiency products and services in a sustained
manner and to help unleash the attendant savings for
individuals and organizations. EPA's funding is not used
to buy equipment, products, or services as is the case
with some energy efficiency programs, such as traditional
demand-side management (DSM) programs seeking
near-term energy savings. Funding is used to provide
businesses and consumers with information and tools
that break down major market barriers and alter
decisionmaking for the long term. This approach, which
helps direct private capital toward energy efficiency
investments, provides a large environmental and
economic payback for the government investment.
One way to look at the role of ENERGY STAR is to
examine the costs and risks involved in purchasing
energy-efficient equipment or investing in an energy
efficiency project. Beyond the actual capital outlay to
purchase a product or technology and a required return
on the investment (ROD dollars, there may also be:
• Transaction costs for researching product or
project choices.
• Risk premiums in case the product or project does not
perform as claimed.
ENERGY STAR enhances the market for energy efficiency
by reducing the transaction costs and lowering the
investment risks to the point that many more projects
become attractive (see Figure 1). It plays a distinct role in
the market place by providing credible, objective information
upon which businesses and homeowners can make
better informed decisions.
FIGURE 1.
ILLUSTRATION OF PROJECT COSTS BEING REDUCED BY
ENERGY STAR INFORMATION
Expected Savings
Risk Premium
Transaction Costs
Required ROI
Capital Outlay
Savings Costs
Before
Savings Costs
Market Enhanced
with
ENERGY STAR
NOTE: This example assumes that the energy-efficient technology delivers the
exact same service as the standard technology.
Source: Adapted from a working paper by Katrin Ostertag, Transaction costs of
raising energy efficiency (May 1999), presented at the IEA International Workshop
on Technologies to Reduce Greenhouse Gas Emissions: Engineering-Economic
Analyses of Conserved Energy and Carbon. Washington, DC. 5-7 May 1999.
WHY THE ENERGY STAR PROGRAM WORKS
-------
IF HALF OF ALL U.S. HOUSEHOLDS REPLACED A STANDARD
TV WITH AN ENERGY STAR MODEL, THE CHANGE WOULD BE
LIKE SHUTTING DOWN A POWER PLANT.
RESIDENTIAL ENERGY EFFICIENCY
The residential sector offers sizable opportunities for
protecting the environment through energy efficiency.
Consisting of more than 100 million households, this
sector contributes about 17 percent of the nation's
greenhouse gas emissions'17 (see Figure 2) and offers
potential energy savings in the range of 25 to 30 percent
compared with current consumption. These retrofit
options include adding the appropriate amount of
insulation or buying more efficient products such as
refrigerators and light fixtures. However, this sector also
presents a large challenge for improving energy
efficiency. To capitalize on the possible savings,
homeowners face numerous decisions. They receive
information on energy efficiency options for the home
from many sources, including manufacturers, utilities,
retailers, and contractors. Frequently this information
comes in pieces, is inconsistent, and leaves homeowners
with more questions about the best option, such as:
• Which products (or homes) offer the energy savings
claimed by the manufacturer, product vendor, or
home builder?
• Which products of those that cost more up front offer
a reasonable return on the additional cost?
• Which products offer the desired features and
performance in addition to greater energy efficiency
(i.e., is a sacrifice required)?
• What design and installation issues are important to
obtaining the claimed energy performance of a product?
• How do owners address the growing energy needs of
the smaller electrical products and equipment in the
household?
• How do owners find a heating and cooling contractor
or home improvement professional who is well
versed in the best practices for home energy
efficiency?
EPA offers ENERGY STAR to homeowners as a
straightforward, powerful, and reliable resource for
answering many of these questions and showing the
benefits of energy-efficient choices. The ENERGY STAR
label is designed to clearly identify products, practices,
and new homes that are energy efficient—meaning they
lead to lower energy bills and help protect the
environment while providing desired features and
performance. The clear government backing of the label
allows consumers to rely on it as credible and unbiased.
ENERGY STAR has had major accomplishments bringing
greater energy efficiency to the residential sector; however,
much more needs to be done. Accomplishments and key
next steps are summarized below.
Clearly Indicating Which Products are Energy Efficient
A cornerstone of the ENERGY STAR program is
identifying efficient products that will reliably deliver
energy savings and environmental benefits. EPA and the
U.S. Department of Energy (DOE)17 work closely with
more than one thousand manufacturers to determine the
energy performance levels that must be met for a product
to earn the ENERGY STAR. The Agencies only award the
label in product categories where the efficient products
offer the features and performance consumers want and
provide a reasonable payback if the initial purchase price
is higher.
• Currently, the ENERGY STAR label can be found on
products in more than 35 product categories (see
Table 1). The qualifying products offer a homeowner
considerable savings: a home fully equipped with
ENERGY STAR qualifying products will operate on
about 30 percent less energy than a house equipped
with standard products, saving the typical homeowner
about $400 each year (see Table 2).
RESIDENTIAL ENERGY EFFICIENCY
-------
FIGURE 2.
U.S. GREENHOUSE GAS EMISSIONS
Other Gases
16%
CO2 from
Other
4%
C02 from
Transportation
25%
Source: EPA, 2003
CO2 from
Industrial
Energy
22%
C02 from
Commercial
Energy
15%
CO2 from
Residential
Energy
17%
For many ENERGY STAR qualifying products, there is
no additional cost at the time of purchase. ENERGY
STAR has played an important role in the efficiency
of products such as office equipment and home
electronics because much of their energy use occurs
when they are in standby mode. This is not apparent
to the user. Through ENERGY STAR, the energy
needs during standby have been greatly reduced with
no change in product performance (see Table 1). To
date these products have contributed impressive
energy savings and environmental benefits.
For other ENERGY STAR qualifying products such
as kitchen appliances and heating and cooling
equipment, the additional first cost may be
significant. ENERGY STAR has played a pivotal role
here, as well, by showing consumers that the higher
initial cost of these products can be justified by the
energy savings every month, year in and year out.
ENERGY STAR provides a clear definition of what is
energy efficient for many stakeholders across the
country (utilities, state energy offices, etc.) who are
implementing their own efficiency programs.
• Although many of the energy-using products in a
household are now available with the ENERGY STAR
label, additional products are always under consideration.
In particular, EPA is examining other products that
use energy in standby mode. These products, along
with small household appliances, are expected to
consume about 40 percent of home energy by 2015 if
no improvements are made.17'
Providing Easy Access to Consumer Information
Through a government ENERGY STAR Web site and
hotline, EPA and DOE provide information directly to
interested consumers about the products that qualify
for the ENERGY STAR. This information encompasses
more than 18,000 individual product models across
more than 1,250 manufacturers. It includes savings that
can be expected, stores that carry the products, and
environmental benefits that will result from using the
products. This comprehensive Web site provides one
place consumers can rely on to determine the authenticity
of key information, see the list of products that qualify
for the ENERGY STAR, and find additional home
improvement tools and guidance. It is currently servicing
more than one million visits per year.
Educating the Public
For the ENERGY STAR label to be attractive to home-
owners (as well as businesses), they must not only
recognize the label, but also understand that it represents
cost savings and environmental protection. EPA
undertakes a variety of efforts to (1) educate the public
about the link between energy use and air emissions,
(2) raise awareness of how products and services
carrying the government-backed ENERGY STAR can
protect the environment while saving them money, and
(3) educate consumers about the hidden price tag of a
product—the cost of energy to operate that product over
its lifetime.
RESIDENTIAL ENERGY EFFICIENCY
-------
ABOUT 40% OF THE AMERICAN PUBLIC CURRENTLY
RECOGNIZES THE ENERGY STAR LABEL
TABLE 1.
OVERVIEW OF PRODUCTS
THE ENERGY STAR PROGRAM
Product Groupings
(# of product
categories)
Lead Agency
Energy Savings
Above Standard
New Products
Market Penetration of
ENERGY STAR Qualifying
Products Sold in 2000
Other Highlights
Office Equipment (8)
Computer/Monitor at Home EPA
Computer/Monitor at Work EPA
Copier EPA
Fax EPA
Other EPA
27%
52%
42%
40%
26-49%
95%/97%
95%/97%
90%
99%
range
Specifications for monitors and
imaging equipment are under
revision in 2003.
Home Electronics I
Televisions
VCRs
TV/VCRs
Audio
Other
EPA
EPA
EPA
EPA
EPA
24%
29%
30%
69%
4-17%
46%
94%
76%
31%
range
Audio equipment needs to use less
than 1 watt in standby to earn the
ENERGY STAR effective January 2003.
Products in other categories (e.g., TVs, VCRs)
are expected to meet 1 watt levels by 2005.
Heating/Cooling (7)
Central Air Conditioners EPA
Furnaces (Gas) EPA
Programmable Thermostats EPA
Other EPA
24%
15%
20%
7-30%
20%
27%
36%
range
Specifications for programmable
thermostats are being examined
to help improve usability for
the consumer.
Appliances (6)
Clothes Washers
Dishwashers
Refrigerators
Room Air Conditioners
Other
DOE
DOE
DOE
DOE
EPA
25%
10%
10%
10-43%
10%
20%
17%
13%
range
Current specifications are effective
as of the effective dates of most
recent minimum efficiency standards.
Lighting (3)
Fixtures
Bulbs
Exit Signs
EPA
DOE
EPA
66%
66%
75%
3-5%
3%
73%
Specifications are being revised as
additional testing methods are developed
to address performance criteria.
Building Envelope (3)
Windows
Other
DOE
EPA
range
range
range
range
Specifications for windows were
recently revised.
Other (5)
EPA
range
range
RESIDENTIAL ENERGY EFFICIENCY
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Educating the Public (continued)
m About 40 percent of the American public currently
recognizes the ENERGY STAR label. In regions that
have active energy efficiency programs, this recognition
is at 60 percent or more. About half of those who
have made a recent ENERGY STAR purchase report
that they were influenced by the label.17"
• EPA is working toward the goal of having 60 percent
of the American public recognize the label. Based on
the effort required to attain this level of recognition,
EPA will develop additional goals for the latter part of
the decade.
• EPA is also striving to increase public awareness of
ENERGY STAR as a government-backed program
providing credible, unbiased information. Recent
reports suggest that some consumers are confused
about who is behind the ENERGY STAR, with some
believing it is a private sector eco-label, a perception
EPA must correct to continue building consumer
confidence.w//
Providing Energy Efficiency Information When and
Where Decisions are Made
In addition to product manufacturers, EPA and DOE
collaborate with a number of organizations to get clear,
accurate ENERGY STAR information to consumers. These
organizations include retailers, utilities, state energy
groups, and public benefits funds administrators. EPA
provides them with training and template materials to
use in their own energy efficiency programs and outreach
efforts. This support is particularly useful to those groups
administering public dollars because it allows them to
use their own funds to reach the businesses and
individuals in their regions, not spend them on the
creation of a regional infrastructure for energy efficiency.
EPA expects to broaden these partnerships over the next
several years because these organizations frequently
have direct contact with consumers and are well
positioned to provide consumer information on home
energy efficiency at the time of purchase.
Protecting the Integrity of the ENERGY STAR Label
Maintaining the integrity of the ENERGY STAR label is
essential to building awareness of and maintaining
consumer confidence in the label, as well as protecting
the taxpayer investment in the program over the past
10 years.
• EPA routinely monitors the use of the label on
products in the market place to ensure that it is used
to identify only products that qualify.
• EPA selectively tests products to ensure that products
said to qualify for the label do indeed qualify.
• EPA updates the performance specifications for the
ENERGY STAR as market conditions change so that
the ENERGY STAR continues to identify the most
efficient, cost-effective products on the market. EPA is
currently updating the ENERGY STAR specifications
for monitors, imaging equipment, and programmable
thermostats, while DOE recently updated the
residential window specification (see Table 1).
Improving New Home Construction
EPA has provided an energy efficiency platform for
builders of new homes since 1995, assisting them
with information on how to construct homes that are
30 percent more efficient than homes built to the Model
Energy Code. Builders can promote ENERGY STAR
qualified homes as energy efficient, comfortable, and
affordable.
• More than 2,000 active home builders partner with
EPA in the ENERGY STAR program.
• The market penetration for ENERGY STAR has
reached more than 20 percent in several markets.
EPA has focused on the rapidly expanding new
housing markets in California, Texas, Phoenix, and
Las Vegas. New Jersey, New England, and the
Midwest also have high concentrations of ENERGY
STAR builder partners.
RESIDENTIAL ENERGY EFFICIENCY
-------
THOUSANDS OF BUILDERS HAVE CHOSEN TO QUALIFY
THEIR HOMES AS ENERGY STAR.
TABLE 2.
TYPICAL ANNUAL HOME ENERGY BILL SAVINGS FROM ENERGY STAR QUALIFIED EQUIPMENT VERSUS STANDARD
NEW EQUIPMENT-for Homes with Varying Heating and Cooling Equipment (in 2000 dollars)
Product Category
Home with Gas Furnace and
Central Air Conditioner
Home with Gas Furnace and
Room Air Conditioners
Home with Gas Furnace
and Air Source Heat Pump
Office Equipment
Computer and Monitor
Fax
Laser Printer
Home Electronics
TV
DVD
Heating and Cooling
Heating
Air Conditioning
Programmable Thermostat
$108
$75
$100
$108
$15
$130
$100
Lighting
5 most used fixtures
Appliances
Dishwasher
Clothes Washer
Refrigerator
Indirect (Other) Savings
Water Heating Energy Savings
Clothes Dryer Electricity Savings
Other Fuel Savings
Total Savings
$465
$377
$412
Avg. $418
NOTES:
Table compares ENERGY STAR with standard new equipment; additional savings are realized when compared to stock.
Heating and cooling savings numbers assume equipment working together.
Room air conditioning number assumes 3 units in the house.
The 5 most used lighting fixtures: kitchen, living room table, living room floor, outdoor wall, and bathroom wall.
RESIDENTIAL ENERGY EFFICIENCY
-------
Improving New Home Construction (continued)
m One-third of the top 100 builders are ENERGY STAR
partners. And the Army Corps of Engineers now
builds all new Army homes as ENERGY STAR.
• EPA has found ways to reduce builder costs when
testing homes for the stringent ENERGY STAR
guidelines, providing homeowners with verification
at low cost to the builder.
• EPA will continue to build consumer interest in
energy-efficient homes with its current partners, as
well as expand into additional regions of the country
such as the Pacific Northwest. EPA will also work with
the manufactured housing industry to ensure that
more of these homes meet ENERGY STAR guidelines.
• EPA has set a goal of more than 500,000 ENERGY
STAR qualifying homes by 2006.
Better Trained Home Contractors and Informed
Home Owners
EPA supports the growing number of professionals
trained to understand how parts of the home work
together to maintain comfort while reducing
energy costs.
• Through ENERGY STAR Home Sealing, contractors
and homeowners are learning about the importance
of sealing air openings to the outside while properly
insulating walls and attics. When combined with
ENERGY STAR qualified windows, this sealed home
envelope keeps conditioned air within the living
space, improving comfort and reducing energy bills.
• EPA actively supports the North American Technician
Excellence (NATE), which tests HVAC contractors on
proper installation, maintenance, and repair or
service of heating and cooling equipment.
• EPA also partners with organizations around the
country to offer a new home retrofit program called
Home Performance with ENERGY STAR. In this
program, trained professionals provide homeowners
with detailed home energy audits and make key cost-
effective recommendations to improve efficiency and
comfort of the home. At the homeowner's request, they
will also make the improvements. Work performed by
home performance contractors is quality controlled by
the sponsoring organization. EPA is expanding this
program to more than 20 areas of the country over
the next 3 years.
Affordable Housing
The only truly affordable home is an energy-efficient one,
with a lower monthly energy bill that places a smaller
burden on limited monthly resources. EPA supports the
U.S. Department of Housing and Urban Development
(HUD) in its integration of ENERGY STAR into home
energy programs and other affordable housing efforts.
International Partners
EPA also cooperates with countries around the world that
are interested in adopting the ENERGY STAR label. In
2001, EPA signed an international agreement with Natural
Resources Canada, allowing it to implement an energy
efficiency labeling program modeled after ENERGY STAR.
This complements existing ENERGY STAR agreements
with the European Community, Japan, Taiwan, Australia,
and New Zealand.
8 RESIDENTIAL ENERGY EFFICIENCY
-------
MORE THAN 1,100 BUILDINGS ACROSS THE UNITED STATES
HAVE EARNED THE PRESTIGIOUS ENERGY STAR.
COMMERCIAL AND INDUSTRIAL
ENERGY EFFICIENCY
Increasing energy efficiency in the commercial and
industrial sectors also offers sizable opportunities for cost
savings while avoiding emissions of greenhouse gases.
These sectors contribute about 37 percent of the nation's
greenhouse gases, with buildings alone contributing
15 percent (see Figure 2).IXAgain, a number of analyses
suggest that substantial savings from cost-effective
improvements are available across these sectors if
certain market barriers can be overcome/-XlThese
barriers include:
• Lack of corporate commitment. When questioned,
many high-level financial decisionmakers see electricity
as the least controllable category of business costs.
• Lack of information. Buildings and industrial facilities
have complicated energy operations. While
information is available on how to approach and
undertake effective energy efficiency improvements,
this information is not widespread. And the expertise
for making changes is lacking within many
organizations.
• Lack of measurement tools. People routinely accept
the premise that you cannot manage what cannot be
measured. Until 1999, there was no reliable measure
for the energy performance or efficiency of various
types of commercial buildings or industrial facilities.
Nor was there a clear definition of what makes a
building or facility efficient.
• Tenant/landlord split incentives. Frequently, utility bills
for a commercial building are passed through to and
paid by the tenants. In these cases, the building owner
has little incentive to engage in energy efficiency
efforts because the tenants directly benefit from the
savings, not the owner.
EPA offers ENERGY STAR to businesses and other
organizations as a straightforward way to adopt superior
energy management and realize the cost savings and
environmental benefits that can result. EPA promotes a
strategy for superior energy management that starts with
the top leadership, engages the appropriate employees
throughout the organization, uses standardized
measurement tools, and helps an organization prioritize
and get the most from its efficiency investments.
While EPA has made significant progress promoting
greater energy efficiency across these sectors, much
more needs to be done. EPA is undertaking the
following activities:
Encouraging Top-Level Commitment to Energy Efficiency
EPA offers the ENERGY STAR partnership to organizations
of all types and sizes. As part of it, senior-level executives
make a commitment to the superior energy management
of their buildings or facilities. This top-level organizational
commitment has proved to be the catalyst for energy
efficiency investments in many of the most successful
partner organizations.
• Almost 12,000 organizations have partnered with
EPA in the pursuit of superior energy management
(see Table 3). These partners include:
• More than 425 public organizations such as state and
local governments, schools, and universities.
• More than 880 businesses across the commercial
and industrial sectors.
• More than 8,000 small businesses.
• ENERGY STAR partners represent over 9 billion
square feet or 13.8 percent of the commercial
building market as well as a significant number
of industrial facilities (see Table 3).
• EPA will expand partnerships across the commercial
and industrial sectors to catalyze energy efficiency at
the top management levels and to facilitate the
development of best practices and information
sharing. While EPA will partner with any interested
organization, special focus will be placed on those
sectors for which EPA has been able to develop new
standardized measurement tools. These sectors
include commercial real estate, public buildings,
schools (K-12), higher education, healthcare,
hospitality, automobile manufacturing, cement
manufacturing, wet corn milling, and others
(see Table 3).
COMMERCIAL AND INDUSTRIAL ENERGY EFFICIENCY
-------
ERA'S PROVEN ENERGY MANAGEMENT STRATEGY
Guidelines for Superior Energy Management
EPA offers a superior energy management strategy based on the success of thousands of ENERGY STAR partners.
Partnership with EPA turns energy management plans into actions:
• Top-level attention and a public commitment to secure resources for sustained improvements.
• A credible, objective energy performance rating system to assess the performance of buildings, validate savings,
and recognize top performance.
• 5-stage building upgrade approach based on building science and designed to take advantage of building system
interactions for greater savings and comfort.
• Visibility of an organization's achievements in the public and financial markets.
• Access to a network of partners, bringing creative approaches to problem solving.
Building the Financial Case
To engage top-level managers, they must see the link
between effective energy management and their core
objectives. EPA is working to demonstrate this connection
and to provide organizations with new financial indices
that help management understand how their energy costs
affect their profitability relative to others in their sector.
• EPA has collaborated with Innovest, a financial
analysis firm, whose studies have determined that
companies with effective energy management plans
in place tend to be strong environmental performers
and strong performers on Wall Street. Innovest
research shows that leaders in corporate energy
management outperform their competitors by
20 to 30 percent on Wall Street/"
• EPA has also succeeded in describing energy
savings in terms of core business objectives for a
wide range of business sectors. For example, EPA
has demonstrated that:
• A commercial building owner can generate $2 to
$3 of incremental asset value for every $1 invested in
energy performance improvements.
• A retail grocery can reap the equivalent of increasing
sales by $85 when it reduces annual energy costs by
$1, given this sector's low profit margins and
relatively high energy expenses.
• A full service hotel can realize the equivalent of
increasing its average daily rate by $1.35 (about
1.6 percent) from a 10-percent improvement in
energy performance.
• EPA will continue to use a variety of outreach
activities to convey the strong financial case for
effective energy management.
Offering Guidelines for Superior Energy Management
Through its work with thousands of partners in Green
Lights and now ENERGY STAR, EPA has identified the key
elements of superior energy management. They are:
• Top-level commitment to reduce energy waste.
Without this commitment, resources are often not
allocated to energy projects, and efficiency programs
are not sustained.
• Routine assessment of organization-wide performance,
against competitors and across own portfolio.
Assessing energy use in all operations and all
buildings results in resources being targeted to those
facilities with the greatest potential for improvement.
Organizations can rank their own properties, learn
from the high performers, and upgrade the poor
performers.
• Use of a systems-integrated approach to upgrade
buildings. Sizing heating and cooling equipment,
integrating individual technical components, and
controlling, operating, and maintaining equipment
play a big role in the energy performance of a
building.
Organizations using these guidelines have realized twice
the energy savings for a given investment as alternative
approaches. The case for these guidelines is clear given
the findings from the past decade:
• The efficiency of building components such as
windows, chillers, etc., has improved by more than
30 percent over the past 25 years, yet building energy
use has not improved by nearly as much.x///
10 COMMERCIAL AND INDUSTRIAL ENERGY EFFICIENCY
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Food Lion, LLC, Salisbury, North Carolina
Food Lion, LLC, a subsidiary of Brussels-based Delhaize Group, operates more than 1,200 supermarkets in 11 Southeastern and
Mid-Atlantic states. Food Lion received the ENERGY STAR Award for Excellence in Energy Management in 2002 and 2003.
Tracking 10 cents of its earnings per share to its energy efficiency accomplishments. Food Lion has successfully integrated energy
management into its corporate business objectives. Food Lion benchmarks all of the stores in its portfolio, evaluates the worst performing
stores on a monthly basis, and provides quarterly energy bonuses to maintenance staff to encourage improvements. A key partner
in developing the EPA benchmark for supermarkets. Food Lion has used the energy ratings to justify recommissioning services.
Food Lion's energy management measures have resulted in impressive energy savings. In 2001, even with a 6-percent increase
in store square footage. Food Lion reduced energy consumption by 1.3 percent—equivalent to over $50 million in sales. In 2002,
Food Lion saw energy savings of 5 percent, and annualized cost savings of nearly $15 million, despite increasing its net square
footage by 2 percent. These savings are the equivalent of increasing sales by $465 million or eliminating the energy use of 55 stores.
• An examination of U.S. buildings shows that the best
performing buildings use 75 percent less energy than
the worst performing buildings. It also shows that
this difference cannot be accounted for by particular
technologies, climate, building size, or building age.xlv
EPA offers its proven energy management strategy to
each of its 12,000 partners. EPA estimates that to date
more than 47.5 billion kWh have been saved through
these efforts/17 EPA will continue to promote this
approach to its current partners and offer it to more
businesses and organizations.
Providing New Standardized Measurement Tools
Fundamental to this whole-building systems approach is
EPA's national energy performance rating system for
buildings, unveiled in 1999. This rating system measures
how well the building systems are integrated and how
well the building is operated and maintained. It fills an
important measurement gap because no consistent or
comparable metric existed prior to this system. Now a
building owner or manager has a rating akin to the
miles per gallon rating for an automobile. And this
rating can be used in key market transactions such as
the assessment of a building's asset value or the lease
price of building space.
• EPA has developed the online rating system for office
buildings, schools (K-12), hotels, grocery stores, and
hospitals (see Table 3). Numerous organizations have
embraced it and evaluated more than 15,000 buildings
through 2002. They represent 16 percent of the
nation's office building market, 13 percent of schools,
20 percent of supermarkets, 21 percent of hospitals,
and 5 percent of hotels.
EPA has also seen major organizations adopt the
national rating system as part of their energy
management efforts. For example, many organizations
are using energy performance ratings to help direct
their project investments and monitor progress
(see sidebars). Two large pension fund managers,
TIAA-CREF and Lend Lease, have announced that they
are requiring managers of the buildings in their
portfolios to rate the energy performance of these
buildings and work to improve their performance/17'
EPA expects to add court houses, residence halls, fast
food establishments, and other retail building spaces
to the rating system over the coming year. At that
point, the rating system will apply to more than
50 percent of the building space across the country.
EPA will also continue to promote the rating system
to its partners and other organizations as an effective
means of measuring building performance and
setting future performance goals.
EPA is now exploring how to adapt the rating to
the industrial sector. A substantial portion of the
industrial sector could benefit from improved energy
performance measurement tools and enhanced
corporate energy management. EPA is investigating
industrial energy performance indicators at the
facility level with interested sectors, including
automobile assembly, malt beverage production,
and corn refining. The glass manufacturing and
pharmaceutical industries have also expressed
interest. EPA will support the development of
indicators for three to five sectors per year.
COMMERCIAL AND INDUSTRIAL ENERGY EFFICIENCY n
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Starwood Hotels & Resorts Worldwide, Inc., white Plains, New York
Starwood Hotels & Resorts Worldwide, Inc., is a leading U.S. hotel company, owning, operating, and franchising over 700 hotels
in 80 countries. Its brands include Four Points, Sheraton, Westin, and W Hotels. Starwood received the ENERGY STAR Award for
Excellence in Energy Management in 2002 and 2003. And at the Energy Efficiency Forum at the National Press Club in June
2002, EPA recognized Starwood's Sheraton Boston Hotel as one of the first hotels in the nation to earn the ENERGY STAR.
Starwood's "Energy Management is Good Business" strategy is centered around its commitment to making energy management
everyone's responsibility. The company has benchmarked all of its owned and managed hotels using EPA's energy performance
rating system and will apply for the ENERGY STAR label for top performing hotels (those scoring 75 or better) to demonstrate
its environmental commitment to guests and the public. Starwood based a portion of its 2001 bonuses for its energy team on
energy consumption reductions, and its "Watts for Wheels" contest created competition among the company's properties for
energy efficiency accomplishments. Starwood also helped EPA test the benchmarking system for hotels by providing energy
data for all of its buildings.
Starwood's energy management initiatives are paying off. The company invested $8.5 million in energy projects completed
in 2001, and saved $3.4 million—equivalent to renting 9,370 additional rooms. In 2002, Starwood invested approximately
$4.6 million in energy projects and saved $1.3 million, the equivalent to renting 9,800 additional rooms.
Distinguishing the Top Performing Buildings
Based on results from the national energy performance
rating system, EPA offers the ENERGY STAR label as a
way to distinguish buildings that are top energy
performers—those scoring in the top 25 percent of
their class which also meet industry standards for
indoor air quality.
• Hundreds of organizations have applied for the
ENERGY STAR and by the end of 2002, 1,100 top
performing buildings nationwide had earned the
prestigious label.
• As a group the ENERGY STAR qualifying buildings
use 40 percent less energy than the average building
in the United States while providing quality space.
• EPA will continue to offer the ENERGY STAR label for
top performing buildings and work with organizations
to help them highlight the design, operations, and
maintenance features that make the buildings qualify.
• EPA is collaborating with leaders in the Green
Buildings Industry to ensure that similar approaches
are used to recognize top energy performing buildings
in the ENERGY STAR program as are used for green
building certification.
Identifying Efficient Products for the Workplace
While ENERGY STAR for the commercial and industrial
sectors places a large emphasis on whole-building
system improvements, there are times when making the
efficient choice is as easy as choosing the most efficient
product. This is largely the case with products that plug
into an outlet—plug loads. Many such products, including
office equipment and appliances, already qualify as
ENERGY STAR and offer significant energy savings
within these sectors. EPA recommends that organizations
specify the following products as part of their bulk
procurement practices: office equipment, commercial
refrigerators, water coolers, and unitary heating and
cooling equipment. EPA may add commercial cooking
equipment and vending machines to this list in the
coming years.
Providing Recognition for Success
An important aspect of an effective energy management
plan is setting goals for continuous improvement and
then meeting these goals. Using the national energy
rating system and other means, EPA recognizes
organizations for reaching key milestones in improved
energy performance and the environmental benefits
these achievements deliver.
Working with Interested Organizations
In addition to the businesses seeking to improve their
energy performance, EPA works with a number of
organizations to get clear, accurate information to these
energy end-users about opportunities for improved
energy performance. These organizations include energy
service providers, utilities, state energy groups, and
public benefits funds administrators. EPA provides them
with training and outreach materials to use in their own
energy efficiency programs. This support is particularly
useful to groups administering public dollars because it
helps them use their own funds to reach businesses in
their regions, instead of in the creation of a regional
infrastructure for energy efficiency. EPA plans to continue
to broaden these partnerships because it is these
organizations that have frequent and direct contact with
the end-user.
12 COMMERCIAL AND INDUSTRIAL ENERGY EFFICIENCY
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TABLE 3.
OVERVIEW OF BUILDING SECTORS AND POTENTIAL GREENHOUSE GAS REDUCTIONS FROM SUPERIOR
ENERGY MANAGEMENT
Market Segment
Potential Carbon Savings
(MMTCE)
Extent of Commitment
to ENERGY STAR:
Total Active Partner
Square Footage
(% of market)
Availability of
Standardized
Measurement
System
EPA 2012
Carbon Savings
Goals
(MMTCE)
Office
General
Courthouses
Banks
Financial Centers
17.5
3.9 billion (32%)
available since 1999
available in 2003
available in 2003
available in 2003
5.3
Retail
Drug Stores
Discount Stores
Home Centers
Department Stores
14.3
1.9 billion (18%)
available by 2004
available by 2004
available by 2005
available by 2005
3.1
Education
K-12
Higher Education
7.4
1.0 billion (12%)
available since 2000
residence halls available in 2003
2,3
Healthcare
Acute Care Hospitals
Medical Office Buildings
Clinics
6,9
350 million (12%)
available since 2001
available in 2003
available by 2006
1,3
Lodging
5.9
730 million (16%)
available since 2002
1.4
Food Service
Fast Food Restaurants
4,9
6 million (1%)
available in 2003
1.2
Food Sales
Grocery Stores
Convenience Stores
3.0
377 million (37%)
available since 2001
available by 2006
1.3
Other
Post Offices
Warehouses
Telecommunication Centers
Wastewater Treatment Facilities
Drinking Water Treatment Facilities
15.8
1.1 billion
available in 2003
available in 2003
available by 2004
available by 2005
available by 2006
1.6
TOTAL 75.7 9.3 billion
NOTE: Savings potential based on a 30% savings in total energy being possible.
17.5
COMMERCIAL AND INDUSTRIAL ENERGY EFFICIENCY 13
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E
o
1
E
c
o
.a
T3
;u
1
8
FIGURES.
AVOIDED GREENHOUSE GAS EMISSIONS FROM THE ENERGY STAR PROGRAM: 1993 TO 2002
30
•S 2=H
I Superior Energy Management
I Product Labeling
20 -
O 10-
15-
1992
1994
1996
1998
2000
2002
Year
FIGURE 4.
EXPECTED EMISSIONS REDUCTIONS FROM THE ENERGY STAR PROGRAM: 2003 TO 2012
50-
I Superior Energy Management
I Product Labeling
I Home Improvement
2003
2011
14 FUTURE OF THE ENERGY STAR PROGRAM
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THE TYPICAL HOME CAUSES MORE GREENHOUSE GAS
EMISSIONS THAN THE TYPICAL VEHICLE. WITH ENERGY
STAR, PEOPLE CAN LOWER THESE EMISSIONS BY 30% WHILE
SAVING MONEY.
FUTURE OF THE ENERGY STAR PROGRAM
Each year, EPA makes a significant effort to accurately
estimate the environmental and economic benefits from
the ENERGY STAR program. EPA uses peer-reviewed
methods that capture the enhanced flow of efficient
technologies and practices into the residential,
commercial, and industrial sectors due to the ENERGY
STAR program, while accounting for the business-as-
usual improvements that would have occurred
anyway.*""-*w"
In 2002, EPA estimates that Americans, with the help of
the ENERGY STAR program:
• Saved more than 100 billion kWh of electricity.
• Prevented more than 20 MMTCEx/xof greenhouse gas
emissions, the emissions equivalent to those from
more than 14 million automobiles.
• Saved more than $7 billion.
Roughly half of these benefits are the result of people
using ENERGY STAR qualifying products in their homes
or at work, and the other half from organizations
adopting superior energy management practices across
the commercial and industrial sectors (see Figure 3).
Looking to the future, EPA expects the activities outlined
above to expand the ENERGY STAR program and to
grow the benefits steadily from 2002 to 2012, as shown in
Figure 4. By 2012, the ENERGY STAR program is
expected to avoid about 50 MMTCE of greenhouse gas
emissions each year, equivalent to the emissions from
more than 30 million vehicles, and reduce energy bills by
about $15 billion annually.
In 2012, EPA expects the use of ENERGY STAR qualifying
products at home and at work to contribute about
45 percent of the environmental and economic benefits
and the adoption of superior energy management
practices to contribute an additional 45 percent. The
remaining 10 percent will come from widespread efforts
to incorporate energy efficiency more comprehensively
into home improvement.
The expected 2012 results represent a doubling in the
benefits from the ENERGY STAR program during its
second decade, proving that sizable benefits remain to be
harvested from this approach for delivering energy
efficiency to the country.
The keys for continued success over the next decade to
which the EPA remains committed are:
• Maintaining the value of the ENERGY STAR label
among the many partners using it to communicate
characteristics of their products or their environmental
stewardship actions.
• Providing clear, objective, and accurate information to
consumers, businesses, and organizations about
sound approaches for energy efficiency and
environmental protection.
• Maintaining transparency with the business
community as the ENERGY STAR program moves
forward and energy efficiency specifications are
updated and improved.
FUTURE OF THE ENERGY STAR PROGRAM 15
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"Our partnership in ENERGY STAR reflects a fundamental commitnn
by Kodak to continuous improvement of all aspects of our energy
performance. We will continue working to strengthen our commitme
because it's good for our business, in addition to being the right thin-
do for the environment."
—CHARLES S. BROWN, SENIOR VICE-PRESIDENT AND DIRECTO
GLOBAL MANUFACTURING & LOGISTICS, EASTMAN KODAK COMPAI\
END NOTES
I Climate Protection Partnerships Division, U.S. Environmental Protection Agency. 2003. Change for the Better, ENERGY STAR and Other Voluntary Programs,
2002 Annual Report, (forthcoming}
11 Ibid.
HI Interlaboratory Working Group. 1997. Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy-Efficient and Low-Carbon Technologies by 2010 and
Beyond. Oak Ridge, TN and Berkeley, CA: Oak Ridge National Laboratory and Lawrence Berkeley National Laboratory. September (ORNL-444; LBNL-40533}.
/VEPA. 2003. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2001. Office of Atmospheric Programs. April (EPA 430-R-03-004).
Available online athttp://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsGHGEmissionsUSEmissionslnventory2003.html.
v EPA and DOE have cooperated since 1996 on qualifying products for the ENERGY STAR.
VI Energy Information Administration (ElA). 2001. Annual Energy Outlook 2002 with Projections to 2020. Office of Integrated Analysis and
Forecasting. December (DOE/EIA-0383(2002».
V!l The Cadmus Group and Xenergy Consulting, Inc. 2002. "National Analysis of CEE 2001 ENERGY STAR Household Surveys." August 1.
VIII The Alliance to Save Energy. 2002. "A Group Study to Explore Consumer Views on Energy Efficiency and Test Alternative Message Benefits." April.
IX EPA. 2003. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2001. Office of Atmospheric Programs. April (EPA 430-R-03-004).
Available online athttp://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsGHGEmissionsUSEmissionslnventory2003.html.
X Interlaboratory Working Group. 1997. Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy-Efficient and Low-Carbon Technologies by 2010 and
Beyond. Oak Ridge, TN and Berkeley, CA: Oak Ridge National Laboratory and Lawrence Berkeley National Laboratory. September (ORNL-444; LBNL-40533).
XI EPA. 1996. "ENERGY STAR Showcase Buildings Program: Results and Lessons Learned." June.
XII Innovest Strategic Value Advisors. 2002. "Energy Management and Investor Returns: The Real Estate Sector." October.
XM Based on Climate Protection Partnerships Division, U.S. Environmental Protection Agency analysis of CBECS 1995 micro data.
XIV Climate Protection Partnerships Division, U.S. Environmental Protection Agency. 2001. "Technical Description for the Office Model." December 31.
XV Climate Protection Partnerships Division, U.S. Environmental Protection Agency. 2003. Change for the Better, ENERGY STAR and Other Voluntary Programs,
2002 Annual Report, (forthcoming}
XVI EPA. 2002. Administrator Whitman to Commend the Real Estate Investment Industry for its Commitment to the Environment. Headquarters Press Release.
December 12. Available online at http://www.epa.gov/newsroom.
XVI1 Webber, C.A., R. E. Brown, and J.G. Koomey. 2002.2002 Status Report: Savings Estimates for the ENERGY STAR Voluntary Labeling Program.
Lawrence Berkeley National Laboratory. (LBNL-51319} Available online at http://enduse.lbl.gov/lnfo/Pubs.html.
XVIH Horowitz, M.J. 2001. "Economic Indicators of Market Transformation: Energy Efficient Lighting and EPA's Green Lights." The Energy Journal 2(4):95-122.
XIX Greenhouse gas emissions in the United States are most commonly expressed as "million metric tons of carbon equivalents" (MMTCE). MMTCE is a metric
measure used to compare the emissions of the different greenhouse gases based on their global warming potential (GWP}. It is determined by weighting the
reductions in emissions of a gas by its global warming potential for a 100-year period.
United States
Environmental Protection
Agency
Air and Radiation 6202J
EPA430-R-03-008
July 2003
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