ENERGYSTAR
                ENERGY STAR® and Other Voluntary Programs
                2003 Annual Report
                                                      United States
                                                      Environmental Protection
                                                      Agency

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ENERGY STAR® AND OTHER VOLUNTARY PROGRAMS
CLIMATE PROTECTION PARTNERSHIPS DIVISION (CPPD)
2003 ANNUAL REPORT
                   CONTENTS
                   Letter from the Assistant Administrator
                   Executive Summary
                   Introduction
                   ENERGY STAR Program  	
                   Climate Leaders Program  	
                   Clean Energy Programs  	
                       Combined Heat and Power Partnership
                       Green Power Partnership	
                   Methane Programs	
                       Landfill Methane Outreach	
                       Natural Gas STAR	
                       Coalbed Methane Outreach
                       Agriculture-Based Programs  	
                   High GWP Environmental Stewardship Programs
                   International Climate Protection Award Winners .
                   Benefits of Voluntary Programs	
                   References
                   List of Figures and Tables
                   Companies and Organizations Mentioned in This Report
                   For additional information, please visit our Web sites at www.epa.gov/cppd
                   and www.energystar.gov or call the toll-free ENERGY STAR Hotline at
                   1-888-STAR-YES (1-888-782-7937).

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                          LETTER  FROM THE ASSISTANT ADMINISTRATOR
                                                                   September 2004
EPA applauds its partners for their leadership and exemplary efforts to save energy and
ensure a cleaner, healthier environment for all Americans. We congratulate the dedicated
partners working with EPA on climate protection. Together, we are on track to meet
President Bush's goal of an 18-percent reduction in greenhouse gas intensity from the
U.S. economy by 2012.
Americans benefit from EPA's voluntary partnerships in the form of economic savings
and emissions reductions. In 2003, with the help of ENERGY STAR, Americans saved
over $8 billion on their energy bills while preventing greenhouse gas emissions equivalent
to the emissions from 18 million vehicles. These same partnerships helped develop a
national market for energy-efficient products, with more than one billion ENERGY STAR
products sold and billions of square feet of building space improved. In addition, EPA's
national outreach campaign has delivered the energy efficiency message to millions of
households and has helped them make informed  choices as consumers.
Great progress has been achieved by partners in other EPA programs as well. The Climate
Leaders Program has added 16 new partners, bringing the total to 52 companies. The
successful Methane Programs have reduced emissions of methane, a potent greenhouse gas,
to 5  percent below 1990  levels, and we expect the reductions to remain below 1990 levels
through 2020,  even with future economic growth. In addition, Environmental Stewardship
Programs that engage specific industries, such as aluminum, electric power,  and semi-
conductors, are cost-effectively reducing U.S. emissions of the most harmful greenhouse
gases and encouraging similar voluntary initiatives abroad.
EPA appreciates the commitment of its partners,  and we look forward to continued
collaboration as we work to find solutions to the  pressing environmental challenges
of our time.
                              Jeffrey R. Holmstead
                              Assistant Administrator
                              U.S. Environmental Protection Agency

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CLIMATE  PROTECTION  PARTNERSHIPS   DIVISION  2003  ANNUAL  REPORT
EXECUTIVE SUMMARY
"EPA appreciates
 the commitment
 of its partners,
 and we look
 forward to
 continued
 collaboration as
 we work to find
 solutions to
 the pressing
 environmental
 challenges
 of our time."
—Jeffrey R. Holmstead,
  Assistant Administrator,
  U.S. Environmental
  Protection Agency
Global climate change is a complex, long-term challenge that will require a sustained effort over
many generations. As President Bush has said, "The policy challenge is to act in a serious and sensible
way, given the limits of our knowledge. While scientific uncertainties remain, we can begin now to
address the factors that contribute to climate change." Wise action now is an insurance policy against
future risks of global climate change. This includes the adoption of leading technologies and practices
that reduce greenhouse gas emissions, as well as enhance the comfort and quality of our homes,
increase the productivity of business, reduce emissions of criteria air pollutants, and improve the
reliability of the nation's power sector.

For more than a decade, businesses and organizations have partnered with EPA through voluntary
climate protection programs  to pursue common sense approaches. Each year the environmental and
economic benefits grow, and 2003 was another  excellent year.

Highlights of 2003:
• Americans, with the help of ENERGY STAR, avoided greenhouse gas emissions equivalent to those
  from 18 million automobiles—up from 15 million in 2002—while saving $8 billion on their
  energy bills.

• U.S. methane emissions remained below 1990 levels, as did emissions of the most potent
  greenhouse gases—perfluorocarbons (PFCs), hydrofiuorocarbons (HFCs), and sulfur hexafluoride
  (SF6)—for the sectors with which EPA partners.

• EPAs new Clean Energy and Climate Leaders programs attracted many new partners and made
  great progress in promoting clean energy and  comprehensive climate change strategies.

• EPAs climate protection programs remain on track to provide 40 percent of the greenhouse gas
  reductions required to meet the President's 18 percent greenhouse gas intensity improvement goal
  by 2012.  EPAs programs again exceeded their goals  for reductions in greenhouse gas emissions
  in 2003.
Figure ES-1.
Division greenhouse gas emissions avoided
compared to program goals
                                         48
                                    42
                                                      I   I   I
                                                 I   I   I   I
                                            I   I   I   I   I
                                        I   I   I   I   I   I
                                   ri   i   •   •11
Additional major environmental and economic
achievements of EPAs climate partnerships  as of
2003 are summarized below.

 ENVIRONMENTAL BENEFITS
 • The partnerships prevented 48 million
   metric tons of greenhouse gas emissions
   (in MMTCE3) in 2003 alone, equivalent
   to the annual emissions from 32 million
   automobiles (see Figure ES-1).
 • 165,000 tons of nitrogen oxides (NOX) were
   prevented in 2003.
 • More than 41 MMTCE per year in
   greenhouse gas emissions will be avoided
   during the next decade due to actions already
   taken by partners in these voluntary programs.
                             '95  '96  '97
                             YEAR
                                          •98
                                               •99
                                                    •00
                              •01   '02   '03
                              TARGET   ACTUAL
                           NOTE: Historical totals updated based on most recent
                           data available.
                           Source: EPA Climate Protection Partnerships Division
1 Each ofEPA's climate protection partnerships is designed to achieve long-term greenhouse gas emissions reduction goals, which were set through an interagency process in 2001 and
 communicated to the Secretariat of the Framework Convention on Climate Change in the U.S. Climate Action Report 2002.

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                                         PROTECTING   THE   ENVIRONMENT — TOGETHER
ECONOMIC BENEFITS

• Consumers and business have locked in investments in
  energy-efficient technologies exceeding $16 billion.

• Net of their investment in energy-efficient technologies,
  consumers and businesses are saving about $89 billion
  cumulatively over the next 10 years; they saved in excess  of
  $8 billion in 2003 alone.


PROGRAM  EFFECTIVENESS

Every federal dollar spent on these partnership programs
through 2003 means:

• Reductions in greenhouse gas emissions of 1.0 metric ton of
  carbon equivalent (3.7 tons of carbon dioxide (CO2)).
                                                              EXECUTIVE SUMMARY


                                   • Savings for partners and consumers of more than $75 on
                                    their energy bills.

                                   • The creation of more than $ 15 in private sector investment.

                                   • The addition of more than $60 into the economy.

                                   The environmental and economic benefits for the key EPA
                                   partnership program areas—ENERGY STAR, Clean Energy
                                   Programs, Methane Programs, and the Environmental
                                   Stewardship Programs for the high global warming potential
                                   (GWP) gases—are summarized in Table ES-1.
Table ES-1.
Summary of the benefits for 2003 and cumulative benefits through 2013 from the actions taken by partners
through 2003 (in billions of 2003 dollars)
                                   BENEFITS FOR 2003
 Program

 ENERGY STAR
  Qualified Products
  Buildings
  Industry
  Net
Savings
  $4.5
  $3.5
MMTCE
  11.7
  11.3
  4.0
  NPVof
Bill Savings
   $47.6
   $51.6
CUMULATIVE BENEFITS 1993-2013
   NPVof
 Technology        NPV of Net
Expenditures        Savings
    $3.1
    $9.6
$44.5
$42.0
               MMTCE
122
209
 na
 Clean Energy Programs
                    0.5
 Methane Programs
  $0.2
  11.5
    $6.3
    $3.4
 $3.0
                                                                      171
 Environmental Stewardship
 Programs

 TOTAL
  $8.2
  9.2

 48.2
  $105.5
   $16.1
$89.4
144

651
NPV:     Net Present Value
NOTES:   Technology Expenditures include O&M expenses for Methane Programs.
         Bill Savings and Net Savings include revenue from sales of methane and electricity.
         ENERGY STAR qualified homes are included in the Qualified Products totals.
         Totals may not equal sum of components due to independent rounding.
         For details on cumulative benefits, see pages 43-44.
	:     Not applicable
na:       Not available
 Program). It does not include emissions reductions attributable to WasteWise, transportation programs, the Significant New Alternatives Program, or the landfill rule, which are the
 remaining actions in EPA's comprehensive climate program. EPA estimates the reduction in greenhouse gas emissions across the entire set of climate programs to be more than
 80 MMTCE in 2003.

3 Reductions in annual greenhouse gas emissions for EPA's climate programs, including non-C02 gases, are based on "carbon equivalents," which are determined by weighting the
 reductions in emissions of a gas by its global warming potential for a 100-year time period.
4 Based on data from The Emissions & Generation Resource Integrated Database (eGRID2002) Version 2.01, released May 2003.

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CLIMATE   PROTECTION  PARTNERSHIPS   DIVISION  2003   ANNUAL  REPORT
EXECUTIVE SUMMARY
"Food Lion is an
 example of how
 a company can
 protect the
 environment and
 meet its business
 objectives. As an
 ENERGY STAR
 partner, Food Lion
 is demonstrating
 a long-term
 commitment to the
 environment and to
 its bottom line."
—Glenn Dixon,
  Senior Vice President of
  Corporate Development,
  Food Lion
KEY ACCOMPLISHMENTS FOR 2003

Climate Leaders
• Since Climate Leaders was launched in early 2002, 52 companies have become partners. Ten of
  the partners have already completed corporate-wide greenhouse gas emissions inventories and
  20 announced aggressive greenhouse gas reduction goals.

ENERGY STAR
• Americans with the help of ENERGY STAR saved a significant amount of energy in 2003, about
  110 billion kilowatt hours (kWh) and 20,000 megawatts (MW) of peak power, the amount of
  energy required to power about 20 million homes (See Figure ES-2). They also prevented
  greenhouse gas emissions equivalent to those from 18 million automobiles.
* The ENERGY STAR label has become the national symbol for energy efficiency, recognized by
  56 percent of the American public.
                                                 * To earn the label on products,
                                                  manufacturers must meet strict energy
                                                  efficiency guidelines set by the federal
                                                  government. More than  1,400
                                                  manufacturers use the ENERGY STAR
                                                  across a total of 28,000 individual product
                                                  models in  over 40 product categories. To
                                                  date, Americans have bought more than
                                                  one billion ENERGY STAR qualified
                                                  products.
                                                 * More than 2,000 builders have constructed
                                                  over 200,000 ENERGY STAR qualified
                                                  new homes, locking in financial savings
                                                  for homeowners that exceed $60 million
                                                  annually.
                                                 * Close to 5,000 homes have been improved
                                                  through Home Performance with
                                                  ENERGY STAR, which continues to
                                                  grow with the addition of U.S. Department
                                                  of Energy (DOE) sponsored pilot programs
                                                  in Atlanta, Atlantic City, Austin, Boise,
                                                  and Kansas City. This is a whole-house
                                                  retrofit program in which  certified contractors
                                                  recommend, through diagnostic testing,
                                                  the most cost-effective, energy-efficient
                                                  home improvements for homeowners.
  EPAs national energy performance rating system has been used to evaluate almost 19,000 buildings;
  17 percent of office buildings, 11 percent of schools,  17 percent of supermarkets, 28 percent of
  hospitals, and 6 percent of hotels have been benchmarked. Nearly 1,400 buildings have earned
  the ENERGY STAR.
  ENERGY STAR for the industrial sector helped improve energy efficiency in four major U.S.
  manufacturing industries by publishing final energy guidelines for the corn refining, cement, auto
  assembly, and brewing industries. Energy guides provide a review of opportunities for improving
  energy efficiency in focus industries.

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                                      PROTECTING   THE  ENVIRONMENT — TOGETHER
                                                                                      EXECUTIVE SUMMARY
Clean Energy
• An additional 143 partners joined EPA's Green Power
  Partnership for a total of more than 230 partners committed
  to purchasing more than 1 billion kWh of green power
  (roughly the annual output of a 425 MW wind farm). EPA
  recognized the environmental achievements of Green Power
  partners at events in California, Georgia,  Illinois, Oregon,
  Washington,  DC, and Wisconsin.
• The number  of partners in the Combined Heat and Power
  (CHP) Partnership more than doubled to a total of 116.
  EPA facilitated 40 projects  in the Midwest and the Northeast,
  bringing the capacity of projects assisted to over 850 MWe.

Methane and High Global Warming Potential (GWP)
Environmental Stewardship
• Partnership programs achieved reductions of non-carbon
  dioxide (CO2) gases—methane, PFCs, HFCs, and SF6—
  totaling an estimated 20.7 MMTCE in 2003 alone.
  Through the continuation of these efforts, U.S. methane
  emissions are expected to stay below 1990 levels through
  2012.  In addition, industry commitments, such as the
  recently announced magnesium partnership commitment to
  eliminate SF6 emissions  by 2010, are significantly reducing
  emissions of the most potent and persistent gases.

Figure ES-2.
Annual savings in energy  use as a
result of CPPD's partnership programs
                                    111
                                 96
                        63
                    46
                29
        10
 Er   5
 m
 5

   •95  '96  '97   '98  '99  '00  '01   '02  '03
   YEAR
NOTE: Historical totals updated based on most recent
data available.
Source: EPA Climate Protection Partnerships Division
EXPECTATIONS FOR 2004 AND BEYOND

The future for EPA's voluntary partnerships is promising, and
EPA has ambitious plans to expand program activities. Proven
strategies and thriving partnerships will promote greater
benefits for businesses, organizations, consumers, and the
environment. In the coming years, EPA plans to:

Climate  Leaders
• Welcome 25 additional businesses  into Climate Leaders and
  have an additional 20 organizations announce corporate
  greenhouse gas emissions reduction goals.

ENERGY STAR
• Enhance the value of the ENERGY STAR label for
  consumers by adding product specifications for new product
  categories such as refrigerated beverage vending machines,
  air cleaners, and external power supplies.
• Maintain the integrity of the ENERGY STAR label by
  revising specifications where appropriate for products such
  as water coolers, telephony, dehumidifiers, and furnaces.
  Continue to identify additional product categories for new
  specification development or specification review.
• As in the past, continue to build public awareness of
  ENERGY STAR and strengthen the ENERGY STAR
  brand nationwide.
• Continue to educate consumers and homeowners to be
  aware that ENERGY STAR can reduce their home energy
  bills by about 30 percent or about $400 annually through
  a variety of means, while making a difference for
  the environment.
• Increase the market penetration of ENERGY STAR
  qualified homes and  expand the partner base. Support
  new and existing sponsors of the existing home
  improvement programs, which include Home Performance
  with ENERGY STAR. In addition, build the contractor
  infrastructure and explore financing options among
  national lenders.
• Offer energy performance ratings and label eligibility for
  more building types, including medical office buildings,
  bank branches, financial centers, courthouses, warehouse/
  storage areas, and residence halls. Continue to promote
  superior energy management by providing focused energy
  performance rating tools to offices, K-12 schools, hospitals,
  hotels, and supermarkets.
• Continue the ENERGY STAR Industrial Sector Focuses
  in the automobile manufacturing,  brewery,  cement
  manufacturing, corn refining, glass manufacturing, and
  petroleum refining sectors. Add new sector focuses
  for the  petrochemical, pulp and paper, fruit and vegetable
  canning, and sugar processing industries.
5
 Measured at the generator terminals.

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CLIMATE  PROTECTION  PARTNERSHIPS   DIVISION  2003  ANNUAL  REPORT
EXECUTIVE SUMMARY
To date,
U.S. consumers
have purchased
more than
one billion
ENERGY STAR
qualified products.

Clean Energy
* Welcome 50 new CHP partners and assist 30 new CHP projects representing at least 800 MWe of
  CHP capacity.

* Add 170 new Green Power partners, raising total green power purchasing commitments to
  1.5 billion kWh of electricity.

Non-C02 Programs
• Maintain methane, PFC, HFC, and SF6 emissions below 1990 levels through effective partnerships
  and outreach to the aluminum, magnesium, semiconductor, electric power, landfill, coal mining,
  and natural  gas industries.

• Assist the aluminum, magnesium, and semiconductor industries with new sector-wide greenhouse
  gas emissions reduction goals as part of the President's Climate VISION (Voluntary Innovative
  Sector Initiatives: Opportunities Now) initiative.

In implementing these plans, EPA expects to more than double the greenhouse gas emissions
reductions resulting from these voluntary programs to about 120 MMTCE in 2012 (see Figure
ES-3). These programs represent 64 percent of the estimated 185 MMTCE to be avoided by all EPA
climate change programs in 2012.

Figure ES-3.
Annual greenhouse gas emissions avoided can be more
than doubled by 2012
  140
                                 '96   '98
                              YEARS 1995-2013
                                                 '02   '04    '06    '08   '10   '12
                             NOTE: Historical totals updated based on most recent data available.
                             Source: EPA Climate Pn.      tnenhips Division

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                                PROTECTING  THE   ENVIRONMENT — TOGETHER
 EPA CLIMATE PROGRAMS EXPECTED TO ACHIEVE 40% OF ADMINISTRATION'S CLIMATE GOAL
In February 2002, President Bush announced an
aggressive strategy to reduce greenhouse gas intensity
by 18 percent by 2012.  By significantly slowing the
growth in greenhouse gas emissions, this policy will
put America on a path toward stabilizing concentrations of
greenhouse gases for the long term, while sustaining
the economic growth needed to finance investments in
a new, cleaner energy structure.
The Bush Administration is strengthening and
expanding EPA's voluntary programs as a key strategy
for achieving the intensity reduction goal. Many
industries have already responded to the new
challenge to reduce their greenhouse gas emissions
voluntarily wherever possible.
EPA's voluntary climate protection programs will
contribute a reduction of 45 million metric tons of
carbon equivalent (MMTCE) annually to the President's
18 percent intensity reduction goal by 2012, in addition
to contributing 75 MMTCE to the Administration's
baseline projection. In total, EPA's programs will contribute
120 MMTCE by 2012, as illustrated in Figure 4. These
avoided emissions are in addition to the 65 MMTCE
avoided annually as of 2003 (not shown in Figure 4).
This annual report provides a summary, update, and
outlook for many of the EPA programs that are
expected to deliver these results. The other EPA
programs that contribute to these results primarily
address transportation  issues, such as  Smart Way,
and can be found at www.epa.gov/air/transport.

 "To achieve this goal, our nation must move forward on many fronts, looking at every sector of our economy.
  We will challenge American businesses to further reduce emissions.... We will build on these
  successes with new agreements and greater reductions."
                                                                      —President George W. Bush, February 14, 2002
Figure 4.
Projected reductions in greenhouse gas emissions due to Administration Climate Policy
    2,400
    2,100
                                                            •120 MMTCE
   180%
   Intensity
     provement
   Goal
                                                                   Without EPA Programs, post 2002
                                                                   Administration s Baseline
                                                                   With EPA Programs
                                                                   18% Intensity Improvement Goal
        02   03   04   05   06    07
        YEAR

Source: EPA Climate Protection Partnerships Division
                                           09    10    11   12
Greenhouse gas intensity is the ratio of greenhouse gas emissions to economic output (measured by the gross domestic product). For more information on the Administration's
goal, see http://www.whitehouse.gov/news/releases/2002/02/cliniatechange.html.

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CLIMATE   PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
INTRODUCTION
                           Global climate change is a complex, long-
                           term challenge that will require a sustained
                           effort over many generations. As President
                           Bush has said, "The policy challenge is to
                           act in a serious and sensible way, given the
                           limits of our knowledge. While scientific
                           uncertainties remain, we can begin now to
                           address the factors that contribute to climate
                           change." Wise action now is an insurance
                           policy against future risks.
                           A common sense approach for addressing the
                           risks of global climate change is to promote
                           the more rapid adoption of existing, improved
                           energy efficiency and renewable resources
                           that provide cost-effective opportunities to
                           reduce greenhouse gas emissions. In addition
                           to reducing emissions, such efforts enhance
                           the comfort and quality of our homes, increase the productivity of business, reduce emissions of
                           criteria air pollutants, and improve the reliability of the nation's power sector.
                           EPA's climate protection programs employ this common sense approach. They promote a broad set of
                           technologies and practices that significantly reduce emissions of the major greenhouse gases—carbon
                           dioxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride—from key sources.
                           The programs provide information, technical assistance, and recognition for environmental leadership
                           to large and small organizations as they develop strategies and take advantage of proven opportunities
                           to reduce their greenhouse gas emissions. The programs also identify opportunities and technologies
                           appropriate for each of the economic sectors to  address the 30 percent of U.S. greenhouse gas emissions
                           from industry, 27 percent from transportation, 18 percent from commercial buildings, 17 percent
                                                                               from residential buildings, and 8 percent
                                                                               from agriculture (see Figure 5).
                                                                               For more than a decade, businesses and
                                                                               organizations have partnered with EPA to
                                                                               pursue these approaches. Each year
                                                                               the environmental and economic results
                                                                               grow, and 2003 was another excellent year.
Figure 5.
U.S. greenhouse gas emissions by sector
and by gas
              AGRICULTURE
                  8.4%
                                                                                In addition, EPA's climate programs
                                                                                are on target to provide 40 percent of the
                                                                                greenhouse gas reductions required to meet
                                                                                the President's 18 percent greenhouse gas
                                                                                intensity improvement goal by 2012
                                                                                (see Figure 4).
                              COMMERCIAL
                                 17.8%
                                                             TRANSPORTATION
                                                                  26.9%
                                          I CO2  83.5% OF TOTAL
                                            Methane/Nitrous Oxide  14.8% OF TOTAL
                                          Ci HFCs, PFCs, Mid SF6 1.B% OF TOTAL

                           NOTE: Totals may not add to 100% due to independent rounding.

                           Source: EPA GHG Inventory 2004

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                                       PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                                                  INTRODUCTION
EPA's public-private partnerships focus on the following
opportunities to take action:
Corporate Commitments. With the introduction of Climate
Leaders two years ago, businesses can now partner with EPA
to reduce their impact on the environment. The Climate
Leaders partners are conducting inventories of their
greenhouse gas emissions and then setting aggressive long-
term reduction goals. They report their progress to EPA
and are recognized for their achievements. The voluntary
greenhouse gas reductions by Climate Leaders partners play an
important part in helping the country reach its greenhouse gas
intensity reduction goal of 18 percent by 2012.
Energy Efficiency. Energy efficiency is an important strategy
for addressing the growing emissions of carbon dioxide (CO2)
from energy generation and use. More than 85 percent of the
energy consumed in the United States is from the  combustion
of fossil fuels, which produces CO2, the dominant greenhouse
gas, as well as criteria air pollutants (see Figure 5).
Energy efficiency—obtaining the identical services or output
such as heating, cooling and lighting for less energy input—
offers significant cost savings to businesses and consumers.
Commercialized technologies and practices are available in  the
residential, commercial, and industrial sectors to improve
efficiency and reduce costs by 20 to 30 percent. The
ENERGY STAR program enables businesses, homeowners,
and others to realize the economic and environmental benefits
of these technologies. Energy efficiency also improves the
reliability of the U.S. power generation system while
enhancing the comfort and affordability of housing and
increasing the profitability of business.
Table 2.
Global warming potentials (GWPs) and atmospheric
lifetimes of greenhouse gases
 Greenhouse
 Gas

 Carbon Dioxide
 Methane
 Nitrous Oxide
 Hydrofluorocarbons
 Perfluorocarbons
 Sulfur Hexafluoride

Source: IPCC1996
Global Warming
   Potential
 for 100 Years

       1
      21
     310
  140- 11,700
 6,500 - 9,200
    23,900
 Atmospheric
Lifetime (years)

   50 - 200
    12 ±3
     120
   1.5-264
 3,200 - 50,000
    3,200
Clean Energy. In addition to using energy more efficiently,
there are ways to make the energy we use cleaner—effectively
breaking the link between increased energy use and harmful
air emissions. Combined heat and power as well as renewable
sources of energy can play larger roles in the U.S. energy mix.
EPA is collaborating with its partners to expand the use of
these technologies.
Methane Programs. Although it is a potent greenhouse gas,
methane is also the major component of natural gas—a much
sought-after clean fuel. When methane emissions are reduced
in a cost-effective manner, the recovered methane represents a
valuable energy source that can be used or sold. The natural
gas, coal,  and landfill gas development industries are working
with EPA through partnership and outreach programs to
capture and use methane wherever cost effective.
High GWP Environmental Stewardship. Hydrofluorocarbons
(HFCs), perfiuorocarbons (PFCs),  and sulfur hexafluoride
(SF6) are potent greenhouse gases, and some persist in the
environment for thousands of years. While emitted in smaller
quantities than CO2, these gases are important to address due
to the greater ability of each molecule to trap heat in the
Earth's atmosphere and, in  the case of PFCs  and SF6, their
long atmospheric lifetimes (see Table 2). Various U.S. industries
are working aggressively with EPA to avoid significant
accumulation of these long-lived chemicals in the atmosphere.
These voluntary programs accelerate the development and
implementation of low-emitting technologies and help
companies use alternative chemicals where technically feasible
and cost effective.
The following sections of this 2003 Annual Report contain
more detailed information about the Climate Protection
Partnerships Division's programs and achievements. Included
are program descriptions, environmental and economic benefits,
and goals for the future. 2003  was another strong year for the
division, and this report reflects the power of voluntary
partnerships to make a difference.

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
ENERGY STAR PROGRAM
"Lowe's is proud to
 offer products that
 have earned the
 ENERGY STAR.
 These are products
 that denote the
 highest quality and
 value, helping our
 customers save
 money and protect
 the environment.
 Lowe's shares the
 responsibility in
 conserving our
 valuable natural
 resources. We're
 proud to promote
 the ENERGY STAR
 message to  our
 customers and
 employees."
—Bruce Ballard,
  Merchandising
  Vice President,
  Appliances, Lowe's
ENERGY EFFICIENCY IS A SMART INVESTMENT

                                                 Energy efficiency is well recognized for
                                                 providing many benefits. These include:

                                                 Cost Savings. American families and
                                                 businesses spend $700 billion each year
                                                 on energy bills—about the same as is spent
                                                 on education. Energy efficiency offers great
                                                 potential for reducing these energy costs.
                                                 Many homeowners and businesses could use
                                                 20 to 30 percent less energy, without sacrificing
                                                 features or comfort, through attractive
                                                 investments in products and services.

                                                 Greenhouse gas reductions. More than
                                                 50 percent of the projected  national energy
                                                 use and CO2 emissions 10 years from now
                                                 will come from the use of equipment
                                                 purchased between now and then (see Figure
                                                 6). Promoting more efficient options could
                                                 reduce greenhouse gas emissions substantially
                                                 as equipment is  naturally retired or replaced.

                                                 Energy reliability. By reducing demand,
energy efficiency is a low-cost (2-4 cents/kWh) contributor to system adequacy—the ability of the
electric system to supply the aggregate energy demand at all times—because it reduces the base load
as well as the peak power demand. This reduction in peak power demand can also contribute to system
security—the ability of the system to withstand sudden disturbances—by reducing the load and stress
at various points in  the power distribution system, thereby decreasing the likelihood of failures.

                                                    Lower natural gas prices. While overall
                                                    demand for  natural gas  in the United
                                                    States is rising, the demand for natural
                                                    gas is growing the fastest in the electric
                                                    power sector, and natural gas prices
                                                    continue to  increase. Energy efficiency
                                                    can be an effective instrument for
                                                    slowing electricity consumption and
                                                    restraining today's increasing natural gas
                                                    prices. It can promote greater stability
                                                    and reduce economic risks in the short
                                                    and long term (see sidebar on page 11).

                                                    Energy security. Between 1973 and
                                                    2002, U.S. dependence on foreign oil
                                                    rose from about 35 percent to nearly
                                                    53 percent of U.S.  consumption. During
                                                    the same period, the import share of
                                                    natural gas rose from less than 5 percent
                                                    to more than 15  percent and continues
                                                    to rise. Energy efficiency and the use of
                                                    renewable energy are environmentally
                                                    sound ways  to reduce foreign oil and gas
                                                    imports and to moderate the effects of
                                                    energy price spikes.
Figure B.
More than 50% of projected energy use 10 years
from now will come from equipment purchased
between now and then
                                 COMMERCIAL/    TRANSPORTATION
                                 RESIDENTIAL
                                                             INDUSTRY
                                                I NEW STOCK PURCHASES
                                                I EXISTING EQUIPMENT STOCK
                          Source: EPA Climate Protection Partnerships Division

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                                PROTECTING   THE  ENVIRONMENT — TOGETHER
ENERGY EFFICIENCY CAN ALLEVIATE THE PRESSURE ON NATURAL GAS MARKETS
Rapidly growing natural gas
demand in the United States and
historically high natural gas prices
are affecting all economic sectors
and causing electric utilities,
regulators, and consumers to
examine the consequences of
these trends on themselves and
on the economy as a whole. They
are posing critical questions about
natural gas markets, policies, and
potential risks. There is interest in
minimizing volatility, keeping
costs from rising even higher, and
avoiding a regional or national
gas crisis in the near future. Many
organizations and policymakers
have already analyzed the current
natural gas market and developed
recommendations for a more
secure, balanced energy future.
According to a recent report by
the National Petroleum Council,
a balanced energy future requires
greater energy efficiency, among
other things.
The National Petroleum Council
reported on the subject of natural
gas markets in the United States
in 1992, 1999, and again in 2003 in
response to a request from the
Secretary  of Energy to update the
previous reports. The latest multi-
volume report. Balancing Natural
Gas Policy—Fueling the Demands
of a Growing Economy1 provides
analysis of market dynamics  and
makes recommendations for
actions that industry and
government can take to ensure
adequate, reliable energy supplies
for customers in all sectors. The
report identifies conservation and
energy efficiency as important
tools for addressing natural gas
demand concerns. Key findings
related to energy efficiency are
summarized below.
• Between now and 2025, natural
 gas demand in the United States
 is expected to rise. Much of the
 increase will be in the U.S.
 power sector,  reflecting future
 use of recent additions to gas-
 fired generation.
• Increased energy efficiency and
 energy conservation are
 essential short- and long-term
 mechanisms for stabilizing
 prices and reducing volatility.
 Without efficiency gains,
 demand in the future will be
 significantly higher.
1 Promoting a balanced future
 that includes energy efficiency,
 development of new sources,
 and fuel choice flexibility could
 save $1 trillion in natural gas
 costs over the next two decades.
 Public policy should be made
 with the goal of a balanced
 energy future in mind.
' Efficiency and flexibility should
 be promoted through the use of
 market-oriented initiatives and
 through consumer education.
 In addition, the capability to
 generate power from alternate
 fuels should be increased.
' Specific measures to encourage
 energy efficiency include using
 market price signals, reviewing
 and upgrading efficiency
 standards, identifying best
 practices and promoting
 their adoption nationwide,
 and removing market
 inefficiencies in wholesale
 markets and in regulatory
 structures.
 Balancing Natural Gas Policy - Fueling the Demands of a Growing Economy (2003). http://npc. org/
                                                                                                                1 1

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION   2003   ANNUAL  REPORT
ENERGY STAR PROGRAM
                          The potential of energy efficiency is not being fully realized nationwide for a variety of reasons. With
                          relatively low energy prices in the United States, many organizations have focused much less on
                          energy efficiency improvements and much more on improvements in labor or capital productivity.
                          While many businesses and homeowners express interest in making energy efficiency investments for
                          their own buildings and homes, they do not know which products or services to ask for, who supplies
                          them in their areas, and whether the real energy savings will live up to the claims.

                          ENERGY STAR

                          The lack of answers to important questions about energy efficiency shows a large information gap.
                          The ENERGY STAR program seeks to fill this gap and enable businesses, organizations, and
                          consumers to realize the cost savings and environmental benefits of energy efficiency investments
                          through a straightforward, market-based approach:

                          • Use the ENERGY STAR label to clearly identify which products, practices, new homes, and
                            buildings are energy efficient—offering lower energy bills and environmental benefits.

                                                                                   Empower decisionmakers by making
                                                                                   them aware of the benefits of
                                                                                   products,  homes, and buildings that
                                                                                   qualify as  ENERGY STAR and by
                                                                                   providing energy performance
                                                                                   assessment tools and project guidelines
                                                                                   for efficiency improvements.

                                                                                  • Work with retail and service
                                                                                   companies in the delivery chain so
                                                                                   they can easily offer energy-efficient
                                                                                   products and services.

                                                                                  • Partner with regional, state, and local
                                                                                   organizations running energy efficiency
                                                                                   programs to leverage the national
                                                                                   energy efficiency specifications and
                                                                                   public awareness of ENERGY STAR
                                                                                   and achieve more with combined
                                                                                   resources.

                     '36   fH
                                  Introduced by EPA in 1992 for energy-
                                  efficient computers, the ENERGY
                                  STAR label has been expanded to more
than 40 product categories. Since the mid-1990s, EPA has collaborated with
DOE, which now has responsibility for certain product categories. Efficient
new homes became eligible for the label in  1995. Efficient buildings became
eligible for the label in 1999, when EPA unveiled a new standardized approach
for measuring the efficiency (or energy performance) of an entire building.

The economic and environmental benefits of ENERGY STAR through the
year 2003 are already substantial. More than one billion ENERGY STAR
qualified products have been purchased and billions of square feet of building
space improved. The results across the ENERGY STAR program in terms of
energy saved and greenhouse gas emissions  avoided in 2003 are provided in
Table 3. Additional program achievements within the residential, commercial,
and industrial sectors are presented in the sections beginning on page 14.

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                                     PROTECTING  THE   ENVIRONMENT — TOGETHER
                                                                                  ENERGY STAR PROGRAM
Table 3.
ENERGY STAR Program: Annual Goals and Achievements
                                                                                            Energy
                                                                                            Saved
                                                                                         (Billion kWh)
                                                                                                        Emissions
                                                                                                        Prevented
                                                                                                        (MMTCE)
Energy Saved
(Billion kWh)
Emissions Prevented
     (MMTCE)
 PROGRAM TOTAL FOR ENERGY STAR
     mercial/Residential Buildings
      Qualified Products Subtotal
         Computers
         Monitors
         Printers
         Copiers
         Other Office Equipment
         Lighting
         Home Electronics
      Building Improvements Subtota
                           4
 Industrial Imnrnvpmpnts Total
 Results for qualified products from Webber et si, 2004.
1
 The kWh savings imply peak demand savings of more than 20 gigawatts (GWI, based on conservation load factors developed by LBNL (Koomey et al., 19901.
 Results for building improvements from Horowitz, 2001.
4
 Results for industrial improvements from ICF Consulting, 2004.
NOTE: ENERGY STAR qualified homes are included in the Other category.
Totals may not equal sum of components due to independent rounding.
	: Not applicable
            CHANGE FORTHE
            BETTER WITH
            IdMJritfldfeW
                                LOWE'S COMPANIES, INC.
                                Mooresville, North Carolina
PARTNER OF THE YEAR 2003
                                For the second year in a row, Lowe's Companies, Inc., won Retail Partner of the Year. Lowe's
                                determination to integrate ENERGY STAR into all marketing practices paid off in a 31-percent
                                increase in sales of ENERGY STAR qualified products in 2003. These sales will save Lowe's
customers nearly $500 million in energy costs over the life of the products, while eliminating one million tons of air emissions
from the environment. Lowe's spread the ENERGY STAR message far and wide through national broadcast TV ads that
achieved nearly 156 million impressions in over 90 markets; an in-store signage  initiative across all 925 home improvement
stores and 45 states that reached more than 9 million customers per week; and a variety of other marketing efforts such as
circulars, direct mail, and Internet—including a newsletter dedicated to ENERGY STAR sent to 1.2 million registered Lowe's.com
users. Together, these activities have contributed to an unparalleled level of ENERGY STAR outreach, awareness, and national
benefits. (For a complete list of ENERGY STAR Award Winners for 2003, see page 22.)

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
ENERGY STAR PROGRAM
"When Pardee
 Homes embraced
 energy-efficient
 building, we
 wholeheartedly
 embraced the
 ENERGY STAR
 program. Not only
 does it deliver a
 solid, energy-smart
 house, but
 ENERGY STAR
 has a name and
 reputation that
 we 're extremely
 proud to be
 associated with."
—Joyce Mason,
  Vice President
  of Marketing,
  Pardee Homes
ENERGY STAR IN THE RESIDENTIAL SECTOR

ENERGY STAR continues to flourish as a powerful platform for delivering energy efficiency to
homeowners across the country. Major highlights of 2003 include:

Building and expanding partnerships with manufacturers to add new products that can earn
the ENERGY STAR label.  EPA is committed to updating performance specifications for products in
cases where technology has advanced and updates are necessary to maintain the value of ENERGY
STAR. In 2003, EPA updated the specifications for ceiling fans, roof products, and ventilating fans.
By the end of 2003, more  than 1,400 manufacturers were ENERGY STAR partners, using the label
on more than 28,000 product models.

Building consumer awareness of the ENERGY STAR label as the national government-backed
Symbol for energy efficiency. Recent surveys, including a 2003 household survey fielded by the
Consortium for Energy Efficiency, show that 56 percent of consumers nationwide recognize the
ENERGY STAR, a jump from 40 percent in previous years. In addition, a majority of consumers
                                                     report that the label influenced their
                                                     purchasing decisions, and more than
                                                     60 percent would recommend
                                                     ENERGY STAR to a friend. Some
                                                     of the growth in awareness is the result
                                                     of EPAs recent national public awareness
                                                     campaign. The "Change" campaign,
                                                     which ended in 2003, garnered more
                                                     than $17 million in equivalent ad
                                                     value through print, radio, and
                                                     television placements that reached
                                                     more than one billion consumers.

                                                     Expanding the number of ENERGY
                                                     STAR qualified homes nationwide.
                                                     Homes  that earn the ENERGY STAR
                                                     label provide comfort, value, and
                                                     savings to homeowners  and increased
                                                     profits for homebuilders, while
                                                     protecting the environment. By the
                                                     end of 2003, more than 200,000
                                                     homes had earned the ENERGY
                                                     STAR, saving Americans more than
                                                     $60 million in energy costs annually.
           CHANGE FORTHE
           ENERGY STAR
      SEA GULL LIGHTING PRODUCTS, INC.
      Riverside, New Jersey
                              In 1919, Sea Gull Lighting Products, Inc., started as a small Philadelphia lighting specialty
PARTNER OF THE YEAR 2003    store with a single workbench. In 2003, Sea Gull Lighting embraced technology that will light
                              the homes of future generations. In 2003, Sea Gull Lighting distinguished itself through
product design, innovation, and the number of qualified products, as well as through its participation in national promotions,
new construction marketing, and retail showroom promotions. The company's dedication to ENERGY STAR was clear when it
launched a full line of products—from chandeliers to wall sconces to ceiling fans—thus allowing builders and homeowners to
choose fixtures from a single source for the entire home. Sea Gull's 2003 marketing efforts included producing a dedicated
600-square-foot display of ENERGY STAR qualified products for the industry's largest trade show and distributing a dedicated
ENERGY STAR qualified products catalog. The company also marketed to consumers using point-of-sale materials, direct mail,
and an ENERGY STAR training session at its national sales meeting. Sea Gull Lighting Products has been a true industry leader.
(For a complete list of ENERGY STAR Award Winners for 2003, see page 22.)

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                               PROTECTING   THE   ENVIRONMENT — TOGETHER
GREENHOUSE GAS EMISSIONS FROM A HOME CAN EXCEED THOSE FROM A PASSENGER VEHICLE

Most people know that their
vehicle—whether it is a car, truck,
SUV, or minivan—emits gases
into the air. They can see the
exhaust from tailpipes when they
drive, and in many states, owners
are required to have vehicles
tested periodically to ensure they
meet emissions standards. In
contrast, most people do not
realize that their home also
causes air pollution and
greenhouse gas emissions. They
do not see these emissions
because the majority arise from
fossil fuel combustion at the
power generation source, not at
the home itself. The fact is that the
average single-family house in the
United States can cause twice as
many greenhouse gas emissions
as the average passenger vehicle.
Figure 7.
Greenhouse gas emissions
          AVERAGE HOME

          AVERAGE VEHICLE
A recent analysis showed that
while the average vehicle emits
around 3,000 Ibs. of carbon9 per
year, the typical single-family
house can cause 6,200 Ibs. or
more of carbon per year to be
released into the air.
EPA believes that if Americans
become more aware of the
magnitude of the emissions
caused by their homes and the
impact on the environment, they
will take a more active role in
managing their household energy
use. Because power generation
for homes is a large source of
carbon emissions, every energy-
saving measure at home helps
prevent greenhouse gas
emissions and air pollution.
EPA seeks ways to improve the
efficiency of homes, as well as the
efficiency of vehicle use.

FIVE STEPS THAT EVERYONE CAN TAKE AT HOME TO REDUCE AIR EMISSIONS:

1. CHANGE FIVE LIGHTS. Replace the five most frequently used lights, or the bulbs in them, with ones
  that have earned the ENERGY STAR to save energy and lower emissions.
2. LOOK FOR PRODUCTS THAT HAVE EARNED THE ENERGY STAR. When shopping for lighting, home
  electronics, heating and cooling equipment, and appliances, ask about ENERGY STAR qualified
  products.
3. HEAT AND COOL SMARTLY. Improve your home's performance by servicing equipment annually, using
  programmable thermostats, and replacing old equipment with ENERGY STAR qualified models.
4. SEAL UP THE HOUSE. Seal air leaks around drafty windows and doors, add insulation to attics, and buy
  ENERGY STAR qualified windows when replacing older ones to  improve comfort in your home and
  save energy.
5. TELL FAMILY AND FRIENDS. Help spread the word that energy efficiency is important—it benefits your
  home, lowers your utility bills, and makes a difference in your environment.


Together, these energy-saving measures at home can add up to sizeable benefits for everyone in the form of lower
energy bills and fewer air emissions. Consider this: If one room in every U.S. household were brightened by
ENERGY STAR qualified lighting, the annual greenhouse gas savings would be equivalent to preventing the
emissions from more than  8 million cars. For more information, visit www.energystar.gov
 Memo from Lawrence Berkeley National Laboratory to U.S. EPA, April 2004.
 C02 is the predominant greenhouse gas, accounting for 83.5percent of total emissions (see Figure 5).

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
ENERGY STAR PROGRAM
                        Program growth has been exceptional with over 100-percent growth during each of the past 3 years
                        and more than 20 percent market penetration in key markets such as Phoenix, Las Vegas, Southern
                        California, and parts of Texas. New Jersey, New England, and the Midwest also have large
                        concentrations of ENERGY STAR qualified homes. Some 2,000 builder partners have joined
                        ENERGY STAR, recognizing its market value. The nation's 10  largest homebuilders are now
                        ENERGY STAR partners, and 23 of the top 25 builders offer ENERGY STAR qualified homes.

                        Reaching more  consumers with ENERGY STAR Home Improvement. EPA continued to expand its
                        work in residential energy efficiency improvements, promoting its whole-house retrofit program
                        called Home Performance with ENERGY STAR. This whole-house improvement program
                        emphasizes home diagnostics and evaluation, improvements made by a trained technician, and a
                        strong quality assurance program. This year DOE provided more than $500,000 in seed money to
                        establish Home Performance with ENERGY STAR in five pilot areas: Atlantic City (New Jersey),
                        Kansas City (Missouri), Austin (Texas), Atlanta (Georgia), and Boise (Idaho).

                        In addition, existing Home Performance with ENERGY STAR projects continued to flourish in
                        2003. Under the leadership of the New York State Energy Research and Development Authority
                        (NYSERDA), more than 4,000 Home Performance with ENERGY STAR jobs were completed in
                        2003, achieving  an average savings of 350 therms and 600 kWh per job per  year. The state of
                        Wisconsin, under its Focus on Energy Program, has completed work in more than 800 homes.
                        Similar programs in California and Kansas City continue to grow. Working with the Building
CHANGE FORTHE
BETTER WITH
ENERGYSTAR
                              NEVADA ENERGY STAR PARTNERS
                              Las Vegas, Nevada
                              The Nevada ENERGY STAR Partners—a unique group of more than 35 home builders, home
PARTNER OF THE YEAR 2003   energy raters, utilities, and other organizations—were recognized for their outstanding
                              commitment to promoting ENERGY STAR in the fast-growing Las Vegas housing market.
The Nevada ENERGY STAR Partners' 2003 effort was designed to promote consumer awareness of ENERGY STAR and increase
the number of ENERGY STAR qualified homes sold in Las Vegas. The 13-week multimedia campaign, including an ENERGY
STAR month for the State of Nevada, resulted in a 16-percent increase in consumer awareness and a 16-percent increase in
sales of ENERGY STAR qualified homes in the Las Vegas Valley. Consumer awareness of ENERGY STAR qualified  homes
reached 76 percent, and the number of ENERGY STAR qualified homes jumped to 46 percent of the estimated  24,000 new
homes built in Las Vegas. More than one-third of all new home communities in the Las Vegas Valley now feature ENERGY
STAR qualified homes; and Summerlin, the largest master-planned community in the United States, is now committed to
building only ENERGY STAR qualified homes. (Fora complete list of ENERGY STAR Award Winners for 2003, see page 22.)

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                                     PROTECTING  THE   ENVIRONMENT — TOGETHER
                                                                                  ENERGY STAR PROGRAM
Performance Institute (BPI) as well as the National
Association for Technician Excellence (NATE), EPA
supported the growing number of professionals trained to
understand how parts of the home work together to maintain
comfort while reducing energy use and energy bills.

Through ENERGY STAR Home Sealing, contractors and
homeowners are learning about the need to seal 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. EPAs seasonal ENERGY STAR Cool Change
Campaign promotes this "systems" approach for heating and
cooling systems.

In 2004, EPA will:
• Update performance specifications for programmable
  thermostats. EPA will also add residential air cleaners and
  external power supplies (cordless phone or cell phone
  charger, for example) to the ENERGY STAR suite of
  qualifying residential products.

• Continue to build  consumer awareness of ENERGY STAR,
  particularly through focused national campaigns for lighting
  products, home electronics,  and cooling equipment, with
  the goal of raising awareness of the label to more than
  70 percent over the next several years.

• Launch a new public service campaign directing consumers
  to five simple steps they can take to help reduce energy use
  at home and prevent greenhouse gas emissions.

• Work with retail partners, utilities, and states in broad
  consumer promotions of ENERGY STAR qualified
  products and new homes.
                              Collaborate with homebuilders and champions to build,
                              test, and label 165,000 additional new homes as ENERGY
                              STAR. To help achieve this goal, EPA will expand its new
                              homes-related outreach to 18 markets and distribute its new
                              CD-based sales tool kit for builders to help sell ENERGY
                              STAR qualified homes.

                              Promote ENERGY STAR lighting fixtures to ENERGY
                              STAR builder partners. Examine whether an indoor air
                              quality label on an ENERGY STAR qualified home will
                              help builders further differentiate themselves in the market.

                              Support Home Performance with ENERGY STAR in
                              Atlanta, Atlantic  City, Austin, Boise, Kansas City, and
                              St. Louis by developing a national sales training course and
                              marketing strategies tailored to these metropolitan areas. In
                              collaboration with DOE and the U.S. Department of
                              Housing and Urban Development (HUD), EPA will
                              establish a $ 1 million grant with a technician certification
                              and contractor accreditation organization to help develop
                              the national technician infrastructure for Home
                              Performance with ENERGY STAR. EPA will target five
                              more  metropolitan areas in which to establish and develop
                              Home Performance with ENERGY STAR.

                              Expand home improvement programs to promote in-home
                              services such as ENERGY STAR home sealing, duct sealing,
                              and proper installation and maintenance of heating and
                              cooling equipment. One key component involves increasing
                              the number of trained contractors to perform these services.
                              ENERGY STAR will continue to work closely with NATE
                              to expand the number of qualified HVAC technicians who
                              understand energy efficiency and the advantages of proper
                              installation  and maintenance of ENERGY STAR qualified
                              HVAC equipment.
            CHANGE FORTHE
            BETTER WITH
            ENERGY STAR
 PARTNER OF THE YEAR 2003
THE CALIFORNIA INVESTOR-OWNED UTILITIES
Pacific Gas and Electric Company-  San Francisco
San Diego Gas and Electric - San Diego
Southern California Edison - Rosemead
Southern California Gas Company - Los Angeles
The California ENERGY STAR New Homes Program is a statewide initiative, jointly implemented by California's Investor-Owned
Utilities (lOUs), that committed an impressive 17 percent market share for ENERGY STAR qualified homes across the state, or
32,000 qualified homes in 2003. The program offers technical training and incentives to encourage builders to construct both
single-family and low-rise multifamily homes that earn the ENERGY STAR. Its effectiveness can be attributed to a smart
marketing and implementation strategy tailored to a large, highly diverse state. For consistency, the lOUs use one builder
brochure and application and advertise jointly statewide. In 2003, they reached  50,000 building professionals. To connect with
consumers individually, each utility creates specialized point-of-sale materials (brochures, direct mail pieces, etc.) for customers
in their respective service territories. The California lOUs are also helping to increase demand for ENERGY STAR qualified
major appliances. Through the second quarter of 2003, California achieved 55 percent market share for ENERGY STAR qualified
dishwashers, 34 percent market share for qualified residential air conditioners, 28 percent for qualified refrigerators, and
27 percent for qualified clothes washers. (Fora complete list of ENERGY STAR Award Winners for 2003, see page 22.)

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CLIMATE   PROTECTION   PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
ENERGY STAR PROGRAM
"The University of
 Michigan is
 committed to
 a policy of
 environmental
 stewardship.
 ENERGY STAR is
 a key example of
 how the University
 accomplishes its
 goal of excellent
 stewardship of the
 environment
 through energy
 efficiency."
—Richard W. Robben, P.E.
  Director of Plant
  Operations,
  University of Michigan
ENERGY STAR IN THE COMMERCIAL SECTOR

To promote improved energy performance in 2003, EPA continued to offer businesses and other
organizations a strategy for superior energy management, as well as standardized measurement tools
to assist in this effort. According to research conducted by Innovest, organizations that improve
energy performance outperform their competitors by as much as 10 percent on net operating income.
Regardless of age and technology, top-performing buildings use four times less energy than those that
are at the bottom of the performance scale.

In 2003, ENERGY STAR in the Commercial Sector continued:
Expanding commitments to successful energy management. In 2003, many new businesses and
organizations committed to implementing a strategy for superior energy management. For example,
the number of new partners in the education and health care sectors doubled and tripled, respectively.

• About 13,000 organizations, including small businesses, now work with EPA to improve their
  energy management practices.

  ENERGY STAR partners represent more than 12 billion square feet, which accounts for
  approximately 18 percent of the commercial building market.

                                                      Encouraging continuous
                                                      improvement. EPA has developed a
                                                      proven energy management strategy for
                                                      its ENERGY STAR partners. Based on
                                                      building science, this strategy assists
                                                      organizations in achieving twice the
                                                      savings for a given level of investment
                                                      as traditional methods would achieve.
                                                      It includes a 5-stage approach to
                                                      building upgrades, which encompasses
                                                      recommendations for building tune-up,
                                                      product procurement, and capital-
                                                      intensive projects.

                                                      • These efforts have saved 55.7 billion
                                                       kWh to date,  according to EPA
                                                       estimates.

                                                      Promoting the use of standardized
                                                      measurement tools. EPA's national
                                                      energy performance rating system has
                                                      been used to evaluate almost  19,000
                                                      buildings; 17 percent of office buildings,
                                                      11 percent of schools, 17 percent of
                                                      supermarkets, 28 percent of hospitals,
                                                      and 6 percent of hotels have been
                                                      benchmarked. This performance rating
                                                      for buildings, launched in 1999,
                                                      measures how well the systems of a
                                                      building are integrated and how well
the building is operated and maintained. By comparing the energy use of an individual building
against the national stock of similar buildings using an objective 1 to 100 point rating system, the
rating fills an important measurement gap. No consistent or comparable metric existed prior
to EPA's system.

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                                      PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                                   ENERGY STAR PROGRAM
• Almost 19,000 buildings representing more than 3.2 billion
  square feet (or 15 percent of the total eligible market) have
  had their energy performance rated.

• EPA now provides the commercial market with the
  capability to rate buildings representing more than
  40 percent of the sector's carbon emissions.

• In 2003, the number of K-12 schools using the energy
  performance rating continued to grow; this sector now
  has the highest number of buildings with ratings.

• Also in 2003, EPA expanded ENERGY STAR to include
  commercial new construction. Encouraging the design of
  energy-efficient buildings will further reduce the air
  pollution and greenhouse gas emissions caused by
  commercial building energy use. Using EPA's performance
  rating tool and other guidance, architecture firms can now
  set an energy use target for whole-building performance
  and design buildings to be among the most efficient in
  the country.

Providing recognition for top performing buildings.
EPA offers the ENERGY STAR label as a way to distinguish
buildings that are top energy performers—those  that score
in the top 25 percent on the rating system while meeting
industry standards for indoor air quality.

• Almost 1,400 buildings, representing about 325 million
  square feet, have been labeled to date.

• More buildings earned the ENERGY STAR in 2003—
  almost 500—than any previous year. The percentage of
  repeat labeled buildings increased as well.

• The supermarket/grocery store sector doubled  the number
  of labeled buildings in 2003.
                                                 Building partnerships with interested third-party
                                                 organizations. In 2003, EPA continued to reach out to
                                                 interested organizations to provide clear, accurate information
                                                 to energy end-users about opportunities for improved energy
                                                 performance. These organizations include energy service
                                                 providers, utilities, state energy groups, and public benefits
                                                 funds administrators. By the end of 2003,  almost 30 energy
                                                 efficiency program sponsors across the United States were
                                                 partnering with EPA to offer resources to end-user customers,
                                                 enabling them to be more energy efficient.

                                                 Some highlights from third-party collaborations include:

                                                 • NSTAR, a major New England utility, launched an
                                                  initiative to its large commercial customers that integrates
                                                  EPA's energy performance rating system with the  utility's
                                                  ongoing energy efficiency programs.

                                                 • The State of New York began using ENERGY STAR to
                                                  market energy efficiency in K-12 schools and the
                                                  commercial real estate market.

                                                 • The Northwest Energy Efficiency Alliance (NEEA) began
                                                  using EPA's energy performance rating in the screening
                                                  process for its new Building Performance Services pilot
                                                  program.

                                                 • The Consortium for Energy Efficiency (CEE), a national
                                                  member organization composed of public energy  efficiency
                                                  program administrators, launched a new working group
                                                  devoted to linking ENERGY STAR with commercial energy
                                                  efficiency programs throughout the country.

                                                 • Service and Product Providers (SPPs) increased their
                                                  activities.  In 2003, SPPs helped benchmark more than
                                                  1,100 buildings. They also assisted in labeling 250  buildings,
                                                  slightly more than half of the buildings labeled for the year.
CHANGE FORTHE
BETTER WITH
ENERGYSTAR
                                GIANT EAGLE, INC.
                                Pittsburgh, Pennsylvania
                                Giant Eagle, Inc., has grown to be the number one supermarket retailer in the region, with
PARTNER OF THE YEAR 2003    131 corporate and 84 independently owned and operated stores in western Pennsylvania
                                and parts of Ohio, West Virginia, and Maryland. The company has demonstrated its
commitment to energy management throughout the organization, up to the highest levels. Its Conservation Department,
responsible for addressing all energy and environmental concerns for the company, reports directly to the President of Giant
Eagle. Approved by senior management, its strategic energy management  program is comprehensive and quantifiable. It
focuses on energy-saving technologies, benchmarking energy performance, and monitoring facility energy use. Giant Eagle has
set an energy goal to achieve and maintain the ENERGY STAR status for 80 percent of its corporate stores by FY 2005. The
company is well on  the way to achieving this goal, having benchmarked close to 100 stores and earned the ENERGY STAR on
17 of them. Giant Eagle also demonstrates its commitment to improving energy performance company wide by purchasing
wind power, designing stores that incorporate skylights for daylighting,  installing remote-communicating energy management
system controls in nearly every store, and proactively upgrading stores with white roofing, occupancy sensors, and variable
frequency drives on HVAC units. (For a complete list of ENERGY STAR Award Winners for 2003, see page 22.)

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CLIMATE  PROTECTION   PARTNERSHIPS  DIVISION  2003   ANNUAL  REPORT
ENERGY STAR PROGRAM
"3M is committed to
 achieving business
 success within the
 framework of our
 environmental,
 social, and
 economic values.
 ENERGY STAR'S
 strategic  approach
 to energy
 management helps
 us address our
 values, meet
 customer
 expectations, and
 achieve our energy
 and environmental
 goals."
—James T. Mahan,
  Senior Vice President
  of Engineering,
  Manufacturing and
  Logistics Operations, 3M
             Reaching out to strategic businesses/organizations.
             • Educated more than 5,000 leading institutional investors focusing on socially responsible investing
               to establish the link between good environmental performance and long-term financial success.

             • Relationships with 12 major Wall Street financial institutions, including Dreyfus, Neuberger
               Herman, The Calvert Group, and many others resulted in more than $4 billion in assets-under-
               management that include ENERGY STAR performance in the evaluation criteria used to determine
               institutional investment options.

             • In collaboration with The Conference Board, hosted the first-ever senior-level strategic energy
               management conference in New York City, drawing over 150 senior managers.

             Adding new products for the commercial sector that can earn the ENERGY STAR label.
             In 2003, EPA added commercial fryers, steam cookers, and hot food holding cabinets to the growing
             list of qualifying commercial products.

             In 2004, EPA will:
             • Promote continuous improvement and recognition opportunities tied to that improvement by
               launching a new initiative, ENERGY STAR Leaders, to honor partners that set a baseline for their
               organization-wide energy use and achieve 10-, 20-, and 30-point reductions in energy use
               (compared to the baseline) across their portfolios.

             • Offer energy performance ratings and label eligibility for more building types, including medical
               office buildings, bank branches, financial centers, courthouses, warehouse/storage areas, and
               residence halls. With this expansion, the rating system will apply to more than 50 percent of the
               building space across the country.

             • Facilitate hosting of EPAs energy performance rating system by third parties, with the goal of
               making it easier for companies to benchmark their customers' facilities using their own energy
               tracking software.

             • Distinguish new construction  projects whose estimated energy performance for their design meets
               EPA criteria as "Designed to Earn the ENERGY STAR." Once constructed, these buildings would
               be eligible for ENERGY STAR after maintaining superior performance for one year.

             • Collaborate with developers of international corporate sustainability indices to include
               improvement against a facility's energy performance baseline as a major energy performance
               criterion. Among these indices are the Dow Jones Sustainability Index (DJSI) and the FTSE4Good
               Index series developed by the Financial Times/London Stock Exchange (FTSE).

             • Update performance specifications for exit signs. EPA will also add vending machines and external
               power supplies to the  ENERGY  STAR suite of qualifying commercial products.
CHANGE FORTHE
BETTER WITH
ENERGYSTAR
                                PROVIDENCE HEALTH SYSTEM
                                Seattle, Washington
                                Providence Health System, sponsored by the Sisters of Providence religious community and
 PARTNER OF THE YEAR 2003    the Little Company of Mary Sisters, provides a comprehensive array of non-profit healthcare
                                services across Alaska, Washington, Oregon, and Southern California. Upon joining the
 partnership in 1999, the President and CEO challenged energy managers to uphold Providence's core value of environmental
 stewardship by using ENERGY STAR to save energy and reduce air emissions. Providence hospitals began using the ENERGY
 STAR Buildings Manual and EPA's energy performance rating system as the backbone of its energy management efforts.
 Providence engineers regularly track and manage facility energy performance, set goals, and  rank facilities by their energy
 intensity to prioritize improvement plans. Senior executives highlight energy savings and provide incentives for achievements.
 Providence's combined savings in energy is equivalent to more than $28 million in new business. (For a complete list of
 ENERGY STAR Award Winners for 2003, see page 22.)

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                                      PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                                    ENERGY STAR PROGRAM
ENERGY STAR IN THE INDUSTRIAL SECTOR
Through ENERGY STAR, EPA is helping manufacturers
identify the best in energy performance for their organizations
and is assisting them in developing strategic approaches to
energy management. These strategies are built on the principles
of organizational commitment and continuous improvement.
A strong corporate energy management program with
sustained progress and decisionmaking leads to  a better
environment and improved financial health for  a company.
Integral to this support, EPA convenes Industry Focuses. An
Industry Focus is a targeted effort to improve energy efficiency
within a specific manufacturing sector. Industry Focuses
create momentum for continuous improvement in energy
performance, provide the tools needed to achieve greater
success in corporate energy management, and create a
supportive environment where ideas and opportunities are
shared. In 2003, EPA initiated several Industry Focuses,
enhanced the networking opportunities for partners from all
sectors,  and supported all industries in their efforts to manage
energy strategically.

In 2003, ENERGY STAR in the Industrial Sector:
* Strengthened existing Industry Focuses in the automobile,
  corn refining, brewing, and cement industries.
• At the request of the auto manufacturers, held the second
  annual Energy Efficiency Focus to exchange energy-efficient
  practices for auto plants, discuss new methods for reducing
  energy use in paint booths, and review use of the Energy
  Performance Indicator (EPI) for automotive assembly plants.
  Representatives from more than 75 percent of U.S. assembly
  production participated.
• Published final energy guides for the auto assembly, brewing,
  cement, and corn refining industries. Energy guides describe
  opportunities for improving energy efficiency in Focus industries.
* Collaborated with the corn refining industry to create an
  initial EPI—a tool that enables company managers to
  measure and assess the energy performance of corn
  refineries, compare results against those of their peers, track
  improvement over time, and prioritize efforts and resources.
s Conducted an energy efficiency Focus with the wet corn
  milling industry. Participating  companies represented more
  than 90 percent of the production capacity in this  sector.
• Introduced the Industry Focus concept to the
  pharmaceutical and petroleum industries and obtained
  agreement to proceed.
* Initiated an energy management guide for the new
  petroleum refining Industry Focus. Worked with technology
  specialists, industry experts, and partners to gather resource
  material.
• Created opportunities for partners from all industry sectors
  to share effective energy management strategies and to
  improve energy efficiency by hosting one in-person and 10
  Web conferences.
* Finalized and published Guidelines for Energy Management
  and disseminated the document to partners from all sectors
  to enable them to build world-class, strategic, corporate
  energy management programs  that sustain energy reductions
  and produce positive results for the environment.
• Coordinated with the Portland Cement Association and the
  Alliance of Automobile Manufacturers to identify pathways
  for achieving these industries' Climate VISION commitments.

In 2004, EPA will:
* Convene energy efficiency Industry Focuses with the
  pharmaceutical and petroleum industries.
* Conduct the third annual ENERGY STAR Energy
  Efficiency in Automobile Manufacturing Industry  Focus
  meeting in Georgetown, Kentucky. Organize a half-day
  meeting with the paint suppliers to develop a plan for
  reducing energy use in auto painting.
• Hold the second annual ENERGY STAR Energy Efficiency
  in Corn Refining Industry Focus in Indiana.

• Develop an initial  EPI tool for the pharmaceutical industry
  to test.
  Increase partner networking opportunities and participation
  by raising the frequency of Web conferences and expanding
  the discussion topics.
• Plan a senior executive corporate energy management
  leadership summit in spring 2005.

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CLIMATE   PROTECTION  PARTNERSHIPS   DIVISION   2003   ANNUAL   REPORT
ENERGY STAR AWARD WINNERS FOR 2003
PARTNER OF THE YEAR-
RETAILER
Lowe's Companies, Inc.
Mooresville, North Carolina

PARTNER OF THE YEAR-
PRODUCT MANUFACTURERS
GE Consumer Products
Fairfield, Connecticut

Good Earth Lighting, Inc.
Wheeling, Illinois

Gorell Enterprises, Inc.
Indiana, Pennsylvania

Lennox Industries Inc.
Richardson, Texas

Sea Gull Lighting Products, Inc.
Riverside, New Jersey

SYLVANIA
Danvers, Massachusetts

Whirlpool Corporation
Benton Harbor, Michigan

EXCELLENCE IN APPLIANCE
RETAILING
Sears, Roebuck and Co.
Hoffman Estates, Illinois

NATIONAL PRODUCT
CAMPAIGN AWARD
Ace Hardware Corporation
Oak Brook, Illinois

Efficiency Vermont and
 Partners Green Mountain
 College, the Village  of
 Poultney, Vermont, and
 Williams Hardware
Burlington, Vermont

The Home Depot
Atlanta, Georgia

Maytag Corporation
Newton, Iowa

Panasonic
Secaucus, New Jersey

Southern Minnesota Municipal
 Power Agency
Rochester, Minnesota
SUSTAINED EXCELLENCE IN
ENERGY MANAGEMENT
Food Lion, LLC
Salisbury, North Carolina

General Motors Corporation
Detroit, Michigan

Mines
Houston, Texas

Servidyne Systems, LLC
Atlanta, Georgia


LEADERSHIP IN ENERGY
MANAGEMENT
3M
St. Paul, Minnesota

Eastman Kodak Company
Rochester, New York

Fremont Unified School District
Fremont, California

Giant Eagle, Inc.
Pittsburgh, Pennsylvania

Providence Health System
Seattle, Washington

Transwestern Commercial
Services
Houston, Texas

University of Michigan
Ann Arbor, Michigan

USAA Real Estate Company
San Antonio, Texas

EXCELLENCE IN SERVICE
PROVIDER PERFORMANCE
ei3 Corporation
Montvale, New Jersey


EXCELLENCE IN BUSINESS
OUTREACH
American Hotel & Lodging
  Association
Washington, DC
EXCELLENCE IN
EFFICIENT HOMES
David Powers Homes
Houston, Texas

D.R. Wastchak, LLC
Tempe, Arizona

Ence Homes
St. George, Utah

Energy Services Group
Wilmington, Delaware

Engle Homes Colorado,
  a division of TOUSA Homes, Inc.
Englewood, Colorado

MaGrann Associates
Moorestown, New Jersey

Nevada ENERGY STAR
  Partners
Las Vegas, Nevada

Pardee Homes
Los Angeles, California

Pulte Homes Nevada
  Operations
Las Vegas, Nevada

Veridian Homes
Madison, Wisconsin

EXCELLENCE IN ENERGY
EFFICIENCY AND
ENVIRONMENTAL EDUCATION
The California Investor-Owned
  Utilities
   Pacific Gas and Electric
   Company
   San Francisco, California

   San Diego Gas and Electric
   San Diego, California

   Southern California Edison
   Rosemead, California

   Southern California Gas
   Company
   Los Angeles, California

CenterPoint Energy
Houston, Texas

The Institute for Sustainable
  Energy at Eastern
  Connecticut State University
Willimantic, Connecticut

Minnesota Power, an ALLETE
  Company
Duluth, Minnesota

Nevada Power Company &
  Sierra Pacific Power
  Company
Las Vegas and Reno, Nevada

New England Joint
  Management Committee

New York State Energy
  Research and Development
  Authority (NYSERDA)
Albany, New York
Northeast Energy Efficiency
 Partnerships, Inc. (NEEP)
Lexington, Massachusetts

Northwest Energy Efficiency
 Alliance
Portland, Oregon

Oncor Electric Delivery Company
Dallas, Texas

Sacramento Municipal Utility
 District
Sacramento, California

Vermont  ENERGY STAR
 Homes  Service, Vermont
 Energy  Investment
 Corporation
Burlington, Vermont

Vermont  Gas Systems
South Burlington, Vermont

Wisconsin's Focus on Energy
 Program
Madison, Wisconsin


SPECIAL RECOGNITION-
TECHNICAL EXCELLENCE
Architectural Energy Corporation
Boulder, Colorado


SPECIAL RECOGNITION-
ADVANCEMENT OF PC ENERGY
EFFICIENCY
Dell, Inc.
Round Rock, Texas

Intel Corporation
Santa Clara, California

SPECIAL RECOGNITION-
ENERGY STAR MILLION
MONITOR DRIVE
Fairfax County Public Schools
Fairfax, Virginia

Indoor Environmental Services
Sacramento, California

The Procter and Gamble
 Company
Cincinnati, Ohio

University of Pittsburgh
Pittsburgh, Pennsylvania

VP Buildings, Inc.
Memphis, Tennessee

Wal-Mart Stores, Inc.
Bentonville,  Arkansas

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                                    PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                          CLIMATE LEADERS PROGRAM
CLIMATE LEADERS
EPA launched the Climate Leaders program in February 2002
as part of the Presidents Climate Change Strategy to challenge
individual companies to demonstrate leadership by setting
aggressive greenhouse gas reduction goals for their sector.
Companies that join the partnership enjoy a number of
benefits from understanding and managing their greenhouse
gas emissions, including increased identification of cost-
effective reduction opportunities and strategic preparation for
the future as the climate change policy debate evolves. Last
year, the program continued to grow, expanding from the
original 12 Charter Partners to include a number of leading
companies across industrial sectors. Climate Leaders partners
set corporate-wide greenhouse gas reduction goals and conduct
annual inventories of their emissions to measure progress.

In 2003, Climate Leaders:
• Welcomed  16 new companies as partners for a total of
  52 partners.
• Had 13 companies announce greenhouse gas reduction
  goals, joining the seven companies that announced goals in
  2002 for a total of 20 Climate Leaders partners with
  publicly stated goals.

In 2004, EPA will:
• Recruit 25 additional businesses.
• Announce 20 additional corporate greenhouse gas emissions
  reduction goals.

"Staples has a long-standing commitment to
  environmental excellence, and we're pleased
  to participate in EPA's Climate Leaders
  Program. Climate Leaders will afford us the
  opportunity to assess all of our current
  operations with respect to greenhouse gas
  emissions—both the emissions we release
  directly into the environment and the
  secondary emissions associated with our
  power procurement. We will then develop
  short- and long-range goals to reduce
  these emissions."
                    —Mark F. Buckley, Vice President
                       Environmental Affairs, Staples
GREENHOUSE GAS REDUCTION GOALS

The targets announced to date will prevent a
total of 7.5 MMTCE per year. These reductions
are equivalent to the annual emissions from
5 million cars.
Partner Goals Announced in 2003:
• 3M pledged to reduce total U.S. greenhouse gas
  emissions by 30 percent from 2002 to 2007.
• Advanced Micro Devices, Inc., pledged to reduce
  global greenhouse gas emissions by 40 percent
  per Manufacturing Index from 2002 to 2007.
• American  Electric  Power pledged to reduce total
  U.S. greenhouse gas emissions by 4 percent
  below an average 1998-2001 base year by 2006.
• Cinergy Corp. pledged to reduce total U.S. greenhouse
  gas emissions  by 5 percent from 2000 to 2010.
• Eastman Kodak Company pledged to reduce total
  global greenhouse gas emissions by 10 percent
  from 2002 to 2008.
• FPL Group pledged to reduce U.S. greenhouse
  gas emissions  by  18 percent per kWh from 2001
  to 2008.
• Interface, Inc., pledged to reduce U.S. greenhouse
  gas emissions by 15 percent per unit of production
  from 2001 to 2010.
• International Paper pledged to reduce total
  U.S. greenhouse gas emissions by 15 percent
  from 2000 to 2010.
• Johnson & Johnson pledged to reduce total
  U.S. greenhouse gas emissions by 14 percent
  from 2001 to 2010.
• Pfizer, Inc., pledged to reduce global greenhouse
  gas emissions  by 35 percent per dollar of revenue
  from 2000 to 2007.
• PSEG pledged  to reduce U.S. greenhouse gas
  emissions by 18 percent per kWh from 2000 to 2008.
• St. Lawrence Cement pledged to reduce global
  greenhouse gas emissions by 15 percent per ton
  of cementitious product from 2000 to 2010.
• United Technologies Corporation pledged to reduce
  global greenhouse gas emissions by 16 percent
  per dollar  of revenue from 2001 to 2006.

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CLIMATE   PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
CLEAN ENERGY PROGRAMS
    2003 ENERGY STAR
    CHP AWARD AND
    CHP PARTNERSHIP
    CERTIFICATES OF
    RECOGNITION

    ENERGY STAR
    CHP AWARD WINNERS
    University of North Carolina at
    Chapel Hill
    Chapel Hill North Carolina
    BP Solvay Polyethylene North America
    Deer Park, Texas
    Calpine Corporation Deer Park
    Energy Center
    Deer Park, Texas

    CHP PARTNERSHIP CERTIFICATES
    OF RECOGNITION
    Austin  Energy Domain Project
    North Austin, Texas
    Harrah's Entertainment, Inc.
    Rio All-Suite Hotel & Casino
    Las Vegas, Nevada
    BP Global Power/Cinergy Solutions, Inc.
    South Houston Green Power 2
"EPA's recognition has highlighted our
 company and the work we do to a
 variety of key stakeholders, including
 the general public. This in turn
 allows us to continue to market the
 environmental benefits of CHP to our
 customers and the communities we do
 business in,  leading to additional
 environmental benefits in the future
 from new project development."
      —Chris Shugart, Director-Industrial Services,
                         Calpine Corporation
COMBINED HEAT AND POWER PARTNERSHIP

In October 2001, EPA introduced the Combined Heat and Power (CHP)
Partnership as part of the Presidents National Energy Policy. CHP projects offer
tremendous potential for pollution prevention by recycling the waste heat that is
produced in many industrial processes and as a by-product of electricity
generation. CHP systems also offer many benefits, including cost savings,
enhanced reliability of the electric system, and local economic development.
Compared with conventional separate heat and power, CHP projects are highly
efficient—often times reaching 75 percent efficiencies and higher—and can be
installed in a variety of settings, including large industrial plants, college
campuses, hospitals, hotels, and commercial buildings. EPA recognizes the most
efficient CHP projects each year through the ENERGY STAR CHP Award.

To maximize the use of cost-effective, efficient CHP, the CHP Partnership
works with industry, state and local governments, universities, and other
organizations to facilitate the development of CHP projects. EPA provides
technical assistance, networking, and public recognition. EPA also partners with
regional CHP initiatives, state agencies, and key industry sectors to organize
CHP workshops and outreach events.

In 2003, the CHP Partnership:
• Grew to 116 partners and facilitated 40 new CHP projects that are currently
  operational or under development, totaling 400 MW of new CHP capacity.

• Co-sponsored CHP workshops in Washington, DC, California, Pennsylvania,
  Texas, and Massachusetts.

• Provided public recognition to projects that won the ENERGY STAR CHP
  Award or CHP Partnership Certificates.

• Offered new services to partners, including the calculation of environmental
  benefits for specific CHP projects, an expanded Web site, and project
  feasibility analyses.

• Initiated niche market development efforts in the ethanol industry, and
  continued project development efforts in the college and university sector.

In 2004, EPA will:
• Add 50 new partners and assist partners with more than 30 new projects,
  facilitating the development of over 800 MWe of new CHP capacity.

• Release a Best Practices Guide to Output-Based Air Emissions Regulations and
  educate air regulators on innovative ways to recognize the efficiency of CHP.

• Co-sponsor CHP outreach events in multiple states.

• Continue niche market development activities with the ethanol and
  college and university sectors, and explore new niche markets such as
  wastewater treatment plants.

• Expand project facilitation services for CHP partners to cover each step in the
  CHP project development cycle.

• Continue to recognize superior projects through the ENERGY STAR CHP
  Awards and CHP Partnership Certificates.

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                                      PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                              CLEAN ENERGY PROGRAMS
GREEN POWER PARTNERSHIP
                                EPA launched the Green
                                Power Partnership in
                                2001 in response to a
                                recommendation in the
                                President's National
                                Energy Policy. The
                                partnership's goal is to
                                lower the cost of
                                renewable energy by
                                enlisting large electricity
                                purchasers to purchase a
percentage of their power as green power. EPA also works to
increase green power's value by offering public recognition to
leading green power purchasers. As increasing numbers of
large electricity customers demand green power, electricity
providers will respond by investing in new renewable energy
capacity to meet this growing demand. EPA supports the
development of green power markets in several ways,
including providing emissions benefits information,
recognizing leading purchasers through annual green power
awards, and supporting the development of third-party
certification so consumers can be confident that they are
getting what they pay for.
In 2003, renewable energy purchasing became increasingly
common among major companies, universities, government
agencies, and other organizations as a strategy for demonstrating
environmental leadership. The Green Power Partnership
welcomed 143 new partners in 2003, and provided technical
assistance, including comparison of various green power
products and information on strategies for maximizing the
benefit of a green power purchase. EPA also  publicly
recognized exceptional partners through its participation in
local events, press releases, speaking engagements, the Green
Power Leadership Club, and national Green  Power Awards.

In 2003, the Green Power Partnership:
• Recruited an additional 143 partners for a total of
  236 organizations that have made a combined commitment
  to purchase more than 1.2 million megawatt-hours (MWh)
  of green power annually, including 700,000 MWh from
  new renewable energy resources.
• Created more technical resources, including a comprehensive
  "Communications Guide for Green Power Partners" and
  the Green Power Locator, a Web-based tool that helps
  consumers locate green power providers in their area.
• Released the Power Profiler, a Web-based tool that allows
  electricity users to understand the air emissions impacts
  associated with their purchases of conventional electricity.
• Provided recognition to leading green power purchasers
  through local press events and the national Green Power
  Leadership Awards.
  2003 GREEN POWER LEADERSHIP AWARDS

  PARTNER OF THE YEAR
  City of Portland
  Portland, OR
  Dyess Air Force Base
  DyessAFB, TX
  Johnson & Johnson
  New Brunswick, NJ
  University of
    Pennsylvania
  Philadelphia, PA
  GREEN POWER
  PURCHASING
  Austin Grill
  Bethesda, MD
  City of Moab
  Moab, UT
  Clif Bar
  Berkeley, CA
  Kinko's, Inc.
  Ventura, CA
  State of New
  Jersey-NJCESP
  Trenton, NJ
  The Tower Companies
  Bethesda, MD
  White Wave
  Boulder, CO
ON-SITE GENERATION
BMW
Spartanburg, SC
City of San Diego
San Diego, CA
Domaine Carneros
 Winery
Napa, CA
Fala Direct Marketing
 Group
Melville, NY
Hayward Lumber
Monterey, CA
Loyola Marymount
 University
Los Angeles, CA
Solano County
FairfieU, CA
Toyota Motor Sales,
 USA, Inc.
Torrance, CA
In 2004, EPA will:
• Recruit 400 additional partners to make commitments to
  purchase green power, bringing the total to more than 600.
• Create new resources for partner recognition and
  technical assistance, including a Web-based listing of
  the top 25 green power purchasers.
• Expand public recognition of outstanding partners by
  working with power providers on joint recognition events
  for their largest green power purchasers.
• Continue to provide recognition through the national Green
  Power Leadership Awards.

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CLIMATE  PROTECTION   PARTNERSHIPS   DIVISION  2003   ANNUAL  REPORT
METHANE PROGRAMS
                          METHANE PROGRAMS

                          Methane's contribution to total U.S. greenhouse gas emissions is second only to that of carbon
                          dioxide. Each ton of methane emitted is, however, more than 20 times more effective at trapping heat
                          in the atmosphere than one ton of CO2. At the same time, methane is also a valuable source of
                          energy, being the major component of natural gas.

                          U.S. industries along with state and local governments collaborate with EPA in several voluntary
                          partnerships to encourage the profitable collection and use of methane that would otherwise be
                          released to the atmosphere. These methane partnerships include the Landfill Methane Outreach
                          Program, Natural Gas STAR Program, and Coalbed Methane Outreach Program. All follow a
                          common approach, which is to provide sound technical, economic, and regulatory information on
                          emissions reduction technologies and practices, as well as tools to facilitate implementation of
                          methane reduction opportunities. Partners profit from their involvement in these programs by
                          making their operations more efficient and their businesses more competitive. EPA also provides
                          information and tools to the agricultural community to encourage methane reductions.

                          In 2003, these voluntary partnerships, in conjunction with a regulatory program to limit air
                          emissions from the nation's largest landfills, reduced national methane emissions to well below 1990
                          levels, and they are projected to maintain emissions below 1990 levels through 2012 (see Figure 8).
                          Figure 8.
                          Partner actions are projected to maintain methane emissions
                          below 1990 levels through 2012
                             180
                             170
                          _ 160
                          CO 150
                          o
                          «
                          § 140
                                                      EMISSIONS WITHOUT PARTNER ACTIONS
                                                      EMISSIONS WITH PARTNER ACTIONS
                                '90         '95

                                YEARS 1990-2012
                                                      '00
                                                                 '05
                                                                            '10   '12
                          Source: EPA Climate Protection Partnerships Division

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                                     PROTECTING   THE  ENVIRONMENT — TOGETHER
                                                                                     METHANE PROGRAMS
LANDFILL METHANE
OUTREACH PROGRAM
LANDFILL METHANE OUTREACH PROGRAM
                     Landfills are the largest source of U.S.
                     human-related (anthropogenic)
                     methane emissions. Capture and use of
                     landfill gas not only reduces methane
                     emissions directly, but also reduces
                     CO2 emissions indirectly by displacing
                     the use of fossil fuels. The Landfill
                     Methane Outreach Program (LMOP)
                     encourages landfills across the nation
and internationally to capture and use their landfill gas
emissions as a renewable energy source. Working with landfill
owners, state energy and environmental agencies, energy
suppliers, industry, communities, and other stakeholders,
LMOP lowers the barriers to landfill  gas energy (LFGE)
project development.
Since the program's launch in December 1994, LMOP has
reduced methane emissions from landfills by approximately
19 MMTCE. In addition, the number of landfill gas energy
projects has grown to nearly 370. In 2003 alone, LMOP
assisted all 33 LFGE projects that became operational,
resulting in a reduction of 4.1 MMTCE.
LMOP focuses its outreach efforts on the smaller landfills
not regulated by EPA's New Source Performance Standards
and Emission Guidelines. The program's varied tools help
landfill owners and operators overcome barriers to project
development. These tools include feasibility analyses, software
for evaluating project economics, profiles of hundreds of
candidate landfills across the country, a project development
handbook, and energy end-user analyses.

In 2003, LMOP:
* Assisted in the development of 33 new landfill gas energy
  projects, with more than 25 additional projects under
  construction and expected online soon.
• Welcomed 32 new partners, increasing participation by
  9  percent and bringing the total number of LMOP partners
  to 379.
* Released two new LFGE project development tools,
  LFGcost and the LMOP Locator, designed to provide
  project developers and other parties with comprehensive
  financial and end-user data. Both tools have led to the
  identification  of dozens of new project opportunities.
• Collaborated with DOE's Federal Energy Management
  Program (FEMP) to implement the first landfill gas to
  energy project at a federal facility under the Biomass and
  Alternative Methane Fuels Program.
                                                            In 2004, EPA will:
                                                            • Implement a corporate and federal end-user market strategy
                                                              to provide energy and financial tools and services to spur
                                                              LFGE project development.
                                                            • Host the 8th Annual LMOP Conference and Project Expo
                                                              and seven state and regional workshops to present the
                                                              benefits of landfill gas energy, discuss project development
                                                              activity and opportunities, and address issues affecting
                                                              landfill gas projects.
                                                            • Conduct three international training workshops to provide
                                                              government officials and technical experts with the
                                                              information and tools necessary to evaluate the potential for
                                                              LFGE project development; tools include a newly adapted
                                                              country-specific EPA model to evaluate LFG potential.
                                                            • Assist in the development of 25 new landfill gas energy
                                                              projects.
                                                             "Landfill gas is a clean-burning fuel and makes a
                                                             perfect power source for the plant's boilers."
                                                                                  —Dave Shenefield, Site Utilities Manager,
                                                                             General Motors Assembly Plant, Fort Wayne, IN

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CLIMATE  PROTECTION  PARTNERSHIPS   DIVISION  2003  ANNUAL  REPORT
LMOP 2003 AWARD WINNERS
     PROJECT OF THE YEAR (TIE): ANTIOCH COMMUNITY HIGH SCHOOL LFG-TO-ENERGY PROJECT
     Antioch, Illinois

     Antioch Community High School is the first school in
     the United States to get electricity and heat from
     landfill gas. Through the combined efforts of the
     Antioch Community High School, Waste
     Management, the State of Illinois, and RMT (an
     environmental and engineering firm), a liability has
     become an asset. Not only has this project turned a
     former Superfund landfill into a source of renewable
     energy, it also serves as a great learning tool for
     students and the community. In 2001, RMT
     approached the school  district about using LFG, and in
     2002 signed an agreement to make it happen. Waste
     Management then agreed to make the gas available
     to the school at no charge, and the Illinois Department
     of Commerce and Economic Opportunity provided a
needed boost with a $550,000 grant to the project.
After years of planning and construction, the school
district now captures gas from the HOD Landfill to
produce electricity and heat from 12 Capstone
microturbines. The microturbines produce 360 kW of
electricity, enough to power the school, with excess
sold to Commonwealth Edison. Waste heat from the
microturbines will be used to heat the school. Along
with the environmental benefits of the project,
Antioch Community High School estimates that the
energy savings will be in excess of $100,000 per year.
The project is part of the 2004 science curriculum, and
is a great example of collaboration between industry,
a utility, and  local, state, and federal agencies.
                       "We 're going to be able to recycle, save money for the taxpayers,
                       and help with the environment."
                                     —Bill Ahlers, Business Manager, Antioch Community High School
                                                                    District 117, Antioch, IL

                       "l/l/e are very excited to support BMW in meeting its energy and
                       environmental goals through this renewable energy project. This
                       project means cleaner air, a healthier environment and a better
                       community for all."
                                    —George Sakellaris, President and CEO, Ameresco, Framingham, MA
     PROJECT OF THE YEAR (TIE): BMW MANUFACTURING LFG-TO-ENERGY PROJECT
     Greer, South Carolina
     BMW and its partners have created a project that will
     have positive environmental and economic benefits
     for at least the next 25 years. In January 2003, BMW's
     Greer, South Carolina plant began purchasing LFG
     from Waste Management's Palmetto Landfill, located
     9.5 miles away. The gas now fires four 1.25 megawatt
     turbines that typically sat idle at BMW's plant. The
     electricity from the turbines provides about 25 percent
     of the Greer plant's electricity needs, while the waste
     heat from the turbines provides almost 100 percent of
the plant's cooling/thermal and hot water needs.
BMW will reduce methane emissions equivalent to
driving 105 million miles per year or more than
4,000 times around the earth. To achieve this success,
BMW worked closely with project partners Ameresco,
Waste Management, and the South Carolina Energy
Office to resolve the many project permitting,
educational, and technology obstacles. Pleased with
the results, BMW is investigating other uses for the
additional gas from the landfill.

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ENERGY PARTNER OF THE YEAR: GENERAL MOTORS

Detroit, Michigan
General Motors (GM), as the single largest direct user
of landfill gas in the United States, has demonstrated
that environmental protection and economic benefits
can go hand in hand. With four landfill gas energy
projects online in Ohio, Michigan, Indiana, and
Louisiana, and a fifth under construction. General
Motors is truly a leader in advancing landfill gas as a
renewable energy source. The four projects use a total
of 6,200 cubic feet/minute (cfm) of LFG, and GM
purchases 8 million kWh of electricity from a LFG
electricity project in Michigan. When the fifth direct-
use project comes online in Oklahoma, it will bring

INDUSTRY PARTNER OF THE YEAR: AMERESCO

Framingham, Massachusetts

Ameresco, a relative newcomer to the landfill gas
energy field, has shown that innovation and creativity
in project structure and technology can create viable
projects. Ameresco got involved in LFG energy project
development in January  2001, when tax credits and
other incentives were non-existent or declining. Since
that time, Ameresco has proven that projects can be
financially successful in the absence of tax credits. The
company currently has three  operational LFG energy
projects, including the well-known, highly successful
BMW project in South Carolina. It also has three
diverse projects under construction—one with an
                  GM's gas usage to 7,500 cfm. In addition to its own
                  LFG projects. General Motors has been instrumental
                  in reaching out to other potential corporate LFG users
                  and has helped the World Resources Institute develop
                  a guidance document on LFG usage for corporate
                  members. All of GM's projects save money while
                  reducing emissions, with average savings of more
                  than $500,000 per project per year. GM estimates
                  that cumulatively more than 170,000 tons of carbon
                  dioxide emissions have been prevented due to its
                  operating projects.
                  electric cooperative, one with a large electric utility,
                  and a direct-use project with Gold Kist, the nation's
                  second largest chicken processing cooperative.
                  Recently, Ameresco was awarded four more projects,
                  all with expected online dates in 2004. The environmental
                  benefits of the operational projects under Ameresco's
                  care, which generate 17.5 MWs of power, equate to
                  removing the emissions from more than 150,000 cars
                  per year. Ameresco estimates that in the next two to
                  three years it will have the equivalent of 54 MWs of
                  power online.
COMMUNITY PARTNER OF THE YEAR: PRINCE GEORGE'S COUNTY, MARYLAND
Largo, Maryland
Prince George's County (PG
County) had one of the first LFG
electricity projects on the East
Coast in the late 1980s and
remains a leader in the field. PG
County, which owns the Brown
Station Road Landfill, began plans
for a LFG energy project in 1985
to supply the electric power needs
of the county's Correctional
Center, 2.5 miles away.
Commissioned in 1987, the
project sends  gas to three LFG-
fired Waukesha engines at the
Correctional Center and supplies
hot water to the facility. Due to
increasing gas supply, the County
began to look at expanding its
LFG energy project in 1999. The
Gas Expansion Project was
completed on April 4, 2003,
adding four Waukesha engines on
site. During construction, the
County worked with PJM
Interconnection and PEPCO on
Interconnection Service
Agreements (ISA). The ISA was
filed with the Federal Energy
Regulatory Commission (FERC)
and is one of the first such filings
under FERC's newly adopted
standard ISA. The project's output
also meets the criteria for Green
Power; it is estimated that at least
$750,000 will result from power
sales. Prince George's County
sets a good example for other
communities wishing to pursue
LFG energy projects.
                                                                                                             29

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CLIMATE   PROTECTION  PARTNERSHIPS  DIVISION  2003   ANNUAL  REPORT
METHANE PROGRAMS
"Our participation
 in Natural Gas
 STAR has
 heightened
 environmental
 awareness
 throughout the
 company.
 Emissions
 reductions and
 operational
 efficiency go
 together and are
 not only good for
 business but also
 for the
 environment."
—Don Anderson,
  Compliance Manager,
  Western Gas Resources
                         NaturalGasA
                         EPA  POLLUTION PREVENTER\TT
NATURAL GAS STAR PROGRAM

                     Natural Gas STAR is a voluntary partnership between EPA and the U.S. natural
                      gas industry designed to overcome barriers to the adoption of cost-effective
                             technologies and practices that reduce emissions of methane. Natural
                             Gas STAR was launched in 1993 with the transmission and
                            distribution sectors, and has since expanded twice—to the production
                         sector in 1995 and the processing sector in 2000. The program has
                          achieved significant reductions through 2003, reducing methane
                          emissions from natural gas systems by 5.7 MMTCE in 2003 alone.

Natural Gas STAR has developed a range of tools and resources designed to help corporate partners
implement best management practices to reduce gas loss. These include an implementation guide, a
series of "Lessons Learned" studies, technology transfer workshops, partner-to-partner information
exchanges, and more. Extensive partner support for and continued expansion of the program,
combined with ongoing positive feedback from partners, demonstrates the effectiveness of these tools
in promoting methane reduction activities.

In 2003, Natural Gas STAR:
• Achieved 64 percent industry participation across all major sectors  (production, processing,
  transmission, and distribution).

* Partnered with 13 new companies, bringing the total number of partners to 111.

• For the first time, conducted technology transfer workshops for all  industry sectors.

* Continued a 2-year study to identify additional cost-effective methane emissions reduction
  opportunities from the gas production and processing sectors.

In 2004, EPA will:
• Expand Natural Gas STAR in all sectors to attain 65 percent industry participation.

• Conduct six technology transfer workshops, including the first workshop for offshore producers.

• Continue to work with the American Petroleum Institute to implement its voluntary
  commitment of 100 percent participation in the Natural Gas STAR Program under the President's
  Climate VISION initiative.

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                              PROTECTING  THE   ENVIRONMENT — TOGETHER

                                                     NATURAL GAS STAR AWARD WINNERS
PRODUCTION PARTNER OF THE YEAR: BP
       bp
 o
                 BP joined the Natural Gas STAR Program in 1998 and has been a leader in reducing methane
                 emissions, first earning the Production Partner of the Year Award in 2001 and the Continuing
                 Excellence Award a year later. BP reported 1.9 billion cubic feet (Bcf) in methane emissions
                 reductions, the most among natural gas production companies for 2002. The company
                 maintains a high profile in the program and provides  leadership not only in reducing
                 emissions but also in supporting outreach and technology transfer goals. BP managers deliver
                 presentations at the Natural Gas STAR Annual Implementation Workshops, contribute to
                 journal articles and technical documents, and participate in an EPA-sponsored study of
                 emissions reduction opportunities at gas processing plants. BP's Implementation Manager,
                 Reid Smith, was honored with the Implementation Manager of the Year Award in 2003.
TRANSMISSION PARTNER OF THE YEAR: EL PASO PIPELINE GROUP
 epaso
                        El Paso Pipeline Group joined the Natural Gas STAR Program in 1993 and has been
                        one of Natural Gas STAR'S most active participants. For 2002, El Paso reported the
                        largest volume of new emissions reductions—more than 2.4 Bcf. To date, the
                        company has achieved the highest cumulative reductions of all transmission partners,
                        totaling 32 Bcf. El Paso Pipeline Group takes advantage of dramatic emissions
                        reduction opportunities by comparing and learning from the experiences of its five
                        subsidiary pipelines. El Paso Pipeline Group has also helped the Natural Gas STAR
                        Program by recently hosting a pair of technology transfer workshops.
DISTRIBUTION PARTNER OF THE YEAR: COLUMBIA GAS OF OHIO (A NISOURCE COMPANY)
           ^*v_
 CblumBfa.Gas9
         of Ohio
         A NiSource Company
                            Columbia Gas of Ohio, one of the 10 energy distribution companies within
                            NiSource Inc., joined the Natural Gas STAR Program in 1993. For 2002, the
                            company reported reductions of 2.3 Bcf—more than any other distribution
                            company. Columbia Gas of Ohio achieved this by performing meticulous leak
                            detection surveys of more than 4,000 gate stations and surface facilities.
PROCESSING PARTNER OF THE YEAR: WESTERN GAS RESOURCES
        Western Gas Resources, Inc
                                      Western Gas Resources (WGR) joined the Natural Gas STAR
                                      Program in late 2001 and achieved the largest emissions reductions
                                      of any processing partner in 2002. To date, WGR has reported
cumulative methane emissions reductions of more than 2 Bcf. WGR has also demonstrated commitment to
communicating the importance of Natural Gas STAR, both internally and externally, by conducting Natural Gas
STAR briefings and training sessions for operations supervisors and managers, and by sharing their experiences
with other companies through presentations at Natural Gas STAR workshops.

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CLIMATE  PROTECTION   PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
NATURAL GAS STAR AWARD WINNERS
      CONTINUING EXCELLENCE: KERR-MCGEE OIL & GAS CORPORATION
            tf£f?f? !W:GEE OtL & GAS CORPORATION
                                                 Kerr-McGee joined the Natural Gas STAR Program in
                                                 1996 and was awarded Production Partner of the Year
                                                 in 2000. The company has continued to be one of the
program's most active partners. In 2002, Kerr-McGee reported emissions reductions totaling 750 million cubic
feet (MMcf)—the second highest volume reported by a gas producer. The company continued to extend its
participation by providing data on many new gas production sites and emissions reduction activities—almost
doubling the number of facilities reporting emissions reductions. Kerr McGee also contributes to program
technology transfer and outreach efforts by developing implementation case studies and presentations
for workshops.
      CONTINUING EXCELLENCE: CHEVRONTEXACO
      ChevronTexaco
                            ChevronTexaco joined the Natural Gas STAR Program separately in 1995 as
                            Chevron and in 1996 as Texaco. Chevron was recognized as the Production
                            Partner of the Year in 1999. As ChevronTexaco, the company has strengthened
its commitment to the Natural Gas STAR Program. For 2002, it reported reductions of 700 MMcf, the third highest
among production partners. Cumulatively, ChevronTexaco has reduced methane emissions by 18 Bcf since 1990.
ChevronTexaco continues to demonstrate leadership by actively contributing to program technology transfer
efforts, including the development of case studies and workshop presentations.

      CONTINUING EXCELLENCE: COLUMBIA GAS TRANSMISSION AND COLUMBIA GULF TRANSMISSION
      (NISOURCE COMPANIES)
      Columbia Gas
         Transmission
      Columbia GuU
          Transmission

                         Columbia Gas and Columbia Gulf Transmission have been leaders since joining the
                         Natural Gas STAR Program. In 2000 and 2001, they were recognized as the
                         Transmission Partners of the Year. For 2002, Columbia Gas Transmission reported
                         the largest emissions reductions (almost 4 Bcf), while Columbia Gulf Transmission
                         reported the 3rd highest (more than 1 Bcf). These two NiSource companies
                         continue to identify and implement a large number of new emissions reduction
                         opportunities, directly contributing to technology transfer efforts. Working with
                         other business units, they are also helping educate all NiSource companies on the
                         value of greenhouse gas emissions reductions.
      ROOKIE OF THE YEAR: NORTHERN NATURAL GAS
             Northern
             Natural Gas
                         Northern Natural Gas operates an interstate natural gas pipeline extending from
                         the Permian Basin in Texas to the upper Midwest. Although the company is new to
                         the Program, Northern Natural Gas has already successfully reduced methane
                         emissions by 200 MMcf. This was accomplished through the aggressive
                         implementation of several emissions reduction technologies and management
                         practices, such as a survey and leak repair program at its compressor stations and
                         remote facilities, altering emergency shut down procedures, and replacing high-
                         emission controllers.

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                                      PROTECTING   THE  ENVIRONMENT — TOGETHER
                                                                                       METHANE PROGRAMS
COALBED METHANE OUTREACH PROGRAM
The Coalbed Methane Outreach Program (CMOP) reduces
methane emissions from underground coal mines by
collaborating with large coal companies and small
businesses—primarily independent natural gas project
developers and equipment supply companies—to develop
environmentally beneficial and economically successful coal
mine methane (CMM)  projects. Outreach efforts focus on
providing high-quality, project-specific information. CMOP
has achieved significant results through 2003.
EPA began working with the coal mining industry in 1990,
when  coal mines captured and used only  25 percent of the
methane produced from their mine degasification systems.
As a result of this collaboration, the percentage of methane
recovery grew to about 85 percent by 2003. To eliminate the
remaining methane emitted from degasification systems,
CMOP is working with industry to use CMM in small- and
large-scale power generation, for mine heating and coal
drying, and for upgrading low-quality gas to pipeline
specifications. Favorable economics also increase the viability
of other end-use options for CMM such as vehicle fuel
(liquified natural gas (LNG) and compressed natural gas
(CNG)), manufacturing feedstocks, and use in fuel cells.
In addition,  CMOP supports efforts to demonstrate the use of
flare technology, which  has yet to be employed at an active
U.S. mine. Following the programs success in reducing
methane emissions from degasification systems, CMOP has
expanded its focus  to the methane emitted from coal mine
ventilation systems. Ventilation air from coal mines typically
contains methane at concentrations below one percent, yet
accounts for 90 percent of the remaining  methane emissions
from underground coal mines—about 80 Bcf of methane
annually. CMOP is collaborating with industry and other
federal agencies to demonstrate and deploy newly developed
technologies that can reduce these emissions substantially over
the next few years.
Abandoned mines are also a source of methane emissions,
accounting for about 5 to 10 percent of U.S. CMM emissions
from underground mines. CMOP is now actively engaged in
promoting reductions from this source. In the United States
alone, 20 projects in 2003 captured and used methane from
30 abandoned mines.
CMOP has developed a range of tools designed to overcome
the barriers to recovery and combustion of coal mine
methane. These include numerous technical and economic
analyses of technologies and potential projects, mine-specific
project feasibility assessments, state-specific analyses of project
potential, market evaluations, and guides to state, local,  and
federal assistance programs. CMOP has collaborated with
operators of virtually every major U.S. underground coal mine
that has gassy conditions or that emits gases to apply these
tools and facilitate projects, which in 2003 alone achieved a
reduction of 1.7 MMTCE.

In 2003, CMOP:
* Reduced methane emissions at 14 of the gassiest mines in
  the country, including the first recovery projects in the
  western United States, by providing high-quality, project-
  specific information  to mine operators, project developers,
  and other stakeholders.
* Published an analysis of domestic and international
  emerging markets for ventilation air methane projects,
  identifying new technologies and assessing project costs and
  benefits.
• Calculated and included methane emissions from
  abandoned mines in the  U.S. Inventory of Greenhouse Gas
  Emissions and Sinks, marking the first time this source of
  emissions was included in any country's national inventory.

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
METHANE PROGRAMS
PROGRAM EVALUATION:
MEASURING RESULTS IN
METHANE PROGRAMS
                              ™
   Tracking and recording the methane
   reductions achieved by EPA's partnership
   programs is a straightforward process.
   EPA gathers project-specific data on
   all the methane reduction activities
   implemented in coordination with
   the partnerships.
   NATURAL GAS STAR

   Industry partners report their
   reduction activities to EPA on a
   detailed online reporting form, and
   EPA works with partners to verify
   these data.
   LANDFILL METHANE OUTREACH

   EPA works with all stakeholders to
   compile up-to-date annual project
   information. The program reports
   reductions from only those projects
   that EPA directly assisted.


   COALBED METHANE OUTREACH

   EPA gathers state gas sales data for
   each mine to determine the total
   amount of coal mine methane used
   from degasification systems.
   Although EPA works with every
   project, the program reports only
   40 percent of the total reductions
   achieved, attributing 60 percent to
   the impact of the Energy Policy Act <
   1992. In the future, the program will
   also report emissions reductions
   from ventilation air methane
   reduction projects.
.


            In 2004, EPA will:
            • Finalize and publish the report Methane Emissions from Abandoned Coal
              Mines in the United States, Emissions Inventory Methodology, and initiate
              additional efforts to support development of projects at abandoned mines.
              Work with CONSOL Energy and DOE to install and operate the first
              commercial-scale demonstration of ventilation air oxidation technology in
              the United States.
            • Encourage greater CMM reductions in the western United States by
              working with DOE and the National Mining Association  to implement
              their voluntary commitments to reduce CMM emissions under the
              President's Climate VISION initiative.
                                             Table 4.
                                             Methane Programs: Annual Goals and Achievements
                                       2003 Goal

             TOTAL REDUCTIONS (MMTCE)    10.6
                                           LMOP
                                           Number of Projects
                                           Annual Methane
                                           Reductions (MMTCE)
                                           Natural Gas STAR
                                           Industry Participation
                                           (% in program)
                                           Annual Gas
                                           Savings (MMTCE)
                                           CMOP
                                           Annual Methane
                                           Reductions (MMTCE)
249

4.1


62%

4.8


1.7
                                                                                    2003
                                                                                 Achievement
11.5


253

4.1


64%

5.7


1.7
2004 Goal

  11.1


  269

   4.3


  65%

   5.0


   1.8
            Source: EPA Climate Protection Partnerships Division

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                                     PROTECTING   THE   ENVIRONMENT — TOGETHER
                                                                                    METHANE PROGRAMS
AGRICULTURE-BASED PROGRAMS

Through outreach to agriculture-based organizations and
farmers, EPA and the U.S. Department of Agriculture
(USDA) work together to promote practices that reduce
greenhouse gas emissions at U.S. farms. The programs
collaborate with the nation's swine and dairy producers to
encourage  development of waste management systems that
generate farm revenues while reducing water and air pollution.
EPA provides technical information and tools to aid in the
assessment and implementation of these projects.

In 2003, EPA and USDA:
• Coordinated development and implementation of anaerobic
  digestion funding mechanisms under the 2002 Farm Bill.

• Developed National Standards for Anaerobic Digestion
  technologies.

* Assisted swine and cattle producers in implementing
  projects that produced nearly 60 million kWh/year of
  renewable energy from farms capturing methane—energy
  then used by the farm and local community.

• Assisted states, including California and New York, in
  developing programs and policies for the broader
  deployment of methane-capturing technologies.
In 2004, EPA and USDA will:
9 Continue the expansion of methane-reducing technologies
  in the livestock sector to help ensure clean water and air
  through implementation of the second year of Farm Bill
  funding under Section 9006 and hold extension events to
  market this opportunity.

* Conduct a national conference to provide state-of-the-art
  technical, environmental, program, market, and funding
  information on anaerobic digestion systems.

* Collaborate with state energy programs in the west,
  northeast, southeast, and midwest to facilitate the
  development of anaerobic digesters as renewable energy
  resources.

* Update the AgSTAR Handbook and develop the second
  version of FarmWare to provide farmers with the necessary
  guidance and tools to evaluate and successfully implement
  proven anaerobic digestion technology.

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CLIMATE   PROTECTION   PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT

HIGH GWP ENVIRONMENTAL STEWARDSHIP PROGRAMS
                         Public-private industry partnerships are substantially reducing U.S. emissions of the high global
                         warming potential (GWP) gases that are released as byproducts of industrial operations. These
                         partnerships involve various industries that are developing cost-effective improvements in their
                         industrial processes to reduce emissions of perfluorocarbons (PFCs), hydrofiuorocarbons (HFCs), and
                         sulfur hexafluoride (SF6)—all particularly potent greenhouse gases. When compared ton-for-ton with
                         CO2, they trap much more heat in the atmosphere. PFCs and SF6 also have very long atmospheric
                         lifetimes (see Table 2). Despite the potential for sizable growth in high GWP greenhouse gas
                         emissions, these partner industries are expected to maintain their emissions substantially below 1990
                         levels through the year 2012 (see Figure 9).

                         THE VOLUNTARY ALUMINUM INDUSTRIAL PARTNERSHIP (VAIP)

                         The primary aluminum producers are collaborating with EPA to reduce emissions of PFCs, which
                         are a byproduct of the smelting process. The goal is to reduce perfiuoromethane (CF^) and
                         perfluoroethane (C2F6) where technically feasible and cost effective. Since the partnership began in
                         1995, participating industries have had notable success in characterizing the emissions from their
                         smelter operations and reducing overall emissions.

                         The Aluminum Association, representing 98 percent of primary aluminum production in the United
                         States, has agreed to a direct carbon intensity reduction target of 53 percent from 1990  levels by
                         2010. The goal includes reductions in emissions of PFCs and CO2 from the consumption of the
                         carbon anode. As large energy consumers, the primary producers also agreed to continue their efforts
                         to reduce indirect CO2 emissions through continued energy efficiency improvements. The aluminum
                         industry has been working to reduce greenhouse gas emissions for more than a decade, and this new
                         commitment equates to an additional direct carbon intensity reduction of 25 percent beyond the
                         2000 achievement.
                          Figure 9.
                          Partner actions can maintain voluntary program sector
                          emissions of high global warming potential gases at or
                          below 1990 levels through 2012
The new commitment builds on the
efforts of EPAs Voluntary Aluminum
Industrial Partnership (VAIP). VAIP
reduced PFC emissions by more than
45 percent in 2000 and by more than
60 percent in 2003, compared to the
industry's 1990 baseline. The
Aluminum Association will measure
progress for the President's Climate
VISION initiative based on data
collected from its members and
pledges to support climate protection
through efforts to increase aluminum
recycling and develop lightweight
vehicles.
                             '90         '95

                              YEARS 1990-2012
                          Source: EPA Climate Protection Partnerships Division

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                                    PROTECTING   THE   ENVIRONMENT — TOGETHER

                                    HIGH GWP ENVIRONMENTAL STEWARDSHIP PROGRAMS
In 2003, the Voluntary Aluminum Industrial Partnership:
• Conducted smelter measurements at three partner facilities
  to complete the U.S. smelter-type data set and to validate
  past process-type measurements.

• Supported the International Aluminum Institute's efforts to
  develop a PFC smelter-specific measurement and training
  module that now serves as an industry-wide, self-supporting
  measurement program. It helps smelter managers around
  the world develop PFC emissions reduction strategies and
  improve the consistency and comparability of global
  emissions data.

* Completed a survey and evaluation of global smelter
  emissions measurement data. This evaluation expanded the
  database used to develop smelter-specific default emission
  factors needed by national governments and others to
  estimate PFC emissions from primary aluminum
  production.
                                                          HFC-23 EMISSION REDUCTION PROGRAM
                                                          Industry is working with EPA to reduce emissions of the
                                                          potent greenhouse gas, HFC-23, which is generated as a
                                                          byproduct in the manufacture of the refrigerant HCFC-22.
                                                          Through this program, EPA encourages all U.S. producers of
                                                          HCFC-22 to develop and implement technically feasible,
                                                          cost-effective processing practices or technologies to reduce
                                                          HFC-23 emissions.
                                                          Partners have reduced emissions of HFC-23 through process
                                                          optimization and thermal destruction. Their efforts have
                                                          helped significantly reduce the intensity of HFC-23 emissions
                                                          (the amount of HFC-23 emitted per kilogram of HCFC-22
                                                          manufactured). Due to these efforts, emissions in 2003 were
                                                          more than 5 MMTCE lower than they would have been at
                                                          the 1990 emission intensity. In 2003, EPA partnered with
                                                          100 percent of the U.S. HCFC-22 producers  to use process
                                                          optimization and abatement to reduce production byproduct
                                                          emissions of HFC-23—the most potent and persistent of the
                                                          hydrofluorocarbons.
"In addition to efforts to reduce direct emissions of
 greenhouse gases, aluminum is also making key
 contributions to climate protection because it
 enables lower weight, fuel-efficient engines and
 parts to be built for cars and trucks as well as for
 highspeed rail and sea travel."
  —Industry Genius: Inventions and People Protecting the Climate, 2003

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CLIMATE   PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT

HIGH  GWP ENVIRONMENTAL STEWARDSHIP  PROGRAMS
                         THE PFC REDUCTION/CLIMATE PARTNERSHIP
                         FOR THE SEMICONDUCTOR INDUSTRY
                         Since its inception in 1996, this partnership has been a catalyst for semiconductor companies in
                         Europe, Japan, Korea, Taiwan, and the United States to jointly set the first global target for reducing
                         greenhouse gas emissions. Collaborating with EPA, these companies have identified and implemented
                                          process changes and manufacturing tool improvements in the production of
                                            integrated circuits to reduce emissions of PFCs.
                                            While the partnership's initial focus was on reducing PFC emissions from
                                             U.S. semiconductor fabrication plants, EPA and its industry partners quickly
                                             recognized the advantage of addressing this global environmental challenge
                                             through international  cooperation. Seeking to maintain a "level playing field"
                                            for the many multinational partner companies, the partnership encouraged
                                         other nations' governments to develop similar voluntary initiatives. Japan was the
                         second country to establish a voluntary partnership following a meeting organized by Japan's Ministry
                         of International Trade and Industry and EPA  in 1996. With the United States and Japan gaining
                         momentum in coordinating PFC emissions reduction activities,  the remaining major semiconductor
                         producers including Europe, Korea, and Taiwan joined the effort soon thereafter.
                         In April 1999, the World Semiconductor Council (WSC), whose members include the national
                         semiconductor industry associations of Europe, Japan, Korea, Taiwan, and the United States,
                         announced a technically challenging goal to reduce PFC emissions by at least 10 percent below  the
                         1995 baseline level by year-end 2010. The WSC's goal represents the first greenhouse gas emissions
                         reduction target for an entire global industry.  This type of aggressive goal  setting reassures
                         international governments, industry suppliers, and the public of the industry's commitment to
                         protect the climate.

                         In 2003, the PFC Reduction / Climate Partnership for the Semiconductor Industry:
                         • Reduced absolute PFC emissions by 12 percent below 2002 levels. When accounting for the
                           industry's new capacity and recovering production levels in 2003, the U.S. partners reduced their
                           emissions intensity by roughly 20 percent.
                         • Continued seeking opportunities for the closely related technical fields of semiconductor and liquid
                           crystal display (LCD) (i.e., flat panel display) manufacturing to exchange information and expedite
                           PFC  emissions reductions. EPA met with production equipment suppliers and the Plasma Etch
                           User's Group to discuss technology transfer  opportunities and  encourage information sharing. In
                           January 2003, the World LCD Industry Cooperation Committee, representing the leading LCD
                           manufacturers from Japan, Korea, and Taiwan, announced the industry's goal to reduce PFC
                           emissions to 0.82 MMTCE by 2010.
                         • Updated the semiconductor PFC emissions projection "vintage" model  to reflect current
                           production levels and manufacturing technologies. This model helps track the partnership's
                           accomplishments, inform future planning, and support EPA's annual greenhouse gas inventory
                           development and economic analyses.

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                                    PROTECTING   THE   ENVIRONMENT — TOGETHER

                                    HIGH GWP ENVIRONMENTAL STEWARDSHIP PROGRAMS
SF6 EMISSIONS REDUCTION PARTNERSHIP
FOR ELECTRIC POWER SYSTEMS

                      Initiated in 1999, this partnership
                      provides a forum for the electric
                      power industry to work with the
                      U.S. government on reducing sulfur
                      hexafluoride (SF6) emissions to levels
                      that are technically and economically
feasible by identifying and encouraging the adoption of best
technologies and management practices.

SF6 is used in the transmission of high-voltage electricity.
Fugitive emissions from aging high-voltage equipment or
improper service and maintenance practices contribute to
greenhouse gas emissions. SF6 Emissions Reduction partners
are industry leaders, providing reliable power to customers in
an environmentally responsible manner. The average emissions
rate for partner companies dropped from  17 percent in 1999
to 10 percent in 2003.

In 2003, the SF6 Emissions Reduction  Partnership for
Electric Power Systems:
• Developed an SF6 reduction case study with partner
  company Pacific Gas & Electric (PG&E) highlighting
  PG&E's program strategy,  activities, and the financial
  benefits of reducing SF6 emissions.

• Collected and reviewed partner data on the most effective
  emissions reduction activities. This analysis contributed
  to the program's annual report and other information
  sharing activities.

• Expanded communications and recruiting materials with a
  new program information kit and an enhanced Web site.
SF6 EMISSION REDUCTION PARTNERSHIP FOR
THE MAGNESIUM INDUSTRY

•               The U.S. magnesium industry is working
               with EPA to identify and encourage the
               adoption of best management practices for
 p,,™hi,t,d,«i,,.ni..i,d^    reducing emissions of sulfur hexafluoride
               (SFg), a long-lived and potent greenhouse
gas. Launched in 1999, this partnership to reduce emissions
from magnesium production and casting operations represents
approximately 80 percent of the U.S. magnesium industry.

In 2003, the SF6 Emission Reduction Partnership for the
Magnesium Industry:
• Supported the President's Climate VISION initiative by
  announcing the partnership's climate protection goal of
  eliminating SF6 emissions by the end of 2010.

• Expanded to 17 partner companies,  representing 100
  percent of primary magnesium production and 80 percent
  of domestic casting and recycling capacity.

• Collected the fourth set of annual SF6 emissions reports
  from magnesium partners. Emissions estimates are reported
  using software designed by EPA with input from the partners.
  Partners have reduced their SF6 emissions intensity by more
  than 5 percent since EPA launched the program in  1999.

• With support from partner company Intermet, 3M™, and
  Australia's CAST Research Centre, EPA completed the first
  independent measurement campaign to study emissions
  from SFg-based cover gas and promising new alternative
  cover gas technologies used in a full-scale production
  setting. Both alternative cover gases, AM-Cover™ (HFC-
  134a) and Novec™ 612 (a fluorinated ketone) reduced
  greenhouse gas emissions by more than 99 percent
  compared to the traditional SFg-based protection system.
  The results from this study were  presented at the Metals,
  Minerals, and Materials Society's (TMS) annual meeting
  and the Earth Technologies Forum.

  "With a global warming potential of 22,200, the elimination

  of a small amount of SF6 can make a major difference

  in a company's greenhouse gas emissions.  That is why

  the companies of the IMA decided to work together to

  reduce  these emissions. With the coordination of IMA

  and the expertise of EPA, this partnership of competitive

  companies will work together to eliminate SF6 emissions

  by the end of 2010."

      —Helmut Brandt, President, International Magnesium Association

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CLIMATE   PROTECTION  PARTNERSHIPS   DIVISION  2003   ANNUAL  REPORT

HIGH GWP ENVIRONMENTAL STEWARDSHIP PROGRAMS
"The Mobile AC
 Climate Protection
 Partnership is
 proving that
 voluntary
 programs can
 gain the support
 of the automotive
 industry when
 they involve the
 best technical
 experts and
 pursue
 performance-
 based solutions
 that reduce
 greenhouse gas
 emissions while
 maintaining or
 improving cooling
 performance,
 safety, and
 reliability."
 —Ward Atkinson, Chair
     of the SAE Interior
       Climate Control
Standards Committee and
   Co-Chair of the MAC
           Partnership
MOBILE AIR CONDITIONING CLIMATE PROTECTION PARTNERSHIP

Under the Montreal Protocol for the Protection of the Ozone Layer, new vehicles worldwide have
been redesigned to use HFC-134a refrigerants in air-conditioning systems rather than CFC-12.
The production of CFC-12 refrigerants for use in developed countries was halted in 1996 and will be
phased out globally by 2006. HFC-134a was the universal choice because it has no ozone depleting
potential, has six times less global warming potential than CFC-12, is non-flammable, has low
toxicity, and has cooling capacity and energy efficiency that can be made comparable to those of
CFC-12 through engineering. Although HFC-134a has far less impact on the climate than the
CFC-12 it replaced, it is still part of "the basket" of greenhouse gases whose emissions need to be reduced.

The Society of Automotive Engineers (SAE), the Mobile Air Conditioning Society Worldwide, and
EPA have organized a global voluntary partnership to promote improved air-conditioning systems
and service. This partnership includes environmental authorities from Australia, Canada, Europe, and
Japan; environmental and industry non-government organizations (NGOs); and global vehicle
manufacturers and their  suppliers. Measures to improve the environmental performance of vehicle
air-conditioning systems consider (1) both refrigerant and fuel consumption over the life of the
vehicle, (2) consumer demand for reliable and affordable transportation, and (3) requirements for
special safety systems and technician training.

The partnership has four goals:

• To promote  cost-effective designs and improved service procedures to minimize emissions from
  HFC-134a systems.

• To cooperate on developing and testing the next generation of mobile air-conditioning systems that
  satisfy customer requirements and environmental, safety, cost, and reliability concerns.

• To communicate technical progress to policymakers and the public.

• To document the current and near-term opportunities for improving the environmental
  performance of mobile air-conditioning system design, operation, and maintenance.

In 2003, the Mobile Air Conditioning Climate Protection Partnership:
• Confirmed in laboratory testing that air-conditioning systems using CO2, HFC-152a, and
  hydrocarbons can be designed to significantly reduce direct emissions of greenhouse gas refrigerant.

• Held meetings in Europe and North America, discussed the upcoming industry announcement,
  and helped organize the "2004 MAC  Summit" in Washington, D.C. to provide the latest technical
  information  to policymakers.

• Instituted the "Automotive Alternative Refrigerant Symposium" as an annual event to showcase
  technical presentations and road tests  of prototype motor vehicles using the new alternative
  refrigerants HC, HFC-152a, and CO2.

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                                      PROTECTING   THE   ENVIRONMENT — TOGETHER

                                       HIGH GWP ENVIRONMENTAL STEWARDSHIP PROGRAMS
In 2004, the High GWP Environmental Stewardship
Programs will:
• Participate in the preparation of the IPCC National
  Greenhouse Gas Inventory Guidelines for Industrial
  Processes and Product Use.
• Begin "rolling changes" in the design of mobile air-
  conditioning systems to reduce greenhouse gas refrigerants
  by 50 percent  and improve fuel efficiency by at least
  30 percent, based on an expected announcement at the
  April 2004 MAC Summit.
• Attend the 2004 MAC Summit at which vehicle
  manufacturers intend to announce that they will work
  cooperatively to improve  HFC-134a systems to reduce
  refrigerant greenhouse gas emissions by up to 50 percent
  and reduce fuel use for air-conditioning by up to 30 percent
  or more. It is estimated that these improvements will add
  $35 to $50 to the cost of producing new vehicles with
  payback in fuel savings within one or two years, and lifetime
  savings of over $400. By 2025, this technology will save
  3.7 billion gallons of fuel in the United States and a
  comparable amount in the rest of the world. The Mobile Air
  Conditioning  Partnership is developing a new strategy to
  promote these environmental and product improvements.
• Host the 3rd International Conference on SF6 and the
  Environment in Scottsdale, Arizona, in December 2004.
                         Conduct an SF6 circuit breaker leak rate field study to
                         evaluate the performance of new equipment.
                         Continue implementing agreements to reduce greenhouse
                         gas intensity for the aluminum, magnesium, and
                         semiconductor sectors through the President's  Climate
                         VISION initiative.
                         Maintain an effective partnership with HCFC-22 chemical
                         manufacturers to reduce emissions of HFC-23.
                         Continue to explore and document the performance of new
                         vehicle air-conditioning designs.
                         Carry out a follow-up study to characterize greenhouse gas
                         emissions as well as workplace health  and safety concerns
                         associated with alternative cover gas technologies as applied
                         to primary and/or secondary magnesium production.
                         Prepare a report on practical emissions reduction strategies
                         for small- and medium-sized semiconductor producers.
                         Assess the impact of semiconductor production migration
                         on Asian "foundry" operations and encourage  countries with
                         rapidly growing production such as China, Singapore, and
                         Malaysia to join the World Semiconductor Council and
                         establish PFC emissions reduction goals.
                         Expand the stewardship programs to reduce high GWP
                         emissions from other key sources, such as the ozone-
                         depleting substance replacement  industries.
TABLE 5.
Stewardship Programs: Annual Goals and Achievements
 TOTAL REDUCTIONS (MMTCE)

 VOLUNTARY ALUMINUM INDUSTRIAL
 PARTNERSHIP
 Industry Participation (% in program)
 Reductions (MMTCE)

 HFC-23 PARTNERSHIP
 Industry Participation (% in program)
 Reductions (MMTCE)1
 OTHER STEWARDSHIP PROGRAMS
 Industry Participation (% in program)
 Reductions (MMTCE)
2003 Goal

   8.6
   96%
   2.1
   100%
   4.9
50%-100%
    1.6
    2003
Achievement

     9.2
    98%
     2.1
    100%
     5.6
 45%-100%
     1.5
2004 Goal

   12.7
   98%
   2.2
   100%
   7.6
50%-100%
   2.9
 These goals have been adjusted downward to reflect lower than expected HCFC-22 production and the closure of one of the four
 U.S. HCFC-22 plants. The industry average HFC-23 emission factor actually declined more than expected.
 Participation varies from 45% of net generating capacity for electric power systems to 100% for primary magnesium producers.

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT

INTERNATIONAL CLIMATE PROTECTION AWARD WINNERS
                            In 1998, EPA established the Climate Protection Awards to recognize exceptional
                            leadership, personal dedication, and technical achievements in protecting the Earth's
                            climate. Since then, EPA has presented 93 awards to individuals and organizations from
                            16 countries, including Australia, Belgium, Brazil, Canada, Chile, China, France, India, Italy,
                            Japan, Mexico, the Netherlands, South Korea, Sweden, the United Kingdom, and the
                            United States. This year, 12 individuals and organizations earned the award by crafting
                            international, national, state, and local policies; by reducing energy consumption; and by
                            inventing technologies that protect the climate.

       CORPORATE AND GOVERNMENT AWARDS
       Interface, Inc.
       Kennesaw, GA
       Turbocor
       Dorval, Canada
       China Certification Center for Energy Conservation Products (CECP)
       Beijing, China
       New York State Energy Research and Development Authority (NYSERDA)
       Albany, NY
       City of San Diego
       San Diego, CA
       City and County of San Francisco
       San Francisco, CA
       European Commission Fluorinated Gas Team
       Brussels, Belgium
       ASSOCIATION AND TEAM AWARDS
       Electrical Inverter Air Conditioning System Team
       Kariya, Japan
       SF6 Emission Reduction Partnership for the Magnesium Industry and The
        International Magnesium Association
       Wauconda, IL
       INDIVIDUAL AWARDS
       Mayor David B. Cohen
       Newton, MA
       Harry Kauffman, HK Energy Consulting Inc.
       Lambertville, NJ
       Julia Martinez, Institute Nacional de Ecologfa
       Mexico City, Mexico

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                                        PROTECTING   THE   ENVIRONMENT — TOGETHER
ENERGY STAR and other voluntary programs have been
very successful during their first decade. They have
dramatically increased the use of energy-efficient products
and practices and reduced emissions of carbon dioxide, as
well  as methane and other greenhouse gases with very high
global warming potentials.
For the year 2003, these partnerships prevented 48.2 million
metric tons of greenhouse gas emissions (in MMTCE)—
equivalent to the annual emissions from 32 million vehicles—
while helping Americans save more than $8.2 billion.
And the benefits from these programs extend well beyond the
emissions reductions and dollar savings in the year 2003
alone. As the partnership programs spur investment in climate
friendly technologies and the purchase of energy-efficient
products, they create a stream of benefits that accrue over the
lifetime of the investment or product. Overall, the benefits
from the investments and product purchases of program
partners and  consumers through the year 2003 can be
summarized as follows:
* More than  650 million metric tons of greenhouse gas
  emissions are being avoided through 2013.

  Consumers and businesses have locked in investments in
  energy-efficient technologies exceeding $16 billion.
  Net of the  investments in energy-efficient technologies,
  consumers  and businesses are saving more than $89 billion
  cumulatively through 2013.
                                                                  BENEFITS OF VOLUNTARY PROGRAMS

                                                              The benefits (see Table ES-1 on page 3) and how they are
                                                              derived are described below for three key climate partnership
                                                              program areas: ENERGY STAR, Methane Programs, and
                                                              Environmental Stewardship Programs for the High GWP Gases.
                                                              ENERGY STAR. The estimated benefits from the ENERGY
                                                              STAR program reflect the stream of energy savings that will
                                                              persist through 2013 due to technology investments and
                                                              product purchases made through the year 2003 by ENERGY
                                                              STAR partners and due to the effects of markets already
                                                              transformed. The persistence is calculated by maintaining the
                                                              energy savings achieved in 2003 through the year 2013.  The
                                                              underlying assumption is that  the lifetime of most building
                                                              improvements and product purchases is at least 10 years. For
                                                              products with shorter lifetimes, such as computers, fax
                                                              machines, and audio equipment, it means that once
                                                              consumers buy ENERGY STAR qualified products, they are
                                                              expected to replace them with ENERGY STAR qualified
                                                              products. The benefits that can be attributed to pre-existing
                                                              trends are subtracted out of the estimated  ENERGY STAR
                                                              benefits presented in this 2003 annual report. From these
                                                              expected energy savings, benefits are determined in the
                                                              following manner:
                                                              » Emissions prevented are calculated as the product of the
                                                                energy savings (e.g., kWh of electricity) and an annual
                                                                emission factor (e.g., MMTCE prevented per kWh).
                                                              * The energy bill savings are determined as the product of the
                                                                energy saved and the cost of electricity for the affected
                                                                market segment, residential  or commercial.
                                                              • The net present value (NPV) of these savings are  calculated
                                                                using a 4-percent discount rate and a 2003 perspective.
10/Vef economic benefits are calculated by estimating the savings in energy expenditures by partners and customers of ENERGY STAR qualified products and subtracting any additional
  capital expenditures necessary to purchase qualified products, upgrade to ENERGY STAR specifications, or change from general operating procedures.
11

  provided by the Lawrence Berkeley National Laboratory for ENERGY STAR Qualified Products.
12,
13
Outlook 2004 for prospective prices.
The 4-percent discount rate used was taken from the Office of Management and Budget Circular 94.

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CLIMATE  PROTECTION   PARTNERSHIPS  DIVISION  2003  ANNUAL  REPORT
BENEFITS  OF VOLUNTARY PROGRAMS
                          In addition, EPA estimates the NPV of expenditures on energy-efficient technologies based on the
                          partners' or customers' cost of the energy-efficient equipment, including the cost of financing.  For
                          ENERGY STAR qualified products, expenditures were taken as the incremental increase in cost, if
                          any, of purchasing these products. For ENERGY STAR Building and Industrial Improvements,
                          expenditures include the capital costs of upgrading a building to ENERGY STAR specifications.
                          Finally, the NPV of the net savings is the difference between the NPV of energy bill savings and the
                          NPV of expenditures. It represents the net value to partners and ENERGY STAR product consumers
                          of participating in the program.

                          The estimated benefits for the ENERGY STAR Program from 1993 to 2013 are as follows:

                          Qualified  Products

                          • Preventing 122 MMTCE in greenhouse gas emissions.

                          • Catalyzing investment of $3.1 billion in climate friendly technologies.

                          • Providing energy bill savings net of investment of $44.5 billion.

                          Building and Industrial Improvements

                          • Preventing 209 MMTCE in greenhouse gas emissions.

                          • Catalyzing investment of $9.6 billion in climate friendly technologies.

                          • Providing energy bill savings net of investment of $42 billion.

                          Methane Programs. The benefits for programs with a small number of partners, such as Natural Gas
                          STAR and Landfill Methane, are calculated on a project-by-project basis from the list of projects that
                          the programs are known to have affected. Energy bill savings include the revenue from the sale of
                          methane and/or the sale of electricity made from the captured methane. The expenditures include the
                          capital costs agreed to by partners to bring projects into compliance with the Methane Programs'
                          specifications and any additional operating costs engendered by program participation. Both energy
                          bill savings and technology expenditures have been placed in net present value terms. These programs
                          are estimated to have the following benefits from 1993 through 2013:

                          • Preventing 171 MMTCE in greenhouse gas emissions.

                          • Catalyzing $3.4 billion in investment in climate friendly technologies.

                          • Providing energy bill savings net of investment of $3.0 billion.

                          Environmental Stewardship Programs for the High GWP Gases. The benefits for these programs
                          are derived from direct partner reports of the greenhouse gas emissions the partners have avoided.
                          Program partners are expected to maintain their investments in  technologies and practices through
                          2013. Expenditures and financial savings in the Environmental  Stewardship Programs are proprietary
                          and are not included in the summary of economic benefits and  expenditures. The programs are
                          estimated to have the following benefits  from 1993 through 2013:

                          • Preventing 144 MMTCE in greenhouse gas emissions.
     ^The NPV of these expenditures was calculated using a 4-percent real discount rate and a 2003 perspective.

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                                       PROTECTING   THE   ENVIRONMENT — TOGETHER
REFERENCES
Andersen, S.O. and D. Zaelke. 2003. Industry Genius: Inventions and People Protecting the Climate and Fragile Ozone Layer.
Greenleaf Publishing. July.
Climate Protection Partnerships Division, U.S. Environmental Protection Agency. Partner and emissions data for 2003 provided by
individual programs and partnerships in the Division.
Energy Information Administration (EIA). 2003. Annual Energy Review 2003- Office of Markets and End Use. Available online at
www.eia.doe.gov/aer/contents.html.
EIA. 2004. Annual Energy Outlook 2004 with Projections to 2025. Office of Integrated Analysis and Forecasting. January. (DOE/EIA-0383(2004)).
Horowitz, M.J. 2001. "Economic Indicators of Market Transformation: Energy Efficient Lighting and EPAs Green Lights."
The Energy Journal 2(4):95-l22.
ICF Consulting Inc. 2004. An Estimate of Emissions Reductions Accomplished by ENERGY STAR Industrial Partners. EPA Climate
Protection Partnerships Division.
Innovest Strategic Value Advisors. 2002. Energy Management and Investor Returns: The Real Estate Sector. October.
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, UK.
Koomey, J., A. Rosenfeld, and A. Gadgil. 1990.  Conservation Screening Curves to Compare Efficiency Investments at Power Plants.
Lawrence Berkeley National Laboratory. October.  (LBNL-27286).
Lawrence Berkeley National Laboratory. 2004. Memorandum to U.S. EPA. April.
National Petroleum Council. 2003. Balancing Natural Gas Policy — Fueling the Demands of a Growing Economy. Available at http://npc.org/
U.S. Department of State. 2002. U.S. Climate Action Report 2002.  Washington, D.C. May. Available online at
http://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsUSClimateActionReport.html
U.S. Environmental Protection Agency. 2004. Inventory of Greenhouse Gas Emissions and Sinks: 1990-2002. Office of Atmospheric
Programs. April. (EPA 430-R-04-003). Available online at
http://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsGHGEmissions.html
Webber,  C.A., R.E. Brown, M. McWhinney, and J.G. Koomey. 2004. 2003 Status Report: Savings Estimates for the ENERGY STAR
Voluntary Labeling Program (DRAFT).  Lawrence Berkeley National Laboratory. July. (LBNL-51319).


FIGURES AND TABLES
Figure ES-1. Division greenhouse gas emissions avoided compared to program goals 	      2
Figure ES-2. Annual savings in energy use as a result of CPPD's partnership programs	      5
Figure ES-3. Annual greenhouse gas emissions avoided can be more than doubled by 2012  	      6
Figure 4.    Projected reductions in greenhouse gas emissions due to Administration Climate Policy	      7
Figure 5.    U.S. greenhouse gas emissions by sector and by gas	      8
Figure 6.    More than 50% of projected energy use 10 years from now will come from
            equipment purchased between now  and then  	     10
Figure 7.    Greenhouse gas emissions  (of the average home and the average vehicle) 	     15
Figure 8.    Partner actions are projected to maintain  methane emissions below
            1990 levels through 2012	     26
Figure 9.    Partner actions can maintain voluntary program sector emissions of high
            global warming potential gases  at or below 1990 levels through 2012	     36

Table ES-1.  Summary of the benefits for 2003 and cumulative benefits through 2013 from the
            actions taken by partners through 2003  	      3
Table 2.     Global warming potentials (GWPs)  and atmospheric lifetimes of greenhouse gases	      9
Table 3.     ENERGY STAR Program: Annual Goals and Achievements  	     13
Table 4.     Methane Programs: Annual Goals and Achievements 	     34
Table 5.     Stewardship  Programs: Annual Goals and Achievements 	     41

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CLIMATE  PROTECTION  PARTNERSHIPS  DIVISION  2003  ANNUAL   REPORT
COMPANIES AND  ORGANIZATIONS MENTIONED IN THIS REPORT
3M	20, 22, 23, 39
Ace Hardware Corporation	22
Advanced Micro Devices, Inc	23
Alliance of Automobile Manufacturers	21
Ameresco	28, 29
American Electric Power	23
American Hotel & Lodging Association	22
American Petroleum Institute	30
Antioch Community High School	28
Architectural Energy Corporation	22
Austin Energy Domain Project  	24
Austin Grill	25
BMW	25, 28, 29
BP
31
BP Global Power/Cinergy Solutions, Inc.
    South Houston Green Power 2	24
BP Solvay Polyethylene North America	24
Building Performance Institute	  16, 17
Calpine Corporation Deer Park Energy Center	24
CAST Research Centre	39
CenterPoint Energy	22
ChevronTexaco	32
China Certification Center for
    Energy Conservation Products	42
Cinergy Corp	23
City and County of San Francisco	42
City of Moab	25
City of Portland	25
City of San Diego	25, 42
ClifBar	25
Columbia Gas of Ohio (A NiSource Company)	31
Columbia Gas Transmission (A NiSource Company)	32
Columbia Gulf Transmission (A NiSource Company)	32
Commonwealth Edison	28
CONSOL Energy	34
Consortium for Energy Efficiency	 19
D.R. Wastchak, LLC	22
David Powers Homes	22
Dell, Inc	22
Domaine Carneros Winery	25
Dow Jones	20
Dreyfus	20
Dyess Air Force Base	25
Eastman Kodak Company	22, 23
ei3 Corporation	22
Efficiency Vermont	22
El Paso Pipeline Group	31
Electrical Inverter Air Conditioning System Team	42
Ence Homes	22
Energy Services Group	22
Engle Homes Colorado, a division of TO USA Homes, Inc. . 22
European Commission Flourinated Gas Team	42
Fairfax County Public Schools	22
Fala Direct Marketing Group	25
Federal Energy Regulatory Commission	29
Financial Times/London Stock Exchange	20
Food Lion, LLC	4, 22
FPL Group	23
Fremont Unified School District	22
GE Consumer Products	22
General Motors Corporation	22, 27, 29
Giant Eagle, Inc	  19, 22
Good Earth Lighting, Inc	22
Gold Kist	29
Gorell Enterprises, Inc	22
Green Mountain College	22
Harrah's Entertainment, Inc.
   Rio All-Suite Hotel & Casino	24
Hayward Lumber	25
Hines	22
HK Energy Consulting Inc	42
Illinois Department of Commerce
   and Economic Opportunity	28
Indoor Environmental Services	22
Innovest	 18
Institute Nacional de Ecologfa	42
Intel Corporation	22
Interface, Inc	23, 42
Intermet	39
International Aluminum Institute	37
International Paper	23
Japans Ministry of International Trade and Industry	38
Johnson & Johnson	23, 25
Kerr-McGee Oil & Gas Corporation	32
Kinko's, Inc	25
Lennox Industries Inc	22
Little Company of Mary Sisters	20
Lowe's Companies, Inc	10, 13, 22
Loyola Marymount University	25
MaGrann Associates	22

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                                      PROTECTING   THE   ENVIRONMENT — TOGETHER
                            COMPANIES AND ORGANIZATIONS MENTIONED IN THIS REPORT
Maytag Corporation	22
Metals, Minerals, and Materials Society	39
Minnesota Power, an ALLETE Company	22
Mobile Air Conditioning Society Worldwide	40, 41
National Association for Technician Excellence	 17
National Mining Association	34
National Petroleum Council	 11
Neuberger Berman	20
Nevada ENERGY STAR Partners	  16, 22
Nevada Power Company	22
New England Joint Management Committee	22
New York State Energy Research and
    Development Authority	  16, 22, 42
Northeast Energy Efficiency Partnerships, Inc	22
Northern Natural Gas	32
Northwest Energy Efficiency Alliance	  19, 22
NSTAR	 19
Oncor Electric Delivery Company	22
Pacific Gas and Electric Company	  17, 22, 39
Panasonic	22
Pardee Homes	  14, 22
PEPCO	29
Pfizer, Inc	23
PJM Interconnection	29
Plasma Etch User's Group	38
Portland Cement Association	21
Prince Georges County, Maryland	29
Prince George's County Correctional Center	29
Providence Health System	20, 22
PSEG	23
Pulte Homes Nevada Operations	22
RMT	28
Sacramento Municipal Utility District	22
San Diego Gas and Electric	  17, 22
Sea Gull Lighting Products, Inc	  14, 22
Sears, Roebuck and Co	22
Servidyne Systems, LLC	22
Sierra Pacific Power Company	22
Sisters of Providence	20
Society of Automotive Engineers	40
Solano County	25
South Carolina Energy Office	28
Southern California Edison	  17, 22
Southern California Gas Company	  17, 22
Southern Minnesota Municipal Power Agency	22
St. Lawrence Cement	23
Staples	23
State of Illinois	28
State of New Jersey- NJCESP	25
State of New York	 19
SYLVANIA	22
The Aluminum Association	36
The California Investor-Owned Utilities	  17, 22
The Calvert Group	20
The Conference Board	20
The Home Depot	22
The Institute for Sustainable Energy at Eastern
   Connecticut State University	22
The International Magnesium Association	39, 42
The Procter and Gamble Company	22
The Tower Companies	25
Toyota Motor Sales, USA, Inc	25
Transwestern Commercial Services	22
Turbocor	42
U.S.  Department of Agriculture	35
U.S.  Department of Energy	4, 12, 16, 17, 27, 34
U.S.  Department of Housing and Urban Development	 17
United Technologies Corporation	23
University of Michigan	22
University of North Carolina at Chapel Hill	24
University of Pennsylvania	25
University of Pittsburgh	22
USAA Real Estate Company	22
Veridian Homes	22
Vermont Energy Investment Corporation	22
Vermont ENERGY STAR Homes Service	22
Vermont Gas Systems	22
Village of Poultney, Vermont	22
VP Buildings, Inc	22
Wal-Mart Stores, Inc	22
Waste Management	28
Western Gas Resources,  Inc	30, 31
Whirlpool Corporation	22
White Wave	25
Williams Hardware	22
Wisconsin ENERGY STAR Homes/Focus on Energy	  16, 22
World LCD Industry Cooperation  Committee	38
World Resources Institute	29
World Semiconductor Council	38, 41

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United States
Environmental Protection Agency
Air and Radiation 6202J
EPA430-R-04-011
www.epa.gov
September 2004

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