Identifying Incentives and Barriers to Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Congressional research reportJan 25, 2010
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Identifying Incentives and Barriers to Federal
Agencies Achieving Energy Efficiency and
Greenhouse Gas Reduction Targets
(name redacted)
Specialist in Energy and Energy Infrastructure Policy
(name redacted)
Specialist in Energy Policy
January 25, 2010
Congressional Research Service
7-....
www.crs.gov
R41040
CRS Report for Congress
Prepared for Members and Committees of Congress
Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Summary
This report identifies incentives for and barriers to federal agencies achieving the energy
efficiency goals and greenhouse gas (GHG) reduction targets outlined in recent laws and
executive orders.
The federal government is the single largest consumer of energy in the United States, but
consumes only 1% of the total energy used. Federal energy spending represents upwards of 1% of
its total budget (discretionary and mandatory spending). Since the 1970s, Congress has enacted
various laws that reduce energy consumption in the federal sector by improving energy efficiency.
The Energy Policy Act of 2005 (EPAct 2005) included measures to reduce energy and water in
congressional buildings, install advanced meters to reduce electricity use in federal buildings,
enact performance standards to improve federal buildings, and to reduce the federal government’s
electric energy consumption through renewable energy offsets (P.L. 109-58). The Energy
Independence and Security Act of 2007 (EISA) mandated further energy savings measures in
government operations, including energy upgrades to the Capitol complex, permanent authority
to use “energy savings performance contracts,” and federal procurement of energy efficient
products and renewable fuels (P.L. 110-140).
Two recent executive orders guide federal agencies in reducing energy consumption and GHG
emissions. In 2007, Executive Order 13423, Strengthening Federal Environmental Energy, and
Transportation Management directed federal agencies to improve energy efficiency and reduce
greenhouse gas emissions by reducing energy intensity. In 2009, Executive Order 13514, Federal
Leadership in Environmental, Energy, and Economic Performance established GHG emissions
reduction goals for federal agencies.
Federal agencies can take advantage of several financing mechanisms to make energy efficiency
improvements without increasing their operating budgets. These include Energy Savings
Performance Contracts, Utility Energy Savings Contracts, and Power Purchase Agreements. In
some cases, agencies may share in the savings gained from reduced energy costs made through
the improvements. New authority to combine appropriated funds with energy savings
performance contracts could further energy efficiency improvements, but the lack of federal rules
delays implementation. However, federal agencies may be reluctant to participate in this
financing option if it reduces their opportunity to retain savings from the improvements.
The new GHG reduction goals come after three decades of effort to reduce energy consumption.
GHG emissions associated with operating federal buildings result from consuming fossil fuels
used in generating electricity and heating. Significant energy reduction resulted early from easily
achievable, low-cost improvements that translate into GHG reductions. The opportunity for GHG
reductions in the future may come through smaller, more difficult to achieve reductions in energy
consumption based on high-tech solutions.
The prospect of reducing the federal budget by reducing energy consumption may be low.
However, policy makers may wish to weigh direct monetary savings against the benefits of clean
energy in terms of avoided emissions of regulated pollutants and greenhouse gases.
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Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Contents
Background ...................................................................................................................................... 1
Federal Energy Management Program Incentives ........................................................................... 2
Energy Savings Performance Contracts .................................................................................... 2
Utility Energy Services Contracts ............................................................................................. 2
Power Purchase Agreements ..................................................................................................... 3
Incentives for Achieving Energy Efficiency and GHG Reduction Goals ........................................ 3
Energy Independence and Security Act of 2007........................................................................ 3
Subtitle B, Energy Savings Performance Contracting ........................................................ 3
Subtitle C, Energy Efficiency in Federal Agencies ............................................................. 4
American Recovery and Reinvestment Act of 2009.................................................................. 4
Title III—Department of Defense (DOD), Facility Infrastructure Investments .................. 4
Title III—Department of Defense (DOD), Near Term Energy Efficiency
Technology Demonstrations and Research Program........................................................ 5
Title V—General Services Administration (GSA), High-Performance Green
Buildings .......................................................................................................................... 5
Title V—General Services Administration (GSA), High Fuel Economy Vehicles ............. 5
Title X—Department of Veterans Affairs ............................................................................ 5
Policy Considerations—Barriers to Achieving Energy Efficiency and GHG Reduction
Goals ............................................................................................................................................. 6
Tables
Table A-1. Meeting EPAct 2005 Renewable Energy Goals Through EO 13423 ........................... 13
Table A-2. EO 13423 vs. EO 13514 .............................................................................................. 14
Appendixes
Appendix. Recent Laws and Executive Orders ............................................................................... 9
Contacts
Author Contact Information........................................................................................................... 15
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Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Background
In FY2006, the federal government spent approximately $17.7 billion for 1.1 quads of sitedelivered energy for buildings and fuel for vehicles. Buildings consumed roughly 40% of energy
end-use, while vehicles consumed the remaining and most significant portion—63%. Overall,
energy costs represented less than 1% of the total federal (discretionary and mandatory) spending
for that year, roughly $2,655 billion (1.7 % if compared to discretionary spending only, some
$1,017 billion). In the larger picture, federal energy consumption represented only 1.1% of the
total United States energy use in 2006—99.61 quads. The federal government is the largest single
purchaser of energy in the United States. Advocates for improving energy efficiency, achieving
energy independence, and reducing greenhouse gas (GHG) emissions believe the federal
government can show leadership by reducing its federal energy use.
Federal government initiatives to reduce energy consumption originated with the Federal Energy
Management Program (FEMP) in 1973. The 1978 National Energy Conservation Policy Act
(NECPA—P.L. 95-619) instituted the program of retrofitting federal buildings to improve energy
efficiency. The 1985 Deficit Reduction Act (P.L. 99-272) amended NECPA by authorizing energy
savings contracts of up to 25 years. NECPA also required that federal agencies report the energy
consumed annually by their buildings, operations, and vehicles. FEMP compiles the consumption
data and estimates related carbon emissions (excluding certain exempt facilities) in an annual
report to Congress.
In 1988, the Federal Energy Management Improvement Act (P.L. 100-615) amended NECPA by
requiring federal agencies to achieve a 10% reduction in energy consumption in federal buildings
by FY1995 when measured against an FY1985 baseline in terms of British thermal units per
gross square-foot (Btu/gsf) of building floor-space.
The 1992 Energy Policy Act (P.L. 102-486) further amended NECPA by adopting direct and
indirect incentives to promote energy efficiency in federal buildings. It authorized and
encouraged agencies to participate in utility-offered programs to increase energy efficiency, water
conservation, and electricity demand. The act authorized agencies to accept any financial
incentive, goods, or services that utilities offered to increase energy efficiency, conserve water, or
manage electricity demand, and encouraged agencies to enter into negotiations addressing the
unique needs of their facilities. A financial bonus program, established by the act, provided direct
financial incentives to reward outstanding federal facility energy managers. Energy Savings
Performance Contracts (ESPCs) authorized under the act, offered federal agencies indirect
incentives to make energy efficiency improvements through private funding that agencies pay
back with energy savings.
The Energy Policy Act of 2005 (EPAct 2005) included various provisions for reducing energy and
water use in federal buildings. The Energy Independence and Security Act of 2007 (EISA)
mandated further energy savings measures throughout government operations and facilities, and
permanently reauthorized “energy savings performance contracts.” Executive Order 13423
(Strengthening Federal Environmental Energy, and Transportation Management) directed federal
agencies to reduce GHG emissions by reducing energy intensity. Executive Order 13514 (Federal
leadership in Environmental, Energy, and Economic Performance) followed with GHG reduction
goals for federal agencies. The relevant provisions in the two recent laws affecting federal energy
use are available in the Appendix to this report along with summaries of the executive orders.
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Federal Energy Management Program Incentives
The Federal Energy Management Program (FEMP) provides federal agencies with assistance in
implementing energy management and investment practices. FEMP supports federal agencies in
identifying, obtaining, and implementing alternative financing to fund energy projects. The
following paragraphs describe several alternative financing mechanisms.
Energy Savings Performance Contracts
Through Energy Savings Performance Contracts (ESPC), federal agencies may use an energy
service company (ESCO) to accomplish energy-efficiency improvement projects without
incurring up-front capital cost or requiring special appropriations. An ESCO may provide a
comprehensive energy audit of the federal facility, identify improvements to save energy,
recommend and install the improvements, and arrange financing. The ESCO guarantees that the
improvements will generate energy cost savings sufficient to pay for the project over the term of
the contract (terms up to 25 years are allowed). After the contract ends, all additional cost savings
accrue to the agency. FEMP-streamlined “Super ESPCs” allow agencies to undertake multiple
energy projects under the same contract in order to bypass cumbersome procurement procedures.
The Congressional Budget Office (CBO) scores ESPCs as future financial obligations on the
federal government. CBO began scoring ESPCs as mandatory spending when the 1990 Budget
Enforcement Act (P.L. 101-508) pay-as-you-go (PAYGO) rules expired. The CBO scoring reflects
how ESPCs create future commitments to appropriations, consistent with how appropriationsfunded energy conservation improvement would be scored throughout the budget.
The Government Accountability Office (GAO) determined that federal agencies could achieve the
benefits of ESPCs with lower financing costs by using upfront funds (that is, full funding in
advance). As federal agencies generally did not receive sufficient funds upfront to make energy
efficiency improvements, they had to rely on ESPCs in meeting their energy conservation goals.
Agencies had previously indentified energy conservation improvements in their annual budget
requests until the National Energy Policy Act 1992 allowed federal agencies to treat energy
conservations measures as “energy costs to be incurred in operating and maintaining (O&M)
agency facilities.” EISA 2007 now permits federal agencies to use a combination of appropriated
funds and private financing for ESPCs. DOE interprets this provision as explicitly authorizing the
payments from one-time avoided costs that originate from authorized sources, including
appropriations specifically for energy improvements. However, how agencies practicably apply
appropriated O&M funds to ESPCs is unclear, as DOE has not yet promulgated rules on the new
authority. The Office of Management and Budget (OMB) indicates in Circular No. A-11 (2009)
that consistent with 42 U.S.C. 8255 agencies should identify funds requested for energy
conservations measures in their budget justification.
Utility Energy Services Contracts
Through Utility Energy Service Contracts (UESCs), a utility arranges financing to cover the
capital costs of energy improvement projects, which an agency then repays the utility over the
contract term from cost savings generated by the energy efficiency measures. This arrangement
allows an agency to implement energy improvements with no initial capital investment. The net
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cost to the agency is minimal, and the agency saves time and resources by using the one-stop
shopping provided by the utility.
Power Purchase Agreements
Power Purchase Agreements (PPAs) allow agencies to finance on-site renewable energy projects
without incurring up-front capital costs. A private developer installs, operates, maintains, and
owns the renewable equipment on an agency’s property. The agency, in turn, agrees to purchase
the power generated by the system and pay for the system over the life of the contract. A PPA
offers the developer eligibility for tax incentives and accelerated depreciation. The agency
benefits by avoiding the need for up-front capital.
Incentives for Achieving Energy Efficiency and
GHG Reduction Goals
Executive Order (EO) 13423 mandated energy reduction and increased renewable energy goals,
and EO 13514 places sustainability and GHG emission-reduction at the core of federal agency
missions with a senior executive responsible for meeting the reduction goals. Earlier legislation
provided incentives for meeting the goals. Provisions in the American Recovery and
Reinvestment Act of 2009 (ARRA—P.L. 111-5) provide funds for facility energy improvements,
energy efficient vehicles, and miscellaneous energy projects. The Energy Independence and
Security Act of 2007 (EISA—P.L. 110-140) expanded energy improvement financing, and
authorized further retention of energy savings. The following paragraphs summarize the key
provisions affecting federal agencies.
Energy Independence and Security Act of 2007
Subtitle B, Energy Savings Performance Contracting
Energy Savings Performance Contracts (ESPCs), first authorized in 1992 amendments to the
National Energy Conservation Policy Act, offer federal agencies a novel means of making
energy-efficiency improvements to aging buildings and facilities without direct appropriation. A
contractor privately finances and installs the energy conservation measures, and in return receives
a specified share of the resulting energy cost savings. Agencies pay for the improvements through
their annually appropriated operating funds. EISA included seven provisions that provided
flexibility in funding ESPCS, increased their contract life and scope, and made their authorization
permanent.
Section 512 (Financing Flexibility) increased ESPC funding flexibility by allowing a combination
of appropriated funds and private financing.
Section 513 (Promoting Long-Term Energy Savings Performance Contracts and Verifying
Savings) restricted federal agencies from limiting the duration of ESPCs to less than 25 years or
limiting the total amount of obligations. Further, this section permits the criteria for savings
verification to satisfy the requirement for energy audits. The section also directed federal agencies
to modify existing ESPCs to conform to the requirements of this subtitle.
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Section 514 (Permanent Reauthorization) permanently authorized ESPCs.
Section 515 (Definition of Energy Savings) extended the definition of energy savings reduction to
include increased use of an existing energy source by cogeneration or heat recovery, use of excess
electrical or thermal energy generated from onsite renewable sources or cogeneration, and
increased energy-efficient use of water resources.
Section 516 (Retention of Savings) permitted agencies to retain the full amount of energy and
water cost savings obtained from utility incentive programs.
Section 517 (Training Federal Contracts Officer to Negotiate Energy Efficiency Contracts)
authorized $750,000 per year over five years for a program to train contract officers in
negotiating ESPCs.
Section 518 (Study of Energy and Cost Savings in Nonbuilding Applications) directed the
Department of Defense (DOD) and DOE to study the potential use of ESPCs in nonbuilding
applications, defining them to include vehicles and federally owned equipment to generate
electricity or transport water.
Subtitle C, Energy Efficiency in Federal Agencies
Section 521 (Installation of Photovoltaic System at Department of Energy Headquarters Building)
directed the General Services Administration (GSA) to use up to $30 million—subject to
appropriation—from FY2007 and prior years’ unobligated balances of the Federal Buildings
Fund to support the installation of a solar photovoltaic system for the DOE headquarters building
in the District of Columbia.
American Recovery and Reinvestment Act of 2009
ARRA emphasized jobs, economic recovery, and assistance to those most impacted by the
recession. It provided nearly $5 billion for “leadership by example” efforts to improve energy
efficiency in federal buildings and facilities. The law puts the GSA at the forefront of this effort,
with $4.5 billion for “high performance” federal facilities. For Department of Defense facilities,
ARRA provided up to $3.7 billion for improvements that have a focus on energy efficiency. The
Department of Transportation received $100 million for “reducing energy consumption or
greenhouse gases.” The Department of the Interior ($1 billion) and Department of Veterans
Affairs ($1 billion) received multi-purpose funds that they can apply to “energy efficiency” or
“energy projects.”
Title III—Department of Defense (DOD), Facility Infrastructure Investments
DOD accounts for approximately 63% of the energy consumed by federal buildings and other
facilities. The department’s activities occupy more than 316,000 buildings and an additional
182,000 structures on 536 military installations worldwide. DOD’s annual spending on facility
energy use was more than $3.4 billion in FY2007. This makes DOD the single largest energy
consumer in the nation, even though the agency consumption comprises only 1% of the national
total for site-delivered energy.
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Of the $4.24 billion that ARRA provides for DOD’s Facilities Sustainment, Restoration, and
Modernization (FSRM) account, ARRA directs that $3.69 billion be used “to invest in energy
efficiency projects and to repair and modernize” DOD facilities. The FSRM account covers
expenses associated with maintaining the physical plant at DOD posts, camps, and stations. The
conference report directs that FSRM funding is available only for facilities in the United States
and its territories.
Title III—Department of Defense (DOD), Near Term Energy Efficiency
Technology Demonstrations and Research Program
ARRA provides $300 million for this program, encompassing $75 million each for Army, Air
Force, Navy, and Defense-wide funding of research, development, test and evaluation projects,
including pilot projects, demonstrations and energy-efficient manufacturing enhancements.
Title V—General Services Administration (GSA), High-Performance Green
Buildings
EISA established the structure for an Office of Federal High-Performance Green Buildings in the
General Services Administration (GSA). The office is responsible for developing a program to
reduce total energy use in federal buildings 30% by 2015 relative to the 2005 level. Further,
agencies must reduce fossil energy use in new federal buildings and major renovations by 55% by
2010 relative to the 2003 level and eliminate fossil energy use by 2030. EISA required GSA to
establish an Office of Federal High-Performance Green Buildings to coordinate green building
information and activities within GSA and with other federal agencies. The office must also
develop standards for federal facilities, establish green practices, review budget and life-cycle
costing issues, and promote demonstration of innovative technologies.
ARRA provided $5.5 billion for the Federal Buildings Fund, and designated that at least $4.5
billion apply to converting GSA facilities to high-performance green buildings. ARRA also
provided $4 million to support the operations of GSA’s Office of Green Buildings.
Title V—General Services Administration (GSA), High Fuel Economy Vehicles
Under the Energy Policy Act of 1992 (P.L. 102-486), 75% of the vehicles federal agencies
purchase in a given fiscal year must be capable of running on alternative fuel, which may include
hybrid and electric drive. ARRA appropriated $300 million for GSA to procure energy-efficient
motor vehicles. Eligible vehicles include hybrids, plug-in hybrids, and pure electric vehicles.
Title X—Department of Veterans Affairs
ARRA provided $1 billion to the Department of Veterans Affairs for non-recurring maintenance
of medical facilities that include energy projects. The funds remain available for obligation
through the end of FY2010, however.
ARRA also provided an additional $50 million to the National Cemetery Administration for
monument and memorial repairs “including energy projects.”
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Policy Considerations—Barriers to Achieving
Energy Efficiency and GHG Reduction Goals
The GHG emission reduction goals of EO 13514 represent new initiatives that the federal
government may only realize in the near term through incremental improvements in energy
efficiency or reduced energy use. The new goals come at a time when the federal government
may have already accomplished the easiest and most cost effective improvements.
EO 13123 had set goals for reducing GHG emissions associated with building energy-use. EO
13423, however, revoked the previous order and redefined GHG reduction in the context of
reducing energy intensity but without quantitative GHG reduction goals. EO 13415 now directs
federal agencies to set GHG reduction targets.
FEMP developed a method for estimating emissions of carbon dioxide, methane, and nitrous
oxide from agency energy use based on the energy data provided by federal agencies. The largest
component of GHG emissions from energy use is carbon dioxide. FEMP’s 2008 report to
Congress states that in FY2006, federal buildings reduced carbon dioxide by 7.4% compared to
FY2003 (from 46.3 million metric tons to 42.8 million metric tons).
EISA set targets and dates to reduce energy use in existing federal buildings 30% by 2015 and for
new federal buildings 100% by 2030. In its recent report on federal energy management, GAO
concluded that agencies would likely face challenges meeting EISA energy-reduction goals. GAO
views long-term funding and capital budgeting issues, specifically the requirements for
recognizing capital costs up front in the federal budget, as key challenges to agencies’ ability to
meet all of EISA’s high-performance federal building requirements.
In citing draft DOE data on federal energy intensity reduction for 2008, GAO notes that federal
agencies rely on, and will continue to rely on, renewable energy credits (RECs), rather than sitegenerated renewable energy to meet EISA goals.1 Generators usually sell RECs in one megawatthour units, and may sell them separately from the physical electricity with which they are
associated. This provides customers the flexibility to offset a percentage of their annual energy
use with RECs generated elsewhere (but not necessarily transmitted through the grid to them).
Wind-generated electricity currently accounts for most renewable energy purchased by the federal
government, but offers agencies limited potential for site-generated energy. Consequently,
agencies purchase wind RECs to take advantage of the source. Solar photovoltaic electricity does
offer agencies the opportunity for site-generated renewable energy, primarily throughout the
Southwestern regions of the United States and Hawaii. In cases where DOD installations may
offer property to developers of photovoltaic farms (through enhanced use lease authority under 10
U.S.C. 2667), DOD may still have to purchase the generated electricity through the grid (i.e., as
RECs). It is not clear whether an agency will be able to take advantage of the double-credit for
site-generated renewable energy under EO 13423.
1
U.S. Government Accountability Office, Federal Energy Management - Addressing Challenges through Better Plans
and Clarifying the Greenhouse Gas Emission Measure Will Help Meet Long-term Goals for Buildings, GAO-08-977,
September 2008, p. 4, http://www.gao.gov/new.items/d08977.pdf.
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The Alliance to Save Energy concluded over a decade ago that dispersed decision-making among
federal agency staff, and each agency’s unique legal requirements and stakeholder demands,
create barriers to increased energy efficiency.2 The Alliance identified several specific barriers
that remain relevant to varying degrees:
•
Energy efficiency is not a core-mission of agency.
•
Agencies lack personnel skilled in energy matters.
•
Capital budgeting for energy improvements up front is difficult.
•
Budget shortfalls.
•
Too many decision makers.
•
Lack of carrots and sticks to change institutional behavior.
Since the Alliance’s report, agencies have taken advantage of energy manager training and
incentives such as ESPCs. Capital budgeting still offers challenges, as discussed further below.
Finally, electricity represented only 1.06 quads or 17.6% of total federal energy-use in 2006.
Buildings consumed the power almost exclusively. The federal government spent roughly $3.7
billion at an average cost of $78/megawatt-hour. Spending on electricity represented the
equivalent of one-third of 1% of the federal discretionary budget. At that time, electricity rates
ranged from 8.2¢/kilowatt-hour for industrial users to 12.0¢/kilowatt-hour for commercial users
(or $82 to $120/megawatt-hours). EISA’s 30% energy reduction goal for federal buildings could
represent a $1.1 billion in savings if the reduction comes from reduced electricity use, assuming
rates stayed constant. This would equate to roughly one-tenth of 1% of the 2006 discretionary
budget.
In the case of ESPCs, agencies “locked-in” the pre-improvement budget for energy in order to
pay for the energy improvement, which also allows the agencies to retain the balance of their
energy savings. Under EISA, agencies may now combine appropriated funds with the contractorfinanced portion of the improvement. DOE has not yet promulgated final rules on agencies’ use
of appropriated funds for this purpose. In the case of the Department of Defense, capital
construction and operating budgets are separate appropriations. Under the EISA/ESPC provision,
a DOD facility could feasibly benefit from improvements under both funding mechanisms. This
may not be a clear-cut case for agencies with combined capital and operating budgets.
The federal government’s prospect of seeing energy reduction translated into a budget reduction
may be low. However, policy makers may want to weigh the direct monetary savings against the
clean energy benefits of renewable energy in terms of avoided emissions of regulated pollutants
and greenhouse gases to the environment.
When the federal government embarked on its energy efficiency mission (following NECPA), the
highest payback came from low cost, easily achieved improvements; for example, replacing
incandescent lights with fluorescent lights, adding insulation, and upgrading window glazing.
Further energy reduction came from, and most likely will continue to depend on, improved
technology; examples include ENERGY STAR products, and more-efficient heating-ventilation2
Alliance to Save Energy, Improving Energy Productivity in Federal Government Facilities, 1998, http://ase.org/
content/article/detail/885.
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and-cooling (HVAC) equipment. Policy makers may wish to question whether further
improvements may come in smaller increments at increasingly higher costs.
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Appendix. Recent Laws and Executive Orders
Two recent laws have provisions aimed at improving energy efficiency in federal facilities: the
Energy Policy Act of 2005 (EPAct 2005)3 and the Energy Independence and Security Act of 2007
4
(EISA). Two recent executive orders (EOs) complement the laws and provide federal agencies
further guidance: EO 13423, Strengthening Federal Environmental, Energy and Transportation
Management, and the more recent EO 13514, Sustainability and Greenhouse Gas Emissions
Reduction. Summaries of the applicable law provisions and discussion of the executive orders
follow below.
Energy Policy Act of 2005 (P.L. 109-58)
EPAct 2005 included three provisions to reduce energy consumption and improve energy
efficiency in federal agencies: smart meters to monitor electricity use, efficiency standards to
reduce energy consumption in new buildings, and increased renewable energy use.
•
Section 103 (Energy use measurement and accountability) amended Section 543
of the NECPA by directing federal agencies to install advanced meters to monitor
and thus reduce electricity use in federal buildings.5 Agencies have until October
1, 2012, to complete their installation.
•
Section 109 (Federal building performance standards) amended the Energy
Conservation and Production Act6 by adopting the 2004 International Energy
Conservation Code. It also revised energy efficiency standards and mandated a
30% reduction in energy consumption of new federal buildings compared to
previous standards.
•
Section 203 (Federal purchase requirement) required the federal government to
offset its electric energy consumption with an increasing percentage of
“renewable energy” starting at 3% in 2005 to not less than 7.5% by 2013 and
each fiscal year thereafter.7 EPAct 2005 defines renewable energy as electrical
energy generated from solar, wind, biomass, landfill gas, ocean (including tidal,
wave, current, and thermal), geothermal, municipal solid waste, or new
hydroelectric generation capacity achieved from increased efficiency or additions
of new capacity at an existing hydroelectric project.
Energy Independence and Security Act of 2007 (P.L. 110-140)
Title IV, Subtitle C (High-Performance Federal Buildings) included six provisions to reduce
energy consumption and improve energy efficiency in federal agencies: building energy
3
See CRS Report RL33302, Energy Policy Act of 2005: Summary and Analysis of Enacted Provisions, by (name redacted) et
al..
4
See CRS Report RL34294, Energy Independence and Security Act of 2007: A Summary of Major Provisions, by (name
redacted).
5
See Department of Energy, Guidelines for Electric Metering in Federal Buildings, DOE/EE-0312, February 3, 2006.
6
42 U.S.C. § 6834.
7
42 U.S.C. § 15852(a).
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reduction, agency energy managers, fossil energy elimination in new buildings, building
equipment efficiency, leasing energy efficient buildings, and “green” building standards.
•
Section 431 (Energy reduction goals for federal buildings) amended the National
Energy Conservation Policy Act (NECPA) mandating a 30% reduction of energy
use in federal buildings by 2015 relative to a 2005 baseline.8
•
Section 432 (Management of energy and water efficiency in federal buildings)
amended NECPA (42 U.S.C. 8253) by adding a new subsection titled “(f) Use of
Energy and Water Efficiency Measures in Federal Buildings.” It defines
“commissioning, energy manager, facility, life cycle cost-effective, payback
period, re-commissioning, and retro-commissioning.” It requires that each federal
agency designate an energy manager responsible for completing annual energy
and water evaluations, implementing energy and water efficiency measures, and
following up on implemented measures.
•
Section 433 (Federal building energy efficiency performance standards)
amended the Energy Conservation and Production Act (42 U.S.C. 68349(a)(3))
requiring a 55% reduction of fossil energy use in new federal buildings and major
renovations by 2010 relative to a 2003 baseline, and a 100% reduction by 2030.
•
Section 434 (Management of federal building efficiency) amended NECPA
Section 543 (42 U.S.C. 8253) requiring that any large capital energy investment
in an existing building to replace equipment (such as heating and cooling
systems) or renovate, rehabilitate, expand, or remodel existing space, employ the
most energy efficient designs, systems, equipment, and controls that are lifecycle cost effective.
•
Section 435 (Leasing) prohibited federal agencies from leasing buildings that
have not earned an EPA ENERGY STAR label.9
•
Section 436 (High performance green federal buildings) directed the
establishment of federal high-performance green building standards for all types
of federal facilities,10 and the establishment of green practices that can be used
throughout the life of a federal facility.
Title V, Subtitle B (Energy Savings Performance Contracts) added five provisions that enhance
and promote privately funded energy efficiency improvements.
•
Section 512 (Financing flexibility) authorized federal agencies to use a
combination of appropriated funds and private financing for Energy Savings
Performance Contracts (ESPC).
8
42 U.S.C. § 8253(a) (1).
In 1992, the U.S. Environmental Protection Agency (EPA) introduced ENERGY STAR as a voluntary labeling
program designed to identify and promote energy-efficient products to reduce greenhouse gas emissions. Computers
and monitors were the first labeled products. Through 1995, EPA expanded the label to additional office equipment
products and residential heating and cooling equipment. In 1996, EPA collaborated with the U.S. Department of
Energy for particular product categories. The ENERGY STAR label is now on major appliances, office equipment,
lighting, home electronics, and more. EPA has also extended the label to cover new homes and commercial and
industrial buildings. http://www.energystar.gov/index.cfm?c=about.ab_history.
10
Consistent with the requirements of Section 305(a)(3)(D) of the Energy Conservation and Production Act (42 U.S.C.
6834(a)(3)(D)).
9
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•
Section 514 (Permanent authorization) enacted the permanent authorization of
ESPCs, and restricted federal agencies from limiting the duration of ESPCs to
less than 25 years or limiting the total amount of obligations.
•
Section 515 (Retention of savings) amended the National Energy Conservation
Policy Act, striking a provision that limited agencies to retaining 50% of any
realized energy and water cost savings for spending on additional energy
efficiency measures or employee incentive programs. (Agencies can now retain
all savings beyond the cost of the energy improvement.)
•
Section 518 (Study of energy and cost savings in nonbuilding applications)
directed DOD to study the potential use of ESPCs in nonbuilding applications,
including vehicles and federally owned equipment that generate electricity or
transport water.
•
Section 526 (Procurement and acquisition of alternative fuels) prohibited federal
agencies from procuring alternative or synthetic fuels, unless contract provisions
stipulate that life-cycle greenhouse gas emissions do not exceed equivalent
conventional fuel emissions produced from conventional petroleum sources.11
Executive Order 13423—Strengthening Federal Environmental,
Energy and Transportation Management
EO 13423 (2007) revoked five earlier executive orders affecting federal agency energy and
12
environmental management. Section 11 consolidated and strengthened the earlier five executive
orders and two related memorandums-of-understanding (MOU). Further, it established new and
updated goals, practices, and reporting requirements for environmental, energy, and transportation
performance, and accountability.13 In some cases, EO 13423 replaced energy and environmental
efficiency goals for previous goals with new target dates.
EO 13423 expanded EPAct 2005 provisions by providing federal agencies with further guidance
on energy and environmental management. EPAct 2005 (Title I, Part A) and EO 13423 jointly
define the current energy efficiency objectives for federal agencies. EO 13423 directs all federal
agencies to curb greenhouse gas emissions by reducing energy intensity relative to each agency’s
baseline energy use in FY2003 (3% annually through the end of FY2015, and 30% by the end of
FY2015). Agencies score progress in reaching building energy-efficiency goals in terms of
11
The provision was included to ensure that federal agencies are not spending taxpayer dollars on new fuel sources that
will exacerbate global warming—a response to proposals under consideration by the Air Force to develop coal-toliquid fuels. Letter of March 17, 2008, from Chairman, House Committee on Oversight and Government Reform to
Chairman, Senate Committee on Energy and Natural Resources.
12
The President, “Strengthening Federal Environmental, Energy, and Transportation Management,” 72 Federal
Register 3919-3923, January 26, 2007.
13
Specifically, Section 11 of EO 13423 revokes the following prior executive orders: EO 13101 Greening the
Government Through Waste Prevention, Recycling, and Federal Acquisition (September 14, 1998), EO 13123
Greening the Government Through Efficient Energy Management (June 3, 1999), EO 13134 Developing and
Promoting Bio-based Products and Bioenergy (August 12, 1999), EO 13148 Greening the Government Through
Leadership in Environmental Management (April 21, 2000), and EO 13149 Greening the Government Through Federal
Fleet and Transportation Efficiency (April 21, 2000). See “Fact Sheet, Executive Order 13423, Strengthening Federal
Environmental, Energy and Transportation Management,” Office of the Federal Environmental Executive at
http://ofee.gov/eo/EO_13423FactSheet.pdf accessed (Accessed November 17, 2008).
Congressional Research Service
11
Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
reducing energy consumption versus gross building area (Btu/gsf). Agencies may exclude some
inherently inefficient industrial buildings from this scoring.
EO 13423 mandates specific energy reduction targets for new construction and renovations.14
Agencies must meet the objectives set in the Federal Leadership in High Performance and
Sustainable Buildings Memorandum-of-Understanding.15 The MOU calls for new buildings to be
30% more cost efficient than industry standards. Buildings undergoing major renovations must be
20% more cost efficient than a pre-renovation, 2003 baseline. The order also encourages federal
agencies to incorporate sustainable practices into projects underway, and to sell or dispose of
unneeded assets.16
EO 13123 (revoked) had directed improvements in building energy efficiency, promoted the use
of renewable energy, and set goals for reduction of greenhouse gas (GHG) emissions associated
with energy use in buildings, among other energy-related requirements. The revoked order had
also served as the basis of DOD’s instruction to the services on energy use. In contrast, the
superseding EO 13423 had no specific GHG reduction target. However, Section 2a of the EO
13423 did include the general goal of cutting GHG emissions by federal agencies through
reductions in the energy intensity of agency operations, but did not specify a GHG reduction
target.
EPAct 2005, Section 203, required federal agencies to increase their purchase of renewable
energy to a minimum of 7.5% of overall energy purchases by 2013. Agencies receive doublecredit for renewable energy generated on their facility sites. EO 13423 required that at least onehalf of the EPAct renewable energy requirement come from “new” (i.e., put in service after
January 1, 1999) renewable energy sources, preferably sited on agency property for agency use.
EO 13423 also allowed agencies to use new “non-electric” renewable energy sources to meet the
requirement for new renewable energy. Examples of non-electric renewable energy include
thermal energy from solar ventilation pre-heat systems, solar heating and cooling systems, solar
water heating, ground source heat pumps, biomass-fueled heating and cooling, thermal uses of
geothermal and ocean resources. However, these non-electric renewable energy sources cannot
apply to meeting the EPAct renewable federal electricity purchase requirement (see Table A-1).17
In 2010, an agency could use non-electric renewables equal to 2.5% of its electricity to satisfy EO
13423, and then use old renewable energy sources for 5% of its use to satisfy EPAct, for a total
equivalent of 7.5% of its electricity use from renewable energy.
14
Section 2f.
Referred to as the “Sustainable Buildings MOU,” it is available at http://www.fedcenter.gov/_kd/Items/actions.cfm?
action=Show&item_id=4713&destination=ShowItem.
16
Office of Management and Budget, Instructions for Implementing Executive Order 13423, March 29, 2007, p. 25,
http://www.whitehouse.gov/omb/memoranda/2007.html.
17
FEMP, Renewable Energy Requirement Guidance for EPACT and Executive Order 13423, January 28, 2008, p. 5,
http://www1.eere.energy.gov/femp/pdfs/epact05_fedrenewenergyguid.pdf.
15
Congressional Research Service
12
Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Table A-1. Meeting EPAct 2005 Renewable Energy Goals Through EO 13423
Renewable energy sources credited in meeting federal annual purchase requirements
Source
EPAct ‘05
Energy
2007 - 2009
2009 - 2012
2013 - out
Electric
3.0%
5.0%
7.50%
EO 13423
Old
Electric
1.5%
2.5%
3.75%
Minimum Goal
New
Electric
1.5%
2.5%
3.75%
3.0%
5.0%
7.50%
Total
EO 13423
Old
Electric
3.0%
5.0%
7.50%
Full Goal
New
Non-Electric
1.5%
2.5%
3.75%
4.5%
7.5%
11.25%
Total
Source: FEMP, Renewable Energy Requirement Guidance for EPACT and Executive Order 13423, 2008.
Notes: Old renewable energy sources are those put into service prior to January 1, 1999. Between minimum
and full goal, federal agencies can use any combination of new non-renewable electric and electric renewable
energy sources to meet EO 13423 requirements. For purposes of EPAct 2005 and EO 13423, purchases of
Renewable Energy Certificates (RECs) are treated the same as renewable energy purchases; however RECs from
qualified renewable sources of non-electric energy can only be used to the EO 13423 requirement.
Executive Order 13514—Federal Leadership in Environmental,
Energy, and Economic Performance
EO 13514 (2009) establishes an integrated strategy to advance “sustainability” in the federal
government and a priority to reduce greenhouse gas (GHG) emissions for federal agencies. The
order also requires federal agencies to set GHG emissions reduction targets, increase energy
efficiency, reduce fleet petroleum consumption 30% by 2020, conserve water, reduce waste,
support sustainable communities, and use federal purchasing power to promote environmentally
responsible products and technologies. EO 13514 expands on EO 13423 by establishing new
goals and extending some dates for compliance. Much of EO 13514 directs agencies to examine
sustainability as a driver of the agency mission regarding environmental and social impacts,
personnel, and logistical operations.
EO 13514 requires each federal agency to assess and measure its GHG footprint and submit
reduction targets. The direction to evaluate the “economic and social benefits, and costs” of
reducing emissions may require clarification as agencies may value benefits differently. New
procurement practices will require environmentally sustainable products and services. Federal
industrial, landscaping, and agricultural applications must reduce water use by at least 20% from
2010 levels. The order also increases the energy efficiency levels required of new building
designs, and targets “zero net-energy” consumption in new federal buildings by 2030. Table A-2
provides a side-by-side comparison of the EO 13423 and EO 13514. For further analysis of EO
13514 refer to CRS Report R40974, Executive Order 13514: Sustainability and Greenhouse Gas
Emissions Reduction, by (name redacted) and (name redacted).
Congressional Research Service
13
Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Table A-2. EO 13423 vs. EO 13514
Goals
EO 13423 (2007)
EO 13514 (2009)
Greenhouse Gas Emissions
Reduction Goals
Reduce GHG through 30%
reduction in energy intensity by
2015, relative to a FY2003 baseline
(no specific GHG reduction
targets).
Establish a GHG percentage
reduction target for FY2020
(relative to a FY2008 baseline),
agency-wide for Scope 1 sources
(federal agency-owned or controlled), and Scope 2 sources
(generated electricity, heat, or
steam purchased by a federal
agency).
At least half of annual renewable
energy purchases must come from
new renewable energy sources,
with projects located on agency
property where feasible.
Establish a separate GHG
percentage reduction target applies
to Scope 3 sources (vendor supply
chains, delivery services, and
employee travel and commuting).
Sustainability
Apply sustainable environmental
practices, and implement
sustainable practices for energy
efficiency, GHG avoidance, and
petroleum product reduction.
Agencies must develop a Strategic
Sustainability Performance Plan
(SSP) to prioritize agency actions
based on a lifecycle return on
investment.
Water Conservation
Reduce water consumption
intensity 16% by 2015, relative to a
FY2007 baseline through life-cycle
cost-effective measures.
Expand EO 13423 water reduction
goals to federal industrial,
landscaping, and agricultural uses.
Reduce potable water consumption
intensity by 2% annually through
FY2020 relative to a 2007 base year
(for 26% total reduction).
Reduce industrial, landscaping, and
agricultural water consumption by
2% annually through FY2020
relative to a 2010 base year (for
20% total reduction).
Add 5 years to the deadline for
meeting the water efficiency target.
Pollution Prevention and
Waste Elimination
Reduce toxic and hazardous
chemicals and materials acquired,
used, or disposed of by the agency,
but set no specific quantitative
reduction goals.
Increase diversion of solid waste,
and cost-effective waste prevention
and recycling programs maintained
in agency facilities as appropriate.
Congressional Research Service
Reduce federal generation of waste
and pollutants before they enter the
waste stream.
Divert at least 50% of nonhazardous solid waste and at least
50% of construction and demolition
materials and debris from landfills
to recycling or recovery operations,
excluding diversion to a waste-toenergy facility.
14
Federal Agencies Achieving Energy Efficiency and Greenhouse Gas Reduction Targets
Goals
EO 13423 (2007)
EO 13514 (2009)
High Performance Buildings
New federal buildings and major
renovations of existing federal
buildings must comply with
“Guiding Principles for Federal
Leadership in High Performance
and Sustainable Buildings.”
Design all new federal buildings to
achieve zero net-energy use by
2030.
Minimize water and energy
consumption with cost-effective,
innovative strategies.
Reduce existing federal buildings
consumption of energy, water, and
materials,
Identify alternatives to renovation.
Apply “best practices” and
technologies to promote the longterm viability of rehabilitated
federally owned historic buildings.
Sustainable Acquisition
Practices
Acquire goods that use sustainable
environmental practices, including
biobased, environmentally
preferable, energy-efficient, waterefficient, and recycled content
goods.
Acquisition practices must ensure
that 95% of new contracts for
products and services are energyefficient, water-efficient, bio-based,
environmentally preferable, nonozone depleting, contain recycled
content, and use non-toxic/lesstoxic alternatives.
Includes all task and delivery orders
but excludes weapons systems.
Refers to
ENERGY STAR products
Federal Energy Management Program
(FEMP)
Electronic Product Environmental
Assessment Tool (EPEAT)
Author Contact Information
(name redacted)
Specialist in Energy and Energy Infrastructure
Policy
/redacted/@crs.loc.gov, 7-....
Congressional Research Service
(name redacted)
Specialist in Energy Policy
/redacted/@crs.loc.gov, 7-....
15
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