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Why so many businesses want to save Energy Star

The federal government's marquee energy-efficiency program has enough funds to last through September. After that, its future is uncertain.

When the Trump Administration published its proposed budget in March, most government programs aimed at investing in energy efficiency were on the chopping block, including one of the most successful public-private collaborations of all time: the Energy Star program created under George H.W. Bush and managed by the Department of Energy.

For the next five months at least, the initiative remains fully funded with about $50 million, according to the Alliance to Save Energy (the exact amount isn’t broken out separately). That’s basically the same annual amount that has been allocated to the program for the past 15 years, but the impact of that investment has been sizable  the estimated savings related to Energy Star guidelines from appliances to buildings is pegged at around $430 billion over the lifetime of the program, according to the EPA. Even electric vehicle chargers are covered, an addition made in the waning days of the Obama administration.

Perhaps just as compelling, as of 2014 (PDF), at least $165 billion in private-sector investments was linked to the effort. There are at least 16,000 Energy Star "partners" — organizations that have invested in the strict, ongoing certification program.

Some other stats more likely to be persuasive with the new president’s advisers: about 2.2 million jobs are pegged to energy-efficiency initiatives across the United States, including those in manufacturing, installation, retrofits and construction. More than 20 cities and states use its metrics to help benchmark the progress of their own regional energy-efficiency projects. 

Despite those compelling numbers and the short-term reprieve in early May, the program’s long-term fate is far from certain and the business community is speaking up. More than 1,050 companies — including giant door and window manufacturer Andersen, HVAC powerhouses Ingersoll Rand (parent of the Trane brand) and United Technologies, real estate companies CBRE and Jones Lang LaSalle, and tech giant Samsung Electronics — added their signatures to a letter (PDF) sent to four key U.S. senators and representatives Congress in late April urging them to stand up for energy efficiency in general and Energy Star in particular.

The letter concludes: 

Energy Star is a model for successful collaboration between public and private sectors. It enjoys a long track record of success and should be strengthened, not weakened, to ensure it continues providing these important benefits to the public while helping us meet our energy and environmental goals.

Kateri Callahan, president of Alliance to Save Energy, the coalition that orchestrated the letter, said her organization has sent similar letters in the past. But it hasn’t done so in several years, and the number of companies that wanted to add their voice was far higher than those that participated the last time. "The concern is whether or not the Trump administration will continue to pursue this moving forward," she said.

Callahan testified May 3 before a Congressional appropriations subcommittee in Washington, D.C. "Federal investments in energy efficiency have reaped huge returns for taxpayers, driving private sector investment, lower energy bills, creating jobs and improving the environment," she said in her prepared remarks. "For these reasons, federal investment in energy efficiency has enjoyed broad bipartisan support in the Congress and the executive branch for decades."

One option on the table is a proposal to privatize the program, an idea that the Alliance to Save Energy opposes. “None of the partners want to see this privatized,” Callahan noted. “It doesn’t have the same integrity or public reach” under that scenario, she added.

Energy Star is a model for successful collaboration between public and private sectors. It enjoys a long track record of success and should be strengthened, not weakened.

The importance of federal participation is underscored by Scott Tew, executive director of the Ingersoll Rand Center for Energy Efficiency and Sustainability: "The Energy Star program doesn’t just help our Trane brand differentiate between its energy efficient consumer HVAC products, but it also helps our customers in understanding and marketing the energy performance of their buildings. Energy Star is a proven, credible and 100 percent voluntary program that will grow in consumer confidence if it remains managed by EPA."

A standard that constantly evolves

One aspect of Energy Star praised most often is that it rewards businesses that invest, noted Jon Moeller, CEO of energy management software company MACH Energy, which was among the companies that signed the bill.

When it comes to buildings, for example, only those graded in the top quartile of performance on energy consumption are eligible for the rating. Among commercial real estate companies, tenants and investors are increasingly interested in the scores, Moeller said. "It typically implies a better-managed building," he said.

What’s more, managers are required to submit updated data annually in order to maintain a rating — as more organizations invest in efficiency measures and median scores rise, it gets tougher to earn the designation. Right now, more than 450,000 commercial buildings are actively measuring their footprints; of those, 25,000 have been certified as Energy Star, for a cumulative savings of about $3.4 billion since 1992. One builder, KB Home, has built more than 100,000 houses certified to the Energy Star credentials — it was recognized in early April with one of more than 143 awards conferred by the program recognizing progress in 2016.

Similarly, the Energy Star designation on consumer products acts as a "market differentiator" that rewards companies that invest in research and development — it’s recognized by easily 85 percent of consumers, said Callahan. "By being early to market, they don’t have to be a loss leader," she noted.

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