ENERGY STAR Delivers Big for America: Why Put It at Risk?

Update: The Fiscal Year 2018 budget proposal from the Trump Administration would eliminate the ENERGY STAR program. NRDC has also posted a new Fact Sheet about the program here.

Imagine owning a brand that’s both well-known and widely trusted by consumers and businesses all over America. Now imagine that it turns a $50 million annual investment into $30+ billion worth of annual customer utility bill savings, and has resulted in branded sales of more than 5 billion products since its inception. That’s one heck of a rate of return and a brand that any CEO would die for.

Well, that brand happens to be ENERGY STAR® a voluntary labeling program for appliances and equipment, as well as buildings that is managed by the U.S. Environmental Protection Agency (EPA) and was established back in 1992. The blue and white ENERGY STAR label makes it easy for consumers to identify energy-saving products that also help save money and protect the environment by using less energy. No wonder it has become one of the most successful public-private partnerships of all time. (The program has more than 18,000 partners, including a wide range of manufacturers, retailers, builders, and utilities.)  

But here’s the shocker: this amazing program looks to be on the chopping block as part of soon-to-be-proposed budget cuts at the EPA.  

How Does the ENERGY STAR Program Work?

ENERGY STAR is a labeling program that helps consumers and businesses select a more energy efficient model—usually among the top 25 percent most efficient on the market. All the consumer needs to do is look for models that have the blue ENERGY STAR logo, which means the manufacturer has voluntarily applied to EPA for the privilege to use the label signifying the product meets specific energy-saving requirements. It's that simple. A consumer doesn’t need to know what energy factor the replacement furnace should have (and whether a higher or lower number is better) or how many kilowatt hours per year a new energy efficient clothes washer should use. 

EPA establishes minimum specifications for each of the 70 product categories in its program. These range from water heaters, light bulbs, air conditioners, and computers, to office buildings and new homes. In general, EPA strives for the ENERGY STAR label to represent the top quarter of the market in terms of a product's energy efficiency. In other words, if there are 100 medium-sized refrigerators on the market, the 25 models that use the least amount of energy would be eligible to qualify for the label. Manufacturers whose products meet or beat the requirements can earn the ENERGY STAR label.

To ensure the products perform as promised and to preserve the integrity of this trusted brand, the EPA requires manufacturers to submit laboratory testing results and conducts annual "off-the-shelf" verification testing of selected products. EPA resets its specifications once the market share of ENERGY STAR-qualified models grows to 50 percent or so for a particular product category, which is typically every two to three years. NRDC has for years participated in EPA’s proceedings where its specifications are set. Their process is open to all stakeholders, is very comprehensive and data driven.

Incentives to Save 

Utilities and program administrators across the country invest billions of dollars each year in rebates to encourage consumers and businesses to buy ENERGY STAR-qualified products. After all, it’s a lot cheaper and better for the environment to invest in energy efficiency than having to build new power plants. Many leading manufacturers tweak their designs to ensure their products meet ENERGY STAR criteria and are eligible for the rebates. The ENERGY STAR labeling program clearly moves markets and as demand for the more efficient models increases, production rises and prices of the more efficient equipment come down. In fact, utilities offered consumers and businesses more than $5 billion in incentive programs in 2016 alone for rebates for products that met or exceeded ENERGY STAR. That’s amazing leverage for the modest investment made by EPA!

A similar dynamic is in play with new homes whereby builders that offer homes that are at least 15 percent more efficient than the local building energy code qualify for ENERGY STAR certification. In 2015 alone, families living in ENERGY STAR certified homes saved more than $625 million on their utility bills. EPA also developed a benchmarking software tool called ENERGY STAR Portfolio Manager which commercial building owners use to assess their building’s energy and water use. The most efficient buildings qualify for the coveted ENERGY STAR certification which can increase the building’s value and help in recruiting environmentally-minded tenants.

The Program that Really Delivers

In its “Overview of 2015 Achievements,” EPA reported that the ENERGY STAR program helped families and businesses save $430 billion on their utility bills while reducing climate change pollution by 2.7 billion metric tons of carbon dioxide since 1992 (cutting energy consumption means also reducing the amount of fossil fuels that need to be burned to produce it). These are massive numbers, many of which would not have occurred without the foundation laid by the ENERGY STAR labeling program. 

Manufacturers like the program as it is voluntary and can provide them with a competitive advantage over products that do not bear the ENERGY STAR logo. Retailers such as Home Depot, Sears and Best Buy are ENERGY STAR partners and utilize the aforementioned utility rebates to drive demand for the ENERGY STAR-labeled products. The ENERGY STAR program has thrived under both Republican and Democratic administrations and has broad support from an amazingly diverse set of stakeholders. Year after year the program continues to deliver amazing results, with savings that outweigh the program cost by more than 500 to 1. 

Given the massive benefits and proven track record of this program, along with the support from consumers, manufacturers, home builders, building owners, retailer and utilities, it's hard to imagine why the Trump Administration or Congress would consider gutting or eliminating this program.

We need to tell them they are looking in the wrong place for cuts and must not eliminate or tamper with this amazingly successful and impactful program.

About the Authors

Noah Horowitz

Senior Scientist and Director, Center for Energy Efficiency Standards, Energy & Transportation program

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