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JEC Chair Maloney Calls for Improvements to Energy Star Program

Aug 30 2010

Letter to Energy Secretary and EPA Administrator Follows JEC Hearing on Clean Energy Innovations

Washington, D.C. – Congresswoman Carolyn B. Maloney (D-NY), Chair of the U.S. Congress Joint Economic Committee (JEC), today sent a letter to the Secretary of Energy and the Administrator of the Environmental Protection Agency seeking their input on how best to update and improve the Energy Star ratings that are awarded to energy-efficient buildings and products.

The letter follows a July JEC hearing that focused on innovations in the consumption and production of energy and which revealed shortcomings in the Energy Star program, including the program’s longstanding use of relative rather than absolute ratings.

At the hearing, Anthony Malkin, who owns the Empire State Building and is leading a major energy efficiency retrofit of that building, voiced concern that the Energy Star ratings compare a building’s energy usage to that of other buildings, but do not provide an absolute rating detailing energy consumption for a specific building.

“Energy Star has been a useful program,” said JEC Chair Maloney. “But, the ratings need to be updated so they’re easier for consumers to understand and more useful to businesses. Businesses want a rating system that quantifies – in absolute, not relative terms – the improvements they make in reducing their energy consumption. A more robust Energy Star program will make it easier for businesses to document and showcase the benefits of their energy-conserving efforts, incenting them to undertake more of these job-creating retrofits. By strengthening Energy Star, we can spur job creation and give our economy a much-needed shot in the arm.”

Maloney emphasized in her letter that speeding the pace of commercial retrofits will create jobs, reduce our nation’s energy consumption and provide an important boost to the struggling construction industry. She also suggested a number of straightforward steps that could be taken to strengthen the Energy Star program for consumers, including reporting the expected lifetime of products and appliances, so that consumers are able to factor durability into their purchasing decisions.

Dr. Michael Greenstone, Director of the Hamilton Project and 3M Professor of Environmental Economics at MIT, testified at the July hearing that additional cost information would enable consumers to make more informed purchasing decisions based not just on the price of the product, but on how much it costs to use the product. He also supported moving from relative to absolute ratings.


The text of the Congresswoman’s letter follows below:

August 30, 2010

The Honorable Lisa P. Jackson
Administrator, Environmental Protection Agency
Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, NW
Washington, DC 20460

The Honorable Dr. Steven Chu
Secretary of Energy
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, DC 20585

Dear Administrator Jackson and Secretary Chu:

I want to bring to your attention an energy issue that was raised at recent hearing of the Joint Economic Committee, which I chair – the need to revamp the Energy Star program to be a more consumer friendly tool and more useful to businesses. Since EPA and DOE jointly operate the Energy Star program, I am sharing this information with both of you.

Anthony Malkin, owner of the Empire State Building, testified about the 40 percent reduction in energy usage he is achieving through a major energy efficiency retrofit of that great building. The energy savings are dramatic. As Mr. Malkin pointed out, the Empire State Building’s energy consumption is equivalent to that of 40,000 single family homes. Indeed, 64 percent of all energy consumed in New York City is consumed by 20 percent of the buildings – a powerful reminder that by focusing on large consumers of energy, policymakers can make significant progress in our effort to conserve energy.

While the progress being made at the Empire State Building is impressive, it is rare. The vast majority of commercial buildings have not undertaken retrofits. As the Department of Energy and the Environmental Protection Agency seek to accelerate the pace of commercial retrofits, it may be productive to review and possibly revamp the Energy Star ratings that are awarded to energy-efficient buildings and products.

Today, the Energy Star program provides data to businesses and consumers on a relative basis. The Energy Star rating compares a specific building’s energy usage to that of other buildings, but doesn’t provide a quantitative rating spelling out the building’s actual energy consumption. A building owner who carries out a major retrofit should be able to expect an Energy Star rating that details the reduction in energy consumption that has resulted. As Mr. Malkin testified, the improvement in the Energy Star rating after the retrofit should not be dependent on what other buildings achieve in energy savings. Additionally, that Energy Star rating should be easily understood by the public, including tenants who want to compare the energy efficiency of different buildings.

Consumers also face challenges when purchasing appliances with Energy Star ratings. A longstanding problem with the EnergyGuide system had been that Energy Star’s ratings were relative, not absolute. For example, a consumer learns that an Energy Star washing machine uses about 30 percent less energy than a washing machine which didn’t make the Energy Star classification. While that’s useful information, what the consumer needs is the amount of energy used by the washer and what financial savings this lower energy consumption will lead to. It should be clear and simple.

Energy Star’s EnergyGuide Program – which lists the expected yearly usage costs for many products – is an important step in giving consumers the most useful information possible when making purchasing decisions. Although the EnergyGuide system is a great innovation, the details of the program are somewhat opaque. It seems that the requirement for an EnergyGuide label only applies to some appliances but not others, even within the same broad category (e.g., water heaters). How is the decision about requiring an EnergyGuide label made?

Additionally, The Energy Star certification process has a credibility deficit. This year, the GAO was able to gain Energy Star approval for 15 out of 20 bogus products that it submitted to the program for approval, including a “gas-powered alarm clock” that was the size of small generator. For the vast majority of new products, GAO reported that Energy Star does not verify energy savings reported by manufacturers.[1]

In the past several years, with the federal government leading the way, our country has made great progress in food labeling. Consumers are able to easily read and understand information about the food products they are purchasing. We should seek the same kind of progress when it comes to Energy Star. Below are a few questions I have about how best to improve the Energy Star program:

• What can be done to update and strengthen Energy Star so that it both provides more information to consumers and businesses and rewards those who undertake energy conserving actions?

• Have EPA and DOE considered requiring manufacturers to report the expected lifetime of products, so that consumers are able to factor durability into their purchasing decisions and calculate the lifetime cost of the product?

• Are EPA and DOE already taking steps to provide more information through Energy Star that would spell out the financial savings associated with a building’s Energy Star rating?

• How can we make it easiest for tenants, for example, to understand and compare the energy-efficiency of the building that they are leasing – or considering leasing – to that of other buildings in their community?

• As you have worked to refine the Energy Star program, are you encountering any obstacles that are slowing progress?

Making the nation’s existing building stock more energy efficient is central to making real progress in reducing carbon emissions. Today, however, just 9,700 commercial buildings have earned an Energy Star label, out of five million commercial buildings in the country. Businesses aren’t acting. The existing $1.80 per square foot tax credit for building retrofits has so far been insufficient to spur significant action.

Of course, the case for retrofits stands on two legs: energy efficiency and economic growth. By accelerating retrofits in both the commercial and residential sectors, we can create jobs, reduce our nation’s energy consumption and provide an important boost for the construction industry. The Home Star Energy Retrofit Act, which passed the House in May and is expected to be taken up soon in the Senate, will help to speed retrofits in the residential sector. Changes to the Energy Star program can provide better information to consumers and also help to build the business case for retrofits in the commercial sector.

On the appliance side of Energy Star, the Department of Energy and the Environmental Protection Agency should build upon the success of the EnergyGuide program, where information is clearly displayed both on a product’s anticipated annual costs to consumers and the estimated amount of energy that the product will use annually. As Dr. Michael Greenstone, Director of the Hamilton Project and 3M Professor of Environmental Economics at MIT, recently testified before the Joint Economic Committee, these improvements would increase transparency and efficiency within the marketplace by allowing consumers to make purchasing decisions based on total future costs of products, not just their prices on the shelf. Thus, the improved Energy Star rating system would harness the full power of consumer decision making to decrease energy usage – saving consumers’ money and reducing American energy consumption. A reformed Energy Star program would also spur innovation and would force companies to compete directly on energy efficiency, durability, and lowering total costs to consumers.

I look forward to your answers to my questions and to any additional perspective you would like to share on how the Federal government can most efficiently encourage energy-efficiency retrofits as well as the consumption of energy-saving products and appliances.


Carolyn B. Maloney
Chair, Joint Economic Committee


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